The ongoing calendar has remained a mixed bag for equity investors on Dalal Street so far. Where the benchmark equity index, BSE Sensex, gained 5% year-to-date as of September 24, the broader indices, BSE Midcap and BSE Smallcap, declined 1% and 3%, respectively, during the same period.
Several factors, including geopolitical tensions, Trump’s tariff woes, and outflows by foreign institutional investors, weighed on market sentiment. So where is the market headed? Which pockets may deliver a solid return to investors going ahead? In an interaction with Business Today, Vinod Nair, Head of Research, Geojit Investments, shared his insights. Edited excerpts:
BT: Which themes are likely to generate strong returns for investors over the next 12-24 months?
Nair: Over the next 12-24 months, domestic investment themes appear well-positioned to deliver strong returns. Domestic reforms such as tax reductions, lower GST rates, easing inflation, and potential rate cuts are set to improve disposable incomes across rural and urban households, thereby strengthening consumption. Consequently, consumption-driven sectors-including automobiles, consumer durables, real estate, and FMCG- are likely to benefit. Infrastructure remains an attractive theme, underpinned by the government’s sustained capex push and modernisation policy. Additionally, rising demand in core industries such as steel and cement, coupled with increasing momentum in emerging areas like data centres and green energy, further reinforces the positive investment outlook, albeit with some execution-related risks. The IT sector presents a compelling contrarian opportunity for investors with a higher risk appetite, supported by the potential for further Fed rate cuts this year.
BT: Could you share a list of stocks that have the potential to deliver double-digit returns over the next 12 months?
Nair: We are bullish on Tata Consumer Products, Suzlon Energy and HG Infra. The diversified portfolio of Tata Consumer Products, including leading brands in tea and salt, positions the company well for long-term growth. Earnings are expected to witness strong growth in the coming years driven by healthy growth in topline and margins. The stock is currently trading at moderately above the long-term average valuation.
On the other hand, Suzlon is set for strong growth with a 42% revenue and 43% earnings CAGR over FY25-27E, driven by a 5.7 GW order book and improved capacity utilisation. Backward integration, ALMM compliance, and margin expansion from core segments position it well for sustained profitability, though execution discipline remains key.
The increasing opportunities in road, railway and solar projects, along with a current order backlog at around 3x TTM revenue, ensure strong business visibility for HG Infra. The management is prioritising the diversification of the order book and maintaining a healthy margin profile to drive future growth.
BT: What would be your advice to investors who are currently sitting on the sidelines?
Nair: For investors who have remained on the sidelines, this is a good time to consider gradually increasing equity exposure in line with their risk appetite. The earnings visibility for H2FY26 has improved, aided by government reforms and a favourable monsoon, which will support the downside and justify valuation. Further, benign inflation and the expectation of 6.5% GDP growth for FY26 will attract liquidity in the market. Concurrently, the softer dollar index and lower US yields are creating a more favourable backdrop for Indian equities. FII outflows have eased in recent months, signalling improving sentiment as India’s premium valuation has reduced. As and when India approaches a deal with the US trade, it will be a boon for the domestic market.
BT: What is your outlook on gold and silver as investment avenues?
Nair: Gold and silver continue to present investment opportunities in the current environment. Gold remains a resilient safe-haven asset amid geopolitical tensions, trade disputes, a weak rupee, central banks’ demand and an uncertain US Federal Reserve policy. However, we have reduced the weightage on gold from 10% to 5%. Silver, being more affordable than gold, benefits from seasonal investment demand, expanding industrial applications in sectors such as solar energy and electronics, and supply constraints, including limited mine output and declining inventories, all of which support sustained price momentum.
BT: How do you view midcaps and smallcaps in the current market context compared with largecaps? Which segment looks more attractive to invest in now?
Nair: On a YTD basis, large caps have performed better than mid and small caps. Investors are largely betting on domestic-theme large-cap stocks owing to a conservative approach to withstand the current global trade tensions and valuation comfort as compared to mid-and small-caps. We expect this trend to continue in the near term; however, the premium valuation of midcaps compared to large caps has normalised in the last year. And in the last 1-2 quarters, the broad market earnings growth has been better than that of large caps. We expect the broad market performance to improve during the fiscal year as earnings growth further improves in H2 and FIIs selling reverse due to narrowing premiumisation, trade deal and change in Fed policy stance.
BT: With a drop of 20%, the BSE IT index is the biggest loser of 2025 so far. How will the $100,000 H-1B visa fee in the US impact major Indian IT companies?
Nair: The steep increase in H-1B visa fees will push Indian IT firms to increase local hiring, subcontracting, and offshore delivery, which may strain margins and extend project timelines in the near term. Larger players are better placed to absorb the cost impact, while mid-tier firms, more reliant on fresh visas, will face greater challenges. Over time, this is reshaping delivery models, with firms accelerating investments in GCCs, automation, AI, and diversification into EMEA and APAC. Despite near-term pressures and policy uncertainties, the sector’s resilient business model and attractive valuations make it appealing for long-term opportunity.
BT: The US Fed has recently cut interest rates by 25 bps. What could this mean for Indian equity markets?
Nair: A change in the Fed’s interest rate policy, with anticipated cuts, is expected to weaken the dollar and boost FIIs’ inflows to emerging markets, benefiting India. However, to get a deeper benefit from it, more cuts are needed. Business-wise, it may not immediately unlock client budgets but reduce downside risks and support sentiment surrounding US enterprise spending, which will be positive for export-and service-oriented domestic sectors. Moreover, cheaper liquidity in the US could encourage businesses to pursue tech upgrades and outsourcing, creating opportunities for Indian IT firms.
BT: Given global headwinds and geopolitical uncertainties, how should investors structure their portfolios? What is the ideal asset mix in the current environment?
Nair: Despite global headwinds, the economic structure remains appropriate with fiscal support. In the current domestic market environment, equities are expected to maintain their long-term buoyancy with government support and in anticipation of a drop in trade and earnings downgrade risk. A recommended investment strategy is a portfolio with a significant allocation to equities (70%), complemented by bonds or debt instruments (25%) and gold (5%).