Devina Mehra Sees Above-Average Returns for Indian Markets Over Next Two Years

After a Long Pause, Indian Equities May Find Their Next Catalyst

Devina Mehra sees the recent stretch of subdued returns as a reason for measured optimism—not a case for abandoning global diversification.

Mehra’s case rests on a history of market cycles

Mehra’s outlook is rooted in her observation that Indian markets have remained broadly flat for about two years. She said that after earlier two-year periods of flat performance, subsequent returns ranged from 5% to 55%, averaging about 25%. On that basis, she believes the probability favours better-than-average returns over the next two years.

That history is a reference point, not a promise. The wide range she cited itself shows how variable outcomes can be, and past market patterns cannot establish what returns will be in the next period. Her broader point is about sentiment: when investing feels easy and confidence is high, future returns may be less generous; when investors are discouraged, the outlook can be more favourable.

For investors, the distinction matters. A more constructive view on Indian equities does not remove the uncertainty around timing or justify making a portfolio decision on a single forecast. Mehra’s comments are best understood as a probability-based perspective, rather than a short-term market call.

Global exposure is part of the argument, not a rejection of India

Mehra said her interest in international investing does not reflect a negative view of India. Her reasoning is that India represents less than 3% of global market capitalisation, making a portfolio concentrated entirely in domestic assets a narrow way to participate in global markets. She also pointed to rupee depreciation as a factor investors should consider when thinking about where their wealth is held.

She recommended that most investors build towards allocating at least 30% to 40% of their portfolios to global investments over time. Mehra said around 80% to 85% of her own portfolio is invested globally, but that personal allocation should not be treated as a default for every investor. The appropriate mix depends on an individual’s circumstances, time horizon and ability to tolerate fluctuations across markets and currencies.

The underlying principle is diversification: returns do not come consistently from the same country, sector, market-cap segment or investment style. A portfolio spread across different exposures may reduce reliance on any single market leadership cycle, though it does not eliminate investment risk.

Allocation discipline can matter more than frequent changes

Mehra cautioned that investors cannot reliably know what markets will do over a single year. She advised against putting all assets in equities and said equity investments should be funded with money investors do not expect to need for seven to eight years. Her emphasis was on setting an allocation suited to the investor and avoiding frequent changes to that allocation, even if individual holdings are reviewed.

That approach separates portfolio structure from market timing. A long investment horizon may help investors withstand periods of weak performance, but it does not guarantee gains. The practical challenge is to keep enough money outside equities for nearer-term needs while maintaining a portfolio mix an investor can stick with through changing market conditions.

Her AI warning highlights the risk of chasing a theme

Mehra also raised concerns about investment tied to artificial intelligence, saying she expects the subject to feature in future accounts of financial bubbles. She argued that AI investment is concentrated in rapidly depreciating assets and warned that, if the boom reverses, those assets may not retain value over the following one to two years.

She cited SpaceX as a possible example of excess, pointing both to valuation and to investors providing capital without voting rights. These are Mehra’s cautions, not a settled verdict on AI or any individual investment. For investors, the broader lesson is to examine what supports an asset’s value and what rights accompany an investment, rather than relying on the popularity of a theme.

Key Highlights

• Mehra expects Indian equities to deliver above-average returns over the next two years after a prolonged flat phase.
• Her historical comparison cited subsequent returns ranging from 5% to 55%, averaging about 25%; it does not guarantee future performance.
• She recommends building global exposure of at least 30% to 40% over time for most investors.
• Mehra advocates keeping equity money invested for a seven-to-eight-year horizon and avoiding an all-equity portfolio.
• She warned that fast-depreciating assets and investments without voting rights can heighten risks in a potential AI bubble.

Investor Note: Mehra’s outlook offers a case for patience with Indian equities, but her comments also underline the importance of diversification and risk control. Investors should treat the return range as historical context, not a target, and set domestic, global and equity allocations according to their own goals, time horizon and capacity for loss.