Indian investors appear to have put their inflation-related worries on the back burner. A recent survey by ING group revealed a marked decline in inflation-related pessimism among Indian investors. In fact, with domestic demand remaining firm, Indian investors' positive expectations have soared, outpacing those of investors in all other Asia Pacific economies in Q1 of 2010. According to the ING Investor Dashboard Survey, the India Investor Sentiment Index has climbed further up in the 'very optimistic zone', rising to 174 in the first quarter of 2010 compared to 169 in the fourth quarter of 2009.
Indicating growing confidence in the economy, the survey found that 91 per cent of Indian investors believe that the economic situation would improve further in the next quarter. Nearly 60 per cent of Indian investors surveyed planned to increase their investments in local stocks, mutual funds and unit trusts (both local and overseas) in the next quarter. A majority (83 per cent) were also bullish about the prospects of property markets in the coming quarter.
“Given that the global economy has stabilised and is entering a period of weak growth and the risk of a double-dip recession in the U.S. has abated, investors are recommended to look at consumer goods, capital goods, construction and infrastructure sectors to capitalise on domestic growth prospects,” said Navin Suri, MD & CEO, ING Investment Management India.
The survey report states that in Q1 2010, 44 per cent Indian investors believed that domestic interest rates had a positive effect on their investment decisions in the past quarter, compared to only 35 per cent in Q4 2009.
Fifty-six per cent of those surveyed indicated that they would invest more and would also reallocate their current portfolio in response to the anticipated increase in domestic interest rates. The investment instruments that they regarded as most suitable for a rising interest-rate environment included gold, mutual funds, stocks, cash deposits and real estate.
The ING Investor Dashboard survey measures and tracks investor sentiments and behaviour of mass-affluent investors each quarter in 12 Asia Pacific markets (including China, Hong Kong, India, Indonesia, Korea, Malaysia, the Philippines, Singapore, Taiwan, Thailand, Japan and Australia).
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