Transcription
Hello, I am Anil Singhvi. Amidst the US-Iran war, crude oil fluctuations, and the weakening rupee, the stock market is quite volatile. And in this interim, FIIs are slowly distancing themselves from Indian markets and are continuously selling. Now the big question is, when will the markets stabilize? When will crude oil come down? When will FII selling stop? When will currency weakness cease? And amidst all this, ultimately, the things that affect the market the most are company results. The results season is on the verge of ending, and how much confidence will come from them. These are all the things you want to know in terms of market direction, and you also want to know where it is better for you to invest in such an environment. To discuss all these issues, a well-known market expert, who is joining the program from Singapore, is with me. While living in Singapore, he not only has a deep grasp of Indian markets but also does a very good job of understanding and recognizing the mood and environment of FIIs in global markets and also tracks global markets. Let's meet Samir Arora, the founder of Helios Capital and an FII fund manager. Samir sir, good morning. A very warm welcome to you. Thank you for giving us your time. What do you think, sir? Should we assume that whatever was bad regarding the war has happened? From here, whatever happens will be good. Can this bring some comfort and confidence? I think so, yes. But I am bullish and think bullish thoughts. But actually, what happened was that in February, I became quite bullish. In the sense that before that, for the last three or four months, maybe six months, there were tensions with the US that our tariffs were very high, and because of that, the currency was weakening, or FII flows were outflows. So, in February, I thought that this deal had happened. Finally, the numbers, the tariff numbers, were reduced by the Supreme Court. But at that time, I became bullish. After that, when the war happened in March, the oil prices and other things increased, and India was negatively impacted again. So, now, if it seems, which I think is the case, that President Trump also does not want to fight, and Iran is also tired, but they are now arguing on different points so that both can show in their respective countries that they have won. So, if this is the endgame, and of course, President Trump tweeted yesterday that mostly everybody is agreed, and he also gave the names of all the Middle Eastern heads – Saudi, UAE, and whatever. And now Marco Rubio is in Delhi. So, he also said that good news is coming, happy news is coming. So, if this happens, then the thing that negatively impacts India the most, because oil prices have increased, which we import, then there should be some benefit from this. Absolutely right. And for the first time in a long time, crude has also come below $100. At what level do you think we would be comfortable? Actually, we have seen much higher numbers in the past. In 2022, it was $50. Now, if you see, oil prices have also started increasing in India. So, if you see, the government announced, it came in the papers, that the loss of 1000 crore rupees had become 750 crore rupees when they increased it by a few paise earlier. After that, I think it has increased by three more times. So, in two, three, four, five, that will also become zero. But other things depend on availability, like gas availability, fertilizer prices, etc. So, if it becomes $80, it's fine. Although earlier it was 60-65, but even at $80, the loss of three months has occurred. But all this gets adjusted because you should not count that this is a loss for one company or four people. If you diversify it, that the government incurred some loss, the consumer incurred some loss, the company incurred some loss, then these small things do not make such a big difference that everything stalls, as it happened, that now no one will invest, or no market will run. Nothing like that happens. What do you think, even if crude comes down to the range of $80-85-$90, and even if there are signals of war ending, will FIIs still return to India? Do you think they will invest money? So, if you look at this year, I don't say big things intentionally, otherwise people will say why I talk about tax, but actually, FIIs have sold in every market. In India, there has been selling of about 20-22 billion dollars this year. In Korea, I think it's 60, I don't remember the number, but yesterday it was 60-70 billion dollars of selling. There has been selling in Taiwan too. Because there has been selling in our country, we are disappointed. But more money has been made in their markets. The bottom line is that nothing is sustainable. Our selling and their markets running so much. But overall, this year, there has been selling of around $125 billion in emerging markets, only in Asian emerging markets. Out of this, India's share in the Asian index, if we take it, India has about 12% in the global market, so in the Asian market, it would be 15-18-20%. It has happened accordingly. So, now, selling is happening in Korea too, and in Taiwan too. Therefore, this should not be taken so seriously that they are selling only in India and putting money there. Selling is happening there too. Sir, you also said that one reason is fine, there is global profit booking or selling. Secondly, FIIs are also a bit unhappy, upset about FII taxation. We were just talking to Mohan Das ji. He also said that if the FII taxation is reduced a bit, some concessions are given to them so that