Amid sharp swings in equities, currency volatility and rising geopolitical tensions in West Asia, markets are being driven by an intense and often confusing news flow. But investors would do well not to lose sight of the bigger picture, according to Devina Mehra, Chairperson and Managing Director of First Global. Speaking to ET NOW, Mehra argued that while headlines around war, oil prices and currencies dominate day‑to‑day market moves, history shows that geopolitics has limited long‑term influence on equity markets, and that the current phase may already be close to a bottoming zone.
Geopolitics not long‑term market direction
Mehra cautioned against reacting emotionally to the rapidly changing narrative around the West Asia crisis, especially the stream of conflicting statements coming from the US leadership. “The news flow on this war has been such that every day it’s a new story…often within five minutes of each other,” she said, referring to frequent comments by US President Donald Trump.
For India, Mehra acknowledged that the key risk from the West Asia conflict is oil. “For India, the question is oil, because we are a big oil importer,” she said. However, she pointed out that crucial trade routes remain open for now. “At least for us, the Straits of Hormuz are open, it appears. So we are not as stuck as some of the other countries. That’s a positive.”
She also highlighted that oil prices had remained subdued for an extended period before tensions escalated. “Oil had been at a low phase for a very long time,” she said, adding that her firm had already repositioned portfolios earlier this year. “In February, when we did our global rebalance, the main change was that we reduced US equities further and increased exposure to commodities, oil, and metals.”
According to Mehra, while near‑term price swings are being driven by headlines, oil may eventually settle “at a slightly higher number than pre‑conflict levels,” rather than continue on an unchecked surge.
Rupee pressure is structural
On the currency front, Mehra said the rupee’s struggles cannot be blamed only on the current crisis. “In 2025, when the dollar was weakening against most currencies, it was still strengthening against the rupee,” she pointed out, adding that the narrative often misses broader forces at play.
She flagged narrowing interest‑rate differentials as a key structural headwind. “Earlier, the interest‑rate differential used to be five to five‑and‑a‑half percentage points. At one point, it was even seven. Now it’s just two to two‑and‑a‑half from the West. That puts pressure on the currency,” she said.
Markets may be in a bottoming range
Despite the uncertainty, Mehra believes equities are entering a zone where staying invested makes sense. “Some of our indicators show that markets are somewhere in the bottom range,” she said, cautioning that timing remains unpredictable. “It doesn’t mean the move starts tomorrow, but we are in a range where you should be invested.”
Drawing on market history, Mehra reminded investors that long stretches of stagnation are often followed by sharp gains. She recalled the words of ace investor Rakesh Jhunjhunwala: “There were even five years where I didn’t make money.” She noted that between 1994 and 2003, markets went nowhere, “but in the next four to four‑and‑a‑half years, they went up six times.” “That’s the nature of equity markets—they always frustrate you,” she said.
Asked whether the current phase resembles March 2020, Mehra drew an important distinction. “In 2020, entire industries went to zero: airlines, hotels, retail, autos. Revenues evaporated. Yet we got a bull run that nobody could have predicted,” she said. While she does not see the same setup today, her broader advice remains consistent.
Sector calls: cautious on banks, overweight pharma, and autos
On sector positioning, Mehra reiterated her long‑held caution on banks. “I’m always a nervous investor in banks,” she said. “Structurally, it’s a business where you get more negative surprises than positive ones—and as an outsider, you can’t see where the risks are hiding.”
Elsewhere, Mehra remains confident. “We’ve been overweight on pharma and healthcare for over two years and continue to be so,” she said. Her firm is also overweight on auto and auto components, holds exposure to metals, and maintains a diversified basket across FMCG, chemicals, and capital goods.
“I always advocate diversification,” she emphasised. “Never have 35–40 per cent in a single sector, let alone a single stock.”
(Disclaimer: The above article is meant for informational purposes only, and should not be considered as any investment advice. ET NOW DIGITAL suggests its readers/audience to consult their financial advisors before making any money related decisions.)
