Greater Noida(Business Desk):According to smallcase managers, Indian markets are expected to continue
their upward trajectory, backed by strong macro fundamentals and policy support. With Nifty50
rebounding from March lows, resistance is expected at 26,300, and a breakout could see the index
reach 27,500+ by year-end.
smallcase Managers believes that the key triggers to watch out in H2 2025 include clarity on U.S. tariff
policies and their impact on global trade flows, resolution of geopolitical tensions in the Indo-Pacific
and Middle East, and progress on key bilateral deals such as the UK–India FTA, which could unlock
export potential in sectors like textiles, pharma, and engineering.
However, they caution investors to closely monitor U.S. inflation trends in remaining months of 2025.
While the US inflation seems quite benign now, the outlook for it is clouded due to the uncertain
impact of tariff policies on supply of goods in the US and thus inflation. If the trade deals are reached
quickly and supply of goods to the US is maintained at reasonable prices to the end user, the Fed could
start cutting rates and this would be positive for the markets with FIIs flows also becoming stronger.
The Fed has kept rates steady consecutively so far in CY25 and cites rising risk of inflation and
unemployment amidst uncertainties. EU has already cut 100 bps rates so far and US Fed rate cuts may
reinforce RBI easing scope. RBI MPC’s further rate cuts is also a domestic development which will lead
to increase in economic growth and household consumption benefitting the markets.
Dr. Vikas Gupta, smallcase Manager and CEO, Omniscience Capital said, “With the interest cutting
cycle having started, it looks likely that if the monsoons are supportive and the inflation remains in
control, there could be further interest rate cuts by RBI triggering growth in the economy. We believe
that the markets should reach back to their average 5-year PE of 25. Further, if earnings growth is
supportive then the markets could be quite buoyant by end of the 2025.”
Robin Arya, smallcase Manager and Founder, GoalFi said, “For the year ahead, one needs to watch
out for certain key developments that might impact the markets. Firstly, the pause for US trade tariffs
with China and other countries was until July, which isn’t very far and no significant trade deals have
been signed yet. This will be the immediate trigger for global trade unrest and may impact Indian
markets as well.”
According to managers top sectors to watch out in remaining calendar year 2025 are:
1. Omniscience Capital: We are positive on Banking, Power, Housing Finance, Infrastructure &
Construction, manufacturing and commercial services. We believe these sectors have
valuation comfort as well as growth. Further, we expect budget increases in Defence and
Railways which give comfort on the growth front. However, we are cautious on Defence due
to valuation concerns, while Railways is slightly better on valuation comfort but not as much
as the sectors outlined earlier.
2. GoalFi: According to smallcase Manager Goalfi, sector to look out for in remining CY2025 are:
o Banks and NBFCs: With favourable liquidity boost and rate cuts will majorly benefit
lenders as they will see NIM expansion and can give out more credit. India’s credit
growth is robust at 15.4% as of May 2025 with personal and housing loans leading.
Gross NPAs have contracted below 3.5% for top players which shows strong asset
quality. Above-Normal monsoon and robust Kharif production set to boost rural
consumption which will benefit segments like Affordable Housing, MicroFinancing
and Vehicle Financing.
- Affordable Housing: Affordable housing is set to grow strongly in FY26, driven by
rising income levels, urbanisation, and supportive government infrastructure
schemes. With inventory levels at a multi-year low and demand recovering, real
estate developers have clear visibility on growth. Additionally, RBI rate cuts will lead
to lower home loan EMIs, significantly boosting housing demand and benefiting
players in the affordable segment. Companies in this space have 13-15% sales growth
and potential for improved profitability.
3. Niveshaay: We continue to focus on these high-conviction themes with strong structural
tailwinds: - Defense Manufacturing: With rising global defense budgets and India’s strategic push
for indigenous procurement, we see a strong multi-year opportunity for domestic
players. - Textiles and Apparel Exports: Amid global supply chain diversification, Indian textile
manufacturers are gaining market share due to efficient turnaround times, integrated
capacities, and a favourable cost base. - Power Infrastructure and Clean Energy Supply Chain: India’s ambitious grid
modernization and renewable energy targets are driving consistent demand for
equipment such as transformers, switchgear, and solar components. Global ESG
mandates and decarbonization goals only add to this momentum. - Pmaceutical CDMO segment: Global innovators increasingly turn to Indian
partners for cost-efficient and compliant development and manufacturing solutions
Arvind Kothari, smallcase Manager and Founder of Niveshaay said, “At Niveshaay, we do not believe
in predicting short-term market movements—especially in an environment as dynamic and complex
as the one we are navigating today. Near-term volatility driven by geopolitics, trade policies, and
central bank actions can often cloud sentiment. However, we remain structurally confident in India’s
long-term growth story and have aligned our portfolios accordingly—with a focus on sectors and
companies that are well-positioned to benefit from emerging global and domestic shifts.”
Earlier, the H1 2025 unfolded amid heightened global uncertainty, marked by persistent inflationary
pressures, diverging monetary policies, and escalating geopolitical tensions. Despite these headwinds,
Indian markets showcased remarkable resilience.
In early 2025, global macro headwinds—including delayed U.S. Fed rate cuts, rising bond yields, and a
surge in crude oil due to Red Sea disruptions—triggered a risk-off sentiment across emerging markets.
The U.S. 10-year yield crossed 4.5%, prompting foreign investors to pull capital from India.
Simultaneously, geopolitical tensions escalated with a brief India Pakistan flare-up at the LoC and
growing fears of renewed U.S. trade protectionism as Donald Trump gained ground in the primaries.
These factors amplified uncertainty around exports and global demand.
Meanwhile, inflation dynamics in India offered a more comforting picture. Inflation stayed within the
RBI’s 4–5% target range, still the RBI maintained the repo rate at 6.50%, prioritizing macro stability in
a globally uncertain environment. Domestically, markets underwent a healthy correction after a
strong 2023–2024 rally. However, the market correction through February and March was less of a
crisis and more of a healthy reset as India’s long-term fundamentals remained intact believes
smallcase Managers.
