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'My Advice To Investors Is Not To Be Extreme': Edelweiss MF CEO Radhika Gupta On Market Correction

She said the outlook for 2025 is one of moderate expectations. Last year was marked by election-driven enthusiasm, but 2025 will shift focus from political events to the reality of earnings growth

Radhika Gupta, MD and CEO of Edelweiss Mutual Fund has said that investors need not panic. With moderate return expectations for the markets in 2025, she recommends a multicap approach for investors. Gupta believes that the consumption sector has become far more dynamic and is set to benefit from India's growing per capita GDP.

In a conversation with Moneycontrol, Gupta discussed her expectations for the Union Budget 2025, and the current market situation.

She said that the outlook for 2025 is one of moderate expectations. Last year was marked by election-driven enthusiasm, but 2025 will shift focus from political events to the reality of earnings growth. The Indian market is now more closely tied to earnings performance than ever before. With valuations no longer cheap, there is even more emphasis on the need for earnings to deliver.

The first half of the year is likely to be marked by potential volatility and significant events, including US Treasury yields at 4.5 per cent, a new US president, and the possibility of trade wars. There will be plenty to monitor in the early months, and hopefully, this will pave the way for stronger earnings growth in the second half of the year, Gupta added.

Talking about the stock market’s deep correction, Gupta said that the midcap index is currently priced higher than both the largecap and smallcap indices. However, midcap earnings have generally been stronger. While it’s difficult to predict the exact extent of any short-term corrections, after three years of uninterrupted rally, a 15 per cent drop likely isn’t the end of the correction.

Overall, largecap, midcap, and smallcap segments have all experienced similar corrections. When looking at the earnings cycle, largecaps and smallcaps have seen more earnings disappointments than midcaps, she added.

Gupta said, “My advice to investors is not to be extreme. We're not telling investors to go sit in largecaps today. We're telling investors to follow the multicap approach.”

Another shift we’ll see in the market is sectoral rotation. Last year, many funds and products focused heavily on manufacturing, defence, and infrastructure. This year, the focus will likely shift towards sectors like technology and consumption, the CEO said.

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