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TABLE OF CONTENTS
1. Introduction 32. Executive Summary 43. Research Methodology 63.1 Survey Structure ................................................................................................................................................................................ 63.2 Retail Investor Sample ....................................................................................................................................................................... 73.3 Corporate Investor Sample .............................................................................................................................................................. 103.4 Advisor Sample................................................................................................................................................................................ 113.5 Index Construction Methodology ...................................................................................................................................................... 124. Key Findings Overall 134.1 Retail Investor Confidence is the highest, followed by Advisor and Corporate ....... ........ ....... ........ ....... ....... ........ ....... ........ ....... ........ 144.2 Political stability viewed as the most positive economic indicator ..................................................................................................... 154.3 Corporate investors from realty and retail investors from medical/bio-tech are the most confident ................................................... 164.4 Corporate investors more bullish on increase in income and employment opportunities................................................................... 164.5 Chennai most confident city - Retail investor and IFA confidence highest in Chennai ...................................................................... 174.6 BSE Sensex likely to trade between 16,000 and 17,000 in December 2009 ........ ....... ........ ....... ........ ....... ........ ....... ....... ........ ....... ... 185. Key Findings Retail Investors 195.1 Retail Confidence - By investor profile ............................................................................................................................................. 205.2 Retail Investment activity ................................................................................................................................................................. 245.3 Retail - Other expectations ............................................................................................................................................................... 265.4 Retail Confidence - By city ............................................................................................................................................................... 286. Key Findings Corporate Investors 336.1 Corporate Confidence - By treasury size .......................................................................................................................................... 346.2 Corporate Investment activity ........................................................................................................................................................... 356.3 Corporate - Other expectations ........................................................................................................................................................ 377. Key Findings Advisors 387.1 IFA Confidence ................................................................................................................................................................................ 417.2 Bank Confidence ............................................................................................................................................................................. 457.3 National/Regional Distributors Confidence ....................................................................................................................................... 46
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1. Introduction
J.P. Morgan Asset Management and ValueNotes are launching the first ever Investment Confidence Index
which reflects the Indian investor and advisor outlook on the economic and investment environment. The
Investment Confidence Index is made up of three sub-indices:
1. J.P. Morgan Asset Management ValueNotes Retail Investor Confidence Index,
2. J.P. Morgan Asset Management ValueNotes Corporate Confidence Index and
3. J.P. Morgan Asset Management ValueNotes Advisor Confidence Index
The three indices together based on a survey of investors and advisors reflect sentiment across the investmen
supply chain. Investors comprise of retail and corporate investors. Advisors comprise of banks, National/Regiona
Distributors (N/RDs) and independent financial advisors (IFAs).
The key objectives of the survey are to capture, across selected cities in India,
To quantify the extent of confidence that investors and advisors have on an improveme nt in the overal
investment environment from current levels
The outlook of investors and advisors on key factors affecting investment behaviour and sentiment
The investor appetite for investing in varied investment options, including stocks and mutual funds
The change in investment behaviour and outlook, from an investors and advisors perspective
The global and domestic cues that impact investor and advisor sentiment
The characteristic investment behaviour of key investor segments and their deviation from overal
averages
These three indices fill a vital gap in the current Indian investment scenario, by providing scientific, research-
driven, sentiment indicators.
The current survey, timed to capture post-Budget sentiment, was carried out from July 7, 2009 to July 20, 2009.
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2. Executive Summary
The J.P. Morgan Asset Management ValueNotes Investment Confidence Index: Indias first-eve
investment sentiment indicator
J. P. Morgan Asset Management and ValueNotes are announcing the first reading of the Quarterly Investment
Confidence Index. The index captures the confidence of retail investors, corporate investors and financia
advisors on the Indian economic and investment environment.
The Investment Confidence Index comprises of three equally-weighted indices:
1) J.P. Morgan Asset Management ValueNotes Investor Confidence Index
2) J.P. Morgan Asset Management ValueNotes Corporate Confidence Index and the
3) J.P. Morgan Asset Management ValueNotes Advisor Confidence Index.
The advisor confidence Index is a combination of sentiment across banks, national/regional distributors (N/RDs)
and independent financial advisors (IFAs), all equally-weighted. At any given point, the Index can range from 0
to 200, 0 being the most negative outlook and 200 depict ing full and absolute confidence.
The indices are the result of a nation-wide survey of retail and corporate investors, and advisors. This quarter thesurvey was carried out from July 7
thto July 20
th2009, ensuring capture of post-budget sentiment. 1,711 retai
investors, 50 corporate treasuries and 325 advisors were interviewed, either face-to-face, online or through the
telephone. The survey covered eight cities in India: Delhi/NCR, Mumbai, Kolkata, Chennai, Ahmedabad,
Bengaluru, Hyderabad and Pune.
All respondents were asked six key or Index questions, the answers to which were used to compute the indices.
Respondents were asked for their opinion with respect to the expected improvement in the Indian and globa
economic situation, improvement in the general investment market environment and atmosphere; the expected
increase in the BSE Sensex, possibility of personal/clients investment portfolio appreciation and the expected
increase in personal/clients investments over the next six months.
The Indian economic prospects drive confidence across the board government with a strong majorityviewed as the most positive economic signal
The Investment Confidence Index stands at 135.9; Investor Confidence index highest at (138.3) followed by
Corporate Confidence Index (136.0) and the Advisor Confidence Index (133.5). A deeper study of the indices
throws up a recurring theme across all three categories consistently high levels of optimism on an improvement
in the Indian economic situation. This is contrasted by a marked pessimism or significantly lower confidence on a
global economic recovery. Other key findings are
Amongst advisors, banks are the most confident (137.9), two points higher than the overall index.
The recent election results have influenced investment confidence favourably, as investors and advisors
alike have voted for a government mandated with a strong majority as the single most positive signal fo
the Indian economy today.
48% of retail investors expect their income will increase and they will make additional investments over
the next six months.
Retail investors are significantly more confident about making additional investments (136.4) than thei
advisors expect them to (132.1).
Advisors are significantly more optimistic about portfolio appreciation (146.8) than their retail clients
(138.2).
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Investment decisions and confidence influenced by location, age, nature of employment and
wallet/treasury size
Among cities Retail and IFA confidence in Chennai is the highest at 160.2 and 147.3 respectively. In
contrast, retail confidence in Hyderabad is lowest at 98.1 and IFA confidence is the lowest in Kolkata at
125.7.
Retail investor confidence declines as age increases, with the age group 22 to 25 most confident (142.7)
and investors aged 55 to 60 the least confident (131.3).
By occupational status, the salaried employees from the private sector have the maximum confidence at
140.8.
Retail investors indicated that investments in stocks and mutual funds increase with an increase in wallet
size. While 37% of retail investors with wallet size between INR 2 and 5 lakhs invested in stocks and
mutual funds over the past 12 months, the figure increased to 79% for investors with wallet size INR 50
lakhs and above.
With regard to investments in stocks and insurance/retirement products, there was a clear shift inpreference between stocks and insurance with increase in age. Investments in stocks tend to be more
than insurance/retirement products between 22 and 35 years, and the preference reverses between 35
and 55 years.
Among corporates, confidence levels and intention to increase investments rises with treasury size. The
confidence of larger treasuries (> 100 crores) in increasing investments is highest at 137.5.
82% of all corporate respondents invested in debt mutual funds in the past year. Among debt mutua
funds, money market funds are the most popular.
Sensex, corporate profits, Indian rupee, interest rates, NPAs set for a rise
Both investors and advisors expect Sensex to reach 16,000 17,000 in December 2009. 76% of retai
and 88% of advisors expect Sensex to rise from current (survey) levels.
70% of corporates expect improvement in profits and employment opportunities.
Half the corporates surveyed believe that the Indian rupee is likely to appreciate in the next six months
while 76% of respondents expect interest rates to move upwards.
36% of corporate respondents expect RBI to intervene in the medium term to reduce liquidity in 6-12
months while 44% believe that NPAs can be expected to increase.
