Markets Will Likely Take Cue From the Budget

The 2024-25 (FY25) October-December (Q3) quarter earnings are expected to mirror those of the second quarter (Q2), with key sectors grappling with a demand slowdown. The government's approach to the economic downturn and its priorities will become evident in the upcoming Budget, says JIMEET MODI, founder and chief executive officer of Samco Group. In an interview with Sundar Sethuraman, Modi suggests domestic markets will likely stay volatile in calendar year (CY) 2025, influenced by developments in the US markets, inflation concerns, recession risks, and interest rate decisions. Edited excerpts:

- In an interview with Sundar Sethuraman, Modi suggests domestic markets will likely stay volatile in calendar year (CY) 2025, influenced by developments in the US markets, inflation concerns, recession risks, and interest rate decisions. Edited excerpts:

What were the key drivers of the equity market rally in CY 2024, and how do you see the investment landscape evolving in CY 2025? As CY 2024 concludes, concerns about rich valuations in Indian markets linger. The Indian economy's growth potential offers grounds for optimism regarding the equity market's performance.

The Indian corporate sector underperformed in the first half (H1) of FY25 due to the electoral process, which disrupted government spending and impacted key industries such as infrastructure, banking, and cement. With the elections now behind, capital expenditure is expected to rise, spurring growth in the second half of FY25. Geopolitical tensions, such as the Russia-Ukraine conflict, will continue to impact global markets. The upcoming US administration shift and its policy announcements will influence capital markets appreciably.

The performance of Indian equities in CY 2024 closely mirrored global trends, liquidity inflows from foreign portfolio investors, and domestic liquidity.