Hold Cash Till Trump's Return Or Head To Nifty-Beating Sectors, Experts Suggest

Retail investors who are conservative and looking for more clear picture in both international and domestic front may decide to hold their cash until Jan. 20, 2025 when US president–elect Donald Trump takes oath, said Andrew Holland, chief executive officer, Avendus Capital Public Markets Alternate Strategies LLP.

Emkay Investment Managers' Director and Chief Investment Officer Manish Sonthalia suggests that retail investors who don't like to sit on cash may want to venture into sectors which are doing better compared to NSE Nifty 50.

Hopefully, there will be some clarity about how things are going to move post Jan. 20, 2025. As long as market participants can see a greater trend going forward on the upside, they can go back in the market again. There's no catalysts for buying aggressively in the market. Holland expects a little downturn is possible in near term.

"There's a narrative going on that tariff may not be 60% on China. It'll be lower than that. In that case, it's good for China. You could see more stimulus package from China as well," Holland told NDTV Profit.

If it's good for China, India may also get some passive flows. However, it will not be good, Holland said.

Sectoral churn is likely, hence retail investors can find some comfort there, said Sonthalia. "There's a propensity for INR to depreciate. There would be a bigger margin of safety in buying into export–related businesses." 

In the US, there's going to be corporate tax cuts and investment in technology. So, there'll be high comfort in technology even in current market scenario. Same applies to pharmaceuticals. Banks as a whole have seen a decent earnings growth. Valuations are extremely conducive in banks, Sonthalia said.

"On the Nifty level, markets are not looking too great at the Nifty level, hence in these sectors, one can find comfort," Sonthalia said.

Sectors that are affected by government spend expected to remain vulnerable. The second half is likely to be better, he said.  

The Nifty 50 is in a range of 23,000–25,000 because there's no near catalysts even if the government start spending. It'll reflect in 2026. "I expect more downgrades in earnings going forward. So, with that you might get a Santa Clause rally in short term, as FIIs who are absent might get back in December," Holland said.

In January, everything changes with the president–elect Donald Trump coming in. It's still unknown about the kind of tariff are going to take place. The focus is going to be on US Markets. "So, don't expect foreign investors to abate selling very soon," said Holland.

The outlook for the Nifty 50 earnings per share is that in financial year 2026, the earning growth will be around 10–12%, Sonthalia said. Earning growth in financial year 2027 will be around 10–12%.  Based on earning growth numbers, the base case EPS growth for the Nifty 50 in 2025 is 1,050, for 2026 is 1,175, and for financial year 2027 it's 1,350 EPS, Sonthalia said.

For 10–12% earning growth in Nifty 50, markets are unlikely to give more than 20 PE. The long period average for the Nifty 50 is closer to 18 times. It's more prudent to assign the highest margin of safety as US markets are going to be the strongest and emerging markets are likely to be under pressure, Sonthalia said.