How to invest money in 2025: Ruchit Mehta of SBI Mutual Fund explains
The pharmaceutical and healthcare sector delivered superlative returns to investors in the ongoing calendar year till December 24. With a rally of nearly 40%, the BSE Healthcare index emerged as the top gainer on the exchange. It was followed by BSE Realty (up 35%) and BSE Consumer Durables (up 28%). Market watchers believe that the Pharma sector benefits from increased health awareness and government incentives promoting local production. These factors, combined with the global trend towards enhanced healthcare spending, make pharma a resilient choice.
When asked how an investor can invest money in 2025, and which sectors may deliver solid return to investors in the New Year? In an interaction with Business Today, Ruchit Mehta, Head of Research, SBI Mutual Fund said companies related to the infrastructure and capex upcycle will continue to benefit.
“We also see potential for the consumer discretionary sectors to continue to do well, like the tourism sector, or see an improvement like in the case of the automotive sector. The financial sector is likely to do well, as we expect credit growth to pick up in the coming quarters on back of improving economic growth and easier monetary conditions,” Mehta said. The BSE Auto and Bankex gained nearly 22% and 7% year-to-date.
On the other hand, the benchmark BSE Sensex advanced 8.63% during the same period. The BSE MidCap and BSE SmallCap indices outperformed with a gain of 26% and 29%, respectively. Sharing his views on the market outlook, Mehta thinks that the forthcoming year can be a volatile year, like the market witnessed in the past few months.
“For markets to deliver double-digit returns, earnings growth must sharply rebound from the current sluggish levels to the high teens range. This is not a given and would need revenue/sales momentum to recover and be the primary driver of earnings growth. It is possible that in the second half of 2025 we could see revenue growth momentum recovering, as economic growth pulls through from the current slow phase,” he said. For the latest quarter ended September 2024, the combined net profit of Nifty50 companies increased by just 4% YoY.
He believes that the key driver for markets in 2025 is going to be how much economic growth recovers. “Do we get back to the 7% real GDP growth rates, and how fast do we get back to those levels. This will be important to drive better revenue growth prospects for companies. The second will be the direction interest rates take, domestically and globally, and this is likely to be a function of the outlook on inflation, especially given the risk of tariff wars,” he said.
Mehta believes that over the longer-term equities will remain the best means to compound capital. What occurs in the shorter term, as in just one calendar year, is uncertain and difficult to predict. “From a pure valuation and sentiment perspective, there appears to be much more froth in broader markets which can act as a headwind going forward,” he said adding any investment decision needs to be made after careful considering the financial status of the investor.
“For investors who have no prior experience with capital markets, would recommend them to start with hybrid funds. Investors who have an experience of investing in equity markets could do well by having a staggered investment approach, using the STP route, to invest into large cap, large and midcap and focussed category of funds,” he said.