While global economic worries seem to have receded among the Indian investor community, fears of domestic political and economic uncertainty have begun to affect investor confidence, says a report on Investor Confidence Index (ICI) by JP Morgan Asset Management and ValueNotes.
The ICI stands at 146.3, climbing 5.1 points or 3.5 per cent from the February 2010 figure of 141.2. The Retail Investor Confidence Index ranks highest at 159.5, followed by the Advisor Confidence Index (147.2) and the Corporate Confidence Index (132.2).
According to the scale, ‘0' depicts the most negative outlook; ‘200' absolute and full confidence; and ‘100', a neutral position.
Domestic investors seem to show an increasing interest in overseas opportunities. “It is encouraging to see that investors are becoming less wary of the global economic situation and that a significant percentage of them are willing to explore investments in international markets. This tells us that while investors have strong belief in the long term growth of the Indian economy they are becoming more cognizant of the benefits of diversification,” said Mr Christopher Spelman, Whole-time Director and Chief Executive Officer of J.P. Morgan Asset Management.
Inflation continues to be a cause of concern for about 63 per cent of corporations, 48 per cent of the advisors and 19 per cent of the investors. This quarter, however, has seen corruption entering the list of negative factors, with about 19 per cent of retail investors and 16 per cent of advisors being wary of it.
“Worries over inflation are still dominant, but corruption has emerged as a major issue. This has kept investor confidence down and is impacting fresh investment flow,” said Mr Arun Jethmalani, Managing Director, ValueNotes.
About 68 per cent of retail investors and 85 per cent of advisors believe that the Sensex would reach the 22,000-23,000 levels in June.
India's GDP growth was considered to be the most positive economic indicator by 20 per cent of retail investors, 49 per cent of advisors and 53 per cent of corporations.
India's GDP growth rate was estimated at 8.9 per cent for the first half of 2010-11.