We are cursed with short attention spans, so we tend to prioritize the most recent events. Social media and smartphones have made this attention problem even worse - as I am constantly reminded, when I return from the grocery store with everything except the item I went there for.
Investors have been pretty downbeat recently about the stock market's performance, so it took a glance at the Nifty50's share price history to give me some perspective on what the year was actually like. The index had a pretty strong first half in 2024, compared to the previous years. The trendline changed sharply only in October, when the decline shook up portfolios and the investor mood.
What about 2025? 2024 has sometimes felt like a holding pattern, with elections in the India and the US, wars without end, and inflation keeping consumers quiet. Early signals suggest that 2025 will be different.
In this week's Analyticks:
- Five trends that will make 2025 unlike 2024
- Screener: Stocks that outperformed their sectors over the past year
1) What happens in the US will not stay in the US - especially under Trump
President-elect Donald Trump is a noisemaker who writes messages in ALL CAPS, throws threats at countries ("100% tariffs!") and nominates messy, troubling characters to key administrative roles, like conspiracy-theorist Kash Patel to the FBI and vaccine-opponent Robert F Kennedy to be the Health Secretary. Trump has also signalled a broad change in US international policy, with his focus on"America First".
One of the things Trump promised this week was "reciprocal tariffs" on US trading partners: “If they tax us, we tax them the same amount." This has big implications for India, since US is India's second-biggest trading partner, and many American goods face high import duties in India. India's average tariffs have risen from 5% in 2014 to 17% now, which is higher than other Asian countries that trade with the US.
Overall, Biden has been better than Trump for India's trade with the US. So this relationship may get shaky if Trump follows through on his trade threats.
2. Oil will be cheaper in 2025 - maybe by a lot
A big, once-in-decades change is happening in the oil market: the OPEC cartel's power is dwindling, with its market share falling fast. “There is more fear about 2025's oil prices than there has been since years - any year I can remember, since the Arab Spring,” one oil analyst noted. OPEC countries are set to raise their pumping targets gradually in 2025, bringing more oil to the market. But 90% of the increase in oil supplies in 2025 are set to come from non-OPEC countries like US, Brazil and Canada, limiting OPEC's pricing power.
The oil surplus could hit 1.6 million barrels per day by the second half of 2025, bringing prices lower, especially if demand from China, the main oil consumer, stays weak.
Brent futures point to a continued downward trend in oil prices, and some analysts are especially pessimistic - Citi analysts expect Brent price to average $60 per barrel next year, while others predict $40 per barrel.
3. Not so green: Coal will come out of the shadows in 2025
There is much talk these days about the green economy: increasing renewables is non-negotiable to bring down emissions. But coal, the dirtiest fuel, is not going anywhere and may even hit record highs in 2025, thanks in part due to India.
Despite countries like the UK banning coal entirely, coal demand was at a record in 2024, according to the International Energy Agency, and is still growing.
India is expected to consume more coal than the European Union and the US combined in 2025. But the main driver of coal consumption is China, which consumes 30% more coal than the rest of the world put together. It will take until 2027 for India's power generation from renewables to have real impact.
4. The consumer story will be back in the headlines in 2025
2024 was an especially difficult year for the Indian consumer, with high inflation and high interest rates depressing spending, and the overall consumer mood. From FMCG to paints to consumer durables, CEOs noticed "a muted response" across Indian consumer markets. Another worrying signal was slow growth in the average salary bill at India's listed companies in the September quarter.
2025 however is expected to see a recovery, with inflation trending downward, as food prices come down from recent highs. If inflation stays within RBI's target range, interest cuts should come as early as February 2025.
S&P Global predicts healthy growth in Indian consumption spending, with spending on goods, already at $1.29 trillion, set to ramp up steadily.
5. 2025 will be a volatile year
The Nifty Vix is going to see some upheaval. Analysts across the board are predicting volatilty thanks to rising geopolitical risks: a trade war is a possibility between the US and China, and a change in government is likely in Canada, Germany and Australia. There has also been a swing to the political right globally, and that is coming with deregulation across industries. Cooling inflation could also drive rate cuts across the board.
Overall, the momentum looks for now, to be in India's favour. China is in the crosshairs, giving India an opportunity in global markets. Oil prices are trending lower, more good news for us, an oil importer.
But there are as always, unpredictables - another regional crisis could flare up (say China-Taiwan), US-India relations could worsen, a bad monsoon could trigger more inflation.
Changes are afoot. As that double-edged promise goes: it is going to be an interesting year.
Screener: Relative Outperformance versus sector over one year
General Industrials & Consumer Durables stocks rise the most in the past year
As we near the end of 2024, we take a look at the top-performing stocks over the past year relative to their sector. This screener shows Nifty 500 stocks whose share price over one year rose faster than its sector.
The screener is dominated by stocks from the banking & finance, automobiles & auto components, food, beverages & tobacco, realty, and pharmaceuticals & biotechnology sectors. The most notable stocks in the screener are Jyoti CNC Automation, GE Vernova T&D India, Motilal Oswal Financial Services, Dixon Technologies (India), Oracle Financial Services Software, Godfrey Phillips India, Kaynes Technology India, and Anant Raj.
Jyoti CNC Automation shows up in the screener after rising by 333.8% over the past year, outperforming the general industrials sector by 157.5 percentage points. This industrial machinery stock was listed on the exchange on January 16, 2024, and is the best-performing IPO during the year. Its stock price surged on the back of its revenue and net profit growing YoY in Q1 and Q2 of FY25. In Q2FY25, the company’s revenue grew by 45.6% YoY to Rs 441.7 crore. Its net profit increased by 348.2% YoY to Rs 75.9 crore, driven by a reduction in inventory and employee benefits expenses.
Motilal Oswal Financial Services also appears in the screener after rising 225.5% over the past year, outperforming the banking & finance sector by 201 percentage points in the same period. This capital markets stock’s price surged on the back of strong results. Its revenue and net profit have grown YoY for the past six consecutive quarters. The company also issued three bonus shares for every share owned by the shareholders on June 10, helping the stock price surge 10.6% during the month.
You can find some popular screeners here.
