While Sensex and Nifty continue their robust run, ace investor Rakesh Jhunjhunwala says that this is one of the most despised rally, as participation remains low. We take a look at why he's bullish on PSU stocks.
While Sensex and Nifty continue their robust run, ace investor Rakesh Jhunjhunwala says that this is one of the most despised rally, as participation remains low. Sharing his top preferences, Rakesh Jhunjhunwala said that pharma and banks are set to do well. According to the expert, since valuations in PSU stocks have eased, there may be a tactical opportunity in shares.
Rakesh Jhunjhunwala noted that while in 2002-03, the markets were set for a secular bull-run, now the Indian economy will experience a period of rapid growth in the next decade. “The stock valuations relative to 2002-03 are much higher today. I feel there is going to be a structural bull-run in the economy. I personally am very bullish on the economy, and believe that structural reforms such as IBC are going to have a very positive impact on the credit discipline in the country,” Rakesh Jhunjhunwala said in an interview to ET Now.
Explaining further, Rakesh Jhunjhunwala said that we have had all the worst effects of GST on GDP so far, and the good effects will reflect on the GDP growth. “We have a very bad negativism in the country, “Mr Modi got GST, as if he committed some crime by bringing the reform. If you look at other countries, they took 5-7 years to stabilize, but we have stabilized within a year,” he said.
Apart from IBC and GST, the problems related to NPAs and capex growth, is reversing, he noted. “The kind of investment that is going to come in to the country, the higher base at which this country is going to grow… India’s cumulative debt to GDP is at 125%, while China has a cumulative debt to GDP at 300%. I agree with the RBI governor, reduce rates and invest, we’ll see in inflation comes,” he said.
Given the scenario, India has severe under-exposure to equities, he said, adding that India should have 400 fund houses as opposed to just 40 currently. So, where is he looking to invest now?
“I think, banks, pharma, infrastructure will do well. The way PSU valuations have fallen, there could be opportunity in shares. Although, its only tactical, as I don’t want to buy PSUs for the long-term. The overall returns in market in the next decade will be far higher, partly as the previous 10-year is a lost decade,” Rakesh Jhunjhunwala said.