Samir Arora, Helios Capital, in an exclusive interview with Anil Singhvi, Managing Editor, Zee Business said private banks, NBFCs and consumer sectors are the areas that will pay off for investors in the long run of some 10-20 years.  However, Arora added that the arrogant nature of the Indian system is one of the causes that is making foreign institutional investors (FII) sell their stocks and leave. Here are edited excerpts of the exclusive interview:

COMMERCIAL BREAK
SCROLL TO CONTINUE READING

Q: My first question is, will the market go up or down?
A: It is not going to happen so fast. Last year, the returns stood around 40 per cent but this year it has given returns of 4-6 per cent. The market has seen a tough time over 5-6 months. If you say that the market is going to cross the mark of 10 per cent between now and December, then I find it very difficult to believe. But few shares will go up and others will go down and the round result will be 0, which is not a bad idea. 

Besides, if Modi government returns to power in 2019, then it may go beyond that level as we will be able to see new reforms like privatisation of PSU banks. These reforms will bring new stories to the market. Currently, the market is in a shape that is neither too bad or good. 

Q: Do you mean that the market may touch the mark of 10,000 again or it will be making a new lifetime high?
A: I don't go for such minute analysis and that's the reason that I have stayed in the market for 25 years. 

Q: Now, I would like to take your opinion related to your portfolio balancing efforts because you always maintain long and shorts in the market? So, how have you structured it this time? How many long and shorts are there in your portfolio? 
A: At this time, my net is around 65% of which 100 are long and 35 are short.

Q: Generally, how do you see it? Can you tell us the number of longs when you are quite bullish for the market? And how many longs remain in your portfolio when the markets are depressed?
A: My long-term average remains around 65 per cent but goes to 80 per cent when the market is at its peak and comes down to 40 per cent when it depreciates. But right now, I am not standing at 65 because I am not getting the shorts.

Q: You are not able to find shorts. Where are your evergreen shorts?
A: All shorts have gone low. PSU banks, which are low by 40 per cent are confusing people. Same is the case with Pharma sector. They are underperforming at present.

Q: You have a sound knowledge of companies, management, economy of India as well as the US. I would like to know about the impact of global market conditions on the Indian market, at least in the era of trade-wars as well the FIIs, who are selling their stocks in India? 
A: I feel the US market is the best in the world at present, as their technology companies, as well as the economy, are performing well. 
In case of India, where the FIIs are selling their exposure, Indians are responsible for the same may be by 25 per cent. Let the remaining 75 per cent responsibility be on them as they are decreasing their stocks across Asian markets. The reasons include the absence of depth in the Indian market due to the arrogant nature of the Indian system. 
The Indian system has turned out to be arrogant as it thinks it is the centre of the world's market and feels that you are an idiot if you are not investing in here. But it is not so. India is doing well, but the world is also doing well. It should realise that the world is working with and without it.

Q: Can you let us know the problem areas in the Indian market? Are we doing so bad?
A: No, India is not doing bad, but should it fail in respecting others, if you are a foreign investor, then you are supposed to have these things. And if you are an NRI investor, then you will have to make sure that you don't have any foreign portfolio. Secondly, India is the only country where you are being taxed. 

I would like to highlight that India's weightage in portfolio investors share stands just at 1 per cent. 
For instance, if the mutual funds are doing good and you come up with regulations asking the investors to fill form 6 times, complete KYC regulations 4 times in a year and levy taxes on them then they will just leave your fund. Why should they take the stress and pressure of the rules just to invest in mutual funds? 

Q: What are good points here?
A: Everything is good. I just wanted to highlight that you are reversing the things for investors in the name of Ease of Doing Business. 

Q: What makes you feel that a return of 5-6 per cent in a year will also work? As far as I remember, in 1997 when I met you for the first time, you used to be a person with high expectation levels. Now, what is that thing that makes you feel that an annual return of 5-6 per cent will also work?
A: For this, I will just quote the name of Warren Buffett, who turned up to be world's richest person just by making 20 per cent returns per annum. It was possible because he invested for 50 years and waited for the returns. That's the reason that I learned a little discipline and continued my new fund for 13 years. Interestingly, we are beating everybody after shorting it. 

Q: Can you suggest some sectors, which are also a part of your portfolio, that you think will pay off, if the market runs nicely?
A: There are 3-4 sectors in my eyes and they are private banks, NBFCs and consumer sectors. These are the sectors where you can remain invested for upcoming 10-20-25 years, they will make money for you. 

Watch this Zee Business video

Apart from that, there are others sectors like the commodity, infrastructure and few others that keep on changing every two to three months. Right now, infrastructure is my favourite.