10% blowout rally possible from here: Samir Arora

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10% blowout rally possible from here: Samir Arora

Claiming that recent inflows into the markets were the result of reallocation of existing funds, Samir Arora of Helios Capital told Udayan Mukherjee of CNBC TV18 that these flows will continue if markets grind higher

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Indian markets are on a swing and the great moves will continue as long as FII flows continue. Claiming that recent inflows into the markets were the result of reallocation of existing funds, Samir Arora of Helios Capital told Udayan Mukherjee of CNBC TV18 that these flows will continue if markets grind higher. He said he has turned bullish on India in the past three months and sees a 10% blowout rally from here. However, "a 15% rally is unlikely," he said.

Speaking on specific stocks and sectors, Arora said Delta Corp remains his top midcap pick, and he continues to hold S Kumars . "I remain short on telecom," he said.

Here is a verbatim transcript of the exclusive interview with Samir Arora on CNBC-TV18. Also watch the accompanying video.

Q: What are you doing now, tagging along with the trend?

A: I have turned quite bullish in the last one or two months, particularly on the basis that the world seems to believe that India has outperformed so much and therefore it needs a correction. And (a) I believe that India has not outperformed anybody in the world yet and (b) the world has become very bearish ahead of any correction that they fear. So, that this year the equity investors haven't really lost any money literally in any market. They may not have made any significant money, but they are taking such a bearish stance as if they would normally react to an event.

So, I feel that the world is too bearish. There is a negative view at least in some quarters even though India is getting a lot of flow that India has massively outperformed its peers, the world and therefore a correction is due. I think that that is also not true that India has outperformed in any significant way similar markets around the world.

Q: Is that your view of the world as well that people are too prepared for a correction, maybe well hedged and therefore it might elude people for a while?

A: That is what I believe because you can see it in any flows into any global firms, US mutual funds, international funds. Basically everywhere in any opinion and in hedge funds exposures, everybody is taking a very cautious view. Normally, if the investors had seen a 10%-15% correction so far and then they had done that, you would think there is logic that people are panicking after a fall. This is maybe for the first time that after a good rally last year, the world has become bearish or very cautious on fears that there maybe a double dip or the US numbers will be worst than they thought, which have already been brought down quite a bit.

And the general rule is that if you are over prepared for an event, mostly that event will not happen immediately. Mostly it will happen, if it has to happen, after some of the people on the border line or sitting on the edge, have already plunged in. So, I think it is too early for the world to correct.

Q: Is there even a growing sense of frustration for the last few weeks for people who had prepared for a correction either by cutting down their net longs or raising cash levels because the correction never materialised?

A: Absolutely. Actually I did a marketing trip to Hong Kong about two weeks ago and there were so many queries of the fact that they like India, they like our stocks selection, my personal style, etc. but they don't have the courage to pull the trigger. I feel if the markets go up even marginally, marginally means that at the end of the day it should have been better to have been invested versus not invested and better to have been invested in India versus something else, many of these guys will finally throw in the towel and take plunge because it's been too long and the world is as I said overly prepared for a fall, which normally then would not happen.

I am playing a bullish stance in my long short fund where normally my upper limit of bullishness would have been 60%-65% of net exposure, which we only fine tuned with changing our shorts, we are at that limit right now. In the long only, we are about 108% long.