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3. Research Methodology
3.1 Survey Structure
Retail investors, corporate investors and advisors were surveyed through a combination of face-to-face
interviews, online surveys (throughwww.valuenotes.com) and telephonic interviews. The surveys were conducted
in selected Indian cities - Delhi / NCR, Kolkata, Ahmedabad, Mumbai, Pune, Hyderabad, Bengaluru and Chennai.
The survey questionnaire for all categories of respondents consisted of three sections.
a) Screeners to capture the profile of the respondent. The screener questions varied by respondent
category.
1) For retail investors, screeners captured gender, location, sector/industry of employment
occupational status, age bracket, years of continuous investment experience, regularity of
saving for investments, investment wallet size and investment activity over the past 12
months.
2) For corporate investors, screeners captured treasury size, years of treasury experience, and
treasury activity over the last 12 months.
3) For advisors, screeners captured the extent of distribution reach, financial products
distributed / services rendered and years of distribution / advisory experience. Within banks,
screeners captured ownership private, public and foreign.
b) Index questions six closeended questions used to compute the Confidence Index, posed to al
categories of respondents, as below.
1) In your opinion, what is the likelihood of the Indian economic situation improving from curren
levels in the next six months?
2) In your opinion, what is the likelihood of an improvement in the general Investment marke
environment and atmosphere from current levels in the coming six months?
3) In your opinion, how likely is the possibility of the global economic environment improving
from current levels in the coming six months?
4) In your opinion, what is the likelihood of the BSE Sensex increasing in the next six months?
5) In your opinion, what is the prospect of your / your clients investment portfolio appreciating in
the coming six months?
6) Investors - Will you increase or decrease the amount of investment in the coming six
months? Advisors - Will you expect an increase in mutual fund inflows / new accounts in the
next six months?
The response options to all the six questions were: Extremely likely, Somewhat likely, More or less the
same as current, Somewhat unlikely and Extremely unlikely.
c) Other questions these varied by category of respondents.
1) All respondents were asked to name the biggest positive economic indicator in the curren
Indian economic scenario.
2) Retail and corporate investors were asked for their opinion on the likelihood of their income
(NPAT for corporates) increasing over the next six months and the likelihood of the
employment opportunity in India improving from current levels in the next six months.
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Fig. 3.2
4%
30%
61%
5% Professional
Self-employed
Salaried Employee-
Private Sector
Salaried Employee-
Governement
Retail profile - By occupational status
Fig. 3.1
12%
12%
12%
12%13%
13%
12%
14%Delhi / NCR
Mumbai
Kolkata
Chennai
Bengaluru
Pune
Hyderabad
Ahmedabad
Retail profile - By City
3) Corporate investors were posed questions relating to their expectation of RBI intervention in
removing excess liquidity in the system, movements in interest rates, direction of the INR and
movement in NPA levels.
4) Retail investors and advisors were asked to take a call on what range the BSE Sensex would
be trading at, in December 2009.
3.2 Retail Investor Sample
The Investor Confidence Index reflects the sentiment of the retail investor from the selected cities. The sample
size is as follows:
Sample Size Methodology
Sample size for Retail Investor Confidence Index 1,711 respondents with a reasonable representation of large,medium and small investors.
Retail Investors Delhi / NCR - 199, Mumbai - 200, Kolkata - 201
Chennai - 213, Bengaluru - 220, Pune - 238Hyderabad - 201, Ahmedabad - 239
A combination of face-to-face
random sampling, telephonic
interviews and online survey
onwww.valuenotes.com
The charts below indicate the break up of the retail investor sample.
Only investors from the selected cities were eligible for the survey.
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Fig. 3.5
45%
30%
16%
5% 4% 2 to 5 years
5 to 10 years
10 to 15 years
15 to 20 years
20 years or
above
Retail - By years of continuous investment
experience
Employees from media, advertising & marketing, public relations, research and financial websites were not
eligible, to eliminate the possibility of a bias creeping into the survey. Employees and immediate relatives of J.P.
Morgan Asset Management and ValueNotes were also not eligible for participation.
Only retail investors, who actively save for investments, whether on a regular basis or intermittently, were eligible
for the survey.
Retail investors below 22 and above 65 years, or with less than two years of continuous investing experience
were not eligible for the survey.
Fig. 3.4
19%17%
13%
2%2%4%
9%
8%
26%
Age 22 to 25
Age 25 to 30
Age 30 to 35
Age 35 to 40
Age 40 to 45
Age 45 to 50
Age 50 to 55
Age 55 to 60
Age 60 to 65
Retail - By ageFig. 3.3
16%
20%
18% 3%6%
13%
7%
17%
IT/BPO/Outsourcing
Realty &
InfrastructureManufacturing
Retail and Hospitality
Medical/BioTech.
BFSI
Services
Others
Retail - By sector
Fig. 3.6
67%
33%
Save part of your
income for
investment-linked
saving on a regular
basis
Save part of your
income for
investment-linkedsaving once in a
w hile
Retail - By saving-for-investment habit
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Fig. 3.9
24%
14%
62%
Yes
No
I have invested
in Mutual Funds
in the last 12
months
Retail - By investments in MFs prior to, if not in
the last 12 months
Fig. 3.8
41%
26%
19%
8%6% INR 2 to 5 lakhs
INR 5 to 10 lakhs
INR 10 to 25 lakhs
INR 25 to 50 lakhs
INR 50 lakhs and
above
Retail profile - By wallet size
In terms of investments, only those retail investors, who had invested in instruments excluding savings accounts,
time deposits, retirement and insurance products, property, gold and other bullion, over the past 12 months, were
eligible for the survey. In other words, only those investors who had invested in stocks, mutual funds, foreign
currencies, bonds, certificate of deposits, warrants or derivative products over the previous 12 months
participated in this survey. Majority of the respondents (99.3%) had actively invested in either stocks or mutual
funds over the previous 12 months. Fig. 3.9 captures retail investors, who had invested in mutual funds, whetherin the past 12 months or before. Fig. 3.8 depicts the respondent profile based on the investment wallet size
Investment wallet size includes all asset classes and investment instruments, excluding property (personal and
commercial), gold and bullion. Only investors with an investment wallet size of greater than or equal to INR 2
lakhs were eligible for the survey.
* Other stock market derivative products (e.g. futures, options)
Fig. 3.7
1%
12%
3%
19%
20%
82%
68%
7%
29%
33%
68%
54%
95%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Others
Derivatives*
Warrants
Certificate of deposits
Bonds
Mutual Funds
Stocks
Foreign currencies
Gold and other bullion
Property
Insurance and Retirement products
Time deposit
Savings account
Retail - By investment activity in the past 12 months
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3.3 Corporate Investor Sample
The Corporate Confidence Index reflects the corporate investor sentiment from the selected cities. 50 corporate
treasuries were interviewed for the survey through a combination of telephonic interviews and online survey on
www.valuenotes.com. Respondents, who were key decision makers in their treasury departments, were either
CFOs, heads of treasury or senior managers from finance/treasury. Corporate respondents were asked fouscreener questions which built their respondent profile. The charts below give the break up of the corporate
investor sample, by each of these screeners.
The treasury size represents the total investments of the corporate excluding those used for business strategy or
foreign exchange management.
Corporates not eligible for the survey included those with a treasury size lower than INR 10 lakhs or with treasury
operations of less than 2 years or whose corporate office was not located in one of the selected Indian cities.
36%
36%
16%
2%10%
2 to 5 years
5 to 10 years
10 to 15 years
15 to 20 years
20 years or above
Corporate - By treasury experience
Fig. 3.12 Fig. 3.13
48%
6%
4%
22%
2%
6%
10%
2%
Delhi / NCR
Mumbai
Kolkata
Chennai
Bengaluru
Pune
Hyderabad
Ahmedabad
Corporate - By city
Fig. 3.10
4%
12%
10%
16%56%
2% INR 10 50 lakhs
INR 50 100 lakhs(INR 1crore)
INR 1 10 crores
INR 10 50 cro res
INR 50 100 crores
INR 100 crores andabove
Corporate - By treasury size
Fig. 3.11
2%6%
26%
8%
6%
10% 4% 2%
36%
IT/BPO/Outsourcing
Realty & Infrastruc ture
Manufacturing
Retail and Hospitality
Medical/BioTech.
