Devina Mehra Picks Themes As India Continues To Outpace Other Markets
India will continue to outperform the global markets this year despite high valuations, says Devina Mehra of First Global.
India will continue to outperform the global markets despite high valuations, according to Devina Mehra.
"India is looking fine and the outperformance will continue. In our global funds, we will be overweight on India," Mehra, chairperson and managing director of First Global Group, told BQ Prime's Niraj Shah in an interview.
Indonesia, along with other markets such as Mexico and Canada, are also looking good, Mehra said.
The investment firm prefers more non-tech and traditional cash-flow businesses such as consumer staples in the U.S., rather than technology businesses. The technology firms in the U.S, Mehra said, even after their recent downfall, do not have the cash flows to justify their valuations.
If you look at all the academic studies, sentiment is a contra indicator of future returns.Devina Mehra, chairperson and managing director of First Global
Capital goods and industrial machinery sector continue to be the best bets, Mehra said.
"The only sector as a whole on which we have been overweight for more than a year, from October last year, is capital goods and industry machinery,“ Mehra said. The sector, according to her, is coming out of a 10- to 12-year downcycle.
Bullish On Banks
"Normally, I am not fond of banks; but they’re looking good," Mehra said. Through a fundamental perspective, banks seem to be in a good place than as the sector is coming out of a period of underperformance, Mehra said.
Even the PSU banks are looking good, Mehra said, "as the NPA cycle is behind you, credit growth has been good".
In addition, when the interest rates increase, in the beginning, it is good for margins because assets, which are the loans, get re-priced immediately, while deposit rates take a slower path, Mehra said.
First Global, however, is not 'overweight' on banks and maintains a 'market-weight' rating.
The investment firm still remains negative on pharmaceuticals and insurance sectors. They are probably closer to the bottom of the list than higher up, Mehra said.
She also does not find "a great deal of comfort" in direct-to-consumer or platform businesses.
Watch the full conversation here: