DoubleLine's Gundlach calls Indian stock market 'scary' NEW YORK (Reuters) - Jeffrey Gundlach, chief executive of DoubleLine Capital LP, on Tuesday gave a strongly negative outlook for the Indian stock market, saying it could be hit especially hard by outflows of funds from emerging markets on expected changes in monetary policy by major central banks. Gundlach, head of the roughly $37 billion DoubleLine Total Return Bond Fund (DBLTX.O), said in an investor webcast that the Indian stock market looks "very scary." Gundlach later told Reuters that was his intermediate-term outlook. Gundlach said in the webcast that he is not negative on all emerging markets and recommended Chinese and Russian stocks. He said the Indian stock market is very reliant on foreign capital and recommended markets that are "insulated" from volatility associated with global monetary stimulus programs. He referred to cautionary comments on India made on Friday by another hedge fund manager, Ray Dalio, chairman and co-chief investment officer of Bridgewater Associates, and said India might be "the leading candidate" of a market downturn as a result of monetary policy changes. Dalio, whose Bridgewater Associates has roughly $150 billion in assets, on Friday forecast an "emerging market crisis" and said that India should "prepare for the worst." Dalio said India is at risk because it has been one of the biggest beneficiaries of foreign capital flows, which have already begun to bypass emerging market equities. Emerging markets have benefited from capital inflows as a result of stimulus programs such as the Federal Reserve's $85 billion in monthly purchases of Treasuries and agency mortgages. Funds that hold emerging market assets have seen outflows recently as interest rates have risen on expectations that the Fed will announce a reduction in its bond-buying when it holds its next policy meeting, on September 17-18. The MSCI Emerging Markets Index .MSCIEF of global emerging market stocks is down 6.1 percent this year. Gundlach's DoubleLine Total Return Bond Fund (DBLTX.O) is down 1.24 percent this year, above 94 percent of peers, according to Morningstar. Investors have pulled about $2.9 billion from Gundlach's fund over the past three months, according to Morningstar. Gundlach, whose Los Angeles-based DoubleLine had roughly $57 billion in assets as of June 30, said on Tuesday that the momentum to higher interest rates is "clearly slowing." The yield on benchmark 10-year U.S. Treasury notes jumped to nearly 3 percent on Thursday, a critical resistance point, after data showed strength in the U.S. services sector in August. At the close of trading on Tuesday, the yield was at 2.97 percent.