“Equities transfer wealth from the impatient to the patient,” Jain said in a special Samvat 2082 conversation with ET Now. “All you really need in the market, apart from understanding, is patience.”
According to him, Indian markets are emerging from a “time correction”, a period where prices consolidate while earnings catch up. “After the post-Covid euphoria, markets overshot fair value. The one year of nil returns was simply that excess being absorbed,” he explained.
Markets consolidate before they climb
Jain noted that over the past year, India has underperformed other emerging markets by nearly 20%, with FIIs turning cautious amid high valuations and slower-than-expected earnings growth.
But he sees this as healthy. “The premium of India over other EMs has normalized, and earnings expectations are now realistic. Typically, when markets consolidate for 12–18 months, the next move is upward — not downward,” he said.
“India’s real growth should stay around 6–7%, and nominal GDP growth near 10–11%. So, over the long term, I expect the Nifty to compound at 11–12% annually.”
Margins stable, growth steady
Corporate margins, Jain said, have largely recovered from the pandemic lows and are now likely to remain flat. “That means profit growth will mirror topline growth — roughly 11–12%,” he added.While this might sound modest, Jain believes it reflects a more stable, low-inflation economy — one where real wealth creation continues even if rupee-denominated growth appears slower.
“Low inflation, low interest rates, and a stable rupee are signs of strong fundamentals. The real wealth creation or purchasing power remains intact,” he said.
Patience and understanding: the real alpha
Jain, known for his long-term conviction bets — from PSUs to private banks — says composure and conviction matter more than momentum.
“Good investing is about understanding what you’re buying, knowing the growth potential, and not overpaying for it,” he said. “If your understanding is right and the business grows, price eventually reflects fundamentals. But if you chase momentum and overpay, returns will disappoint.”
His confidence, he says, comes from studying the intrinsic value of businesses, not short-term price moves. “You buy great companies when the near-term looks painful — that’s when they’re cheap,” he added.
Sectors to watch: IT reasonably priced, FMCG still expensive
On sectors, Jain sees consumer staples as somewhat stretched, given high penetration levels and limited volume growth potential. “Staples are highly penetrated; just because incomes rise doesn’t mean people consume more essentials,” he noted.
He expects consumer discretionary categories to outpace staples, while IT services, despite slower growth, are now trading at reasonable valuations.
“Both FMCG and IT don’t need much capital to grow, so their dividend payouts are strong. But in FMCG, valuations still have room to correct. IT, on the other hand, looks fairly priced,” Jain said.
He added that once in a while, even slower-growing sectors can become attractive if valuations turn cheap. “When growth gets mispriced, re-rating can create opportunities,” he said.
The bigger picture: India’s slow and steady wealth creation story
For Jain, India’s next decade will mirror its last — steady growth, lower inflation, and consistent wealth creation.
“In dollar terms, India has been one of the world’s best-performing markets alongside the US. The next 10 years should deliver similar returns — around 9–10% in dollar terms and 11–12% in rupees,” he said.
His message for investors this Samvat: stay patient, stay invested, and let fundamentals do the heavy lifting.
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