Ahmedabad investors most bullish on India growth story: Study

The deep-rooted equity culture among Gujaratis and their appetite for risks have once again come to the fore. Equity investors in Ahmedabad were found to be the most bullish about the India growth story, and topped an investment confidence survey conducted by JP Morgan Asset Management India.

The Investment Confidence Index (ICI) survey, covering cities such as Mumbai, Delhi, Kolkata, Chennai, Bengaluru, Pune and Hyderabad, besides Ahmedabad, was conducted in June 2010 by market research company ValueNotes for JP Morgan. The findings were released on Monday.

The survey found that while the overall retail investor confidence was buoyant and increasing every quarter, retail investors in Ahmedabad had surged ahead to take the top position for the first time since July 2009. Until now the position was held by investors in Chennai.

“The retail investors’ confidence in Ahmedabad reached an all-time high of 177 points, a rise of 40 points over the year, in June 2010,” the survey revealed.

Market experts said the report was not surprising. “The high
confidence among Gujarati retail investors can be gauged from the fact that their participation in equity markets, directly and through mutual funds, is on the rise,” said Nilesh Kotak, MD & CEO, Dhanvarsha Fincap Pvt Ltd.

Kotak also said that the equity culture in Gujarat was widespread, and that Gujarati investors are known for taking risks. Moreover, Gujarat is registering the highest GDP growth in the country, he added. According to the survey, the overall investment confidence index stood at 140.4 in the quarter, while the retail investor confidence stood at 151.7.

These scores were derived on the basis of questions posed to the target segments about the likelihood of Indian economic situation improving from current levels, possibility of improvement in general investment market environment and global economic environment, and chances of BSE Sensex going up in the next six months, among others.

Hyderabad remained the least confident of the eight cities surveyed, but JP Morgan said that its retail confidence index was increasing.  According to JP Morgan, a significant trend noticed over the last four quarters suggests that investors are getting increasingly conscious of monetary and fiscal policy developments. The survey findings indicate that inflation has been the single biggest confidence killer in the Indian economy over the last two quarters.

The Eurozone debt crisis appeared to have dented confidence to some extent, while the high fiscal deficit is also one of the causes of concern among retail investors.