See min 100 bps rate cut in next 12 months: Raamdeo Agrawal

With only two days to go for Samvat 2072 and nothing much to write about Samvat 2071, the big question is will India continue to be the darling of global investors?Market experts, Manish Chokhani of Enam Securities Madhu Kela of Reliance Capital and Raamdeo Agrawal of Motilal Oswal – all believe the long-term India story is still intact although short-term pain cannot be ruled out.In an interview to CNBC-TV18’s Latha Venkatesh, Agrawal says there are going to be both positive and negative surprises along the way but 12-months forward, things could be different. According to him if one has an investing horizon of 3-5 years, then there could be a year when market could rise by 50-60-70 percent. So, it is important to take positions in the market now. Therefore he is very optimistic from a 3-5 year horizon and thinks the downside to market is very limited. “If you look at the history of index there are four to five big years of decline that is 1992-1993, 2000-2001, 2007-2008. But they are always preceded by five to six times expansion. So, the hangover is after the party. But party is yet to happen this time. So, first party will be there of expansion of four to five times,” says Agrawal.Chokhani too says it is a great time to be an investor seeking alpha in India. According to him there is no need to obsess about a 10 percent fall in the market because there is every possibility of making 50 percent in three years.Meanwhile, Kela says its market’s nature to be volatile but one must learn to differentiate between volatility and risk. Market can be volatile but is it really risky?He explains:“If you have time by your side and if you have the right portfolio manager by your side, are they risky? No. While fixed deposit is actually risky, much to the misconception of people, yes because you are losing out the opportunity cost. Ultimately whether you are losing money or whether you are losing profits, it is a loss. Let us say fixed deposits have gone up 10 times in last 20 years and mutual fund has gone up 80 times, that 70 times someone has paid. It is just that because you do not lose money, you are unconscious about that loss. You are unconscious about the loss of profit. “Kela is also worried about the lack of retail participation in the India story to the extent they should be participating.Answering query on their expectation of rate cut from RBI, Kela said there is possibility of a 50-basis point cut in next 12 months. While, Chokani does not rule out a cut between 50-100 basis points, Agarwal expects a minimum 100 bps rate cut.Below is the verbatim transcript of Manish Chokhani, Madhusudan Kela, Raamdeo Agrawal’s interview with Latha Venkatesh on CNBC-TV18.Q: If you looked from Samvat 2071 this year, it has not been very pleasant at the Nifty level. Is that the way to look at it at all? Has this year been not a pleasant year for investing, the year that was? Chokhani: It has been a year in two halves. From last Samvat till March, the market kept rallying and we all did reasonably well. It was post the disappointment of the Budget and then the emerging markets (EM) crisis which then sparked the selloff. Even post that, the market has been acting wonderfully in terms of the rotation between sectors and specific stocks. So, no reason really to complain. It is a great time to be an investor, seeking alpha in India and Madhu promises he is going to give us five great multi bagger ideas so in that hope we stay alive.Q: The just concluded corporate earnings season did not leave us very thrilled, in terms of topline definitely not, in terms of margins yes. What is the sense you are getting, when is that earnings turning quarter? Chokhani: Reality is India for long has been this beautiful bride which is yet to deliver to its full potential. So, while the PE rerating of India and especially of consumer stocks and companies like that has occurred, earnings have not kept pace. There were certain fundamental things which one would have expected a right off center government to deliver which for whatever reason, obstruction in parliament or unable to get legislation through and so on, it didn’t happen. The global environment hasn’t been supportive and I don’t expect it to be supportive. I think it is also a reset of investor expectations where everyone thought you get a classic v-shaped recovery, you play economic cycles the way it did in the past but without realising that the world no longer is playing economics by the old rules because the very force of gravity in the world which is interest rates is currently artificially rigged by all the central banks. So, unless that reset occurs, I don’t think it is going to be life as usual. For us investing out of India, if you are competing with 2 percent cost of capital it is hard to say why the investment cycle is not reviving because as an industrialist I am really scared of putting capacity against people with 2 percent cost of capital. Also, it is pertinent that nowadays a lot of the action is happening outside the public markets. We were speaking earlier that the private equity industry itself has put four times the money that foreign institutional investors (FIIs) have put into India this year. Even in the US, the last big tech IPO was Facebook and Alibaba and all the other, USD 250 billion of unicorns as they call them are outside the public markets. So, that change is still occurring and it is that disruptive phase for economies in the world which the markets will gradually get to see as these companies come into the market. So, I am not as despondent about the lack of revival in the economy because it