Devina Mehra lays out the biggest risk for D-Street in 2022

Devina Mehra of First Global said rupee depreciation is the biggest risk for the stock market in 2022. While prices of most commodities have eased a bit, she expects oil prices to stay range-bound for some time, going ahead.

India is one of the better markets to be in, says she, as she picked capital goods, FMCG and four-wheeler makers as her top themes at present.

In an interview to ET NOW, Mehra said rupee weakness is a risk and opportunity for some. She said it was evident even before the big commodity rally or the Russia-Ukraine conflict. While the RBI has made some efforts to support the rupee, and the domestic currency has seen a slight moderation, the overall trend will continue for some more time, Mehra said.



Mehra said moderation of inflation, at least from the commodity end, has begun. She gave examples of industrial and precious metals that are negative or near negative in 2022 so far.

Besides, agri commodities, which were fuelling a lot of inflation globally, have also seen a great deal of moderation: Cotton is down 35-40 per cent from the peak, wheat is down 40 per cent and palm oil has also cracked big time, Mehra said, adding that the only part of the commodity basket which still remain up are oil and gas but that has also come off its high.

"Crude might well remain range-bound rather than come down very sharply or go up very sharply but it does not look as if it will come down a lot more. Whatever per cent it has come down helps India besides the fact that India may not always be buying at that quoted crude level but these other things," She said.

Sectors to watch
Mehra said the sector she is most overweight on is capital goods and, in that, particularly industrial machinery.

She sees textile as a part of the rupee depreciation theme and is somewhat 'overweight' on the sector. She also likes to select chemicals and IT stocks.

Among sectors that she thinks are making a comeback are FMCG and auto, especially the four-wheeler space, which she noted has been looking good for a while. Mehra has increased weightage on the auto sector.

Mehra said the fall in agri commodity prices will help FMCG companies.

In terms of the consumer basket, it would mean more room for FMCG purchases. In the last few months, consumers were postponing not just consumer durable purchases, but even things like shampoos, she said.

"It was showing declining volumes for FMCG. So FMCG after a very long period of underperformance, which has lasted over a year-and-a-half year, is looking better. We do have some FMCG names now in our portfolio and including ITC, in fact, that was the first one to come back into our portfolios some weeks and months back so that has played out well for us," she said.

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