NewsStocksMid and Small Caps May Outperform as Foreign Investment Returns, Says Helios Capital's Samir AroraMid and Small Caps May Outperform as Foreign Investment Returns, Says Helios Capital's Samir Arora
Samir Arora of Helios Capital suggests mid-cap and small-cap stocks could outperform if foreign institutional investor (FII) flows turn positive. India's underperformance compared to emerging markets has widened, potentially creating investment opportunities. FIIs are shifting from large financial, IT, and consumer stocks to smaller and new-age companies. Despite a year-to-date net outflow of Rs 1.46 lakh crore, October saw a positive inflow of Rs 8,100 crore. Arora anticipates increased foreign interest in India, particularly with ongoing US-India trade talks aiming to double bilateral trade to $500 billion by 2030.
*this image is generated using AI for illustrative purposes only.
Samir Arora, a prominent figure at Helios Capital, has shared his perspective on potential shifts in the Indian stock market landscape. According to Arora, mid-cap and small-cap stocks may outperform their larger counterparts if foreign institutional investor (FII) flows turn positive.
Market Dynamics and Foreign Investment
Arora points out that India's underperformance compared to emerging markets has widened significantly, potentially creating an opportunity for investors. He notes that global investors are increasingly allocating funds to non-US markets, which could benefit India.
Shifting Investment Patterns
Foreign institutional investors have been adjusting their portfolios, with notable changes in their investment strategies:
| Sector | FII Action |
|---|---|
| Large Financial Stocks | Selling |
| IT Stocks | Selling |
| Consumer Stocks | Selling |
| Smaller Companies | Increasing allocation |
| New-age Companies | Increasing allocation |
FII Fund Flows
The Indian equity market has experienced significant FII fund movements:
| Period | FII Fund Flow |
|---|---|
| Year to date | Rs -1.46 lakh crore (net outflow) |
| October | Rs 8,100 crore (positive inflow) |
Future Outlook
Arora anticipates increased foreign interest in India, particularly in light of a potential trade deal with the United States. Key points regarding the trade talks include:
- Ongoing progress between India and the US
- Aim to conclude the first tranche by year-end
- Goal to double bilateral trade from $191.00 billion to $500.00 billion by 2030
Expert Insight
"The current market dynamics may present an opportunity for mid and small-cap stocks," Arora suggests. "If foreign institutional investors reassess their strategies and potentially increase their exposure to the Indian market, we may see a shift in performance favoring these segments."
Investors should note that market trends can be unpredictable and that past performance does not guarantee future results. It's always advisable to conduct thorough research and consider one's risk tolerance before making investment decisions.
15
