'The liquid won’t let him live': Why IIFL evoked Bollywood villain's dialogue in market outlook 2025

IIFL Securities in its 2024 market outlook 2025 said two broader factors may work against each other and that it would prove tough for the NSE barometer Nifty to hit 25,000 level in 2025. The domestic brokerage evoked legendary Bollywood villain Ajit's famous dialogue where he instructed his sidekick Robert on holding his captives in liquid oxygen because: "The liquid won’t let him live, and the oxygen won’t let him die”.

For IIFL, the liquids for stock market in 2025 are rising US bond yields, weak rupee, slowing growth and rich valuation multiples. Soft commodity prices and cooling inflation would remain the 'Oxygen' that it believes would not let market down too much. 

"There is altogether less oxygen and more liquid (but not liquidity) than we would like. Nifty is likely to hit 22,500 (5 per cent incremental downgrade to FY26 EPS and applying a broad brush 20x multiple) before troughing out and should struggle to go past 25,000 in 2025," it said.

The domestic brokerage is overweight on IT, hospitals, domestic pharma companies, auto four-wheelers, Power T&D, real estate, cement and construction stocks.

In the IT sector, it picked Infosys Ltd as the best play on acceleration in discretionary spending in the US. We expect commentary on this to turn positive by Q2 of 2025. In the cement sector, IIFL prefers UltraTech Cement.

"Allied to this call is a BUY call on DLF, which has become the steady-Eddie of the sector and should continue to monetise its massive land bank steadily while having concentration in the luxury and ultra luxury market of Gurgaon (golf courses in the backyard can’t be replicated in Mumbai)," it said.

In the pharma and healthcare, it likes Torrent Pharma Ltd and Apollo Hospitals. It likes Maruti Suzuki India Ltd in the auto sector on the basis of a very brutal correction in the sector in Q4CY24, adding that the commodity prices have been benign and low-priced 4W volumes being 25 per cent lower than 2019.

The domestic brokerage sees tyre companies to benefit from soft crude, and Apollo Tyres especially due to being India-focused and revenue dependence mainly on the replacement market. Eicher Motors Ltd will get further derated due to poor growth and falling profitability, it warned. 

Banks have not rerated like the rest of the sectors, and HDFC Bank Ltd and ICICI Bank Ltd look set to deliver above-average earnings growth in 2025, IIFL said.

"We note that INR depreciation will help US Pharma. Lupin is our favourite name here, but we have a sell, Dr Reddy’s, based on a weak complex generics pipeline and optimistic margin projections by consensus. Our below consensus call on Biocon is based on pricing/demand challenges, uncertain launch timelines, slow ramp-ups, all contributing to earnings misses," it said.