Acche din over for the Indian market

Acche din over for the Indian market? Marc Faber sees slight correction in second half

He also sees a pattern on Indian markets where the leadership will change from index to stock specific names.

The Indian market rallied as much as 22 percent so far in 2017 in dollar terms but it is unlikely that we could see a similar performance in the second half of 2017, Marc Faber, editor of The Gloom, Boom & Doom Report said in an exclusive interview with CNBC-TV18.

“In a world where we have artificially low-interest rates, the market rallied a little bit ahead of itself and could witness slight correction. But, long term story still looks promising,” he said.

He further added that equity markets around the world in 2017 saw a strong performance of 17-22 percent in Asian markets including India as well as in Europe.

“Hence, the second half would be difficult and I would not be surprised to see US markets going down or the leadership changing. So far the leadership in US markets is held by bellwethers such as Apple, Netflix, Facebook, Amazon, Google etc. and that is about to change.”

This pattern will also apply to Indian markets where the leadership will change, but the only difference is that the leadership would shift from index to stock specific names.

“Going into the second half, India will be more of a stock pickers market and not an index market,” said Faber. There could be some volatility in the short term, but, for the long term, the story looks good.

In the short term, the Indian market could correct here but given favourable fundamentals in long term, Faber is not overly bearish. But, as I said – “If I have to invest for 10 years and choose between Indian and US, I would chose India because it can outperform the US,” said Faber.

Sectoral Outlook

Commenting on the banking sector, Faber said that he is positive on financial stocks such as banks and particularly insurance companies. They might be going through near-term pain but eventually they will clean up their balance sheet.

The long-term potential for banking as a sector is huge but equally we have to understand there are huge technological changes underway in the world, explains Faber. Financial institutions who move along with technology will do well while other will not do that well.

Financial stocks which have underperformed for the year will outperform. Secondly, Feber said that in his asset allocation, I always have 25 percent in real estate.

“I think some real estate in India may not be fully attractive because it may be fully priced. But, on the other hand, there is still plenty of real estate which will now move up substantially in value,” said Faber.

Commodities

Commenting on gold, Faber said that the price of the yellow metal went up by 8 percent last year against the US Dollar. It saw strong outperformance. This year, the gold is already up 7 percent against the USD whereby Dollar has lost 7 percent against the euro. In euro terms we are even.

“Some agricultural commodities are trading at the lowest point and could still bounce back in the second half. But, given the slowdown in growth around the world except India, I would be little bit cautious on industrial commodities,” he said.

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Refer by-Moneycontrol