7th wave of Investment Confidence Index

7th wave of Investment Confidence Index – by J.P. Morgan Asset Management in association with ValueNotes

– The Investment Confidence Index (ICI) falls to an all-time low – drops 9.5% this quarter

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17 May 2011: Today, JPMorgan Asset Management India Pvt. Ltd. (JPMAMIPL) in association with ValueNotes announced the findings of their seventh wave of the Investment Confidence Index (ICI) in India. The J.P. Morgan Asset Management – ValueNotes Investment Confidence Index (ICI), which was launched in August 2009, is published on a quarterly basis. ICI captures the confidence of the retail and corporate investor sector as well as financial advisors on the Indian economic and investment environment.


One of the key findings this quarter is that the Indian financial community’s faith in the Indian economic story could be weakening and they have turned cautious. This has driven the ICI downhill to an all time low, recording the biggest fall in the history of this Index. For the very first time the confidence in India’s economic growth has broken out of the 147-154 range to end at 136.1, denoting a cautious outlook. The confidence has dropped across the board among retail investors, corporates and advisors and concerns over the investment market environment and atmosphere has led to this fall. The ICI stands at 132.3 in March 2011, indicating a 14-point or 9.5% decline from the ICI in December 2010.


ValueNotes, an independent market research company, was commissioned by J.P. Morgan Asset Management to conduct the survey. The ICI was developed by interviewing a random sample of retail investors (with a wallet size in excess of INR 200,000), corporate investors and financial advisors. The survey took place in March 2011 in eight cities across India: Mumbai, Delhi/NCR, Kolkata, Chennai, Ahmedabad, Bengaluru, Pune and Hyderabad.


The key objective of the ICI is to quantify confidence in the investment environment among investors and advisors. The survey also attempts to study investment behaviour and sentiment based on key factors such as the improvement in the Indian and global economic environment, general investment atmosphere, expectation of growth in investment portfolios and others. Additionally, ICI analyses the short term and long term changes in investment behaviour and outlook every quarter, from an investor and advisor standpoint.


The J.P. Morgan Asset Management – Valuenotes ICI score is derived from responses to the following questions posed to all target segments:

1) The likelihood of the Indian economic situation improving from current levels in the next six months.

2) The likelihood of an improvement in the general investment market environment and atmosphere from current levels in the coming six months.

3) The possibility of the global economic environment improving from current levels in the coming six months.

4) The likelihood of the BSE Sensex increasing in the next six months.

5) The prospect of your / your clients’ investment portfolio appreciating in the coming six months.

6) Expected increase or decrease in the amount of investment and/or increase in mutual fund inflows in the coming six months.

Responses to these 6 questions also form the basis for arriving at the Retail Investor Confidence Index, Corporate Confidence Index and the Advisor Confidence Index which are sub-indices of the Investment Confidence Index. At any given point, the indices can move from ‘0’ to ‘200’, with ‘0’ depicting the most negative outlook; ‘200’ depicting full and absolute confidence and ‘100’ showing a neutral position.


Mr. Christopher Spelman, Whole time Director and Chief Executive Officer of J.P. Morgan Asset Management said, “Inflation is clearly a concern among the Indian financial community. Enthusiasm in the Indian growth story has suffered this quarter and concerns over the global economy are resurfacing. However, it is encouraging that investors and advisors both believe that the Sensex will be higher in September then it currently is. Another point to note is that mutual funds remain the most preferred debt investment vehicle this quarter.”


Mr. Arun Jethmalani, Managing Director, ValueNotes commented, “The ICI has hit an all-time low this quarter and I believe, based on the data we have, this is primarily because inflation has started to really hurt sentiment across the board. Inflation and a consequent tightening of money supply could jeopardize the weak recovery in the global economy. Though investors are still bullish on the Indian economy, confidence levels have reduced.”


Key findings:

  • Confidence of India Inc (123.5) hits a new low this quarter. Besides, India Inc has been the most sceptical through the year.
  • Sentiment across all three categories of advisors drops from December 2010 readings. Bank and IFA confidence declines by 17.9 and 7.9 points respectively, while N/RD optimism is the most affected with a 21.4-point drop from last quarter.
  • The Indian GDP continues to provide a beacon of hope. All three categories, retail (25%), corporates (46%) and advisors (26%), continue to vote for GDP growth as the most positive economic indicator
  • Growth in corporate profits is a major positive for retail investors (15%) and advisors (26%), an opinion not shared by India, Inc (4%) themselves.
  • Majority of retail investors (56%) are satisfied with the Union Budget, with 9% “extremely satisfied”.
  • Chennai regains its September 2010 position of being the most confident city among investors and IFAs to stand at 151.9 points and 150.3 points, respectively.
  • Money market mutual funds are the most preferred debt instrument among 86% of corporate treasuries this quarter compared to 67% in December 2010.
  • Retail investors (63%) and advisors (68%) believe that the benchmark BSE Sensex will trade at higher than current levels in September 2011. Chennai (83%) is the most optimistic city followed by Bengaluru (81%), expecting the BSE Sensex to trade above current levels.
  • Chennai (83%) is the most optimistic city followed by Bengaluru (81%), expecting the BSE Sensex to trade above current levels. Interestingly, both the cities are so optimistic that none of the respondents from these cities expect the sensex to go below the current levels.
  • Investors and advisors were very optimistic in their predictions of the levels at which the BSE Sensex would trade in March 2011. A clear majority of investors (64%) and advisors (59%) expected the BSE Sensex to increase from the levels seen in September 2010 (19,500–20,500).


