Contributed by: Sitaraman Iyer CFA
The Seventh 2015-16 annual Forecast Survey, an exercise conducted every year for IAIP’s flagship annual forecast event, results were released on 1st April 2015. The survey which every year attempts to capture the mood in the investment community, received an overwhelming response with over 414 respondents voicing their opinion. Respondents comprised the entire spectrum of the investment industry, ranging from Buy/Sell side analysts to Equity/Debt Fund managers to regulators and stock exchange participants. Survey results were presented by Jitendra Marchino, CFA, Chair – Programming and Continuing Education Committee.
Following were the key findings of the survey
- Over 67% of the respondents believed that Equities would be the most preferred asset class to hold. If 2014-15 survey results were anything to go by where 71% rightly predicted equities to do well, we are in for another bumper year in equities this financial year.
- Government bonds and corporate bonds were second, third most preferred asset class garnering 9%, 7% votes respectively.
- Nearly 2/3rd of the participants believed that India’s GDP growth rate would be between 7-8%.
- 44% of the respondents believed that CPI inflation would be between 5.5-6.0%. A similar percentage of people last year believed that CPI inflation would range between 7-8%. An inference that can be drawn is that respondents see India benefiting this year from the significant drop in crude oil prices
- Nearly 40% of the respondents expected G-sec yields to be in the 7.0-7.5 % range.
- 69% backed Brent crude oil to trade between USD 50-70 per barrel. We must add though that crude oil was one of the major misses of last year’s forecast survey. Last year almost 39% respondents believed Brent Crude would trade between USD 100-110
- About 35% of the respondents believed Gold would trade between USD 1100-1200 per ounce. About 28% felt gold would trade between USD 1000 and USD 1100.
- For the second year running majority of the participants expected rupee to trade in a tight range of INR 60-62 per USD
- 47% of the participants expected sensex to trade between 32000-36000 at the end of the FY15-16. This would translate to a return of 14.5%-28.5% based on sensex’s March 31st 2015 closing price of 27957.
- On the qualitative side of the survey, we asked participants to respond on what would be the biggest concern for economic growth , factors that would drive equities this year and key initiatives that the government could achieve within the next 12 months
- Biggest concern for economic growth – Nearly 36% expected Government policies and initiatives to the single most important factor for the economy. 23%,20% of the participants expected Global low growth and deflation, Domestic Politics and corruption to also be key factors.
- Factors that would drive equities – Here again over 50% of the participants believed Government policies and economic reforms to single most important driver for equities. Other prominent drivers that garnered 23%,11%,6% of the votes included Corporate results/profits, Global liquidity and Global equity markets respectively
- Initiatives that the government could achieve within the next 12 months – Nearly 62% of the participants believed that the government would be able to revive GDP growth for the following year. ~45% of the participants believed that Make in India, Lower inflation, Divestments and Swaach Bharat Campaign were initiatives that could also be achieved over the next 12 months. The local defense manufacturing and smart city initiative found very little takers.