Overseas investments into India will gain momentum on political stability and peaking U.S. results but not at the cost of China, according to Helios Capital's Samir Arora.
"There has been a lot of talk and we have had many meetings on foreign investors wanting to allocate in India...," Arora told NDTV Profit's India Market Live show. "But it has not yet converted to funds yet because people still have to give up on China."
While it is not reasonable to expect investors to sell China and invest in India, but new flows into China can fall or reduce, he said. That, he said, will help India as it is the most logical bet.
Overseas investors turned net buyers of Indian equities after two months in November and have bought stocks worth more than Rs 26,000 in December alone, according to NSDL data. FPIs have net invested Rs 1.32 lakh crore so far this year.
Arora expects inflows to rise on the back of political stability and peaking U.S. interest rate cycle. India's equity markets have rallied after BJP won the three Hindi belt seats, bolstering its chance returning with a full majority in the next year's general election.
Arora, however, said between November and February the markets are generally bullish, he said.
"The markets is supposed to go up—was going up, but maybe the December rally took away little bit of what we may have got in the first half of next year," he said. "But broadly, this is the correct direction, and not so big to change any longer term, or even medium-term expectation."
Prefers Large Caps
The fund manager's preference leans towards large-cap stocks as the difference between mid- and large caps is relatively small, he said.
From the "three large-cap pockets", he prefers finance as it had good returns in the past. Banks have reported good earnings, but currently are available for two-year-old prices which is beneficial, Arora said.
Though the information technology pocket had done good this year, he does not like it as it "continuously disappointed".
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