Has Rakesh Jhunjhunwala turned bearish on stocks?

Ace investor Rakesh Jhunjhunwala, commonly known as India’s Warren Buffett has trimmed positions in various stocks in the current year. The ‘big bull’ has sold off positions in Delta Corp, Titan, Escorts, Lupin, and SAIL, as per the latest quarterly filings on BSE. 

These stocks have plunged by up to 20% in the last one month as compared to a 6% fall for the Nifty 50 index. 

Here’s a look at what’s weighing on the stocks and Rakesh Jhunjhunwala’s action on these. 

Rakesh Jhunjhunwala: Latest action in stocks

Delta Corp (stake cut by half to 3.36%): The company reported a 17% drop in net profit in Q4.

Titan (stake down to 5.05% from 8%+ in the 2000s): Weak Q4 results coupled with a slowing economy and rising interest rates have led Titan to fall 30% from its peak.

Escorts (stake cut to 1.38% from 7.42% in March 2020): Volatility in tractor demand, raw material headwinds, and lower margin expectations have impacted the shares.

Lupin (stake below 1% from 1.51% in March): After a tepid Q4, the outlook remains challenging with headwinds in the U.S. on account of price erosion, and inflation in input materials and freight.

SAIL (stake cut to below 1% from 1.8% in the previous quarter): An export duty on steel, inflation, and rising interest rates have dented sentiments for cyclical stocks such as SAIL in recent times.
 

Rakesh Jhunjhunwala: Stocks down up to 20%

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What should you do now in Rakesh Jhunjhunwala stocks?

Rakesh Jhunjhunwala and Associates publicly holds 33 stocks with a net worth of over ₹28,166 crores, according to media reports. Given his celebrity status, the changes made by Rakesh Jhunjhunwala are closely tracked by market participants. Hence, the news of him cutting stakes in companies could lead one to think about how to navigate the current difficult times. Here are a few tips to cope with the current market volatility. 

• Use this fall as an opportunity to accumulate quality stocks trading at attractive valuations.
• Avoid buying high debt companies and look out for companies with higher pricing power that can pass on the inflation to customers with strong balance sheets.
• Invest in equities in a staggered manner. 
• Stick to large caps and index stocks that are best suited to navigate the ongoing volatility.
• Invest only in high-quality AAA-rated bonds as they have the least risk.
• There is a significant tax advantage in holding a debt fund for more than 3 years. 
• The interest rates are expected to move higher over the next 3-6 months. Shorter duration funds are likely to outperform in this scenario, given their lower sensitivity to interest rate changes as compared to long-duration funds.
• Having proper equity, and debt allocation on the basis of your risk profile and goals is the key.
• Ride out the volatility with SIPs.