However, retail investors in Ahmedabad losing confidence in markets, says study.
The Warren Buffets and Rakesh Jhunjhunwalas of the world keep saying: Invest when financial markets are bearish. Amdavadi financila advisors too have similar thoughts. With the Sensex and Nifty having seen around 15% decline in the past year, retail investors in the city have lost their confidence in financial markets, including the stock market. But, financial advisors are optimistic about it.
The individual financial advisors (IFAs) of top cities across country still feel that their clients are not confident about market condition. However, IFAs in Ahmedabad have been found as the most optimistic amongst IFAs from all the cities in the country, reveals a report.
In fact, IFAs in Ahmedabad believe that the retail investors' confidence has increased in the past year. JP Morgan Asset Management India in association with ValueNotes announced the findings of their eighth wave of the Investment Confidence Index (ICI) in India in July 2011. The index, which was launched in August 2009, is published on a quarterly basis. ICI captures the confidence of the retail and corporate investor sector as well as financial advisors on the Indian economic and investment environment.
According to the report, among Delhi, Mumbai, Kolkata, Chennai, Bengaluru, Pune, Hyderabad and Ahmedabad, the investment confidence among financial advisors has risen with the highest levels seen in Ahmedabad and Bengaluru, while in other cities, the confidence has dipped. On the other hand, retail investors of Ahmedabad, Bengaluru, Hyderabad and Chennai have lost their confidence in the markets. Amongst the cities, Ahmedabad's retail investor confidence index was down by 8% between March 2011 and June 2011.
Christopher Spelman, director and chief executive officer (CEO) of JP Morgan said, "ICI for the current wave has been impacted by a significant fall in the outlook on global economy, domestic interest rate hikes and inflationary concerns.
Despite this negative news, the Indian financial fraternity maintains a positive outlook with a majority of investors and advisors expecting the benchmark index to trade between 20,000 and 22,000 by the end of the year. Another interesting finding is that young investors (aged 22 to 25 years) appear highly enthusiastic about investing in mutual funds.”
Nimesh Shah, MD and CEO of ICICI Prudential Asset Management Company, who was recently in the city also saw rise in investment in last one year. "In the last one year, the mutual funds have given better returns and so the investors have gained in confidence," he said.
Echoing similar views, Nilesh Kotak, Ahmedabad-based stock broker and analyst, and MD and CEO of Dhanvarsha Fincap Pvt Ltd, said, "Compared to gold and real estate, the returns in equity markets are negative and so the investors have totally lost confidence in it. At present, the banks have started offering around 12% interest in deposits which is almost equal to the annual average growth of the equity market in the last 15 years.
Due to this reason, the investors are likely to stay away from the stock market till March 2012," he said.
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