What the Big tanks Samir Arora & Rakesh Jhunjhunwala are thinking about market?

August 17, 2011   ·   0 Comments

Views of Samir Arora of Helios Capital on Market outlook for the 2012 & ahead on Indian stock market & World stock market & the impact of US downturn on Indian Economy

www.stockssavvy.comIMPACT OF US DOWNGRADE
India is likely to witness volatility over the next few days and the market may trade lower. However, the impact of US credit rating downgrade on the Indian market will not prolong beyond a day or two. At worse, we expect a 5-7% downward impact on the domestic market.

OUTLOOK FOR INDIA
At this juncture, India will outperform on downside. Making absolute money on upside could happen after 3-4 months. I am not sure about the next 15-30 days. I expect next year to be very good, as rates will peak and inflation will ease. Next year, there may be even 20-25% returns.

SECTOR PICKS
We like financials and infrastructure, which we consider as one theme. Second, we like consumer and our third pick would be technology.

ON DEFENSIVES

Valuations in defensive stocks are too high and they are not defensive any longer. You can’t have a 40 P/E company not falling. It may not decline more than others, but it will fall anyways.

ON INFRASTRUCTURE
Infrastructure stocks are waiting for interest rates to peak. After that, you can start buying. But they will do well in the next twoyear horizon.

ON INFORMATION TECHNOLOGY
We like large-caps over small-caps, because IT is one sector where historically large-caps have broadly delivered and there is no need to look for mid-caps. It would be too easy to say that Infosys doesn’t know how to react to the world and TCS does. We own both stocks equally. We think that Infosys should also do well if the IT industry is doing well in 9-12 months.

INDIA 2012 OUTLOOK
We have pushed interest rate hikes beyond limits and there is no chance now of another rate increase. But in case there is more rise in policy rate, it will signal that the end is near. Also, more actions are expected from the government on the policy front. So, by 2012, India would look better.

Rakesh Jhunjhunwala says that India may take 3-4 years to set the base, but the country is ultimately going to grow in double digits .Excerpts:

www.stockssavvy.comGrowth Prospects for India

I feel that India has the potential to grow well, because India is a largely consumption story, it’s partly isolated from the world. Secondly, questions are being raised about India’s long-term growth prospects and fiscal and monetary conditions. I think, we, as Indians, have to take action so that the growth capacity of the economy, which is a function of savings and investments are made. Now that there is a realisation and admittance of this, the government must act. So, there could be some short-term pain for India. But I have no doubt that in the next 3-4 years, India will have the capacity to grow at double digits every year for a long period of time.

In the near term, the market may not fall more, but it will not recover in a hurry. Is that correct?
That’s what my opinion is. I feel 60-70% chance is there that we may not recover in a hurry. And as it is, I am fully committed. So, it won’t make a difference to me. I feel that the market always gives time both to the buyer and the seller. So now, the market, after such a fall, will give time to the buyer. If the market goes in a big rise, it may not be very sustainable. It’s only when the market comes to a level, trades within a range, only then you can make a recovery that is sustainable.

Why have you sold Punj Loyd, and increased your exposure to Praj?

I have sold Punj Loyd completely. Praj is a small purchase, just 10% of what I already had.
You’ve made some small investments in Delta Corp. Sterling Hotels in the past six months. Why have you made these small investments?

They are not small investments. I have bought five million shares of Sterling Hotels and 1.5 crore shares of Delta Corp. I have put in 78 crore into Delta. So, it is not small. I am very excited by the gambling business in Delta. They hope to capture 75-80% market share in India and even Sterling Holidays is a business with very high entry barriers and it is a zero-debt company. There are at least one crore couples in India who in the next few years are potential customers and both companies put together are getting 30,000 customers per year. So, there is vast potential for growth. As income increases, expenditure on holidays will go up substantially.
You have stated that the Golden period for the Indian market is still to start. Why?

I would think so. I would say that even the silver period hasn’t started yet, and from silver we’ll come to gold.
Everyone seems to be selling EMs and buying gold due to risk-aversion. Do you fell that’s the right way to go about it?

I have no investment in any other asset class other than equity. I have so much wealth invested in equity that even if I buy any other asset, it will not make a difference to me financially. But I do feel that in the coming 3-5 years, the Golden period for India is still to come.
Will you then hold on to your stocks for the next few years?

I won’t say that I will not sell them, but I have no intention of selling the ones that are performing. I am not looking for my stocks to double in value. If stocks give me 18-24% returns posttax, then I am happy.
Being a capitalist you have recently made a commitment to share 25% of your wealth. Why?
I think, charity has its origin in religion and it is accentuated by capitalism. I have already given 20-25% of my dividend income. I am going to give my assets, and I want to do it, because I believe that the giver of wealth is God and it is the duty of one to be of use for social good. I want to see that money being used efficiently and for a good cause.

Source: Economic Times

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Rajesh Singla

Rajesh is the founder & CEO of Stockssavvy, Stocks analyst,financial advisor by choice,software engineer by fate,biker,gamer,cricket lover n enthusiastic person. He believes in doing things not just to get by but to get Ahead...

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