Pharma, healthcare, auto components continue as running themes, says Devina Mehra

Devina Mehra, Founder, Chairperson and Managing Director of First Global, said several long-running themes in the market remain intact, including pharma, healthcare and auto components. She explained that these sectors have stayed part of the firm’s portfolios for some time, even though performance within them has varied over different periods.

Mehra said her investment system often picks up shifts earlier than the broader market. She pointed to industrial machinery and capital goods as an example, noting that her team entered the theme in late 2021, well before most investors. “Our system signals it a bit early,” she said, adding that discovery by the wider market often comes much later.

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In the latest portfolio rebalance, the most notable change has been the addition of the energy and oil segment. Mehra said this is the “new thing which has come in” for the quarter, as the firm previously had no weight in the space. She said most other adjustments have been small, with a slight shift from large-cap IT to mid-cap IT.

Mehra noted that pharma had a period of weak performance but appears to be turning around. Auto and auto components, she said, also remain steady themes. The firm added public sector undertaking (PSU) banks earlier in the year, which she described as a “now discovered theme.” Fast-moving consumer goods (FMCG) exposure has also been built up over the past year as the models continued to favour the sector.

She said the broader market remains narrow despite recent gains. As of August, only a small percentage of stocks had outperformed. “This has been an unusually narrow market,” she said, adding that the proportion of stocks down 20-25% or more is still high.

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Mehra also commented on global diversification, cautioning investors not to assume they are globally diversified by only holding US indices. She said the US market has been driven mainly by a few technology stocks, which she believes is a sign of risk. The strongest performers, she noted, include companies with “no revenues or no profits,” which she views as a warning signal.

She added that sentiment should be used as a contra indicator. Excess optimism, she said, often precedes below-normal returns, while periods of doubt tend to produce better outcomes. “Keeping control of your emotions and remaining invested… is really the superpower,” she said.

First Global manages assets worth about ₹297 crore.

For the full interview, watch the accompanying video

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