Report-JPMAM-VN Investment Confidence Index

8/14/2019 Report-JPMAM-VN Investment Confidence Index

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J.P. Morgan Asset Management ValueNotes Investment Confidence SurveyJuly 7 to July 20, 2009

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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


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


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








economic situation

Retail

Corporate

Advisor

Confidence on the Indian economy is highest

Neutral

Fig. 4.4



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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


19/47


Page 19

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


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



Improvement in globaleconomic environment

Improvement in investment marketenvironment and atmosphere

Improvement in Indianeconomic si tuation

Retail Investor Confidence Index and its components

Neutral



20/47


Page 20

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


Fig. 5.3


21/47


Page 21

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


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



22/47


Page 22

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


Medical/BioTech.

BFSI

Services

Others

Medical/Bio-Tech./Pharma investors most confident


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


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


23/47


Page 23

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


Fig. 5.9


24/47


Page 24

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


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


25/47


Page 25

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%


Stocks

Mutual Funds

Stocks andMutual Funds

Wallet size influences investment activity


26/47


Page 26

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


27/47


Page 27

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


28/47


Page 28

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


Fig. 5.20

160.2

160.8

159.4

160.8

156.3

157.7

166.2

50 100 150 200


Change in amount

of investments

Appreciation in








economic situation

Confidence of Chennai supported by high expectations of India's economyNeutral



29/47


Page 29

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


Change in amount

of investments

Appreciation in








economic situation

Hyderabad investors expect to decrease investments

Neutral


30/47


Page 30

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


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


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



31/47


Page 31

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%


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



32/47


Page 32

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


33/47


Page 33

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








economic situation

Corporate Investor Confidence Index and its components

Neutral

Somewhat Unlikely More or less the same Somewhat Likely Extremely Likely


34/47


Page 34

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


35/47


Page 35

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


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


36/47


Page 36

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


37/47


Page 37

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


38/47


Page 38

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'








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











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


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











economic situation

IFAs - Confidence Index and its components

Neutral

Fig. 7.7



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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

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



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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

Report-JPMAM-VN Investment Confidence Index

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