Even though 2025 has been challenging for Indian markets, the Nifty index still managed a 7‑8% gain, and systematic investment plans (SIPs) remain robust. At the same time, Abakkus Asset Manager introduced a new FlexiCap mutual fund aimed at retail investors.
How the Market Performed in 2025
The Nifty’s modest rise shows that the market is correcting in time rather than in price. While some countries like South Korea posted 60‑70% gains, those numbers are driven by a few tech and AI stocks and could reverse if the AI hype fades. India’s broader five‑year returns are still healthy after a strong run from 2020‑2024.
Why Abakkus Chose to Launch a FlexiCap Fund
Founder Sunil Singhania explains that Abakkus started in 2018 with alternative investment products and has grown to manage over ₹40,000 crore. After five years, regulations allowed the firm to offer a mutual fund. The FlexiCap category is the largest in India and lets managers shift across market caps, sectors, and themes—useful when valuations are similar across large, mid, and small‑cap stocks and volatility is high.
Current Valuations: Fair or Expensive?
Indian equities now trade at about a 15% premium to emerging‑market averages, roughly the 10‑year norm. The price‑to‑earnings (PE) ratio sits near 18×, which is slightly above the level justified by today’s 6.5% interest rates but far below historic peaks of 30‑35×. If corporate earnings grow faster, the PE could adjust quickly.
Sectors With More Comfort and More Risk
- Comfort: Financials (banks, NBFCs), asset management, wealth management, life insurance, pharma, non‑ferrous metals, select engineering firms, and some renewable‑energy companies.
- Risk: Companies that are not yet profitable, burn a lot of cash, or have extremely high valuations such as certain new‑age platforms and low‑growth consumer staples.
What Investors Should Keep in Mind
Investors are encouraged to stay focused on long‑term wealth creation and avoid overreacting to short‑term news. Many concerns, like rate hikes, are already priced in. Upcoming budget measures and GST cuts are expected to boost corporate results toward the end of the year, offering a tailwind for equity returns.
Outlook for the Next Few Years
With GDP growth projected at 6.5‑7% and nominal growth near 10%, earnings for large‑caps could rise 12‑13% annually, while mid‑caps might see 14‑16% growth. Over a three‑ to four‑year horizon, investors can reasonably expect low‑to‑mid‑teen compound annual returns.
Remember, this is perspective, not a prediction. Do your own research and consider your risk tolerance before making any investment decisions.