Live Chat with Rakesh Jhunjhunwala

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Mr. Jhunjhunwala joined the Trading India forum on the 14 of November, 2017 and shared with Trading
India members his view on Indian Equity Markets

Below is the transcript of the online discussion with Mr. Jhunjhunwala and Savio Shetty, Editor at Trading
India in the presence of over 700 Trading India members. For enquiries or access to Trading India
chatroom, please send us an email at savio.shetty@thomsonreuters.com

Rakesh Jhunjhunwala
Hello, this is Rakesh here

Participant 1
Welcome

Savio Shetty Thomson Reuters

Hello Mr. Jhunjhunwala. Welcome. Thank you for taking time. Let’s begin with the first question.
What is your View of the current market scenario with respect to earnings recovery, valuations and the
impact of GST & Demonetization?

Participant 2
Welcome sir

Rakesh Jhunjhunwala
I think fundamentally we have already borne the worst of GST and Demonetization. Countries like Australia,
Malaysia have had problems with GST implementation. I think people are looking too much at the short
term issues. GST is akin to jumping into the river to learn how to swim, we just had to do it. Tax collections
in monsoon have been very good which is actually the leanest part of the year. Logistical ease will flow. This
will digitize the entire economy. DeMo is done. The effects are important. The tax to GDP ratio by 2020
should be 20, more than what it is today. All in all it is short term pain for long term gain.

Savio Shetty Thomson Reuters

Thank you Mr. Jhunjhunwala
What about the hit to small businesses?
Rakesh Jhunjhunwala
Small traders paying taxes is good

Savio Shetty Thomson Reuters

Moving on, what is your take on the current equity valuations?

Participant 3
Which stocks do you think will benefit most from GST (i.e. grey market competitors being taxed leading to
greater market share for large listed stocks who pay taxes anyway?)

Rakesh Jhunjhunwala
nd
Earnings will pick up in 2 half of FY. If you remove 6 Nifty companies there is actually, 13% growth in
earnings. Also do remember that a trend change happens only when 3 things happen (1) Tremendous
valuation froth (2) Tremendous commitment froth (3) Bad news

Savio Shetty Thomson Reuters

Thank you – On that note, any global risks?

Participant 4
Sir, what about USDINR outlook?

Rakesh Jhunjhunwala
Risks are geopolitical, slowing growth and high interest rates. My feeling on North Korea is nothing much will
happen. As far as interest rates go, US will increase in a very measured manner. I believe interest rates will
stay lower, definitely not explode.

Participant 5
Hello sir, what’s your view on PSU banks as they will start coming to raise capital before December, is there
scope of an upside & any steam left?

Rakesh Jhunjhunwala
On PSU recap, I think it will remove the danger of a systemic risk. NPA problem will not rise as much.

Participant 6
To invest one needs float. . Do you generate it by trading in stocks or are there any other way?

Participant 7
Sir what will be the impact of Bharat 22ETF on markets?

Participant 5
Sir is there matter of common sense in pharma sector that stocks which are fundamentally sound should be
bought in core portfolio when they are in doldrums & are available at throwaway valuations with solid
franchises...what is your view?
Rakesh Jhunjhunwala
There may be an opportunity in pharma stocks. At these valuations, lots of opportunity even in the real
estate sector.

Participant 4
Sir, what about Indian interest rates outlook

Participant 4
So what about CAD (current account deficit)

Savio Shetty Thomson Reuters

What’s your view on 2018?

Rakesh Jhunjhunwala
I don’t really change my portfolio. Little churn here and there. Some old pvt sector banks should do well

Participant 2
What is your view on NBFCs like Capital First and Bajaj Finance, who are more into retail?

Participant 6
Any specific pharma ... did u add Lupin on dips?

Savio Shetty Thomson Reuters

There have been significant issues around succession planning in Indian companies such as Tata and
Infosys. Do you avoid companies that have a chance of getting into problems around succession or do you
see advantage in consolidation in those companies?

