Tax cuts in the budget may have limited impact on consumption stocks, says Helios Capital’s Samir Arora

Arora adds that he sees little impact on consumption stocks. “What will you do with it? Because A, inflation is there. Secondly, the basket of people has changed. Will they order one more time from Zomato, or will they change or buy an extra lipstick? Who knows?” he added.

While there is some expectation on tax cuts in the February 1 budget, Helios Capital’s Samir Arora expects the material impact on consumption stocks to be minimal. “I'm expecting (some modifications in tax slabs) but it may not be material. Since the chatter is there, and it is logical that the government has given some incentive to the corporate sector through lower taxes in 2019. So they might do something for the middle class or for the taxpayer,” he told CNBC-TV18.

Arora adds that he sees little impact on consumption stocks. “What will you do with it? Because A, inflation is there. Secondly, the basket of people has changed. Will they order one more time from Zomato, or will they change or buy an extra lipstick? Who knows?” he added.

On the overall markets, Arora says that the market has faced a challenging start to the year. " It has been tough because the companies doing badly have been penalized much more than you would normally expect," Arora noted.

Market underperformance, he adds has been particularly severe for companies that slightly miss expectations. "So if you are slightly off, they are down 8-10 percent," he added. However, Arora added that that at Helios they are not feeling negative, because over time, they have eliminated these stocks which used to have either very high leverage or some personal leverage or shares that were leveraged, or something where it was a government-type stuff where an order is not coming.

Global markets on the other hand continue to perform well.

Investment flows also continue, offering hope. " Even we as a small mutual fund still get flows. We even get flows in our PMS, in our AIF, in our offshore long-short fund. This month, actually, we got more than 25 million in our offshore fund. We normally don't get in a sort of a bad phase."

Arora adds that their focus has been on a balanced strategy, combining high-growth stocks with stable performers. "Our formula always has been that we want both hands" This approach includes a mix of high-growth stocks and traditional banking and IT firms. "So we have a few stocks which are of this high growth, like Policy Bazaar, growing by around 40 percent, but has high valuation. But it looks that it can grow like this for long," he explains adding that at the same time, more stable investments are necessary for portfolio balance. "We also have these ICICI banks and HDFC banks, and also these IT guys; if they grow 2% instead of 1.8%, the stocks go up a lot. So I don't want the market to decide for me. I will have a mix."

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