Singapore: Fund manager at private equity firm Helios Capital Llc Samir Arora said in an interview he is bullish on the markets. Edited excerpts:
How are you feeling about the markets, cautious or bullish?
I am back to my normal bullish stance; my net exposure is in the 50-60% range, which we define in our minds as being bullish. I had been bearish in January-February. But at the end of February, I decided that I don’t want to pre-empt the world’s problems. I still remain willing to react to (the) world’s problems rather than pre-empt them and wait for a bearish trade to develop, because some of the things the world and the markets in India have taken in stride. I am by nature a bullish guy. So I have increased my exposure back to this range since March.
Bullish stance: Samir Arora. Bloomberg
Has it come as a surprise how resilient markets have been over the last few months?
In February, I believed that the Greece problem, which at that time had just started, could start a new spiral. But it could be that the world, at least where the stock markets are concerned, last year saw a rally without really any new investments. In India, of course, we got some foreign flows, but in general aggregate across the world, there was not much new investments in equity and it was just a rerating or re-pricing of the same equities. So it is possible that the world has not bought new exposure...they have just shifted it around.
Do you see the Nifty index on the National Stock Exchange stuck in a 10% trading range?
We just saw that from 30 May, after the election rally, the market is up about 13% for all the hullabaloo that we have done. I have played that part well because basically the large-cap stocks have their own problems. So it may not have to do with anything else than the fact that the constitution of our index, where oil and gas is subject to subsidy, where telecom is subject to its own issues, where the Reliance group had to wait for this resolution, and so on. So it may not be because there is an actual preference for mid-cap versus large-caps, but just the fact that simultaneously, in the same 6-12-month period, all the large-caps has some issues related to their own sector, their own companies. Over time it can’t go on like this, but so far that is the case.
Another thing, if you look at our market, now it’s determined by two ends. One end is the extreme short-term, one-day type trading. The other is this long-term insurance type money, which, I think, has an easier time in terms of justifying their existence because there is no transparency, there is no day-to-day performance evaluation...
So for investors in between, who have a horizon of not one day and not 10 or five years, I think it’s a great time because you are getting excesses in both these sides in some industries—where stocks go up 10% on a day for random news, which nobody should buy into, and there are stories people are justifying that it’s a good entry point, it will work out in five years; that also there is no need. So there is lot of money to be made in between.