Investors Should Limit Exposure To Small Caps, Says First Global's Devina Mehra

Investors should limit their exposure to small caps as this is a time to exercise caution, according to Devina Mehra of First Global Stockbroking Pvt.

During the 2008 market crash, only 1% of small caps ended up in the positive territory by the end of the decline, said Mehra, chairperson and managing director at First Global. Similarly, in the fall that began in 2018, only 8% of the stocks managed to finish with gains.

"Investing is a loser's game, you win only if you don't lose. So you have to make sure you don't lose a significant part of your capital at any point," she told BQ Prime.

Crude oil prices have a significant impact on India, affecting various aspects like the country's current account deficit, inflation, and corporate earnings, as many inputs are derived from petroleum, according to Mehra.

A rise in crude oil prices is indeed a negative factor for India and can also impact corporate earnings to some extent. However, it's not an extremely alarming situation at the moment. It's still under control in terms of the rates, according to her.

The outlook for crude oil suggests that it might stay within a range, possibly between $92 to $110 per barrel, with an upward bias rather than a downward bias, Mehra noted.

Mehra remains positive on the capital goods and industrial machinery sector, maintaining an overweight position. "We've also added the automotive, auto components, pharmaceuticals, and selected construction companies," she said.

A few fast-moving consumer goods companies have begun to show promise, which wasn't the case in the past year or two, she noted.

Mehra is cautious about banks and financials with an underweight position on them. She citing worries about potential negative surprises.