05-05-2025
Gold vs Silver vs Sensex: Which is better for investing this year? Aamar Deo Singh of Angel One explains
Indian stock market: With the Indian stock market and bullion exhibiting a strong trend in 2025, investors are divided on which asset class could be the winning bet for this year. However, Aamar Singh Deo, Sr VP Research at Angel One, sees silver to emerge as the best asset given the gold-silver ratio and demand for a safe-haven asset. Additionally, he expects the Indian stock market to remain on a front footing in May, and holds a bullish view on healthcare and private banks. Edited excerpts:
'Sell in May and Go Away' has not exactly worked for Indian equities in the past decade. Nifty has clocked on average more than 1.5% during May and positive returns in 6 out of 10 instances in the past decade. There is an ongoing corporate season, geopolitical tensions with Pakistan and mixed global signals. However, domestic fundamentals such as stable GDP growth and in-line corporate earnings continue to show resilience in India's growth story. Revival of foreign inflows also suggests that exiting in May and going out is not such a good strategy.
As suggested, healthcare as a space looks good to us. Hence, Dr Lal Path Labs and Narayana Hrudayalaya look good. In the mid-tier IT space, Persistent Systems looks good for investment over a one-year horizon.
Yes, many private banks have delivered double-digit returns, but the rally in private banking stocks is expected to remain strong on the back of a stronger balance sheet as compared to PSBs and earnings recovery starting from H2 of FY26. Valuations for private sector banks also look pretty reasonable at this point in time. In FY25, margins remained under pressure for banks as funding costs increased and the CASA ratio worsened for most banks, leading to pressure on profitability. Pressure in NIMs is expected to continue when the interest rate cycle is on a downward trend, but recovery is expected in the second half of FY26 and is expected to continue in FY27.
Stock markets had remained volatile on account of global issues and geopolitical tensions, and Indian listed companies had delivered lacklustre numbers in Q2 and Q3 FY25. With expectations of single-digit earnings growth for Nifty50 companies, earnings up till now have been better, and markets are expecting this momentum to continue in the latter half of the season as well. Consumption is expected to do well, and big private sector banks and NBFCs have delivered good results. Also, pockets of healthcare have done well.
In the past few years Indian IPO market had boomed pretty strongly but slowed down in FY25. In FY25, the IPO market in India was down by 20% according to a market study, as investors remained cautious of volatility in equity markets. However, resilience continues to stay in the Indian markets with mild recovery in Q4FY25 in equities and also in the primary markets. Going forward, as well, a healthy pipeline of companies is expected to hit the Indian market across varied sectors. In the previous bull run, retail participation had increased a lot in the IPO market. We expect this trend to continue. Investors should focus on fundamentally strong companies with a record of sustained profitability, along with a presence in sectors with good tailwinds will allow them to get better returns from the IPO markets. Also, the horizon for the same should be longer when selecting good fundamental companies, and retail investors should not just chase listing day gains.
A year of uncertainty and tariffs has just gone by, and the tariff war, which is at a halt at this moment, is still not solved. Geopolitical tensions across the globe are also at the forefront. Hence, safe-haven assets tend to do well in such a scenario. We expect Sensex to deliver returns of 10-11% for FY26E, citing a growth of 11% in EPS and no expectation of re-rating for Sensex. Gold, on the other hand, had rallied significantly and had briefly touched the ₹ 1 lakh mark. However, considering the gold-silver ratio, silver looks highly undervalued. The gold-silver ratio is currently over 100, and historically, in the past decade, it has hardly gone over 80 on a few instances. However, silver tends to be more volatile than gold. Return expectations for silver are highest amongst the three, considering the above scenario, but it also comes with its own set of volatility.
Disclaimer: This story is for educational purposes only. The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
First Published: 5 May 2025, 01:22 PM IST
