Mark Mobius, Chris Wood up stakes on Indian markets; top stocks they are betting big on

NEW DELHI: Reaffirming their faith in India’s story, two large foreign fund houses, namely CLSA and Templeton Group, have told ET Now in an interview this week that they have increased their allocation towards India and remain positive on the Modi-elected government to push pro-growth reforms.

Mark Mobius, Executive Chairman, Templeton EM Group, said in an interview with ET Now that India is now walking on a longer-term bull market and as Modi carries out reforms and becomes more effective in making the changes he would like to make, this will strengthen the capital markets in India.

"India is the second largest of our holdings after China. Thailand is a pie in our Asian funds, but among our global funds, India is right up there along with Brazil," he added. Mobius expects to increase allocations going forward.

Earlier this week, Chris Wood, Chief Strategist, CLSA, said that India has been one of his favourite markets in Asia and remains so most particularly since the elections. He has allocated 41 per cent of his long only portfolio to India.

Commenting on Modi, he said that he is viewing India as a five-year story given the fact that Modi has been elected for five years.

"Modi is the most pro-business, pro-investment political leader in the world today. So in all likelihood he would get the investment cycle going again," he added.

Top bets of CLSA & Templeton Group

Templeton Group

Mark Mobius sees banks to benefit as the economy bounces back. So, "well-managed banks will be benefiting from what is happening now, but if you look at our portfolios, we have quite a lot in the consulting area, in outsourcing firms like Tata Consultancy," he says.

IT sector: If you could see from their earnings growth, IT stocks have been doing very well and if you look at the market capitalisation compared to companies like Alibaba or any of these internet companies, you will realise that these outsourcing companies are actually in a much stronger position from a longer-term point of view.

Oil & Gas sector: Mobius likes oil marketing stocks. He says ONGC is a very good company. Liberalisation of pricing will be very beneficial for these companies. The governments around the world are giving up on these fixed and subsidised prices because they have now realised that they just can’t afford them for the long term and it encourages waste in the usage of these raw materials.

CLSA:

In a recent report released last week, titled ‘Bits & Pieces’, CLSA said that the renewed investment cycle should significantly favour infrastructure asset owners and contractors such as Larsen & Toubro. Corporate lenders such as ICICI Bank and SBI should also benefit.

Among building material companies they prefer Grasim. "Ensuing job creation will be positive for discretionary consumption plays such as Bharti Airtel. State-owned oil companies will appreciate subsidy cuts," says CLSA. Their favourite pick is ONGC.