Mkt to jump 40-50%, enter now for long-term: Kotak Instl Eq

The market has lost strength, completely tired and haggard as the bears have taken toll. Investors are nervous and worried as the market is on a sharp decline. However, some experts see silver lining in the dark cloud and see opportunity in this weak market.

In an interview to CNBC-TV18, Sandeep Bhatia of Kotak Institutional Equities said that this is a good time for long-term investors to enter the market as he is expecting a bounce back of around 40-50%. Though he does not rule out problems of 2008 fading away as yet, Bhatia advises investors not to get carried away in a bull or bear market. According to him, the market may tank 10% from the current levels but definitely it will bounce back guaranteeing more opportunities for patient investors. However, the dark corners of the market are still to be lit up as India is likely to see further FII outflows in near-term. Bhatia is positive that interest rate is likely to stabilise after the Reserve Bank of India's monetary policy meeting on September 16. Meanwhile talking on the auto sector which is on a losing spree, he feels that valuation look good even though margins and volumes may be low. Below is an edited transcript of his interview with Udayan Mukherjee and Mitali Mukherjee. Also watch the accompanying video. Q: The world is in a bit of a tizzy right now. Are we staring at more downside here? A: Yes of course, we are definitely staring at more immediate term downside. I have said multiple times that the problems of 2008 have not gone away. What we have done is just infused some liquidity in the global markets, but that does not mean that the leverage which was on the private sector and on the banks which went to the sovereign states has eventually been paid up. So the leverage issue has just changed nature and its still going to hound us. Even if you look at sectors or companies who have balance sheet issues, we know that it takes time, we know that you have to cut down on expenses, you have to generate higher free cash flow, you have to sell peripheral assets, etc. It will take may be five years for a company to come out of a balance sheet problem, and these are countries. Remember, these countries have the freedom to print their currencies and they have the ability to raise as much debt as possible at very favorable terms and they have done that for decades. Therefore, when this all is coming to roost, it