is happening outside the public space. Q: Even as we await good tidings in the new year, the last event for the market is not very encouraging. The fact that a government on which the market placed so much hope has faced its second major defeat in 2015 at the state level, do you see that taking away the Modi premium? Are we still going to see some losses before we see the markets give us gains? Kela: It can play the other way round as well that what has been this somewhere I think if they have deviated from why they came into the power that was development. Essentially if they go back and say that regardless of how the voters respond we will carry on in our agenda and we will deliver on our promise of development, then it could be a different story encrypted in times to come. To my mind what happened on Friday evening was a very significant event which was the package of discom. I cannot overemphasise the importance of that for India, importance of that for banks, importance of that for markets. This is a single biggest reform if it is executed the way it is presented. If it is executed the way it is presented then it is the single biggest reform which has happened in the recent past, not only by this government but by many governments. If you can get the discoms to a zero loss situation, it can turnaround a lot of things and why did they do it on a Friday evening?Q: My point is what exactly in that package you think might go array because you keep saying if it is implemented the way it was announced?Kela: There are lot of ifs and buts the states have to hike the power, they have to double feed a system -----, interest rates have to be passed on to discoms so anything is never a straight line. Hiking power, again in this kind of a political environment might not be an easy task that to farmers, that to for consumers. I am saying that there is a resolve which one can see from them to and this fortunately is not a legislative issue so it doesn’t require Rajya Sabha and Lok Sabha approval so I am hopeful that even if they implement 75-80 percent of what is being told in the package I think it will be a big thing. Q: The best thing that I heard from the government is that they clearly told the banks that you will not lend if the discoms don’t shape up. That coming from the shareholder was very strong. That is where you can really arm twist everyone into behaving themselves. Raamdeo Agrawal what is your fear as an investor? Do you think that things will get derailed because the government may take this as a mandate to be more populist or do you think one need not fear that? Agrawal: One is this big picture and political actions; I mean lots of these big headlines are there on the channels and newspaper. They are in the business of headlines. However, there is a hardcore business going on. The investing is about understanding those businesses, what is really happening? Say today HDFC Bank, I don’t think Bihar outcome has any impact on their money making machine. I mean if they are making Rs 74,000 crore profit they will not make even Rs 1 crore less so understanding the reality of businesses while investing is important. Of course you cannot overlook what is happening globally, locally. Eventually they will have impact that is important but they are knowable. So let us focus on to what is happening at business level clearly there is a little slowdown in the economy whether it is a global or local but there are still some winners. There are huge trends underlying. First ------ was defined by massive commodity inflation from USD 20-25 to USD 125-150. It was made out as if there is going to be no oil only in the ----8:17 so, we talked about peak oil theory. Now the same guys they are talking about USD 20 oil as if oil is going to become like water. This decade will be defines by the collapse in the commodity prices. What took 15 years has taken 15 months to collapse. After effect of that for any action there is a reaction in the business – so now we are going to see lot of benefits. Lot of companies they will benefit in their own way –small way, big way. Lots of companies future will be redefined, negative also positive also. We have to see how are portfolios are aligned to these big trends this one. Second is say internet. ------ the century there was no internet. Today everything was redefined by internet. I don’t know how much more, every day it is just marching. Lots of new businesses are being build and lot of businesses are destroyed. We have to see that you are on the right side of the big trend. Third is goods and service tax (GST), whether it is more political then economic right now but whenever it happens this will really make the country one place to make business. So, if a company is operating say 50-40 godown, a 40 distribution systems he doesn’t need that. He might need two or three depending on his need. That will give benefit to the – so these are big trends which will happen and you have to see who are good and who are competent who are mot valued properly and today in given opportunity where are those few 10-15 -20 ideas some of them will win, some of them will lose, eventually you will make money.Q: You said HDFC Bank -- banks also showed a certain slowness in growth and margins but that apart there is a reset in the banking space, you cannot take away from the fact that payment banks are coming with the cream of entrepreneurial talent in the country with oodles of capital at least to start with and with cutting edge technology. Will you still back the banks or is that the sector that will not perform or we find it very difficult to perform in the coming Samvat 2072?Agrawal: First time we