Major asset classes including equities and precious metals delivered double-digit returns to investors in the ongoing calendar year till December 17. While the benchmark equity index BSE Sensex advanced nearly 12% YTD, the broader indices the BSE MidCap and BSE SmallCap rallied 30% and 33%, respectively, during the same period. On the other hand, gold and silver rallied 21% and 20%, respectively, YTD. Market watchers hold a bullish view on these assets for the year 2025.
Overall, the Indian equity markets remained resilient for most of 2024, despite challenges posed by sticky inflation, weaker-than-expected Q2FY25 earnings, general elections outcome, FII outflows and global geopolitical uncertainty. For the coming year, there are expectations that heightened trade friction, problems in China to continue and global situations to put pressure on the fiscal positions of major economies.
In the advanced economies, the focus of policy could shift away from inflation control to job creation and unemployment is likely to be closely tracked. India seems to be no exception to the heightened volatility around, and currently appears to be relatively insulated against global shocks like tariffs levied post change in the US Presidency.
However, various key sectors are poised for substantial growth, even as the broader economy shows signs of moderation. Rajesh Bhatia, Chief Investment Officer – ITI AMC said, “Indian equities are expected to perform strongly in the coming year. In the short term, though, slowing economic growth, high starting valuations, and weak earnings-per-share revisions could keep markets rangebound. We believe that sectors like private banks, IT, digital commerce, capital goods and pharma may have a clearer path to stronger earnings and are expected to perform well.”
Narinder Wadhwa, Managing Director and CEO, SKI Capital, said, “Indian markets could remain volatile in early 2025 but are expected to rally in the second half, especially in large-cap and quality mid-cap stocks. Sector rotation will play a key role, making the identification of emerging sectors crucial.”
Coming to precious metals, the year 2024 was a standout for commodities, with gold and silver reaching all-time highs of Rs 79,408 per 10 gram and Rs 98,788 per 1 kg, driven by strong central bank demand, geopolitical tensions, and growing industrial applications in green technologies.
Crude oil prices, meanwhile, exhibited volatility, starting strong on supply risks but ending under pressure due to weak Chinese demand and surging US production. The price of the commodity has stood almost flat at Rs 5,952 per barrel on MCX.
“As we move into 2025, gold and silver are expected to retain their strength, bolstered by safe-haven demand and industrial needs, though strong dollar and Trump’s economic policies could temper gains. Crude oil faces challenges from a projected global surplus, but continued tensions in the Middle East and Russia-Ukraine conflict may provide occasional support,” Kotak Securities said in a report.
Sharing its view on the yellow metal, global brokerage UBS said, “We maintain our bullish gold outlook and expect to see new highs in 2025, though year-on-year gains are likely to be slower than 2024. There is still room for strategic gold allocations to rise and this should keep driving gold prices higher. The market is likely to remain supported by official sector purchases continuing at historically elevated levels and resilient physical demand.”