Retail investors in India seem quite confident about the performance of equities, reported Morgan Stanley in a survey it conducted. Those surveyed believe that the Sensex will give a return of 20%. This is in stark opposition of what global fund managers are predicting. Global fund managers and various institutions are predicting India to perform poorly compared to other emerging markets.
The survey also showed that investors perceive political instability and indecision as a concern than inflation. Investors don’t see much of a hike in the interest rates from current levels.
A Merill Lynch survey of global investors pointed out that India is among the least preferred of emerging markets. India's Sensex trades at 17.78 times estimated earnings, while China trades at 13.98 times, according to Bloomberg data. Among other leading emerging markets, Brazil trades at 10.71 times and Russia at 7.46 times.
Foreign investors who had invested almost $30 billion last year have sold a net of $1.6 billion so far. The Sensex has shed almost 7% so far. The general mood is that rising inflation is going to put pressure on growth.
A quarter of those surveyed believed that valuations are high at present levels and they will go for buying only on a correction. Among sectors, technology is the most preferred by retail investors whereas telecom is the least preferred. In 2010 technology was the best performing sector and telecom the worse.
As of today the markets are continuing with their recent bullish trend. Both the bourses are in the green, with Sensex crossing the 19000 mark and the Nifty above 5700.
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