Equity market forecast for February 2025
The market sentiment remains cautious due to ongoing geo-political uncertainties, a new administration in the USA, and the persistent outflows by foreign investors. Despite these challenges, fund managers are optimistic about the equity market outlook for February 2025.
During this correction phase, industry experts are leaning towards large-cap stocks or those with robust and stable fundamentals over mid and small-cap stocks. This preference reflects their strategy to navigate the current market conditions and capitalize on potential opportunities.
Neelesh Surana, Chief Investment Officer at Mirae Asset India Mutual Fund, emphasized that the Indian economy’s consumption-driven nature plays a pivotal role in addressing the ongoing economic slowdown. He highlighted the recent budget announcement by Finance Minister Nirmala Sitharaman, which aimed to boost consumption through income tax concessions for the middle class.
Surana identified key factors such as US policy shifts post the presidential transition, geopolitical dynamics, central banks’ rate trajectories, and private capital expenditure resurgence as critical drivers for the Indian equity markets. He views the current market slowdown and correction as an opportunity to invest in fundamentally strong stocks at attractive valuations. Mirae Asset’s preference for large-cap-oriented funds aligns with their strategy for the upcoming months, suggesting diversified funds like large-cap, flexi-cap, and multicap funds as viable investment options.
Rahul Singh, Chief Investment Officer at Tata Mutual Fund, underscored that December’s quarterly results and the policies of the newly elected US President, Donald Trump, would influence the global and Indian equity outlook in February. He highlighted that the budget’s support for consumption and manufacturing sectors will lead to a more balanced market across different sectors. Singh suggested that large-cap stocks are likely to outperform mid and small-cap stocks due to the latter being comparatively overvalued.
Sandipan Roy, Director and Chief Investment Officer at Motilal Oswal Mutual Fund, outlined geo-political factors and the upcoming policies of the Donald Trump administration as key drivers for equity markets in February. The fund house remains cautious on mid and small-cap stocks, given their overvaluation. Roy recommended investors focus on large-cap stocks with robust fundamentals as the year is expected to be characterized by stock accumulation.
According to Sorbh Gupta, Senior Fund Manager – Equities at Bajaj Finserv Mutual Fund, the January equity market dynamics were influenced by US leadership changes and continuous FPI outflows. Gupta highlighted the importance of maintaining a diversified portfolio and monitoring sectoral trends to capitalize on emerging opportunities.
In conclusion, the equity market outlook for February 2025 is shaped by a combination of global events, economic policies, and sector-specific dynamics. Fund managers are navigating these complexities by emphasizing large-cap stocks and those with strong fundamentals as potential avenues for capital growth and investment in the upcoming months.