At 18000 plus, how would you characterise the market?
Bullish. One with opportunity, with attended risk. Rather than looking at the market levels, we should look at the Indian economy and I see no reason why India's growth will be reversed. Of course, there are attended risks internationally. So overall, the picture is good.
But are the low hanging fruits being plucked?
It depends on what kind of time period you are looking at. If you are looking at 3 to 5 years, there is tremendous opportunity and I do not think even the low fruits have been really hanged because you have seen good news stories coming out every year. The fact that people are feeling difficult and they feel there are no news stories and markets will refuse to go down, is a healthy sign.
How would you describe the market earnings? They surprised us or are we in 2007 when it was a power of liquidity which took markets up?
I do not understand this liquidity and all. Markets go up not because there is abundance of buyers, but because there is a lack of sellers. So markets always go up because there are more buyers than sellers or they go down because there are more sellers than buyers.
So I do not understand all this liquidity because I do not know on what basis you can create fair value and then you can say it is overvalued and it is undervalued. After all, it is the way you see it. So I do not know whether we are in somewhere like 2005, 2006 or 2007.
Do you think we are in that stage of disbelief because retail participation is low? If you look at futures and options open interest also, that is not high by any yardstick.
I do not know about the future interest, future positions and all. But I know one thing, I do not think there is retail participation at all and there is a lot of money waiting on the sidelines. Socially people are not participating in the markets. There is a fair amount of disbelief.
What is Rakesh Jhunjhunwala, the trader, thinking?
Trading is momentum and the markets - although the Nifty and some of these heavyweights are not doing well - are gaining gradually. But they are gaining. So I am a bull at the moment.
Let's say for the next 3 to 6 months, does the directional call for a trader has to have a long bias or a short bias?
I can tell you one thing that there are no directional calls for 3 to 6 months. Directional calls in trading can change overnight, but as circumstances play out today, markets are going up. It is wholly your trade challenger or right now the person who feels that the market is at a turning point will be a bear today.
What is the possibility that we can make a new high in this financial year itself?
I will read the probability high.
Can we make a new high and stay beyond that mark, which is 21000?
I do not know if we can make a new high. I personally think we can, but even if we do not make a new high, I know one thing that direction of the market is upwards and with a good range. Although the international scenario is unknown, my personal opinion for the next 3 to 9 months is that I do not see any adverse thing happening.
Why do you say that?
Because I feel the point where this growth is really going to slow down is still 9 to 12 months away.
Do you think all the problems have been pushed under the carpet and they will not surface up for another 6 to 12 months?
I want to say one thing. Is it a crisis in the system or is it a crisis of the system? So it is not that the world has not borne sub par growth, we will bear it. The world is not going to fall as long as there is confidence in governments and in banking institutions and the financial system.
I do not know if world is going to turn upside down and I do not see India going at less than 8-8.5-9% and if we take the scene on infrastructure and other reform, I do not think world can go at 1.5 and India can grow at 12.
The fact that we are at a 3-year high, Chinese markets are marching towards a new 52-week low. There is a disconnect there. In 2007-2008, the story was different. All markets were going up together and all markets were coming down together. Can this disconnect really last?
It is lasting.
Do you think it is here to stay?
If the Indian economy performs and with what Manish said that day that with the underexposure of equity in India, I see no reason for Indian markets to go down.
On a personal side, you have just turned 50. So how will Rakesh Jhunjhunwala in his 50 be different from Rakesh Jhunjhunwala in his 40s?
Rakesh Jhunjhunwala is going to live more for himself now. I reflected a lot, I thought a lot on my 50th birthday. It has been one of the most important birthdays in my life, not in terms of celebration but in terms of retrospect. I want to know what I enjoy. I want to give more time to my children, my family, to my health.
What are some of the personal pleasures you have taken?
After my 50th birthday?
Yes.
I have started exercising very little, but I am doing it, spending more time with my children. I never used to go home before 9:30-10:00. Now at 7:30, I want to be at home. I want to develop habits outside the market. I want to do lots of things and I own the theory of all age beyond 60-65 is bonus. So I feel that there are not many years left. So let me do what I have not done in the last 50 years.
So you are running fast, but this time you are running fast on the treadmill. Can I say that?
Not, I do not run fast. I run very slowly, but I am trying.
You are a proud father of 3 children. So every morning when you leave your house, what do you tell them and what do you teach them?
The two small ones are too small to be really told and my daughter also, I do not want to give moralistic lectures, but I wish them to be responsible in life. They have their mother's nature and my brain, and I hope they turn out to be responsible people.
I always feel that I want to give them personal freedom and let them do what they want in life. I do not want them to be fund managers. They may not like to be wealth conscious. I do not want them to be wanting to own wealth unnecessarily. So I want them to be responsible and leave them well, do what they want in life and pray that they do well. That is the only thing we can do.
A year ago, you had indicated that the best is yet to come for Rakesh Jhunjhunwala. So what do you mean by that? Do you think the best in terms of stock idea, best in terms of a strategy, best in terms of a trade, it is yet to come?
