Rakesh Jhunjhunwala latest interview ............in ET

‘No meaningful correction before another rapid rise’
Markets Will Remain Far, Far, Far Above The Lows Of October And March Last, Says Rakesh Jhunjhulwala
THE flood of money waiting on the sidelines means that the market is unlikely to see a meaningful correction anytime soon, says Rakesh Jhunjhunwala, leading stock investor, and partner, Rare Enterprises. In an interview with ET, he says a delayed recovery in the world economy is not a bad thing for India, as we stand to gain from moderate commodity prices.

You mentioned at a recent seminar that the market appears poised for a bust. What according to you, are the symptoms?

What I said has been grossly misinterpreted. What I said was that this kind of systematic rise in the market, where the market goes up, then corrects briefly — both price and time wise — and then once again resumes its gain, cannot even have a meaningful correction without a burst of a rise, which means a very, very rapid rise.

Key indices have more than doubled in the past seven months, many midcaps have given unbelievable returns. Is the market over heated?

I surely feel that in terms of commitment and belief, the market is not heated at all. There is disbelief all around and huge money on the sidelines. This is a reason why we don’t get any meaningful correction, and this is also the reason why we could still have a sharp rise ahead of us.

But a correction is only inevitable. Whenever that happens, do you see the market retesting the lows of March 2009 or October 2008?

Markets by their very nature will naturally correct at some point of time. The markets, as I see them, are not as of the moment indicating any signs of meaningful correction. Whenever markets correct, I do not expect the correction to be anywhere near what we saw last year, and I expect the markets to remain far, far, far above the lows of October and March.

Which are the sectors in the Indian economy that you are bullish on?

I am bullish on all sectors which are domestic economy dependent and underpenetrated. Banking, retailing, infrastructure, pharma are among the key ones.

What is your reading of the key events likely to play out in world markets over the next few months, and what implications do you see for India?

I do not expect that the western and the developed economies can make any meaningful recovery and sustain it. Mr Bernanke is well known for his views of having a loose monetary and fiscal policy in times of difficult economic conditions. Thus, I believe interest rate worldwide in general, and in the western world in particular, are not going to go up in a hurry. Even if the western and developed world do not make any meaningful recovery, I see no reason why the Indian economy and the Indian markets cannot continue to sail alone smoothly. If the world does not recover, commodity prices will remain moderate, which is a big plus for India. What is vital is what happens to Indian software exports. My personal view is that there is more than a fair chance that India will grow well and outperform, even if the world does not recover.

Is there any lurking negative that the market appears to have overlooked?

I think that the western and developed economies are set for sub-par/negative growth for a good period of time. There has to be a transition of both consumption and power from the developed world to the developing world. What effect this will have both economically and geopolitically is a matter of uncertainty and no one can definitely predict the smooth course of this transition. This, I surely think, is a matter that could unsettle markets if the transition is unruly and geopolitically destabilising. Be that so be, I have no doubt in my mind that this transition has to and will take place.

My Comments:
I am a great fan of Rakesh Juhnjhunwala.Why?Maybe because he is eternal BULL like me! Maybe.....but in his pre 2003 days he was a bear.
I was also surprised to read that he is saying that market will burst in couple of months.
But as he has said , he was misinterpreted.......
The reason I like him is because he is a visionary and is able to see things coming up.He was bullish right from 2003 and RJ and Shankar Sharma use to have debates on where the market is going and it turns out always to be hot.Becuase SS always use to speak on bearish side while RJ always speak on Bull side but ultimately RJ proved right all along the bull run uptill 2007 Diwali interview at CNBC.....
I read and hear RJ very keenly and try to understand the finer prints of his interview.....anyone of my reader who have any interview given elsewhere is always invited to give the link or entire interview transcript here.....I will be more then obliged.......