‘We See a Lot of Value in Mid- & Small-Caps’

The Economic Times - - Companies: Pursuit Of Profit -

Mark Mo­bius, ex­ec­u­tive chair­man of Tem­ple­ton Emerg­ing Mar­kets Group at Franklin Tem­ple­ton In­vest­ments, be­lieves the rally in In­dian mar­kets is set to con­tinue, thanks to the high eco­nomic growth in the coun­try and re­forms be­ing im­ple­mented by the gov­ern­ment.

“We are pretty much on a bull run and these bull mar­kets can last quite some time,” said Mo­bius in an in­ter­view to Sanam Mir­chan­dani.

Mo­bius ex­pects the ru­pee to strengthen to 60 to a dol­lar by the end of the year. Edited Ex­cerpts:

Bar­ring the last few days, In­dian mar­kets have seen a near ver­ti­cal move. Would you be a buyer at these lev­els? We are very pos­i­tive on In­dia. I am very happy with the re­forms that Prime Min­is­ter Modi is im­ple­ment­ing in the coun­try and also the high eco­nomic growth. What we are do­ing is fo­cus­ing on small and medium cap (com­pa­nies) be­cause they tend to be a lit­tle cheaper than the large caps. The av­er­age price- to-earn­ings ra­tio in In­dia is much higher than that in other emerg­ing mar­kets gen­er­ally, but av­er­ages of course don’t tell you the full story. At the end of the day, we have to look at in­di­vid­ual stocks.

What are your thoughts on In­dian small-cap space where val­u­a­tions are con­sid­ered steep at cur­rent lev­els? We have quite a few of the small and medium cap stocks in our small-cap fund. Some of these of course we would take prof­its on but gen­er­ally speak­ing we have not moved our po­si­tions in In­dia. We see a lot of value there and you have to be aware of the growth rate of these kinds of stocks. We like what we see in small- and medi­um­caps in In­dia.

Do you think the rally in In­dian mar­kets has peaked out? No, I don’t think so. We are pretty much on a bull run and these bull mar­kets can last quite some time. Of course, there will be corrections on the way. But at the end of the day, we have to be aware of the fact that we are in a very pos­i­tive eco­nomic sit­u­a­tion in In­dia.

Some mar­ket par­tic­i­pants have likened the on­go­ing eu­pho­ria in the mar­ket to the 2007 bull mar­ket. What are your thoughts? Each bull mar­ket is dif­fer­ent from the other but one thing we do know is that bull mar­kets last longer than bear mar­kets. Bull mar­kets go up in per­cent­age terms more than bear mar­kets go down. Know­ing that, we re­alise that this can go on for quite some time.

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