they bring more dollars. But the problem is, even if it is done, what is the guarantee that FIIs will not sell? It might be that the prices go up further, and then they will sell. We don't know if they will bring new money or not, how is this decided? Absolutely. Now, like before marriage, if you are looking for a groom, when would you say no, I will get my hair cut, I will shave. Does that mean your marriage will happen? But you still do it, don't you? You prepare yourself, thinking that now we are young, the girl's family is coming to see us. So, life is like this. You will do your work, what will the other person do afterwards? You know that my beard doesn't look good, I need to shave. Even after that, many people don't get married. What can be done about that? It's not like you have written something saying, I am cutting my hair, come quickly. They might ask, why are you doing this at this age? It doesn't happen like that. The bottom line is, you should understand that you are not ready. We are not ready. But even then, people get married, and people still invest money in the market. So, therefore, everything is not one-to-one. But it should be understood that this is wrong relative to others. But I don't want to talk about tax now because I am not any representative of FIIs who are paying me money. So, the bottom line is that in India, the market, by and large, seems to have more prospects of improving. That's why if you look at my long-only fund or our mutual fund in India, we are running at 99% invested. And even in my long-short fund, we are at 72-73%. Because we feel that India, which has been overly hurt, has prospects of reversing. It's a very good thing that the market has become excessively negative, and there are prospects of reversal. Generally, sir, you also know that in tough environments or crises, some big and good things happen. Like when Trump imposed tariffs, our GST work was done well. It gave a big push to the economy. Can something similar, one or two big things, be done right now to further strengthen the economy and stop the weakening of our currency? So, two types of work are needed here. One is immediate, what to do for the next one or two years. Now, I only feel that if this war ends and oil goes back to $85, suppose $90, then don't think that okay, it's done, now there's no need to do anything. This is also a fear in our world. But otherwise, you need two things. One short-term work, for one year, your currency is still weak, it might go up by half a percent or one percent, but if it doesn't stabilize, then either direct it to get dollars. In my opinion, NRI deposits should be made. And the long-term is, what should be our policy of energy? Should we produce more and more energy in India, or incentivize them, or give them approvals for FDI to invest, or to attract FIIs. Regarding attracting FIIs, many people say that FIIs were also investing two years ago. Of course, these things come to mind when you need more from that line, more money from that line. It's not just that when my market has 20% earnings growth, then FIIs will come. They will be ready to pay tax at 20%, but those years are few in life. Normal years are many, in which you don't perform very below average. So, some things need to be done for the slightly longer term, and some for the sort of here and now. I think that in this here and now crisis, if this war ends, I think our system will get back on track. This is a bit negative in my opinion. Uh, one more thing, sir, in such an environment, it seems to be understood by almost all countries in the world that you have to be self-reliant in terms of energy. Right. So, from an investment perspective and government focus, could this be a very interesting and big theme for the next 5-10 years? Are you looking for opportunities there, studying, researching, seeing where to invest? Yes, this sector looks very appealing. It's a very difficult sector for investing. Because if you say I am talking about power, which was needed independently anyway, even for AI, because AI also consumes a lot of power, energy. So, for that, the stocks, either you have what we have, you have taken them, Hitachi types and all, they have become so expensive that one wonders where to buy from and how. Not a single share in them. And on the other hand, there are utility-type companies. They have such long-term plans that you don't feel they have significant growth in any year, but they give slow returns. And third are solar companies and wind companies and solar cell companies. I don't have much interest in all these. Anyway, 90% of them are unlisted. So, you will find this theme big, but you can buy power equipment related things. We have them, but now they seem quite expensive to us. So, this is their story. It's not so obvious to make new money in this sector, to make more money. If entry happened at the right level earlier, it's good. Now, if it has happened, they are there. Correct. Their returns have also become very large, 200-200% have been made in these companies. Now we have them. We also think about what to do with them. But it's not that if this theme is good, you keep buying at any price. Banks, NBFCs, in this difficult time when the current account deficit and rupee are weak, do you still like them? Would you like to invest? Okay. There's no particular great story, but it's okay. You need a backbone. Stocks have not moved for a long time in terms of backbone. HDFC Bank, ICICI Bank are with us. This is because you don't feel like selling them at any time