Helios Capital’s Samir Arora expects volatility in foreign markets to persist and has cut his tech exposure, but he remains bullish on "consumer companies" such as hotels and festive fashion stocks.
In an effort to maintain market stability, the U.S. Federal Reserve is “talking down the market” and warning of a “hot market” as volatility will persist, Arora, founder and fund manager at Helios Capital Pte., told BQ Prime’s Niraj Shah.
Even in the domestic markets, Arora said, growth at any price as compared to value will not work unless the valuations are adjusted.
Arora is not optimistic on commodities or state-owned companies. According to him, “oil might be the new data” but India doesn't have large oil companies under that umbrella that could impact investment and returns.
As active fund managers, he said, it is important to ensure the outperformance of an overall portfolio to an index fund rather than focusing on individual stocks that are “a bit confusing and have a story of their own because of commodities”.
According to Arora, unlisted companies are not in a strong place right now, but they may see a correction depending on quantitative tightening and if the U.S. market doesn’t see a fall.
Key Themes
Information technology stocks have seen a correction and the management commentary has been optimistic for FY23 and beyond. But the Helios Capital founder said that cannot be relied upon beyond one or two quarters because after that it’s a "big picture play" and remains "confusing”.
He expects factors like U.S. stock prices, companies not meeting earnings estimates, margin reduction and overall PE reduction to exert pressure on IT stocks. Arora has reduced his tech exposure by 3% because the valuations of very-high PE companies in the U.S. were correcting, and Indian companies have fallen as well.
Over the last few months, Arora has been interested in "consumer companies" but not in "consumer durable companies" or commodity stocks. His key investments include hotels and QSR stocks, as well as festive dressing companies like Vedant Fashions Ltd., the parent company of Manyavar.
Watch the full conversation here:
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