Valuations in India`s equity markets are cheap but need to fall further to represent a buying opportunity, Mark Mobius, executive chairman of Templeton Emerging Markets Group, told CNBC exclusively on Tuesday.
"Not quite yet," Mobius warned, when asked if recent sharp stock market declines marked a good entry point for longer term investors. "Indian markets have not fallen far enough to make them attractive." India is beset by high inflation, slowing growth, a ballooning current account deficit and a record low currency. At the core of the problem - foreign capital outflows precipitated by expectations cheap liquidity will come to an end with the September wind-down in the US Federal Reserve`s asset purchase program. India`s NSE index fell nearly 2 percent on Monday to its lowest close in 11 months, as blue chips slumped after a record low rupee aided fears of foreign selling and more steps by the central bank to stem dollar outflows. Mobius, who manages USD 53 billion, said he "likes and holds" Tata Consultancy Services and would add to positions if the stock fell 10 to 15 percent further. From the consumer sector perspective, Mobius said he would buy Hindustan Lever - a stock that he currently doesn`t own - if it fell 20 percent further. More pressure is in store for India`s currency, Mobius warned. "With the US dollar getting stronger, the rupee could get hit further," he said, adding "significant declines" may be on the horizon unless controls were imposed to limit capital outflows. India is "moving definitely in that direction but I hope common sense prevails," Mobius said of the risk of further restrictions on foreign investors aimed at preventing them from moving funds out of the country.Related
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