Mumbai: Investor Rakesh Jhunjhunwala feels the Indian stock market, currently on an upward rally, may “burst” in a month or two.
“If your see the formation of the indexes, all the stocks are going up, indexes are going up. (There are) minor corrections at every point. You cannot have this kind of a rise...(a) peak without burst. I think the burst will come within one or two months,” Rare Enterprises partner Jhunjhunwala said at the Private Equity International India Forum 2009 on Thursday.
Indian capital markets have been heading northward led by robust liquidity positions and on the belief that economic recovery has begun. However, “I have a right to be wrong and I may change my opinion very fast,” Jhunjhunwala said.
He said the future of the Indian market depended on the performance of the Indian economy and the international scenario.
“I think economic growth in India is going to be between 12% and 14% over the next five-seven years. I think the factors that are guiding this growth are irreversible, whether it is skills, tolerance, democracy, demographics,” Jhunjhunwala said. “As far as the economic slowdown goes, I think we have not (yet) seen the peak. I think the next two-three years for the western world are going to be far slower than for the rest.”
According to him, even though India places significant importance on foreign fund inflows, the amount of local money invested in the markets in the last five years has been far greater than the foreign money. “This year, I think Rs2,500-3,000 crore local money will come and in two years maybe Rs6,000 crore. I am bullish. The flow of money is going to go through the roof,” he said.
The Dalal Street guru said he has decided not to invest in start-up companies “because you have to nurture them and bringing them to size is a bit of a painful process”.