Rakesh Jhunjhunwala - Bull market to continue

Rakesh Jhunjhunwala of Rare Enterprises says that the bull market which started in 2001 will continue and Indian equities will outperform global stocks in long term. Bourses across the world have managed to gain during the week as investors took hope from various Euro zone countries coming on board to expand the European Financial Stability Facility - a fund which is supposed to be used to ease out countries from the debt crisis.



Jhunjhunwala said, "Markets are seeing a correction in middle of a bull run. Even in times when equity seems extremely attractive you should diversify your asset class. I feel that India will give far greater returns provided we have patience."

"If I predict 15%-16% earnings growth, in a country with sales of $700 billion today, how is it possible that 6-7 years later there will be $1.5 trillion? We do not have $30 billion coming to the equity markets," added Jhunjhunwala.

Emerging markets just had their worst quarter in a long time, and the fear of another global economic and financial crisis has crept back again into investors' minds.

Jhunjhunwala said, "We have a good market, market regulation and perfect systems, you are setting up the institutions by which this money will go. My bet on India is as much as a call on the earnings growth and the PEs. I think consistent rise causes the euphoria."

"I don't think markets will peak out before 25 times forward earnings. The period may be as small as 1 year but that will be the time to enter," added Jhunjhunwala.

Antoine van Agtmael, chairman and co-CIO Ashmore EMM had a different view. He said, "India is not the most attractively- valued emerging market and its inflation is not just higher than elsewhere but tenacious. When the bounce in markets comes, India is not likely to be the largest beneficiary but in an age of ETFs, the market should also benefit when the turnaround comes. And it will come."

Earlier this week, JPMorgan said that over the next 2 quarters Indian equities may enjoy a broad range of 14,800-18,900 through March 2012.

via Economic Times