Mumbai: Rising inflation and a possible interest rate hike are key concerns for investors in India, with many willing to reallocate their portfolio to hedge from such risks, a survey by Dutch financial services firm ING said.
A majority of about 83 per cent investors expect
inflation to rise in the near term, while 64 per cent of those
surveyed believe domestic interest rates will go up in the
While, almost 40 per cent of the respondents have decided
to look at other options and redistribute their portfolio
others are still indecisive.
"Forty-two per cent of Indian investors have not decided
what to do to beat inflation, but 40 per cent will reallocate
their investment portfolio and/or invest more to beat
Although investors were optimistic about the stock
market, stocks seemed to have lost their appeal when it came
to battling inflation, ING said.
"Popularity of mutual/managed funds and unit trusts as
tools to beat inflation has also declined. Most investors in
India appear to prefer investing in property and gold instead
to hedge against inflation," it added.
Moreover the study highlighted that Indian investors felt
their household financial situation had sunk 19 per cent in
the third quarter of 2009 from 76 per cent in the second
ING said that investors had become cautious and realistic
as only 47 per cent expect India to meet or exceed its GDP
target of 7 per cent this fiscal, even though the country
remained the most optimistic market in the region.
Despite all this, Indians continue to remain bullish
about the local stock market and expect sectors like energy,
technology, telecom and infrastructure to lead the growth when
the global economy bounces back, the survey said.
Property market also figured in the survey with many
saying that "they also remain bullish about the local property
market and expect residential real estate prices to further
rise by 8.5 per cent in Q4 2009".
Among other things there has been rise in awareness about
financial planning with almost 65 per cent investors in India
in favour of doing their own long-term financial planning
instead of relying on advisors.
"This contrasts with developed Asian markets like
Australia where investors pay a fee of between USD 1,000-5,000
to advisors seeking their help to make a financial plan for
themselves. This highlights a huge need and an opportunity for
the development of financial planners in India," ING
Investment Management India Managing Director and CEO Navin