Rakesh Jhunjhunwala, the Badshah of Dalal Street, had correctly predicted that in 2013 there would be a great Bull Market and investors who bought stocks would make a lot of money.
This prediction came true because a lot of mid-cap stocks and large-cap stocks (especially from the Info-tech sector) have given double-digit gains in 2013. Though on the surface, the Index has remained flat, a lot of top-quality stocks have doubled and even trebled.
Now, for 2014, Rakesh Jhunjhunwala has again sent a wake-up call to investors to come out of their burrows and start buying top-quality stocks.
In his latest interview to ET, Rakesh Jhunjhunwala has made some very valid points.
First, he pointed out that equities will continue to out-perform all other assets classes such as real estate and gold.
Second, he advised investors to buy mid-cap stocks aggressively where there are healthy operating margins, decent cash flow, good governance, and an enduring brand. He cited his own purchases of mid-cap stocks like Escorts, Diwan Housing Finance and Firstsource as examples to inspire his disciples.
He reminded investors that if they bought stocks where there is value and the quality is very good and there is some inherent advantage, they would do very well.
The third point that Rakesh Jhunjhunwala made is that investors have to buy Information Technology stocks. Though the stocks have already run up a bit, the longer-term prospects of the software industry have just started, he added.
Rakesh Jhunjhunwala also made it clear that he is very bullish on Housing Finance companies. He cited Dewan Housing (DHFL) as an example of a top pick. He said it had a niche for loans below 12.5 lakh which is the fastest growing sector. The market is at least 500 times what it is today, he said. DHFL is an undervalued stock, he said with an air of confidence in his voice.
Rakesh Jhunjhunwala also singled out Tata Motors for praise. It is going to be a world leader in luxury cars (Jaguar) and if we look at the quality of the products no other product is available and they are also delivering on earnings.
As regards Titan Industries, his crown jewel stock, the Badshah oozed confidence. Titan is undoubtedly going to be the leader of the Indian gold market. There is going to be a big shift from the unorganised sector to the organized sector and this will lead to stupendous growth for Titan Industries, the Badshah said with a big smile on his face.