Rakesh Jhunjhunwala
My investment horizon is long. But not that long

Participant 8

Savio Shetty Thomson Reuters

Your view on the aviation sector, please

Rakesh Jhunjhunwala
One word - Booming

Participant 5
NBFC & HFC's View please

Savio Shetty Thomson Reuters

What is your view on Crypto-currencies, especially the 600% rally in Bitcoin?

Rakesh Jhunjhunwala
Remember the tulip bulb craze? I wouldn’t touch crypto currencies with a pole.
Participant 8
So Bitcoins and others are going to fizz out too you mean?

Participant 4

Savio Shetty Thomson Reuters

How do you see the transition from oil to gas and to EV eventually? Are you incrementally more positive on
gas stocks? EV?

Rakesh Jhunjhunwala
Gas is the most desired fuel, no doubt about it. I know the process of change is very badly resisted and then
very easily accepted. But I think EV is a long term play. At the moment it is a pie in the sky. Nothing too
soon.

Participant 8
What worries Mr. Jhunjhunwala? Current or future.

Participant 10
What would be your suggestion to novice retail investors?

Participant 11
Sir any take on Theme Parks in India?

Participant 2
Your view on Tata Motors hedging ...have they improved? Is your confidence up?

Savio Shetty Thomson Reuters

What is your view on OIL – prices inching up - at $64 now was at $30 1.5 years ago. Has government taken
advantage of the muted oil prices? Are you playing the OMC consolidation theme?

Rakesh Jhunjhunwala
Yes, the government has taken advantage of the fall in oil prices, definitely. On the whole though, I don’t
believe the government should be in the business of doing business.

Savio Shetty Thomson Reuters

What is at the top of your worry list in 2018?

Rakesh Jhunjhunwala
Big risks will be Geopolitical (Iran, Saudi, and North Korea) and Rising interest rates

Savio Shetty Thomson Reuters

What’s your view on the INR?

Rakesh Jhunjhunwala
The INR will be in depreciation mode. 66-67 in 2018 probably which will be a big boost to software and
pharma
Participant 8
Due to outflows / dollar rise / nervous domestic political background?

Participant 12
Sir any view on Tea sector? Do u see shift from unorganized to organized in this?

Savio Shetty Thomson Reuters

Are you worried about populist measures before 2019?

Rakesh Jhunjhunwala
I have a lot of trust in this government. I foresee a pickup in credit growth too. Lots of capacity utilization will
start.

Savio Shetty Thomson Reuters

IPO market in India – after a bull run doing you think the IPO market is losing steam? Have you taken part n
the recent IPOs?

Rakesh Jhunjhunwala
Stay away from the IPO market. Lots of froth

Participant 10
View on aviation please with increasing crude price

Savio Shetty Thomson Reuters

What is your framework to exit a stock? What early signs do you look for to take that decision?

Rakesh Jhunjhunwala
If the EPS and PE have peaked or I have a better investment idea and of course quality of management.

Rakesh Jhunjhunwala
Aviation is a growing space. I think regional connectivity is good and very profitable.

Participant 13
Sir, sometime back in an interview you had mentioned that you would be focussing on health now, are you
able to take time off markets to focus on health now?

Rakesh Jhunjhunwala
Yes, absolutely. I take time for my health now.

Participant 14
Sir on this note, can you also share what a typical day looks like in life of Mr. Jhunjhunwala

Rakesh Jhunjhunwala
I really don’t have a routine. I do some yoga.
Thank you everyone

Savio Shetty Thomson Reuters

Thank you Mr. Jhunjhunwala for your time
Any final thoughts?

Rakesh Jhunjhunwala
I would just like to put in a word of caution. We’ve gone from 7500 to 10300. There may be a sharp small
correction. But the long term trend remains intact.

Savio Shetty Thomson Reuters

Thank you and thank you everyone else for your questions. Good day!