Stock broker Rakesh Jhunjhunwala, who predicted Indian stocks would fall two months before the benchmark Sensitive Index peaked in January, says the worst may be over for Asia’s fourth-biggest equity market.
Stocks are poised to recover from their biggest annual decline because companies in the benchmark index are valued at less than half their four-year average, said Jhunjhunwala, named India’s Warren Buffett by Forbes magazine in March.
Investors will look beyond last month’s terror attacks because the country is growing faster than almost every other market, he said.
“India will see the mother of all bull runs in the next four or five years, boosted by double-digit economic growth and increased investment by domestic investors, including pension and insurance funds,” Jhunjhunwala said in an interview at the South Mumbai office of his company, Rare Enterprises, a name that combines Ra from Rakesh and Re from Rekha, his wife.
“We will see a period of great uncertainty but great potential too,” Jhunjhunwala said. He is holding on to investments including Titan Industries, which fell 47 per cent this year, and Aptech that lost 84 per cent.
His other holdings include Praj Industries, Lupin, which declined 12 per cent and Crisil that has fallen 47 per cent.
Jhunjhunwala advised investors to be cautious and predicted the market would “pause and correct.”
He didn’t expect the Sensitive Index and the S&P CNX Nifty index to fall to their lows for the year in October.
“I was caught completely by surprise when the Nifty broke the 4,000 level; that was the rock solid bottom, I had thought, said Jhunjhunwala, who has invested about $100 million in 15 privately held companies.
Annual inflation in India may drop to less than 5 per cent in the next two months, which should result in lower interest rates, Jhunjhunwala said. Inflation slowed to a seven-month low of 8 per cent in the week to November 29.
The rupee, the second-worst performer among Asian currencies after falling 19 per cent this year, may strengthen to between 44 and 45 against the dollar by March, Jhunjhunwala said. The currency gained 1.4 per cent to 48.35.
Jhunjhunwala recommends investors bet on gains in equities, commodities and emerging-market currencies, and declines in the US dollar.