are talking about opening up of the banking sector in terms of licensing. So a lot of things have happened and a lot of guys will fall by the wayside. In the private sector banking and a completely protected environment 10 guys got licenses, hardly 2-3 survived. So now you are talking about even much more opened up potential because of technology and internet and banking licensing, my sense is that the coverage of effective banking, which is almost half of the country, will go to 100 percent. That is like in telecom, so we are seeing the benefit of telecom. Like that, benefit of monetisation of the formal economy is going to be massive.Q: Will the beneficiaries be the banks?Agrawal: Beneficiaries will be banks if they do their job well. Which are the banks that can gear up to this particular new reality, new challenges, new competetive structure and how this payment banks, small banks -- most of the small banks, 99 percent of the banks are all talking about those microfinance institutions (MFIs) to be converted into banks. So they are on a very different kind of a culture, different mindsets and huge distribution and the bottom of the pyramid they are addressing to.So that is a segment, which is not today with the big banks, so it is going to expand and they need support of the organized banks so how these things will pan out in next two-three years, there will be different new winners and there will be some losers.Chokhani: If you first look at the picture, let us say I am just rounding off numbers that we are a two trillion dollar economy and we save 25 percent so that is USD 500 billion. Of that barely 50 percent goes to financial assets as it were. The rest is still sitting in gold and real estate. So first of all this economy from two trillion is hopefully going to 5 trillion. So you are expanding the size of the cake.Secondly, the saving rate of USD 500 billion presumably will become two trillion by then. Within that the share of money going to financial assets has to become better. That is the whole intention of financial inclusion that you stop buying gold or stop buying real estate and stuffing money under your pillow and so on. So the opportunity set itself becomes very large.Thirdly, when you talk of payment banks, there are these large industrial groups and I am not sure what the economic model is of a payment bank as yet other than private equity (PE) will finance it and so on but normally it is a small guy who worries about how will I face the big guy.Here the big guys are 25 percent private sector banks, which are already on the digital path much ahead of people. If they start shrinking their cost income ratios and they have this lead already, imagine the explosion which can happen in this space. So I think we are undercalling what can happen to the banking industry with the incumbence who have a great tailwind now behind them where in a way the shackles have been unleashed that you could in theory now say, I don’t need to open so many branches, put up so many ATMs, I can do it all digitally. So the opportunity set for private sector banks and non-banking financial companies (NBFCs) is just extraordinary I feel now.Q: So private sector banks and NBFCs but still when I am calling a taxi, I am using Paytm.Chokhani: Paytm's hope in life is to become a bank, right? If you look at all the banks, ultimately they all have payment solutions. Today HDFC Bank as he was saying or Axis they are already offering you those payment solutions in their Wallets. Now it is like in the old age, do you want to deal with multiple vendours or will I rather deal with one guy with whom I have more trust and I have a history of 10-15 years, I won\\'t switch if I get the service. If I don’t get the service, then we have an error and Paytm itself wants to become a bank.Kela: I would like to add here. Looking at this big picture is very easy to paint a very gloomy scenario that there is going to be so much competition. In a worldwide, people have thrived for competition. Competition cuts both ways. I think otherwise if you look at the public sector banks, which have had 75 percent market share in the banking industry, you know what constraints they are going through today whether it is in the form of decision making, capital adequacy, their ability if you toss it to a few people around youngsters, how many of these youngsters are going and opening accounts with public sector banks. So I am saying where the market share will go and who will take the market share is what is going to decide and it need not necessarily grow out of the concept.Q: In the last 25 years, we have probably brought five banks and the public sector shares barely fell from probably 100 percent to 70 percent. Now there are 25 new players just 15-20 months so will the public sector share fall to 50 percent?Kela: It is a very strong possibility. Some of the public sector banks also might surprise on performance. So you cannot say that all 30 public sector banks will lose market share or all of them will gain market share or all 20 private sector banks will lose market share, all of them will gain market share. We will have to look at it strategically, who are the people who are positioned well to capture this opportunity. It is very difficult.Q: Manish Chokhani seems to be saying that he will put his eggs in the private sector banks basket, what would your bet be?Kela: My bet will also be the same. I would say that I will expand that to NBFCs because they are extremely well positioned with the falling interest rate scenario and they are nimble in decision-making process and perhaps there is no dearth of good investing credit -- let us not fool ourselves