Mumbai: Big bull Rakesh Jhunjhunwala feels
the Indian stock markets, currently on an upward rally, may
"burst" in a month or two.
"If your see the formation of the indexes, all the stocks
are going up, indexes are going up. (There are) minor
corrections at every point. You cannot have this kind of a
rise...(a) peak without burst. I think the burst will come
within one or two months," Rare Enterprises, Partner, Rakesh
Jhunjhunwala said at the Private Equity International India
Forum 2009, here today.
Indian capital markets have been heading northward led by
robust liquidity positions and on the belief that economic
recovery has begun.
However, Jhunjhunwala said that "I have a right to be
wrong and I may change my opinion very fast."
He said that the future of Indian markets depended on the
performance of the Indian economy and the international
"I think economic growth in India is going to be between
12-14 per cent over the next 5-7 years. I think the factors
that are guiding this growth are irreversible, whether it is
skills, tolerance, democracy, demographics," Jhunjhunwala
"And if growth in corporate profits is going to be a
percentage of nominal GDP growth which it is worldwide, I
don`t see any reason why corporate profits should not grow
between 15-17 per cent compounded," he added.
However, there is still some pain left for the western
economies which have not yet witnessed the peak of the
"As far as the economic slowdown goes, I think we have
not (yet) seen the peak. I think the next 2-3 years for the
western world are going to be far slower than for the rest,"
According to him, even though India places significant
importance on foreign fund inflows, the amount of local money
invested in the markets in the last five-years has been far
greater than foreign money.
The Dalal Street guru said he has decided not to invest
in start-up companies "because you have to nurture them and
bringing them to size is a bit of a painful process".
"This year, I think Rs 2,500-3,000-crore local money will
come and in two years maybe Rs 6,000 crore. I am bullish. The
flow of money is going to go through the roof," he said.
The market pro said he does not expect India to hike
interest rates before March next year.