'He had a tremendous appetite for risk, but was equally aware of the role of luck in our lives': Friend remembers Rakesh Jhunjhunwala

Even if you give a sure-shot multibagger idea to 10 people, chances are that just one or two of them will be able to make the most of it, says Ajay Kayan, a leading name in the Kolkata (then Calcutta) money market and stock exchange of the 1980s and 1990s.

And that, Kayan says, “is what made Rakesh (Jhunjhunwala) stand out,” reminiscing about his association with the legendary investor known as the Big Bull, who died in Mumbai on August 14 at age 62.

Kayan, now in his mid-sixties, was known to be an arch rival of the late Harshad Mehta, the original Big Bull and the suspected mastermind of a stock market scam that rocked India in the early 1990s.

“I got acquainted with Rakesh sometime in 1986 when he was still new in the industry. Like all newcomers, he was trying to build his network in the market and that is how we met,” Kayan told Moneycontrol.

Kayan was, by then, an already established player in the financial markets, having started his career in the mid-70s.
He recalls Jhunjhunwala as being very ambitious.

“Being a chartered accountant, he could take apart a company’s balance sheet in no time and make a fair guess about whether the company was being honest about the numbers. That was a different era, information was hard to come by… it was a fight to get your hands on a company’s annual report. Companies used to declare their numbers once in six months, and were reluctant to meet investors, unlike today when companies are only too eager to speak to analysts and fund managers, and plenty of data and information is available publicly,” he says.

He and Jhunjhunwala would meet regularly whenever Kayan visited Mumbai in the 1980s and 1990s. They talked mainly about companies, but enjoyed a good rapport and discussed personal matters as well, Kayan said.

“Rakesh made much of his early capital by short-selling stocks. More than the companies he liked, he would tell me about the companies he found to be overvalued, and then go after them,” Kayan said.

“That era was such that bears often ended up making more money than the bulls. Because of the high rates of interest back then, carrying forward long positions through BSE’s badla system could cost as high as 25-30 percent (annualized). On the contrary, bears would get 25-30 percent for agreeing to defer the settlement of trade,” he recalled.

“Besides, there was more bad news than good news from the economy in those days, which caused prices to go down more often than they would go up. But even the bears had to work for their money. Many expensive stocks were able to sustain high valuations for long periods. Besides you also had promoters trying to support their stocks.”

Kayan had a couple of things to say about Jhunjhunwala’s legendary appetite for risk and the role that luck plays in a trader’s life.

“There is a stage in every man’s life when he has very little to lose and everything to gain, but few realise that. Rakesh perhaps understood that well and decided to double down. He had a tremendous appetite for risk, but was equally aware of the role of luck in our lives. Many good traders are wiped out because they feel they have mastered it all. No matter how skilled you are as a trader, you still need many other things to fall in place to be able to win big.”

Jhunjhunwala began his career in the stock market with Rs 5,000 in 1985 and parlayed it into a net worth of $5.5 billion (by July 2022).

“The thing about trading is that it tests your nerves and stomach frequently. Over time, that takes a toll on your health. To an outsider it looks like easy money, but ask a trader what it feels like when the market swings wildly and you have got open positions funded by borrowed money,” Kayan said.

“Such big moves happen at least a dozen times every year Rakesh was able to withstand that pressure better than most others, and that is why he succeeded big too. We would be amazed at some of his bets, which seemed downright reckless, but when asked about it, he would say: ‘If I don’t take enough stress, I don’t get good sleep at night.’ He enjoyed the good life, and to anybody who tried to caution him about its effects on his health, his answer would be: ‘Every day is a bonus once you cross 50. I want to enjoy life till then.’

“Titan was Jhunjhunwala’s best investment in terms of the wealth it created for him. Strangely, Karur Vysya Bank was the stock he spoke more fondly about. He had been accumulating the stock since the 1990s when he was more of a trader than an investor.”

(Jhunjhunwala held a 4.5 percent in stake in Karur Vysya at the end of the June quarter. In an interview to CNBCTV18 in 2010, he said that it was a stock he felt emotional about.)

Will there be another Rakesh Jhunjhunwala in the market?

“In terms of wealth creation, there may be, because that is the nature of the market. In the 70s, you were big if you had lakhs, then in the 80s and 90s, that became crores, in the early 2000s, it was hundreds of crores and now success is measured in tens of thousands of crores,” says Kayan, who claims he had never met anyone as outspoken both in public and private as Jhunjhunwala was.

As for Kayan himself, he was portrayed as a key member of the bear cartel in the web series, Scam 1992. Was he indeed at loggerheads with Harshad Mehta in the 1990s?

“Cartel is a fancy term created by the media and market watchers,” Kayan says. “In a market, there are only buyers and sellers. For any transaction to go through, there has to be both a buyer and seller. Every person will have a view on what is a fair price for a stock; that is how the market functions. I have had a satisfying career, and absolutely no regrets about how things played out or about any decisions I took.”