Domestic Policy, Reforms Will Drive Markets, Says Gautam Chhaochharia
The factors that will drive the market in 2025 are based on the budget and the new economic policies, according to UBS' Gautam Chhaochharia.
Timing the market based on global cues are complicated calls to take. While some zooming out and focus on international cues usually helps predict the market's direction, this market expert believes otherwise. Put simply, the cues that investors need can be found right here at the domestic level.
The factors that will drive the market in 2025 are based on the budget and the new economic policies, according to Gautam Chhaochharia, head of global markets at UBS.
Domestic Market, Domestic Policy
Given the volatility that is clearly present in the current market, Chhaochharia expects stability soon. Despite the blend of factors that are contributing to current volatility, signals that investors need to watch for are policy-based reforms in the nation, he said.
"The bigger driver of the markets will be policy. The market direction is driven by local flows so policy is important," Chhaochharia explained. When one zooms out, the market background is different compared to last year, he noted. But the impact of policy is not only limited to market stability, but also spills on to returns expected from the market.
Positive Cues
As far is capex is concerned, it has been a disappointment for the market, according to Chhaochharia.
"Any pick-up in this will be reassuring and will be welcomed by the market," he said. Increased government spending opens up avenues for growth in the market and will only support expansion across sectors.
"In financial year 2025, we expect 80 bps of fiscal consolidation and this is likely to impact growth. What will matter is the direction from the RBI and the broader reforms agenda. These elements will drive market returns," he emphasised.
Stocks And Sectors
With safer bets being encouraged, Chhaochharia advises cherry-picking when it comes to sectoral plays.
"One big thing is, this year is going to be a lot more about individual stocks within sectors, rather than big sector bets. A lot about bottom-up stock picking than style based allocation," he said.
In the banking sector, this same strategy applies and there are lot of opportunities in PSU banks. Chhaochharia highlights that there are much more opportunities in private sector banks as well.
