Every time market fell sharply till about 18 months ago, retail investors would take comfort in the words of India’s Big Bull Rakesh Jhunjhunwala, whose optimism and confidence in India and Indian market seemed unshakable. With Nifty trading nearly 25 percent higher since August 2022 when he passed away, and his favourite basket of stocks – PSU banks - having turned multi-baggers in the current rally, what may be his advice to investors?
His close aide and chief investment officer of Alchemy Capital, Hiren Ved, said in an exclusive interview with Moneycontrol: "He would have said, be careful of what you buy now but certainly don't sell.” Besides, he would have said, "The best way to play a bull market is to stay committed to it."
Ved is one of the close aides of Rakesh Jhunjhunwala who was the original investors in Alchemy Capital, originally promoted by Lashit Sanghavi and Ashwin Kedia. The firm was started in 1996 and Ved joined the company in 1999.
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Outguessing the Big Bull on his take on current markets, Ved said, he might say: "You can't get on and off the horse, you have to stay on the horse. The horse might not be galloping but throttling. As long as it is throttling in the right direction and once in a while it gallops in the right direction, one has to stay on the horse," said Ved. Ved said, staying the course was the Jhunjhunwala’s consistent advise to him and other investors.
In the last one year, Nifty 50 has gained 23 percent while the Senex has gained 19 percent in the same period. Nifty 50 forward PE is at 20.05x while Nifty 50 ten-year average PE is at 20.08x.
The bull run rally has been led by small-caps and mid-caps, which surged ahead of large-caps in the past one year. The Small-cap index has rallied 71.7 percent in the last one year while the Nifty Mid-cap index has gone up 59 percent during the same period. The BSE Small-cap and BSE Mid-cap index gave returns of 63.6 percent and 58.2 percent respectively in the last one year.
One segment of stocks that has done exceptionally well during this rally has been PSU banks, which the Big Bull batted for in his last TV interview before he passed away. Jhunjhunwala's rationale behind the same was that with clean balance-sheets, credit was set to rise, and as a consequence, there will be an increase in the pricing power of banks. He also said PSU banks’ great power of gathering deposits would hold them in good stead.
In the Indian Economic Conclave in 2021, he had said PSU banks were hopelessly undervalued. “I feel the most undervalued banks are in the public sector. The credit cycle has just turned. Going ahead, there will be a lot of demand for money. The cost to income ratio of public sector banks is going to come down. There will be pricing power as there will be demand for money,” he had said.
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