that India still requires a lot of credit and that has become more easily available because the public sector banks are taking that much more time to approve the credit. So my point is that people have the capability to assess the risk, there is enough money to be made in the market today.Q: You spoke about distribution companies (DISCOMs) reforms, surely that should affect a lot of the old economy stocks, how should an investor look at it, aside from the fact that it will spur economic growth for an investor what is there in that theme?Kela: If you observe the market for last three-four years, it may sound very cliché that when you do a sector, you do your bit but that is not the situation. You look at the auto sector, it has been very good performing sector for the last couple of years but there are so many winners and losers within that sector. So I am saying in this entire old economy space, whether it is mining, whether it is power, whether it is DISCOMs, whether it is transmission and distribution (T&D), there are bound to be some winners over the next five years and it is the most hated sectors today, you talk to anyone he will look in another direction and the money is being made when you approach this differently so there would be winners but for me to say yes, because DISCOMs reforms have happened, power sector is going to be the winner that will be again stretching it too far.Q: Not power sector, would you look at say power equipment sector?Kela: Yes, of course I am saying selectively. What I am saying is still the art and science only lies in doing your bottom up work really well in a very exhaustive manner. The easy money era in my opinion that we have been in a bull market “Kuch bhil le lo pasia ban jayega - I think that is all over. Now it is all hard work, it is really honest work and within the sector really getting deeper into the companies, into business model, into balance sheets and that is what will differentiate. So, to answer the question straight will there be opportunity because of discom reforms? There is going to be plenty of opportunities. However, is a sector as a whole a buying opportunity, whether it is transmission and distribution (T&D) or whether it is – I don’t want to get into individual names? In the transmission and distribution space there were 10 companies in 2008. The whole sector was booming. 10 out of 7 have vanished. Look at their balance sheet, what has happened as compared to 2008. If you hang on just because the T&D sector is offering opportunity and you say the seven are looking cheap you might actually get in a wrong foot.The sector might boom they wealth might get created but you might just get with a wrong investment idea. That is my precise point, it is going to be bottom-up but there are lots of opportunities. Q: If I asked old economist stock especially mining to Raamdeo Agrawal he will also turn his head that side.Agrawal: Coming back to power, power is massive in the sense that without power nothing works. Now we are talking of power for everybody by 2020 so the amount of power India can actually use is literally unlimited. You have a generator, you have a distributor and then you have the consumer. However, industry is very sick because of very sad distribution system right now. This discom reform is the heart of it and not the financial reengineering, that okay you have converted existing Rs 3-4 lakhs crore to government debt, that you can do always as a government, I don’t think that solves the problem. Real problem is actually 25-30-40 percent T&D losses which is theft and lot of it is technical also. So, how do you actually bring it down? They have a target that 25 percent going down to 15 percent. Real boom will start when people like us; at least I will get much more convinced when you come down from 25 percent actually to 20 percent. Rest all you do that is a patch up.Q: It has happened in many states. Agrawal: Many states yes, but at the National level still there is a lot of gap. Still in 3-3.5 lakh crore industry you have an annual loss of Rs 80,000-90,000 crore and nobody knows the account. Accounts are also published after 15-18 months. The issue is that there is a black hole in that entire industry. Till you fill that black hole I think the prospect for that industry is not going to work. Now the new minister is showing that possibility. It is a promise. Kela: It is mend by execution, when I meant that they are saying that they will reduce to zero and it will not happen overnight (interrupted) Agrawal: In my mind if this happens it is huge. Chokhani: Let me now give you the disruptive element here. Like you argued for banks, the reality is today in 2015 solar power is cheaper than grid power. You are running the old model of, there is a central mainframe computer and then there are wires drawn to every home and there is clients serve and the wires are defaulting the issue is in five years and again like Raamdeo Agrawal said 5x of our power lies ahead of us to be built that is going to be solar sitting on your household. When you sit on the household there is no T&D. The cost of a power plant is capital expenditure (CAPEX). That capex becomes now part of your mortgage loan which is lowest cost of finance. So, you take a cheap power cost sitting on your house get rid of all these T&D, boom, all the politician are disrupted. What do you do know, how do you give free power and say it is a freebee to you and I get interrupted power. So, there are all these reform elements, technology all this is coming together I think five years later the picture is going to be so different we won’t be discussing like what were these guys thinking