FIIs may return as valuations ease, but tax tweak key for big inflows: Helios India's Dinshaw Irani

Mint, Irani said pockets of the market continue to offer value despite headline premiums. Even though smallcaps are quoting at a slight premium to largecaps, on a price-to-earnings-growth (PEG) basis, the ratio is almost half that of largecaps.

Thus, valuations are looking attractive, he added.Helios India, part of Singapore-headquartered asset manager Helios Capital Management Pte. Ltd, manages an estimated ₹13,000 crore in assets across mutual funds and alternatives.Edited excerpts:Nifty 50 constituents have not seen as much of a downturn in profits as the broader market, represented by the Nifty 500.

Looking at the Nifty 50 alone to gauge growth is therefore not justified. The Nifty 500, however, has seen a healthy upturn in profits in recent quarters, with Q2FY26 and Q3FY26 clocking earnings growth of 15% and 18%, respectively.Growth in Q4 is also expected to remain in double digits, albeit lower than in the previous two quarters.

It could have been stronger but for the impact of the war.It was not only elevated valuations but also earnings growth falling off for the broader markets that made them pull back. Now, with growth rates coming back and valuations becoming reasonable, we can expect FIIs to start trickling back.To see a deluge of inflows, the government has to relax capital gains norms for FIIs, as we are probably the only country that charges capital gains tax on foreign inflows.Our strategy is dictated by our Elimination Investment philosophy, where two factors—negative medium-term triggers (in most cases projected financial performance) and unreasonably high valuations, which are short- to medium-term in nature—keep refreshing our portfolio depending on what is working best at a given point in time.