WHERE TO INVEST IN 2025

IT'S TIME TO LOWER EXPECTATIONS FROM EQUITIES AS EARNINGS GROWTH SLIPS. SOME DIVERSIFICATION INTO GOLD AND REAL ESTATE MAY BE IN ORDER.

-  RASHMI PRATAP

INVESTING should be more like watching paint dry or grass grow. If you want excitement, take $800 and go to Las Vegas." When Nobel Laureate Paul Anthony Samuelson (1915-2009) wrote these famous lines, his point was clear-there is no alternative to patience in investing.

Real paint takes time to dry, but in India, the metaphorical investing paint has been drying in real quick time. In the last two years, every asset from shares and gold to real estate has given high double-digit returns driven by FPI inflows, decline in interest rates, strong earnings and benign inflation. However, the dream run halted in October 2024 as FPIs started withdrawing money from bond- and capital markets, leading to a sharp correction in equities. Inflation overshot expectations and corporate profit after tax dipped 2% in Q2 FY25, the first decline in eight quarters. India’s GDP growth hit a seven-quarter low of 5.4% in Q2 due to a slowdown in manufacturing and investment demand. Alongside, the victory of Donald Trump led to a rally in the U.S. dollar, triggering outflows to the U.S. and selloff in precious metals such as gold and silver as yields on U.S. Treasury bonds became attractive.