Sanctions on Russia could also sting US, but for now the geo-political impact on stock markets is not likely to be huge in the medium term. First Global’s Devina Mehra tells Moneycontrol, It is time to orient towards companies that can gain from a weakening Rupee.
First Global’s Devina Mehra believes the impact of ongoing geopolitical crisis on the Indian stock market will fizzle out over the next 3-6 months. In conversation with Moneycontrol during a Twitter Spaces conversation, Devina cited data to conclude that there has not been a single instance in the last 40 years, when the impact of an international war-like event has sustained beyond a year, except for markets (whether stock markets or commodities) which are directly impacted. In fact, most of the impact may have happened in the run up to the actual event, she went on to add.
World During Major Geopolitical Crises
The two pockets where one usually sees some impact of a global turmoil like the ongoing Ukraine crisis are oil and gold, according to Devina Mehra. History shows that a year into a major war-like confrontation, demand for crude oil and safe haven like gold have been positive, she added. More so, she goes on to add, because many of these confrontations have been in oil-rich geographies.
In this particular conflict, several other commodities have been impacted where Ukraine or Russia are major players. Prices of several agri-commodities, potash, metals like palladium, aluminum, nickel etc have gone up 20-30% since the beginning of 2022 - in some cases even more. Sectors and companies with these as inputs and outputs will be impacted and that has to be factored into your estimates.
Sanctions on Russia
Devina believes any serious and significant sanctions on Russia would also imply a risk of aggravating inflation. She doubts any democracy would have the stomach for it. Already, the commodities where Russia and Ukraine are major players are up sizeably this year. It is doubtful that the West would want to worsen that situation.
At First Global, the consensus is that inflation will be a big factor influencing India Inc’s earnings. Already, many sectors are facing margin compression and some are not able to pass on price hikes. This, Devina feels, is a crucial factor in defining the India impact of any turmoil. The other major area of weakness is currency, according to her. Devina is of the opinion that this year we will see a weakness in Rupee playing out. Currency and fixed income markets will give a clearer indication of how the year will pan out for investors, she told Moneycontrol.
Navigating The Turmoil
Devina Mehra’s advice to investors is to stay picky this year, when it comes to sectors and companies. She is gravitating towards companies which stand to gain from any potential weakness in Rupee. She also has liked IT for a long time. But over a 10-12 year period, market returns have been been sub par, and there is still a lot of ground to cover. Hence the risk of a major crash is limited. Even last year, on relative basis, India was only the 6th best in the world. Before that, for many years, India has not been a below average performer.
Her final take captures the dichotomy of our times so well. “Don't be at either end of the spectrum, investing in either Fixed Deposits, or trading cryptos”.
(A version of this article first appeared in Moneycontrol)
From the desk of Devina Mehra
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Einstein taught us about relativity in nature. Now come Devina Mehra and Shankar Sharma of First Global to teach us about relativity in financial markets -- and raise some serious questions about just what is driving stock prices.
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With so much of volatility in the market, risk management is very important part & considering that FG is doing awesome work!!! Kudos to you Chief
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Truly outstanding. As a retail subscriber to #fghum #smallcase, I can vouch for the Nifty beating returns (8% vs 3%) in last 1 year. Keep up the awesome work @firstglobalsec
We can load above testimonials on site as a scroller, and just below that we can add a section for compliments . Below tweets are comments and praises are related to our content, performance and some our direct compliments to you.
ADIT PATEL @ADITPAT11226924
Good team... Special mention @KarmathNaveen .. he is soo helpful anytime of the day or night..
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It has doubled almost, excellent pick.Every small investor must invest in her FG-HUM Smallcase.
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I have 8 small cases and your has been the most rewarding ones .. thank you Devina.
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There is absolutely no doubt that she is one of the best investors of India in modern times but more importantly, she shares the most sincere and sane advice with retail investors.
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We are learning More about markets (& Life ) thanks to U than we learnt in our Professional courses.A BIg Thank You, Wish all get Teachers Like You!!
Sumit Sharma @MediaSumit
"The ability to be comfortable with being outside consensus is a superpower in investing...and in life." Devina ji hits the nail on its head!
Majid Ahamed @MajidAhamed1
Congratulations @devinamehra mam! All the best for long term returns as well.
Vinay Kumar @VinayKu05949123
This is the wonderful session I have ever attended till date. One of the most fruitful hour of my life. Devina madam, ur clarity on financial mkts is simply superb.The way u portray the facts supported by "data" about stock mkts is really astonishing.I will listen again.Thanks.
I loved to read your journey, insight and philosophy. It's a pleasure to read and know of your takes on market and life.
Check & follow @devinamehra's timeline for lots of post debunking such rosy stories. Also, she gives amazing 🤩 sector directions/hints.
KLN Murthy @KLNMurthy2016
Good actionable insights, great article!
Suresh Nair @gkumarsuresh
Devina Madam is simply terrific... good knowledge, straight and simple thinking.
Very difficult to emulate such traits. I listen her past interviews from youtube.
One of the brightest minds in the world of finance :)
Radhakrishnan Chonat @RCxNair
📣 Calling all investors! Just had an incredible interview with @devinamehra, Chairperson and MD of First Global. We discussed the importance of global diversification, effective asset allocation, and the risks of sitting on the sidelines. Trust me, you don't want to miss this!
Excellent performance. Flexibility is the key as you have mentioned it earlier also. Cannot have finite rules for infinite mkt opportunities.
To be honest, the insights which Devina madam brings in is very enriching..have learnt a lot from them...
Himanssh Kukreja @Himansh02428907
One of the most accurate analysts :) I always look forward to you interviews mam
Abhijeet Deshpande @AbhijeetD2018
Madam, It is always a treat to read your insight, not only on business but on other topics also!!
Thanks for this wisdom ma'am. Always love hearing your thoughts on everything equity. :-)
Excellent points! Can clearly feel this thread is a product of marination of many books and years of experience. 👍
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