The market has already turned around and India is outperforming its global peers: Samir Arora

India’s major indices may have returned to all-time highs after a 14-month wait, but many retail investors still feel the cheer is missing. According to Samir Arora, founder of Helios Capital, this perception hides the real story: the market has already turned around and is now outperforming almost every major global market.Speaking to ET Now, Arora said that MSCI India is up 5.5% in the last two months, while China is down 6%, emerging markets are up just 1.8% and US markets are up less than 2.5%. “In dollar terms, India is one of the best performing markets today,” he said.

‘Small caps will catch up: the turn has already taken place’

The subdued sentiment among investors, Arora says, is because portfolios with large small caps have not yet regained previous peaks. But the broader market has already stabilized and turned around.”Our midcap fund launched in March is already up 30%. The midcap index is up 20% over the same period. The rally has happened – it’s just not visible when you compare it to the 2024 highs,” he noted.

Arora believes wider participation will return once FIIs ease selling pressure and domestic demand, boosted by reforms, starts flowing.

Reforms fuel the market: VAT cuts, interest rate cuts, income tax relief

Arora attributes the improving market tone to the government’s recent reform plans:

• Rationalization of GST rates
• RBI rate cuts
• Income tax cuts
• Rate-related adjustments

“These changes are impacting consumer finances. They may not be reflected in a particular company’s earnings, but they are strengthening household balance sheets – and that is supporting the economy,” he explained.

Why he avoids stock exchanges and brokerage shares

Arora remains cautious on capital market developments, especially brokers, exchanges and depositories, despite BSE and MCX soaring in 2024.

“Speculative volumes are too high. Regulators don’t like it. Post-Covid, trading volumes have multiplied 10 to 15x – that’s unsustainable,” he warned.

He believes these companies should “moderate, correct, and then grow steadily,” rather than continuing to rise in a straight line.

Long-term winners: asset managers, core financial sectors

The part of the capital market ecosystem that Arora likes: asset management companies, which benefit from disciplined investing and are structurally supported by the system.

He expects the largecap financial sector to remain strong as FII outflows decline, and expects a further broadening of the rally to midcaps and smallcaps thereafter.