BFSI
Services
Others
Diversified
Corporate - By sector
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3.4 Advisor Sample
The Advisor Confidence Index reflects banks, national / regional distributors (N/RDs) and IFA sentiment from the
selected cities. 325 advisors were interviewed for the survey by a combination of telephone and online survey
onwww.valuenotes.com. Sample size includes 285 IFAs, 20 banks and 20 N/RDs.
N/RDs consist of all key national wealth management / brokerage houses with a significant nation-wide or
regional reach. The rest of the advisors are referred to as IFAs. Advisors with less than 2 years of experience in
providing financial services were not eligible for the survey. From each city, a minimum of 30 IFAs were surveyed
The highest response was from Mumbai (17%) followed closely by Ahmedabad (16%).
11%
17%
13%
11%11%
12%
9%
16%
Delhi / NCR
Mumbai
Kolkata
Chennai
Bengaluru
Pune
Hyderabad
Ahmedabad
IFAs - By city
Fig. 3.14 Fig. 3.15
16%
37%
43%
4%
2 5 years
5 10 years
10 25 years
25 and above
IFAs - By years of experience in financial
services
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3.5 Index Construction Methodology
The three confidence indices are constructed in a similar manner. Response to each Index question is indicated
by a confidence-level point, as below.
The number of responses to each question is multiplied by the respective confidence-level point and these are
aggregated at each Index question level. Sub-indices are calculated for each of these six Index questions, which
is the arithmetical mean of the aggregates. The arithmetical mean of the sub-indices form the Overall Confidence
Index for that respondent category.
The Advisor Confidence Index gives equal weights to the Bank Confidence Index, N/RD Confidence Index and
the IFA Confidence Index to arrive at the overall advisor sentiment.
The Confidence Index, at any given point can vary between 0 and 200.
200 denotes the highest level of confidence in improvement from current conditions, 100 denotes a neutra
sentiment and 0 denotes an extremely negative outlook.
Extremely unlikely Somewhat unlikely More or less the same as current Somewhat likely Extremely likely
0 50 100 150 200
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4. Key Findings Overall
The Investment Confidence Index stands at 135.9. The findings of the survey show that the Indian financia
community currently holds a cautiously optimistic view towards their local market . The first chart below indicates
the current index level and the second chart gives the break-up of confidence on all the key parameters under
consideration.
The confidence levels across all indicators are positive with the highest expectation on an improvement in the
Indian economy (148.0) followed by an increase in the BSE Sensex (143.5). The outlook on the global economy
was the lowest at 112.8.
135.9
0 50 100 150 200
Investment Confidence Index
z
Fig. 4.1
Extremely LikelySomewhat LikelyMore or less the sameSomewhat UnlikelyExtremely Unlikely
Fig. 4.2
Extremely LikelySomewhat LikelyMore or less the sameSomewhat Unlikely
135.9
131.5
138.7
143.5
112.8
140.9
148.0
50 100 150 200
Investment Confidence Index
Change in amount
of investments
Appreciation in
investment portfolio
Increase in BSE Sensex
Improvement in global
economic environment
Improvement in investment market
environment and atmosphere
Improvement in Indian
economic situation
Significant difference in domestic and global economic situation
Neutral
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The survey results suggest moderate confidence of an improvement from current levels, in the economy and
investment markets, from all key categories in the investment supply chain retail investors, corporate investors
and advisors. A common finding across all three categories is the significantly higher optimism on the India story
as against a marked pessimism on global economic recovery.
4.1 Retail Investor Confidence is the highest, followed by Advisor and Corporate
The Confidence Index for all three categories ranges between 133 and 139. It is significant to note that none of
the three crossed/touched the 150 benchmark which indicates a somewhat likely improvement from current
levels.
Retail investors are the most confident among the three categories of respondents with a Confidence Index of
138.3. In comparison, the corporate confidence and advisor confidence is 4.8 and 2.3 points lower, respectively.
Fig. 4.3
136.0
133.5
138.3
0 50 100 150 200
Advisor
Confidence
Corporate
Confidence
Retail
Confidence
Retail investors one of the most confident
Extremely LikelySomewhat LikelyMore or less the sameSomewhat UnlikelyExtremely Unlikely
132.1
146.8
144.9
96.6
140.3
155.0
126.0
131.0
145.0
109.0
143.0
147.0
136.4
138.2
140.5
132.9
139.5
142.1
50 100 150 200
Change in amount
of investments
Appreciation in
investment portfolio
Increase in BSE Sensex
Improvement in global
economic environment
Improvement in investment market
environment and atmosphere
Improvement in Indian
economic situation
Retail
Corporate
Advisor
Confidence on the Indian economy is highest
Neutral
Fig. 4.4
Extremely LikelySomewhat LikelyMore or less the sameSomewhat Unlikely
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The confidence levels of retail, corporate and advisors across the six key parameters indicates a difference in
outlook towards an improvement in the Indian and global economic environment. Despite all three groups
expecting the Indian economy to do much better than the global economy in the next six months, the retai
investor is more confident of a global economic recovery. Corporate and advisor views suggest an as is or
marginal global improvement.
4.2 Political stability viewed as the most positive economic indicator
Respondents across all key categories named stability in the political system, as indicated by the clear majority
secured by the recently elected government, as the single most positive signal for the economy.
GDP driven by continuing domestic demand and consumption is also a strong confidence driver, especially
among corporates and advisors. A significant number of corporate (18%) and advisors (17%) view the increase in
FII inflows as a strong indicator, while expectedly, the advisors sentiment, (which includes banks) is positively
impacted by the central banks monetary policies. The continued rise in the stock market predictably influenced
the retail sentiment (15%) much more than it did the corporate (6%) and advisor (1%) segments.
*GDP growth meeting/exceeding expectations^Government with a strong majority
6%
10% 10%
15%
8%
27%
4%
10% 9%
1%
4%
20%18%
6%
0%
28%
4%
8% 8%
4%4%
19%17%
1% 2%
28%
2%
5%
19%
2%
0%
10%
20%
30%
40%
Corporate
profits
GDP growth* F II inflows Rise in stock
market
Property
prices
Political
stability^
Inflation Govt stimulus
packages
RBI's monetary
measures
Others
Retail Corporate Advisors
Political stability and GDP growth strongest positive economic signals
*GDP growth meeting/exceeding expectations^Government with a strong majority
Fig. 4.5
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4.3 Corporate investors from realty and retail investors from medical/bio-tech are the most confident
The survey captured the investors occupational sector. Corporates were assigned a sector, based on their
companys dominant revenue-generating activity. The results of the corporate v/s retail by sector analysis are very
interesting, as shown below.
The overall difference in confidence between retail and corporate investors is 4.8 points. However, the difference
is wider amongst the three sectors. Real Estate and Infrastructure scored significantly below-average in retai
investors (114.4), whereas the corporate treasuries in this sector (166.7) are more optimistic. Within the retail &
hospitality and medical, bio-tech & pharma sectors, the retail confidence is much higher than corporate
confidence. The difference is the least in Services where retail confidence is higher than corporate by 5.6 points.
4.4 Corporate investors more bullish on increase in income and employment opportunities
Retail and corporate respondents were asked for their opinion on the likelihood of the Indian employment
opportunity improving and the likelihood of personal income/corporate profits improving in the next six months.
