Jhunjhunwala sees 3 phases of mkts

Investor and Trader Rakesh Jhunjhunwala sees a three-phased way out of the current bear market. “First is going to be a phase of stabilisation and it will be linked in a large part not to local but international factors. Then we will go through a phase of consolidation. Then, we will go through a new market,” Jhunjhunwala said.

Jhunjhunwala also said the strengthening dollar was beyond comprehension. He said, “I don’t understand how the dollar is defying gravity. The only way for housing to ease in America is to consumption to ease up. The only way the American economy can stabilise is by growing exports and with this value of the dollar, what will happen to American exports?”

On the possible reasons for things to improve, Jhunjhunwala, said there were two positives that could result in markets moving up from here. “There are two factors that should dramatically improve the atmosphere for Indian equity. One, interest rates are headed nowhere but down. In my calculation — and I have studied the WPI index — one is going to have between 5.5-6% inflation by March and interest is one of the biggest factor in valuing assets,” Jhunjhunwala said. “So when interest is going to go down, that will give a kick to equities.”

“Secondly, one year ago, nobody was bothered about India’s monetary and fiscal position and the only joker in the pack was oil. With oil being down — and I am not seeing any recovery for oil — India’s monetary and fiscal position and foreign-exchange position next year will dramatically improve,” Jhunjhunwala added. These are two factors which could drive up valuations in India, he said.

Source: Moneycontrol