Rakesh Jhunjhunwala Predicts Bull Run, US Rate Hike, IT Consolidation

New Delhi: The Big Bull of Dalal Street Rakesh Jhunjhunwala (RJ) has come out with his latest prediction on key issues pertaining to the markets. Indian stock market is poised to witness an encouraging bull phase and it’s already entered the bull market.

Rakesh Jhunjhunwala

Indian stock market is in early stages of bull phase. Because bull markets cannot end just like that as it’s an intermediate correction that remains high after a strong upward move. Indian market has not reached the top so far.

According to a report by The Economic Times, Jhunjhunwala,in his 30 years in the stock market, has not been so candid earlier as the way markets going ahead.

He said: “Indian stock market is in early stages of bull phase. Because bull markets cannot end just like that as it’s an intermediate correction that remains high after a strong upward move. Indian market has not reached the top so far.”

This year so far, foreign portfolio investors (FPIs) have invested Rs 39,905 crore in equities while they withdrew Rs 7,450 crore from the debt market. This resulted in a net flow of Rs 32,455 crore.

Jhunjhunwala is upbeat on foreign funds inflows. He said a tsunami of foreign investment flows is still ahead of us. The domestic markets have been witnessing positive inflows from foreign investors since March. This year so far, foreign portfolio investors (FPIs) have invested Rs 39,905 crore in equities while they withdrew Rs 7,450 crore from the debt market. This resulted in a net flow of Rs 32,455 crore.

He further predicted that midcap and smallcap stocks have outperformed largecaps in last one year, but predicted that largecaps tend to underperform at the start of a bull market.

Jhunjhunwala expects US Fed rate would hike interest rate. He’s bullish on the yellow metal as limited supply compared with its availability will boost the demand, while expecting consolidation in the IT sector.

He expected US Fed rate would hike interest rate. The US Federal Reserve could raise interest rates two to four times in its current rate hike cycle. However, he doesn’t expect interest rate to go up over 1-1.5 per cent in the US. Jhunjhunwala further predicted that the current global rally could continue as long as interest rate doesn’t go up in the US.

Betting on gold, Jhunjhunwala is bullish on the yellow metal as limited supply compared with its availability will boost the demand. Coming to the IT sector, Jhunjhunwala sees a consolidation phase.

The correction in the market has witnessed in software stocks so far in 2016 would end and ultimately the stocks will perform again. He said that IT applications are in demand, but agreed that people are now bearish on IT stocks. Citing example of Citibank, he said the US global bank is giving a $1 billion single contract to digitalise the bank. The competency of Indian companies is just going up every day.