Weak market sentiment today often signals stronger returns ahead: Devina Mehra
Indian equity investors faced a challenging 2025, with benchmark indices masking significant portfolio underperformance. Despite widespread disappointment and FOMO, experts advise against emotional decisions, highlighting that current weak sentiment often precedes improved future returns. Investors are urged to stay invested but actively prune portfolios and maintain balanced asset allocation, including global diversification.
Synopsis
Indian equity investors faced a challenging 2025, with benchmark indices masking significant portfolio underperformance. Despite widespread disappointment and FOMO, experts advise against emotional decisions, highlighting that current weak sentiment often precedes improved future returns. Investors are urged to stay invested but actively prune portfolios and maintain balanced asset allocation, including global diversification.
ET Online
Finally, Mehra returned to her now much-discussed DP statement remark, clarifying that the problem is not the number of holdings but the quality.
Indian equity investors are closing 2025 with mixed emotions. On paper, benchmark indices suggest a year of modest gains. In reality, portfolios tell a very different story. Indian markets have been among the worst global performers, sitting in the bottom decile compared with peers worldwide. That gap has sparked a familiar feeling among investors — the regret of missed opportunities in gold, silver or overseas markets, and the fear that capital may have been better deployed elsewhere.
Speaking on ET Now, Devina Mehra, Founder & CMD of First Global, said the pain of 2025 has been far deeper than headline indices suggest.
“So, 2025 has not been a great year for most portfolios and that is not really adequately captured by the indexes because I saw just a few days back that even though, let us say, the NSE 500, BSE 500 were up for the year, the median stock was still down and many stocks were down, a large percentage were down more than 20%. I think 75% were down more than 10%. So, it has not been a very pretty picture…”
She noted that this disconnect between index performance and individual stock returns has intensified FOMO among investors. But she cautioned strongly against letting regret dictate strategy.
“I think it causes some FOMO, but I can tell your viewers that FOMO is the wrong way to invest and driving looking only at the rear view window and looking at what has gone past is not how you make the decision of where to go next.”
According to Mehra, what stands out today is not euphoria but persistent caution. Market conversations are dominated by risks, disappointments and underperformance. Ironically, history suggests this is precisely when future returns tend to improve.
“Now academic studies show that when the sentiment is this weak is when the next period returns are above normal. When there is over optimism and buoyancy… that is when you need to be wary.”
Her advice for investors heading into 2026 is clear: stay invested, but don’t stay complacent. “So right now, you should be… to the extent of your equity allocation my recommendation is that be invested however… it does not mean that you remain invested in where you are invested.”