Big bull Rakesh Jhunjhunwala has decoded why domestic stock markets stood firm while the grim second wave of coronavirus stunned the nation. The ace investor believes that the sentiment in the country might be negative at this juncture but India’s reality is not negative and hence that has given Dalal Street the nudge. “Sentiment is bad but the reality is not. In the third and fourth quarters, Indian companies have reported the biggest profit growth in the last five years,” Rakesh Jhunjhunwala told Hindi news channel Aaj Tak in an interview aired this week.
Corporate profits soar
“In 2008, India’s corporate profits to GDP were 8%, and in 2019-20 the same was down at 2%. I believe this year we will have it at 6%,” Rakesh Jhunjhunwala said while stressing the positive outlook for the Indian economy. He added that in his view, India is entering a phase where the country will see double-digit growth. He said that India will witness 10% GDP growth this year and will continue witnessing high growth for the next 20 years. Further, the billionaire investor gave a thumbs up to India’s economic management, adding that the government’s vision to provide tap water to every household is something that will save lives going forward.
Covid-hit sectors to bounce back
Talking sector-specific, the big bull said that all sectors will emerge from the pandemic. “The sectors that are badly affected are restaurants, tourism, and aviation. They will come back with a bang,” he said. Rakesh Jhunjhunwala added that in his view, by the end of this year resorts in India will once again see customers coming back strongly. “… five years down the line I will tell people to sell and nobody would do so, but right now, nobody is ready to buy,” he said.
Share market investment mantra
Rakesh Jhunjhunwala also shared his mantra for investing in stock markets, which he says, has not changed so far and will not change in the future too. “I invest in markets seeing the same things now that I did back in 1985. Nothing has changed. Markets base final valuations on cash flow,” the big bull said while cautioning people that markets move in excess in either direction.
On the current health crisis, the ace investor said that India could be looking at going back to normal soon. “This is a tragedy and there is no question it is a war and we have to fight it,” Rakesh Jhunjhunwala said.