Samir Arora of Helios Capital sees FIIs flooding back in six months

Helios Capital founder Samir Arora.

Samir Arora, veteran investor and founder of Helios Capital, said he used the fall in the market last month when Nifty fell close to 15,000 to deploy cash.

As a result, cash in his portfolio reduced from 12 to six percent.

"We have basically bought financials and a little bit more consumer stocks,” he said in an interview with CNBC TV18. He sees value in IT stocks as well but has not bought them recently given the headwinds they face.

Financials, especially private banks, have been on analysts and investors’ radar for a while now. On a trailing basis, Nifty Bank was valued at a price to book value of less than 2 times, which most money managers said was very attractive. Since the start of July, the stocks in the sector have gained momentum and outperformed the wider market.

IT stocks, however, have suffered as their growth outlook has deteriorated in the face of a looming recession in the US and Europe, which are key markets for them. Recent results of TCS have also been disappointing.

Arora also refuted that domestic auto companies have become attractive all of a sudden due to pending orders for months and a letup in the semiconductor crisis.

Arguing against auto sector bulls, he cited the example of auto stocks in the US – Feneral Motors, Volkswagen and Tesla – that are suffering despite an improving scenario.

When are FIIs coming back?
One big theme that has grabbed headlines in the last 10 odd months has been heavy selling by foreign institutional investors (FIIs).

Arora, however, believes they will likely start becoming net buyers in the next 5-6 months. He said it is rare for foreign investors to be net sellers and the trend will reverse sooner than expected.

Despite heavy selling by FIIs, the Indian market has outperformed its peers thanks to steady and continuously strong flows from domestic investors, largely via mutual funds.

This, Arora believes, adds to the attractiveness of the market.

He is not among those who believe indices will start rising higher after the recent correction. However, he said the correction phase, where you would think the market would fall every day, is over. And, now consolidation may begin.

“I would think that the next phase is that it stops falling,” Arora added.

Though, he cautioned that a deep recession is a big risk and nobody can afford that.

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