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Overall Investment Sentiment Remains Positive

Monday, February 25, 2013

Fund Managers Survey
Major findings of a just released Fund Managers Survey, by ICICI Securities covering domestic fund managers from the mutual fund industry.

Where do you expect BSE Sensex the end of calendar year 2013?

  • Most of the fund managers are positive on the market from a one year perspective
  • Majority of the fund managers expect the market to be up in a range of 10-15% at the end of 2013
  • A minority (30%), among fund managers, expect the market to deliver returns in the range of 5-10%

Where will you broadly position the Indian equity market on a valuation scale?

  • After the recent run up, 80% of the respondents believe the markets are fairly valued

What is your broad outlook on the markets in the next three months?

  • Overall, domestic fund managers have turned slightly cautious in the near term after the recent rise in the market. However, none of them are bearish
  • The number of participant having a bullish outlook in the near term has reduced from 58% three months ago to 40% currently
  • As compared to three months ago, neutral outlook for the markets in the near term has increased from 42% to 60%.

Compared to the previous three months, are you more confident about investment in the equity market?

  • The bullish sentiment has reduced as compared to three months back when 50% of them, as against 10% currently, were more confident about investing in the markets.

What could be the major global risk for Indian markets?

  • Concerns over higher global crude oil prices have increased after the recent rise in oil prices
  • As the Indian currency seems to have stabilised, concerns over it seem to have subsided, to a certain extent
  • A slow recovery in the US and the European sovereign also remains a source of concern for fund managers

What is your corporate earnings growth expectation for FY12-13 and FY13-14?

  • With the recent quarterly results better-than-expected for a large number of companies, earnings growth expectations for FY12-13 have increased significantly with 60% of them now expecting earnings growth to be in the 5-10% range.
  • Majority of the fund managers continue to expect earnings growth of 10- 15% for FY13-14.

Which segment of the market would you prefer with an investment horizon of one year?

  • After the significant out performance of midcaps in 2012, preference for midcaps has reduced and 80% of the respondents believe large caps are better placed for investment in the current environment.

Rank the sector according to your preference

  • Preference towards the infra/capital goods, pharma and IT sectors has increased as compared to the previous survey
  • The FMCG/consumer oriented sector has seen a significant decline in preference as compared to the previous survey. Sectors like banking, auto and telecom have also seen some decline in preference.

What are your expectations from the Union Budget and the implication in the short term for the equity market?

  • Majority of the fund managers expect the Union Budget to be balanced with no major impact on the markets in the near term. Total 30% of them expect it to be reform oriented and positive for the markets.
  • None of the respondents expect the Budget to be populist and negative for the markets.

Which asset class do you think will outperform in the calendar year 2013 from current levels?

  • Equity markets are the most preferred asset class among fund managers with an investment horizon of one year, with 60% of them expecting them to outperform
  • After the recent good performance, expectations of an out performance from the Indian debt markets, in relative terms, has declined

What equity market strategy would you suggest now?

  • Majority of the fund managers still continue to advise investors to increase allocation to equity markets
  • However, with the recent rise in equity markets, a higher number of respondents advise investors to maintain their existing asset allocation
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