Hedge fund names 3 ‘big picture’ investment themes to ride out the volatility from India’s Covid resurgence

India’s Covid-19 cases are rising again but the market impact is expected to be limited as investors have some visibility over the longer term, Helios Capital’s Samir Arora told CNBC on Monday.

Arora, who is founder and fund manager at the Singapore-based hedge fund, said that investor confidence is coming from the fact that reinfection among those who are getting vaccinated against the disease is very low.

“I think this will not have a serious market impact, only because the end, otherwise, is quite visible,” he said on CNBC’s “Street Signs Asia.”

“Although we are seeing second wave, third wave cases around the world, nobody is really reporting that the people who have got fully vaccinated are having a large number of cases, or that those cases end up in hospitals,” Arora added.

India reported a record number of new cases over a 24-hour period on Monday, surpassing levels seen in September when the first wave of infection reached its peak. There were 103,558 new cases, more than half of them in the state of Maharashtra, pushing the country’s total number of reported infections to more than 12.5 million.

Indian shares tumbled Monday afternoon as both the Nifty 50 and the Sensex closed down more than 1.5% each.

Big picture themes

Bearish on EV

The electric vehicle market in India is at a nascent stage with plenty of potential. Analysts and investors have highlighted specific automakers as well as ancillary service providers that potentially stand to benefit from a shift from internal combustion engines to battery-operated vehicles.

For his part, Arora said electric vehicles are going to be “value destructive” for most automakers. He explained that they would face competition from tech names like Apple, Baidu, Xiaomi and others — many of those companies have already announced plans to enter the electric vehicle market.

Those companies are “laterally trying to enter this industry only because this industry now seems to give new people a chance, who may not have been good at automobile engineering or assembly or manufacturing, but have some other angle related to electric vehicles,” he said.

As a result, more companies will be competing in the auto market for the same number of users, many of whom may also prefer to use ride-sharing services instead of owning their own vehicles, Arora added.

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