Samir Arora on India-US ties, FPI outflows, Union Budget 2026 and more

Samir Arora of Helios Capital said on Monday that equity investors had assumed an extreme worst-case scenario, including the US imposing 500 per cent tariffs and India continuing Russian crude imports, adding that such assumptions were overdone. He said comments by US Ambassador to India Sergio Gor had pulled back those assumptions to some extent.

“I don’t think this means that tomorrow some deal is happening or some great positive thing is happening, but I think the other end was extreme,” Arora said in an interview with Business Today.

Arora said he was glad that these developments had taken place ahead of Union Budget 2026, as it gave the government an opportunity to take decisive steps to demonstrate that it could manage without the US. He added that if a deal with the US were to happen, it would be “sone pe suhaga”.

Earlier in the day, Gor told the media: “I’ve traveled all over the world with President Trump and I can attest that his friendship with Prime Minister Modi is real. The United States and India are bound not just by shared interest but by relationship anchored at the highest levels. Real friends can disagree but always resolve their differences in the end.”

FPI outflows and valuation concerns

Arora said the fall in Indian equities may not have been driven entirely by valuation concerns, adding that such concerns were often used to justify market movement.

He noted that foreign portfolio investors had more flexibility than domestic investors in deciding whether to stay invested in India, and said FPIs sold $17 billion to $18 billion worth of Indian shares last year. Of this, about $10 billion was sold in January 2025 alone. From February 1 to December 31, 2025, institutional investors sold about $7 billion, which he said was less than 1 per cent of their holdings in India.

Arora said two issues unique to India occurred during this period — the India–Pakistan conflict and the tariff war.

“And during that time, there were so many IPOs, new-age IPOs and old-age IPOs. Everybody believes that these IPOs are loss-making companies, high PE companies and very much future growth companies. All of them were aggressively bought, both as anchor investments and otherwise, by foreign investors. What they sold, even if you include the $10 billion of January, were the older names — banks, IT companies and consumer companies — which in theory had much lower valuations,” Arora told Business Today.

The interview was moderated by Siddharth Zarabi, Group Editor at Business Today, and Aabha Bakaya.

Arora said the real outflows began from July. Between March and June, when global markets were seeing inflows, India also received inflows. It was towards the end of July or August that tariff-related issues emerged.

“So I think it is very much related to that at one level, and then it becomes a self-fulfilling thing,” Arora said.

Budget 2026 and taxation

Arora said any tax tweaks in the Budget would be seen as a positive move, adding that it would reverse something that was “a bit out of line”.

He explained that when a foreign investor earlier evaluated markets, Indian equities might deliver 11 to 13 per cent returns in rupee terms, but after a 3 to 4 per cent currency impact, returns came down to about 10 per cent, which was higher than 8-9 per cent in other markets.

“But as soon as India has a 15-odd per cent average tax and other countries have zero, you fall below half of those countries in terms of returns, and that obviously will make a difference. These things get highlighted only in bad times. Why will they get highlighted when the market is up 20 per cent, which once in a while it happens,” Arora said.

He noted that the US government was effectively foregoing $500 million to $700 million in tax revenue from Indian investors. He gave an example, saying that if Indian investors had invested $20 billion and earned a 20 per cent return, the profit of $4 billion would translate into a large tax outgo if the US imposed a 20 per cent tax.

“I am saying Indians should appreciate that they gave away $800 million and did not charge Indian investors, and the Indian government was allowed to charge,” Arora said.