Sumit Poddar on stocks sectors and smart investing in 2025

Sumit Poddar, Founder and CIO of Tikona Capital, shares insights on the broader market's correction, which runs deeper than Nifty’s 12% dip from its highs. Many stocks have faced sharp declines, driven by global and domestic factors. As key economic and political uncertainties fade, the next 6-12 months could see renewed confidence, fueled by government spending, interest rate cuts, and sector-specific opportunities.

While Nifty's correction stands at 12%, a deeper impact is visible in individual stocks, with nearly 80% of those valued over Rs 1,000 crore down by more than 20%.

The slowdown can be attributed to global fund outflows, a strong US market, and a temporary pause in government spending due to elections. However, with key events behind us, the market is poised for a shift.

Multiple factors indicate a revival in market momentum. Interest rate cuts and tax breaks are expected to provide a liquidity boost, improving consumer sentiment.

Government spending, which was slow in the first half of the year, is likely to accelerate. With improved cash flow in the hands of individuals by April, discretionary spending could increase, supporting growth in key sectors.

Despite recent volatility, midcap stocks continue to show strong fundamentals. IT companies are seeing a better demand outlook, while export-driven businesses are expected to stabilize as freight and exchange rates normalize.

PSU banks have outperformed their private counterparts, benefiting from lower exposure to unsecured lending. Meanwhile, select capital goods and public sector enterprises remain attractive despite valuation corrections.

With the market undergoing a phase of readjustment, a cautious but steady approach is advisable. Instead of making lump sum investments, a staggered strategy allows investors to navigate volatility.

Large institutional investors remain on the sidelines, but a return of fresh FII inflows could drive a new market rally. For now, stock picking based on company-specific growth potential is the best approach.

The second half of CY25 is expected to bring better market conditions, supported by increased spending and a more balanced macroeconomic environment. While fears around geopolitical risks and tariffs persist, markets are likely to adjust over the next few quarters.

With sectoral differentiation becoming more pronounced, investors should focus on individual companies rather than broad market trends to capture potential gains.