Samir Arora on What it Means to be Bullish on India

Samir Arora, fund manager with Helios Capital, spoke to NDTV about his outlook on stock markets and what it means to be a bull. He also highlights sectors that are likely to do well and those that may underperform over the medium-to-long term. Edited transcript (Watch the full interview here) Outlook on markets: I am not a raging bull, but higher than normal, at least my 10-year normal. Reasons for being bullish: Among the many reasons, two important ones are, a) Global cues: It (global factors) is strengthening India's hands at every point -- whether it is related to the fact that oil has fallen, or China has shot itself in the foot, or monsoons, which were supposed to be bad and have not been so bad. b) Alternative choices for Indian retail investors, which were fixed income, bank deposits, real estate, gold, etc. -- all are doing badly and that is why people in India will have to make large allocation to equities in their portfolios. Criteria for bullishness: It should mean whether Indian markets do better than other markets as far as foreign investors are concerned. From a local point of view, whether it will do better than alternative choices. On both counts, people should be investing in India. Bullish means you should be adequately compensated relative to what else you could have done with your money. What to Expect from India: If investors can get 15-16 per cent rupee returns, it should be enough to satisfy. No fund manager wants to underperform the market, but in general a 15 per cent return from the market is an attractive return from every angle. If you look at the history of Indian markets, it has been giving on an average 15 per cent return. India is a long/short market: Some sectors will do well, and some sectors, which could have seen a cyclical upturn, they may face slowdown because of polices of government, which are good in medium-to-long term, but because they are directly impacting these sectors, so these sectors will bypass or delay upturn. In real estate, in luxury consumption, in purchase of gold, etc., there would be slowdown. Genuinely, Indian property prices are obnoxious. Corporate earnings: 10 per cent growth in aggregate earnings is not a bad number per se considering we are coming out of an even weaker environment. There are some global companies in our market, which may get hit because of metal prices being down, China slowdown, etc. Why retail investors struggle: People who find stocks on their own and are not full-time market guys, they don't do as well even though they may make high percentage return on one or two ideas. That's because their return on equity may be higher, but return on portfolio may be low because they will not be as confident about any one idea, they will put less money in those ideas. You (retail investors) can think you will make more money on your own, but 99 per cent you won't. Markets don't have expectations from government: Cyclical sectors, where government policies would have helped such as realty, capital goods, construction, etc., the valuations or stock prices have not moved. Valuations are high in consumer, defensive sectors, where there is no role of the government. In that sense, markets don't have any expectations from the government. The government has been helped by 2-3 factors -- 1) fall in oil price last year; 2) monsoons have not been that bad so far; and 3) fears that money will shift to China have not come true.

Samir Arora on What it Means to be Bullish on India

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