Look Before You Leap

In 2025, Investors Will Need To Factor In Volatility Across Asset Classes

- NAVNEET DUBEY

AS WE GET CLOSER to the new year, there is a general belief among investors that various asset classes may face a challenging economic environment, influenced by global recovery efforts, rising inflation, and changing monetary policies.

Most importantly, equities because of the volatility they face, may confront challenges in the coming year. A potential rate cut by the US Federal Reserve could alter market dynamics further, likely boosting risk appetite among foreign investors.

However, despite these headwinds, India’s 2025 debt outlook is cautiously positive, with stable yields likely if inflation is managed. Global index inclusion and new instruments may deepen market participation.

Gold, traditionally a hedge against inflation and uncertainty, could see sustained demand, especially if geopolitical tensions rise or inflation remains persistent. In this context, India’s 2025 real estate outlook too remains strong, driven by luxury housing, co-working spaces, and sustainable technological solutions, with geopolitical tensions being the primary dampener.

In 2025, therefore, investors will need to consider both the risks and rewards across these asset classes to build resilient and diversified portfolios.

EQUITY

The biggest takeaway, at least towards the latter half of this year, was the exit of foreign institutional investors (FIIs) in large numbers. FIIs maintained their selling spree up to November 22. Following equity sales worth ₹1.13 lakh crore through exchanges in October, they offloaded an additional ₹41,872 crore in equities via exchanges as of November 22, introducing considerable volatility to the Indian market.