Rakesh Jhunjhunwala rues the poor haven't gained from 40 years of Bull-Run, but warns against wealth tax

The poor have not benefited from the bull-run in markets of the past four decades and we need to stand guard against populist moves like wealth tax, veteran investor Rakesh Jhunjhunwala said Tuesday. He said the poor, who have missed out on personal growth opportunities, decide governments through their votes and the leaders they choose serve the core constituency.

Citing the example of the US, where one of the nominees of the next presidential race has promised to impose a wealth tax, he said, similar moves will be implemented across the world if the trend continues. "We will have consequences which will not be good," Jhunjhunwala said, speaking at the launch of ITI Mutual Fund, the 41st AMC to have set up shop in the country.

American president Donald Trump is also a product of such tendencies and is talking of making America great again, he said. Explaining the perils of wealth tax, he said in the absence of consistent dividends, he will have to sell down 2.5 percent of his holding every year to comply with the tax requirements.

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Domestically, even Congress president Rahul Gandhi is talking about a lot of populist policies, he said, underlining the need to be vigilant. In a departure from his earlier views, Jhunjhunwala said the ruling BJP will not get a clear majority in the ongoing polls. However, it will be a major partner in the next government, he said, adding from an economic perspective, there won't be any veering off the policies as they remained consistent with different governments since the 1990s.

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Even as markets breach new highs, he advised investors that this is not the best time to invest and recommended a cautious outlook as always the gains are limited when the expectations are high.

"We shouldn't be aggressive till the election results," he said. Jhunjhunwala said another factor he worries about is a possible nuclear attack by Pakistan, adding there are enough rogue elements in that country who may not hesitate to use the N-button.