why were they not changing that much faster. Q: So Coal India and the power companies are in to become kind of dinosaurs?Chokhani: It is inevitable; there is rate of change in the world. You can’t be running like we always say we have 18th century laws, 19th century organization trying to run a 21st century country. It has to change. Q: That is very true but probably we are not talking 2072 Samvat. Many of your themes are probably 2075 Samvat. Chokhani: I will tell you honestly, market discounts terminal value. If I get earnings right for next year and by then market is worried about – like you are arguing in case of banks that competition, technology will disrupt. If you believe there is disruption and it is positive your multiple goes up. If you think that disruption is negative your multiple goes down. The whole gain and loss in market is made of multiples. You need earnings of course it is weight of profit eventually but if I believe in the long-term picture I will have patience’s to wait for that earnings to come through. Kela: I will just add here – that is the precise problem with the investing community. Why are we focusing on the next 12 months. Who has told us that we have to make money only in 2072 you have to make in 2073 also 2074 and 2075 also and we have seen we always end up underestimating what is possible in the long run. We always end up overestimating what is possible in the short-term. We will overestimate our ability to predict market precisely well over the next six months and 12 months and we will lose the big picture. I want to communicate to people who are watching this show that these are the times when you have to take. When you buy a house do you call your real estate agent every three months basis what is the value of my house the why for equities review of every quarter. You review but you have to invest with conviction to make money and that cannot happen in one year. Chokhani: There is a great saying, it says – things that you expect to happen take longer then you expect but when they happen they happen faster than you expect.Q: We have to get to some Diwali gifts for our viewers. They need not be 2072 ideas but they have to be at least 2075 ideas as you said. The ace stock picker, where should people look for gains?Agrawal: Continuously 50-60 percent of the time I spend only on tracking companies and meeting the companies and all but I would not hazard any kind of possibility of talking about a stock per se because the power of portfolios now are far higher than power of an individual stock and there are very few viewers of yours who are competent. What has happened is, the market character has changed. In 80s and 90s and even till early 2005, the competition of a retail investor was with a retail investor broadly. Today, it is like I fighting a sumo wrestler. All the global sovereign funds, FIIs, domestic funds and insurance companies they have battery of analysts, management access, computational capability. Against that, the poor investor, he is buying in IPOs at crazy prices. How does he win? So, I think winning as an individual they must realise and I am not saying nobody can win, somebody can win but for large number of viewers, they must look at good portfolios, good portfolio managers. Q: Some of your faavourite stocks used to be two wheelers. Do you think that that outsized gains from that sector is over now and it is time to go more to the four wheelers? Agrawal: I would think so because one is that now the competitive landscape has changed somewhat. Honda has come which is a private company and it is a global giant. So, it will definitely have its impact – they have changed, if you remember, in 90s it was a scooter company, they changed it to motorcycles and now from motorcycle they are again converting into scooter company. In that scooter space, it is private, it is not for you and me. Activa is the sole running – I think by far the largest two wheeler and it is unlisted. So, that kind of a competition change is happening and at the same time it is becoming very global. So, your Bajaj’s of the world, Hero’s of the world and I think we have one huge emergence that is Eicher Motors in Royal Enfield. So, there is another story which is happening within two wheeler is the Premier Eicher. So, there we made massive money in Eicher but now that has also run up its growth. So, one has to be little careful in buying those stocks.However, four wheelers, I think is a brand new game. In the sense that it is the last largest in the world and we have almost all the guys buying for that pie and there are some opportunities there. So, you have to be whether in ancillary or the main OEMs, I think you can make some decent amount of money. However, automotive remains a very good segment to invest per se.Q: One segment which actually gave money and was the usual safe harbor was pharmaceutical. However, in the last few weeks and even months, we have had a series of accidents from that space. Is this the time primarily to buy the distress? Chokhani: We are all saying that you don’t buy a sector, you buy a stock and again in the sector, whether it was private banks last year, three or four did very well and one or two didn’t. Similarly, in pharmaceutical it is playing out now that you have got the leader which has disappointed and so on. So, it is about individual stocks. However, I just want to pick on from what Raamdeo rightly said. We are a 26 year old country, equities is the place to be and the best equity is to be the one which you built. All of us are seating here because of businesses we built, more than even the stocks we bought. So, if you are 25-26, first think about