In an interview to ET Now, Rakesh Jhunjhunwala has stated that the markets will triple in the next 4-5 years. He pointed out that in a bull market, corporate profit as a percentage of GDP will go up. Therefore, one needs 20% to 23% earnings growth as GDP growth numbers climb up to 6% or 6.5% over the next five years.
Rakesh Jhunjhunwala’s logic is that if PE ratio and earnings growth go up to, say, 18% or 20% over the next five years, then earnings will double, and PE will improve by, say, 30%. So, in the next four to five years, you can see the Nifty and the Sensex at three times their present values.
Rakesh Jhunjhunwala’s favourite stocks to buy for 2015:
Titan Company, United Spirits and Lupin:
Rakesh Jhunjhunwala is already holding all the three stocks in his portfolio. He believes that these stocks can give double digit returns going forward.
Multi Commodity Exchange:
Rakesh Jhunjhunwala sees tremendous potential in MCX as he sees the stock as a proxy to India’s financial sector.
“MCX is a proxy for India’s financial sector, India’s growth“. It is highly unlikely that in the next 50 years also, MCX’s leadership in the commodity market is going to be taken away.
Rakesh Jhunjhunwala sees immense potential in Crisil, because it is a proxy for India’s economic growth and the financial sector. “I got Crisil because Crisil was unique. If India’s economy grows – free cash flow, no investment needed, difficult monopoly to break – then volume is going to go through the roof. So it is a proxy for India’s economic growth and the financial sector,” he says.
Housing Finance Companies:
Jhunjhunwala is very bullish on HFCs and thinks that they are the best part of the whole finance sector.
Rallis India Ltd:
Rallis is an underperformer at present but there is hope that it will perform.