Sensex could touch 19000 this year

Sensex could touch 19000 this year
The Economic Times, June 26, 2009, Page 18

THE market is likely to consolidate at these levels for some time, but the Sensex could touch 19,000 and the Nifty 6,000 before the year ends, says Rakesh Jhunjhunwala, partner, Rare Enterprise. There are plenty of opportunities despite the sharp run-up in prices, Mr Jhunjhunwala said in an interview to Nikunj Dalmia of ET NOW. Excerpts:

Where do you think we stand as far as the markets are concerned?

We stand in a fluid state because markets (Nifty) have had a tremendous rise from 2,700-2,500 to 4,700, and then corrected back to 4,200-4,300. And there’s no question that the economic scenario worldwide is still not out of the woods. After such a big rise, markets need to consolidate. I don’t think we’re going to make any major move either way prior to the Budget unless things internationally take an ugly turn, or there’s a big upswing. We’ll get the real direction post-Budget and depending on how things develop internationally. So, I’d say fluid. I won’t rule out Nifty going to 5,200-5,300. At the same, I won’t rule our it coming back to 3700.

Let’s take the conversation slightly backwards. From March 9 is roughly when global markets bottomed out. How have things looked? Oversold to overbought ? Or do you think a 10% movement here or there perhaps, and we would stabilise over a long-term basis.

I am hopeful that we would stabilise at 10% upwards or downwards. Either we have a bear market, which will last long and will correct the rise from 2900 to 21000. It will take a lot of time, or this fall was just a long-term correction of the bull market. I think this year at some point, you’ll have the Nifty around 6,000 and the Sensex around 19,000, though the situation is fluid and it could go either way. Maybe a year later, you’ll move upward and go above 6,000. Or we could come back to a level of say 3,200-3,700, and then you spend 2-3 years consolidate and then the market moves.

You got to be cherry-picking now. Time has gone. Low-hanging fruits have been plucked. If you miss the March-April-May, you got to think, look back and then perhaps start cherrypicking...

I wouldn’t say that. There could still be a lot of cherry-picking opportunities.

Well, it’s not my work to advise people in individual investments. But generally, I feel there are a lot of opportunities in the markets. It’s not that there is no opportunity.

You have two sides Rakesh. It’s rare to find the combination of a perfect trader and a great investor. Let’s look at both the sides. What is the investor in you telling you and what is the trader inside you indicating?

Well, the investor inside me is telling me that markets are going to consolidate more than anything else. The market needs reason to break or to go up, right? More reasons, right? Or more external data which is favourable or critical. As an investor, I have no doubt about India’s long-term growth story and the growth rates. I have all my wealth in Indian equity. And I think it will remain that way.

Last time when we interacted, you had indicated that you pretty much have investments across the board. Is that still your mantra? Be diversified and you’ve got investments which are spread across sectors?

Yeah. I have largely not changed my investments. They are the same.

Things are foggy for real estateand IT. What’s your sense, not purely on stock prices, but on earnings and your assessment. Let’s start with real estate. We can endlessly argue on both the sides that demand could come back. Some would say demand could never come back. They are leveraged companies.

Well I would like to stay away from real estate.

Why is that?

It’s a long story. They can’t get those lands back to those prices and I don’t think they can have those kind of margins. They are not used to paying taxes. You sell to associate companies and there is profit. I can’t understand all this. So it is better to stay away. I don’t know where the real-estate people want to raise money. Everybody wants to raise money to buy distress assets. So a person who has distress assets is raising money to buy distress assets. I don’t know why...About technology, I think it’s going to be neither a very bullish sector, nor a bearish one. It’s one of the defensive sectors. But I think shortly the performance of these companies — and this is my assessment and I don’t have a very good assessment, it’s just my impression — will be better than what people are predicting.

What is the one investment you really feel proud of when you look back? That really could be called as your favourite stock pick. I just want to understand how did you pick it?

No. The best is still to come. If you are trying to identify which is your favourite investment, it is like you are trying to say who do I love better — my daughter or my son.