Housing finance, infra and Escorts: Rakesh Jhunjhunwala's top picks in a booming economy

If there’s one investor who’s moves are closely tracked in Indian markets, it’s Rakesh Jhunjhunwala, and while he may have burnt his fingers on stocks like SpiceJet, the famed investor says he is bullish on the Indian economy and some stocks in particular. So what’s his favourite pick from stocks presently? Turns out, it’s housing finance companies like LIC Housing Finance and DHFL. “I’m very bullish on housing finance companies. You cannot create a housing finance company because you need a large network,” he told Bloomberg TV India in an interview, adding that it was a sector that could grow 400 percent if the Indian economy grew as per projected figures. “They have entry barriers and continuity, which makes me bullish about it,” Jhunjhunwala said. [caption id=“attachment_2036147” align=“alignleft” width=“380”]  Reuters image[/caption] He maintained that he doesn’t allocate funds as per sectors and he only bought companies that he liked. However even though Jhunjhunwala likes internet companies, he thinks their valuations are too high. The ace investor said he liked the infrastructure sector but cautioned investors to choose cautiously. “I think financials should do well. There is so much potential for financial services to grow in India,” he said. One company he said he was bullish on was Escorts, which he believes will do well once they start generating volumes in sales. On public sector companies, Jhunjhunwala said there was a lot of potential but there was little knowledge about how the government planned to divest them and he would be cautious about it. He admitted that it was easier to get value picks when markets were down but it didn’t mean that one couldn’t find opportunities in a bull market. “There’s a correction there’s no doubt about it. I would be cautiously optimistic and long term I am optimistic,” he said, adding that it was merely a correction and not a reversal, which gave him reason for optimism. The investor said that he was keen on the Indian economy only because he still had faith in the Narendra Modi-led BJP government. “The most important thing is that we have a mature and determined government,” he said. Jhunjhunwala said the promulgation of ordinances was an indication of the determination of the government to bring about reforms and advised waiting for some time to see their effect. The investor refused to be drawn into what he expected from the Union Budget this year. “First let the market stop falling first and then we’ll take about a rally. We’re living in a very uncertain world presently,” Jhunjhunwala said. “It’s a buffet, choose what you want but don’t overeat…In time to come all sectors will do well,” he said. His advice to retail investors on investing in this market? Choose a good fund manager and let him do his job since it’s a field that requires some degree of expertise. Jhunjhunwala maintained that the only thing he would advise investors to be worried about are international factors like the Greek elections and its effect on the Euro but said he didn’t see anything to worry about the Indian economy.