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Rakesh Jhunjhunwala recommends these sectors to invest in a post-COVID world

Updated : 2020-06-01 15:59:03

Ace investor Rakesh Jhunjhunwala decodes the impact of COVID-19 and the subsequent nation-wide lockdown on various sectors and their survival going forward.

As the Indian economy takes initial steps towards opening up, all eyes will be on the direction the stock market and investments would take amid the coronavirus pandemic. CNBC-TV18 spoke to ace investor Rakesh Jhunjhunwala to understand how he views the impact of COVID-19 and the subsequent nation-wide lockdown on various sectors and their survival going forward. (Image: CNBC-TV18)
As the Indian economy takes initial steps towards opening up, all eyes will be on the direction the stock market and investments would take amid the coronavirus pandemic. CNBC-TV18 spoke to ace investor Rakesh Jhunjhunwala to understand how he views the impact of COVID-19 and the subsequent nation-wide lockdown on various sectors and their survival going forward. (Image: CNBC-TV18)
 Financial sector- an 'investible' sector despite vulnerabilities:  Although Jhunjhunwala believes that the only certainty is uncertainty, he thinks that the uncertainty in the banking sector is far more than any other sector. Quoting a Credit Suisse report, Jhunjhunwala spoke about the earnings decline in most private sector banks, which is around 4-5%, whereas the price asked by analysts is half or even one-third. Jhunjhunwala was talking about the discrepancy in the earnings decline in some private banks and the price quoted for them. (Image: PTI)
Financial sector- an 'investible' sector despite vulnerabilities: Although Jhunjhunwala believes that the only certainty is uncertainty, he thinks that the uncertainty in the banking sector is far more than any other sector. Quoting a Credit Suisse report, Jhunjhunwala spoke about the earnings decline in most private sector banks, which is around 4-5%, whereas the price asked by analysts is half or even one-third. Jhunjhunwala was talking about the discrepancy in the earnings decline in some private banks and the price quoted for them. (Image: PTI)
The ace investor points out that if one is bullish on India, then there can't be growth without banks. He adds that post COVID-19, banks will be the only entities with a liability franchise. Despite calling the banking sector as an
The ace investor points out that if one is bullish on India, then there can't be growth without banks. He adds that post COVID-19, banks will be the only entities with a liability franchise. Despite calling the banking sector as an "investible" option at current levels, Jhunjhunwala cautions investors that there would not be substantial recovery in the financial sectors before the end of this calendar year when some clarity emerges on defaults cropping out of the moratorium on loan EMIs implemented by Reserve Bank of India (RBI). (Image: Shutter Stock)
 Pharma sector set to play a Tendulkar innings:  According to Jhunjhunwala, the pharma sector will play the role of a Sachin Tendulkar double century where the first 30-40 runs have already been scored. He feels that the pharma sector will be the one to watch closely, although he laments that he has keen interest in the sector. (Stock image: CNBC-TV18)
Pharma sector set to play a Tendulkar innings: According to Jhunjhunwala, the pharma sector will play the role of a Sachin Tendulkar double century where the first 30-40 runs have already been scored. He feels that the pharma sector will be the one to watch closely, although he laments that he has keen interest in the sector. (Stock image: CNBC-TV18)
 Commercial mining/metals - From being beaten down black to turning green:  Jhunjhunwala is positive on the outlook of companies involved in commercial mining. According to him, some of the most profitable investments will be made in stocks that have been severely beaten down and investors need to assess which company would manage to survive the losses they have already incurred.(Image: AP Photo)
Commercial mining/metals - From being beaten down black to turning green: Jhunjhunwala is positive on the outlook of companies involved in commercial mining. According to him, some of the most profitable investments will be made in stocks that have been severely beaten down and investors need to assess which company would manage to survive the losses they have already incurred.(Image: AP Photo)
 Aviation may have a delayed take-off:  Once bullish on the aviation sector, Jhunjhunwala believes that the sector will take time to make a comeback. He advises investors to stay away from the aviation sector. (Image: Reuters)
Aviation may have a delayed take-off: Once bullish on the aviation sector, Jhunjhunwala believes that the sector will take time to make a comeback. He advises investors to stay away from the aviation sector. (Image: Reuters)
 Hotels - Time to check in?  Jhunjhunwala feels that hotels will make a comeback, but the current fall has dented the sector, which has been in depression for the last five to six years including construction, hotels and restaurants. Putting an analogy supporting the comeback of the restaurant sector, Jhunjhunwala said that he likes to go to Golden Dragon and eat there, ordering food home does not satisfy him. (Image: Reuters)
Hotels - Time to check in? Jhunjhunwala feels that hotels will make a comeback, but the current fall has dented the sector, which has been in depression for the last five to six years including construction, hotels and restaurants. Putting an analogy supporting the comeback of the restaurant sector, Jhunjhunwala said that he likes to go to Golden Dragon and eat there, ordering food home does not satisfy him. (Image: Reuters)
 FMCG - How soon before it moves into the fast lane?  The millionaire investor said that he is not concerned about the prospects of the FMCG sector. He believes that the sector may just grow about 5% this year, but remains optimistic on the return of consumption growth. He added that impact on performance of FMCG companies for one year should not matter to investors and if the company survives the current downturn then they would do very well in future.(Image: Chinatopix via AP)
FMCG - How soon before it moves into the fast lane? The millionaire investor said that he is not concerned about the prospects of the FMCG sector. He believes that the sector may just grow about 5% this year, but remains optimistic on the return of consumption growth. He added that impact on performance of FMCG companies for one year should not matter to investors and if the company survives the current downturn then they would do very well in future.(Image: Chinatopix via AP)
PSUs and disinvestmentSpeaking about PSUs, Jhunjhunwala stresses that he will not read into things which the government says before it acts. According to him if the government has a coherent disinvestment policy, the share price of every PSU would double from current levels. The problem currently, Jhunjhunwala believes is the lack if a coherent disinvestment policy. (Image: Reuters)
PSUs and disinvestmentSpeaking about PSUs, Jhunjhunwala stresses that he will not read into things which the government says before it acts. According to him if the government has a coherent disinvestment policy, the share price of every PSU would double from current levels. The problem currently, Jhunjhunwala believes is the lack if a coherent disinvestment policy. (Image: Reuters)
Overall, Jhunjhunwala remains absolutely bullish and is fully invested at this point. The key risks according to him remain a situation where there is no movement on the reforms front and a recurrence of an abnormally large increase in COVID-19 cases. (Image: Reuters)
Overall, Jhunjhunwala remains absolutely bullish and is fully invested at this point. The key risks according to him remain a situation where there is no movement on the reforms front and a recurrence of an abnormally large increase in COVID-19 cases. (Image: Reuters)
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