If there's one investor whose moves are closely tracked in the Indian market, it's Rakesh Jhunjhunwala.

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While Jhunjhunwala, who owns private equity firm Rare Enterprises, believes that there are growth opportunities in every section of the stock market, he has his favorites and one of them is Tata Steel.

"I have put my bet basically on Tata Steel. I am extremely bullish. I feel they have got great value added," Jhunjhunwala told CNBC-TV18 on Thursday.

Lets understand the reasons behind Jhunjhunwala's pick:

Ace investor Jhunjhunwala believes Tata Steel, formely known as Tisco, will benefit the most if the global steel prices were to rise from the current levels.

According to market experts, the demand for steel is expected to remain steady this year, which is likely to support metal prices. China drives the outlook for steel companies in Asia because the country represents the region's largest steel consumer as well as producer.

"... if steel prices were to come off, Tisco is going to earn in India a margin of less than Rs 25,000-30,000 crore. If prices remain where they are today, their EBITDA could go to Rs 35,000-40,000 crore. So on an equity of Rs 1,200 crore, even with a debt of say Rs 75,000, it is easily serviceable."

Jhunjhunwala believes steel prices are not at their peak right now.

"Steel prices are only where they were in 2012-2013 and a lot of capacity is not feasible below a certain price."

For more on news on Rakesh Jhunjhunwala and his stock picks, click here