Sensex could hit 200,000: Mobius bullish on India's economic rise under Modi 3.0

Mobius on India’s growth: Sensex could reach 100,000 points by the end of Prime Minister Modi's current term, and 200,000 lakh in the long term driven by India's growing role in global supply chains as countries seek alternatives to China, ace investor Mark Mobius said in an exclusive interview with Republic Business. Mobius praised Modi's digitisation efforts and identified India, Taiwan, and Vietnam as top emerging investment destinations. He also stressed the need for India to simplify bureaucracy and foreign exchange regulations to attract more foreign investments.

Edited Excerpts:

On India’s growth story

Yes, I believe what's happening globally is that more and more people are tuned in to India, increasing their knowledge of India and increasing their interest in India. And this is particularly true in the US and Europe, where there's a need for new supply chains, not so much dependent upon China, but on other countries. And India, of course, is the prime example of where countries can diversify their supply chains. So the interest in India is definitely growing.

On global economy

Well, first of all, as you know, interest rates in America are very high. You can get as much as 5 per cent for US treasuries short term, and that is attracting a lot of money. However, there's still an incredible amount of money supply, not only in the US but globally, because as a result of COVID many central banks pumped increasing amounts of money into the system. In the US, in one year alone, the money supply went up by 26 per cent and over two years, double that, about 40 per cent. Even though the Fed has been decreasing the money supply growth, the money supply is still there. And so there's a lot of money searching for opportunities.

And that's true globally as well. Many of the central banks around the world would like to bring down inflation, but it'll be very, very difficult, and they stand the danger of creating a crisis on the consumer side. So this is something we have to watch carefully.

On his biggest worry for global economy

As of now, my biggest worry is that the dependence upon interest rates by market observers is too great. In other words, they believe that if interest rates come down, the markets will do well. And that's not necessarily the case. If we look at history, the correlation between interest rates and markets is not very close. This is a worry that I have, that people will depend on that too much. So we have to watch that. The other thing, of course, is that we've been in a bull market for quite some time, not only in India, but in the US and other countries.

And there's always going to be a correction along the way. So we've got to be ready for a correction at some point.

On mental health

Yes. What I try to point out in the book is that, yes, it's important for you to try to invest wisely in the short term and make money in the short term. But most people are not going to be lucky in the short term. They're going to be lucky in the long term. And the way they are lucky is by maintaining their positions for the long term. And probably a good example of that is Warren Buffett, who's been in the business for many, many years, and he's become wealthy because he's been able to hold positions for a long term.

Of course, that means picking the right positions in the market. But at the end of the day, the health aspect is very important because if you're healthy, you can live longer. If you can live longer, you can invest longer and therefore become more wealthy.

On 10 years of Modi government

I think Modi has done a terrific job and I think the reason for that is his interest in digitisation of the Indian economy. He is very interested in technology, and he realises that's the way for a country to grow. If you digitise the economy, if you give people more tools such as the Internet and other tools in the technology area, the country is going to grow faster.

And that's what's happening now in India. And Modi has promoted that very successfully.

On market movements

Well, as I've said in the past, the Sensex is going to continue to grow. There will be corrections along the way, but the Sensex will do very, very well in the long term. So people investing today for the long term will do very well. Of course there'll be corrections and that's the reason why it's a good idea to keep some cash available when those corrections come. But you should stay in the market with good companies, companies that have good earnings growth, low debt, and you'll do very, very well because India is growing at such an incredible pace that the companies in India, of course, will benefit from that high growth.

On markets for the next decade

Of course, I can't predict, but I know that it will go to that point (Sensex touching 1 lakh mark). And then after that you're going to see 2,00,000. It will be a long term projection, but that's definitely in the cards for India.

On top emerging investment destinations

First, of course, India, Taiwan, and then after that, perhaps Vietnam. First of all, in the case of India, the young population, the increase in technology and the use of technology by the population at large is really the driving force. The two driving forces in the case of Taiwan, it's the semiconductor industry and how much they have advanced in that area. And as you know, TSMC, Taiwan Semiconductor company, is the leader in that area. But throughout Taiwan, there are incredible companies that are doing very advanced technology. So that's driving growth. In the case of Vietnam, they are increasingly taking over manufacturing from China. And also it's a young population, a very dynamic population, and that will drive growth in that country. And also we also know that China plus one is one thing, and businesses are moving out of China and coming to India and to other emerging economies as well.

On India Vs China

Well, of course, you cannot ignore China. China is still a very big economy. You've still got very, very good companies in China. But at this stage of the game, India is coming up at a very fast pace and taking a lot of the manufacturing from China. That's taking time. It's not going to happen overnight. But definitely India will become a major manufacturer. As you know, India is already a big export of software. The software industry in India is very advanced, perhaps more advanced than in China. But gradually, the semiconductor industry will be coming into India and India will become a leader in semiconductor technology. So that's where the big growth is going to be coming.

On sectors with growth potential

The first would be in electronics manufacturing. Now, of course, there are not that many companies yet, but as I said more and more electronics manufacturing, semiconductor manufacturing will come to India. And that's a sector that you want to look at closely. The other would be infrastructure. India needs an incredible increase in infrastructure and the demand is growing at a very rapid pace because if you have a country growing, you need more power, electric power, you need more railroads, you need more roads, you need more bridges. All these infrastructure are a very, very important part and an area where investments will be growing at a fast pace.

On budget and needed reforms for India

First of all, I would say a simplification of the paperwork and bureaucracy regarding funds, incoming investments. There's a little bit too much bureaucracy now and there's a need to open the market up to that regard. Now, of course, related to that is foreign exchange. I know the Reserve bank of India is very careful with the exchange rate.

They're very careful about the amount of foreign exchange available, but they have to free up that more and more to allow foreign investors to come in. In other words, when foreign investors come in, they have to be able to get out. So you have to give them that assurance that they can bring money in and out without too much bureaucracy.