Mark Mobius: Reform process will accelerate if BJP comes to power

In an interview with ET Now, Mark Mobius, Executive Chairman of Templeton Emerging Markets Group talks about the attractiveness of emerging markets like India and the upcoming general elections in 2014.

ET Now: Asian equities have had a very negative start in 2014. When do you see valuations getting attractive for investors?

Mark Mobius: They are now beginning to get quite attractive. Of course, it depends on the individual country, the individual company but we are finding quite a few bargains in Asia right now.

ET Now: Electoral success of new parties in India has raised possibility of a fractured mandate for the BJP if it comes to power. Is that something you are factoring in into your calculations when investing into Indian equities?

Mark Mobius: If the BJP does get into power, we believe that the reform movement will accelerate. That would be positive for the Indian economy and Indian stocks eventually. Of course, they have got to solve the Muslim problem. They have got to make sure that they make amends for their past behaviour in that regard. If they are able to surmount that hurdle, it will be quite good.

ET Now: Indian shares have extended 2013 with a record 9% gain as foreign investor flows have offset concerns about the domestic economy. Do you expect that trend to reverse in 2014 because of the US tapering?

Mark Mobius: No. Investors in America now need to diversify away from the US market. Their US market holdings have increased dramatically. So they have got to diversify internationally and that means emerging markets and India would be included.

ET Now: IT and pharma stocks in India were the best performers in 2013. Will this trend roll over to 2014 as well? Are you bullish or bearish about these two sectors?

Mark Mobius: I am still bullish. These sectors benefited from the weakness of the rupee, particularly the IT sector. That situation continues. The rupee continues to be weak against the US dollar and these companies benefit from that because their cost is in rupees and their income is in dollars.

ET Now: India's Central Bank has said that the economy is ready to face the effects of the US tapering. Do you echo that sentiment?

Mark Mobius: Yes. Simply because I do not think the tapering is very significant. The amount of money in the central banks around the world that they has been printed is tremendous. Their assets have been growing very very rapidly, not only the US but in Europe, in Japan and in other countries. I do not believe that tapering will have that much of an impact.