Speaking with ET Now, Devina Mehra, Founder and CMD of First Global said that the situation remains fluid and difficult to predict. “Very difficult to say what will happen… if you hit Iran, you are going to be hit back hard… it is not a pushover,” she said, pointing to the country’s size, military capability and geography. She also noted that despite mismatched conflicts historically, outcomes are rarely straightforward.
At the same time, Mehra urged investors to avoid overreacting to geopolitical developments. “The big picture is that geopolitics beyond a point does not influence stock market movements,” she said, citing long-term historical trends. However, she acknowledged that for India, the oil factor remains crucial given its dependence on imports, with higher crude prices likely to exert pressure on corporate earnings.
Her firm had already started positioning for a commodity upcycle before the crisis intensified. “We took out some more money from US equities and put it in commodities, oil and metals… the trajectory was due for an upward move,” she said, adding that while short-term volatility is driven by news flow, oil prices may eventually settle at a higher level than before the conflict.
On the supply front, even if tensions ease, the Strait of Hormuz could remain a point of concern. Mehra noted that costs may rise, though India could be relatively better placed. “Iran is supposed to be India’s friend, so hopefully we get a better deal,” she said.
Currency pressures are adding another layer of complexity. The rupee has remained weak despite earlier dollar softness, and the narrowing interest rate differential with the West is now a structural concern. “That also puts pressure on the currency,” Mehra explained, while pointing out that RBI interventions have had limited success in reversing the trend.Despite these headwinds, Mehra believes equity markets are in a zone where investors should stay invested. “Some of our indicators show it is somewhere in the bottom range… markets always frustrate you,” she said, emphasising the importance of maintaining a long-term perspective. Drawing from market history, she highlighted that long periods of stagnation are often followed by sharp rallies.She stopped short of calling the current phase a repeat of the 2020 pandemic crash but noted that opportunities often emerge during uncertain times. “We are in the range where you should be invested,” she said, even if the timing of the next upmove remains unclear.
On sectoral allocation, Mehra emphasised diversification over concentration. Her firm remains overweight on pharma, healthcare, auto and auto components, while also maintaining exposure to metals, FMCG, chemicals and capital goods. Banking exposure, though below market weight, has been increased compared to earlier periods.
However, she continues to approach banking stocks with caution. “I am always a nervous investor in banks… you do not know where the surprises are hiding,” she said, pointing to recurring negative surprises in the sector. While valuations have turned more attractive, sentiment remains fragile, and visibility is still limited.
While geopolitical tensions and macro pressures may dominate the near term, disciplined investing, diversification and a focus on long-term fundamentals continue to be the most reliable strategies in uncertain markets.
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