NEW DELHI: Marc Faber, Swiss investor and publisher of the Gloom Boom & Doom Report, on Wednesday said the rupee may weaken further, but Indian stocks should adjust on the upside in 2017.
In an interview with ETNow, Faber said if the dollar continued to extend its recent rally, there would be a maximum of one rate hike by the US Federal Reserve, as the US central bank would ensure that the real interest rate remains low.
"I think if the Fed increases rates, it will make sure that the rate increase does not lead to real interest rates going up substantially. So if the inflation is at 5 per cent, and you have a Fed fund rate at 2.5 per cent, you still have a negative real rate of 2.5 per cent. In India, the monetary policy will be a pro-growth one," Faber said.
The ace investor said the Indian market has adjusted downward and it is in a buying range.
"We expect India to grow at the rate of 4 per cent-7 per cent in the next 10 years. The rupee will continue to weaken and stocks will adjust on the upside," he said.
Valuations in India are at reasonable level, Faber said, adding that 4-7 per cent earnings are still high compared to no growth in US. Faber is not sure whether the domestic market may hit a record high level in 2017.
Over a longer period, Faber said, earnings will expand in line with GDP growth rates.
Faber believes that commodity stocks reasonable priced, with plantation agriculture and fertiliser stocks will turn relatively attractive. Besides, Faber expect no significant growth in US and Europe going ahead.
Source: economictimes.indiatimes.com