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“In 2025, two niche themes stand out as potential investment opportunities: water and renewable energy ,” says Atul Singh – MD and CEO of LGT Wealth India. In an interview with ETMarkets, Singh said: “The Indian water and wastewater treatment market offers substantial growth potential, driven by increasing demand, government initiatives, and advancements in technology,” Edited excerpts: The Indian market closed 2024 on a positive note. How do you see markets in 2025? The Indian market enters 2025 with optimism tempered by caution.
GDP growth is projected at 6.5%-7%, driven by domestic consumption and industrial expansion, positioning India as a resilient investment destination. The RBI ’s expected rate cut cycle in February 2025 should support growth, but sluggish exports may elevate the current account deficit.
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Softer trade policies could attract inflows into export-focused emerging markets like China, potentially causing India to underperform in a broader EM rally. Conversely, stricter policies may favour India. Additionally, interest rate cuts could be delayed, given inflationary pressures from Trump’s policies and the narrowest interest rate spread with the U.
S. in recent history. Domestically, a new RBI leadership and a likely inflation cool-off due to a high base may create an environment conducive to rate cuts, potentially boosting economic activity.
However, election-related social spending, which supported consumption in recent years, is expected to abate, with only Delhi and Bihar heading to the polls in 2025, creating a challenging base effect for consumption growth. US markets rose more than 20% in 2024. How should investors play the global diversification in 2025? While US markets delivered stellar returns in 2024, global diversification remains essential.
While the broader market valuation is stretched few themes continue to be favoured. AI theme is likely to broaden out to Phase II beneficiaries including infrastructure and software companies. The Healthcare sector provides defensiveness given low correlation to macro but we are selective on stocks and prefer weight-loss and MedTech sub-themes.
In addition to LRS, GIFT based OPI funds allow investors to access these global markets and themes. Gold glittered more in 2024 along with Silver. What is your outlook for precious metals in 2025? Gold and silver should remain strong in 2025, driven by central bank demand, inflation concerns, and industrial use.
Allocating 5-10% to gold and tactical exposure to silver through ETFs or mining equities can help balance portfolios amid market uncertainties. Which sectors are looking attractive for the year 2025? Capex related sectors particularly on the private side (like semiconductors) could be a pocket to watch out for. Renewable energy plays (preferably indirect or second order) are also attractive especially in the Transmission & Distribution space.
Certain pockets within Consumption (like Gold / Jewellery / Hotels) could also be in focus as witnessed by the life-time high Gold imports and decent room in certain attractively valued hotels. Any niche theme or sector that could turn attractive in 2025? (EV, green energy, premiumization etc) In 2025, two niche themes stand out as potential investment opportunities: water and renewable energy. The Indian water and wastewater treatment market offers substantial growth potential, driven by increasing demand, government initiatives, and advancements in technology.
As India faces mounting challenges in managing its water resources, innovation, regulation, and collaboration could unlock significant opportunities in ensuring clean and safe water for its growing population. On the energy front, India’s focus on renewable power continues to gain momentum. Despite past bottlenecks in grid infrastructure and transmission networks, strides are being made to streamline these challenges.
As India targets 500 GW of renewable energy capacity by 2030, supportive regulations and advancements in clean energy technology are expected to drive growth, making this sector an attractive long-term investment avenue. How are HNI, and UHNI looking at Indian as an investment destination? India is emerging as a top investment destination for HNIs and UHNIs, driven by its robust economic growth, regulatory reforms, and expanding middle class. At GIFT City, we are seeing significant interest in India-focused funds from global investors, as they seek to capitalize on the country's innovation-driven sectors and long-term growth story FIIs found their love in primary markets in 2024.
What is the trend you foresee for 2025? In 2024, FIIs favoured India’s primary markets, drawn by fair valuations and promising opportunities. However, the broader trend reflected a shift in preference towards the U.S.
economy, which dominated global markets due to its strong performance, resilient stock markets, and higher interest rates. This diverted investments into U.S.
bonds, money markets, and equities, often at the expense of emerging markets like India. Indian secondary markets faced challenges such as elevated valuations, a high market cap-to-GDP ratio, slowing GDP growth, weaker industrial output, and subdued corporate earnings. Additionally, persistent CPI inflation hurt urban demand, further impacting sectors reliant on consumer spending.
In early 2025, FIIs may remain cautious toward Indian equities, influenced by the appreciating dollar and attractive U.S. bond yields.
FIIs are likely to resume buying Indian equities once signs of growth and earnings recovery emerge. Are any big IPOs on your watch list for the new year? Typically, IPO selection for first few months at least post listing, need to be cautious as price and volume discovery both materialize. Multiple lock-ins and normalization, if at all, of fundamentals on a quarterly basis needs to play out to get a sense of true intrinsic valuation of the company.
Nevertheless, any IPOs in our preferred themes (select capex, select consumption etc.) can be looked at on a preliminary basis given the potential top-down tailwinds that could help. Currently in the SEBI-cleared ongoing pipeline, Quadrant Future Tek capitalizes on railways capex, specifically KAVACH implementation (Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own.
These do not represent the views of the Economic Times) (You can now subscribe to our ETMarkets WhatsApp channel ).
