FII selling, weak rupee and oil prices drag Indian markets, but long-term story intact: Mark Mobius

India’s sharp and sudden market correction has raised concerns among investors, driven largely by foreign outflows and global uncertainty, but the long-term investment case for the country remains strong, according to veteran emerging markets investor Mark Mobius, Founder of the Mobius Emerging Opportunities Fund.

Speaking to ET Now, Mobius said recent volatility reflects a combination of global risk aversion and domestic pressures rather than a fundamental breakdown of India’s growth story.

Why Indian markets corrected sharply

Mobius said foreign institutional investors (FIIs) have pulled out nearly $3 billion from Indian equities, making foreign selling a key driver of the recent fall.


He cited multiple factors weighing on sentiment:

• Rising global trade and geopolitical uncertainty
• Profit-taking after strong multi-year gains in Indian equities
• A weaker rupee, down about 2% against the US dollar in a month
• Higher crude prices, with Brent up nearly 6%
• Leverage unwinding and margin calls in parts of the market

What concerns Mobius more, however, is India’s recent underperformance relative to China.

“The Chinese market is recovering from very depressed levels, and that is why it is outperforming India for now. This is something investors need to watch closely,” he said.

When FII flows could return

Mobius believes earnings will ultimately drive foreign investors back to Indian markets.

He highlighted technology and software companies, including Infosys, as areas where earnings momentum could revive sentiment. While mid- and small-cap stocks and momentum-driven names have struggled, he said select consumer and technology stocks have held up well.

“As better earnings come through, foreigners and domestic investors will come back,” Mobius said.

Budget expectations: reforms and infrastructure in focus

With the Union Budget approaching, Mobius expects reforms aimed at easing foreign investment flows.

He said simplifying investment processes for overseas investors and accelerating infrastructure spending would be critical signals.

“India’s growth will increasingly depend on foreign capital, know-how and technology, just as China’s did during its reform phase,” Mobius said, adding that Prime Minister Narendra Modi remains committed to reform.

India vs China: growth outlook

Mobius remains more bullish on India than China over the long term, particularly on GDP growth.

India’s young population, strong consumption base and services-led economy give it a structural advantage, while China faces challenges shifting away from infrastructure and defence-led spending.

“India has a great road ahead, especially as it invests more in technology and manufacturing,” he said.

Sectors to watch when FIIs return

According to Mobius, financials will continue to matter due to their heavy index weight, but the biggest growth opportunities lie elsewhere.

He is particularly positive on:

• Technology and software
• Technology hardware manufacturing
• Semiconductors and chips

India, he said, is well positioned to emerge as a major semiconductor hub, drawing parallels with TSMC and the role chips play in companies such as Nvidia.

Currency weakness not a concern for equity investors

Despite the rupee’s recent decline, Mobius said currency risk does not worry him as a long-term equity investor.

“Equities tend to outperform currency depreciation over time, as companies adjust prices in real terms,” he said.

Gold and silver allocation

Mobius reiterated the importance of precious metals in portfolios.

He recommends around 10% allocation to gold and an additional 3–5% to silver.

While Indians traditionally hold higher exposure to gold, Mobius cautioned that gold does not generate income and should be balanced with quality equities over the long term.

Why gold’s rally still makes sense

Mobius does not view the gold rally as overdone. Instead, he sees it as a catch-up move driven by rapid growth in US dollar money supply since the global financial crisis and the pandemic.

He also flagged risks from stablecoins, arguing that insufficient dollar backing could further expand money supply, supporting gold prices over time.

Emerging markets could regain appeal

Despite volatility driven by policies under Donald Trump, Mobius believes emerging markets could eventually become a refuge for global investors seeking diversification away from US-centric risk.

“India has outperformed the US in dollar terms for many years. Emerging markets, including India, can still offer strong relative opportunities,” he said