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market | IST

Continue to remain optimistic about the market; overweight on IT: Helios Capital

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Dinshaw Irani, CIO of Helios Capital India, in conversation with CNBC-TV18, analyses the current market situation and decodes why Helio Capital is still bullish on IT stcoks.

Dinshaw Irani, CIO of Helios Capital India, in conversation with CNBC-TV18, analysed the current market situation and gave a commentary on the stock market.
First up, Irani said, "Our house view is that this present correction that you have seen as some kind of correction to correct the huge outperformance that India has seen -- vis-à-vis the region. Our view is that this correction is healthy. Any bull market or connection is healthy so our belief is that it is going to be short-lived. If anything, I think it's done and dusted."
He added, "From here on, look at the longer-term per se and look at what the quarter has done to us. The September quarter was decent and all stocks surprised investors. In fact, the disappointment to surprise ratio was one is to five literally. In this quarter, the balance sheet strength came to the fore, debt equity is at all-time lows for India Inc. Free cash flow generation has been huge. So we continue to be sanguine about the market. We think there is a lot of opportunities here, maybe a stock pickers market going forward."
On what is looking attractive in this market, Irani said, "Our comfort level lies in the financial sector, again consumer facing finance, consumer facing banks, NBFCs and export oriented sector, external facing sector which is IT and speciality chemicals and pharma and so on and so forth. So, these are the few sectors where we are fairly concentrated and we intend to remain so."
On IPOs he said, "Thank God for the Paytm bounce, because everybody was concerned that something like 2008 is in the offing, that debacle started with one huge IPO, which failed on the bourses. So that was a good awakening for everybody that IPOs don't make money all the time.
"But as you said, Latent View Analytics has made huge amounts of money. In our case, we look at what kind of valuations are being offered for these IPOs. When you are doing a listing at such huge valuations, we ourselves are not too comfortable with it, so we would avoid it. In fact, in the case of Latent View, its been a fantastic listing. I don’t know whether there is a fundamental justification to this, only time will tell."
On IT stocks, Irani lamented, "We are fully overweight on IT. Our call on IT has been that and it has been that way since the time of inception of PMS we have been overweight on IT. Our call was simple that global companies need IT. In fact, despite this kind of aggression some of the data points that are coming out – despite so much of spending -- most of the IT spending is 4 to 5 percent of some of the big conglomerates, which has to go further up. So obviously, there is a lot of demand for it. One caveat here would have been that the supply side is getting constrained. So there may be some input cost price pressures, but most IT companies showed an expansion in margins and that was an eye-opener for all."
"More or less from the commentary that we heard it looks as if we are in a very sweet spot for the next three, four years in IT so it's better to remain invested here," he explained.
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