Investing in 2025: Rudra Murthy’s top stock picks and sector insights

With many key events now behind, the Indian stock markets face a challenging year ahead. The benchmark indices Nifty 50 and Sensex are already down nearly 9-10% from their all-time highs reached in September, bringing them close to correction territory. 

Key headwinds such as foreign institutional outflows, uncertainty over central banks’ rate cut trajectories, inflation, growth concerns, and weak earnings paint a bleak outlook for the year. In this context, Rudra Murthy suggests that large-cap stocks will perform better in 2025, and investors should steer clear of mid-cap and small-cap stocks where valuation comfort is lacking.

“Stocks trading at P/E multiples of 80 times, 100 times, or even 150 times, will likely see substantial corrections in the first half of next year,” predicted Rudra Murthy. Investors need to be clear that the stocks they choose in 2025 should demonstrate good quarterly performance and come with reasonable valuations, he added.

A quick glance at the BSE Smallcap and BSE Midcap indices reveals that many stocks trade at P/E ratios exceeding 100 times, with some even at exorbitant valuations of 900 times (like Jain Irrigation) and a staggering 3,000 times (such as Delhivery). In contrast, only one stock in the BSE Sensex, the newly-added tech company Zomato, has a P/E ratio over 100 times.

Stocks to buy in 2025

Rudra Murthy’s top stock picks for 2025 include names from the banking, IT, and pharma sectors. In the banking space, 

he favours India’s three largest lenders by market capitalization: HDFC Bank, State Bank of India, and ICICI Bank. Among pharma stocks, Dr. Reddy’s Laboratories, Sun Pharma, and Divi’s Laboratories are his preferred choices. For IT stocks, his picks include blue-chip companies such as Wipro, Tech Mahindra, and Infosys.

Rudra Murthy is also bullish on India’s most valued company, Reliance Industries. However, he believes a better entry point would be closer to ₹1,000, as the current price of ₹1,200 is still on the higher side. Reliance Industries closed at ₹1,223.50 on the BSE on Tuesday, December 24. The stock is down 5% in 2024, on track to record its first yearly loss in 10 years.

“Start nibbling into Reliance,” Rudra Murthy said, adding, “I’m still not convinced the market has found its bottom. If we see a 5-10% correction at the index level, Reliance should also experience a downward move towards ₹1,100. That would be a more attractive price to buy into Reliance.”

In addition to these, Rudra Murthy is also optimistic about Indus Towers and oil marketing companies (OMCs). “OMCs are poised to perform well as a sector. With crude prices now stabilizing after geopolitical tensions, I see valuation comfort. Among OMCs, my first pick is HPCL, followed by BPCL and IOC,” he commented.

Sectors that may shine in 2025

Commenting on his sectoral views for 2025, Rudra Murthy expressed a preference for IT, banks, and pharma.

“Even at current market prices, IT stocks—having shown strong performance in the last two quarters—can continue to do well,” he said. “In pharma, I see valuation comfort.”

Regarding banks, he noted that while the sector has not performed well in terms of stock prices, earnings have been strong, barring IndusInd Bank. Despite being heavily bought by FIIs, banking stocks are expected to perform better in 2025, Rudra Murthy concluded.

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Disclaimer: The views and recommendations above are those of individual analysts, experts, and brokerage firms, not Mint. We advise investors to consult certified experts before making any investment decisions.