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    Rakesh Jhunjhunwala reveals stocks & sectors he likes most

    Synopsis

    Jhunjhunwala said investors today are not focusing on the rising number of Covid-19 cases, as people are learning to live with the flu. Covid-related deaths, he said, are coming down every passing day. What investors are looking at today is forward earnings.

    Rakesh Jhunjhunwala praises farm laws, says agri reforms would benefit both consumers & farmers in coming yrs
    Big Bull Rakesh Jhunjhunwala says investors in India 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." The ace investor, who believes India could be the farmer and factory of the world, is betting big on pharma stocks and said Tata group stocks could be in for a re-rating. He sees a faster-than-expected recovery from Covid-19 blues across sectors.

    Jhunjhunwala said investors today are not focusing on the rising number of Covid-19 cases, as people are learning to live with the flu. Covid-related deaths, he said, are coming down every passing day. What investors are looking at today is forward earnings, he told ET NOW, adding that everyone will be surprised by the recovery in the Indian economy and the growth that follows.

    On stocks & sectors
    Jhunjhunwala said most sectors will make a faster-than-expected comeback. Restaurants and hospitality are some of the hardest hit sectors, and they may recover only gradually.

    He said India has the ability to be the 'pharma capital' of the world and there is a scope for P/E expansion and EPS growth for API and generic players. He says the pharma rally was overdue and it will only get bigger from here on.

    The billionaire investor said large FMCG companies are fundamentally in a bull market despite the recent underperformance. He expects large companies in the FMCG space to continue to get high P/E valuations.
    A defined divestment policy can lead to a re-rating of the PSU sector, Jhunjhunwala said, as he felt a lot of investors do not like the uncertainty in this space.

    He said cash flows of Indian IT firms are very strong and a 15 per cent kind of growth will attract buyers. "Cash flows of IT companies are almost equal to profits," he pointed out. He also does not expect any reversal in FAANG stocks, "unless earnings growth reverses."

    On PSU banks, the big bull said these lenders continue to have strong deposit franchises, but investors have stopped believing in public sector ownership of banks . "The difference between corporate banks and retail banks is unjustified," he said.

    The ace investor said banks as a pack are underperforming due to NPA uncertainty. Investors need clarity on NPA issues in the post-Covid world. "Once that happens, banks will bounce back and outperform," he said. He finds HDFC Bank as a valuation leader on the back of years of superior execution.

    The Big Bull also sees strong chances of re-rating for Tata Group companies, as emphasis on cash flow management at the group is higher now. He expects Tatas to buy back some of the Tata Sons stake held by the Shapoorji Pallonji group.

    Jhunjhunwala said deleveraging is happening in only those groups where leverage is in excess. He expects the Tatas and Ambanis to invest if great opportunities come.

    On reforms
    Jhunjhunwala said the recent agriculture reforms would benefit both consumers and farmers in the coming years, and expects wastage in the sector to drop from here on. He said agriculture can become one of the largest value-added exports of India.

    The ace investor said reforms and ease of doing business are the key catalysts for growth. The golden years of India's growth are most likely ahead of us. He said India has all ingredients for a pickup in manufacturing and investors will soon turn to this space. "India has flexible labour laws and abundant electricity supply, which should help," he said.
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    5 Comments on this Story

    mdshivashankarper Shivashankar13 days ago
    He acts against to what he preaches & retail investors are at receiving end.
    Krishnan Avinjikkad22 days ago
    With economy in doldrums, and serious global issues- you name it and you have it- mounting with each passing day, I am afraid, we are heading towards another depression, reminiscent of the Great one of the 1830s!! I am an optimist, tho'!!!
    Chandra Shekhar22 days ago
    his advice to be taken with a pinch of salt.punishes the counters he advises by going opposite direction,once the herd follows him
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