From a markets perspective, Samir Arora, Founder and Fund Manager at Helios Capital while constructive on equities, flagged concerns around taxation, currency impact and global investor perception, which may cap inflows despite strong domestic fundamentals.
Sandeep Tandon maintained that improving sentiment, infrastructure-led investments and increased exposure to mid- and small-cap segments could drive the next phase of growth.
Abhijit Roy highlighted that policy continuity and a stronger push towards industrialisation, employment generation and services-led growth could materially improve the economic trajectory in key states.
Expectations around fiscal incentives, land reforms and large-ticket investments suggest a gradual revival in industrial activity, which could support demand across sectors, including paints and building materials. The outlook hinges on execution, but early signals point to a more favourable environment for corporate growth.
These are edited excerpts from the interview.Q: On balance, which way does it tilt, from a market perspective, all the positives, negatives, how are you thinking about it?Arora: Markets we are bullish. That’s why we are I guess, zero cash everywhere, and even in my long shot, our net might be 70, which is sort of reasonably high, and in a sense of bullish stance. I am on the way back from US and the people that are upset, my God, I have never seen people so upset with India. And I have been marketing for 30 years for I started marketing in 1993 for our first offshore fund, and must have gone to 30-40, countries. This is just too much on taxes.
I didn’t realise even on debt taxes, people are upset. I met some debt guys who said that they have been saying forever that the debt taxes, also India stands out. I don’t know all these because I don’t do debt that even on, like, if you buy a bond and there is some interest accrued before that, no other country charges tax on that for to the new buyer. So they say that also we have to pay.
And then they were a little bit upset with FX. There are many, many things they are upset with. And in general, I would say, these things on whether we have AI or not, I recently saw on social media that Ruchir Sharma said that India does not have AI, and that is the reason FIIs are not investing. So that question came up everywhere, and I used to say that there are 198 countries we do not have their own LLM model.
So you treat us like those 198 at first level, not compare us to US directly. And then I found that in India, people are saying, No, that is not the reason. Ruchir Sharma is wrong. So then what is the reason? Because there is something definitely different.
And according to me, that difference is not LLM and it is not this thing. It is taxes which are obscenely different, and because of currency weakness, they are upsetting people even more, because the taxes have been charged on rupee profits.
The other problem, which I also had, but I never realised that everybody has, is that if you are running an open-end fund, and you pay taxes every quarter, and then if, in the end, you make losses, and then you have to get your taxes back for another 15, 18, 12 months, you won’t get your money back. And how does that work in an open-ended fund?
If everybody sat together in one place, it would be solved, or at least they will accept and have to say, no, we don’t care. Right now what happens is what everybody said, you go to one government guy – he says, this is not my job. This is the other guy’s job. If you go to the other guy, he says, no, this is SEBI’s his job. You go to SEBI, they say, it’s RBI’s job. So all these things were upsetting people, and I did my bit, because I am an India only fund manager, but I am telling you, the feedback was pretty scary.
Q: This is you’re saying that you have been marketing for 30 years, and you’ve never seen people this upset.Arora: Also, of course, one reason is that the rest of the world is doing well, but what I am saying is that we seem to be not listening to their concerns in a comprehensive manner, or something like that, I don’t know. My point I have been saying this forever, that these things are serious, but I said it without really listening to anybody else, because I am also one of them. I can also feel broadly on behalf of everybody, without having met them. But when you meet them, realise that I was quite controlled in my being upset.
Q: If taxes stay where they are in India, India will continue to underperform?Arora: No, it’s not a matter of underperforming. The point is you will always get less than you deserve, and that is rightly so. Because, let us say, our expected returns are 10% and other guys is 12% which is okay, somebody may say we are more steady, we are more secular, but then those returns for the rest of the world, our post tax is equal to pre-tax.
So for us, when we compare our index and say, India has underperformed, the actual numbers are much worse for the end investor, because in other markets, there was no tax. So another say 15% tax. Of course, last one year, they may not have been because market didn’t go up, but generally 15% tax and then the other thing is that the foreign investor may lose on account of currency, so his NAV is down, but because the taxes are charged on rupee profits, that is another source of being upset.
So obviously, when there’s a bull run and our market goes up 20% which it will, and then it will look to the investor that he made 16% because 20% would have gone in taxes, or 15% it may still look okay.
Q: Your first thoughts, from a what do you think big picture, top down, the impact is?Tandon: Frankly speaking, is a very sentiment booster news flow and obviously good for the economy, good for the state. West Bengal has been suffering, at some point of time, it used to be capital of India, and from there, if you have seen it, has only degrown over a period of time. It is a great opportunity. And good luck to the West Bengal people.
