Stay bullish on Indian equities: Rakesh Jhunjhunwala

Jhunjhunwala added that all the talk about high valuations has him convinced that there is a start-up bubble

Rakesh Jhunjhunwala on Saturday urged Indian households, which have until now been under-invested in equities as compared with their peers worldwide, to stay bullish and invest in Indian equities.

India's shift in demographic profile will spur high disposable income and consumption growth, he said, adding that the country's Gross Domestic Product (GDP) had been seeing decadal growth rates on a higher base.

Addressing the students of Indian School of Business (ISB) at it's 13th leadership summit in Hyderabad, Jhunjhunwala, one of India's most admired value investors, said the bull market in India is structural and irreversible, backed by good corporate governance, prudent fiscal and monetary policies and efficient use of capital.

"India is going through a massive political, financial, cultural and structural change, and the pace of change is accentuated with every year and decade. We must invest in equity," he said.

Saying that whether it is a country or a company, it is a truism that governance always pays, the ace investor said only companies with good governance could maintain leadership in their respective sectors in the long-term.

"With high governance, HDFC, HDFC Bank, Infosys and Tata Group companies together have over 30 per cent weightage in the Nifty," Jhunjhunwala pointed out.

Terming Prime Minister Narendra Modi as "a capitalist with a socialist bent", he said Modi had placed India on the global map by inviting investments, dismantling corruption, institutionalising processes and mindsets, improving efficiency through clear performance and accountability mechanisms in the government administration, and reforming labour laws and business laws, including bankruptcy and arbitration laws. "Modi's entire campaign is based on growth," he said.

On start-ups, which are increasingly making the headlines through funding rounds and high valuations, Jhunjhunwala suggested he was steering clear .

"The more bigger the valuation, the bigger the bubble. I have no doubts, it (start-up) is a bubble," he said.