Amish Shah, Head of India Research at BofA Securities, said the room for equity gains appears limited in the short term, especially in broader markets where midcap valuations remain stretched.
“Our target for this year is 25,000. We are only about a percentage away from there,” Shah said, speaking on the sidelines of the BofA Securities 2025 India Conference. “So clearly the conviction that markets could give me even a high single-digit return is not very high.”
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With fixed income products yielding around 7% pre-tax, the risk-reward has tilted in their favour, Shah suggested. “If I can get a safer return in a fixed income product, then I would probably look to avoid the risk of equities right now.”
He added that while largecaps may still be “sensibly priced”, the midcap space has run ahead of fundamentals.
That said, Shah reiterated that equities remain attractive over the long term, especially in sectors where structural growth drivers are in place.
Financials, in particular, continue to find favour with BofA and many investors. “Financials is at least a sector that unanimously, everybody likes, including us,” he said.
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Newer themes such as electronics manufacturing, semiconductors, biofuels, green hydrogen, and data centres are also drawing interest. Shah highlighted a shift in investor attention towards these segments, which are gaining traction in the market and seeing more listings. “There is definitely traction to all of these themes,” he said, even as valuations in some cases may require a closer look.
For now though, with equities nearing their ceiling and uncertainty still looming over global macros and rate cuts, BofA is playing it cautious. Investors, especially those with a shorter horizon, may do well to park funds in bonds and wait for more clarity—or cheaper valuations.
First Published: Jun 4, 2025 10:45 AM IST