NEW DELHI: While many foreign institutional investors are pulling money out of India, renowned emerging markets investor Mark Mobius remains confident of the strength of the bull market in the country.

Mobius, though, says there is a good possibility of 10-15 per cent correction in the ongoing bull market, but that is “minor” given the humongous rally we have seen in the last one and a half years.

According to data available with NSDL, foreign portfolio investors (FPIs) have withdrawn nearly Rs 29,500 crore from the equity markets since October. They say other markets present better alpha than India now given that valuations have surged significantly here.

In an interview with ET Now, Mobius said he saw corrections as a good opportunity to buy into the markets. “Don’t think there will be any reason for us to get out even in a correction. Expect the bull run to continue in the markets,” he said.

Indian stock markets have seen a lot of volatility in the last one month. Since hitting an all-time high in October, benchmark indices have lost about 7 per cent because of inflationary pressure and rising Covid-19 cases across the world, among other things.

Mobius said he was invested in stocks such as Polycab, Apollo Tubes and Persistent Systems. The investor also expressed interest in small banks that have grown rapidly, though he has avoided financials because they were already a big part of the indices.

Mobius did not seem too excited by the frenzy in primary markets. He said he would rather skip initial public offers (IPOs) as they were perfectly priced. Moreover, a lot of tech companies were riding on hopes and forecasts rather than earnings.

This view has been echoed by many other value investors also. They point out that in a consolidation phase, companies delivering consistent profit growth tend to outperform and those delivering losses fall behind. Most of the recently listed tech companies are loss-making.

Mobius said Indian markets have benefited greatly from supportive government policies. Moreover, Indian companies have vastly improved corporate governance and were relatively more focussed on ESG factors. The investment guru said he would continue to buy Indian stocks, which already have over 20 weights in his funds.

The world over, markets have been concerned over the emergence of the Omicron variant of coronavirus. Some health experts have said it was relatively more infectious. However, Mobius said this might not necessarily be bad for the markets. For him, the bigger risk was any drastic change in government policy.

Recently, the Modi government was forced to roll back three farm laws in the face of continued protests. Those farm laws were described as market-friendly. Some political commentators said the government did so to not face the wrath of farmers during the upcoming state elections.

If the government brings any more regulations or laws that are anti-markets, the stock market might not take it kindly.

Mobius said investors should keep at least 10 per cent gold in their portfolio. Cryptocurrencies can not be an alternative to them as they can not be termed as investments. He called them rather speculative assets.


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