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Notes to Editors

About J.P. Morgan Asset Management

J.P. Morgan Asset Management is the brand name of J.P. Morgan Chase & Co’s asset management companies. J.P. Morgan Asset Management is a global asset management leader providing world-class investment solutions to clients. With US$1.298 trillion* in assets under management (as at 31 December 2010) and offices in 40 locations around the world, J.P. Morgan Asset Management offers global coverage with a strong local market presence, and leadership positions in most asset classes.

Commitment to India: JPMorgan Asset Management India Private Limited is the Indian arm of J.P. Morgan Asset Management.  It commenced its mutual fund business in India in April 2007, initially establishing its head office in Mumbai and subsequently opening satellite offices in Delhi, Kolkata, Chennai, Ahmedabad, Pune and Bengaluru. The firm distributes its funds through a network of banks, independent financial advisers and national distributors and currently has caters to investors in 141 cities across the country.

The firm is still in its infancy but has a very clear agenda of bringing the inherent strengths of J.P. Morgan Asset Management into the country, namely:

  • Excellence and continuity in investment management


  • A comprehensive and competitive range of products


  • Strong systems and processes


  • Exceptional risk management and controls


J.P. Morgan Asset Management manages assets on behalf of a broad range of retail and institutional investors in India.  It continues to expand its product range to meet the needs of its diverse client base, using the resources and expertise available from its global network.

*Note: Includes Investment Management and Private Banking

About ValueNotes

ValueNotes is a leading provider of business intelligence and research, with expertise across industries, particularly in financial services, media, engineering, healthcare, IT and the outsourcing industry. It operates at multiple points of the knowledge value chain to provide bespoke competitive intelligence, research, analytics, knowledge management and intelligence to a wide variety of users. ValueNotes’ customers include some of the leading global corporations, asset and wealth managers, management consulting firms, research publishers, PE and VC firms.

ValueNotes products and services are made available by different Business Units:

  • Custom Research: Provides a wide range of bespoke services in the areas of business and financial research & analysis. Assessing market opportunities, quantifying customer / brand / investor perception, facilitating entry into Indian markets, enabling competitive intelligence, providing dedicated research support teams and providing research-enabled written content are among the key services provided.


  • IndiaNotes.com (formerly ValueNotes.com): Is a search engine and financial portal that aggregates research, news, information and independent third-party articles/analyses, primarily about Indian financial and equity markets.


  • Sourcing Practice: Publishes proprietary market intelligence on the (services) outsourcing industry, with an emphasis on knowledge services or KPO. It has dedicated research practices for legal, publishing, education and research & analytics.


Risk Factors: Mutual funds and securities investments are subject to market risks and there is no assurance or guarantee against loss in the Scheme or that the Scheme’s objectives will be achieved. As with any investment in securities, the NAV of the Units issued under the Scheme can go up or down depending on various factors and forces affecting capital markets. Past performance of the Sponsor / AMC / Mutual Fund does not indicate the future performance of the Scheme. Mutual funds invest in securities which may not always be profitable and there can be no guarantee against loss resulting from investing in the Scheme. For scheme specific risk factors and other details please read the Scheme information Document (SID), Statement of Additional Information (SAI) and other scheme related document carefully before investing. Statutory details: Sponsor: JPMorgan Asset Management (Asia) Inc. Trustee: JPMorgan Mutual Fund India Private Limited, a company incorporated under the Companies Act, 1956. Asset Management Company: JPMorgan Asset Management India Private Limited, a company incorporated under the Companies Act, 1956. JPMorgan Mutual Fund has been established as a Trust under the Indian Trusts Act, 1882, by JPMorgan Asset Management (Asia) Inc., liability restricted to initial contribution of Rs.1 lakh. SID, SAI, Key Information Memorandum and application forms are available at Investor Service Centres and distributors.

The information contained herein is provided based on a public survey. Although we endeavour to ensure that the information is as current and accurate as possible, errors do occasionally occur. Therefore, we cannot guarantee the accuracy and adequacy of the information. Readers should, wherever possible, verify the information before acting on it.

This information is based on our assumptions and interpretations of the survey conducted. No part of our compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed herein. Be aware that our assumptions and interpretations are partially based on our observation of participants’ past behaviour. Do not base your actions on the material so provided. These observations will change if different assumptions and interpretations are applied for the purpose of preparing this survey report.

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