Last update:December 20, 2024, 1:53 p.m. IST

Even though markets have generated robust profits in recent years, 2025 may not reflect the same upward trends.

Investors were advised to moderate their expectations after record highs.

While the stock market has delivered impressive returns in 2024, with major indices like Sensex and Nifty hitting record highs, investors have been advised to prepare for a more cautious approach in 2025. HDFC Securities, a brokerage firm national leader, urges investors to moderate their expectations, warning that excessive greed for higher returns could lead to significant losses due to several unpredictable factors that could influence market dynamics over the course of the coming year.

Dheeraj Relli, Managing Director and CEO, HDFC Securities, highlighted that after a prolonged period of strong market performance, investors should prepare for a change in their expectations. Even though markets have generated robust profits in recent years, 2025 may not reflect the same upward trends.

The brokerage firm’s outlook suggests that while returns will still be generated, investors need to adjust their strategies to avoid the pitfalls of overconfidence and excessive risk-taking.

Relli explained that after years of market recoveries, investors accustomed to strong returns should recalibrate their outlook for the year ahead. “The stock market has made remarkable gains in recent years, but it is crucial that investors manage their expectations in 2025. We could see a slower pace of growth, and those seeking unrealistic returns could find themselves on the wrong side of the market. “Relli said.

Despite the expected moderation, HDFC Securities remains optimistic about the long-term prospects of stocks. The brokerage reassured investors that stocks will likely continue to outperform other asset classes in 2025, given the resilient economic growth trajectory.

The country’s demographic advantages, ongoing reforms and expanding middle class should provide the basis for an eventual market recovery, even if near-term volatility persists.

HDFC Securities has set a cautious but optimistic target for the National Stock Exchange’s Nifty 50 index, forecasting that it will end 2025 at around 26,482 points. This would represent growth of more than 10% from the index’s closing level of 23,951.70 points on Thursday, December 19. While this suggests positive return potential, the company cautions that it may not be as robust as the growth seen in previous years.

One of the main concerns highlighted by HDFC Securities is the potential for market corrections in 2025. Relli pointed out that many investors who entered the market after 2020 never experienced a significant downturn, which could make them more vulnerable to market shocks. “There is a real possibility of sharp declines, and investors need to be mentally and financially prepared for this risk,” Relli warned.

Since a large portion of retail investors entered the stock market during an unprecedented bull run, they may not have experienced the type of stock market corrections that periodically test investors’ resilience . This lack of experience could lead to panic selling in the event of a sudden market downturn.

Even though HDFC Securities calls for caution in the near term, the long-term outlook for stocks remains positive. The brokerage said the market could face headwinds in 2025, but these challenges are unlikely to derail the broader trajectory of economic growth. Investors were encouraged to diversify their portfolios and remain patient, knowing that the stock market is inherently volatile and requires a disciplined, long-term approach to navigate periods of uncertainty.