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Samvat 2072: Market under correction; bet strong on NBFCs: Samir Arora

Samir Arora, founder and fund manager at Helios Capital says that the market is in a serious correction currently. It is advisable to bet on stocks that have remained strong so far, he adds.

Speaking to CNBC-TV18, Arora says only two to three theme works in the Indian market. He prefers private companies over public due to less government interventions.

“If you look at it from June-July, I don’t think any stocks related to the government have done well,” he says adding that BHEL or any of the capital goods, infrastructure, public sector banks where has anybody bet on them have done great. 

Arora is bullish on non-banking finance companies (NBFCs), including some housing finance companies in long-term. On the other hand, he is bearish on telecom and consumer good names.

Below is the transcript of Samir Arora’s interview with CNBC-TV18’s Latha Venkatesh, Sonia Shenoy and Anuj Singhal.

Anuj: This year a lot of people may have bid more money playing cards than Indian stock markets. Especially, if they have been in the large caps. It has been a bad year at least for the Nifty?

A: Actually, it has been a great year for a short type environment and fortunately, we have so much money in shorting. We are okay otherwise, but broadly you are right that this year has been disappointing as far as long only investing in index is concerned or index type companies is concerned.

Latha: How short are you now?

A: Right now, we are 100 long, 45 short, but till Friday we were 100 long, 50 short.

Latha: So, what caused this reduction in shorts – these governmental announcements?

A: Because of money made on Monday. But, broadly speaking, we were much lower than what we would like to be. If we were very bullish, which is around 70, the average has been say, 60 for ten years. These days it is more like 54-55 and that is after covering yesterday and day before.

Anuj: I remember talking to you at the time of general election outcome and all of us believed it is going to be a massive trigger for the market and it was like that for a certain time but are you getting a sense that this whole Modi premium is being – or are we reading too much into this last round of correction?

A: No, that is a serious correction. It is a serious issue, but the thing is there was no Modi premium per se because if you look at the market and what did well at least from May onwards, it was actually stocks which did not have anything to do with the government.

If you see the infra stocks, capital goods stocks, public sector bank stocks, metal commodity type stocks, anything where the government could have done something maybe not in every place any day they have never done well. They only did well for two or three months pre May when even state owned banks went up.

But if you look at it from June-July, I don’t think any stocks related to the government have done well. Look at BHEL or look at any of these capital goods, infra, public sector banks where has anybody bet on them after, or maybe for a few months they did.

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