Stocks may remain disconnected from the economy in the short term, so don’t be too negative: Gurmeet Chadha

Gurmeet Chadha, Managing Partner and CIO at Complete Circle Consultants, has advised investors not to be negative about the stock markets as they tend to humble people. As the year draws to a close, his biggest lesson from the past 18 months is that stock markets can remain disconnected from the economy in the short term.“The markets continue to degrade. A key lesson of the last 18 months is that equity markets cannot remain connected to the economy in the short term. Last year, when the economy was weak, EPS growth was flat and markets peaked. As economic momentum picks up, reforms are taking place that are correcting the markets. But ultimately, over a five-year period, markets reflect economic growth. Don’t be too negative on the markets,” Chadha said.

As 2025 comes to an end, market trends reflect a mixed year, with Nifty maintaining almost double-digit growth as of today. Markets remained positive on Friday after four consecutive sessions of decline. They reached the day’s high at 25,993.35 and rose 178 points or 0.7% intraday. Sector-wise, the auto, energy and financial sectors kept sentiment positive.

The year started on a rough note with Nifty falling 0.6% in January and 5.9% in February. They ended up with positive monthly returns for the next four months ending June 30. The highest return of 6.3% was achieved in March. In July and August, Nifty corrected by 2.9% and 1.4% respectively. The September-November period also brought gains for India’s pulse index, with Nifty hitting a new all-time high of 26,325.80 after a 14-month gap. However, December has proven to be a lackluster month with sideways trading. According to Trendlyne data, Nifty is offline every month.

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With seven sessions to go, it remains to be seen whether Nifty retains the lead and finishes above last year’s 9% gain. Chadha remains bullish on the Indian markets and has been supportive on previous occasions as well.

He previously defended the IT sector following problems due to its long underperformance. The Nifty IT index has fallen by almost 15% in twelve months. But over the past three months, the sector has seen a strong turnaround with gains of 6.1%, 4.7% and 3% in September, October and December MTD respectively.

He criticized analysts who he said took advantage of top IT companies. Indian IT stocks could fall on current headwinds, but the companies are a backbone for the domestic economy, generating millions of jobs and foreign exchange reserves while building a technology ecosystem, Chadha said in a tweet in October. He said the “analysts” should analyze, sell or trim their positions in IT stocks and refrain from “abuse.”

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(Disclaimer: The recommendations, suggestions, views and opinions expressed by the experts are their own. These do not represent the views of The Economic Times.)