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Cautious uptick in investor confidence

business Updated: Apr 19, 2009 22:06 IST
Devraj Uchil

Investor confidence seems to be returning to markets, slowly but steadily. With the economy showing some signs of

rebounding from its slowdown, buyers may be back, say analyst reports.

According to a report by CRISIL FundServices, mutual funds’ equity assets recorded high growth in March 2009 on account of share rebound in domestic equity markets.

“Equity returns in March 2009 were driven by a sharp rise in metals (up 24 per cent), oil and gas (up 16 per cent) and
automobile segments (up 14 per cent),” said Krishnan Sitaraman, director, CRISIL FundServices.

A Merrill Lynch Survey of Fund Managers for April found that global optimism about growth reached its highest level since early 2004. A net 26 per cent of 214 respondents surveyed said the global economy would strengthen in the next 12 months, up sharply from a negative 24 per cent in January.

“Despite early signs of stability, the revival in the economic activity will take some time as the confidence level still remains low,” said Kaushal Sampat, chief operating officer, Dun & Bradstreet India. Dun & Bradstreet India expects industrial growth to remain subdued till the first quarter of 2009-10.

Though experts are unanimous that an economic recovery is inevitable, downside risks to demand like employment uncertainty, political uncertainties and declining exports are likely to play spoilsport.

Asset allocators are turning towards cyclical sectors, such as technology, at a global level. “Improving sentiment on financials has decisively removed the logjam on sector rotation,” said Gary Baker, co-head of international investment strategy at Banc of America Securities-Merrill Lynch Research. However, Asset allocators are still underweight on equities.