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‘Big Bull’ sees big gains in Indian stock market

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According to billionaire investor Rakesh Jhunjhunwala, annual returns on Indian stocks will be around five percentage points in addition to economic growth of 7-10% in the coming years.
Known locally as Warren Buffett in India due to his penchant for investing in equities, Jhunjhunwala is counting on the country’s long-term growth potential and political stability to fuel further gains in the $ 3 billion stock market. dollars which has already reached record after record this year.
His bets range from banks and health insurance – which he says will be boosted by the pandemic – to a large gathering of consumers on the backs of Prime Minister Narendra Modi’s policies to give every Indian a home and access to drinking water.
“We are in the middle of a bullish phase that will last a very, very long time,” Jhunjhunwala said in an interview earlier this month. “India will also look lucrative when the US Federal Reserve begins to withdraw its stimulus measures, but there will be disruption in the near term.”
Longtime observers of Jhunjhunwala, also known as the “Big Bull” in India, would not be surprised by his predictions. Rich valuations and growing concern that the Fed may soon start cutting its stimulus measures have done nothing to shake investor confidence, which has in the past said its early stock picking strategy. of a growth cycle was inspired by American billionaire George Soros and Hong Kong investor Marc Faber.
Jhunjhunwala’s comments come as local stocks continued to climb despite a deadly wave of coronavirus that hurt the real economy, leading to job loss and consumption. India’s central bank warned in its annual report last month that the surge in local stocks “poses the risk of a bubble.” “The Reserve Bank and others were worried even when the Nifty was at 8,000 points,” Jhunjhunwala said in a video interview on June 3, referring to one of the country’s key indicators which is now heading towards a unprecedented level of 16,000 after almost doubling since late 2015.
Only two events would be significant enough to make him suspicious of India’s prospects, he said.
Political instability – which he says is unlikely for now given he expects Modi to stay in power at least until 2029 – and any antagonism from rival Pakistan of India, endowed with nuclear weapons.
The Nifty 50 Index has risen by more than 12% so far in 2021, outperforming the MSCI Asia Pacific Index by around nine percentage points. The Indian gauge is trading at more than 20 times its 12-month profit forecast, down from an average multiple of 18 over five years, according to data compiled by Bloomberg.
The Nifty rose 0.6% to 15,784 on Thursday, near an all-time high, while the S&P BSE Sensex climbed 0.7% to 52,658.4 points in Mumbai on Friday.
A record pace of gains, extreme scale (95% of stocks are above their 200-day moving average) and the penny stock craze could indicate a short-term pause in Indian stocks, but “we continue to be structurally positive for the long term. term, ”Bloomberg Intelligence strategists Gaurav Patankar and Nitin Chanduka wrote in a report earlier this week.
Jhunjhunwala, 60, developed a fascination with stocks as a child while watching his father, a retired tax commissioner, juggle market investments, he said in an interview with Bloomberg News in 2005. After graduating with honors from Sydenham College of Commerce and Economics in Mumbai, he borrowed $ 100 from a brother-in-law in 1985 and started buying stocks at the age of 25.
New money will only fuel further gains in key indices, Jhunjhunwala said, with a large photo of BSE Ltd., Asia’s oldest stock exchange, visible in the background. The Reserve Bank of India sees the region’s third-largest economy grow 9.5% in the year that began April 1.
A custom index of the billionaire investor’s top 20 holdings at the end of March has grown by around 85% over the past year, according to equity exchange data compiled by Bloomberg. That’s against a 50% jump in the Nifty 50 gauge during that time.
Jhunjhunwala has an estimated net worth of $ 4.6 billion, according to Forbes.
A resident of Mumbai, Jhunjhunwala also invests through his company Rare Enterprises Pvt which derives its title from the first two letters of his name and that of his wife, Rekha Jhunjhunwala. He declined to comment on the individual investments citing local regulations and Rare’s own policies.
One of his first successes was Crisil Ltd, which he bought for the first time in 2002 at Rs 150 apiece. S&P Global offered 775 rupees in 2005 to take over the Indian company. Crisil is now at around Rs 2,882, and Jhunjhunwala, along with his wife, held around 5.5% at the end of March, according to data compiled by Bloomberg.
Jhunjhunwala hasn’t always been a bull. He said he made 400 million rupees ($ 5.4 million) from short selling stocks during India’s first billion dollar financial scandal, which erupted during the heady days of economic liberalization at the start of the 1990s.
At the time, a broker, Harshad Mehta, transferred money borrowed from banks to shares on BSE, driving up stock prices. When the $ 2 billion fraud was discovered, it caused a stock market crash. The Securities and Exchange Board of India was created in the wake of the scandal, and millions of millennials have roared as retail investors ever since.
“I have complete confidence in the markets,” Jhunjhunwala said. “All my money is invested in stocks. I have not invested anywhere other than the stock markets.

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