Mumbai: Mark Mobius, executive chairman of Templeton Emerging Markets Group, expects the National Stock Exchange’s Nifty index to double from the current level of around 10,000 points within the next three or four years.

“This would be due to a combination of things. One would be the high growth rate of the country, a more rational interest environment where interest rates are more in line with what the market is able to pay," Mobius said in a phone interview from Singapore on Thursday.

“Also, you will see the foreign reserves of the country will continue to grow. In addition, if liberalization continues, you will see much more foreign investment coming in, in addition to the domestic investment," he added.

Mobius, 80, had joined Templeton in 1987, as president of the Templeton Emerging Markets Fund.

Contrary to the usual trend of foreign institutional investors being buyers of Indian shares when domestic institutional investors are sellers and vice versa, both categories of investors have turned net buyers since 2015.

Lower interest rates in recent times have prompted local investors to invest in equities, shunning traditional investments such as bank deposits. “As interest rates come down, as the deposit rates come down, people will begin to look at other alternatives, other ways to make money. That will also drive people to equity markets," said Mobius.

Even as Indian markets have hit record highs, Mobius said, Templeton has not cut its India holdings, and is particularly interested in small- and mid-cap stocks. China, India and Thailand are among Mobius’s top bets in the emerging markets space.

While the consumption story is seen ruling the Indian markets for now, Mobius believes infrastructure is likely to emerge as a bigger theme. “I think the Indian government realizes that they are far behind China in infrastructure, and something has to be done about that," he said. 

“Part of it comes from privatization of the state-owned enterprises, part of it will come from raising money for infrastructure projects, and of course, the way you do that is by making it safer for infrastructure investors to go into the market," he added.

Even as the long-term outlook stays promising, he did not rule out a correction in the near term.

“There will be a correction on the way, because you’ve seen almost a continuous rise from early this year. Markets just shot up continuously. Whenever you have that kind of a situation, you can expect a fallback," said Mobius. “It can happen any time, it just depends on what the trigger is," he added.

He also said that he was concerned about the geopolitical risks bothering India. “There is stress with China, there is some stress with Pakistan that still continues. If you have an outbreak, it will not be good for the markets," he said.

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