135.9
114.4
141.6
135.9
152.2
140.8145.2
125.0
166.7
100.0
130.6
139.6 140.6134.9
133.3
129.5
90
100
110
120
130
140
150
160
170
180
IT/BPO/Outsourcing Realty and
Infrastructure
Manufacturing Retail and
Hospitality
Medical/BioTech. BFSI Services Others*
Retail Corporate
Confidence differs between Realty, Retail and Medical investors
Retail confidence - 138.3
Corporate confidence - 133.5
Fig. 4.6
Fig. 4.7
4% 2%
9% 8%
20%
29%
36%
41%
34%17%
0%
20%
40%
60%
80%
100%
Retail Corporate
Extremely
likely
Somew hat
likely
More or less
the same
Somew hat
unlikely
Extremely
unlikely
Indian employment opportunity likely to
increase
Fig. 4.8
2% 4%7% 10%
30%16%
40% 44%
21% 26%
0%
20%
40%
60%
80%
100%
Retail Corporate
Extremely
likely
Somew hat
likely
More or less
the same
Somew hat
unlikely
Extremely
unlikely
Personal income and corporate profits set
to rise
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Corporate expectation of an increase in profits (NPAT, excluding investment income) and employment opportunity
is higher than retail investor sentiment on the same. 70% of corporates think it extremely or somewhat likely that
the employment opportunity will improve and their profits will increase. This suggests that corporate profits are
likely to see an improvement in the next 6 12 months.
4.5 Chennai most confident city - Retail investor and IFA confidence highest in Chennai
The overall retail investors and IFA sentiment from each selected city shows some interesting deviations.
Very significantly, the retail and IFA confidence levels were the highest for Chennai at 160.2 and 147.3
respectively. Retail investors are generally more confident than IFAs across most Indian cities except in
Hyderabad and Ahmedabad. Retail investor confidence in Hyderabad is the lowest at 98.1 and is lower than the
IFA sentiment by 42 points. IFA confidence is the lowest in Kolkata. Interestingly, in Bengaluru, the overal
confidence appears to be low, as indicated by the IFA and retail scores for the city.
Fig. 4.9
139.7142.5 144.6
160.2
149.6
98.1
137.2
125.7
147.3
140.1142.6
131.7
128.6129.4133.6 134.0
80
100
120
140
160
180
Delhi / NCR Mumbai Kolkata Chennai Bengaluru Pune Hyderabad Ahmedabad
Retail IFA
Chennai - the most confident city
Retail confidence - 138.3
IFA confidence - 134.9
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4.6 BSE Sensex likely to trade between 16,000 and 17,000 in December 2009
Retail investors and advisors were asked to indicate a level where they expect the BSE Sensex to be trading at
the end of December 2009. During the survey period, the Sensex rose from 14,100 to 15,200.
The chart above represents their responses for each range. Advisor sentiment on an increase in the BSE Sensex
is significantly higher than retail outlook. 88% of advisor respondents indicated that the benchmark Index would
be trading at higher levels in December 2009, against 76% of retail investors who expressed a similar outlook
Interestingly, opinion among advisors (34%) and investors (22%) alike is for the Sensex to trade in the range of
16,000 17,000.
Fig. 4.10
1%4%
4%
15%14%
22%
17%10%
5%4%
1%4%
0%
1%3%
11%
21%
34%
18%
7%
3%
1%0%
0%0%
5%
10%
15%
20%
25%
30%
35%
40%
10000-
11000
11000-
12000
12000-
13000
13000-
14000
14000-
15000
15000-
16000
16000-
17000
17000-
18000
18000-
19000
19000-
20000
20000-
21000
21000-
22000
Retail Advisor
Advisors more confident of BSE Sensex trading at higher levels in December 2009
BSE Sensex
during the
survey
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5. Key Findings Retail Investors
The Retail Investor Confidence Index stands at 138.3. This indicates that retail investors are, in general, confiden
of the economic and investment environment improving from current levels. The first chart below indicates the
current index level and the second chart gives a break-up of the confidence level on all key parameters under
consideration.
The Indian retail investor re-affirms the sentiment that the Indian economy will fare better and recover faster than
many of its global counterparts. The retail investors confidence in the Indian economic situation is the highest and
is in fact 9.2 points higher than their confidence in the global economic situation. The sentiment regarding the
BSE Sensex is also positive, indicating confidence of a general upward trend in the benchmark Index. The
confidence in the Sensex is partially validated by an overall positive outlook that returns from investment portfolios
will likely increase (138.2 as indicated in the chart above). However, the likelihood of increasing persona
investments is lower than the confidence in the Indian economy and investment markets.
This suggests that the retail investor, despite being upbeat on the domestic economy, will be seeking
further positive cues from the global and domestic markets, before increasing investments.
Fig. 5.1
138.3
0 50 100 150 200
Retail Investor Confidence Index
z
Extremely LikelySomewhat LikelyMore or less the sameSomewhat UnlikelyExtremely Unlikely
Fig. 5.2
138.3
136.4
138.2
140.5
132.9
139.5
142.1
50 100 150 200
Investor Confidence Index
Change in amountof investments
Appreciation in
investment portfolio
Increase in BSE Sensex
Improvement in globaleconomic environment
Improvement in investment marketenvironment and atmosphere
Improvement in Indianeconomic si tuation
Retail Investor Confidence Index and its components
Neutral
Extremely LikelySomewhat LikelyMore or less the sameSomewhat Unlikely
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5.1 Retail Confidence - By investor profile
Retail Investor Confidence when computed on the basis of of their wallet size, shows that retail investors with
investible cash between INR 10 lakhs to INR 25 lakhs are the most confident, higher than the retail average by
2.1 points.
The survey results suggest that investor confidence in general sees an upward trend with a higher investmen
amount however it appears to decline as the number of years of experience in the markets goes up. In that sense
Confidence and Experience seem to be inversely related. Interestingly, investors with a wallet size of betweenINR 5 to 10 lakhs show a declining trend in confidence with increase in investment experience.
Overall, it is interesting to note that those with the most (>20 years) investment experience are the least confident
possibly an effect of greater wisdom and caution.
Fig. 5.4
142 143144
142142
137138
141
145
140
136
145
137
146
133
145
138
150
123
130 130
120
135
135
136
110
120
130
140
150
160
INR 2 to 5 lakhs INR 5 to 10 lakhs INR 10 to 25 lakhs INR 25 to 50 lakhs INR 50 lakhs and above
2 to 5 years
5 to 10 years
10 to 15 years
15 to 20 years
20 years or above
Investors >20 years experience least confident except mass-affluent
Retail Confidence - 138.3
136.8
138.2
140.4139.8
139.3
130
135
140
145
INR 2 to 5 lakhs
INR 5 to 10 lakhs
INR 10 to 25 lakhs
INR 25 to 50 lakhs
INR 50 lakhs andabove
Retail investors with wallet size between INR 10 to 25 Lakhs have the most confidence
Retail Confidence - 138.3
Fig. 5.3
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Retail Investor Confidence when computed on the basis of occupational status, shows that salaried employees in
the private sector are the most confident, higher than the retail average by 2.5 points.
The chart above indicates an interesting trend with Government employees, where investor confidence appears
to be positively correlated with their wallet size. This trend is also visible among private sector employees and the
self employed. However, the trend reverses with professionals.
Confidence level in the private sector is above the retail average. It may be worth reflecting that private sectoemployees have been relatively well-shielded from recessionary pressures, as fixed pay has not seen a
significant impact and inflationary pressure on cash flows has been low. The self-employed, on the other hand
have had first hand experience of a tight liquidity situation with low credit availability and weakened demand.
Fig. 5.5
138.8
133.2
140.8
137.0
120
125
130
135
140
145
Professional
Self-employed
Salaried Employee-Private Sector
Salaried Employee-Government
Private sectors most confident
Retail Confidence - 138.3
Fig. 5.6
136
141
130
158
131
155
110
158
120
136138
125
138
145144
134
149149
136
145
100
110
120
130
140
150
160
170
Salaried Employee-Government Salaried Employee-Private
Sector
Self-employed Professional
INR 2 to 5 lakhs
INR 5 to 10 lakhs
INR 10 to 25 lakhs
INR 25 to 50 lakhs
INR 50 lakhs andabove
Government employee confidence increases with wallet size
Retail Confidence - 138.3
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Retail Investor Confidence when computed on the basis of sector employed in, shows that respondents from
Medical / Bio-tech and pharma are the most confident, significantly higher than the retail average by 13.9 points.
