the Bombay Stock Exchange (BSE) building, in Mumbai,.
Credit: PTI Photo
Bengaluru: Near-term weakness and heightened volatility will mark Indian equities in the January to March quarter (Q1) of 2025, with the rupee likely to hit Rs 88-89, according to broking house Emkay Global.
However, it also sees a gradual consumption recovery in the second half of 2025, led by an improvement in employment trends, a revival in unsecured lending, renewed government spending, and tax relief.
The firm anticipates discretionary consumption recovery within two to three quarters, underpinned by a rebound in IT hiring, better liquidity conditions, and an improvement in retail lending dynamics.
Nifty is projected to reach 25,000 by December this year, as the earnings downgrade cycle appears to be concluding. Consensus Nifty estimates for the next fiscal (FY26) are seen adjusting downward by 3.9% since January 2025.
On similar lines, it saw the stress from the falling rupee expected to ease from April. The firm added, one must live with a bit of rupee depreciation; that is good for India as an economy. But the level of rupee depreciation will come down.
Despite persistent selling pressures now, Foreign Portfolio Investment (FPI) shedding is expected to subside by Q2 2025. A peak in the US Dollar Index (DXY) should also ease rupee depreciation concerns and help stem FPI selling.
On capex growth, following a 31% compound annual growth rate (CAGR) between FY21 and FY24, a slowdown to 10-13% is anticipated, primarily due to election-related spending constraints. A rebound is expected in FY26 as policy certainty returns.
While capital-heavy sectors face challenges, green energy continues to be a bright spot.
Key sectors that are expected to be overweight are real estate, healthcare and those susceptible to discretionary buying.