Jeff Chowdhry, Head-Emerging Equities, F&C Investments, sees markets trading 10-15% higher from current levels. But was quick to add that it will be in a 5-10% range either way.

He is bullish on BHEL and L&T from the capital goods space.

Here is a verbatim transcript of the exclusive interview with Jeff Chowdhry on CNBC-TV18. Also watch the accompanying video.

Q: We saw some turbulence over the last fortnight – do you think it has some shape of a deeper correction which is beginning or it’s probably one of those shallow dips that we saw?
A: Well obviously we have had a very good from the lows of the last year, emerging markets you know have doubled from the lows of last year, developed markets have done extremely well since they bottomed in March. I think volatility is expected given the run that we have had so far, and also the economic picture from the US looks mixed at this particular time. So I would not be surprised to see more volatility in the next few months.

Q: If that volatility were to come about how do you see India performing in a relative sense compared to other markets?
A: i think the chances of correction in India are reasonably high in line with the view that the markets are going to remain volatile in the next 3-6 months. However I’m pretty confident that India will outperform and the reason for that is that the economy appears to be a lot more robust than many other economies around the world. And particularly the Reserve Bank of India (RBI) announcement recently about the attempts to tighten monetary policy, I think is a very smart move indeed

Q: There were some disappointment though post earning season this time on how influential stocks had performed – what did you make of Q2?

A: I think it’s been very mixed. There are some areas which have actually done quite well and there have been some disappointments. Disappointments, I think have been in some cyclical areas and obviously in the telecom which has been very disappointing.

Q: What about the much loved capital goods space, where stocks like Larsen and Toubro and Punj Lloyd went down as a minus?
A: I think in capital goods and infrastructure the part of the disappointment has been execution. I don't have any problems in terms of the backlogs or the growing backlog. It’s a fact that some of the companies have failed to execute in terms of earnings. In this particular area we continue to like the big blue chips BHEL, Larsen & Toubro because on the medium term basis, we think those companies will show increasing backlog and growing earnings.