A strong market, a fitting homage to India’s Big Bull


MUMBAI (Reuters Breakingviews) – “I see hordes, hordes, hordes and hordes of Indian money coming.” Rakesh Jhunjhunwala was on the money when he predicted idINL3N1PD3DJ five years ago at a Reuters Breakingviews event in Mumbai that the country’s stock market was approaching a tipping point. The resilience of Indian stocks in a world of heavy selling is a fitting tribute to billionaire investor Big Bull who died at the age of 62 on Sunday.

Jhunjhunwala earned the reputation of Indian Warren Buffett for his business success. The self-made man’s statements about stocks were closely watched. His portfolio included Tata Motors and watchmaker Titan. But unlike the Sage of Omaha’s $660 billion Berkshire Hathaway, Jhunjhunwala’s Rare Enterprises was not a publicly traded entity and the two men had opposing views on aviation. Jhunjhunwala’s enthusiasm for the sector was just beginning to come alive; he died a week after his budget carrier Akasa Air’s maiden flight.

India’s financial community is losing a giant figure just as its stock market appears to be maturing. Stock prices have remained relatively numb as foreign institutional investors, who own about a fifth of the market, have sold $25 billion net of stocks this year due to the war and rising interest rates in United States. India’s benchmark Sensex is up 2% year-to-date in local currency and down less than 5% in US dollars, making it one of the best performing global indices after Bovespa in Brazil, according to Refinitiv data. The S&P 500 is down 10%.

Jhunjhunwala paved the way for Indians who are now enthusiastically buying into the country’s long-term growth potential through “systematic investment plans”. There is an influx of domestic liquidity. Household money in mutual funds stands at $260 billion, a jump of more than 60% in the three years to September 2021, and represents about 10% of GDP, according to data from the Reserve Bank of India.

There are reasons to be nervous, however. As equities gain prominence alongside gold and real estate as the first place ordinary people can save, India’s premium valuation in emerging markets rises. The MSCI India Index is trading at 21 times forward earnings, nearly twice the level of the MSCI Emerging Markets. A persistently high oil price and slowing global growth have yet to fully materialize for a state that is a net importer of crude. Optimism has its limits, but Jhunjhunwala got off to a good start.

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India’s best-known stock market investor, Rakesh Jhunjhunwala, died on August 14, sparking an outpouring of tributes for a self-made billionaire whose fortunes grew along with the country’s economy. Jhunjhunwala has died aged 62, a week after launching his low-cost airline, Akasa Air.

(Editing by George Hay and Thomas Shum)

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