Economy

Samir Arora of Helios Identifies Key Themes in a Volatile Market

Samir Arora of Helios Capital expects foreign market volatility to continue and has reduced his tech exposure, but he remains bullish on “consumer companies” like hotels and festive fashion stocks.

The US Federal Reserve is “talking down the market” and warning of a “hot market” as volatility persists, according to Arora, founder and fund manager at Helios Capital Pte., who spoke to BQ Prime’s Niraj Shah.

Even in domestic markets, growth at any price relative to value, according to Arora, will not work unless valuations are adjusted.

Arora is pessimistic about commodities and state-owned enterprises. “Oil might be the new data,” he says, but India lacks large oil companies under that umbrella, which could have an impact on investment and returns.

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Samir Arora
Samir Arora

As active fund managers, he believes it is more important to ensure that an overall portfolio outperforms an index fund rather than focusing on individual stocks that are “a little confusing and have a story of their own because of commodities,” as opposed to focusing on individual stocks that are “a bit confusing and have a story of their own.”

Unlisted companies, according to Arora, are not in a good place right now, but they may see a correction if quantitative tightening continues and the US market does not fall.

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Themes that Recur

Information technology stocks have experienced a correction, but management has remained upbeat for FY23 and beyond. But, according to the founder of Helios Capital, that can’t be relied on after one or two quarters because it’s a “big picture play” that’s “confusing.”

Helios
Helios

Factors such as U.S. stock prices, companies failing to meet earnings estimates, margin reduction, and overall PE reduction are expected to put pressure on IT stocks, according to him. Because the valuations of very-high PE companies in the United States were correcting, and Indian companies were falling as well, Arora reduced his tech exposure by 3%.

Arora has been interested in “consumer companies” in recent months, but not in “consumer durable companies” or commodity stocks. Hotels and QSR stocks, as well as festive clothing companies like Vedant Fashions Ltd., the parent company of Manyavar, are among his key investments.

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