I am expecting lot of capital related, infrastructure related movement can happen. There is a one area with and lot of investment will happen now with the BJP government coming, as you rightly said, the previous speaker said double engine Sarkar now.
The current government will put lot of efforts the way they are putting effort in Northeast. This will be another focus area from their long term perspective. It could be a great opportunity for market perspective also.
One more clarity is emerged, and this is the area where some amount of disturbance was there. I am looking at a more constructive manner. And anyway, we have been saying right from March end that versus behind us. And best is yet to begin. So maybe this could be a small beginning in that direction.
Q: I recall you were sitting on a fair amount of cash, and then as we started this fiscal, there was some deployment. Can you give us an update with regard to cash levels and where was much of the deployment done?Tandon: Cash level has come down, let’s say in February on 20$ odd. Now we are hardly 3-4% cash we are left with. And as I said, in the couple of times this is a time to rebuild your exposure. We have increased a lot of exposure in the infrastructure space, and particularly in the small and mid-cap space. That’s the area where we are ramping our exposure gradually.
Q: What is the mood like in Calcutta?Roy: After a long time, I think almost 49 years now, where most of the time we were at, sort of a state where it is always in opposition hands, against the centre, so therefore there was always this feeling that, development is not happening at the pace at which it should have happened. So now it looks like that, the double engine Sarkar will be there.
BJP, having promised a lot or no that on the economic side, which is the progress that they want to make in terms of giving employment, in terms of setting up industries, specifically on the service side as well, whether, movement happens in that direction has to be seen. But we are quite hopeful that things are going to change for the positive, as far as West Bengal is concerned, on the economic side.
Q: Economy wise, what were the top promises? What were the big poll promises by BJP from a from a financials and economy point of view? Roy: What they have said is that, that industrialisation will pick up speed, and, they will provide a lot of employment. So we expect that the industrial policy, which has been in abeyance for some time, in fact, the earlier government went to the extent of having a retrospective, sort of law brought in so that the incentives which they were supposed to pay earlier were also disallowed.
The reason was that, they don’t have the funds to give and therefore they decided that the industries, the big industries, don’t need any money, and hence there will be no fiscal incentive for them. And that was retrospectively bought, which got challenged in the Supreme Court as well. The case is still going on.
What is important is that, the fiscal incentives will play an important role. As far as the manufacturing thing is concerned. The industrial scape also, it depends on the land issue, which is, that there is a dearth of land here. The population is much higher compared to other states.
The intensity of population is very high in the state, and therefore getting land becomes an issue at times. There they had promised that they will have some sort of a policy that they will ensure that the land is taken and payment made to the people concerned from whom the land is being taken so that development can happen at scale.
The third thing which they had promised is that the services side will possibly get an impetus as well, and an employment which is the biggest selling pitch for BJP in the state was that lot of the people have to go outside. All the kids have to go.
They are talented Bengali, and they will find all over in Hyderabad, Bangalore, etc. They can be retained in the state. And for that the services side also needs to be developed, and significant work should happen. We possibly are expecting some big-ticket announcements, which can happen in the next one year, of services being brought into West Bengal in a much bigger way.
Q: The big surprise has come in in Tamil Nadu – TVK. Now Tamil Nadu is big in automotive manufacturing. What does the TVK government stand for? What should we expect in terms of reforms, administrative steps, governance in Tamil Nadu now, because his politics is sort of untested, so there is that uncertainty which is lingering.Mukherjee: BJP is a party I have been following for the last 14 years since its birth. In Southern India and in eastern India, it works as a cultural party. In heartland, Hindi heartland, it works as a religious party, and in some places it works as a political party.
In the West and Kashmir and all these places. So, there are three BJP – the cultural BJP, the political BJP and the religious people. In this way, in South India and in Eastern region, BJP has penetrated as a socio-cultural party. And the basis you see Thalapathy’s rise or Mamata’s downfall is basically they were hinting at it from the cultural point of view.
In Bengal. Also, BJP wants a Hindu homeland being created – Shyama Prasad Mukherjee’s dream. So they were aiming this and they waited. They were waiting. They were gradually developing Mamata made way for it. Mamata in 2018 she did not allow 30% of the people to vote in the local elections.
In 2019 BJP got around 18 seats, and then BJP gradually went up. They got 77 seats, but vote percentage went up, phenomenon from 10% to 14%, and this time it’s going up further, because the graph is going. BJP is gradually making inroads. What Thalapathy’s rise and Mamata’s downfall are parallels to BJP way of invading different states in different ways. They don’t have one format. That is its beauty, and that is the only reason Mamata could not play out with BJP.
For full interview, watch accompanying video
