Stop waiting for the so-called 'bottom': Samir Arora

Samir Arora of Helios Capital feels that, the investors are giving too much importance to waiting, for the so-called 'bottom'. He said that he has not changed his sector preferences in the portfolio from last year, nor is he worried about a further fall, The key, Arora said, is whether to buy or not. 

 

He said that the odds are against the market correcting at around 50% from the peaks. The domestic institutions need to show some more conviction in market, Arora said. He believes that the FIIs are staying away due to the complete lack of domestic participation.

 

Excerpts from CNBC-TV18's exclusive interview with Samir Arora

 

Q: Is this indeed a bear market?

A:  Catching a bottom is more of an ego trip than anything else, and investing is not about ego and saying that I have invested in the bottom. The question should be that if there is going to be a bottom in some days then how far we are from it and I don't think anybody would be able to say, that we are very far from it in terms of percentage if we have not already crossed it.

 

Q: So you don't agree with people who believe that there could be another 15%-20%, downside tot his market from say a rough 15,000-15,500 levels?

A : If that happens then it would mean that there are some major issues around the world which could take us there, and its very difficult to say like that, but the odds would say that that is not the case anymore and if it did happen then it would happen for extremely short period of time. As of now it is a bit unreasonable to think that the market should correct 50%, from the top and generally a 30% to 35% fall which we have seen not from year to date but from the highs of 8^th to 10^th January. It is not a fall after you start worrying about, whether there will be further declines or not, but whether you should buy or not is another question, not that it will be another 15%-20% but normally it doesn't happen.

 

Q: What's happening with the global money, its true that they haven't pulled out a lot of money, but one would have expected that after a 30% fall for a market like ours, which people seem to like quite a bit till December, they would have bought a little bit more, what's keeping them away you think?

 

A: What's keeping them away is the complete lack of backbone of the Indian investors; we know that the HNI's in India have been wiped out in January, but the way the mutual funds and the fund managers are behaving as if they also don't have backbone left even. The foreign investors will be thoroughly  de moralized looking at how the Indian mutual funds and the Indian institutions behave, foreign investors have a lot of interest in India, and even in the end of this month we will have some high quality names coming in to our front but the point is, there must be two sides to it, the Indian mutual fund guys, the Indian investors and institutors also have to show some commitment to their own market and not worry about outsmarting each other for the 8%-10% cash that they have.

 

Q: What's yours sense of when we might sort of begin to get out of the woods when the market will not trade with such thin volumes, complete apathy, no flows, this kind of a situation might get arrested?

 

A: My feeling is, by the ways of more of retail driven analysis but I even try it on institutions and it works most of the times, is that if you look at the market its not for the institution but more for the retail. If you look at the market as a source of making money, it will not work because what happens in India, as the HNI says that I will invest so much money every year out of my options trading and futures trading, I want to make x% returns, but if  you look at the market as an investment, that means  you keep investing and over time you will make money, always does right Now the problem is that we are all now looking that we must invest only in the bottom not one week or one month before. You look at the worst of the views on India, from the bearish guys, they all say another 10%, and they don't say that it is only 10%, so you might as well start, because you will not be able to invest everything on one day, they say there is another 10% or 5% or whatever percentage left on the bottom. Its been too precise, so it will turn when it turns, the market will go up when it stops going down. I can see in my limited fund, that I would have received at least 20 emails in the last 15-20 days, from institutions we had met 5-6 months and one year ago and to our mailing list and all, for our monthly letter saying we want to look at India, tell us what you have done and the market has done, what are the opportunities, some of them may and some of them may still not invest but it is on everybody's radar.

 

Q: There is one feeling which has been bolstered by the moves of the last 3 months that maybe the underperformers of last year will do better this year as they have like, IT, FMCG, Pharmaceuticals, do you think that's the way it will pan out, as the over-ownership unwinds or some of the good performing sectors of last year could bounce back?

A: We are not changing our sectors, IT we had a little bit in the end of December, and my theory is the India stories are the under penetration and shortage of infrastructure, financials, market share gains of private sector versus the public sector in different stories. India's story cannot be a consumer which relies on growth into rural. India's biggest long risk is that the Indian rural economy is not growing at the same rate as the urban and therefore the rural population is feeling bad, and feels that hey have been left out and the growth in agriculture is 2% and the growth in urban services and all is 9%, so how can stocks whose main growth avenue comes from expanding and the rural be good only because their earnings are a little less volatile and therefore in a sector rotation in a short period of time, they don't fall and therefore they are viewed as the new sector, we are not  changing our sectors, we are remaining in the sectors of last year but as I always said, we are not in real estate and that I think will not be a sector even in the following years but other sectors are all capital goods, infrastructure, financials and nothing wrong with any of them.

 

 

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