Outmoded investor Rakesh Jhunjhunwala, popularly identified as ‘mountainous bull’, is no longer very overjoyed with the command of the Indian market prison now, however he would possibly per chance perchance moreover no longer be bearish on the market at contemporary levels.
He maintained his inspect that Nifty ought to quiet withhold the 10,750-11,000 because the bottom, after contemporary corrections. The index corrected from its listing high of 12,100 levels to below the psychological 11,000 tag in a two-month length.
One in every of greatest contributors to this tumble became the banking sector, which has the excellent weightage in the Nifty50, because the Nifty Financial institution lost extra than 10 per cent in 2 months.
Jhunjhunwala however is bullish on the banking sector, as he feels that the height of the NPA (non-paying property) cycle has passed.
Banks earnings in the quarter ended June 2019 had been better than previous quarters, however asset quality, barring just a few, remained extinct with elevated provisioning.
The rapid-term slowdown in the economy became precipitated by fiscal cases and crisis in the NBFC quandary, Jhunjhunwala acknowledged in an interview to CNBC-TV18.
“The NBFC crisis rose out of indiscriminate lending. Every bank is shying some distance from lending to corporates. However PSU bank recapitalisation and toughen to NBFCs will serve lending,” he acknowledged in the interview.
He acknowledged that barring select NBFCs corresponding to DHFL, others are in a keep to raise money. “We wish a form of urgency with appreciate to facing NBFCs,” he acknowledged.
Non-banking finance companies, including housing finance stocks, and lenders which maintain exposure to those NBFCs, had been hit laborious in the market correction.
The liquidity crisis in NBFCs also hit a truly great sector, that is consumption, which has been slowing for extra than a year now, and the foremost victims maintain been the auto and auto ancillaries industries.
The Nifty Auto index has lost extra than 14 per cent in the last two months, while the BSE Particular person Durables and Particular person Discretionary Goods & Providers indices lost 10 per cent every in the same length.
Jhunjhunwala expects the consumption quandary to revive in the next 2-3 months.
“Consumption growth will reach support when the government takes corrective circulate. I don’t judge we are able to search out out about double-digit growth in the next 2-3 years. Investments will rep as soon as ask revives,” he acknowledged, including that the government would possibly per chance perchance moreover no longer select on to attain issues in a stride.
The federal government last week assured corporates that it would possibly well most likely perchance exhaust every measure needed to revive the economy. The Reserve Financial institution of India has been doing its section, having reduce the repo rate by 110 bps in four tranches in 2019.
One other sector that has been reeling below promoting power for a number of years is pharma, as a result of US pricing pressures and warning letters from the nation’s regulator, the USFDA.
Jhunjhunwala, however, feels that the field has bottomed out.
If truth be told, the solid numbers by healthcare foremost Solar Pharma on August 13 is a mirrored image of this.
The firm reported a 31 per cent year-on-year growth in profit and 16 per cent upward thrust in earnings pushed by India, US and The leisure of World companies.
Junjhunwala however acknowledged he’s terribly bearish on cab aggregators corresponding to Uber, Ola and Lyft, questioning their profitability.Subscribe to Moneycontrol Proand salvage salvage admission to to curated markets records, buying and selling suggestions, equity analysis, investment tips, insights from market gurus and heaps extra and masses extra. Internet Moneycontrol PRO for 1 year at sign of3 months at 289. Utilize code FREEDOM.