Here is what’s keeping leading money manager Devina Mehra awake at night

The ongoing rally in the domestic equity market is just the beginning rather than the end of the run-up, according to Devina Mehra, Founder and Chairperson of First Global. Her views are significant as they come at a time when the benchmark equity indices are hovering at around record highs. On a year-to-date (YTD) basis, the 30-share BSE Sensex advanced nearly 7.5 per cent till July 10. On the other hand, the broader indices BSE Midcap and BSE Smallcap have rallied 14 per cent each.

Mehra, who also uses a lot of quant analysis to identify stocks, is still overweight on the outperforming capital goods and industrial sector. “We have been overweight on the sector since October of 2021. Our system has not signalled that that run is over,” the market watcher told Shailendra Bhatnagar of Business Today TV. The BSE Capital Goods index has gained nearly 22 per cent YTD.

Among the other major sectors, the market maven added some auto and auto-ancillary stocks, select pharmaceutical players and a couple of construction firms in the recent past. “We are always diversified both in terms of number of companies as well as the sector,” Mehra said, adding that stock-specific calls also worked well for them. The BSE Auto index has gained nearly 23 per cent YTD.

While sharing her views on the underperforming information technology sector, Mehra said, “The logic for the sector not doing well last year was that the whole world has been digitising and there is so much demand for people with technology backgrounds. As a result, employee costs shot up and therefore costs went up and margins got squeezed. This is a little overdone because what happened was due to a slowdown in some of the Western economies. However, nothing is going wrong with the industry at a fundamental level. At present, we are not super bullish on the sector but we are still slightly overweight on the sector,” she said. The BSE IT index has gained just 2.83 per cent YTD. The market maven also likes the banking sector.

Commenting on the global markets, Mehra added that equity markets across the globe look pretty ok. “2022 was the worst year for all asset markets put together globally. It was almost the worst year in 100 years. So I was clear from the beginning of 2023 that a bad year doesn’t repeat. It’s very improbable that the next year will also be bad. So I was quite clear that 2023 would be a better year in terms of the equity markets that we think will outperform this year. India is also part of the list,” she said adding the risk right now is missing out on the up move.

“It is time to be invested in the market. The best time was March, but the next best time is now,” Mehra said.

On things that keep the leading money manager awake at night, Mehra said it way the economy is growing. “On the one hand, you have luxury homes and luxury cars, both are doing well. On the other hand, sales of two-wheelers, which were at a 10-year low a year ago, though they have recovered from there. And the thing that worries me most on a macro basis is that you might lose out on the so-called demographic dividend because you have a young population, but you’re not able to find jobs for them. These things worry me.”

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