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Well, it's quite alarming that the Indian market has fallen so much and so suddenly and I think we can attribute it to a number of factors. First of all, barn selling. Uh about three billion has been taken out of the Indian market by foreign sellers. Uh so that's very significant. Of course, one of the reasons for that is the uncertainty generally taking place around the world.
As you know, we still have the global trade uncertainty making investors risk adverse. U there's also an element of profit taking because you must remember that from the foreigner's point of view, the Indian market has performed very very well over the last few years and some of them are taking profits at the same time.
uh then of course there are very specific earnings and stock uh disappointments that cause falls and I think you have to look at two other factors. One u we currency the u this month alone the rupee is down about 2% against against the dollar and of course higher oil prices up about 6% this month. So uh these taxes also play into this.
And then finally uh leverage unwinding. There's a lot of margin calls in the market that caused the market to be weak. I think most important is that most concerning to me is that uh the Indian market has been underperforming uh the Chinese market and I think that that should be changing uh going forward.
But I think it's something that we should keep an eye on because China is beginning to recover from a very very low level which is not surprising but at the same time it means that it's outperforming India. Mark Sajjit here if you look at the emerging markets India has been underperforming the emerging markets and and we are seeing a lot of outflows as you you know spoke a while back.
uh where do you see uh this uh uh out FI flows you know uh coming to a stop or or reversing and what could be the factors at which will you know make FI come back to the Indian markets well I think first of all earnings will be very important if you look at some of the tech names in India they're doing quite well and going forward the whole area the software area uh companies like Infosys and other companies like that are going to do better and better and as they announce better results this will draw in foreign investors and Indian investors as well.
Of course up to now the midcaps and small caps and smaller industrials have not done too well. uh frothy names and momentum names have not doing very well but uh some of the solid uh consumer names fast selling consumer names and the uh tech sectors done fine so I think you're going to see for is coming back uh on the back of better earnings results of those companies
you've you've been watching India for a couple of decades Now Mark uh we have a budget which is coming and what do you expect from the uh government? I think the government is going to announce more and more reforms. I think the government is now coming to the realization that they there's got to be a reform within the government itself so that investors can put money in the market easily particularly foreign investors you know it's quite complicated for foreign investors to put money in.
So I think uh that is going to be a very very important part of the budget and I think also infrastructure spending will move ahead as well which is very very important because India is deficient in a number of areas of infrastructure. So these two uh themes I think hopefully will be part of the budget.
I'm not I maybe I'm speaking more hopefully rather than factually but I think the party in power Modi is very intent on reform expect this budget to focus on capital markets in a big way so that foreign investors and foreign direct investments start coming back into India. Yes, I think so. I think that's going to be a big emphasis because that look they know that at the end of the day India is going to grow with foreign investments and foreign knowhow and technology so forth just like China did you know China when they saw the reform movement they imported a tremendous amount of foreign knowhow foreign capital and that really put them on the road to high growth of course India is already getting some of that and we can't laugh at the incredible incredible growth GDP growth that India now has.
I think that will even be accelerated going forward with a more welcoming situation for foreign investors. Right. Uh Mark, hi. Uh since you've spoken about India and you've spoken to that in parlance with China, China is largely a manufacturing economy. India is largely a consumption-driven and a services-based economy which is expected to outperform the other let's say for the next decade or even slightly near to medium-term which market are you more bullish on
well there's no question that India will outperform on a GDP growth basis you must remember that u uh you know the the Chinese say they've got over a billion people that's not the case I don't think I think uh I'd be lucky to get 800 million uh in India in terms of population whereas uh India has got incredible growth on the back of 1.2 1.3 billion people.
So uh that's a one big difference. Young population of course is the other big difference and uh India already has a consumerbased economy which is incredible. This is something that the Chinese are struggling with and we'll probably not get there anytime soon because their money is going to be going into defense and into already it's gone into infrastructure but defense is going to be a big part of that and technology.
