Mobius leads return of fund managers to India

Mark Mobius is leading a return of fund managers to India as the nation’s biggest banks say demand for cars and homes will help them ride out a global recession.

“Domestic industries can build high profits and growth,’’ Mark Mobius, who manages more than $24 billion in emerging-market assets as executive chairman at San Mateo, California based Templeton Asset Management, said. He is buying Indian consumer-related stocks.

Slowing global growth may benefit India by giving the Reserve Bank of India “scope’’ to cut rates after crude-oil prices tumbled 60 per cent in four months, Mobius said. India is a “very large market’’ that isn’t highly linked to the global economy, he said.

Executives at State Bank of India, and Housing Development Finance Corporation said investors ignore the potential for interest-rate cuts and rural spending to fuel demand.

“My rural business is growing faster than my urban business,’’ SBI Chairman O P Bhatt said. “The psychology and the expectation of the people have changed. They are looking for a better life, they are actually enjoying a better life.’’

SBI plans to hire 25,000 staff and open 2,000 branches in year ahead, Bhatt said. HDFC predicts lending will increase more than 20 per cent, Managing Director Keki Mistry said.

Templeton, Aberdeen Asset Management and F&C Management are buying Indian stocks as strategists predict a rebound in the rupee, after it fell 9 per cent since September 15 to 50.09 per dollar. The median forecast of 17 strategists in a Bloomberg survey is for the currency to strengthen to 48.3 by the end of June.

Inflation, which cooled to 8.9 per cent from a 16-year high of 12.91 percent in August, will slow to 5 per cent in June, HDFC’s Mistry predicts. Fair value for the rupee would be between 40 per dollar and 44 within 12 months as India’s trade deficit narrows, he said.

“Inflation is behind us,’’ said Mistry. “Over one to three years, I am extremely bullish on Indian stocks.’’

State Bank’s Bhatt predicts the currency will appreciate to 45 next year because 80 percent of foreign funds have already left the stock market. India has ''huge pent up demand’’ should housing prices and mortgage rates fall because 90 percent of households can’t afford to buy a home, he said.

A drop in India’s home loan rates to below 10 per cent, from as high as 14 percent, will “kick-start consumer buying,’’ ICICI CEO K V Kamath, said. “'The Indian financial system got cleared up five years back and thereafter has not ventured into anything which should cause worry,’’ Kamath said.