Don't expect major selling in June: Samir Arora

"Although the markets have fallen 5-6% and the currency has depreciated 6% in May, I don’t think we have seen any major selling. So unless there is a black and white answer after the Greek vote, which I think will not be the case, I don’t think there will be big selling in June," Arora says.

Greek elections are scheduled for June 17 and could hasten the country's departure from the currency club should a government intent on ripping up the country's bailout programme result.

Without new bailout funds, Greece will run out of money by the end of June. The EU's EFSF rescue fund must still decide on the release of about 4 billion euros left over from an aid tranche agreed in March.

However, Arora feels that a Greek exit is unlikely in the near-term. "There will be many negotiations; whoever wins, will negotiate with the rest of Europe. So it won’t happen straight away," he explains.

"I am no longer taking macro decisions on India and on the world. I am still buying stocks that I like and still shorting stocks that we don’t like and generally trying to not be overly aggressive but not hiding," he told CNBC-TV18 in an interview.

Below is the edited transcript of Arora’s interview with CNBC-TV18. Also watch the accompanying video.

Q: What’s your outlook for June? How do you think things will pan out?

A: It’s very difficult to have month-to-month outlook, although June is an important month, because of the Greece vote. But my guess is that the day after the vote it will not be clear as to what will happen. It doesn’t look that in one week or one month Greece will leave the euro.

Therefore, I am no longer taking macro decisions on India and on the world. I am still buying stocks that I like, shorting stocks that we don’t like and trying to not be overly aggressive but not hiding.

Q: The fear about June is that this could be the month where outflows exacerbate, something that hasn’t happened through the course of this series. Do you see that as a likely threat?

A: If there is a big trip up then there can be big selling. As of today even in May although the markets have fallen 5-6% and the currency has depreciated 6%, I don’t think we have seen any major selling. Unless there is a black and white answer after the Greek vote which I think will not be the case, I don’t think there will be big selling in June.

Markets can or may remain weak, maybe not because this month has been so bad, but in general I am not overly anticipating that we will not get any clarity immediately. I mean if there is a Greek exit that will take 6-7 months or more, there will be many negotiations. Whoever wins will negotiate with the rest of Europe. So, it won’t happen straightaway.

Q: What have you made of earnings season this time around? It’s caused a lot of individual stock level damage?

A: No, it’s more or less in line. We have these two groups of companies now in the market, some which continue to do well and some which continue to have very volatile earnings and volatile environment. Basically, the premium on quality has gone up too much.

Even today we also warn that we are not willing to speculate on results. People are not even willing including us buying stocks only because they are cheap, because it is not that all the problems are over. It is just that on a day-to-day basis if we were to look at what our government is doing which is nothing and what Europe is doing which is also nothing, then in some sense we will not feel like coming to office, but we still want to come to office.

Q: What did you make of Tata Motors numbers and how have you approached that name now?

A: We have it. Our thesis in life has been not to sell when stocks are down 10%, so we had it before today and we still have it. A few weeks ago when I was on your channel that day, Cognizant had fallen 19% in one day. Although I didn’t own it and I still don’t own it, I said that it is ridiculous how fund managers can sell stocks like that. In this bad market since then that stock is up more than 10% from that day.

The point is my belief is that fund managers act differently when they are playing with their own money or investing their own money and then they invest as fund managers. I have always behaves with the fund money that it is my money. So would I just sell a stock down 10% as if there is some fraud that is being discovered tonight on a company, which has 4 multiple because we own the DVR and which has 3% plus yield and a 4 multiple. You may not buy it today which even we have not bought, but to sell it down 10% is basically playing with other people's money and we don’t do that.