Indian Market Does Not Face A Huge Downside Risk, Says Devina Mehra

We are far below the trend line, and the risk of a big crash is higher when the market is far above the trend line, says Mehra.

<div class="paragraphs"><p>The bull outside BSE. (Source: Vijay Sartape/ BQ Prime)&nbsp;</p></div>
The bull outside BSE. (Source: Vijay Sartape/ BQ Prime) 

The Indian market doesn't seem to be at a point of any huge downside risk despite being surrounded by numerous challenges, according to Devina Mehra of First Global.

"We are far below the trend line, and the risk of a big crash is higher when the market is far above the trend line," the founder of First Global told BQ Prime's Niraj Shah in an interview on Women's Day. The last relative bull market in emerging markets was from 2003 to 2007, she said.

The emerging markets globally "aren't looking bad" from a medium-term perspective at present, especially after a long period of underperformance with the European market leading the race, according to Mehra.

Manufacturing and employment still stand weak as compared with the organised sectors that have fortified themselves, she said. Thus, the current economic growth is "skewed" in nature with negligible chances of a heavy fall.

Key Bets

Industrials and capital goods continue to be First Global's biggest overweight sectors since the last one and a half years, given the attention these sectors have from the government and the kind of allocation they occupied in the budget too.

Banks, on the other hand, have transitioned from being zero-weighted to overweight after 2022, citing significant credit growth, price movements, and the positive effects of an increase in interest rates, at least initially.

The information technology sector, too, has phased out last year's underperformance, and hence they have shifted to being overweight in the sector now, especially due to reasonable predictability.

Apart from these, auto components and pharma—though not as much as the diagnostic pocket—look positive too.

On the other hand, NBFCs and real estate don't garner her interest as of now, she said. "Lending businesses can come up with negative surprises at any given point in time."

Watch the full interview here: