G.L.

BAJAJ INSTITUTE OF
TECHNOLOGY AND MANAGEMENT
Approved by A.I.C.T.E. & Affiliated to Dr. A.P.J. Abdul Kalam Technical
University (Plot no.2, K.P-3, Greater Noida, Distt. G.B. Nagar, U.P-201306)

RESEARCH PROJECT REPORT ON

“The study on factors affecting the investors decision in
investing in equity shares in India”
Submitted for the partial fulfillment of the award of degree
of Masters of Business Adinistration

Under the guidance of Submitted By

Mr. Sarvendu Tiwari Tulika Pant
Assistant Professor 1619270056
Department of Management Studies 2016-18
1
 G. L. BAJAJ
INSTITUTE OF TECHNOLOGY &
MANAGEMENT
GLBITM Approved by A.I.C.T.E., & Affiliated to Dr. A.P.J. Abdul Kalam
Technical University

Dated: 05th April 2018

CERTIFICATE

This is to certify that ………………………………………..has undertaken this Research

project work entitled “…………… ………………… … … … ………………………..” for
the partial fulfillment of the award of Masters of Business Administration degree
from Dr. A P J Abdul Kalam Technical University Lucknow (U. P.).

As per best of my knowledge this Research project work is an original piece of work
and has not been submitted or published elsewhere.

I wish him/ her all the best for his/her bright future ahead.

DR. DEEPA GUPTA

HOD-HEAD MBA

Department of Management Studies

2
 G. L. BAJAJ
INSTITUTE OF TECHNOLOGY & MANAGEMENT
GLBITMApproved by A.I.C.T.E., & Affiliated to Dr. A.P.J. Abdul Kalam Technical University

Dated: 05th April 2018

CERTIFICATE
This is to certify that ………………………………………..has undertaken this Research
project work entitled “…………… ………………… … … … ………………………” for
the partial fulfillment of the award of Masters of Business Administration degree
from Dr. A P J Abdul Kalam Technical University Lucknow (U. P.).

As per best of my knowledge this Research project work is an original piece of work
and has not been submitted or published elsewhere.

I wish him/ her all the best for his/her bright future ahead.

Project Supervisor

Mr. Sarvendu Tiwari

Department of Management Studies

3
 DECLARATION

I hereby declare that the dissertation titled “Study on the factors affecting the investors decision

in investing in equity shares in India” Submitted for the Award of Master of Business

Administration (MBA) at Dr. A.P.J. Abdul Kalam Technical University, Lucknow is my

original work and the dissertation has not formed the basis for the award of any degree, associate

ship, fellowship or any other.

The material borrowed from similar titles other sources and incorporated in the dissertation has

been duly acknowledged.

I understand that I myself could be held responsible and accountable for plagiarism, if any,

detected later on.

The research papers published based on the research conducted out of the course of the study are

also based on the study and not borrowed from other sources.

DATE: SIGNATURE OF THE STUDENT:

ROLL NO. 1619270056

4
 ACKNOWLEDGEMENT

I am thankful to Dr. A.P.J. Abdul Kalam Technical University, Lucknow for giving me an
opportunity to pursue MBA.

I would like to thank to Dean sir Dr. Mukul Gupta and HOD mam Dr. Deepa Gupta for their
continuous support and guidance.

I would also like to thank my guide and my perpetual source of inspiration Mr. Sarvendu
Tiwari for his valuable mentoring and inputs. Her constant support and invaluable advice has
always guided me towards the right direction. She helped me to know various phenomenon’s
related to the research practices which further gave an impetus to channelize my study in an
appropriate way. I sincerely thank her for her treasured guidance without which this dissertation
would have never been possible.

I won’t miss this opportunity to give credit to the sources both primary & secondary for adding
valuable inputs to my dissertation. I also thank the administrative staff, the library staff & the
computer lab staff of Dr. A.P.J. Abdul Kalam Technical University, Lucknow for providing
reference material required in my research work.

Lastly, I express my deep sense of gratitude to the almighty, my family, friends & colleagues
who have directly and indirectly helped me in this dissertation.

--------------------------

Signature of Student

5
 PREFACE

Many people consider investing is a daunting activity. They are bewildered by the profusion and

proliferation of investment alternatives, rattled by the fluctuations in financial prices,

overwhelmed by the presence of mighty institutional investors, confused by exotic instruments

and complicated investment strategies, confused by the intricacies of the tax system, exasperated

by the fiancial scams that periodically rock market.

Notwithstanding these concerns, investing can be fairly manageable, rewarding, and enjoyable

experience, if we adhere to certain principles and guidelines. By this we can expect and hope to

maximize our returns by diversifying our investments into suitable portfolios. For this, each and

every investor has to be well educated about economy, investment options, market conditions

and its consequences.

