Have Rs 10 lakh to invest in FY25? Cyclicals, commodities & capex themes are looking promising: Somnath Mukherjee

“Cyclicals, commodities, capex are the most promising segments in the market,” says Somnath Mukherjee, CIO & Senior Managing Partner – Product & Research, ASK Private Wealth.
In an interview with ETMarkets, Mukherjee said: “India’s a structural growth story, so expect FII flows to remain quite good. The real breakout will be the start of US rates cuts,”. Edited excerpts:

As we step into FY25 – how do you see markets in the next financial year? Do you see a double-digit return?
Somnath Mukherjee: Markets are pricing in multiple best-case scenarios currently – a)Current Ruling Party’s victory in elections, b)inflation continuing on its downward trajectory, c)US rate cuts sometime during the year, and d)conflict zones remaining non-disruptive.

By definition, these are the “best case scenarios”, one or more of them may disappoint. In this case, markets could be disappointed disproportionately. Risks and rewards are quite evenly balanced right now.

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In terms of earnings – how do you see India Inc. faring in FY25. P/E multiple has expanded but there is a lot of catch-up which earnings have to do. Do you see earnings recovery in FY25 especially in the small & midcaps space?
Somnath Mukherjee: Earnings growth has come off significantly, and small and mid (SMID) stocks a bit more than large caps now.