Avoid IT, focus on growth: Samir Arora's playbook for next 12 months

Investor sentiment has turned increasingly optimistic as hopes rise for a formal agreement between the United States and Iran, easing concerns around energy markets and geopolitical uncertainty. According to Helios Capital founder Samir Arora, the prospect of peace in West Asia could remove a key overhang for global markets and help keep oil prices under control.

Speaking to ET Now, Arora said investors should focus on the broader outcome rather than the specifics of the deal.

"Hopefully both sides, although it is not a very US-favourable deal, will not overpush anything. All we want is that there be peace and that oil flows easily, and prices are already showing that."


He noted that reports suggest the framework agreement is largely complete and that markets are looking beyond the formal signing process.

"As long as they do not fight, the rest of the world is happy."

Oil Pressure Eases
While crude prices briefly surged during periods of heightened tensions, Arora believes the pressure on oil markets has eased significantly.

He pointed to ample supplies, including oil currently stored on ships, as well as incentives for producing nations to increase output in order to fund reconstruction efforts. He also highlighted the possibility of Iranian oil re-entering mainstream global markets if sanctions-related restrictions are relaxed.

"I would think that oil is now not 80-90, but maybe 65 to 80 or something. I have no idea, but I think that pressure is off."

According to him, India has already raised domestic fuel prices, creating enough buffer within the system to shield oil marketing companies from further shocks.

Fully Invested and Looking for Growth
Asked whether this is a good time to accumulate quality companies ahead of earnings season, Arora responded with characteristic humour.

"For us, the problem is that we are already stocked up. So, there is nothing more. You send us new money, we will stock up more."

His investment preference remains firmly tilted toward companies capable of delivering strong growth rather than marginal earnings surprises.

Arora said his firm favours mid-cap and smaller companies that can grow at double-digit rates rather than businesses where expectations are already low.

"I do not like companies guiding for 5% growth and the stocks reacting well if they end up delivering 6% growth. I want the starting point of the companies to be 13%, 14%, 15%, 12%, something like that."

Consumer Staples and IT Remain Out of Favour
Among sectors, Arora remains constructive on most areas of the market but continues to avoid consumer staples and information technology.

He argued that traditional consumer companies are facing challenges from quick commerce, digital advertising platforms, and changing distribution models.

"Everything they had is being attacked on every front."

On IT services, Arora believes the market is underestimating the disruptive impact of artificial intelligence and the rise of global capability centres (GCCs).

AI Disruption Still a Concern for IT Services
While some IT companies continue to speak positively about AI-driven opportunities, Arora remains unconvinced that the industry's growth outlook is immune from disruption.

He pointed to pricing pressures in existing businesses and questioned whether AI-led productivity gains can coexist indefinitely with traditional outsourcing growth.

"There is pressure on the old business and there is growth in the new business, but the new business currently is maybe 8%, 10%, 12% and the old business is 90%."

Arora also argued that if companies such as OpenAI and Anthropic achieve the massive growth expectations currently embedded in market valuations, some of that growth must come at the expense of existing service providers.

"If OpenAI and Anthropic grow a lot, some part is natural, new things they are doing, but some part is that they are substituting what somebody else was doing."

He also highlighted the rapid growth of GCCs in India, questioning why investors assume this trend will have no impact on traditional IT services companies.

Financials Still the Portfolio Backbone
Although financials remain the largest sector exposure in his portfolio, Arora acknowledged that he is not adding aggressively to the space.

Instead, he views banks and financial institutions as a stabilising force within portfolios due to their reasonable valuations and relatively predictable earnings profile.

"You need somewhat of a backbone in terms of stability."

He added that foreign institutional investor selling has been one of the key reasons financial stocks have underperformed, but that pressure could ease if India's relative market performance continues to improve.

"Maybe some FII pressure on selling goes down and if that goes down, these financials will do okay. Better than what they are doing these days."

Crude-Sensitive Sectors Could Return to Focus
With oil prices retreating and the geopolitical outlook appearing more stable, Arora acknowledged that crude-sensitive sectors may once again become attractive tactical opportunities.

"Broadly yes, possible, I agree."

He said markets typically look ahead and do not wait for every barrel of additional supply to arrive before pricing in improved conditions.

"If markets believe that it is coming, it does not matter if it is two months here or two months there."

Market Outlook: Broadly Positive, Selectively Positioned
Despite reservations about IT and parts of the consumer sector, Arora's broader view on equities remains constructive. His preference continues to be growth-oriented businesses outside the traditional consensus trades, while maintaining financials as a core holding for portfolio stability.

For investors, the message is that with geopolitical tensions easing, oil risks receding and earnings growth still available in several pockets of the market, stock selection matters more than ever.