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Marc Faber On Indian Equities


wealthymattersMarc Faber, the author of The Gloom, Boom & Doom report, spoke recently to Bloomberg UTV on the Indian equities and the global headwinds. Here are the key pointers from the interview:

On Indian economy:
– 2008-like fall will send dollar higher, rupee lower
– Domestic consumption remains India’s biggest story
– Growth in rural areas, population key driver

On Indian equities: 
– Difficult for Sensex to cross 21,000 in next 6 months
– Expect Sensex to fall 12000-15000 in near-term
– Don’t expect India to fall below 2008 levels – Markets got oversold in last 2 months
– Would accumulate Indian stocks on weakness
– May also look at investing in Indian banks
– Impossible for India to hit new high in next 6 months
– Banks continue to operate like hedge funds

On Eurozone headwinds: 
– Greece should not have a major impact on global economy
– Greece bailout would be a wrong move
– Do not penalise taxpayers around the world
– Italy a bigger problem than Greece
– Italy needs to balance its budget, bring down government debt

On US economy: 
– Don’t expect Fed to officially announce QE3
– Fed could keep rates at zero till jobless rate hits 7%
– Money supply in US growing rapidly
– Staying in cash via dollar not a bad strategy
– Euro fundamentals worse than dollar

On global equities: 
– Bear market underway right now
– Don’t expect equities to fall below March 2009 lows
– Can see further decline in equity markets
– Upside potential in next 6 months extremely limited
– May see 10-15% rebound, but no new highs
– Difficult for S&P 500 to cross 1,370 in next 6 months
– Expect EMs to underperform US in next 6 months

On gold: 
– Gold could fall to $1500/oz but remain in bull market
– Gold overshot on the upside, see correction

BTW I have been expecting a stock market crash for a while even upto 12000 levels.But I seemed to be the only one of that opinion and I was getting around to double guessing myself.I came across the transcript of this interview dated 19 September 2011 today.Now I feel a little better knowing that even if I’m wrong I won’t be the only one.And if the big names can be wrong what’s so awful about a novice like me being wrong?

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About Keerthika Singaravel
Engineer,Investor,Businessperson

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