“Stocks transfer wealth from the impatient to the patient,” Jain said in a special Samvat 2082 conversation with ET Now. “The only thing you really need in the market, other than understanding, is patience.”
According to him, Indian markets are coming out of a ‘time correction’, a period in which prices consolidate while profits catch up. “After the post-Covid euphoria, markets exceeded fair value. The one year of zero returns was simply that excess returns were absorbed,” he explained.
Markets consolidate before they rise
Jain noted that India has underperformed other emerging markets by almost 20% over the past year, with financial institutions turning cautious due to high valuations and slower-than-expected earnings growth.
But he considers this healthy. “India’s premium over other emerging market countries has normalized and earnings expectations are now realistic. When markets consolidate for 12 to 18 months, the next move is usually upward, not downward,” he said.
“India’s real growth should remain around 6-7%, and nominal GDP growth around 10-11%. So in the long run, I expect the Nifty to reach 11-12% annually.”
Margins stable, growth stable
Operating margins have largely recovered from the pandemic lows and are now likely to remain flat, according to Jain. “That means earnings growth will mirror revenue growth – around 11 to 12%,” he added. While this may sound modest, Jain believes it reflects a more stable, low-inflation economy – one in which real wealth creation continues even if rupee 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 true alpha
Jain, known for his long-term beliefs – from PSUs to private banks – says calm and conviction are more important than momentum.
“Good investing is about understanding what you’re buying, knowing the growth potential and not paying too much for it,” he said. “If you get it right and the company is growing, the price ultimately reflects the fundamentals. But if you chase momentum and overpay, the returns will disappoint.”
He believes his confidence comes from studying the intrinsic value of companies, and not from short-term price movements. “You buy great companies when the short term looks painful – then they are cheap,” he added.
Sectors to watch: IT reasonably priced, FMCG still expensive
In terms of sectors, Jain sees consumer staples as somewhat under pressure given high penetration levels and limited volume growth potential. “Staples are very popular; just because incomes are rising doesn’t mean people are consuming more basics,” 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 do not require much capital to grow, so their dividend payouts are strong. But in FMCG, valuations still have room for correction. IT, on the other hand, looks reasonably priced,” Jain said.
He added that even slower-growing sectors can occasionally become attractive when valuations turn cheap. “If growth is mispriced, a revaluation can create opportunities,” he said.
The bigger picture: India’s slow and steady wealth creation
For Jain, India’s next decade will mirror the last decade: steady growth, lower inflation and consistent wealth creation.
“In dollar terms, India is one of the best performing markets in the world next to the US. The next decade should deliver similar returns: around 9-10% in dollars and 11-12% in rupees,” he said.
His message for investors this Samvat: stay patient, stay invested and let the fundamentals do the heavy lifting.
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