Mumbai: Retail investors are more confident than corporate investors and financial advisers about economic recovery and its impact on markets, said a recent survey by JPMorgan Asset Management India Pvt. Ltd and ValueNotes Database Pvt. Ltd, a Pune-based research firm.
According to JPMorgan’s confidence index in India, a first of its kind, on a scale of 200, retail investor confidence stood at 138.3.
A deficient monsoon and swine flu panic have pulled down the Sensex 949.65 points or 5.95% in the past five trading sessions. On Wednesday, the Sensex recovered 319.11 points or 2.17% from its intraday low of 14,701.05 to close at 15,020.16, as investors rushed to buy after industrial production grew at a higher than expected rate of 7.8% in June.
The survey was conducted between 7-20 July. “The deficient monsoon and the panic being caused by swine flu are not reflected in the survey. These could have considerable effect on sentiment,” said Arun Jethmalani, managing director, ValueNotes.
The score of financial advisers is 136 and that of corporate investors, the least confident lot, 133.5. The aggregate investor confidence index is at 135.9.
Krishnamurthy Vijayan, executive chairman, JPMorgan Asset Management, said the index would help gauge the investor sentiment, a key factor that drives the market. The index will be calculated on a continuous basis through quarterly surveys.
At least 62% of retail investors expect to increase investments over the next six months.
The survey covered 1,711 retail investors with liquid assets in excess of Rs2 lakh across eight large cities—Delhi, Mumbai, Kolkata, Chennai, Ahmedabad, Bangalore, Hyderabad and Pune.
It also polled 285 independent financial advisers, 50 corporate treasuries, 20 banks and 20 national/regional distributors of financial products.
Among the eight cities, investors in Chennai are the most optimistic with the city retail investor confidence index of 160. Investors in Hyderabad are the least optimistic, with a score of 98. The other six cities have confidence indices between 130 and 150 points.
According to 76% of the retail investors, the Sensex will be at a much higher level by the end of the calendar year, and 22% of them expect the benchmark index to trade in the range of 16,000-17,000 by December. At least 15% of retail investors expect the Sensex to trade at 18,000-19,000 levels by the year end, and some of them (4%) even said the index could touch 20,000.
According to Jethmalani, a deeper study of the investor confidence index throws up a recurring theme across all three categories—consistently high levels of optimism on an improvement in the Indian economy. This is contrasted by a marked pessimism or significantly lower confidence in a global economic recovery.