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Foreign investors may return to Indian equities by new year: Samir Arora

Foreign investors may return to Indian equities by new year: Samir Arora

Foreign investors may return to Indian equities by new year: Samir Arora
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By CNBCTV18.com Oct 24, 2022 10:30:14 PM IST (Published)

Samir Arora of Helios Capital tells CNBC-TV18 that in his view, FIIs should return to the Indian market by January or February, because "a new year always makes them reset their allocations and by that time, the US interest rate (hikes) would be out of the way".

Market veteran Samir Arora believes foreign investors may make a comeback to Indian equities by January or February. In an interaction with CNBC-TV18, he said: "A new year always makes them (foreign institutional investors) reset their allocations and by that time, the US interest rate (hikes) would be out of the way and then we can perform in absolute what this year we have done in relative terms."

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The remarks from the eminent fund manager come at a time when foreign investors have broadly remained net sellers of Indian shares for the past several weeks, though some experts believe their slowing pace of withdrawals is a positive sign for Dalal Street.
FIIs emerged net buyers of Indian shares for the first time in a month in August since September 2021 and have remained on the selling side since.
In all of Samvat 2078  — the Vikram calendar year that ended on the eve of Diwali 2022, they pulled out about Rs 3.7 lakh crore from Dalal Street, according to provisional exchange data.
Arora, Founder and Fund Manager at Helios Capital, believes it is "India's time right now because of the frustration and the pain people would have had in China".
In his view, the India story fits the needs of fund managers beautifully due to:
  • China Plus One — both from corporates' and investors' point of views
  • India is doing well on its own
  • India has dealt with FII outflows with dignity so far this year (resilience)
  • "I wrote in my last letter to these guys that people were putting money into China, the sort of the best example of the Stockholm syndrome, where you fall in love with your kidnapper or the guy who's abusing you, deflating you, because the performance that they've had, since 1992, the returns are negative... Today, I think Hong Kong is at a 15-year low," he said.
    "First of all, you can also imagine when we say invest for the long term and time is important, you can be in markets like Japan in the 90s or in Hong Kong for the last 15 years or China since 1992. So never think that everything is so straightforward."
    He suggests investors to go for stocks that are less impacted by external factors, holding the view that IT is not a space to be in. 
    IT is among the worst hit spaces on Dalal Street so far in 2022. Many experts believe there is more pain left in the sector before it makes a comeback on Dalal Street.
    Arora believes it is wiser for long-term investors to focus elsewhere for now.
    "Nobody's saying that the US has slowed down right now, the whole story is that the US has not slowed down... But the Fed thinks it should slow down so that inflation can be brought under control. But in any case, I think everybody does well, everything does well if the market is up, but we think that non-IT will do better than IT," he added.
    Meanwhile, Indian equity benchmarks Sensex and Nifty ended 0.9 percent higher on the first day of Samvat 2079 in a special one-hour Muhurat trading session to mark the occasion of Diwali.
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