Ace investor Rakesh Jhunjhunwala, often remembered as the Big Bull of the Indian stock market, is widely known for his investment philosophy that will continue to inspire generations to come. Investors often remember how the Warren Buffett of India made 20x returns on a Rs 1 crore investment overnight after the 1989 Budget.
In 1989, a thick cloud of anxiety hung over the Bombay Stock Exchange. The newly formed VP Singh’s government was preparing to present its first Union Budget under Finance Minister Madhu Dandavate.
Dalal Street was gripped by panic, as most investors assumed the socialist-leaning coalition would announce an aggressively anti-business budget, slapping heavy taxes on corporations and crushing private enterprise. Investors scrambled to unload their holdings, pushing the market down sharply.
But amid the panic selling, 29-year-old Rakesh Jhunjhunwala saw something everyone else had missed. He believed that VP Singh, who had previously lowered tax rates and abolished estate duty during his stint as Finance Minister years earlier, was fundamentally pragmatist and business-aware.
He was convinced the government would deliver a growth-oriented budget rather than a punitive one. Deciding to stake everything on this single conviction, Jhunjhunwala went all-in.
He aggressively bought up heavily discounted shares, most notably iron-ore exporter Sesa Goa. Going against the herd, he accumulated massive positions right into the peak of the pre-budget panic.
By the time the Finance Minister stood up in Parliament, Jhunjhunwala’s portfolio was leveraged to the hilt, representing roughly Rs 1 crore to Rs 2 crore of net worth on the line. When the budget details hit the wire, Jhunjhunwala’s thesis played out almost instantly.
Far from a corporate nightmare, the 1989 budget was surprisingly rational and pro-growth. As this brought much-need relief to investors on Dalal Street, market witnessed a sharp rally.
Prices rocketed, and the very stocks the Street had dumped hours earlier surged in a frenzied buying spree. As the dust settled and the market recalibrated overnight, Jhunjhunwala’s bold leveraged bets paid off exponentially.
His net worth multiplied virtually overnight, jumping from roughly Rs 1 crore to a whopping Rs 20 crore, eventually swelling to nearly Rs 50 crore over the following months as the rally matured.. one thing that VP Singh will not give a budget that will hurt the business community.
