No rate cut by RBI is unfortunate; still positive on India, says Mark Mobius

Mark Mobius, founder of Mobius Capital Partners said he was and still is very positive on India but the country's central bank not cutting interest rate is an unfortunate thing.

"I believe the Reserve Bank of India (RBI) should have lowered rates because the Indian market does need lower and lower rates. Hopefully, this is going to be a temporary situation. As we go forward, we can see lower rates because the economy needs it very badly and it is important to see this economy continue to grow, " he said, adding that concerns about inflation are probably overworked. Hopefully, there will be a change coming forward when they realise that lower rate is needed for the economy.

Talking further about the RBI decision and growth  he said, “I can see their concern about inflation but it is a short-term concern. The real concern is the growth of the economy because if the economy is growing then you can solve these price problems. So, I believe that it is probably a little bit too short-sighted not to lower rates because the health of the economy is number one and that is really the concern that we should be looking at and not the short-term situation with the commodity prices,” said Mobius.

With regards to market, he said,“The market is looking forward, they are looking to next year and this is true of most of the equity markets around the world."

"I believe that most of the investors see the economy in India doing better next year and the growth continuing. The problems that India has had are temporary. Therefore, the future for next year seems to be much brighter,” he said in an interview with CNBC-TV18 on the day the channel was celebrating its 20th birthday.

When asked where India ranked in his pecking order, he said, “India ranks very high from my point of view but of course if you look at the overall global situation, China is higher in the emerging markets (EMs) index. Therefore, if you look at the tremendous flows from exchange-traded funds (ETFs), the money will go there first and then to India. India needs a heavier weighting in the index, so that they can capture some of these fund flow.

According to him, government should do more privatisation by selling state enterprises, so that market capitalisation of India grows and therefore weighting in the index increases and that inturn brings money into India..

Sector specific, he said, “Telecom is a very important part of the daily expenditure of the Indian communities. So if you look at that situation, you will realise that these exogenous kinds of changes which are beyond the control of the companies themselves – so again what I try to emphasize is these are temporary. The market makes an adjustment but at the end of the day, you have to help the economy by lowering rates so that these companies can survive."