Mumbai: Market veteran
Samir Arora on Friday lashed out at the Indian government and rated its response to the coronavirus pandemic and the subsequent
economic crisis as ‘near zero’ on a scale of 1 to 10.
“If you put it on a scale relative to the world, we would have to put it near zero, except some response from the Reserve Bank of India (RBI),” said Arora, Founder and Fund Manager at the Singapore-based Helios Capital. He termed even
RBI’s measures as too unrealistic.
He was speaking at the ETMarkets Investor Conference.
“It is unrealistic, knowing that the banks have their own money in reverse repo with RBI. When they have money which they are not lending, why would they take additional money and lend to mutual funds?” he asked.
To ease liquidity pressure on mutual funds, RBI last week announced a special liquidity facility of Rs 50,000 crore for mutual funds. Under this facility, the central bank will provide funds to banks at lower rates and banks can avail it for exclusively meeting liquidity requirements of mutual funds.
Watch Samir Arora's full speech at ETMarkets Investor Conference!
Arora said the government’s response has not been adequate.
India Inc has been patiently waiting for the government to dole out a second round of stimulus measures, this time to provide some much-needed respite to the medium, small and micro enterprises (MSMEs), even as the country enters the 41st day of the coronavirus-induced lockdown.
After announcing the first stimulus of Rs 1.70 lakh crore, mainly to support the poor and the underprivileged, many industrial sectors have been hoping for a similar package, but no such announcement has come in as yet.
“It is completely inadequate. Every time, we leave everything for the last day,” he said, expressing concern.
The lockdown has been extended up to May 3, but there is no clarity on the relaxation or extension of the same beyond this date.
Arora said the Indian market will underperform in the near term, as the country wrestles with uncertainty over the plan ahead with lockdown
The domestic equity indices recovered smartly in April, recouping some of the steep losses seen in March, boosted by stimulus packages by central banks and governments across the world.
In April, Sensex rose 14.28 per cent and Nifty 14.59 per cent, posting their best monthly show since September 2009 after suffering steep losses in March. Stimulus packages by central banks and governments across the globe have boosted investor sentiment and triggered brisk buying in stocks after the March selloff eroded 20.69 per cent of Sensex and 21.41 per cent of Nifty.
“I do not want to use the word ‘dead-cat bounce’, because it would mean the entire rally would be given up,” said Arora.
“We just followed the US,” he said, adding that the April rally in Indian stocks was a bit too much.
There is no clarity on which parts of the country will be open, and how things will pan out, Arora said and warned that next 1-2 months could be bad for the Indian market in the light of the steep slowdown the economy is going to experience.
The market veteran does not expect a V-shaped recovery for the market, but does not see Nifty touching 7,500 level again over the next few months as well.
He said India has disappointed foreign institutional investors (
FIIs) a lot over the past few years, and even then they liked India, albeit that largely concentrated in top companies.
“Now they (FIIs) are getting frustrated in some sense. There are issues such as only 20 companies will do well. Then there is this speculation that the tax rates will be reversed, etc,” Arora said.
“They are not thinking this is a great opportunity to buy Indian stocks. That is not the case,” he said.