HDFC Securities advises investors to temper returns expectations for 2025

Relli highlighted potential policy disruptions in the United States next year that could fuel inflation, with monetary policy responses being insufficient to address these challenges

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Domestic brokerage HDFC Securities has told investors to moderate return expectations amidst elevated valuations. The brokerage expressed concerns about investor reaction in a scenario of muted returns after 10 continuous years when Nifty ended positively.

 

“The big concern here is that we are approaching 2025 with fully valued markets. This does not mean there are no opportunities, and equities as an asset class will not do well. My take is that equity will continue to outperform other asset classes in India and globally. Still, we have to moderate our return expectations,” said Dhiraj Relli, managing director and chief executive officer of HDFC Securities.

 

Relli said that policy disruptions in the US next year could be inflationary, and monetary policy responses will be inadequate to tackle them. 

 

“Monetary policies can only address the demand side of inflation. If tariffs make most commodities expensive and persistent geopolitical issues make the supply side more difficult, that can lead to more headwinds for inflation,” said Relli.

 

Relli added that rising global debt is another concern for markets.

 

“Global debt is about $323 trillion. This is significantly higher than many multiples of the world GDP. I think these are not sustainable. And that too when you particularly have a higher interest rate still going on,” said Relli.

 

HDFC Sec expects Nifty to go up to 26,482 next year, a 10.5 per cent upside from the current levels. Regarding its sectoral preference, the brokerage said it is overweight on BFSI, industrials, cement, and real estate stocks.