Strong Growth Expected in 2025, But Caution is Key
As the year 2024 wraps up, stock market analysts are already setting their sights on 2025, predicting a year of solid growth for India’s leading equity indices, the Sensex and Nifty50. While global uncertainties linger, the domestic market’s fundamentals remain robust, with growth expectations boosted by a decline in interest rates, supportive government policies, and a steady GDP growth trajectory.
With Sensex having shown a positive return in 2024, there is growing optimism for further gains. Most analysts are confident that the Sensex will breach the 90,000 mark by December 2025. Despite headwinds like foreign institutional investor (FII) selling, expensive valuations, and geopolitical risks, predictions suggest a healthy double-digit return in the coming year.
Sensex: On Track to Cross 90,000
A recent survey by ETMarkets revealed that a significant majority of market participants are bullish about the Sensex in 2025. Around 65% of respondents believe the index will surpass 90,000 by the end of next year. After a decent performance in 2024, many brokerages expect Sensex to continue its upward trajectory, with some even predicting it could reach as high as 93,000.
Several factors contribute to this optimistic outlook:
- Strong earnings growth across major sectors
- A stable macroeconomic environment
- Positive domestic flows and continued fiscal consolidation
Morgan Stanley, one of the global brokerages, projects a Sensex target of 93,000 by December 2025. According to Ridham Desai of Morgan Stanley, the Indian economy’s resilience, coupled with favorable conditions like low oil prices and macro stability, makes India’s stock market one of the most attractive emerging markets in 2025.
Nifty50: Targets and Predictions
The Nifty50 index, which comprises the top 50 stocks on the National Stock Exchange, is expected to follow a similar growth pattern. Based on an average of several brokerage targets, the Nifty is likely to reach a target of around 27,140 by the end of 2025. Among the more optimistic forecasts, Bajaj Broking and ICICI Direct have set targets of 28,700 and 28,800, respectively.
The range of predictions for Nifty indicates moderate growth, with some brokerages such as Jefferies forecasting a 10% total return for the index. Despite strong earnings growth in recent years, the pace of growth is expected to moderate. Still, analysts anticipate steady domestic flows and a favorable macroeconomic backdrop will push the index higher.
Notable global brokerages like Goldman Sachs and Citi have slightly more conservative targets, pegging Nifty at 27,000 and 25,000, respectively. The broader consensus, however, remains positive for the year ahead.
Key Stock Picks for 2025
With the market likely to see double-digit returns, stock picking will play a crucial role in achieving superior returns. Most analysts emphasize a bottom-up approach, focusing on high-quality stocks at reasonable valuations. Here are some of the top stock picks for 2025:
- ICICI Bank: A top pick across brokerages, ICICI Bank’s strong financials and growth prospects make it a must-have stock in 2025.
- HCL Tech: As the tech sector continues to thrive, HCL Tech stands out with its strong performance and consistent growth.
- L&T: With a diversified portfolio and a robust order book, L&T is well-positioned for long-term growth.
Other top stock recommendations include:
- Axis Bank
- Bharti Airtel
- SBI
- Godrej Properties
- Polycab
- Zomato
Mid and small-cap stocks are also expected to perform well, with Prabhudas Lilladher picking stocks like Aster DM Healthcare, Jindal Stainless, and Lemon Tree Hotels for strong potential in the year ahead.
Sector Outlook for 2025
While specific stock picks will depend on market conditions, certain sectors are expected to outperform in 2025. Analysts are particularly bullish on financials, technology, healthcare, and infrastructure stocks. The continued strength of domestic flows, supported by retail investors, is likely to drive growth in these sectors.
The financials sector remains a favorite, driven by strong earnings growth from major banks like ICICI Bank, Axis Bank, and SBI. Similarly, the technology sector, with companies like HCL Tech and Infosys, is poised to benefit from ongoing digital transformation trends both within India and globally.
The healthcare and infrastructure sectors, with key players like L&T and Bharti Airtel, are also likely to provide stable growth, driven by favorable policy support and a growing economy.
