IT, FMCG, Pharma: Key sectors to watch out for in 2025

The Indian equity markets in 2024 have seen varied performances across sectors, with some industries delivering impressive returns while others showed more modest gains. Data from ACE Equity showed that the BSE Sensex, India's benchmark index, saw a moderate growth of 11%. 

While at the forefront of growth were the BSE Realty and BSE Healthcare indices, both posting an exceptional 40% year-to-date (YTD) return, signalling strong growth in the real estate and healthcare sectors. In contrast, the BSE FMCG index struggled, delivering just a 1% YTD return. 

Looking ahead to 2025, investors are keenly eyeing a few key sectors that are expected to drive market performance. Gaurav Garg, a Research Analyst at Lemonn Markets, shared his insights into the sectors poised for strong performance in the coming year.

“Despite the recent 7% market correction, the Indian economy remains resilient, with GDP growth at 8.2% for FY24 and 6.4% for Q1 FY25,” Garg explained. “The Nifty index has shown a nearly 20% gain over the past year, driven by strong earnings, political stability, and steady domestic inflows.”

According to Garg, three sectors — IT, FMCG, and Pharma — are expected to perform strongly in 2025:

IT sector: The Information Technology sector remains a key area of interest, with solid earnings growth. “The Nifty IT index saw a year-on-year profit growth of 15.3%,” Garg noted. “Revenue growth was up by 7.3%, slightly surpassing expectations. A major driver of future growth is the rebound in discretionary IT spending within the Banking, Financial Services, and Insurance (BFSI) sector. The outlook remains optimistic, particularly as the US Federal Reserve is expected to initiate a rate-cutting cycle, which could further boost sentiment.”

FMCG sector: Although the FMCG sector faced some challenges in Q2 FY25, Garg remains positive about its long-term outlook. “While there have been issues with urban demand and rising raw material costs, revenue growth remains strong, especially with a recovery in rural demand,” he said. “The FMCG sector’s defensive nature makes it an attractive option for investors, and a rebound is expected in the latter half of FY25, driven by rural market recovery and improved urban demand trends.”

Pharma sector: The pharmaceutical sector is another area Garg sees as a top pick for 2025. “The pharma sector offers strong earnings visibility and resilience in volatile market conditions,” he said. “Q1 FY25 earnings were robust, and favorable conditions like stable US generic drug pricing strengthen the sector’s growth prospects. With sector rotation also in play, pharma remains a compelling opportunity.”

In conclusion, despite the mixed performance in 2024, sectors like IT, FMCG, and Pharma are expected to drive strong market performance in 2025, offering a promising outlook for investors.