Indian Equities To See 'More Volatility' In H1 2025, Says Axis Securities As It Picks 6 Golden Themes

Indian equities are likely to see volatility in the first half of 2025 with the majority of the return expectations being back-end loaded in the year, according to Axis Securities.

The economy will continue to be "star performing" compared to other emerging markets and it is likely to continue its growth momentum in 2025 against the backdrop of a volatile global economy, it said in a report.

Fiscal 2026 is expected to be better than the current year, driven by fiscal tailwinds, private capex revival, and easing of credit conditions post-CRR cuts, the brokerage said in a report on December 31, 2024.

Earnings per share of Nifty 50 companies are expected to grow by 7.6% in financial year 2025, with growth expected to accelerate to 13.7% in fiscal 2026 and to 11% in 2027.

Policies in the US government during the Trump presidency, trade policy, rate cut by the Federal Reserve and the direction of currency and oil prices will be the monitorables during the year.

The market will closely monitor developments towards the upcoming budget and the rate cut trajectory in the Indian market, Axis Securities said. "We anticipate one to two rate cuts from the RBI in 2025, contingent upon inflation trends and the broader growth dynamics."

These events will keep the Indian equity market volatile, and it could respond in either direction based on the developments, it said. "However, we expect the first half of 2025 to be more volatile."

Its six themes for 2025 include structural play in premium consumption stocks and healthcare industry for its growth story, companies with higher growth potential in the infrastructure value chain and pharma and telecom as defensive play. Real estate companies should benefit from the demand visibility and the BFSI stock from reasonable valuation, the note said.

NSE Nifty 50 and the BSE Sensex closed 2024 with gains of nearly 8.86% and 8.12%, making it nearly 50% below gains made in the previous year.

For Nifty, the 23,000 level serves as a pivotal support for the index, the report said. "Holding above this level could drive a rally toward the all-time high of 26,277, potentially extending gains to 27,500 in the coming year."