Sell-off in the US? Get ready for volatility in Indian mkt, says Faber

Marc Faber, the editor of Gloom and Doom and Bloom, thinks US stocks are headed for a downward spiral, and possibly even a bear market, before they shoot up again. And the US job report released on Friday only reaffirms his belief. Job growth in the world’s biggest oil consumer slowed to 120,000, the Labor Department said on Friday, the smallest increase since October.

In an exclusive interview with CNBC TV 18, Faber said US markets are likely to witness a correction of at least 10 percent this year. " But the big question: is it just a correction or is it the beginning of a more serious downturn," he said.

Once the markets see a selloff of around 10 to 20 percent the Fed is likely to ease its monetary stance by pumping in more money into the economy through QE3. But will this be enough to boost the market above its recent highs? Faber doesn’t think so.

Moreover, volatility in the developed markets will have a spill-over effect on emerging markets, which Faber expects will underperform with very few exceptions.