The Hindu Business Line : Investor confidence in NDA Govt high: Survey

AN on-line pre-election investor survey of the stock market by ValueNotes Database here, a leading provider of business intelligence and research across domains and customer needs, suggests that investor confidence in the present Government is quite high and that investments will increase significantly if the National Democratic Alliance (NDA) returns to power.

The survey sample of 233 respondents, who responded to an on-line questionnaire between March 20 and April 19, comprised primarily of individual investors (86 per cent), brokers and sub-brokers, technical analysts, research analysts, portfolio mangers and investment advisors.

The salient findings are that investors plan to increase investments if the current NDA Government returns to power, that a positive outlook is running high in the run-up to the elections, that the pharmaceutical, biotech, banking and finance sectors look extremely attractive to investors and that interest in the IT sector is very low given the fact that this is election year in the US as well.

The survey says that investor confidence in the present Government is quite high as is evident from the fact that more than half the number of respondents said they would increase their investments if the present government retains power.

According to ValueNotes, this is perhaps because the NDA Government is credited with pushing reforms ahead and with providing stability, which has helped boost the performance of India Inc. "Thus if the NDA Government retains power, the stock markets are expected to gain further and this would increase infusion of funds into the equity markets. However, if the present Government fails to retain power, only nine per cent of the respondents said that they would increase investments."

The survey goes on to state that optimism among the people following the stock market seems to be high in the run-up to the elections. A huge majority, 86 per cent of the respondents were convinced that the stock market would cross the 6,500 mark in the current financial year.

Of those who feel that the Sensex will breach the 6,500 mark, almost 43 per cent predict that it will happen in the next four months, by August 2004. This goes in tandem with the fact that for an economy, which is largely dependent on a good monsoon for economic growth, the next few of months will be a crucial determinant of the market performance.

This positive outlook can also be attributed to the fact that by August 2004, (i.e. the latter half of the second quarter), stability post elections would bring about a bull run in the stock markets.

In keeping with the investor confidence, 21 per cent of the respondents expect returns of over thirty per cent while 42 per cent estimate between 20 and 30 per cent returns.

A significant 54 per cent of the respondents rated the pharmaceutical and biotech sectors as very attractive followed by banking and finance (53 per cent).

"This could be attributed to the following reasons:

Falling interest rates fuelling increased credit off-take;

Increased propensity to spend due to increased pay scales;

Easier norms for availing a loan, increasing the loan portfolio of financial institutions; and

Increased transparency in the operations of market participants, which in turn would fuel growth in the finance sector.

Interest in the IT sector seems subdued due to the BPO backlash and the strengthening of the rupee against the dollar.

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Investor confidence in NDA Govt high: Survey