While a weakening rupee is a dampener for foreign investment inflows into India, export-oriented companies could benefit from the fall in the local currency, as they become more competitive against China, Mark Mobius, chairman of Mobius Emerging Opportunities Fund, said on Friday.
“I would look at export-oriented companies to begin with because of the currency situation, and also because India is gradually becoming more competitive against the Chinese exporters,” Mobius told a business news channel.
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Infosys, for example, which exports a lot of software, is going to become more competitive because of the weakening rupee, he said. “We are on the cusp of more exports coming out of India, not only in the software area but also in manufacturing.”
Mobius also expects the Indian markets and domestic industries to benefit from the Trump administration more than any other country, as India is the natural choice after China for manufacturing. He also expect Prime Minister Narendra Modi’s reforms to result in a good partnership with the US.
“Where else can investors go overseas? India comes up all the time because of the incredible growth of the country, the reforms that are taking place under the current government, and because there is so much value in the market,” Mobius said. “My personal desire is to be 50% invested in India,” he said.
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Mobius added that many of the stocks in India that have a US dollar income component will continue to do good.
The rupee depreciation is likely to continue because of the strength in the dollar and India’s wider trade deficit, according to analysts.
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