because they are very cheap. But you don't feel like buying them because FIIs sell a lot. So, it works with the flow. There is no interest in taking extra weight in this right now. Meaning, if you give 4% money in our fund, we will take 4% again. But we are not inclined to make it five. So, sir, in such an environment, it must be very difficult for you to find where to invest. Meaning, finding it is a big task. If you like something, FIIs are standing there to sell. If you don't like something, you will invest in it. That's why, that's why, that's why I say that a fund should have 40-50 names. Even more. In this, you are taking some names for stability, some names for higher confidence, and some are a bit expensive, but you are not investing everything, but they are running, like power equipment related ones are running. So, we bought them until a few days ago, meaning until a month ago, they were expensive even then, now they have become more expensive. Now it seems too much. So, this mix and match happens in this way because you cannot work on a single theme. We only buy cheap companies. If you only buy cheap companies, many of them have been disrupted, or they are not relevant nowadays because they have unlimited selling from FIIs. This and that. So, everything works through mix and match. Yes, that's why I don't have a powerful single theme. Okay, Samir sir, one thing. Although you are Indian, you love India, you invest money in India, you have a fund here. For a moment, forget that you are Indian. Okay? You are sitting in Singapore. You are an international fund manager. You have to invest money anywhere in the world. Money is limited. You have to invest somewhere. Today, what is the best market for you? To make new investments globally, worldwide. Best investment, or good investment, because what happens is that all the experience is from the Indian market. So, we feel we have a bit of a grip on the Indian market. But otherwise, in my opinion, if you want to do easy work, take the Nasdaq 100 ETF. What's the benefit in that? In Nasdaq 100, you are not betting on a single company. You will get different types of technology in all companies. Mostly, if you look at these companies in aggregate, their management is good. If you look at their profits in aggregate, they have cash flow. They have exports. And so they are able to, as a single country, assume this as a single country that has these factors: fiscal surplus because they make profits. Trade surplus because they export. Latest technology. Enough diversification. And the second thing I take and tell people to take is the World ex-US ETF. Okay. Meaning, nowadays, stocks outside the US are actually doing better than the US. But it's not understood as a single country which one to take. A single sector is not understood. Sometimes Japan starts running, sometimes Brazil runs, sometimes Korea and Taiwan are running. But if you take Korea and Taiwan independently, it seems strange to buy after a 200% rise. So, that's there, but still, in the end, all the money we have made over the years has been from India. That is your love for India. There is no question about that. That's why I said it's not about love. In India, you work with an index. Here, you take stocks, which if they perform even 5-6%, it's equal to the index. That understanding and grasp is more natural. One more thing, sir, that I wanted to ask you. In such an environment, you have stayed away from IT stocks for a long time. Has your love for IT stocks not returned yet? No, another new story has come, Anti-Anti. So, if you saw yesterday or the day before, Anthropic announced that their revenue for the first quarter, the first quarter, or whatever the number is for that quarter, has crossed $10 billion. In one quarter. Wow. That means Anthropic made a profit in that quarter. Actually, Anthropic's revenue run rate has become $40 billion. Now, people who were bullish on Indian IT used to tell us that these US or global companies will not be able to use AI themselves. They will need hand-holding. Such big companies, how will they do it themselves? Who will explain it to them? Our companies will do the work. Now, have our companies got the work or not? But they have spent $40 billion there. In that $40 billion, I would think that not more than 5-10% is public, because public mostly uses free versions. Free ones. So, assume, I don't know, maybe 70-80-60, but in my opinion, more than 70-80% is enterprise. So, enterprises alone have made their run rate on Anthropic $30-35 billion, and on OpenAI separately. So, these are the companies in the world that have committed to spending $50-60 billion combined already and have started paying. They didn't wait for an Indian company to explain it to them. This means this is not such a big story that no one can go on their own or no one will go. And secondly, if they have spent so much money, they would not have increased their budgets so much. So, they will bargain with others. Just before you, sir, I was talking to Mohan Das ji. I was interviewing him. He strongly believes that if people think that Indian IT companies have lagged behind in AI or will be finished, then I will send you his interview, his link too. He said, don't write off our companies like this. Who is writing them off? Yes. Who writes anyone off? You wrote off SMS. Now you get OTP, right? Correct. But did WhatsApp cause the loss of SMS or not, quite a bit? Now, you go to watch movies, right? But did OTT disrupt it or not? It doesn't happen like that. Now people say