Will share markets continue to gain in May? Don’t get your hopes high, warns billionaire fund manager

Sending warning signals that the jolly ride that domestic markets enjoyed in April could soon be cut short, market veteran and founder of Singapore-based Helios Capital, Samir Arora said that Indian equity markets could in for a W kind of recovery. Arora pointed out that equity markets in India have been reacting to the performance of the US markets that have been helped by the unflinching help that is being provided to businesses there. “They (US) are being bailed out and we are reacting to that as if we are being bailed out. Today we are being driven by their moves but 6-12 months down the line when we recover on our own, and they keyword here is on our own, we would then move on then,” he said during the ETMarkets Investor Conference. 

The fund manager who has been one of the leading commentators when it comes to Indian stock markets was visibly dissatisfied with the response so far by the Indian government and the Reserve Bank of India (RBI). “RBI’s is unrealistic in knowing the situation, they are asking banks to lend to mutual funds by taking money from the central bank but why would take additional money from RBI and lend money when they already have funds and are not lending even that,” he questioned. 

The central bank, in an effort to infuse liquidity into the system, last week announced the second batch of its targetted long-term repo rate. RBI made available Rs 50,000 crore to the banks asking them to lend half of that to small and medium NBFCs. This was the second such effort by the RBI, the first was largely given by banks to large corporates and public sector enterprises.

“Indian government is being unnecessarily shy and thinking how will the world react,” Arora said. He highlighted the Yes Bank saga — where the government imposed certain restrictions on the trouble private lender for a few days — questioning the government’s response to unnecessarily create panic. “When the government can do everything why are they trying that let us see if the banks lend to Mutual Funds or not,” Arora added. He is of the view that the government needs to show the willingness to help in the current situation. Offering a contrarian view on the auto sector, Arora said that the argument that people will ditch Uber and Ola to travel in their vehicle is not something that he believes in. 

Large caps over mid-caps is how Arora is betting on during the current turmoil. He advised fresh investors to wait and carefully invest fresh cash and only after analysing the situation. “Things will be delayed so it’s not like people will still paint houses and use plywood on tables,” Arora added while cautioning investors.