Summary
Nikest Shah CIO on house views on macro economics and investment outlook
Global Economy
- Global equities continue to rally, with the US, Japan, Korea, and Taiwan outperforming India over the past year.
- The ongoing global bull market supports sentiment across emerging markets, including India.
- A potential US–India trade treaty is seen as a key global trigger that could boost foreign inflows into India.
Domestic Economy
- Despite being one of the worst-performing markets last year, India’s strong macroeconomic fundamentals remain intact.
- India’s growth prospects and fiscal stability continue to outshine peers, supporting long-term attractiveness.
- Market valuations are elevated, but sentiment has improved post-Diwali amid global momentum.
Investment Outlook
- Equity allocations remain favourable as India joins the global uptrend.
- Balanced Advantage and Multi-Asset strategies remain preferred, offering flexibility across asset cycles.
- Equity valuations are not cheap, but participation in a global bull phase justifies a positive stance.
Risks
- Valuations across markets are high, leaving limited margin of safety.
- Excessive speculation in gold and silver may cause short-term volatility.
- Any delay in the US–India trade pact or reversal in global risk appetite could impact flows.
Risks
- Slowdown in central-bank gold purchases may cap prices.
- High SMID valuations with weak earnings.
- Leverage in margin/ESOP funding could trigger sharper drawdowns.
- Nominal growth and exports remain key drags on corporate momentum.
Opportunities
- India’s macro resilience, strong growth narrative, and potential trade triggers position it well for 2025.
- Multi-asset funds offer balanced exposure to equities, debt, and commodities with lower risk concentration.
- Equity investors may benefit from continued global liquidity and domestic growth convergence.
Policy Watch
- Global central banks maintain accommodative stances; India is likely to continue measured policy support.
- Progress on US–India trade negotiations remains a key policy catalyst to watch.
Key Takeaway
India stands strong within a global bull market phase.
While valuations are elevated, robust domestic fundamentals and potential global triggers justify a cautiously optimistic outlook — with Balanced Advantage and Multi-Asset Funds as core allocations.
