Rakesh Jhunjhunwala is one of the market's Big Boys with a portfolio rumoured to be Rs5,000 crore.On the day the stock market crashed, he told DNA Money most Indians don't recognise the India story, and tried to explain why he remains extremely bullish.
On the participatory notes issue There was a day when we had to pledge our gold (to borrow foreign exchange, in 1990). Now we have to restrict foreign capital. Life has come a full circle.
Where will Sensex go next?
50,000 in 6-7 years if the current profit growth is sustained.
And GDP growth?
India will grow at 10% before 2010. I have a dinner table bet with TN Ninan, the editor of Business Standard, on this.
What about corporate profitability?
Stock valuations are slaves of earnings. Economic history tells us that earnings grow at 1.25-1.75 times GDP growth. Hence, I see the growth in corporate profitability over the next few years at 17-20%.
Which sectors are hot?
India-centric sectors such as telecom, banking and infrastructure will continue to remain hot. Stay away from IT because the current 30% margins cannot be maintained. Only monopolies can maintain 30% sustained margins.
What about real estate?
I don't invest in real estate. Real estate prices in fringes of cities will fall because the current prices are unsustainable. Education is a great business to be in, but I can't find the right investment. I am bullish and my faith is getting accentuated by every public appearance I make.
What about household money coming to markets?
In 1992, 17% of domestic savings went into the stock markets. In 2004, it fell to 1%. And I feel 15% of domestic savings will go into the stock market by 2011. So $45-50 billion of local money is what we are talking about.