Market outlook 2025: Nifty 50 could correct another 5-10% in the first half, says Murthy of Vachana Investments | Stock Market News

Investors hoping for a strong rebound in the Indian stock market in the near term may be in for a major shock. Recovery in the Indian market could start only in the second half of the calendar year 2025 with better earnings and valuation comfort, according to CA Rudra Murthy B.V., the founder director of Vachana Investments.

“We might see some more weakness in the Indian stock market. Indian companies’ earnings were definitely disappointing last quarter, so the Nifty may come down by another 5-10 per cent in the first half. Recovery will start only from July onwards,” Murthy, who is a market veteran and the author of the Amazon bestseller ‘Mind Markets & Money’, told in an exclusive interaction with Mint.

Murthy sees the Nifty 50 closer to 25,000 to 26,00 by the end of 2025. Year-to-date, the index is up a little over 9 per cent.

Disappointing quarterly earnings, concerns over premium valuations, heavy foreign capital outflows amid a strengthening US dollar and rising bond yields, along with geopolitical uncertainties, triggered a correction in the Indian stock market that began in October and continues to this day.

The index dropped more than 6 per cent in October, followed by a decline of nearly 0.5 per cent in November. So far in December, it has fallen by almost 2 per cent.

The Nify 50 is now down about 10 per cent from its all-time high of 26,277.35 hit on September 27 this year.

The Indian stock market benchmark looks set to end the year with a low double-digit gain.

A swift and steep recovery unlikely

Murthy believes the market may not see a swift and significant recovery as earnings will take time to recover. The upcoming Budget will also be a key factor for the market.

“If there is a recovery, it may not be steep, and it will take time. I have to see what happens in the Budget and then how the earnings pan out,” said Murthy.

He feels the December quarter earnings may not be as bad as the last quarter, but the revival will take time.

“It might take another two or three quarters, and then the market will be comfortable with the valuation, and then we may see a fair level of the market,” said Murthy.

Among the global factors, Donald Trump’s policies will be a key trigger for markets. Moreover, how interest rates move in the US will be a key factor, Murthy observed.

In fact, he expects a correction in the US market also because of stretched valuations.

“The correction we have seen post October 3 onwards, I won’t be surprised to see a similar correction happening in the US market, which can happen in January,” said Murthy.

While the near-term prospects of the broader market appear weak, Murthy says investors must follow a stock-specific approach next year.

Pharma, banks look attractive

Murthy pointed out that the pharmaceutical and banking sectors offer some valuation comfort. He thinks they will do well in 2025.

“There is valuation comfort in pharma and banks, both private and public banks. FIIs have been selling aggressively in the banking space. The sector has not performed well in terms of stock price, but in terms of earnings, they have definitely. Except for IndusInd Bank, the earnings of all major banks were really good last quarter,” said Murthy.

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