SENSEX NIFTY
Apr 12, 2013, 01.16 PM IST | Source: CNBC-TV18

Infosys is shorting idea; Japan's trumped India: Arora

Samir Arora of Helios Capital said Infosys has lost its leadership position and the stock may still be a shorting idea. The company posted disappointing Q4 numbers and issued lower than expected revenue guidance for fiscal year 2014.

Samir Arora

Fund Manager, Helios Capital Management

Expertise : Equity - Fundamental

More about the Expert...

Samir Arora of Helios Capital said Infosys has lost its leadership position and the stock may still be a shorting idea. The company posted disappointing Q4 numbers and issued lower than expected revenue guidance for fiscal year 2014.

The dismal picture unnerved investors, and Indian equity benchmarks crashed in the morning trade. Although negative on Infosys, Arora told CNBC-TV18 that he continues to own HCL , Tech Mahindra and Mahindra Satyam among the IT pack.

Speaking about the economy, Arora said he is losing faith in the government’s reforms agenda and feels everything is going wrong with India. Even diesel price hikes will not continue for very long, he said.

Today, everything is driven by United States and Japan. On one hand, India falls whenever US falls or whenever there is a negative data. On the other hand, Japan’s move on monetary measures is a big negative for India. In the coming days, flows from emerging markets will be directed to Japan.

Below is the verbatim transcript of Samir Arora's interview on CNBC-TV18

Q: What did you make of Infosys?

A: You normally expect that a day one result, this mandate was given to Infosys because it made a difference to the market and also to India. Now, the stock is down 17 percent and even then the market is up today. So, that itself shows how much Infosys has lost its position in the last couple of years. I am not short and that is my sadness today.

Q: Can you still short it or do you think the opportunity is gone now?

A: I don't think it is gone, although I haven't thought about shorting it now because we have two ways to short. One is to make money, second is to be highly confident that you cannot lose too much money. Sometimes that is also a good reason to short because it is like a free option you get. Unless everything suddenly changes, you won't lose meaningful amount of money then, may be because we are negative on the market. Also, there will be a heavyweight of people owning it and people won't be able to justify putting a buy on it today.

At the best, people who had buys may say, ‘continue, week hold’ or wait for another quarter but I don't think anybody will come out with an aggressive buy in any case. So it may not be a bad idea but sometimes a short is not that you will make lot of money but just the fact that you may not lose a lot. This is a good reason depending on the backdrop of the market which iteslf is quite weak these days.

Q: What have you been doing with your own position in terms of your net long, short positions? Is it the lowest that you have had in recent times in terms of a net long?

A: It is quite low, it is currently around 30-32 percent but we have been even negative only once in our life. It should be zero, but we don't have that much courage so 30 is quite low for us considering that our steady state is around 60 if we took a seven years average.

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