A confidence level of 152.2 in the Medical / Bio-tech / Pharma sectors is significant as it is the only segment in the
Retail Index that has crossed the benchmark 150, which denotes a significantly higher level of confidence. This in
part demonstrates the defensive nature of this sector, given the current/ past recessionary trends.
By sector, Medical/Bio-Tech sector is the most optimistic. In contrast, confidence level of retail investors in the
Real estate sector is below the retail average.
114.4
141.6
152.2
140.8
145.2
135.9135.9
134.9
100
110
120
130
140
150
160
IT/BPO/Outsourcing
Realty and Infrastructure
Manufacturing
Retail and Hospitality
Medical/BioTech.
BFSI
Services
Others
Medical/Bio-Tech./Pharma investors most confident
Retail Confidence - 138.3
Fig. 5.7
Fig. 5.8
148.7
159.9
173.3
145.8
122.2
107.9
123.1
110.8
91.7
132.3
80
100
120
140
160
180
200
INR 2 to 5 lakhs INR 5 to 10 lakhs INR 10 to 25 lakhs INR 25 to 50 lakhs INR 50 lakhs and above
Medical/BioTech.
Realty andInfrastructure
Contrasting behaviour in Retail and hospitality vs. M edical/Bio-Tech.
Medical/Bio-Tech Confidence - 152.2
Realty and Infrastructure Confidence - 114.4
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Retail Investor Confidence when computed on the basis of respondents age bracket , expectedly shows that
younger respondents aged between 22 to 30 years are generally more confident and confidence levels
gradually decrease as the age bracket increases.
142.7 142.3
138.5 137.9
134.2 133.4 134.0
131.3133.0
100
110
120
130
140
150
Age 22 to 25
Age 25 to 30
Age 30 to 35
Age 35 to 40
Age 40 to 45
Age 45 to 50
Age 50 to 55
Age 55 to 60
Age 60 to 65
Retail investor confidence declines with increase in age
Retail Confidence - 138.3
Fig. 5.9
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5.2 Retail Investment activity
The respondents for the retail investor survey were asked about their investment activity over the past 12 months
The chart below represents the percentage of respondents who invested in each of the said investment
instruments. Please note that the chart does not indicate the amount of assets allocated to each
Percentage of respondents investing in stocks and/or mutual funds is significantly high, with 82% having invested
in Mutual Funds and 68% in direct stocks.
The above chart represents the number of respondents who invested in select investments during the last 12
months. The highest number of respondents investing in direct stocks is from the BFSI sector (72%), highes
number of investments in insurance and retirement are from the Medical/Biotech sector (82%) and highes
investments in property are from the Realty and infrastructure sector (53%).
60%
69%
24%
72%69%
53%
78%
61%
35%
72% 70%
45%
82%
61%
40%
78%72%
28%
57%
63%
28%
66%71%
35%
0%
20%
40%
60%
80%
100%
Insurance and Retirement Stocks Property
IT/BPO/Outsourcing Realty and infrastructure Manufacturing
Retai l and Hospi tali ty Medical/B ioTech. BFSI
Services Others
Retail investor investment activity across sectors
Fig. 5.11
* Other stock market derivative products (e.g. futures, options)
Fig. 5.10
1%
12%
3%
19%
20%
82%
68%
7%
29%
33%
68%
54%
95%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Others
Derivatives*
Warrants
Certificate of deposits
Bonds
Mutual Funds
Stocks
Foreign currencies
Gold and other bullion
Property
Insurance and Retirement products
Time deposit
Savings account
Investment activity of retail investors in the past 12 months
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The responses indicate that retail investor appetite for investing directly in stocks and mutual funds increases withan increase in wallet size.
The responses of retail investors who invested in stocks and those who invested in insurance and retirement
products, over the past 12 months, highlights the tendency of younger investors investing more in stocks as
compared to insurance and retirement. Expectedly, the trend reverses gradually from 35 years onwards and
reverses back again after 55.
Fig. 5.13
56%
64% 65%
73%76% 74%
79%
68%
57%
81%
67% 68% 65%
59%
67%
75% 76%71%
0%
20%
40%
60%
80%
100%
Age 22 to 25 Age 25 to 30 Age 30 to 35 Age 35 to 40 Age 40 to 45 Age 45 to 50 Age 50 to 55 Age 55 to 60 Age 60 to 65
Insurance and Retirement Stocks
Stocks and Insurance - Contrasting trends
Fig. 5.12
60%68%
70%
83% 85%
76%
82%
89% 90%93%
37%
51%
59%
74%
79%
0%
20%
40%
60%
80%
100%
INR 2 to 5 lakhs INR 5 to 10 lakhs INR 10 to 25 lakhs INR 25 to 50 lakhs INR 50 lakhs and above
Stocks
Mutual Funds
Stocks andMutual Funds
Wallet size influences investment activity
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5.3 Retail - Other expectations
As part of the survey, respondents were asked for their opinion on the likelihood of an increase in their income,
employment opportunities in India, increase in property prices in the next six months and the biggest positive
economic indicator for the Indian economy. Their responses are given below.
The above charts clearly indicate that the positive retail investor confidence is a result of the following (Fig 5.14,
5.15, 5.16):
Positive outlook towards income increasing (61% extremely or somewhat likely),
Increase in employment opportunities (58% extremely or somewhat likely)
Property prices increasing (57% extremely or somewhat likely).
Fig 5.17 suggests that in the current economic scenario (the survey was conducted post-Budget), respondents
considered the new central government with a strong majority (27%) as the biggest positive economic indicator
This trend is seen across all categories of respondents such as age, sector, occupational status, investment
Fig. 5.14
21%7%
40%
30%
2% Extremely likely
Somew hat likely
More or less the
same as current
Somew hat unlikely
Extremely unlikely
Personal income likely to increaseFig. 5.15
17%
41%
29%
9%4% Extremely likely
Somew hat likely
More or less the
same as current
Somew hat unlikely
Extremely unlikely
Indian employment opportunity to pick-up
Fig. 5.16
18%
39%
12%2%
29%
Extremely likely
Somew hat likely
More or less thesame as current
Somew hat unlikely
Extremely unlikely
Property prices in India set to rise
Fig. 5.17
4%
27%
8%15%
10%
10%
6%
1%
10% 9%
Corporate prof its
GDP grow th
FII inflow s
Rise in stock market
Property pricesPolitical stability
Inflation
Govt stimulus packages
Monetary measures
Others
Political stability the strongest signal
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experience and wallet size. The next biggest economic indicator is a rise in stock markets (15%), which could
have been influenced by the increase in FII inflows (10%) which incidentally is the third biggest driver.
Retail investors likelihood of income
increasing was analysed against thei
likelihood of increasing investments in thenext six months. This shows a clea
positive relationship. 48% of respondents
are somewhat or extremely confident of
their income increasing and will increase
their investments in the next six months
In contrast, respondents who are
somewhat or extremely unlikely to
increase investments despite a positive
outlook on an income increase are only
3%.
The respondents were asked what level they expect the BSE Sensex to be trading at in December 2009. The
chart below represents responses from respondent by wallet size.
The chart does not include responses of those who refused or did not choose an option. Also, those respondents
who selected less than 10,000 (~1%) are not shown in the graph.
76% of all retail investors expect the BSE Sensex trading at higher levels at the end of December 2009.
Interestingly, the expectation rises with an increase in wallet size. Subsequently, while only 72% of respondents
with wallet size of INR 2 5 lakhs expect a rise, 85% of those with wallet size of INR 50 lakhs and above expec
the BSE Sensex to trade higher.
