NEW DELHI: Big Bull Rakesh Jhunjhunwala’s mantra for investing success has three 'Fs' – fair valuation, fundamentals and future. That, he says, has worked for him since 1985.
“I have made wealth in Indian stock market because, I was always bullish on India. India has grown rapidly in the last few decades,” the ace investor told Hindi news channel Aaj Tak in an interview.
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He said it is a myth that the market is driven by non-real factors. “Markets are the supreme king, and one has to accept it. So, follow it and learn from it. The so-called kingmakers are behind bars in Arthur Jail,” he said. “There is no 'Harshad Mehta' in the markets. It is not manipulated. Such talks are completely bogus.”
Jhunjhunwala compared the current mushrooming of startups in India with the derby (horse race). “The startup business is highly speculative. If 1,000 horses run in a race, we will have the top 10 from it. We need an organisation to invest in startups. I cannot invest in startups at these valuations,” he said.
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On the current health crisis, Jhunjhunwala said the pain is real, but temporary. “Covid is just a flu, not cancer. It can affect a company's operation for a quarter or two, but investors cannot give up on the next 10 years,” he said. At the same time, "we cannot take this human tragedy lightly.”
Fondly referred to as India's own Warren Buffet, the Dalal Street veteran lashed out at the media for building fear psychosis and depression over the Covid crisis.
“It is a war, which is to be won. The sudden spike in cases put immense pressure on the deficient health infrastructure. No matter how bitter the reality, we have to face it. Out of 1.4 billion population, 20 million people got infected by Covid in India, while 10 per cent of the population got infected in the US,” he said.
The market guru said the sentiment might be poor on Dalal Street, but the reality is not. The last couple of quarters have been the best ones for Indian companies in the past five years.
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Despite record low savings, double-digit unemployment rate, rising inflation, the ace investor is swearing by the Indian economy and equity. Changes like digitisation, IBC, RERA, GST, farm bills, labour laws, mining and power sector reformed and the digital economy will lead the way for growth, he said.
He said India is entering a new phase of growth, with a double-digit run this year and for the next few decades. “The US witnessed the most prosperous decade after the Spanish flu. All sectors are going to survive this pandemic,” he said.
Jhunjhunwala said hospitality, restaurant and aviation are the worst affected sectors, but they would come back with a bang. “I will change my name, if you get a booking at any resort in Nov-Dec. Abhi koi lega nahi, 5 saal baad koi bechega nahi,” he said.
The ace investor said market-based final valuations are done on cash flows. “That has never changed and it will never change." However, due to rising inflation, demand may soften in the near future but companies will absorb it through price hikes and by improving efficiencies, the veteran said.
Jhunjhunwala gave a thumbs up to the economy management by the Mod government, with a score of 9 on 10. He said the government has done a phenomenal job. “I am a capitalist, but the only panacea for this country is growth. Mr Modi is a distilled socialist, who thrives for the big picture,” he said
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