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Rakesh Jhunjhunwala expects bull run to continue for years; finds opportunity in midcaps, smallcaps

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Rakesh Jhunjhunwala, Titan companyRakesh Jhunjhunwala, Titan companyThe ace investor said that the Union Budget of 1989, stock market bottom in 2001, and 2020 March sell-off were the three biggest opportunities for markets that he has seen.

Ace investor Rakesh Jhunjhunwala continues to be optimistic about India’s growth story and sees the current medical situation as a “blip”. “This is a small diversion which is going to be a very long bull market,” Rakesh Jhunjhunwala said in an event organised by All India Asset Management Association (AIMA) He stressed that India is now witnessing a multi-year bull run which, according to him, started when stock markets made a bottom in March 2020 and Nifty hit 7,500 points. Since March 2020, Sensex and Nifty have now managed to surge nearly 75% each.

“March 2020 was one of the biggest opportunities I have ever seen in my life. Risk reward was so much in your favour,” Rakesh Jhunjhunwala said. He highlighted that the share price of Tata Motors had tanked to Rs 80 apiece, during the March sell-off even though the company had robust fundamentals. Jhunjhunwala is now a shareholder in Tata Motors, purchasing a 1.3% stake in the company during the July-September quarter last fiscal year. The ace investor went on to add that the Union Budget of 1989, stock market bottom in 2001, and 2020 March sell-off were the three biggest opportunities for markets that he has seen. 

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Often called the big bull of Dalal Street, Rakesh Jhunjhunwala said that India’s corporate profits to Gross Domestic Product ratio is very low and expects it to grow as India moves into the post-pandemic era. “India is well placed to register double-digit growth in the next 4-5 years. Despite covid, we will see double-digit real growth even this year,” he added. Rakesh Jhunjhunwala believes that the government’s reform push would aid his expectations as he cited the PLI scheme among others as key reforms undertaken by the government.

While stock markets have continued to remain range-bound for the last few trading sessions, Jhunjhunwala believes another sell-off is not on the cards unless daily coronavirus cases spike to reach a range of 6 lakh cases a day. “I would have liked it if covid would not have come but I will not change anything in my investing horizon just because of covid,” he added.

Diving into pockets where he sees opportunity ahead, Rakesh Jhunjhunwala said that he is bullish on metal stocks. “If you look at the divergence between the valuation of cement stocks and valuation of metal stocks, and if you look at the prospects of metals stocks, I don’t understand it (the divergence in valuation),” he said. Jhunjhunwala remains a believer in the pharma space for India. India’s pharma exports were at $24 billion last year whereas US software exports were near the $200 billion range, the big bull believes that pharma could replicate those numbers in the future.

Further, Rakesh Jhunjhunwala said that the next leg of returns for investors would not come from the big wigs of Dalal Street but from the most battered midcap and smallcap stocks along with cyclicals.

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