Mark Mobius Backs PM Modi, Makes Case for Buying Indian Stocks

Prime Minister Narendra Modi has got the backing of renowned emerging market investor Mark Mobius, who says measures taken by the government so far have been good.

Mr Mobius’ comments come weeks after the exit of billionaire commodity guru Jim Rogers from India, who had sold his stock holdings, citing the absence of reforms by the Modi government.

According to Mr Mobius, many market watchers have been focused on China recently, but India’s growth story may be even stronger.

The 79-year-old executive chairman of Templeton Emerging Markets Group noted that Indian markets have turned volatile amid the underperformance in emerging markets vis-a-vis developed markets, but sounded confident about the future.

“We have high hopes for India’s future, so we remain quite interested in India and continue to seek out investment bargains there. Given current market conditions, we are looking to diversify our exposure to Indian equities through a mix of commodities-oriented, export-oriented and domestic companies. In particular, we are focused on companies that could benefit if India’s currency continues to weaken, and if oil prices remain suppressed,” Mr Mobius wrote.

Indian stock markets hit a 14-month low in September as foreign investors sold cash shares worth over Rs 30,000 crore (net) in August and September amid turmoil in China and on concerns of a rate hike in the US.

However, foreign investors have resumed buying domestic shares, leading to a 4 per cent gain in benchmark Nifty in October.

Mr Mobius noted that India had some recent successes in attracting foreign investment, but added that there is certainly room for more. He singled out India’s “youthful” demographic as a positive, saying the median age in India is 27, compared with 36.8 in China and 37.8 in the United States.

He said PM Modi’s ‘Make in India’ has great potential as manufacturing represents only 16 per cent of India’s GDP and 1.8 per cent of world output. In China, manufacturing contributes 34 per cent to GDP and 13.7 per cent of world manufacturing, he added.

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Source:Ndtv