Nifty won't cross 6,200 unless there are policy changes: Rakesh Jhunjhunwala in ET

Rakesh Jhunjhunwala tells ET Now in an interview that he is bullish on India long term, despite mid-term uncertainties. Excerpts:

ET Now: How would you characterise the current market environment? There are bears everywhere, foreign institutional investors are selling markets down, retail is absent, HNI investors are now investing in gold and real estate. Do you think it is time to buy fear and put money to work?

Rakesh Jhunjhunwala: As I told you, I am a near-term bull. I am of the opinion that markets could touch 5,500 to 5,700 on the Nifty in 3-6 months. Medium term there is a lot of uncertainty. On the longer term, I remain bullish.

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ET Now: There are 4 factors weighing on the markets currently -- European cues, inflation, fiscal deficit as well as the rupee. Do you think over the next 1 year, at least 2 factors, such as the rupee and inflation, will be taken care of and at least moderate?

Rakesh Jhunjhunwala: Commodity prices have come off, inflation will come down, interest rates will come down aggressively and the rupee will gain.

ET Now: So why are you bearish on commodities at a time when most central bankers are committed to printing more liquidity, more money, that will only fuel asset price inflation. What makes you a commodity bear?

Rakesh Jhunjhunwala: As long as there is no structural change both in America and Europe, structural change in Europe and American consumers wash out their debt, I do not see any means by which economic growth there can recover on a continuous basis. Commodities are technically weak and commodity prices will go down further. They may go up in the next 10-15 days because they have fallen so deeply, but ultimately the path is downward.

ET Now: Globally, where do you think the biggest risks lie? Greece, China or the US?

Rakesh Jhunjhunwala: I do not think those factors are going to change. Europe commodities, US elections, US economy, that is as far as the world is concerned.

ET Now: So at these levels, do you think markets are pricing in a disorderly exit of Greece?

Rakesh Jhunjhunwala: Markets have priced in a Greek exit but are uncertain of what will happen following a Greek exit. How deep are the problems in Spain and Italy and how will investors react to their bonds. There is a fair level of uncertainties here.

ET Now: Do you think at these levels, local bad news has already been priced in?

Rakesh Jhunjhunwala: Yes, the only thing which is uncertain is the monsoon.

ET Now: Are you saying if we get a good monsoon this year, the Nifty is on course to touch 5,500?

Rakesh Jhunjhunwala: If we get a good monsoon, commodity prices come down, inflation is controlled, interest rates come down and there is some hint of action on the government's part.

ET Now: So when do you think the next bull market will start in India?

Rakesh Jhunjhunwala: I do not think that India is really set for the next big bull run. I do not see the Nifty crossing 6,200 easily unless and until there is substantial policy change in India and the horizon in the Western world corrects. So I do not see that happening for the next 12 to 36 months.

ET Now: Do you think India is still a bad macro and a good micro story because even though benchmark indices have done precious little in last 4 years, some of your top holdings -- like Titan, Karur Vysya Bank, Lupin -- are at an all-time high?

Rakesh Jhunjhunwala: There is always a micro story anywhere in the world but I am hopeful that in the next 12 to 36 months, India will take the steps required -- by consensus or crisis -- to leap into double-digit growth. Once that happens, I have no doubt that India will have double-digit growth. In 2 to 3 years, we will have a lot of clarity on what will happen in Europe and America, and then India will be ready for the next big bull market like we had from 2003 to 2007.

ET Now: So does the current market remind you of 2003 when macros were terrible, earnings fuzzy and valuations very attractive?

Rakesh Jhunjhunwala: No, all that is present but I do not think the Indian economy is at that stage. We are not at a stage where companies have invested and returns have not come. So I do not compare the present situation to 2003.

ET Now: Last time when I interacted with you on this forum, your view was that the best for India is yet to come. But given how things have moved in the last 1 year, are you still confident that the best for India is yet to come?

Rakesh Jhunjhunwala: No, it is still ahead of us.