CY24 started on a positive note, but market corrected in the second half of the year due to premium valuations, China stimulus and a decline in domestic corporate earnings. What's in store for CY25? Join Satish Menon, Executive Director of Geojit, as he shares his expert insights on the Indian market outlook for 2025. In this video, he will discuss the key challenges and opportunities ahead, and provide valuable guidance on navigating the market in 2025.


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What happened in CY24…
The year started on a positive note, driven by the strong corporate earnings growth in FY24. After a modest trend during the pre-election period between Jan to May, the upside increased after the national election , leading to a rebound of FII inflows. The optimism continued until the end of Q3, post which the market started to correct due to India’s premium valuations compared to other EMs, the emergence of China as an attractive investment option and a slowdown in domestic corporate earnings. But overall, the broad market delivered a decent return of 20%.
Outlook for 2025…
We expect CY25 to remain positive, but we foresee a subdued return of around 10% for the broad market. The Indian economy is forecasted to strengthen in FY26 with real GDP growth of 7%, which is higher than the estimated 6.5% in FY25. This indicates that CY 2025 could be a good year. However, high valuation remains a challenge for India, which will likely affect the performance of domestic stock market in the short to medium-term. While corporate earnings slowed in H1FY25, they are forecast to recover from Q3FY25 onwards. This will help, but it is uncertain if this recovery will match the levels seen in the past 2-3yrs. India’s EPS growth is likely to moderate to 10-12% in FY25 and 12-14% in FY26, lower than the average growth of 20% seen during 2021 to 2024. Hence this may lead to moderation in India’s valuation in the short to medium-term. On a positive note, the Indian economy is expected to be the fastest growing economy, with real GDP growth of 6-8% and nominal growth of 10-11% over the decade. This supports the theory that India's valuation could be better compared to other EMs in the long-term. Hence, sectors & stocks with potential for high revenue growth will likely maintain premium valuation. Trumponomics is going to be key concern for global markets, although its impact may be less volatile compared to Trump's first term from 2017 to 2021. The decline in global inflation, interest rates, and geo-political risks (like potential resolution of Ukraine-Russia and Israel-Iran war) will help the growth of equity markets in 2025, which will also support the Indian stock market.
My concluding message for 2025 remains consistent with my Diwali message: expect a moderation in returns and remain patient. On behalf of Geojit, I wish you and your loved ones a very prosperous 2025.


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