Big Bull Rakesh Jhunjhunwala says he is not looking forward to any big-bang announcement in the forthcoming Union Budget, but expects the government to do some actual work.
He expects retail participation in the market to improve post the event. Finance Minister Nirmala Sitharaman is likely to table the Budget on February 1.
In an interview with ETNOW, Jhunjhunwala said the government should extend the duration of long-term capital gains tax to two years, but tax on dividends is undesirable and unjustified.
Jhunjhunwala, who expects some Budget relief for the real estate sector, said the government must make investing in real estate tax-free. “The government needs to send out a message to the business community that ‘we are on your side’,” he said. The Big Bull said he expects a lot of incremental measures going forward.
On the Tatas, Jhunjhunwala said the Tata Sons-Mistry spat is over. He said he is very happy with Natarajan Chandrasekaran’s policies.
Chandrasekaran is the chairman at Tata Sons. “Chandra is consolidating the group and is rewarding performance,” Jhunjhunwala said, adding that the worst is over for Tata Motors.
The ace investor, who will turn 60 soon, said he was not bothered by the change of guard at Titan. The successor (CK Venkataraman) to former MD Bhaskar Bhat at Titan very competent, he said.
Among sectoral bets, the ace investor said he is bullish on the pharma sector. The auto sector is going through structural issues, he said, but suggested that the theme around electric vehicles is largely overplayed.
“Cement stocks, too, are overvalued. To identify market’s darling, you need to see earnings from cement and steel companies,” Jhunjhunwala said.
Any rerating in PSU stocks, he said, would depend on clear and transparent divestment policy. He remains bullish on banks – be it retail or corporate, as he expects consumer credit to boom and the NPA cycle to peak out.
Jhunjhunwala said India’s GDP would grow at 9-10 per cent in the next 10 years and that is why he expects better returns this decade compared with the last one.
The government, he said, is trying to enhance the ease of doing business, which is not an easy thing to do in a country like India. “Investors are just harping on problems, but they are not realising that the recent reforms will eventually help the economy,” he said.
“I believe markets are missing the woods for the trees,” said the market veteran.
He said the market breadth has started improving in last two months and price movements show there is a big stirring in midcap and smallcap stocks. “I believe midcap and smallcap stocks will definitely outperform in 2020. Largecaps may get into a zone where they can consolidate for a few years,” he said.
The ace investor says a bubble may be building up in the unlisted space, which may burst in next 12 months.
He said the economy is paying the cost, as there is a ‘correction’ in the way businesses were conducted earlier. “Participation in the market is low and equity seems to have become a bad word, which indicates that there are a lot of opportunities,” he said.
Jhunjhunwala, whose investments are mainly in finance, technology, retail and pharma sectors, held 32 stocks with a net worth of Rs 12,919.50 crore. The net worth of his public equity rose from Rs 9,474.9 crore in December 2015 to hit a peak of Rs 14,331.6 crore in March 2019.
Initial shareholding data available for December quarter showed the Big Bull cut his stake in at least two of his portfolio holdings. His holding in Firstsource Solutions has fallen to 2.78 per cent in December quarter from 3.1 per cent in September quarter and 2.89 per cent in the year-ago quarter.
In Orient Papers, the ace investor has trimmed his stake to 1.17 per cent from 1.22 per cent sequentially. RJ, as he is fondly referred to, holds more than 1 per cent stake in 30 odd companies.
Jhunjhunwala’s major investments are in Titan, in which his holding is valued at Rs 6,943.4 crore, followed by Crisil, Escorts, Lupin and Federal Bank. In 2019, while Titan and CRISIL gained 28 per cent and 20 per cent, respectively, Escorts, Lupin and Federal Bank did not deliver.