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The fifth round of BW-J.P. Morgan Asset Management-ValueNotes quarterly survey reveals retail investor continues to be the most confident of the lot — the other two being advisors (distributors of financial products) and corporate. The retail confidence index has increased 21.7 points to 160 in September this year. Confidence among advisors has also improved (up 8.7 point) after dropping for two consecutive quarters. The earlier four surveys were held in July 2009, September 2009, February 2010 and June 2010.
Overall, the BW-J.P. Morgan investment confidence index (ICI) has improved by 4.9 points from June 2010 to 145.4. After an all-time high in September 2009, the ICI declined in the following two quarters. The index ranges from 0-200, with zero depicting the most negative outlook, 100 showing a neutral position and 200 depicting full confidence.
But not everything is hunky-dory. For one, confidence of corporate investors has dropped 2.2 points to 131.8 points, after showing signs of revival in the June quarter. Besides, there are other macro-economic worries. Inflationary trends continue to remain the biggest cause for concern. Though investors reckon there will be significant improvement in the global economic environment, there are apprehensions about resurgence of the US/global recession. Advisors are most apprehensive about recession (36 per cent), followed by corporate (30 per cent) and retail (29 per cent).
The survey, conducted in September in eight cities — Delhi/NCR, Mumbai, Kolkata, Chennai, Ahmedabad, Bengaluru, Hyderabad and Pune — interviewed 50 corporate treasuries, 296 advisors and 1,642 retail investors — with investible funds of over Rs 2 lakh.
There is good news for equity investors, too. The benchmark BSE Sensex has gained over 2200 points to 20000 points in the past three months; and if the results of the survey are any indication, the party will continue. Thirty four per cent advisors and 27 per cent retail investors expect the Sensex to trade in the range of 21000–22000 in March 2011. India Inc.'s outlook for the Sensex, however, has hit an all-time low, slipping 24 points to 119 since September 2009. This does not bode well for the markets.
Furthermore, confidence of corporate investors has seen a decline in many sectors except information technology/BPO/outsourcing and realty and infrastructure. Interestingly, confidence of investors in manufacturing sector has declined, though many expect strong GDP growth.
City-wise, retail investors are most confident in Chennai. The city has regained its top spot after losing it to Ahmedabad in June. Hyderabad continues to surprise, rising 32.2 points to 163 since June. It was the least confident city in June, a position taken over by Kolkata this time round.
Christopher Spelman, whole-time director and chief executive officer of J.P. Morgan Asset Management, said in a statement: "Despite the concerns surrounding the global economy, it is reassuring to see that retail investors still remain optimistic. It is also encouraging to see that confidence is returning among independent financial advisors."
Retail investors seem to be following what Winston Churchill once said: a pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty.
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Click here to view the J.P. Morgan Asset Management-ValueNotes Investment Confidence Index