Outlook 2025: Kotak Securities is bullish on banking, pharma & 2 different sectors within the 12 months forward

Blame it on geopolitical tensions, world financial weak point, or elevated rates of interest, amongst different elements, however the Indian inventory market noticed vital volatility within the calendar 12 months 2024.

Pattern this: Between March and June 2024, the fairness benchmark Nifty 50 remained rangebound, fluctuating between 22,339 and 22,821 ranges, advancing by barely 500 factors over the three months. Equally, after reaching an all-time excessive of 26,216.05 on September 26, the index declined by over 7 per cent, closing at 24,198.85 on December 18. 

The Nifty 50 index has delivered practically 12 per cent return in 2024, decrease than 19.4 per cent in 2023 and over 24 per cent in 2021. Nevertheless, it’s a lot greater than the 4 per cent return index delivered in 2022.

Amid excessive volatility and valuation issues, buyers are unsure about the place to speculate.

Shrikant Chouhan, the top of fairness analysis at Kotak Securities, feels that markets are pretty valued and supply an upside alternative. “For buyers with a long-term perspective, this means that they need to contemplate investing at present ranges and may take a look at including on market correction,” mentioned the equities skilled.

Sectors to observe in 2025 

The brokerage has highlighted 4 sectors it’s bullish on going forward:

1. Banking Sector: The banking sector has given steady returns through the in any other case risky market situations. Whereas the sector has underperformed vis-a-vis broader markets, Chouhan mentioned staying invested within the sector is a clever resolution primarily based on fundamentals.

The fairness analysis head additionally mentioned that the banking shares below the protection witnessed 20 per cent year-on-year earnings progress, and the brokerage expects manageable credit score prices this cycle.

“Banking shares provide worth and security, probably outperforming the Nifty in 2025, pushed by double-digit mortgage progress and powerful asset high quality. In diversified finance, we favour housing finance over unsecured and microfinance segments, given higher asset high quality and sustainable long-term progress prospects,” mentioned the fairness markets skilled. 

2. IT Sector: Drawing a parallel between Banking Monetary Companies (BFS) companies and IT companies, the brokerage expects a normalisation of BFS vertical income for the IT companies within the monetary 12 months 2026.

The brokerage additionally believes that the tech spending outlook is “fairly good” for many regional banks, cost firms and mid-tier BFS companies.

“Banks proceed to spend on cloud-based platforms and are shifting extra core workloads to the cloud,” Shrikant Chouhan mentioned, responding to Mint’s question on the sectoral advice.

Investments in information, analytics, AI and cyber safety are being prioritised because the finance trade strikes towards modernisation and on-line adoption to maintain the competitors stakes excessive, which bodes effectively for the IT sector.

3. Prescription drugs Sector: Kotak Securities highlighted that the pharma trade witnessed subdued progress for the final three months after which recovered with a ten.7 per cent rise year-on-year in November 2024. The brokerage prefers large-cap firms on this sector.

4. Healthcare Sector: The equities skilled additionally centered on the healthcare sector’s enhance in personal mattress capability together with the tempo of growth in Delhi NCR. The tempo is predicted to be 4 to 6 instances greater than in different Tier 1 cities. The capability is predicted to almost double by the monetary 12 months 2028. 

“This quantities to a cumulative addition of ~8,400 beds by key firms in Delhi NCR,” mentioned Shrikant Chouhan.

Max, Medanta, Artemis and Rainbow (in that order) are including the best proportion of their new beds (as a share of their present general beds) within the micro-markets, he mentioned, highlighting the micro markets inside a 10-kilometer radius of Gurugram, South Delhi, and Noida.

This poses “a threat to present and upcoming beds in these micro-markets,” mentioned Chouhan.

Disclaimer: The views and suggestions given on this article are these of particular person analysts. These don’t symbolize the views of Mint. We advise buyers to examine with licensed specialists earlier than making any funding selections.