Dr. Mark Mobius, executive chairman of Templeton Emerging Markets Group, an affiliate of San Mateo, CA-based Franklin Templeton Investments, expects India’s Stock Exchange indices,the Nifty and the Sensex to double within the next three or four years.
“This is due to the high growth rate of the country and a more rational interest environment where interest rates are more in line with what the market is able to pay,” Mobius said in a phone interview from Singapore.
“Also, you will see the foreign reserves of the country will continue to grow. In addition, if liberalization continues, you will see much more foreign investment coming in, in addition to the domestic investment,” he added.
Mobius explained that as interest rates get lower deposit rates become lower too and this will drive people to invest in equity markets. He believes that though India’s markets are booming on consumption rates currently, infrastructure is likely to emerge as a bigger theme. This will happen “from privatization of the state-owned enterprises; part of it will come from raising money for infrastructure projects, and of course, the way you do that is by making it safer for infrastructure investors to go into the market,” he said.
Mobius added that geopolitical risks bothering India could be of concern, reports Live Mint.