The main objective is to select the suitable investment criteria like if we want better returns, or

consider risk factors or liquidity factors or safety of principal. By this we can set our portfolio

objectives and construct our portfolio according to our needs and manage it with respect to the

market conditions and the securities fairing in the market.

6
 TABLE OF CONTENTS

S.no Contents Page no.

1. Introduction 8-50

2. Literature Review 51-55

3. Research Methodology 56-59

4. Data Analysis and Interpretation 60-85

5. Findings & Suggestions 86-90

6. Summary & Conclusion 91-93

7. Annexure : Bibliography 94-97

Copy of Questionnaire 98-104

7
 CHAPTER-1
INTRODUCTION

8
Study on the Factors affecting Investors Decision in investing in
equity shares in India

1.1 INTRODUCTION:

The main focus of this research report is to identify the factors affecting or influencing the

investors decision in investing in equity shares in India. Here in this research report I have

targeted the whole population of India. Data was collected using questionnaires and subsequently

analyzed using descriptive statistics and factor analysis techniques. Majority of India would

prefer investing in other asset classes such as real estate. Only a small percentage (28%) of the

target population had invested in the stock market. The results indicated that decisions to invest

in equity stocks are influenced by economic and behavioral factors. The key economic factors

influencing decisions to invest in equity stocks were found to be expected dividends, capital

appreciation and affordability of shares. Among behavioral factors were herd behavior, depicted

by decision to invest based on popular opinion or shares in high demand and friends and co-

workers recommendation, and overconfidence depicted in the respondents belief that they are

better than others; forming the basis of self attribution bias.

Although finance has been studied for several decades, behavioral finance which considers the

human behaviors in finance is a quite new area. Behavioral finance theories, which are based on

the psychology, attempt to understand how emotions and cognitive errors influence individual

investors’ behavior. The individual investor plays a vital role in the stock market because of their

9
good savings. The regulators of the stock market cannot ignore the behavior of individual

investors. Many individuals find investments to be fascinating because they can participate in the

decision making process and see the results of their choice. Not all investments will be

profitable, as investors’ whims not always result in fruitful returns. Recent studies on the

behavior of individual investors’ have shown that investors do not act in a rational manner.

Several behavioral factors influence their investment decisions in stock markets.

Behavioural finance research is rather new. Within behavioural finance, it is supposed that

information configuration and the features of capital market participants scientifically influence

individuals’ decisions regarding investments as well as market results. Investors hardly act

reasonably while taking investment decisions. Investors have definite weaknesses like cognitive

and poignant which take an important role in taking investment decision of individuals. They

have behavioural biases in the event of taking decision while investing. They just react to the

available information with them and act accordingly to the financial environment. Decisions

relating to investment also depend on the different type of investors, family back ground, age,

occupation, sex, income, marital status, risk tolerance capacity, education, demographic

environment and advice of financial expert and advisor.

Notwithstanding, the entire wherewithal and infrastructure, investors espouse some avenues after

analyzing different factors which are influenced by environment. Lot of factors influence

investors in framing their perceptions on various investment options. Financial market has a

10
considerable role to take part in the economic development of the country, therefore, the

mobilization and provision of savings is very critical in the growth process. Growth is possible

when savings are channelized into productive investments which in turn boost the competence of

the economy to manufacture goods and services, which have bearing on the standard of living of

the masses. Hence, capital market will be successful in increasing the economic progress if it can

persuade the flow of savings and investment through the purchase of Government and private

securities and others with the aim of financing the implementation of projects especially of

capital nature.

The decision making process is a cognitive process which results in the selection of a course of

action among several alternatives. In this process, the emphasis is on thinking things through and

also on weighing the outcomes and alternatives before arriving at a final decision. Every

decision-making process produces a final choice. The output can be an action or an opinion of

choice. Investment decisions made today often are critical for financial security in later life, due

to the potential for large financial loss and the high costs of revising or recovering from a

wrongful investment decision. Most of the equity investors do not have the sufficient knowledge

of basic economic concepts required to make investment decisions. Thus, there is a need to

conduct research on factors, other than knowledge, that could influence investment decisions.

Investors are the heart of stock exchanges in any country. Without them it is impossible to

imagine trading of securities in the stock markets. Perception, a psychological factor, influences

11
the behavior of people whether it is in home or work place or businesses. With regard to stock

markets investor perceptions play a significant role in it. The choice of their investment depends

on their perception about stock market activities, brokers and investment avenues available. A

successful investor should understand the factors affecting the stock market operations.

