Diwali Special: Market rising in a very narrow range, euphoria has cooled down, says Samir Arora

The Indian market's Euphoria seems to have cooled down and the festive cheer seems to be missing in the ongoing earnings season, said Samir Arora, the founder of Helios Capital. In an interview with BTTV Managing Editor Siddharth Zarabi, Arora talked about his favourite sector in the market, recent market movement and more in a 'Special Market Masters' episode. 

Arora said the festive cheer seems to be a tad bit missing this earnings season ahead of Diwali. 

"We need consumer sector to be strong over time. And we hope that going forward, maybe a little bit improved because of rural economic recovery. But on the urban side, we need new themes, new sectors for the country, not just for our investing, because we don't see middle class, high level, high income jobs being created, which we can immediately connect. So, you know, middle class jobs and therefore downstream benefits of more jobs helping the job numbers and then spending. Yes, that is a negative," said Arora.

On the stock market euphoria, which seems to have cooled down, Arora said the euphoria has gone for some time. 

"So if I look at the last 20 years date of the index, let us take a Nifty index then the last three years return of Nifty is at least 2% per annum lower than the previous 17 years per annum return of the index. From 2004 to 2021, Nifty is up some 16% per annum. I'm taking the same October 2004 to October 2021 and 2024. It was up 16% per annum and last three years it's up 13% per annum, only 13. The 17 year return was 16.1 or something so very close to the Nifty itself. And for the last three years it was some 16.6%. So big picture being that this market is moving up now in a very narrow range. Otherwise, there is no euphoria. If you look at the aggregate numbers. But if you look at some stocks of mid cap or some small caps or some IPOs or some capital good stocks, they are up 200%, 300% even in one year. And the big picture therefore, logic has to be that some of those where the returns have been very high and in most cases, not really supported by longer term fundamentals," said Arora. 

Answering a question on the recent rally and then the subsequent correction and bounce back in the PSU stocks, Arora said the golden period for public sector stocks is now over. 

"Golden period means going up much more than the market. And that needed more than just the fact that they started with very low valuation, say, three years ago, because for the previous 10-15 years, they had underperformed a lot. But if you see the last three years performance or 4-5 years performance, particularly post Covid of the PSU stocks, now they don't look that even if you do it over a 10 year period, that they have done much worse than the overall market."

On stocks and sectors he is bullish on Samir said he likes financials and IT stocks. 

In case of IT stocks, he said he hopes that bad news on that front is over. 

"And another thing is that now if there is bad news, it won't be like the bad news that you are seeing in consumer and consumer durable that the stocks fall 10% in a day because the expectations are so high and things like that. So it is like a safe, somewhat hiding. But with the hope that the future is better than the recent past," Arora told BTTV.