We are very comfortable with markets at these levels- Samir Arora, founder & fund manager, Helios Capital

We are very comfortable with markets at these levels: Samir Arora, founder & fund manager, Helios Capital

Investors’ frustration with China over the past few years may force more people to look at India as a destination, says Samir Arora, founder and fund manager of Helios Capital, whose flagship investment product is Helios India Rising PMS. Arora tells Meghna Sinha that the Indian market may outperform its global peers in financial year 2024. Excerpts:

The Sensex made a fresh high on Wednesday and Nifty50 is also near its all-time high. How do you see the markets at this point in time? How do you find the valuation of Indian equities?

We are very comfortable with the market at these levels, as the indices are up by approximately 5.05% on a year-to-date basis, and by close to 13.5% a year, over the past five years. This is not out of line with historical longer-term returns or growth in earnings.

Will foreign institutional investors (FII) flow sustain? What is fuelling the optimism?

FIIs in general are buyers on a net basis every year. In the past 20-odd years, they were net sellers only four times in 2008, 2011, 2018 and 2022. Therefore, there is a reasonable expectation that FII flows will continue as India痴 fundamentals are strong and growth is visible. Also, investors’ frustration with China over the past few years may force more people to look at India as a destination. We, therefore, expect higher flows than average.

What is the micro or macro factors that will likely influence the Indian markets?

As the US interest rates peak in the next six months, India will have room to cut rates, and if both FIIs and DIIs are buyers at the same time, equity markets could do very well.

Considering the broader market (i.e. midcap-smallcap) has outperformed the frontline indices, what percentage of your portfolio will be falling in this bracket?

We have about 35% of our portfolio in mid and smallcap stocks.

At the time when markets are at high, IT sector continues to be a laggard. How do you see this sector performing in the near future?

We are relatively bearish on Indian IT and have been so since July 2022. We will decide what to do next after reviewing the results and commentary of IT companies in July 2023.

What are the sectors you are looking at for an opportunity to deploy funds?

Generally, we invest in Indian financials, consumer and IT sectors. Although in the last one year, we have not owned any Indian IT stock. Over time, these three themes should do well and generally do well. Opportunistically, we also currently own stocks in the capital goods and defence sectors.