Investors expecting increase in income more likely toincrease investments
Likelihoodof
incomeincreasing Likely 3% 10% 48%
Same 4% 15% 12%
Unlikely 5% 2% 2%
Decrease Same Increase
Likelihood of increasing investments
0%
5%
10%
15%
20%
25%
30%
10000 -
11000
11000 -
12000
12000 -
13000
13000 -
14000
14000 -
15000
15000 -
16000
16000 -
17000
17000 -
18000
18000 -
19000
19000 -
20000
20000 -
21000
21000 -
22000
INR 2 to 5 lakhs
INR 5 to 10 lakhs
INR 10 to 25 lakhs
INR 25 to 50 lakhs
INR 50 lakhs and above
Expectation of a rise in BSE Sensex increases with wallet size
BSE
Sensex
during the
survey
Fig. 5.18
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5.4 Retail Confidence - By city
5.4.1 Chennai investors most confident; Hyderabad least confident
Retail investors from eight selected cities were surveyed.
Retail Confidence for Chennai is the highest at 160.2, followed by Pune at a distant second at 149.6. On the other
hand, Hyderabad has the lowest confidence index at 98.1, followed by Bengaluru with confidence at 131.7.
The confidence level for investors in Chennai is highest with regard to their expectation of improvement in the
Indian economic situation in the coming six months at 166.2, while their global outlook is also significantly higher
at 156.3.
Fig. 5.19
139.7142.5
144.6
160.2
131.7
149.6
98.1
137.2
80
90
100
110
120
130
140
150
160
170
Delhi / NCR
Mumbai
Kolkata
Chennai
Bengaluru
Pune
Hyderabad
Ahmedabad
Chennai investors most confident, Hyderabad least
Retail Confidence - 138.3
Fig. 5.20
160.2
160.8
159.4
160.8
156.3
157.7
166.2
50 100 150 200
Investor Confidence Index
Change in amount
of investments
Appreciation in
investment portfolio
Increase in BSE Sensex
Improvement in global
economic environment
Improvement in investment market
environment and atmosphere
Improvement in Indian
economic situation
Confidence of Chennai supported by high expectations of India's economyNeutral
Extremely LikelySomewhat LikelyMore or less the sameSomewhat Unlikely
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The retail confidence Index for Hyderabad is 98.1 representing a status-quo outlook on almost all aspects.
The confidence level for retail investors in Hyderabad is primarily supported by their expectation of increase in
Sensex levels in the coming six months. The overall investor index for Hyderabad is dragged down by a negative
outlook on potential investments from the current level over the next six months. Overall survey results suggest
that retail investors in Hyderabad are most unlikely to increase investments.
Somewhat LikelyMore or less the sameSomewhat Unlikely
Fig. 5.21
98.1
84.3
99.8
103.5
96.5
101.7
102.7
50 100 150
Investor Confidence Index
Change in amount
of investments
Appreciation in
investment portfolio
Increase in BSE Sensex
Improvement in global
economic environment
Improvement in investment market
environment and atmosphere
Improvement in Indian
economic situation
Hyderabad investors expect to decrease investments
Neutral
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5.4.2 Chennai confidence high across all asset levels, Hyderabad consistently low
Retail investor confidence levels for all cities shows occasional spikes in confidence across different wallet sizes.
Interestingly, retail confidence in Mumbai shows declining confidence levels with increase in wallet size. Chennai
the most optimistic, shows high confidence across all asset levels. Retail investors in Pune with INR 25 to 50
lakhs are the most confident (161) for that category. Ahemdabad has a relatively lower deviation within each
category of wallet size as compared to other cities. The negative sentiment in Hyderabad is low across al
categories, except at the highest level, where super high net worths display a significantly higher confidence.
Interestingly, confidence of investors in the retail & hospitality sectors shows contrasting trends in Hyderabad and
Bengaluru. In Hyderabad while outlook of most sectors is negative, confidence is high (147) in this sector
whereas in Bengaluru this sector has the lowest confidence (100.9)
147
129
105
126
67
149
77
138
100
148
132
154
136
150
136
150
132
157
150145 140147
157
137136 138
186
161
138
154
139134 136
131
148
168
132131
139 135
60
80
100
120
140
160
180
200
Delhi / NCR Mumbai Kolkata Chennai Bengaluru Pune Hyderabad Ahmedabad
INR 2 to 5 lakhs INR 5 to 10 lakhs INR 10 to 25 lakhsINR 25 to 50 lakhs INR 50 lakhs and above
Mumbai shows a declining trend with increase in wallet size
Retail Confidence - 138.3
Fig. 5.22
Fig. 5.23
107
90
147
98
90
97
8380
100
120
140
160
180
200
IT/BPO Realty Manufacturing Retail &
Hospitality
Medica BFSI Services
Delhi / NCR
Mumbai
Kolkata
Chennai
Bengaluru
Pune
Hyderabad
Ahmedabad
Hyderabad confidence low across sectors, except Retail and Hospitality
Retail Confidence - 138.3
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5.4.3 Retail investors in all cities value political stability
The percentages in the above chart indicate the percentage of responses from that city. Political stability i.e.
government with a clear majority is considered as the most positive economic indicator in all cities, excep
Hyderabad where rise in stock market is considered to be the most positive economic indicator.
Fig. 5.25
54%
18%10%
26%
31%35%
29%
17%
0%
10%
20%
30%
40%
50%
60%
Delhi / NCR Mumbai Kolkata Chennai Bengaluru Pune Hyderabad Ahmedabad
Corporate profits
GDP growth*
FII inflows
Rise in stock market
Property prices
Political stability
Inflation
Govt stimulus packages
RBI's monetary measures
Others
Political stability most positive signal
Fig. 5.24
172
108.3
193
158161
135.5
70.8
128.5
60
80
100
120
140
160
180
200
Professional Self-employed Salaried Employee-Private
Sector
Salaried Employee-Government
Delhi / NCR
Mumbai
Kolkata
Chennai
Bengaluru
Pune
Hyderabad
Ahmedabad
Chennai and Bengaluru investors contrasting confidence trends
Retail Confidence - 138.3
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5.4.4 Mumbai expects Sensex to trade between 17,000 and 18,000 in December 2009
During the survey period, the Sensex moved upwards from 14,100 to 15,200. 76% of retail respondents indicated
that Sensex would trade at levels higher than the survey period. Investors in Mumbai are expectedly the most
bullish with 90% expecting an increase from current levels. More significantly, investor opinion in Mumbai (23%) is
titled towards the Sensex ranging in 17,000 - 18,000 levels as against a national expectation of 16,000 17,000
Pessimism in Hyderabad is carried to the Sensex as well, with majority 60% indicating that the Sensex will remain
at current levels or fall further.
Fig. 5.26
0%
5%
10%
15%
20%
25%
30%
35%
40%
10000-
11000
11000-
12000
12000-
13000
13000-
14000
14000-
15000
15000-
16000
16000-
17000
17000-
18000
18000-
19000
19000-
20000
20000-
21000
21000-
22000
Delhi / NCR Mumbai Kolkata Chennai
Bengaluru Pune Hyderabad Ahmedabad
Mumbai invesors most bullish on the BSE Sensex
BSE Sensex
during thesurvey
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6. Key Findings Corporate Investors
The Corporate Investor Confidence Index stands at 133.5. This indicates a fair amount of confidence from
corporate investors about an improvement from current investment conditions. The first chart below indicates the
current index level and the second chart gives the break-up of confidence on all the key parameters under
consideration.
Corporate investor confidence is highest on an improvement in the Indian economic situation but lowest on the
global economy. The corporate confidence on global economic upswing is 109, a marginal optimism oimprovement from current levels. The confidence levels on a sustained upward movement in the BSE Sensex is
high, tempered by a much lower optimism on an increase in investment portfolio and an increase in investments.
