'Let's Think Of Around 15% Returns Over 12 Months'

'The March correction was clearly due to the war and with prospects of that coming to a conclusion, there is a natural rally.'

Markets reacted to the developments in West Asia and the outcome of the monetary policy meeting of the Reserve Bank of India on Wednesday, April 8, 2026.

Samir Arora, founder and chief investment officer of Helios Capital, tells Puneet Wadhwa/Business Standard in a telephonic conversation that there may be some impact of the West Asia war on select sectors and companies. However, it's not as bad as was feared earlier.

How are markets interpreting the ceasefire in West Asia -- is this a stop-start phase, or is the worst over?

I don't think it is a stop-start situation. We and markets believe that the worst phase of West Asia war is over. By February-end, the markets were in a 'good mood' and held up despite sharp corrections like in the information technology (sector.

So, the March correction was clearly due to the war and with prospects of that coming to a conclusion, there is a natural rally.

Even the recent quarterly business updates by companies suggest consumer sentiment is strong.

For the most recent quarter (which includes March), we have seen strong business updates from consumer companies, good numbers from auto companies and decent recovery in credit demand for banks.

There would have been some damage to macro in terms of higher oil and commodity prices, lower travel/tourism and may be lower remittances but hopefully this is largely contained.

Markets had discounted the bad news with select pockets seeing a dip of over 15 per cent, which have recovered partially now.

Yes, there may be some impact of the West Asia war, but it's not as bad as was feared earlier.

Some sectors may continue to face pressure, but overall, markets are not behaving as if the worst is still ahead.

What returns should investors expect from here on?

As of now, we are not getting carried away in our expectations only because the fall has been sharp in March and year-to-date.

Let us think of around 15 per cent returns over the next 12 months after the 7-8 per cent gains already made this April.

That's a more realistic approach and target right now. Additionally, some macro factors like currency stability have also improved, which supports this moderate optimism.

But will the real impact show up with a lag in companies' financial performance, especially the rise seen in crude oil prices? Are markets factoring this in?

Yes, if there is any slowdown, inflation, or damage, it may show up after one-two months -- but not across all sectors. Also, if the impact is for a short period, markets tend to justify and absorb the impact.

Economy, oil prices and inflation, among others, will not exactly go back to February-end levels in a short period.

But markets have a habit of looking into the future and small adverse changes may have been already reflected in the prices due to steep fall in March.

Will tariffs and trade deals drive markets from here on?

Yes, tariffs matter, but in a positive way. First, tariffs matter if a country is isolated and suffers because of specific targeting, which makes it uncompetitive versus others.

If all countries face the same tariff (10 per cent currently), it is more a cost issue for US customers rather than a negative for us.

As far as India is concerned, the tariffs have fallen from 50 per cent to 10 per cent. It is not even clear how US will extend these tariffs beyond the 150-day limit.

Also, even if US President Donald Trump increases the tariff for different countries using different trade laws, our effective weighted tariff is expected to be at 18 per cent (according to the trade deal).

So, it will still be much better than the 50 per cent tariff we were paying till recently.

How US will reinstate tariffs for different countries to the pre-supreme court decision remains to be seen but there is no reason to believe that India will again be targeted separately on this.

Disclaimer: This article is meant for information purposes only. This article and information do not constitute a distribution, an endorsement, an investment advice, an offer to buy or sell or the solicitation of an offer to buy or sell any securities/schemes or any other financial products/investment products mentioned in this article to influence the opinion or behaviour of the investors/recipients.

Any use of the information/any investment and investment related decisions of the investors/recipients are at their sole discretion and risk. Any advice herein is made on a general basis and does not take into account the specific investment objectives of the specific person or group of persons. Opinions expressed herein are subject to change without notice.

Feature Presentation: Aslam Hunani/Rediff