Rakesh Jhunjhunwala, the billionaire investor in an interview with ET NOW‘s Managing Editor Nikunj Dalmia made bold predictions about the country’s future and the future of the Indian market. Although the ongoing COVID-19 pandemic that has affected every major sector is still on the rise the investor believes in a faster than expected recovery of the market. He even said that investors are still in disbelief about the recent stocks rally, and reiterated that the market has just seen a “the birth of a classic bull market.” He thinks that India could be a farmer and factory of the world and also predicts that pharma stocks might take a hike.
Jhunjhunwala said that now the investors are learning to live with the pandemic and are not taking into consideration the rising number of COVID-19 cases. He also added that COVID related deaths are coming down with every passing day. The ace investor also says that now investors of the Indian market are thinking more of forward earning and predicts that everyone across the world would be surprised by the recovery of the Indian economy and the growth that follows. On COVID-19 and lack of a definitive vaccine, he said, “These dire predictions of COVID are behind us. COVID is getting milder and people are learning to treat it better. The percentage of deaths is coming down. we are learning to live with it. It’s not much as a changing event as it was being predicted.”
He said, “There is only worry and a lot of disbelief in the market. We have gone through the classical birth of a bull market where there is a sharp fall, sharp recovery, and everybody is dumbfounded, therefore no one believes in the rise. India is on the verge of a secular, structural bull market. This bull market is not only going to be about the stock market but about India. People are going to be surprised at the way India’s growth is going to recover, and how it is going to sustain and further recover.”
Although he predicts a huge recovery from every sector, he says that the hospitality sector is to be hit the hardest. He only can think of a gradual recovery of the restaurant and hospitality sector.
He speculates that India has the ability to make a mark in the pharma industry and can be the “pharma capital” of the world in the future. He thinks that the rally in the pharma industry was overdue and it will only get better from this point. Although the underperformance in the FMCG market, the investor expects the companies in the sector to get high PE valuation.
The main reason for the investor being optimistic is because of the recent reform measures by the Modi Govt, in areas such as Agriculture and Labor. The newly introduced Farmers’ Produce Trade and Commerce Bill, 2020 provides farmers the freedom to farmers to sell directly to institutions without going through the hassle of a middleman. The passed labor code bills from the government provide power and flexibility to employers to hire and fire workers.
He said, “People are realizing the consequences of reforms- auctioning coal mines, GST, RERA, IBC, Labour laws, Agri reforms, sale of PSUs- all this will add up. What India needs is the ease of doing business. Indians will capture the opportunity when given. Software exports will go up, India has the ability to be the Pharma capital of the world. Agri reforms are path-breaking. Why will manufacturing not come to India?- import duty is there, labor law is flexible, the land is there, electricity is not a problem, there are talent and corporate sector integrity- this is what the market is recognizing. I feel we are underestimating, but I think the golden years are ahead of us- not just for the stock market but India’s growth too.”
On the ongoing battle between Tata Group and Shapoorji Pallonji Group, he said, “The Tatas know best. I think they will buy out somehow or the other. They wouldn’t have told the court if they don’t have a plan in mind. I don’t think they will buy from the cash flows of group companies. They can buy by selling a stake in a listed entity.”