being a person who creates jobs, not someone who is looking for a job. That is really wealth creation number one. Number two, if you don’t have time to do this full time like Raamdeo is rightly saying, just invest in the right fund manager and there are enough of them. We have wonderful mutual funds running in their own houses and they should be the ones where people should be putting in because where else will you get the best person in the country managing your money for 1 percent and 2 percent. Why are you applying so much brains because you are not going to beat this people anyway. Number three is if you are looking out for rate of change like he again said all these computational powers and brokerage houses and all these are focused on 100-150 companies so your edge if any is not going to be in the Nifty. There is no point of obsessing whether the Nifty is going. Find the next 50 out of the 150-200 range, that is where probably a retail investor who can look around, the old Peter Lynch model of see what is going on, do some financial homework and then go and see if you can invest and make money in that stock. Lastly I would just say, like he rightly said thematically why are you investing in India is for big demographic change, there is big digital change and there is this big export opportunity for companies which are competitive. These are by and large the three big baskets that one has to think of. Even if you look at last year and I am taking that as a proxy for the world, what played out, your pharmaceutical, IT are play on globalisation, your media and auto are consumer discretionary and who are benefitting tremendously from what is going on in India and financials is your overarching – I can get power to housing finance, consumer finance all in one place and then these few consumer picks which one can pick for the average investor this is good enough. You don’t need to over complicate life to think about will I get the mining cycle right, will I get the power reform right, it doesn’t matter. There is such a wide array of stocks in just these three or four sectors, why do you need to look outside. Kela: Just to add to the one point that you asked, when I go to a retail investor, what are the questions you are asking, ‘kab lena hai aur kya lena hai’. Those are two completely wrong questions. The question has to be ‘kitna lena hai aur kitne samay ke liye lena hai’. A lot of people have participated in equity story but portfolio is 2-5 percent and in that portfolio you are looking for multi bagger, you are looking to create charisma. 95 percent of your portfolio is real estate or gold which is lying down ideal, you don’t bother to even enquire the rate of that for three years but you give money to Motilal Oswal Mutual Fund and Reliance Mutual Fund, the fund has underperformed by 2 percent so I need to look for a better manger. I need to fine tune my entry in the market. If the retail person can answer this question, ‘kitna lena hai aur kitne samay ke liye lena hai’ a lot of this debate will close down. As Manish said, we have 20 years of experience and stock market is like a swimming pool. How much ever someone teaches you how to dive, etc the fact is that unless water doesn’t go inside till then you can’t swim. So, why not take advantage of that, give money to 1 percent and this for a normal retail investor. There are some savvy traders, savvy high net worth individuals (HNIs) who have the capability, let them to do it on their own. We are talking of 120 crore people, out of them at least 10-20 crore people are investing population that are potential investors and I can assure you 98 percent of them neither have time nor the skill to do it and for them this advice that you chose a right portfolio manager, you have right allocation in equity and you have a right timeframe for gain. No one can beat you. At the cost of bragging, whatever disclaimer you have to put you put, Reliance Growth Fund is up 80 times, not 80 percent, 80 times in 20 years. We are celebrating coincidently 20 years of wealth creation, where else can you get. This is after fees and this after taxes. You don’t have to pay a single penny tax, you don’t have to pay any fee. This after fee and tax and with this kind of track record you still want to go and find out for your own self that what will work in discoms and that is the message for Diwali. Q: That is your uniform message for Diwali that trust the guy who is specialising in looking at stocks all for a fee of 1-2 percent but not for nothing is the Sensex called a sensitivity index. It certainly propels or distances the retail investor. So for the sake of that investor do you think there is a likely shock on the Sensex, is that we are going to see 20,000-22,000 for whatever reason? Kela: Since you want an honest answer, I don’t think there is any shock. I don’t know whether you call 10 percent correction as a shock, I don’t call it a shock but that is possible. That is entirely possible, in any market that is possible.Q: A Samvat conversation does not end unless you tell people that this is the kind of the worst that they can expect and this is the kind of highs that you can expect. On those lines, is 9,100 going to be the high for sometime now?Agrawal: I don’t think so because expectations are very low. Last year expectations were running high. So we are starting with politically, economically, globally -- every aspect of this is slightly shaky and things are not good. I think when you give up then only markets rise.In 2002-2003 I thought that world is coming to an end after 9/11 and we saw the biggest bull run. The world is saying oil is down and out and nobody knew one