Why First Global's Devina Mehra Is Bullish On Indian Markets

Indian stocks are set to outperform globally even domestic benchmarks hit a new record on Monday, according to Devina Mehra.

"Given the time where we are today, the risk of crash does not appear very high," Mehra, founder, chairperson and managing director of First Global, told BQ Prime's Niraj Shah. The valuations are not very stretched, she said, adding that Nifty 50 PE is around 22.5, which is not a peak level.

Indian stock markets have hit fresh all-time highs, with the BSE S&P Sensex crossing 65,000 and Nifty 50 breaching the 19,000 level.

Easing prices of crude and oil-based inputs for several industries will boost corporate earnings in the coming quarters, Mehra said. "From this quarter, we will see the benign effects of crude oil prices coming down."

According to her, crude prices are going to be "a big story" for India because it has come down dramatically from where it was last year.

Prices coming down drives a lot of things in the Indian economy as it gives the RBI breathing room, boosts growth, and helps in bringing down inflation and the current account deficit, Mehra said. "The whole economic scenario and corporate earnings is better than it used to be."

Mehra continues to bet on industrial machinery and capital goods. "This is our biggest bet," she said. "People discovered this a few months back, but this has paid us with many of these stocks paying two-four times."

Banking stocks have become overweight because of the price movements, she said, admitting that they are comfortable with this.

Mehra said the information and technology sector did not fare as expected. "I had expected it to do better than it has, but the sector has not done anything fundamentally wrong."