“The markets are not following fundamentals, technicals, or liquidity,” Mehta told ET Now. “All they are following is what President Trump has to say.” When Trump signals the Russia-Ukraine war is winding down, oil prices ease and markets rally. When he threatens strikes on power infrastructure, oil spikes and equities tumble — with India suffering a sharper blow than most.
“We are more sensitive to oil price increases than anybody else in the world, and therefore we see exaggerated moves in our markets.”
Mehta is blunt about the near-term outlook. He expects a “tepid” March quarter and a “disastrous” June quarter earnings season, as corporate results begin to absorb the collateral damage from the ongoing conflict.
How to spot a real bottom
Before declaring the market has troughed, Mehta wants two things. First, empirical evidence that hostilities have genuinely wound down and oil supply lines are secure. Second — and more tellingly — a shift in chart structure.
Mehta’s bottom-confirmation checklist
- Clear evidence that war is de-escalating and oil infra is safe
- Pattern shift from lower highs / lower lows to higher highs / higher lows
- Only then: increase market exposure meaningfully
“So far what we have seen is lower tops and lower bottoms — that is a sign we are in a bear market,” he said.
“When the exact reverse pattern starts, that will give more confidence that the worst is over.”
His advice to investors in the meantime: use the volatility to upgrade portfolio quality. Sell laggards — even at a loss — and deploy into large-cap names that are normally too expensive. “You can sell low, buy low as well,” he noted. When the war eventually ends, he expects a “spectacular rally” that will arrive well before earnings actually improve.
The new investment playbook: energy security
The war has permanently reshuffled India’s strategic priorities, Mehta argues, with energy security now at the top of the government’s agenda. And where the Modi government sets its sights, sectors tend to follow.
ETMarkets.comDefence remains a structural long-term theme — “now nobody is safe,” Mehta observed — but energy transition is the fresher opportunity he sees emerging directly from this crisis.
The message for investors is equal parts caution and conviction: don’t chase a bottom that hasn’t been confirmed, but start building positions in the sectors a post-war India will need most.