Rakesh Jhunjhunwala can be what he is only when the external opportunities expand. So the opportunities are expanding day by day. I would like to replicate what I have done in India on the international scene is a dream. I am learning with every experience, every passing moment. I am trying to build an organisation.
People may feel that I have achieved a lot, but there is far more to be achieved compared to what I have achieved. So I still feel the best is yet to come. Then I still feel even on my deathbed, the best is yet to come. So I do not think we can ever peak in life.
The insiders we talk to have told they have told me privately that Rakesh Jhunjhunwala has pledged that he will never sell Titan. Is it so?
I make pledges and wishes for my children, not for my stocks. I will sell Titan one day, but I do not know when. I have a dream. I will sell my share for a billion dollars, otherwise I would not hold on to the stock.
But they are not a billion dollar yet, so you will not be selling them soon?
Well, if they go to 3 times what they are today, it will be a billion dollars.
Do you think Titan can go up 3 times from these levels?
Who knows?
But at least the belief is there. I mean your belief is there that it could go up.
Otherwise I would not hold on to the stock. I do not know 3 times or two times, but I think it should give a good return. Let me make a disclosure, I am interested, I have a holding in Titan. So whatever I say has to be taken with a pinch of salt.
But Titan as an investment is very close to your heart even though you have identified bigger multibaggers -- Praj and Crisil. Why is Titan so close to your heart?
Well I don't think I have identified any bigger multibagger than Titan and also I believe I am excited because I think there is scope to improve Titan's margins. Titan's business is not volatile. Titan is still according to me a very young company and I personally believe that Titan can be an international watch brand.
Once Titan starts generating Rs 400-Rs 500 crore in India every year, they have free cash flows which I think they can invest and they can replicate worldwide or may be at least in the emerging world what they have done in India. That's very exciting and my emotions about Titan are about my investment. I have a lot of respect for its management, for the ethics like for the kind of skills they have, the dedication which they work for.
Are you really emotional about any of your stock ideas, any of investments or they are pure investments?
I have emotions for my children, for my wife, may be for my girlfriend. I would not say there is no emotion when you have invested for such a long periods of time, but they are not such emotions that will not part ways.
This year you made two large investments -- one is Rallies, the other one is VIP. One is consumer-oriented business and you like the consumption story in India. But does Rallis mean that you also like the rural related businesses in India?
Yeah, I like them and that is one of the reasons I have invested. I think Rallis has done a tremendous turnaround and the opportunities are unbelievable. They have very good distribution base which we do not recognise. They have no debt, they have a lot of excess assets.
So it's a company which can grow very large without having any need for equity and they perform very well and have very good management and tremendous opportunity.
But are you bullish on agri as a theme?
How are we going to feed India's people?
But are there enough opportunities?
And I also believe that there will be food inflation because to get more food, you will have to have terms of trade in favour of the farmer.
So do you like anything which is a typical rural story which is automobiles, which is FMCG or you only like companies which would be boosting agri production?
I like automobiles and they are not only linked to agri. They are linked to all of India. A lot of other products and FMCGs are also linked to urban India and rural India. So I won't call them as agri product companies. I would say agri product companies are basically those which are inputs.
In VIP Industries you invested at sub 100, it has gone up to 500 plus. Is it fully valued or is there still upside for VIP Industries to go?
I would not comment on its price, but again comment on its business that it has about 55-60% organised luggage market in India. If India is going to have a middle class and India is going to travel right and you want to have people more brand conscious, then branded luggage is going to sell and they have got reasonably good margins.
I think they have a sensible management. So it was a lucky pick. I bought some stocks sub-par, I bought at 295-300 also. I think it's a good company, but I would not comment on the price.
You do not like PSU banks and you have said that on various public forums. Why is that?
Well, I do not like PSU banks as a long-term investment. One biggest thing is a public sector banks are not able to bring down their ratio of cost to income. In private sector banks as incomes goes up, the cost as a percentage of income goes down. Therefore, the real efficiency never comes.
What about valuations, the valuations are quite supportive?
That's why I say I trade them, but I do not make long-term investment in those. I do not trust them and I do not trust government's companies beyond a point. Look at ONGC, IOC. So beyond a point I do not want to. I have a very little surplus capital to invest.
Are you fully invested in equities?
Yeah, absolutely. 200-300%.
And there is no reason why you are looking at taking some chips off the table.
No, I do not know what I will be doing, it could change tomorrow. But at the moment, I am not and I do not want to sell some part and buy some other stocks. I do not want to have a consolidated portfolio, I do not want to sell my holdings and then create smaller holdings. Sell these because this will go up double and that we will go up triple. I do not want to do all that.
What about real estate stocks? You have always said that you do not like real estate stocks, their business models are very difficult to decode.
I hold my words for long term investment, but I think as a trading bet they may be good. I am holding some real estate stocks, but I would not be a long-term investor.
Why not? Real estate is a complete proxy to India consumption if you are bullish on Indian consumption.
Well there are lots of things for which, let us not discuss the reasons. If somebody feels bullish, it's his or her choice.
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Source:http://economictimes.indiatimes.com/opinion/interviews/I-still-feel-the-best-is-yet-to-come-Rakesh-Jhunjhunwala/articleshow/6370393.cms?curpg=1
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