Fig. 6.1
133.5
0 50 100 150 200
Corporate Investor Confidence Index
Extremely Unlikely Somewhat Unlikely More or less the same Somewhat Likely Extremely Likely
Fig. 6.2
133.5
126.0
131.0
145.0
109.0
143.0
147.0
50 100 150 200
Corporate Confidence Index
Change in amount
of investments
Appreciation in
investment portfolio
Increase in BSE Sensex
Improvement in global
economic environment
Improvement in investment market
environment and atmosphere
Improvement in Indian
economic situation
Corporate Investor Confidence Index and its components
Neutral
Somewhat Unlikely More or less the same Somewhat Likely Extremely Likely
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6.1 Corporate Confidence - By treasury size
Corporate Investor Confidence when computed on the basis of respondents treasury size shows that large
corporate treasuries are more optimistic.
When Confidence is analysed further for increase in
investments, the likelihood rises with treasury size
Corporate investors with treasury size > INR 50 crores are
most likely to increase investments.
Fig. 6.3
127.8
123.6
130.0
136.5 136.0
115
120
125
130
135
140
INR 10 lakhs INR 1
crore
INR 1 10 crores INR 10 50 crores INR 50 - 100 crores INR 100 crores and
above
INR 10 lakhs INR 1crore
INR 1 10 crores
INR 10 50 crores
INR 50 - 100 crores
INR 100 crores andabove
Larger treasuries more confident
Corporate Confidence - 133.8
Fig. 6.4
83.3
108.3
110.0
125.0
137.5
50 100 150 200
INR 10 lakhs
INR 1 crore
INR 1
10 crores
INR 10
50 crores
INR 50 -
100 crores
INR 100 crores
and above
Confidence in increasing investments
Neutral
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6.2 Corporate Investment activity
Fig. 6.5 and Fig. 6.6 depict the preferences of the
corporate investors for investments among the various
investment options. 24% of the corporates invested in
both, debt and equity mutual funds. Maximum
respondents indicated investments in debt mutual funds
within which, there exists a high preference for money
market funds. There is also a high preference for safe
instruments such as term deposits.
Fig. 6.5
6%
12%
8%
8%
18%
32%
12%
38%
82%
24%
24%
78%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Others
Structured products
Derivatives*
Warrants
Certificate of deposits
Bonds
Stocks
Equity Mutual Funds
Debt Mutual Funds
Commercial Papers
Inter-corporate deposits
Term deposits
Corporate investment activity in the past 12 months
Fig. 6.6
19%
33%
60%
65%
27%
0% 20% 40% 60% 80% 100%
GILT funds
Floating Rate
Debt Funds
Fixed Maturity
Plans
Money Market
Funds
Bond funds
Money market funds most popular with
corporate treasuries
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6.2.1 Investment Activity in Debt Mutual Funds by Treasury Size
In this section, the treasury sizes of the various corporate respondents are analysed with their investment activity
in debt mutual funds over the past year. More than 60% of the firms surveyed in all categories have invested in
these instruments in the past year.
Money market funds appear to be the most popular among all corporate respondents, when the various treasury
sizes are compared with the mutual fund options. Significantly, the preference for bond funds and fixed maturity
plans is higher in smaller treasuries.
Fig. 6.7
33%
75%68%67% 67%
33%
50%
60%
13%18%
50%
60%60%
50%57%
33%
17%
40%38%
32%
20%25%
14%
0%
20%
40%
60%
80%
100%
INR 10 lakhs 1 crore INR 1 10 crores INR 10 50 crores INR 50 100 crores INR 100 crores and
above
Bond funds
Money Market Funds
Fixed Maturity Plans
Floating Rate Debt
Funds
GILT funds
Money market funds more popular with larger treasuries
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6.3 Corporate - Other expectations
Corporate treasuries were asked four questions relating to expectation on the Reserve Bank of Indias (RBI)
policies, non-performing asset (NPA) movements and the direction of the Indian Rupee. The charts below
highlight their opinion.
While 64% of corporate investors surveyed are of the opinion that RBI will withdraw excess liquidity in the system
24% feel that RBI intervention will happen over the next 3 6 months and another 36% peg it between 6 12
months. As a corollary, 28% of all respondents feel that interest rates are set to harden within the next 6 12
months while a significant 26% expect it to rise much earlier, within the next 3 6 months. Predominant corporate
expectation (44%) is for NPA levels to increase over the next 6 12 months. The over-whelming consensus from
corporate investors on the Indian Rupee is that it will either appreciate or remain range bound over the next 3 6
months.
Fig. 6.8
24%
12%
36%
28%
0% 20% 40% 60%
Cant say
After 12
months
6 - 12 months
3 - 6 months
RBI expected to reduce liquidity in 6-12
months
Fig. 6.9
28%
28%
44%
0% 20% 40% 60%
Cant say
NPAs w ill
come down
NPAs w ill
go up
NPAs expected to go up
Fig. 6.10
24%
22%
28%
26%
0% 20% 40% 60%
Cant say
After 12
months
6 - 12 months
3 - 6 months
Interest rates expected to go up; "when"
uncertain
Fig. 6.11
6%
36%
8%
50%
0% 20% 40% 60%
Cant say
Will remain at
current levels
Rupee w illdepreciate
Rupee w ill
appreciate
INR to appreciate in 3 - 6 months
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7. Key Findings Advisors
The Advisor Confidence Index stands at 135.1. This indicates a fair amount of confidence from the advisors
regarding a betterment from the current investment scenario. The first chart below indicates the current index
level and the second chart gives the break-up of confidence on all the key parameters under consideration.
The Indian advisor is fairly confident of an improvement in the Indian economy, a rise in the BSE Sensex and an
increase in clients portfolios. However, in line with the general trend demonstrated by the retail and corporate
indices, advisors too are not optimistic about a global economic revival. Interestingly, advisors confidence in an
increase in both, the BSE Sensex as well as their clients cumulative portfolio is contrasted by a significantly lower
confidence in an increase in mutual fund inflows. This probably suggests that advisors are conservative in
estimating investor confidence as against their own confidence in the markets.
Fig. 7.1
135.0
134.9
137.9
136.0
0 50 100 150 200
N/RDs
Confidence
IFA Confidence
Bank Confidence
Advisor
Confidence
Advisor Confidence Index - IFAs, Banks and N/RDs
Extremely Unlikely Somewhat Unlikely More or less the same Somewhat Likely Extremely Likely
135.1
133.5
145.7
142.8
103.4
136.6
148.8
50 100 150 200
Overall Index
Increase in mutual fund
inflows / new accounts
Increase in clients'
investment portfolio
Increase in BSE Sensex
Improvement in global
economic environment
Improvement in investment market
environment and atmosphere
Improvement in Indian
economic situation
Advisor Confidence Index and its components
Neutral
Fig. 7.2
Somewhat Unlikely More or less the same Somewhat Likely Extremely Likely
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Advisor Confidence by category
Though there isnt a marked difference in the outlook between different advisor categories, banks on the whole
seem a bit more positive than the IFAs and N/RDs.
It is notable that the advisors, as a class, are quite bullish about the Indian economic scenario, with two of the
categories, namely banks and the N/RDs, crossing the second highest benchmark (150) of the index on this
indicator. Banks are also significantly more confident of an increase in their cumulative clients portfolio which is
also backed by a fair amount of confidence of a rise of the BSE sensitive index.
N/RD confidence on the Indian economic situation is the highest among all advisor categories, but also notably
the lowest in a global economic recovery. Notably, banks and N/RDs believe that the global economy might
worsen from current levels.
Fig. 7.3
Somewhat unlikely More or less the same Somewhat likely Extremely likely
125.0
140.0
147.5
90.0
142.5
137.5
155.0
145.0
95.0
142.5
152.5
133.9
145.4
142.3
104.9
135.8
147.4
165.0
50 100 150 200
Increase in mutual fund
inflows / new accounts
Increase in clients'
investment portfolio
Increase in BSE Sensex
Improvement in global
economic environment
Improvement in investment market
environment and atmosphere
Improvement in Indian
economic situationIFA
Banks
N/RDs
IFAs vs. Banks vs. N/RDs
Neutral
`
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All categories of advisors clearly expect clients portfolios to appreciate but are lesser optimistic about clients
making additional investments. Banks are most upbeat about clients portfolio appreciation and N/RDs are the
least optimistic of clients increasing investments.
