I am positive on India: Rakesh Jhunjhunwala

Rakesh Jhunjhunwala, partner at Rare Enterprises, said the real turnaround will happen after elections with the return of confidence.

The current uncertainty that has hit almost every man on the street, has not shaken Rakesh Jhunjhunwala's faith in India. The ace investor and trader, who is also a qualified Chartered Accountant, remains as optimistic as he was during the bullish days and claims he has not lost confidence in this country's future. Jhunjhunwala, often called pin-up boy of bull run, told Udayan Mukherjee on CNBC-TV18 that the real turnaround will happen after elections with the return of confidence. Although he reduced his stake in watches-to-jewellery maker Titan Industries early this year, Jhunjhunwala says he will sit on the remaining shares of this cherished company for the long term. Below is an excerpt from Jhunjhunwala's exclusive interview on CNBC-TV18 Rakesh Jhunjhunwala: I still retain (my) full confidence in India. I still think that India will grow in double-digits; it may take two, it may take three but it is not going to take five years. I feel this country is gone into a process of consolidation and correction. I like the way the other organs of democracy have responded to all the mis-governance. That gives me great confidence in this country. So, although I should be worried that market could fall in the short-term, but I am not worried. I think so be it. How is it going to affect me? Maybe the value of my portfolio may come down by some amount, but that does not affect me because I do not mark my portfolio to market everyday.

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Q: How much time will it take in your eyes? Do you think it can happen only after new government comes into play? Is that what you are pinning your hopes on for the turnaround? A: The real turnaround will come only with the new government but the confidence if the market and the people feel that they will get a government, which will be good for the market and for the economics of the country— it could. It is a matter of confidence. The moment confidence returns, everything will return. We do not have inspiring leadership. Mr. Chidambaram is trying what he can. But he is also placed in a corner. Q: Consumption is slowing down. One of your holdings has been VIP Industries, which has struggled quite a bit over the last three-four quarters. Are you seeing reflection of a slowing economy in consumption in some of these names? A: Yes, consumption is coming down. Consumption growth is coming down but the fact remains that because consumption growth is coming down and earnings growth is slowing, that is why there should be decline in prices. A very big part of the valuation is return on equity (RoE) and the growth. If the growth slows the RoE will go down. Q: Have you had rethinks or doubts about your large holding in Titan over the last two months? A: I have no doubt. I sold some part of my holding in January-February anticipating all these problems. Whatever Titan I have, I am going to sit tight. I have full confidence in the long-term. The fact is that you cannot curb good consumption in India. I first bought Titan at Rs 30. The stock went to Rs 6,000. I have had nobody in history come and tell me: Why don’t you have buy Titan? The only advice I get is: Why don't you sell Titan? Q: Have you utilised this massive fall in bank stocks to buy anything? A: I will not buy public sector undertaking (PSU) banks and hold them for three-five years because there is no real earnings growth. The new private sector banks, although I made a mistake by not buying Axis Bank around Rs 50, I do not think the valuations are so attractive that I should go in and buy. Q: You think there is a big trading upside from here even in IT given the way the rupee is moving, given the improving leverage to the US economy? A: I think so. I personally feel they are all matured investments. To expect more than 18-24 percent, I do not think is possible but surely they will give return between 15 percent and 18 percent. I do not think for a year, but they will give for continuous periods of time.