Indian Economy Will Grow In Double Digits For 4-5 Years: Rakesh Jhunjhunwala

Rakesh Jhunjhunwala, CEO, ‎Rare Enterprises, also known as the Warren Buffet of India and the Big Bull, is betting on the Indian economy growing in double-digit percentage over the next 4-5 years despite the second wave of covid and lockdowns.  Speaking at the 6th National Leadership Conclave of All India Management Association (AIMA), Jhunjhunwala insisted that covid was a mere small diversion in what will be a 'long, long' bull market in India. "This too shall pass," he said.

Sunil Kant Munjal, Co-Chairman, NLC 2021 & Chairman, Hero Enterprise, said that it was quite strange that India's stockmarkets seemed to defy gravity. "Is it due to the lack of depth in the market that each time a billion dollars come into the market, it picks up," he wondered. He pointed out that the Indian stock market was receiving billions after billions from overseas as the cost of money worldwide had gone down to zero, even negative, and that was a good thing for India.

Jhunjhunwala argued that there was plenty of scope for Indian stock markets to rise, as India still had a low corporate profitability to GDP ratio - mere 1.5 per cent compared to 9 per cent in the US. He pointed to the healthy forex reserves, low national and consumer debt compared to other large economies and Prime Minister Modi's determination for speedy reforms as the reasons for his belief. "We Indians don't believe in ourselves," he remarked, adding that one day India's per capita income will exceed China, though it may take 30 to 40 years.

On covid's impact on market sentiment, Jhunjhunwala said that while the human aspect of the pandemic was tragic, there was a business aspect. He said that the March 2020 crash in the market was the biggest stock buying opportunity, as stocks of big, strong companies were available extremely cheap. Jhunjhunwala argued that covid's impact on India will be minimal and once vaccination is through, there will be little to worry about. He said that not more than 50 crore Indians needed to be vaccinated, as the rural population and the young people did not need vaccination and herd immunity will develop. "If the 2.5 lakh infections a day is the peak, the market will not go down," he insisted.

Jhunjhunwala blamed the covid hysteria on the media's need to blow something up. "We will have roaring 20s in India just as the US had it after the Spanish Flu," he said.

The stocks that will give the best returns in the coming period, according to Jhunjhunwala, include battered cyclical stocks. He said that the demand for metals will be huge because of major investments in infrastructure while the cost of setting up new capacity will be huge. There has been minimal investment in metals in the past 10 years because of the low returns and the agitation against pollution, he pointed out. Jhunjhunwala also sees India's pharma and IT exports growing substantially. However, he is not very bullish on real estate, especially in the large cities, where, he says, prices will not rise much because of growth in the volume of supply.

Explaining his success in investing, Jhunjhunwala said that wherever he invests, he invests when valuation is low, and he stays invested instead of selling to buy other scrips. "My portfolio is not structured. It is based on intuition," he said. He added that he earns in trading to invest. Trading is short-term, based on price movement, whereas investing is based on earning potential, he elaborated.