Advisors in India are overall positive about an increase in the BSE Sensex levels by December this year. While
N/RDs (40%) indicate a relatively lower range of 15,000 16,000, the bulk of IFAs (31%) and banks (42%)
indicate the next higher range of 16,000 17,000.
125.0
137.5
133.9
140.0
155.0
145.4
50 100 150 200
NRDs
Banks
IFA
Increase in clients'investment portfolio
Increase in mutual fundinflows / new accounts
Advisors more upbeat on clients' portfolio appreciation; low on additional inflows
Neutral
`
Fig. 7.4
Somewhat unlikely More or less the same Somewhat likely Extremely likely
Fig. 7.5
0%
32%
2%4%
17%17%
31%
14%
2%
4%1%1%
6%
0%
5%
11%
42%
5%
5%
0%0%0%0%0%
5%
15%
30%
0%0%0%0%
10%
40%
-5%
5%
15%
25%
35%
45%
10000 -
11000
11000 -
12000
12000 -
13000
13000 -
14000
14000 -
15000
15000 -
16000
16000 -
17000
17000 -
18000
18000 -
19000
19000 -
20000
20000 -
21000
IFA
Banks
N/RDs
BSE Sensex
during the
survey
IFAs and banks more bullish on the BSE Sensex
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7.1 IFA Confidence
The confidence Index of IFAs is 134.9, the lowest among all three categories of advisors.
IFA optimism is the highest on the Indian economy improving in the coming six months while their outlook on the
global economy is markedly low. Most expect only a marginal, if not any, improvement in global conditions over
the next six months.
IFA confidence in a sustained upward trend in the BSE Sensex and in their clients portfolio appreciation is not
supported by their outlook on clients increasing investments. This appears to corroborate a lower confidence onan improvement in the general investment market environment and atmosphere.
Fig. 7.6
134.9
0 50 100 150 200
IFAs - Confidence Index
Extremely unlikely Somewhat unlikely More or less the same Somewhat likely Extremely likely
134.9
133.9
145.4
142.3
104.9
135.8
147.4
50 100 150 200
Overall Index
Increase in mutual fund
inflows / new accounts
Increase in clients'
investment portfolio
Increase in BSE Sensex
Improvement in global
economic environment
Improvement in investment market
environment and atmosphere
Improvement in Indian
economic situation
IFAs - Confidence Index and its components
Neutral
Fig. 7.7
Somewhat unlikely More or less the same Somewhat likely Extremely likely
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7.1.1 IFAs By City
Depicted below is the IFA confidence Index for all the eight cities covered under the survey. IFA Confidence for
Chennai is the highest at 147.3.
Chennai IFAs display above-average optimism on all parameters, but a significantly higher confidence in the
Indian economy. In five of the six key questions, the Chennai confidence level has crossed the 150 benchmark
The Chennai Confidence is moderated by a mostly status-quo view on the global economy. Kolkata has the least
confidence level overall. It is interesting to note that IFAs from the financial capital of the country, Mumbai, are not
very bullish about improved conditions in the next six months.
The chart above plots the city-wise expectation of IFAs with respect to an expected increase in their clients
portfolio vis--vis an expected increase in mutual fund inflows. Chennai IFA confidence is validated again by high
confidence on both parameters. It is notable that the difference in outlook on these two parameters is significantly
high in Delhi/NCR and Bengaluru. This probably suggests that IFAs in these cities expect clients to wait and
watch further, before returning to an investing mode. Hyderabad shows a contrasting trend, where the results
suggest a higher confidence in increasing investments (151.9) over an increase in portfolio appreciation (146.3).
Fig. 7.8
133.6
129.4
125.7
147.3
128.6
134.0
140.1
142.6
110
115
120
125
130
135
140
145
150
Delhi / NCR Mumbai Kolkata Chennai Bengaluru Pune Hyderabad Ahmedabad
Delhi / NCR
Mumbai
Kolkata
Chennai
Bengaluru
Pune
Hyderabad
Ahmedabad
Chennai IFAs most confident, Kolkata least
IFA Confidence - 133.5
Fig. 7.9
150.0
140.4
134.7
150.0
142.2
142.9
146.3
156.7
128.1
130.9
123.6
151.6
112.5
132.9
151.9
142.2
50 100 150 200
Delhi / NCR
Mumbai
Kolkata
Chennai
Bengaluru
Pune
Hyderabad
Ahmedabad
Increase in mutual fundinflows / new accounts
Increase in clients'investment portfolio
Chennai IFAs upbeat on portfolio appreciation and additional inflows
Neutral
Somewhat unlikely More or less the same Somewhat likely Extremely likely
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The chart below shows the top two economic indicators as recorded from the IFA respondents from the eigh
cities.
IFAs across cities had a varied opinion on the biggest positive economic indicator in the current Indian economic
scenario. While IFAs in Pune were most positive about GDP growth, Mumbai IFAs were most upbeat of increase
in FII inflows.
22%
25%
34%
22%
13%
19%
14%
22% 22%
28%31%
6%
13%
40%
19%
13%
3%
29%
19%
30%
24%
21%21%
17%
11%
17%19%
0%
10%
20%
30%
40%
50%
IFAs Delhi / NCR Mumbai Kolkata Chennai Bengaluru Pune Hyderabad Ahmedabad
Increase in FIIinflows
GDP growthmeeting/exceedingexpectations
Government with astrong majority
Pune IFAs most upbeat on GDP growth
Fig. 7.10
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The charts below portray the IFA by city for the opinion expressed by the advisors with regard to the BSE Sensex
levels in the next six months.
The positive sentiment on the benchmark Index is mostly consistent across cities. Chennai optimism is re-
affirmed by their view on the Sensex, as 100% of Chennai IFAs indicated that the Sensex would rise from current
levels. IFAs in Delhi are the least optimistic with 21% opining that the Sensex would remain range bound at
current trading levels and only 66% expressing optimism on a rise.
Fig. 7.11
10%
0%
7%
0%0%3%
14%
7%
31%
21%
3%3%
7%
0%
0%
26%
12%
21%
14%
5%
5%
0%
5% 0%
0%0%
12%
18%
36%
6%
12%
3%
6%
3%
0%
3%
0%
13%
19%
32%32%
0%0%
0%-5%
0%
5%
10%
15%
20%
25%
30%
35%
40%
11000-
12000
12000-
13000
13000-
14000
14000-
15000
15000-
16000
16000-
17000
17000-
18000
18000-
19000
19000-
20000
20000-
21000
21000-
22000
Delhi / NCR
Mumbai
Kolkata
Chennai
Chennai IFAs most optimistic of the BSE Sensex rising
BSE Sensex
during thesurvey
Fig. 7.12
0%0%
3%
6%
32%32%
10%6%
3%
0%
0%
7%7%
27%
13%
27%
7%3%0%
10%
4%
0%
11%11%
15%
33%
11%7%
4%
4%
0%
7%
0%
20%18%
34%
14%
0%0%
5%
-5%
0%
5%
10%
15%
20%
25%
30%
35%
40%
12000-13000 13000-14000 14000-15000 15000-16000 16000-17000 17000-18000 18000-19000 19000-20000 20000-21000 21000-22000
Bengaluru
Pune
Hyderabad
Ahmedabad
IFAs from tier-I cities expect the BSE Sensex to rise
BSE Sensex
during the
survey
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7.2 Bank Confidence
The confidence Index of Banks is 137.9, higher than the advisor confidence by 1.9 points.
Banks confidence appears to be significantly tilted towards an upswing in the Indian economy and an increase in
clients investment portfolios, with the sentiment on both these crossing the benchmark 150. Significantly, banks
expect a marginal deterioration in the global economic scenario.
Banks appear to be most upbeat about an increase in their clients portfolio, with the sentiment going above 150
which denotes a somewhat likely to increase sentiment.
137.9
0 50 100 150 200
Banks - Confidence Index
Fig. 7.13
Extremely unlikely Somewhat unlikely More or less the same Somewhat likely Extremely l