Amish Shah, Head of India Research at Bank of America Securities, expects the Nifty to deliver only single-digit returns in 2025-comparable to fixed-income returns. He remains particularly wary of the broader market, arguing that mid and small-cap stocks are still overvalued Small and midcaps have hit the brakes on and off in the past six months. Both the small as well as midcap indices slipped into the bear territory with their 20 percent crash from record highs. Several market experts have pointed the blame for expectations of muted returns on . Despite the recent leg of correction, the Nifty continues to trade at a 4 percentpremium over its long-term average. "Ideally, that premium should come down to zero.

This makes it difficult to justify valuations," says Shah. Shah believes FIIs will opt for US treasuries or equities over Indian assets. Back in August,BoFA Securitiesdowngraded 13 out of 14 industrial stocksthat it covers, moving them from 'buy' to 'sell' Shah has not turned bullish on the sector as he expects more correction to come by. Despite the correction, the firmupgraded only one stock to 'neutral', leaving the sector with one 'buy', one 'neutral' and 12 'sell' calls. Shah holds a bullish outlook onrate-sensitive sectors like autos, real estate, select internet names, and some financials. "Given our cautious market outlook, we also have defensive positions in healthcare and telecom," he said.

Shah remainsselectively positive on jewellry, travel and tourism, and cigarettes, along with some staple names. He is especially positive on healthcare, thanks to the sector's defensive nature. "Demand is inelastic, supply chains are hard to shift, and valuations are The government's $12 billion (Rs 1 lakh crore) tax stimulus is a positive, says Shah. However,he is still not bullish on the entire consumption basket. "So, while it helps, it won't drive broad-based growth," Shah believes.