‘Will increase allocation to India to 30%-35%’, says billionaire investor Mark Mobius

The Indian equity markets have seen a lot of volatility in the past year. Although domestic institutional investors were buying heavily, foreign institutional investors were on a selling spree in 2022 and the first quarter of 2023. In 2022, FIIs sold Indian shares worth $17.2 billion which took their aggregate holding to a multi-year low. But, since April, things have seen a dramatic change.

April 2023 marked the return of the foreign institutional investors in a big way. Global investors are once again turning bullish on India.

For global investor Mark Mobius, his biggest allocations are to Taiwan and India. In fact, Mobius says, his allocation to India is likely to go up to 30% - 35% going forward. From a sectoral perspective while India has opportunities in all sectors that can be considered, software, metals and health are the billionaire investor’s top picks. India’s demographics and digitisation are its biggest advantages, he adds.

So, what changed? A combination of factors seems to have contributed to this change in sentiment.
India’s economy has shown resilience despite several headwinds, both domestically and globally. Even if there is some slowdown in growth, India will remain the fastest growing economy in the world. Meanwhile, the Reserve Bank of India’s decision to pause rates along with inflation numbers on a downward trend, fuelled expectations that the central bank would continue to remain status quo on rates for some more time.

Added to this, the rising tensions between the West and Beijing along with the fact that recovery in China hasn’t been swift, led to a series of ramifications including investors pulling money out of China. India was the obvious alternative.

However, experts are of the view that no assumptions should be made from the recent spurt in FII buying. Instead FII behaviour over the longer term should be observed before reaching any conclusions.