India could benefit as dollar weakens, says economist Ruchir Sharma; calls 6-month market correction a ‘positive’

India may turn into a beneficiary of global capital attacks where the money begins to leave the United States, according to Rochrda Sharma, president of Rockefal International. Sharma also said that the effect of the tariff war may not be bad for India.

“I think it might not be bad for a separate reason, I think that the economists do not count,” he said in a conversation with action manager Rahul Kanwal. “Every capital in the world went to America in this contract, and if you also looked at the Indian market or India in general, foreign capital flows have been very bad … especially the stock market flows have dried up over the past two years.”

Sharma noted that the weak US dollar and low enthusiasm for American assets may encourage foreign investors to return to emerging markets – including India. He added: “India can attract larger capital flows over the next two years. Emerging markets in general can attract more, and the dollar is generally the weakest environment is a more favorable environment for emerging markets and other countries in the world.”

Indian stocks, which have been seen one day exaggerated by global investors, may now seem more attractive after recent corrections. “I think there is much greater interest (in the Indian stock market). If this environment continues as the capital continues slowly leaving America over the next few years, I think this is a much better opportunity for emerging markets including India. The fact that we have a correction over the past six months, I think it is positive.”

Despite India’s higher assessments compared to other emerging markets, Sharma believes that its depth and diversity emerge. “From the point of view of pure evaluation, it is clear that India is more expensive, but the opportunity to grow here is much greater due to the size and diversity of the market. We still have more than 500 companies in India with a maximum of the market with more than a billion dollars. This type of diversity and depth you do not find in any other emerging market,” he explained.

In addressing concerns about China that attracts the capital that came out of America, Sharma argued that the largest trend is about moving away from the capital from the United States, not a zero battle between India and China. “In general, the real place for the place where the capital will be issued is America. So you do not think about this as something in the Indochy … our market may become negatively linked to the American market now,” he said.

He suggested that the belief that America alone will dominate innovation and attract investment is already challenged. “We have seen tremendous flows in Europe this year. It was unaware to say 6 months ago that Europe could attract capital flows from America. Europe is the Silicon Valley of the organization, not innovation – this was the common talk,” said Sharma.

The economist concluded by emphasizing the importance of the dollar as a sign of investment flow to India. “The most important variable if you want to look at the flow of capital is how much a foreigner will put in India, just see the dollar exchange rate – this will tell you everything. This is something you said in November even in November, as long as the dollar, it is not expected that the capital will expect more than that, I expect you to expect more than that.

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