Retail investors should avoid being fully allocated to equities at any point in the cycle and instead maintain disciplined, diversified exposure, according to Devina Mehra, Founder & MD of First Global. As reported by CNBC TV18, Mehra continues to emphasize that investors must stay invested in the market, not matter what the allocation. She cautioned against shifting between extreme narratives that dominate market sentiment, noting that neither optimism around India's growth story nor recent sentiment towards global diversification represents the correct approach.
According to Mehra's assessment reported by CNBC TV18, Indian equities are not at valuation extremes across the board. While certain pockets may appear stretched, she emphasised that on a broader, sectorally adjusted basis, the market does not sit at either extreme of overvaluation or undervaluation. She highlighted that retail investors should remain consistently invested, advising them to 'Stay invested and do not go out of the market'. The firm's recent quarterly portfolio rebalance focused on stock-specific and sector-specific adjustments rather than major strategic shifts.
Mehra continues to favor sectors such as auto components, automobiles and pharmaceuticals, which have remained key portfolio themes for more than two years. As reported by CNBC TV18, the latest portfolio review led to a higher allocation to pharma stocks, while auto and auto ancillary companies continue to feature prominently in the portfolio. The firm is also seeing more opportunities emerge in the power and power equipment space through its bottom-up stock selection process, indicating a diversified approach across multiple sectors.
Mehra stressed that equity markets should not be viewed like fixed deposits, as returns are inherently unpredictable over short horizons of one to three years. According to CNBC TV18, she noted that 'Sentiment is a contra indicator', adding that periods when markets feel overly easy or excessively optimistic are often not the best times for strong forward returns. She believes investors often place too much emphasis on geopolitical developments, stating that based on data of 125 years of data, you should not react too much to geopolitics unless your country is at war. She also dismissed the notion that foreign institutional investor (FII) flows are a reliable indicator of market direction.
On technology stocks, Mehra struck a cautious note on the global artificial intelligence theme, questioning whether the massive capital spending currently taking place would generate adequate returns over time. However, she believes Indian IT services companies are better positioned than many investors assume. As reported by CNBC TV18, while AI could alter employment trends in the sector, she expects technology service providers to adapt their business models and continue playing a key role as intermediaries between enterprises and AI platforms. She also noted that lower crude oil prices are beneficial for India, both from a macroeconomic perspective and for corporate earnings, as softer prices reduce input costs for several industries and support profitability.
