But Devang Mehta, Deputy Managing Director & CIO, Spark Capital Private Wealth, is not flinching. His advice to clients right now is blunt: stay put, invest in tranches, and resist the urge to react to the news cycle.
“You do not lose when markets panic,” he told ET Now. “You lose when you panic.”
Why India’s fundamentals haven’t broken
Mehta was careful to separate market sentiment from economic reality. India’s macroeconomic picture, he argued, remains largely intact — with two important caveats.
The February rally offered a glimpse of what a policy-supportive environment can do. FII flows returned after months of absence, driven by progress on the tariff front and a budget the market received well. The most recent earnings season delivered solid numbers across sectors, and crucially, the cycle of earnings downgrades appears to have paused.
The risks are real but specific: rising crude is the headline concern, and the duration of the current Middle East conflict will determine whether earnings estimates need to be cut again. “We need to monitor how long this war remains,” Mehta acknowledged. But his baseline view holds — the underlying economy has not deteriorated.
His advice for investors sitting on the sidelines: “If you do not have money to put in more, at least stay invested. And if you want to invest more, invest in a couple of tranches.”
Sector Call #1: Autos and auto components — a ‘small puncture’ moment
Mehta’s highest-conviction buy is the auto sector — and the logic is grounded in data, not hope.
Since GST cuts ahead of last year’s festive season, sceptics argued the sales bump would prove temporary. It hasn’t. Vehicle sales across two-wheelers, passenger vehicles, commercial vehicles, and tractors have posted strong numbers for four to five consecutive months. Management commentary across auto companies has been, in his words, “exemplary.”
Yes, rising crude is a headwind. But Mehta frames the current weakness as a “small puncture” in a structurally strong story built on pent-up demand and rising per-capita vehicle consumption in India.
His top picks within the theme: two-wheelers and four-wheelers as the primary play, with auto component companies as the high-quality proxy trade for investors who prefer ancillary exposure.
Sector Call #2: Financialisation — buy the dip in capital market stocks
His second high-conviction theme is what he calls the “financialisation of India” — the structural shift of household savings from physical assets into financial instruments.
The beneficiaries are companies in stock exchanges, depositories, and wealth management — businesses whose growth is driven not just by market levels but by the sheer expansion of India’s investor base. The number of demat accounts and SIP folios continues to climb even through volatile periods, underpinning long-term revenue visibility for these platforms.
“This might be a cyclical time of volatility,” Mehta said, “but these are times when you should probably encash on such falls.” He flagged a potential 5% further correction as possible in the near term — but called it a buying opportunity, not a warning signal.
What to avoid: Metals and IT
On metals, Mehta was measured but clear — global dependency in a volatile macro environment reduces the margin of safety. Short-term technical bounces of 10–20% are possible in copper, aluminium, and silver plays, but for long-term investors, the risk-reward is unfavourable right now.
IT faces its own structural headwinds around AI disruption — strong balance sheets notwithstanding.
The message from one of India’s senior wealth managers is consistent: in a market driven by fear, the edge belongs to those with a plan.