that nowadays, people only eat healthy, like we say that I, for example, say that in the US, even Corn Flakes have been disrupted. Corn Flakes, which everyone used to eat in the morning in the US. Now they say no, it has sugar. Okay. So, therefore, one should eat healthy food. Like it all started then, that McDonald's, the food there is not so fresh. Everything is made in front of you. Did McDonald's shut down? Nothing shuts down. No one needs to write anything off. Our job is not to write off. Our job is to see where more money will be made in two-three years. No, your two-three years are gone. Tell us when you are not written off. But one more thing. In India, about one-third of software engineers, IT services people, have now come to GCC, to their own centers, their own units of those foreign companies. So, those one-third people who have come from zero, not even 10 years ago, is that also not new work? Some work was there, which you used to get done by other foreign companies. Some new work might also be there, which you say we don't get done by Infosys, TCS, and all. But it's not that all these companies, GCC, have opened in India, about 2000, in which about how many people work? Around 20 lakhs. This is all extra work, and the old work of IT companies is the same, and growth will continue. And these 20 lakh people have come, and they have a total of 35 lakh people, so a total of about 55 lakh. So, these 20 lakh people have come to take work from within that, haven't they? So, write-off is a very strong word. You can say anything is written off. That's right. Okay, one more thing. No one has written off in India, but look at India's performance in the last two years. You have heard of write-off, you have paused, you have delayed, you have redeemed a bit, correct? So, if someone says you cannot write off India, obviously you cannot write off India. So, one discussion that is going on very strongly in the country these days is that what you said, that our two years have been wasted, in a way, one and a half to two years. So, now people have started discussing, is it not that the FIIs who are selling and leaving, are we, by doing SIPs or putting money in mutual funds, are giving them an exit? Is it not happening that we will be fooled, and the smart people will take their money and leave? You reverse it. Because FIIs sold, Indian mutual funds got shares at cheap prices. Let's reverse one thing: who is the cause, who is the effect? The bottom line is that the money that foreigners have taken out. Firstly, no one noticed that money has been taken out of every market, including in 25, there was net selling in Korea. There was net selling in Taiwan. There was net selling in India too. But in 25, India's was slightly higher in proportion, but it was not positive in those countries either. So, this has more to do with not investing new money in emerging markets. It's not that more money was made in Korea, so they took it out and put it in India. Nor is it that because India is bad, they took it out of India and put it in Korea. They took it out of both. But last year, they took out less from there and more from here. This year, as I was saying, about in proportion, about 25 from here and a total of 125 billion. So, this cannot be the story. Second is, what do you do? I tweeted that what would you do? If you don't do SIP, what would you do? You would say we will invest all abroad, so the Indian currency is weakening anyway, so our system wouldn't even let you take out money on such a scale. Our system still hasn't let you take out from mutual funds. Imagine if the whole country said we want to do that, then our currency would have ended anyway, and your new money, 1%, 5%, would have been invested in good places, and the value of your money invested over the last 25 years would have fallen by another 20-20%. That's right. Okay, sir, now one last question. Around 96-97, our currency against the dollar was around 23,500-23,800, and the Nifty was at this level. For FIIs, is it worth investing money or withdrawing money? In our opinion, it is worth investing, and we are doing this marketing every morning, and that's why I was in the US two-three weeks ago, and everyone was getting convinced. After my arrival, I haven't followed up with many people in two weeks, so they don't say, "Oh, you invested, are you investing or not? Tell us quickly." This work is done quietly in this business. But in a general conversation, they say that your government is saying there is a big problem. Now, if there isn't, they will say you don't know anything. So, therefore, we will have to be quiet for a few weeks again, for us to say, no, it's done, it's done. In enthusiasm, no problem is so big that you say it's so big a problem that it has been done like this. It's a problem, but some solutions come on their own through cycles, through time, like the war ends, oil corrects a bit, and we should take some steps. That's it. Absolutely right. Samir sir, before concluding the show, I would like to give you a compliment. Sir, light-colored suits suit you very well. Next time, I will wear pink for you. Oh, wow, what a thing. I have 101 colors. Whatever you say, I will wear. Thank you, sir. Thank you. Thank you very much. And you always speak from the heart and give advice and opinions from the heart. You provide guidance. Thank you so much, sir. Thank you very much for being with us. Samir Arora, speaking from Singapore about the market mood and the FII mood. That's all in this special show. Give me your leave. Hello.