Mark Mobius sees scope for 10% more correction in Indian markets

Market Outlook

Mobius, the founder of Mobius Capital Partners, says he remains invested in Indian equities given as the country’s growth prospects are good

Veteran emerging market investor Mark Mobius said on February 15 that there is a possibility of another 10 percent correction in Indian equities.

“We can probably see another 10 percent correction but we are still in a long-term bull market,” Mobius said in an interview to CNBC-TV18.

The comments come in the backdrop of a more than a 7 percent drawdown in the domestic benchmarks from their record highs hit in October 2021.

Mobius, the founder of Mobius Capital Partners, said that he remains invested in Indian equities given that the country’s growth prospects are good.

The government expects India’s GDP to grow by 8-8.5 percent in 2022-23, while the Reserve Bank of India has pegged the growth at 7.8 percent for the next fiscal year.

Mobius also suggested that the incessant selling by foreign investors is being driven by exchange-traded funds that track emerging market stocks.

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India has seen net outflows of close to Rs 1 lakh crore from foreign investors over the past four and a half months.

Globally, investors have been pulling out of emerging market exchange-traded funds given the weakening outlook for the cohort in the face of likely rate hikes by the US Federal Reserve.

The US central bank is expected to raise interest rates five times this year as it looks to tame multi-decade high inflation.

Also read: RBI underestimating inflation, 50 bps hike by Fed not a done deal: Morgan Stanley’s Chetan Ahya

Mobius termed the ongoing tensions in Eastern Europe between Russia and Ukraine as a sideshow to the bigger concern of interest rate hikes by the Fed.

Media reports suggested that Russia has begun to pull troops back from the Ukraine border after some military drills.

“We are climbing a wall of worry in the market,” Mobius said, as he advised investors to stick to companies with strong earnings prospects.

He believes that the ongoing bear market in cryptocurrencies could be beneficial for equities as retail investors seek other avenues for returns amid a slump in the digital asset’s fortunes.

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