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Franklin Templeton has a ‘slightly overweight' call on Indian equities and expects the ongoing gush of foreign inflows into emerging markets such as India to continue on the back of changed perception of lower risk. A perception of lower risk has led to flow of about $2 billion foreign institutional investors (FII) money into the Indian market in the last 8-9 days.
“The inflows (foreign) into Indian stocks this year will be as good if not better than last year,” Dr Mark Mobius, Executive Chairman of Templeton Emerging Markets Group, said here on Friday. For Templeton Emerging Markets Group, Dr Mobius manages equity portfolio of over $50 billion including about $6 billion focused on India.
Emerging markets including India had underperformed from November last year to February 2011 on the back of concerns among foreign investors that inflation had gone too high and more monetary tightening was required.
The short term risk to the India growth story is the slowdown in government policy initiatives on account of the recent corruption scandals (telecom, commonwealth games). “I am not saying there will be... But there could be a slowdown in policy initiatives. Frankly I think it won't happen. But it could happen and it is a risk,” Dr Mobius said.
At the same time, Dr Mobius also highlighted that there will be less unemployment and underemployment in India as there is good demand for goods and services in the Indian market. Indian economy is expected to record 8.5-9 per cent growth in 2011-12.
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