More Stories

Informist, Tuesday, Dec. 31, 2024

By Anjana Therese Antony

MUMBAI – After seeing significantly lower returns in 2024, analysts expect better corporate earnings and higher returns for investors in 2025. Analysts and fund managers are betting on the government's spending to gain traction and interest rate cuts in India to begin early next year, which will help the domestic market to see better growth. While the near-term outlook on the market remains slightly bearish, analysts expect the medium- to long-term scenario to be positive.

Foreign investors will "definitely" come back to India once the earnings performance of Indian companies improves, Sanjeev Hota, vice-president and head of research at Mirae Asset Sharekhan, said. "The primary concern of the Indian market was the earnings downgrades... The Indian market was trading at a premium to other emerging markets and foreign investors were finding better opportunities in other markets." FIIs net purchased shares worth $884.28 million in 2024, which is less than 4% of what they bought a year ago.

Benchmark indices, which rose around 20% in 2023, saw less than 10% growth this year. However, this was better than the 4% expansion in 2022. The Nifty 50 and BSE Sensex closed the last trading session of the year on a slightly bearish note. The 50-stock index ended less than a point lower at 23644.80 points. The 30-stock index closed 0.1% or 109.12 points lower at 78139.01 points. The near-term support for the Nifty 50 is pegged at 23350-23300 points and resistance at 23900-24000 points.

Among factors that dragged domestic equities down this year are expensive valuations, a slowdown in earnings growth and consequent downgrades in earnings estimates, the economic slowdown, higher food prices, depreciation of the rupee, global crude oil price volatility, foreign investor outflows to other markets such as the US and China, anticipation of slower rate cuts in the US, and conflicts in West Asia.

Investors await the December automobile sales data to be released by companies Wednesday. The wholesale figures are expected to be healthy for passenger vehicles and tractors and marginally positive for two-wheelers, Nuvama Institutional Equities said in its report. On the other hand, growth in commercial vehicles is likely to be flat, it said. The brokerage also expects high-single-digit growth in volumes of two-wheelers and tractors over the period from financial year 2023-24 (Apr-Mar) to FY26.

Market participants now await the December quarter earnings for cues. While many analysts expect no major improvement in earnings growth during the quarter, they will closely watch for management comments on the outlook and business growth in the coming quarters. The growth in revenue of Nifty 50 companies had fallen to a 15-quarter low in Jul-Sept and the adjusted net profit fell to an eight-quarter low, according to the corporate performance report by the National Stock Exchange. 

Information technology companies, also called early birds, are scheduled to kick-start the earnings season before mid-January. After a decent September quarter, seasonal furloughs are expected to weigh on growth for the sector in Oct-Dec, Motilal Oswal Financial Services said in its preview report. "That said, looking beyond seasonality, macro uncertainty is gradually easing and we expect the outlook for technology spending to improve in CY25 (calendar 2025)," it said. The broking firm also said it sees clear signs of an acceleration in earnings recovery.

Among specific stocks, ITC will be in focus as the demerger of the company's hotels business will be effective Wednesday. Hyundai Motor India will raise prices across its range of models with effect from Wednesday.  End

US$1 = INR 85.61

Edited by Rajeev Pai

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

Informist Media Tel +91 (22) 6985-4000

Send comments to feedback@informistmedia.com

© Informist Media Pvt. Ltd. 2024. All rights reserved.