Title of the Research

Impact of Interest Rate on Investors

Rationale of the study

Investment: Different people invest with different strategies
or no-strategies. This article describes in more details different behavioral patterns of investors of four distinct types. When trying to make observations of types of investor behavior, this QuaSyLaTic invariably uses his own investment philosophy and strategies as reference for making observations. Hence the set of characteristics and attributes on what constitute a focused and disciplined investor to create wealth is first described. Characteristics and Attributes of Focused & Disciplined Investor Taking investment as a serious study, research and monitoring work not a casual game with hear-say and hope for the best. Understand investment is a matter of timing, not blindly trusting in long term Invest in market instruments that have potential to bring the best return, not using diversification to mix up good apples with bad fruits. Study risk / reward carefully and prepare to exist if faced with high uncertainty to protect acquired gain, or preserve capitals or cut loss. Make research on future scenarios of investment performance with monitoring to validate the assumptions and do not deal with uncertainty or unknown. Take care of every dollar of investment to ensure its value creation.
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With the above as criteria, four distinct types of investors are observed. TYPE 1: Investors who subscribe to the above stated strategies or approach but do not have the interest to study and take up the discipline. Or they do not have any preference for any particular strategy or approach. They prefer to let consultant cum investor handle everything and their fund, as long as they are being kept informed. Most important of all, they understand the nature of investment risks and blame no one. TYPE 2: Investors who also let consultant cum investor handle everything and their fund, but they want to learn the above described strategies and approach, with the views that one day they can handle on their own investment. They also understand the nature of investment risks. TYPE 3: Investors, who has their own strategies and willing to put in hard work to monitor and validate their assumptions in order to grow their wealth. They may have different strategies or approach from the above. This QuaSyLaTic will network with these people for networking and exchange of ideas. TYPE 4: Investors who do not subscribe to the above stated strategies and approach. Usually they do not do serious research and monitoring work. They do not show consistency in the investment decision. They use general investment ideas as strategies, with hope for the best. They may not have the stomach for investment losses. They dont cut loss and hope for the best into the future.
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Small Investors: Traditional economic analysis of markets

with asymmetric information assumes that the uninformed agents account for the incentives of the informed agents to distort information. We analyze whether investors in the stock market are able to account for such incentives. Security analysts provide investors with information about investment opportunities by issuing buy and sell recommendations. The recommendations are likely to be biased upwards, in particular if an analyst is affiliated with an investment bank that is a recent underwriter of the recommended firm. Using the trading data from the Stock Exchange, we find that large (institutional) investors generate abnormal volumes of buyer-initiated trades after a positive recommendation only if the analyst is unaffiliated. Small traders exert abnormal buy pressure after all positive recommendations, including those of affiliated analysts. The trading behavior of small analysts implies losses, since stocks recommended by affiliated analysts perform significantly worse than those recommended by unaffiliated analysts. Our results imply that larger investors account for the distortions of recommendations, but small (individual) investors do not. Increased competition among analysts does not remedy the informational distortion or investor reactions.

Objectives
Is the interest rate fluctuation really dampening the spirit of small investors i.e.

changes

in

ration

of

investment

and

consumption.

Research Methodology
I have used both primary data and secondary data for my project. The secondary data is used to collect information on investment options for the Indian investors. These included product brochures of various schemes like post office schemes, RBI bonds, ICICI bonds, bank deposits, insurance policies etc. For the collection of primary data a questionnaire is prepared for studying the mind of general investor. This survey will be done using stratified random sampling. These findings of the same are presented in the findings portion of the report. Effect of interest rate change will be studied based on the following points: More consumption than saving. Capital market becoming attractive. Tax benefits available on investment. Effect of these changes on senior citizens. Expected disposable income in the hands of the investors. Since, list of investment avenues last long, I have restricted my scope to few most common governmental and non-governmental investment options Non-governmental options ICICI infrastructure bonds RBI relief bonds IDBI bonds Governmental options National saving certificates Provident fund LIC
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Fixed deposits This study includes the interest rate changes in above options and respective change in investment flows to these options. Reasons in the mind of small investors while deciding the investment portfolio are also a topic of study.

Limitation of the Project

At the time of s tudy I For may me have i ts to face cer tain to problems rela ted to time due to the high number of inves tmen t policies. very hard communicate with policy makers as they are far from my approach. Thus the source of informati on for me is Internet from where is colle cting the informati on about the proj ect and communicate wi th many small inves tors and policy agents. The limi tati ons to the research design and time frame may be another factor limi ting the study because key personnel may not find time to respond or may not like to discl ose their vision regarding the activities in which they are involved.

QUESTIONNAIRE
1. Do you invest your money or savings somewhere? If yes then where If no then why . . . 2. Which kind of investment option you prefer governmental or non-governmental? Why? Govt. Non-Govt. 3. Which investment scheme is best from your point of view please ranking them? Why?

ICICI infrastructure bonds

National Saving Certificates RBI Relief Bonds Tax saving Bonds

IDBI Bonds Fixed Deposits LIC Provident Funds Others (Name them)

Why 4. How much you invest every month? Less than 1000Rs. 5000-10000Rs. 10000-50000Rs 1000-5000Rs.

More than 50000Rs

5. What you think is better save money? Saving cash Purchasing Property

Purchasing investment policies/bonds Investing money in share market Why?

6. Is investment is more consumption or expenditure than saving? Comment. 7. Is share market is a good way to do investment? Comment.

8. Is

there

is

some

tax

benefits

available

on

investment, explain them? 9. Whom do you consult before doing investment? Financial Reports Financial Advisors Self Bank/policy agents Investment consultants

Why you do so? Comment. 10.Conclude the term investment and its benefits in 60 words.