year back that USD 100 per barrel is going to come down to USD 50 per barrel. So my sense is that there are a lot of surprises in store positive as well as negative. We could be anywhere but as I said, today expectations are low so I think we will have a very decent time on a 12-months basis and if you have an investing horizon of 3-5 years, I think there will be a year when markets will rise by 50-70 percent. So take your position because we don’t know whether it is going to be starting from tomorrow or starting after a year. We have seen the corporate profit remain stagnant for four-five years. Now corporate profits are almost 10 percent to gross domestic product (GDP) which can go to as high as 7-8 percent. So it is still falling to GDP but when it reverses, it will just go blast, in next three-four years and we keep hoping that the reversal will happen next quarter, second half of the year, it has not happened so far. On a three-five year basis I remain optimistic.Q: Two very good takeaways from you that 9,100 need not be the roof of even in the next 12 months and that in the next three-five years there can be one year of 50-60 percent, what about the downside? Is it that you can see 7,000 in this combination of negative trends that are coming or don’t we go that far?Agrawal: If you look at the history of index, there are four-five big years of decline. That is 1992-1993, 2000-2001 and 2007-2008 but they are always preceded by 5-6 times expansion. So the hangover is after the party but party is yet to happen this time. So first party will be there of expansion of four-five times.Q: A bit of a party happened in May 2014.Agrawal: That has again gone.Kela: Index is up only 9 percent since the time Narendra Modi came in power.Chokhani: And oil is half.Agrawal: Don't talk about 10 percent correction or anything like that as a big event. From any level, it is a rolling 10 percent it can happen but I will be surprised on 12 months basis, we have more than 5-6 percent correction on a yearly basis. It will come back, it can correct by 10 percent but it will come back to be at the same level or something like that. So downside is very limited. Give a three years time, upside is massive.Q: You don’t have to concur but do you think that 9,100 remains a roof?Chokhani: I think Madhu Kela said it very well and Raamdeo Agrawal, as always, has expressed it beautifully that if you express the problem as you might rose 10 percent and you will almost certainly make at least 50 percent in three years, is that a good bet or not? So instead of obsessing about oh, the market can go down, of course it can and it will. For sure it will go down 10 percent repeatedly 4-5 times. If you look at history of all these great companies from Microsoft to Infosys to everything, they all had precipitous declines of 20-20 percent across their career.The question is are you invested enough and are you holding it for long time enough so that you don’t get scared out of the market when it does go to 7,000 if it does. If you are holding on till 13,000-15,000 what is the problem?What Madhu Kela said is right as the way we frame the question influences the viewer. The question is not about being fearful about this year or hopeful about this year. Am I hopeful about equity investing in India generally or not and am I picking the right sectors, the right managers, the right companies or not? If I have done that, time is on my side. I will surely make money here because there is a rate of return in these businesses, which you do not have in your gold bar, which you do not have in your real estate and in fixed income, your fixed deposit rate is going to go down that is certain. So your option is only equity, you have no choice.Kela: One new thing which I have learnt in last two-three years myself and I have been digging deep that when you talk about this, what you are worried about is not the risk, you are worried about volatility. So let us differentiate, what is the difference between risk and volatility. Can market be volatile? They can be volatile and they will be volatile that is the nature of market for 100 years but are they risky? If you have time by your side and if you have the right portfolio manager by your side, are they risky? No. While fixed deposit is risky, much to the misconception of people because you are losing out on the opportunity cost.Ultimately whether you are losing money or whether you are losing profit, it is a loss. For example, if fixed deposit has gone up 10 times in last 20 years and mutual fund has gone up 80 times, that 70 times someone has paid. It is just that because you don’t lose money, you are unconscious about that loss, you are unconscious about the loss of profit. Let me just sum it up because Diwali is a fantastic time, it is a pain for someone like me who has been in a mutual fund business for almost 15 years now that retail investors are still not participating in India story to the extent they should be participating because you are stuck in the wrong question of when to buy and what to buy. One should change it to how much to buy and for what time one should hold it. You will get it right. It is not that savings are meant for one year, savings are meant for five-ten years. If they start putting some amount of this saving, for five-ten years then after five years, they need not be taught any of these, the proof of the pudding will be in the eating.Q: How much will rates fall in the next 12 months you think?Kela: In next 12 months there is a strong possibility of at least more than 50 bps.Chokhani: I would hope more than that. I am not an expert but 50-100 bps I don’t rule out.Agrawal: Minimum 100 bps.