Investor Rakesh Jhunjhunwala, who predicted Indian stocks would fall two months before the benchmark sensitive index peaked in January, says the worst may be over for Asia’s fourth biggest equity market.
Stocks are poised to recover from their biggest annual decline because companies in the benchmark index are valued at less than half their four year average, said Jhunjhunwala, who was named India’s Warren Buffett by Forbes magazine in March. Investors will look beyond last months terror attacks because the country is growing faster than almost every other market, he said.
India will see the mother of all bull runs in the next four or five years, boosted by double digit economic growth and increased investment by domestic investors, including pension and insurance funds, Jhunjhunwala, 48, said.
The Sensex rose 7% since the three-day attacks that started 26 November in Mumbai, trimming this years decline to 54%.
The slump left the index valued at 9.6 times the earnings of its 30 companies, compared with a four-year average of 19.2, according to data compiled by Bloomberg.
Indians as a society are not going to be bogged down by these terror attacks; the nations tolerance, skill set and democracy will prevail, said Jhunjhunwala.
Stock sales International investors sold a record $13.5 billion (Rs65,475 crore) in Indian equities this year as of 5 December, according to data from the Securities and Exchange Board of India (Sebi), as global credit losses and write downs approached $1 trillion. Investors bought a record $17.4 billion in 2007. India’s $573 billion stock market is the region’s fourth-largest after Japan, China and Hong Kong.
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