Dipan Mehta, Director, Elixir Equities admits that even decades of experience do not make days like these any easier.
“Despite being 35 years in the market and seeing so many such days, you still feel paralyzed here,” he said in an interview to ET Now. “Intuitively, you should be looking at buying, but the real problem is that there is very little cash in investors’ portfolios. Even domestic mutual funds are running a bit thin. Inflows were at multi-month lows, and while stocks are at attractive valuations, the big uncertainty is how long this conflict will last.”
According to him, the duration of the crisis will determine the market’s trajectory. “If it is just four-five days, then the market will come back very strong. But if it is a bit longer, then certainly the sentiment will wear us down even more.”
He underscored that West Asian tensions tend to affect India more directly than distant conflicts. “This is not like a war between Ukraine and Russia, which hardly had any impact on us. Any West Asian crisis has a deep impact on India because of oil, remittances, exports, and close ties.”
For now, his advice is simple: patience. “Just wait and watch at this point of time. Definitely, if stocks come to levels that are super attractive and you have been tracking them for so long, this is a good time to buy. But it requires courage. That is all I can say — it requires courage.”
Defence Stocks: Growth Priced In?
One pocket that has remained active amid the turmoil is defence. Shares of Hindustan Aeronautics Limited and Bharat Electronics Limited have seen renewed attention on expectations of fresh orders and clearances.
Yet Mehta sounds a note of caution.
“I think the future growth is largely discounted. They are looking at multi-year orders. For example, whether HAL has order visibility of three years, four years, or five years does not really matter. At the end of the day, it boils down to execution. Defence is all about execution and managing quarterly volatility.”
He revealed that he continues to hold small investments in both companies but is hesitant about fresh exposure. “From a fresh investment perspective at these levels, at these valuations, I do not think the risk-reward favours you.”
Interestingly, he believes the better opportunity in defence may come during calmer times. “There will always be a time to buy defence stocks, and that is when there is peace. Once geopolitical events go into the background and there are one or two soft quarters, that is a good time to enter into defence, which still remains a multi-year long-term investment theme.”
For now, elevated ownership levels and heightened focus could limit near-term upside. “I am not saying you will not get good returns. It is just that, in my opinion, in times like this you look for opportunities outside the stocks in focus. Some of the beaten-down stocks may offer higher returns. This is a great time to buy good-quality midcap stocks of outstanding businesses.”
Is There a Safe Haven?
In times of crisis, investors often seek refuge in domestic-facing sectors such as FMCG and pharma. But Mehta believes real-world behaviour rarely follows textbook theory.
“At the end of the day, the war will have an impact on all sectors — a little bit more, a little bit less. Yes, certain domestic-focused companies like FMCG and pharma may be safe places to hide. But in times like this, investors do not think in terms of putting money into safe industries or safe stocks.”
Instead, he sees two common reactions: paralysis or selective boldness.
“They are either paralyzed and not knowing what to do, or the smarter ones look for good-quality businesses, as I said, which they were always wanting to buy but could not because valuations were really high. Now the entire market has corrected, and that provides an opportunity.”
He also suggests that crises are a good time for portfolio introspection. “Investors are also looking at their portfolios closely to see if they can reshuffle them to improve quality. That is where the thought process goes.”
In his view, broad theories about ‘safe stocks’ often fall short. “At the brass tacks, all these theories that we should buy safe stocks do not really work because your portfolio has to be well diversified. One cannot let go of an opportunity like this — a crisis like this — to look for stocks which, say one year or two years down the line, can give great returns.”
With markets already under pressure before the conflict escalated, the correction has deepened. The focus now, he says, should be clear and long-term: “The focus has to be more on those businesses where you feel they can give superlative returns over the next three years or so.”
In other words, fear may dominate the present — but for those with patience and courage, volatility could well lay the groundwork for the next cycle of wealth creation.