The firm continues to favour sectors such as auto components, automobiles and pharmaceuticals, themes it has maintained for more than two years. According to Mehra, the latest review led to a higher allocation to pharma stocks, while auto and auto ancillary companies continue to feature prominently in the portfolio.
The firm is also seeing more opportunities emerge in the power and power equipment space through its bottom-up stock selection process.Read Here | India can weather crude shock, modest RBI rate hikes likely: DBS Group’s Taimur Baig
On the broader market outlook, Mehra believes investors often place too much emphasis on geopolitical developments. “Based on data of 125 years of data that you should not react too much to geopolitics unless your country is at war,” Mehra said.She added that lower crude oil prices are beneficial for India, both from a macroeconomic perspective and for corporate earnings. Since India is a major importer of crude oil, softer prices reduce input costs for several industries and support profitability.
Mehra also dismissed the notion that foreign institutional investor (FII) flows are a reliable indicator of market direction. According to her, long-term market performance and FII buying or selling activity do not necessarily move in tandem.
On technology stocks, Mehra struck a cautious note on the global artificial intelligence theme. While she acknowledged the transformative potential of AI, she questioned whether the massive capital spending currently taking place would generate adequate returns over time.
However, she believes Indian IT services companies are better positioned than many investors assume. While AI could alter employment trends in the sector, she expects technology service providers to adapt their business models and continue playing a key role as intermediaries between enterprises and AI platforms.
For the entire discussion, watch the accompanying video
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