How to invest Rs 10 lakh in 2025? Vikas Jain of Reliance Securities shares his asset allocation strategy

The year 2024 was favourable for the bulls with the benchmark equity index NSE Nifty rising nearly 10% year-to-date. On the other hand, the broader indices Nifty Midcap 150 and Nifty Smallcap 250 gained 24% and 25%, respectively, during the same period. Data showed that as many as 26 stocks in these indices rallied more than 100% YTD.

With a gain of 315%, GE Vernova T&D India rallied the most. It was followed by KFin Technologies (up 230%), Motilal Oswal Financial Services (up 195%) and Oracle Financial Services Software (up 191%). Sector wise, healthcare and real estate indices have gained more than 35% in the ongoing calendar year. So which stocks and sectors should investors zero in on in the New Year?

In an exclusive interaction with Business Today, Vikas Jain, Head of Research, Reliance Securities suggested buying stocks such as Aarti Industries, Dalmia Bharat, Tata Motors, Avenue Supermarts and Astral.

Sharing his views on these stocks, Jain added that Aarti Industries has a de-risked portfolio that is multi-product, multi-geography, multi-customer and multi-industry. He believes that new capacities to drive volume growth, Chlorotoluene to come in FY26: Ethylation and Nitrotoluene capacity to come onstream at the end of Q2FY25 will contribute to incremental volumes in FY25.

On the other hand, he added that Tata Motors remains committed to consistent, competitive, cash-accretive growth and generating strong returns. “Demerger in the first quarter of the next year will unlock value,” Jain said.

Commenting on Avenue Supermarts, the market watcher said the growth story revolves around healthy SSSG, store expansion, and offering great value through DMART ready stores turnaround, higher contribution from gross merchandise and private labels, and focuses on store size optimisation and improvement of sales per sq feet leading higher productivity.

“The recent sharp correction offers a great quality franchisee with proven growth strategies, increased consumer preferences for private labels compared to loose products in standalone retail stores and attractive valuations at multi-year lows,” he said adding Astral is well positioned for accelerated growth driven by its strong track record of scaling new business at regular intervals and management is confident of doubling the revenues with margin expansion and improved profitability over the next few years.

Among sectors, Jain is overweight on automobiles, private banks, cement, consumer and chemicals. “The auto sector is trading at a 15-17% discount to its long-term averages, new launch of products, streamlining of channel inventory, improved demand in the next year fuelling strong monthly sales and price hikes done by various companies will improve margins going forward,” he said.

Asked how investors can invest Rs 10 lakh in 2025, Jain continues to believe that the long-term structural story intact. “One should continue to invest in equity through direct allocation or in funds through the SIP mode and diversify 25-30% in debt funds for some emergency crisis. One should be more overweight towards large caps towards 50% allocation and tactical exposure in mid-caps and small caps as the risk-reward is strong and in favour of large caps ideas,” he said.

What risks should investors watch out for in 2025? Jain said that risks and challenges are always unknown and could emanate from nowhere but as time passes its importance recedes post the event and markets take its own tide to overcome and recover fully as we witnessed in the past.

“The immediate risks could be in the form of delayed rate cuts by the domestic central banks if inflation continues to persist higher, some data points and specific announcements of Donald Trump policies in the next year for some sectors specifics in terms of tariffs or sharp growth in China markets and slowdown in earnings growth for the Nifty50,” he said.