Indian stock market falls in 6 of 9 sessions in January: How should you rejig your portfolio now? | Stock Market News

After delivering moderate returns in 2024, Indian markets have lost 2.3 per cent in January 2025 so far. Today is the fourth straight day of losses for the benchmarks that have fallen in six out of the nine trading sessions so far in January. The losses come amid rising crude oil prices, weakening rupee and massive foreign capital outflows.

Sensex fell 1,129 points to the day’s low of 76,249.72 while Nifty lost 331 points to hit an intra-day low of 23,100.60. The selloff was sharper in the mid and small-cap segments, a trend that has been observed in 2025 so far. The BSE Midcap and Smallcap indices declined 4 per cent each.

“Market will continue to be under pressure from the many strong headwinds. The blowout jobs data from the US with 2.56 lakh job creations in December against expectations of 1.65 lakhs means the rate cut expectations in 2025 are now down to one. With the unemployment in the US down to 4.1% the economy doesn’t need any stimulus. This good economic news is turning out to be bad news for markets which were discounting many rate cuts this year. For India, the Brent crude rising to $81 is a concern. But the IIP data for November at 5.2 per cent indicates that the economy is recovering from the slowdown in Q2,” said V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.

“With the US 10-year bond yield above 4.7 per cent, FIIs will continue to sell offering opportunities for long-term investors to buy reasonably priced large-caps. The broader market will continue to be under pressure,” he added.

How should your portfolio be?

Amid the current bloodbath on Dalal Street, the big question remains: How should investors rejig their portfolios to safeguard against sharp market drawdowns?

The consensus among experts is clear: 2025 demands a balanced and diversified portfolio to navigate the challenges ahead. With evolving macroeconomic conditions, experts advise investors to focus on risk management, maintain flexibility in their strategies, and align their investments with growth-oriented and resilient sectors.

Apurva Sheth, Head of Market Perspectives & Research, SAMCO Securities observed that while returns appeared decent in absolute terms in 2024, the relative performance—adjusted for volatility—was less attractive for many investor classes.

For 2025, Sheth emphasised an investment strategy prioritising capital preservation over aggressive returns. He recommended a balanced portfolio allocation: 50% in large-cap stocks, focusing on private banks, pharmaceuticals, and IT; 25% in debt instruments; and 25% in gold.

Trivesh D, COO at Tradejini, also suggested maintaining a diversified portfolio across equities, gold, and fixed-income instruments. This approach minimises risk and enhances return potential, he said. 

He further noted that high-PE-ratio stocks could be vulnerable to short-term corrections. Trivesh advised booking profits in overvalued segments and holding cash to seize future opportunities in undervalued or growth-oriented sectors.

Divam Sharma, Founder and Fund Manager at Green Portfolio PMS, stressed the need for investors to recalibrate their approach in light of uncertainties arising from global economic pressures, government policy shifts, and technological advancements. He highlighted India’s economic resilience, driven by factors such as digital transformation, infrastructure growth, and an expanding middle class.

“While large-cap stocks could face global headwinds, mid-cap and small-cap companies in innovative sectors are expected to outperform in 2025,” Sharma said.

Making a similar case for investments in mid and small-cap stocks, Anil Rego, Founder and Fund Manager, Right Horizons PMS advised increasing exposure to high-conviction ideas within the small and mid-cap stocks segment, especially in themes with favourable earnings growth outlooks, while being mindful of mounting geopolitical risks and expensive valuations.

Rego highlighted that the equity rally over FY20-FY24 was driven by strong corporate earnings, domestic inflows, and a resilient macroeconomic environment. However, entering 2025, corporate earnings growth is expected to moderate due to commodity pressures and diminishing tailwinds.

He provided a nuanced market outlook, citing – 1) Fair valuations in large-cap stocks, 2) Stretched valuations in broader markets, and 3) Reasonable valuations in select high-quality small and mid-cap stocks with strong growth potential.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.