While she expects largecap indices to recover, smallcap and microcap stocks, as well as certain thematic investments from the last cycle, may not perform that well. She advises investors to evaluate their portfolios carefully rather than wait for past winners to regain their highs.
Mehra is bullish on IT, pharma, auto components, FMCG, and chemicals, as these sectors continue to show strength but is cautious on energy, real estate, and paints. The market is currently stock-specific rather than broadly theme-driven.Also Read | Pankaj Murarka says the market may have bottomed, sees opportunities in these sectors
Sectors like auto ancillaries and pharma could face challenges due to potential tariffs. However, some of this risk may already be reflected in stock prices. Trump’s tariff policies are often unpredictable and used as negotiation tools.Despite discussions around European reconstruction and potential demand, Mehra does not see metals as a promising sector. India’s limited metal exports and the risk of becoming a dumping ground due to global trade shifts make this space less attractive.
The US stock market has outperformed for over a decade, but this may be shifting. Trump’s policies are accelerating the transition, and Mehra has adjusted her global portfolio by reducing US exposure and increasing allocations to Europe, which is showing signs of recovery after years of underperformance.
Also Read | China stands out among emerging markets, says Julius Baer’s Bhaskar Laxminarayan
Mehra believes that concerns that FIIs will withdraw funds from India to invest in Europe or China are likely overstated. Factors like rupee depreciation, capital gains tax, and domestic market conditions influence FII decisions more than simple reallocations between global markets.
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