So I think India now can transition more and more into investment in technology and the growth of the manufacturing economy. Um and so there's this great road ahead for India in that regard. Mark u what are the sectors pockets that you believe will likely benefit if FIS were to start favoring India at least at this point it doesn't seem like that's going to happen but at some point those flows will reverse because now FI holdings in Indian equities is at uh over decade lows if I can call it that.
uh and therefore when that reverses will it still be the traditional names finance, IT uh will those be the sectors which will benefit? Uh of course finance is very important and when you look the index the waiting of the finance is very important. So that's uh critical but at the end of the day the real growth areas will be in technology uh particularly software technology but going forward hardware will be very very important.
uh you're going to see India becoming a big manufacturer of technology hardware and of course don't forget the whole chip revolution taking place globally is going to hit on India as well uh India is going to be developing a very large chip industry which will be a good place to invest I believe going forward if you look at the performance of companies uh like TSMC in Taiwan you'll see they've done very very well and of course in Nvidia depends on these high-tech chips for their growth.
So India should be and must be and will be a big producer of chips going forward. Make mark of dollar depreciation and how it influences your investing. You're of course well invested in India as as a percentage of portfolio. It's quite chunky. I'm trying to understand what's driving that confidence despite uh you know the INR weakening or the rupee weakening against the dollar.
Well, it's uh it's my belief that from a longer term point of view, India will could be coming on top. uh uh since we're investing in equities uh I'm not worried about the currency side because if you look at the equity market equity will outperform any uh decline in currency. So when you're investing in equities whether it be in India, US, Japan or wherever else you are pretty much protected against uh these u currency changes that take place because companies adjust their prices in real terms.
So uh it's a it's a great way to escape currency weakness. Mark, how are you looking at precious metals at the moment? Uh given that global markets and there's so much happening in terms of global news flow and volatility uh in the Indian market too. Uh talk to us about what should the allocation be towards precious metals and will the runup continue from here?
Well, I still believe that you should have at least 10% of your portfolio in gold uh and then maybe another three, four, five% in silver. Um and as you know in India lots of people have their wealth in gold particularly which is very good. I think they should stay there. And of course maybe for Indians the gold area is a little bit higher than what I'm recommending probably more than 20 maybe 20% or so.
But then I tell them uh gold does not produce dividends. Gold does not grow although in dollar terms it grows but in the long run you're better off with going into good equities. Mark, uh, you believe that the rally that we've seen is overdone? Do you believe that there is, uh, there is merit in a possible correction here in gold at least for a bit before a further rally emerges?
How should one look at it? Well, I think we have to look at gold in terms of money supply of the US dollar. If you look at the incredible increase in money supply that took place during COVID in the US and of course over the years money supply in the US has increased dramatically. Uh so you've seen this big big increase in the last 20 years maybe 300 or 400%.
So uh in some ways gold is catching up because if you want to look at the price of gold you've got to look at in terms of US dollars. Now more US dollars are being printed which has been the case. Gold should follow. However what happens is that there leads and lags. uh gold is now in a catch-ups phase I would say where uh now there's a growing realization that the dollar is not going to be worth as much as it is today as it will be tomorrow.
So people are protecting themselves by going to gold and silver particular particularly gold and that's really the way you should look at it. money supply will have to determine what happens to the gold price. The other factor which is uh I covered in my recent book on digital currencies is this with stable coins coming in there's a potential for a pretty dramatic increase in the supply of dollars which means money supply of dollars going to be going up again.
Now many people say okay well stable coins you should have for every stable coin you issue there should be a dollar behind it. Unfortunately, that has not been the case and there have been a number of instances where the stable coin was not fully backed by dollar, which means you're issuing more and more stable coins without dollar backing and that of course increases money supply without any constraint.
Mark, if you look at uh the geopolitical risk now primarily led by Donald Trump and the policies that he's following, uh do you think that the entire risk now can be mapped uh or you know seen through these two commodities gold and silver and and markets in general have either you know discounted it or you know are not taking it seriously because of the policy shifts that he does and including you look at the oil market which doesn't move much after the announcements.
Yeah, there's no question that uh Trump has created a lot of uncertainty and people have to sit back and say, "Wait a minute, if this policy or that policy which she's promoting takes place, this will be bad uh for me or my business or the economy." Uh, of course to some degree people have become used to uh and become inured to Trump's announcements but in the background they're saying well maybe I better protect myself by going into gold going to silver going to stocks uh and generally keeping away from this money supply increase and any particular upsets that can take place going forward.
Uh now it's true that on this Green Greenland issue uh there's a lot of smoke uh but at the end of the day there's very little fire simply because as uh Trump stated uh in Switzerland at the forum he said he's not going to go to war over Greenland. So but it would be more pressure more than anything else.
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