Where to invest now? Devang Mehta bets on financialization, capex and consumption plays

Indian equity markets remain under pressure from global headwinds such as tariffs and geopolitical tensions, but domestic growth drivers continue to provide optimism, according to Devang Mehta, Deputy Managing Director & CIO - Equity NDPMS, at Spark Capital Private Wealth.

Speaking to ET Now, Mehta highlighted that while the recent tariff news has spooked markets, the impact on Indian pharma is likely to be limited.

“India is one of the largest exporters of generics to the US, and this segment remains unaffected. There could be some impact on biosimilars or specialty high-cost drugs, but by and large, the generics market — which accounts for the bulk of exports — stays resilient,” he said.


Mehta added that investor sentiment has taken a hit because “everything gets painted with the same brush,” but fundamentally, most pharma companies remain stable.

Domestic resilience amid global uncertainty

Despite global volatility, Indian markets have shown resilience. Mehta pointed out that FIIs have been largely absent, but strong domestic institutional flows have helped maintain stability. He believes investors should focus on India’s three long-term growth drivers — consumption, capex, and credit growth.

“Financialization of savings is one big theme. Apart from banks and NBFCs, we find opportunities in wealth management, asset management companies, depositories, and exchanges. These businesses, despite recent corrections, have the potential to deliver 18–20% growth over the next few years,” he said.

Sectors to watch

• Mehta outlined three major investment themes for portfolios in the current market setup:
• Financialization of savings: Wealth managers, AMCs, depositories, and exchanges.
• Capex cycle: Power automation, engineering, manufacturing, ER&D, stamping, and equipment makers.
• Consumption: Premium and discretionary spending, with rural demand also showing early signs of recovery.
• He also noted that GST reforms and falling inflation will support consumption demand further.

Outlook

While markets have seen nearly a year of sideways movement since hitting record highs in September 2024, Mehta remains optimistic.