The Indian equity market witnessed a see-saw motion in the first few months of 2011, but a significant number of Indian investors believe it will outperform global indices in 2011.
According to a Franklin Templeton Global Investor Sentiment survey, 61% of the Indian investors surveyed think the domestic bourses will do better this year than global indices.
Moreover, 82% of respondent are optimistic that the Indian stock market will do better than the rest of the world over the next 10 years.
In the first three months of 2011, the Indian stock market market has fluctuated on concerns of surging global crude oil prices and inflation at home. Last year, it gave a returns of about 15% to investors.
Enthusiasm for global markets is also on the rise, with half of the respondents planning to invest outside their home country in 2011.
"The survey clearly shows the growing optimism in India about the state of the economy and growth prospects. Despite this confidence in local markets, it is interesting to note that many people are considering increasing their global exposure over the coming years. We believe this is a positive trend as it helps Indian investors diversify their portfolio across countries and asset classes," Franklin Templeton India President Harshendu Bindal said.
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Out of over 13,000 people surveyed in 12 countries, 60% of global respondents think their own country's stock market will increase in 2011. And 33% believe it will perform better compared with the rest of the world. This indicates the growing preference to invest outside their domestic markets in the coming years.
Globally, 34% investors currently invest outside of their domestic market, while that number jumps up to 50% when looking at 2011.
"With an improved global economic outlook, investors are increasingly looking worldwide for investment opportunities. A diversified portfolio today is no longer just a mix of asset classes but also a mix of geographies," Franklin Templeton Investments President and CEO Greg Johnson said.
When it come to long term investment, Indian respondents (53%) believe that mutual funds are best suited to meet long-term goals, such as retirement and children's education.
Indian respondents believe patience and timing are the most important factors for successful investing in stock markets.
The survey found stark regional differences in opinion on whether the best investment opportunities exist in emerging versus developed markets. A majority of those in Asia (8%) and Latin America (61%) believe the best investment opportunities over the next 10 years will be found in emerging markets.
Europeans are almost evenly split with 53% looking to emerging markets, while in the US and Canada, only 37% opined that emerging markets are going to provide the best returns in the decade ahead.