Helios Capital's Samir Arora has proposed an unprecedented idea for Indian mutual funds: a 30-day boycott of new IPOs, QIPs and placements. According to reports from CNBC-TV18, Arora suggested that mutual fund houses could come together, similar to how AMFI functions, and agree not to participate in any new issue for 30 days at a stretch. He explained that the strategy would involve 'we will boycott, without any specifics, we will boycott every IPO, every QIP, every placement for 30 days' and then observe market performance before resuming participation. The proposal is designed to be applied broadly rather than selectively, with Arora stating 'Let five fail' and noting that his firm currently takes anchor allocations in only about 7-8 IPOs a year.
Arora attributed the current pressure on Indian equities not to FII selling, as foreign investors have been net buyers for the past two months, but to the large number of new issuances coming to market. As reported by CNBC-TV18, he compared the current situation to 1999 and 2007, when similar floods of new issues weighed on the market. The proposal is designed to be applied broadly rather than selectively, with Arora stating 'Let five fail' and noting that his firm currently takes anchor allocations in only about 7-8 IPOs a year. According to latest reports, Arora emphasized that the weakness is driven by an influx of new issuances handled by less careful investment bankers rather than foreign institutional investor selling pressure.
Despite the boycott proposal, Arora highlighted four positive changes over the past three to four months that support his more optimistic outlook. According to CNBC-TV18, the US tariff rate, which had been as high as 50 percent, is now at 10 percent. The rupee, after weakening against regional currencies, has stayed largely flat for two months, which he linked to FCNR-related inflows. Additionally, concerns about India missing out on AI-related opportunities have eased, since AI-linked stocks — including Google, Amazon, Meta and semiconductor companies — have not been performing strongly either.
Arora reported significant improvement in earnings growth metrics across market segments. As reported by CNBC-TV18, earnings growth has picked up from 7-8 percent over the last year or two to around 18-20 percent overall, with mid-cap earnings growth near 20 percent and small-cap earnings growth around 30 percent. This substantial improvement in profitability metrics provides a fundamental support for the market despite the proposed boycott strategy.
