The year ahead will likely be defined by a confluence of three structural themes - trade conflicts, deal-making, and the earnings upgrade cycle, as well as the global rebalancing of power and currency dynamics - shaping both global and domestic markets, said Trideep Bhattacharya, President & CIO - Equities at Edelweiss MF, in an interview with Moneycontrol.
Among asset classes, he believes equities will be the best-performing asset class in the year ahead, supported by the twin tailwinds of global deal-making and an earnings upgrade cycle.
What key factors should investors focus on in the next one year, given the market has faced several headwinds over the last few quarters?
The year ahead will likely be defined by a confluence of three structural themes shaping both global and domestic markets:
From trade conflicts to deal-making: A gradual shift in global trade dynamics — from confrontation to selective cooperation — could benefit export-oriented and globally integrated sectors, especially IT services, engineering, and specialty manufacturing.
Beginning of an earnings upgrade cycle for India: With corporate balance sheets deleveraged, government capex rising, India is poised for a 13–15% earnings CAGR over FY27–28. This could mark the start of earnings expansion phase after years of consolidation.
Global rebalancing of power and currency dynamics: As global capital reallocates from developed to emerging markets, India’s macro stability — 6.5% GDP growth, moderate inflation, and fiscal prudence — should attract incremental foreign capital.
Together, these themes position India for global outperformance in the year ahead, both in relative growth and market returns.
Which asset class do you believe will perform best in the year ahead — equities, gold, or any other?
Our base case is that equities will be the best-performing asset class in the year ahead, supported by the twin tailwinds of global deal-making and an earnings upgrade cycle.
However, investors should also prepare for abrupt shifts in global capital flows as geopolitical and currency realignments play out. Maintaining higher cash buffers and some allocation to real assets like gold or REITs offers a prudent hedge against external shocks.
Which sectors could play the key role in the year ahead?
From trade conflicts to deal-making: IT services and engineering exports could benefit from de-escalation of tariff tantrums and resumption of global trade.
Earnings upgrade cycle: Discretionary consumption and government capex beneficiaries — especially in capital goods and defence — remain high-conviction areas.
Rate cut beneficiaries: Autos, NBFCs and select mid-cap lenders could gain as domestic rates ease later in 2025.
Do you expect SIP inflows to improve significantly in the year ahead? Will domestic institutional flows (DIIs) also be stronger in the coming year?
Systematic Investment Plans (SIPs) have already crossed a record Rs 21,000 crore per month, and the trend should strengthen further in the year ahead. Retail investors now account for over one-third of equity AUM, reflecting a deep structural shift in household savings behaviour. Domestic institutional investors (DIIs), led by mutual funds and insurers, are likely to remain net buyers as financialization accelerates.
Do you expect foreign institutional investors (FIIs) to turn more bullish in the year ahead? Could a trade deal or global economic developments be key catalysts for a shift in sentiment?
Foreign Institutional Investors (FIIs) may turn incrementally bullish in the year ahead after India’s underperformance in the past one year. India’s relative macro stability, under-ownership in FII portfolios, and improving earnings visibility could drive a reversal in flows. A de-escalation of US–India trade tensions or easing global policy uncertainty could further amplify sentiment.
What would you advise for the year ahead?
As we ushered in Samvat 2082, it is worth reflecting on the lessons from the year gone by — one that tested investors’ conviction, patience, and adaptability. Last Samvat reminded us that markets reward fundamentals, not narratives. It was a year when volatility and valuation divergence coexisted, yet India remained one of the most stable large markets globally. Three lessons stand out from the last one year:
First, be style agnostic — no single investment style, whether value, growth, or momentum, worked consistently through the year. Investors who stayed diversified across styles fared best.
Second, rely on bottom-up company specific earnings resilience. Companies with robust balance sheets, strong pricing power, and market-share gainers, significantly outperformed those riding macro or liquidity trends.
Third, stay agile, as macro conditions can turn on a dime. The sharp swings in oil, currency, and bond yields reminded investors that flexibility and risk management matter as much as stock selection. The last one year rewarded those who reacted nimbly to changing global narratives rather than anchoring to a single view.
Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.
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