Rakesh Jhunjhunwala - Interview

In an exclusive conversation with ET Now, Big Bull Rakesh Jhunjhunwala says that he is concerned about the impact of inflation on Indian equities and it is indeed the biggest risk for the markets. He says that the next 3 months are likely to be very difficult period for the markets. Excerpts:

What is your view on the markets?

The next three months are going to be a very difficult period for the markets. The chances to break down to me seem to be greater than the chances to break up, at least in the next three months.




Do you see 5000 acting as a base for this market?

That is difficult to say, but I would think so, 4800-5000 is a level where markets will surely find a base, strong support which goes there.

:So what is the biggest risk for Indian markets currently?

The headwinds are on Indian markets, the most important thing is inflation. Because inflation controls everything, interest rates, growth and the second headwind is the government inaction. Although we have very good people at the helm of government and they know what needs to be done, but politically they are not able to give any consensus at all.

There was hopes of some big reform after the elections, but nothing has happened up until now. And unless we get some kind of a reform in the subsidies and some kind of a clear roadmap for the DTC and goods and sales tax, GST, the markets are waiting for that.

But would you bang the table and say that or predict rather that in next 3 years, Sensex will be at least 50% higher than where it is?

I am extremely bullish in the longer period. Three months unless and until we get clarity on the monsoons which we will get by August end, and we will see what kind of government action comes through. Until then, the markets are going to have a downward bias. Three years, 5 years, 10 years, I am extremely bullish.

Do you think the golden period for Indian equities is not over?

It has not even started.

Let me get this right and this is one point I do not want to get it wrong for our viewers, near term you are not bullish, but your long-term outlook is still intact.

Absolutely and near term I mean until things clarify and it depends how events turn out. If the monsoon is good and commodity prices ease which I personally expect, oil prices should be at $80-85 and some government action comes through and inflation may not have come down, but it becomes apparent that in future months, inflation is going to come down, then the Indian markets will have a very strong ride after that.

So I am saying that the next 2 to 3 months are uncertain depending on how events turn out. The period for the next 9 months could be very good or could be okay.

But is the rampant speculation in commodities over?

I do not think so. Speculation in commodities is at an all-time high.

But insiders tell me that you have been short commodities of late.

Yes, I am shorting some commodities. I am short.

How come you have not made any large investments in last 6 months? Delta Corp was only large investment you made and that was just before Diwali.

I have applied for a loan to my father-in-law. When he sanctions it, I will disburse it. I will make it. I am fully invested and all that I have done in my life is investing. So now even though I have some money, let me buy something else.

But if you had enough capital, do you see currently enough opportunities which are available?

I am always capital short. If I see the opportunity, I will get the money. So if I see an opportunity, I will surely invest.

Are you excited that Titan is at an all time high, your biggest investment?

I am happy that the company has proved itself to be an extremely good robust company, very good growth prospects, now getting very aggressive. I am extremely very happy really.

But you are still of the view that Titan potentially could be $1 billion investment for you?

I am hopeful now it should be more than that.

More than a billion?

Why not?

Why is Titan an exciting business to own?

Because this business has the highest entry barriers. They have good growth. They have excellent management. They are expanding very aggressively. They have good brands. So I think the retailing is going to be one of the biggest growth stories in India and Titan is in a sector which dominates whether watches or jewellery and now they are coming to frames. They could enter other areas also. So with such high entry barriers and growth and very high return on equity and good positive cash flows, Titan surely is a very sweet spot.

What about the PE multiple if you look at estimates and again I am looking the consensus estimate?

By Indian measure of measurement, it is expensive. But good stocks always remain expensive.

That is the investor Rakesh Jhunjhunwala, but what is the trader Rakesh Jhunjhunwala thinking and doing?

Thinking and doing, I am trading. I feel the markets in the next 3 months have more downsides than upsides.

So broadly speaking can I safely assume that the trader Rakesh Jhunjhunwala is short or he is not bullish?

I am certainly not bullish and let's not discuss my trades.

So where do you think the new leadership in the markets could emerge from?

Titan will be one of the leaders.

Even after this run up?

Yes, why not?

It is interesting if I look at your investment portfolio. You do not own any Nifty 50 or Sensex 30 stocks. Why is that?

I hope that some of those stocks which I own will become part of the Nifty or Sensex.

So apart from Titan, which other stock has the possibility of being part of Nifty 50?

Lupin. Lupin is a fairly large company now.

What makes you so bullish on Lupin because the Indian pharma business...?

It is growing well, they have done well. They are doing well in Japan, America.