Market veteran and the founder and fund manager of Helios Capital, Samir Arora, believes the year 2023 will be good for the Indian market, even though it may underperform China for 6-12 months.
In an interview with ET Now, Arora said: "If the US is not falling and China is doing well, India may underperform China for 6-12 months, but I still think that on an absolute basis, this year will be reasonably good for India in the range of 15 percent."
Arora said India should not be negative just because China sees a rebound in trade and jumps 15-20 percent or even more by the end of the year.
Arora's hypothesis is that the domestic market has a cycle of five-six positive years, followed by one or two negative years. The market gives up the last two years’ gains in those negative years.
"So, we have four years of performance in a seven-year period and sometimes five years of performance in a seven-year period with one year being negative and that negative year taking away the returns even of the previous positive year," Arora told ET Now.
"So when the years are positive, the returns are more than average, 13-14-15 percent per annum. We will be plus/minus that or higher by the end of the year," he added.
Arora said financials, consumers, pharma and IT remain the main themes in the world and every other theme is on and off.
"You may once in a while buy one defence stock or a beaten up stock, but ultimately the main themes in the world are financials, consumer and IT and pharma. Everything else is on and off. There is no history in the other sectors of making long-term returns and maybe once in a while, some stocks will do that but in aggregate, very few stocks from outside these three sectors have created long-term wealth," said Arora.
Arora said he has a reasonable bet in financials relative to tech. He said he has invested in shares of HDFC Bank, ICICI Bank and State Bank of India in nearly the same weight. He also owns shares of Axis Bank and IDFC First Bank.
Among the new-age tech companies, Arora said he owns shares of Paytm and Zomato because these companies are long-term survivors and their stocks had been beaten up enough.
Arora said the competitors of these two companies have run out and the people who were funding the competitors have given up. He added that these two are not really making losses anymore.
Arora believes many headwinds for the market will gradually fade away and the year will turn out to be better for the domestic market.
Arora told ET Now that inflation in the US does not seem to be going out of control and the US markets seem to be settling down and may have already bottomed or may bottom in the next few weeks or months as the interest rates reach the 5 percent target.
However, he added that the US inflation rate might not reach the targeted 2 percent level soon so the Federal Reserve may not cut rates quickly but the hikes will stop sometime soon.
Disclaimer: This article is based on an ET Now interview. The views and recommendations given in this article are those of the analyst. These do not represent the views of MintGenie.