Stock market strategy: How to build your equity portfolio in 2025? Here’s a guide

The Indian stock market rose over just 8 per cent in 2024 but logged its ninth straight year of gains. While domestic inflows and policy continuity following the Bharatiya Janata Party’s (BJP) return to power supported investor sentiment, poor corporate earnings and an exodus of foreign funds curtailed annual gains. India witnessed the lowest gains among major global peers and even entered the correction territory.

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The equity benchmarks rose nearly 21 per cent each to hit record highs on September 27. In November, they slipped into correction territory—a 10 per cent drop from all-time high levels.

Meanwhile, the mid and smallcap indices outperformed benchmarks rising over 23 per cent and 24 per cent, respectively.

With the onset of the new year, positioning your portfolio effectively is critical to navigating the uncertainties and opportunities that 2025 may bring. Leading financial experts have shared their insights to help investors balance risk, growth, and resilience in their investment strategies. They suggested focussing on diversifying the portfolio, being selective while picking stocks and looking for companies with sound fundamentals.

Diversify your Portfolio

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Feroze Azeez, Deputy CEO, Anand Rathi Wealth emphasised the importance of aligning investment strategies with financial goals. For short-term objectives like funding a vacation, he suggests prioritising conservative assets such as debt investments. Conversely, for long-term goals like a child’s education, growth-oriented assets like equities are preferable, he said.

He highlights diversification as a key step, advising investors to spread equity investments across various categories, such as large-cap, mid-cap, small-cap, and thematic funds, to mitigate risks associated with sectoral concentration. Periodic portfolio reviews and maintaining an emergency fund covering 3–6 months of expenses are also crucial, he said.

Ajit Mishra, SVP, Research, Religare Broking also underscored the value of a diversified portfolio comprising large-cap stocks for stability, mid-cap stocks for growth, and select small-cap stocks with strong fundamentals. 

He stresses the importance of evaluating valuations and rebalancing portfolios regularly to avoid over-concentration in any single stock or sector. “Pay attention to valuations, focusing on stocks with reasonable PE, PB, or EV/EBITDA ratios, and avoid overpaying even for well-known names. Additionally, maintaining a cash reserve can help seize opportunities during market corrections,” advised Mishra.

Be Selective

Pawan Bharaddia, Co-founder, Equitree Capital said to build a resilient portfolio in 2025, investors need to blend stable large-caps with high-potential small-cap investments—especially in manufacturing and engineering. The key is to be selective: prioritise companies with strong fundamentals, proven track records, and steady cash flows, he said. 

“Stay agile by staggering your investments and capitalising on market dips, so you’re ready to navigate any volatility that comes your way,” Bharaddia advised.

Focus on sectors with strong growth potential

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Sujit Modi, CIO, Share.Market recommended focusing on growth-driven sectors such as renewable energy, healthcare, financial services, and infrastructure. “With increasing government spending and technological innovation, these sectors present significant opportunities. Infrastructure is a key area, with the government increasing spending on roads, railways, and ports, offering long-term opportunities,” advised Modi.

Healthcare benefits from rising demand and innovations like telemedicine, while financial services, especially fintech, are booming with increased digital adoption, he added.

Look for companies with strong fundamentals and reliable management, he further said. 

Disclaimer: 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 taking any investment decisions.