Govt's reform push will be warmly received by market: Arora

Samir Arora, fund manager, Helios Capital, says that decision on several FDI related reforms is a very aggressive and good move by the government which has been awaited by the market for a long time. This decision will be warmly received by the market next week and for a month now.

Below is the edited transcript of his interview to CNBC-TV18. Q: The government has finally moved decisively on several FDI related reforms, what is your view?
A: I think this is very aggressive and very good move by the government. Something that we have been waiting for such a long time and I think this will be warmly received by the market next week and for month now. Hopefully, there is no rollback in any of this but so far this is very positive. Q: It does not look like that there will be a rollback if they didn’t have the political courage or they hadn’t made up their mind this time around I doubt if they had gone through with all these proposals but just as far as investor sentiment is concerned on the FDI front several big ticket items being cleared today, FDI in multi-brand retail, aviation, power exchanges, broadcasting services what is the message that foreign investors will take from this?
A: Initially, portfolio investors will react but they will be comfortable that FDI investments are allowed all though it may take longer. The biggest message is that India wants and is welcoming investments. Foreign investors will think that the Indian government has done this in the face of political opposition from both actual opponents and from their own coalition partner which itself makes it a difficult decision and everybody should warmly applaud government taking difficult decisions. Q: So thanks to diesel price hike and what Ben Bernanke overnight in the US, we saw an over 400 point rally what do you anticipate this will actually do to the market?
A: There could be another 3-4% rally on Monday itself because this is all coordinated in some sense, some by coincidence that all these things happen and that the RBI should cut rates by at least 25 basis points on Tuesday because in some sense the government has delivered on its part of the commitment that they will do things for reforms and to encourage FDI so it is coming out very well as a package some of it from abroad and some from India and I think Reserve Bank should also play its part on Tuesday.
Q: How materially has this changed your outlook in India, what's happen yesterday and today the decisions taken by the Indian government and also perhaps as you were pointing out a rate cut being announced by the Reserve Bank on the 17th September, how significantly do you believe the outlook on India has changed?
A: The difference for me personally is that, so far, what I used to call reluctantly bullish but from Monday or maybe over the weekend I will call up my own investors to see what their reaction is and I am sure that we could all get more in flows into our funds and therefore into India. One should give up the reluctance part and become a little more bullish. RELATED LINKS:

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