Trivesh D, COO Tradejini believes while the market may remain stable, investors should prepare for modest gains as the pace of growth slows. He advised that it’s wise to adopt a ‘wait and watch’ strategy instead of rushing to buy on dips. While short-term declines can be tempting, if you are confident in a sector or stock, consider accumulating gradually with a long-term view. Focus on fundamentals and avoid trying to time the market perfectly. Investors should focus on diversifying their portfolios to build stronger, more resilient investments. Gold ETFs and real estate are good options, suggested Trivesh. Edited Excerpts

What went right and what went wrong for the markets in 2024?

I think the Q2 earnings season in India showed a diverse range of performances. On one hand, sectors like banking and financial services thrived, benefiting from high interest rates and better asset quality. Pharmaceuticals and healthcare also performed well, driven by strong domestic demand and steady exports. IT companies displayed resilience with stable earnings, and the auto sector, especially SUVs, gained momentum from strong consumer demand and smoother supply chains.

Yet, I feel the overall picture was clouded by challenges. Despite a 9% revenue growth across 1,023 companies, a 2.7% dip in net profits revealed struggles with margin pressure and unmet expectations. Adding to this, Foreign Institutional Investors (FIIs) sold heavily— ₹94,000 crore in October and another ₹29,000 crore by November, marking the lowest FII ownership in over a decade. These outflows seemed tied to China’s stimulus expectations, Japanese Investor’s withdrawal due to the unwinding of the YEN carry trade, U.S. policy changes, volatile metal prices, and uncertainties around China’s economic stability.

Some key lessons investors should learn from 2024?

2024 has been a rollercoaster year for investors. Major indices hit all-time highs in September, with the Nifty 50 soaring to 26,170, the Sensex reaching 85,500, and the Bank Nifty climbing to 54,300. Portfolios were glowing green. However, by October and November, heavy FII selling triggered a sharp 8-11% decline, shaking the market. While December saw some recovery, many portfolios struggled to fully bounce back. For many new retail investors, this was a wake-up call.

Markets rise, but they also fall. The key lesson? Patience is essential. Always conduct thorough research before investing and remember that the stock market has two sides: bullish and bearish. Navigate both with wisdom and caution.

Do you continue seeing the record-high streak in Nifty next year as well? Or will volatility be high?

Looking ahead, we expect reduced volatility and significantly lower returns on the Nifty compared to the current year. While the market may remain stable, investors should prepare for modest gains as the pace of growth slows.

Can you explain some risks, that may lead to weaker performance next year as compared to 2024?

2025 could see continued growth in the Nifty, it may come with some bumps along the way. Despite the Indian stock market’s current high valuations, it still holds potential. Investors should focus on the core strengths of individual companies and consider a “Buy on Dip” strategy for specific stocks rather than attempting to time the overall market. This approach would allow them to take advantage of market corrections and build long-term positions.

As AI adoption in trading strategies grows, the market could shift from its current volatility-driven state to a more structured and stable environment. However, geopolitical tensions and global factors—such as the new US administration’s policy on tariffs—could present challenges. In light of this, cautious trading will be essential. While India’s growth opportunities remain strong, 2025 may not replicate the exceptional performance of 2024, so calculated moves will be key to navigating the year ahead.

Midcaps and small caps have witnessed exceptional performance this year. Do you believe the trend will continue or should we be watchful now?

Midcap and small-cap stocks have been particularly appealing due to their high return potential. So far in 2024, the Nifty Midcap 100 and Nifty Smallcap 100 indices have significantly outpaced the Nifty 50, gaining 28% and 29%, respectively, compared to the benchmark’s 13% increase. This trend is not new—last year, in 2023, mid and small caps delivered impressive returns of 32% and 35%, outshining the Nifty’s 18% rise.

Looking ahead, however, we may see a shift. With increased regulatory scrutiny and tighter regulations, coupled with slower earnings growth, mid and small caps could underperform or, at best, match the broader market indices in the coming year.

Would you advice investors to buy now or should they wait for a 2-5 percent decline or more?

It’s wise to adopt a ‘wait and watch’ strategy instead of rushing to buy on dips. While short-term declines can be tempting, if you are confident in a sector or stock, consider accumulating gradually with a long-term view. Focus on fundamentals and avoid trying to time the market perfectly.

Apart from equities, which asset class should investors accumulate in 2025?

Investors should focus on diversifying their portfolios to build stronger, more resilient investments. Gold ETFs and real estate are good options. Gold ETFs provide a modern, cost-effective way to invest in gold, offering liquidity and ease of trading on stock exchanges. They are ideal for hedging against market volatility and benefiting from potential price appreciation. Real estate, on the other hand, remains a solid long-term investment, providing stable returns through both capital appreciation and rental income. Diversifying across asset classes is crucial for long-term growth and risk management.

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.