Refrain from trading, invest in MFs instead: Jhunjhunwala

ALSO READ See what other experts are saying about markets See what FIIs are saying about the markets See what Udayan Mukherjee is saying about the markets

This is Samavat 2067. Udayan Mukherjee, Managing Editor of CNBC-TV18 caught lucky mascot of the Indian bull markets Rakesh Jhunjhunwala reminiscing about the past year. Jhunjhunwala also shared his thoughts on what he expects the next year to be like.

He said that he sees no negative factors on the horizon. "I think with the good monsoon and good momentum in the economy and in my personal opinion with time even inflation is going to come under control."

How long will this rally last? Jhunjhunwala said it would be very difficult to predict but he does see the Sensex earning 1,100 this year and say 1,250 next year. He added that the Nifty is now unlikely to go below the 5,850-5,900 level. "The bull market is going to be very much alive," he said.

In an ironic twist, Jhunjhunwala begs retail investors not to trade in the equity market, "I think 98% of retail people lose money in trade. Whether correction - no correction, bull phase - bear phase. Everyone has a sad story. The proof is in the statistics and we know people will say, you trade yourself but stop others from trading, I say dad used to drink whisky and asked us to refrain from it." Instead, he says, one should invest in mutual funds.

Below is the verbatim transcript of the interview on CNBC-TV18. Also watch the accompanying video:

Q: Are you bullish for next year?

A: I am. There are no negative factors on the horizon. I think with the good monsoon and good momentum in the economy and in my personal opinion with time even inflation is going to come under control. I don't see any negative factors and I still think there is a lot of doubt and suspicion over whether this rally will last or not or this market will last or not.

I think Indian companies have fared very well, Q2 results have been good. I see no reason why the Sensex stocks will not earn 1,080 to 1,100 this year. I see that growing 18-20% next year and I think the government also sees that we have to bring about some change. Although politically very little has been done and it's a difficult proposition. So I see no bearish factors.

Q: Between this Diwali and next Diwali do you think we can see something between 7,000 and 7,500 on the Nifty?

A: It is very difficult to predict. If the PEs are maintained I see no reason. If the Sensex is going to earn 1,100 this year and say 1,250 next year, I see no reason why we cannot have the Sensex and the Nifty in new highs. Where they will go and at what level they will stop? I think the important thing is that if we hit a new high what level do we rise to, what quality the rise has and then when we correct where do we come. I think that will really determine and tell us what kind of a bull market we are in.

Q: For now where do you think the floor of the market is for the Nifty?

A: I don't see the Nifty going below 5,850-5,900. The results are out. I see the foreign flows are going to continue in my opinion. Also I feel there is some kind of exhaustion in the local selling. The thing is that none of us are listening to the screen and the market. We are placing our opinions ahead of the screen and the market. I think that's where the key lies. So as long as we follow our opinion and not the market I think the bull market is going to be very much alive.

Q: When will retail start participating? Last Diwali to this Diwali they have been out of the game?

A: I think if the market will not go down for another 15-20 days, one month, already - I think as much as the retail was not participating, the fund managers themselves were bearish because I think at the end of the September they were carrying 9% cash in the Indian mutual fund industry - if I am not wrong, normally cash is 4-5%.

So I think retail will slowly and surely participate. When and how? I don't know but I can tell you one thing when and how they will participate I don't know but one thing I can tell you is this rise cannot end without their participation. Their participation has to come and will come in my opinion.

Q: Gold is up 20% between last Diwali and this Diwali. Do you think it can generate that kind of performance again?

A: You have to ask my wife. She knows better.

Q: But you do the buying?

A: I don't do the buying.

Q: You are not bullish on gold?

A: I am not bullish or bearish. I don't buy any gold. But there is a very big paradox there that you have interest rates at all time lows and you have talk of inflation and because of that you think gold prices will go up. And now there is a lot of consensus trade also in gold. I don't know, I am not bearish but I am not too bullish also.

Q: Do you think commodities will have a big rally in the next 12 months including crude?

A: I am not bullish on crude at all. I think the world is oversupplied. Already Organization of the Petroleum Exporting Countries (OPEC) is not producing 2 million barrels. I think the OPEC itself doesn't want prices to go up above USD 75-80 per bbl. More production capacity is coming on stream and all the hullabaloo of peak oil and all that has been proved wrong. So I don't see crude prices going above USD 75-80 bbl.

I think even the steel market is quite weak despite cut of capacity in China. I think the commodity that is really showing price strength and where inventories are going down is copper. To some extent even aluminium has done well. I haven't said that I am any expert on commodities, so I don't know.

Q: You don't trade commodities at all?

A: I used to earlier but I have stopped now because I guess the market is enough. Trading at night at 9 o'clock-11 o'clock, its better not to trade them.

Q: You still find value at these levels because you have been buying large chunks of some midcap companies over the last few months?

A: Last few months I have bought two stocks, Orchid and Delta.

Q: Large quantities though.

A: Yes, I would like to keep a limited number of companies. If you search, you will get value with time. We think there is value and only time will tell us if there is value or not.

Q: You bought pharmaceutical stocks after a long time because Lupin is a long-term holding for you and then you bought Orchid recently?

A: Yes, I bought Orchid after a long time. I have two investments in the unlisted space. I hope it will do well.

Q: You liked that story?

A: Yes, I like it.