ETMarkets Smart Talk: Indian equities could go into a bear market and will fall by more than 20% by April 2025: Amit Goel

“We believe Indian equities will go into a bear market and will fall by more than 20% by April 2025,” says Amit Goel, Co-Founder & Chief Global Strategist, Pace 360.

In an interview with ETMarkets, Goel said: “We believe investors should stick to the fundamentals and buy only the stocks with reasonable valuations,” Edited excerpts:

A near 6% fall in the market post the election outcome and a quick rebound to hit fresh highs. What is your view on markets?
The ruling party has suffered a setback in the election results. However, BJP should be able to form the government for the third term. Indian markets saw nearly a 6% fall post the election outcome.

The Election result sparked a wave of fear selling in the domestic market. We expect markets to remain highly volatile for the next few days.

The political scenario has changed. Will this also change any target you have on D-Street?
The unexpected outcome of the general election has changed the political scenario. However, BJP should be able to form the government in the third term, but the reform agenda of the government may go into the backburner.

We believe Indian equities will go into a bear market and will fall by more than 20% by April 2025. We believe investors should stick to the fundamentals and buy only the stocks with reasonable valuations.

Hence, investors should buy only when the market is deeply oversold and that too for the short term to medium term only.

We will also see a Budget session in July. Do you expect any specific reforms from a market point of view?
Indian Prime Minister Narendra Modi will expand his alliance's majority in parliament and is likely to boost the country's financial markets in hopes of economic reforms.

The market is likely to reward a sense of expected continuity in policies and push for economic reform that investors may now look forward to.

Disinvestment and uniform civil code are other reforms that are expected to be unveiled. A big victory could provide political leverage to push for harder reforms. This will include more exacting changes to land and labour laws.

How are FIIs likely to approach D-Street amid political uncertainty? The valuation premium was on stable fundamentals but the new govt might come with a different agenda. What are your views?
Over the past two months, FIIs have been net sellers, primarily driven by political uncertainty. This has led to the offloading of equities and profit-booking.

With the resolution of election-related uncertainty, we anticipate a reduction in FII selling pressure. Concurrently, DIIs, who have been holding cash reserves, are expected to commence purchasing with more intensity.

We foresee no change in the political regime, ensuring political stability and policy continuity. However, the market dynamics have shifted.

Sectors such as FMCG, consumer durables, two-wheelers, and pharmaceuticals are expected to outperform, while PSEs, defence, and infrastructure sectors may lag.


Which could turn out to be a dark horse in Modi 3.0? PSU, defence, and capital goods have already run up a lot. Do you see a further rise in these sectors?
Macroeconomic and financial stability is likely to be prioritized, which is vital for continued macro growth and corporate earnings.

Capital expenditure is expected to continue, with roads, railways, affordable housing, and green energy in focus.

Is there a need to shuffle the portfolio amid political/reform uncertainty?
We would recommend investors to make some changes to their investment strategy and tweak their portfolios. Indian markets are extremely overvalued and do not represent a great buying opportunity.

We advocate investors to remain cautious due to stretched valuations and hold off on making investments until there has been a sizable correction in the markets.

We are extremely bullish on 30-year Indian government bonds and see them as a great investment opportunity for the next 2 years. We have a long-term bullish outlook on gold but do not recommend buying it at current levels.

Do you think there is going to be a complete reset of the policy initiatives?
BJP should be able to form the government in the third term. There should not be much change in the policy initiatives as the NDA Government came with the coalition, led by BJP.

This is likely to be a shift in political policy with a focus on social economics, which will have a positive effect on the rural economy.


(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)