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    Elitist India’s disliking for govt social policies creating pessimism in the economy: Rakesh Jhunjhunwala

    Synopsis

    When market is at an all-time high, there is no manipulation and there is no participation.

    Mid & smallcap will outdo largecaps in 2020: Rakesh Jhunjhunwala
    Big Bull Rakesh Jhunjhunwala says the pessimism in the Indian economy is long overdone and optimism is overdue. In an interview with Nikunj Dalmia of ETNOW, he said the economy has seen some long-term positives and they will help it grow from here on. Excerpts:-

    How would you characterise the current environment: markets at all-time high, economic indicators at record low?
    I think it is an environment full of opportunity. When the market is at an all-time high, there is no manipulation and there is no participation. People don’t talk of equity. In cocktail parties. Equity is a bad word. So, I think that indicates that there is a lot of opportunity.

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    Why are headlines not matching what the market is doing?
    You should ask yourself, because you make the headlines, I do not. I think there is a general depression. Suddenly certain parts of the economy are being bit, have been hit, but I think things are improving. I think it just tells you we are overdoing the pessimism and optimism is overdue. I, for one, think the economy is bottoming out and the way from here on is upward. At what pace and in how much time it will happen is a matter of conjuncture and opinion.

    So let us take your view on the four pillars of the economy: consumption, exports, government spending and private sector capex. When we are taking a view on the economy, why do not we talk about these four pillars?
    See, all four play upon each other: government spending leads to capex; consumption leads to capex, capex leads to consumption. I think all pillars of the economy will improve and we have bottomed out. I have no doubt about it.

    When we met last in August, your view was that the market has bottomed out, the economy has bottomed out. Post that markets have rallied, at least the benchmark indices have rallied and the economy -- we can argue -- whether it is good or bad. There are some green shoots but there are some bad news also.
    Given the kind of fall we have had in the economy, we are not going to improve in a day. As for the green shoots in the market, what is important is that market breadth in last two months has been far better than what it was earlier. Not only have the markets improved, but even the participation in terms of market breadth is much better now. As for the economy, it is not going to turn itself in a day. It is a slow process. It is going to take time. But it is not as pessimistic as before. A lot of pessimism is emanating from the fact that a large part of elitist India does not align itself with the political and social policies of this government. A large part of elitist India is aligned to the economic policies, but they are not aligned to the political and social policies. They are expressing that anguish in their thoughts about the economic policies and consequently the economy.

    We also spoke about the way business would be done in the future. You said the way business will be done in the next decade will change from the way business was done in the last decade. That entire change is coming at a cost.
    We have to pay the cost. If there is a cancer, it has to be cured. Chemotherapy has to be taken. Your hair will go. So many problems are there. So that correction, in the way our society functions, is coming at a cost and I think no cost is enough for that change has to take place.

    Now what is happening because of this…
    Remember one thing. That change has come in the form of GST, in the form of the banking code, in the form of RERA. These are all very long-term positives for the Indian economy. The only thing I see newspapers harping on is, this is not good, that is not good. I do not know how the bankruptcy code is not good. I cannot believe GST is not good for this country. Every country has had to struggle to implement GST; be it Malaysia, be it Britain, be it France. We are just going on harping on the problems without realising that these are going to lead to a good and better economy and society.

    What is also happening is that the big are getting bigger and the mega companies are getting ultra-mega. In this economic slowdown, every sector has seen a supply disruption….
    That is what happens in any society. As a society matures, as sectors mature, the big gets better.

    Is there nothing wrong with this, if there are very few players left….
    Now, we have a competition conviction. It is not that monopolies have been created. There is intense competition in all aspects in India, and the percentage of corporate profit-to-GDP is an indicator. In America today, it is 10-11 per cent of what it was and one of the primary reasons is consolidation. In India, there is still intense competition in each sector. You tell me one sector in which there is no competition.

    Is that what markets are voting for? Because wealth flows and the change happening to the economy are getting reflected in the market with just 15-20 stocks seeing all the price action and all the flows…
    I do not really agree that it’s going to only 15-20 stocks. I can clearly tell you from the price movement in the market that there is big stirring in midcap and smallcap stocks, and they are now starting to flutter and a lot of them have gained very well. So, I see no reason to say that the rally in last two months was only of the largecaps.



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    (What's moving Sensex and Nifty Track latest market news, stock tips and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)

    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

    ...more
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