Mark Mobius sees Sensex at 1 Lakh by end of year, bets 50% fresh investments on India

With Indian equities, Mobius is finding real estate and commodity plays as bullish bets. For real estate, India's housing demand remains robust as expected to soar, from middle as well as lower income pockets.

Renowned emerging market investor Mark Mobius sees the ongoing rally in Chinese equities as a positive for Indian stocks, and forecasts Sensex to touch the one lakh mark by the end of the year.

Speaking to CNBC-TV18 on September 30, the founder of Mobius Capital Partners LLP said if capital market regulator Sebi comes out with regulations to limit derivatives activity, that would have a big impact on a rally which has been 'unprecedented'. That said, Mobius added that he will advice funds coming to emerging markets to deploy half of their allocations to India.

The China Stimulus

Mobius believes that there may be a 'new bull market' emerging in China, as Xi Jinping, President of the People's Republic of China seems to have shown willingness to help small businesses with recent stimulus initiatives. "Xi has been saying that he wants to help small businesses, and it is a good sign that he is changing his stance," said Mobius.

China has launched a slew of fiscal as well as monetary measures to boost growth and demand in Chinese economy, triggering a sharp upmove in China's benchmark indices last week.

"We may see a new bull market for China," Mobius added, which will be 'positive' for India as well as other Asian economies. After the sharp, recent upmove in China, Mobius said a pullback is possible, as the Chinese market's relative outperformance may be 'temporary'.

India's rising weightage in key EM indices like the MSCI is positive for Indian stocks, Mobius said, adding that the China rally should help India as nearly half of all the money coming into EMs goes into index funds.

He adviced that foreign funds should deploy at least 50% of the fresh money for EMs in India, 25% in China and Taiwan, and another 25% in Vietnam, Turkey, Brazil, South Korea and Thailand.

Sensex at 1 Lakh?

The ongoing momentum in Indian stocks is likely to take Sensex past 1,00,000 mark 'probably by end of the year', provided measures by capital market regulator do not become a dampener, Mobius said. "If Sebi comes out with regulations to curb derivatives activity, that would have a big impact," Mobius said. However, the measures will not be able to hold back the bull run in Indian stocks, which Mobius said has been 'unprecedented'.

Sectors of Choice

With Indian equities, Mobius is finding real estate and commodity plays as bullish bets. For real estate, India's housing demand remains robust as expected to soar, from middle as well as lower income pockets.

Mark Mobius also sounded upbeat on the Metals space and related plays, such as automotive and infrastructure. Aside of these, Pharma and Financials are sectors to look at, for the billionaire investor.

The China rise will be positive for Indian stocks, according to Mobius, as he bets more FII money will come into India.

Mark Mobius also said he is very much interested in India's semiconductor story, given recent inaugurations of a number of projects as well as future investments lined up, along with serious global players entering the Indian ecosystem. "Those will be interesting to keep an eye."

Valuations in India

Mobius remained upbeat on India Inc's earnings potential. "In P/E, the Earnings moving up means valuations do not look steep," said Mobius, implying India Inc's future P/Es may come down.

That said, Mobius concurred with the view that right now may be a time to watch out for risk. "I have always said, there will be corrections along the way in India that can be 5-10-15%, so expect that, but be ready to buy when imt happens," said Mark Mobius.

Mobius made a case for diversification too, "It is a good idea to hold gold, may be 10% of portfolio. One of the reasons of gold's price rise is the Indian buying."

India's IPO Rush

Mobius was slightly cautious on the primary market frenzy in India, as the bullish momentum invited a number of players to list their businesses seeking higher valuations. "It is not a good idea to pile in to the IPOs unless you are certain about the business," said Mobius.

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