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