Therefore it is important for the investors to understand the influences of various factors on

investment decisions. The main purpose of investors engaged in investment is to both maximize

their income and minimize their expenses. In the literature of finance, individuals are considered

to behave rationally when pursuing their own benefits. In this context, individuals spare some of

their income for expenditure and some for saving. Within this framework, individuals route their

savings into investment. Probability of profit and loss in the investment process makes decision-

making difficult for individuals. In this scope, the rational use of savings is determined by how

quickly and efficiently information about investment reaches the investor, the income the

individual will get and the level of risk. Likewise, proper pricing cannot be realized on the

occasions that the information accuracy in the markets is not reflected to the investors

completely and transparent.

12
Investor’s Buying decision Process:

Investing in shares is like investing into ownership of a company, which no other investment

instrument can give. Unlike any other investment instrument that either gives fixed income or

meager returns and no ownership in the same, equity investment gives an opportunity to become

a part of the company ownership and also gives regular returns on investment as dividend

income or through appreciation in share price. Investing in equity also allows investor to enjoy

the flexibility of staying invested as long as he/she wish to, take advantage of the price

movements and thus utilize the liquidity.

Step 1: Investible Surplus: Generally, an individual earns more than he/she can spend. The

amount of money an individual is able or willing to keep aside for investments is referred as

surplus investible. The investible surplus plays a vital role in selecting from various asset classes

as the minimum investment amounts differ and so do the risks and returns.

Step 2: Sources of Investment Information search: At this stage, investor wants to find out the

information about the financial products, return, risk involved and tax-benefit. Investor collects

the information from different sources like Personal sources such as Family, friends, co-workers,

and Public sources such as mass media and credit rating agencies.

Step 3: Evaluation of stocks: After collecting the information, investors arrive at some

conclusion about which companies’ stock can be purchased. At this stage, investor compares

different stocks on set parameters, which he/she thinks required. The evaluation process varies

13
from investor to investor. 40 items have been identified which influence the stock purchasing

behavior of the investor. These attributes were categorized under five heads; namely, Personal &

Financial needs attributes, Firm-Image of company attributes, Accounting Information of the

company attributes, Neutral Information (general information about the company) attributes and

Advocate Recommendation attributes

Eleven items correspond to Personal & financial needs; next eleven items correspond to Firm-

Image; next seven items correspond to Accounting information; next seven items correspond to

Neutral information; and the last four items correspond to Advocate recommendation.

Step 4: Choosing a Stock: After evaluating the stock based on various factors the investor

chooses the one.

Step 5: Purchasing a Stock: At this stage investor purchases the most preferred stock.

Savings form an important part of the economy of any nation. With the savings invested

in various options available to the people, the money acts as the driver for growth of the country.

Indian financial scene too presents a plethora of avenues to the investors. Though certainly not

the best or deepest of markets in the world, it has reasonable options for an ordinary man to

invest his savings.

One needs to invest and earn return on their idle resources and generate a specified sum

of money for a specific goal in life and make a provision for an uncertain future. One of the

14
important reasons why one needs to invest wisely is to meet the cost of inflation. Inflation is the

rate at which the cost of living increases.

The cost of living is simply what it cost to buy the goods and services you need to live.

Inflation causes money to lose value because it will not buy the same amount of a good or

service in the future as it does now or did in the past. The sooner one starts investing the better.

By investing early you allow your investments more time to grow, whereby the concept of

compounding increases your income, by accumulating the principal and the interest or dividend

earned on it, year after year.

The three golden rules for all investors are:

· Invest early

· Invest regularly

· Invest for long term and not for short term

15
 1.2 NEED FOR THE STUDY

Stock market has been subjected to speculations and inefficiencies, which are beached to

the rationality of the investor. Traditional finance theory is based on the two assumptions.

Firstly, investors’ make rational decisions; and secondly investors are unbiased in their

predictions about future returns of the stock. However financial economist have now realized

that the long held assumptions of traditional finance theory are wrong and found that investors

can be irrational and make predictable errors about the return on investment on their investments.

This analysis on Individual Investors’ Behaviour is an attempt to know the profile of the investor

and also know the characteristics of the investors so as to know their preference with respect to

their investments. The study also tries to unravel the influence of demographic factors like age

on risk tolerance level of the investor.

1.3 VALUE ADDITION

This analysis will help to strengthen investor intimacy. This analysis will also throw light

on various investment avenues available in India that will help in many ways like. The

expectations of different types of investors regarding particular service requirements can be

identified.

 The common problem areas faced by the investors can be understood.

16
  It also enhances new services initiatives.

 This study will help in gaining a better understanding of what an investor looks for in an

investment option.

 It can be used by the financial sector in designing better financial instrument customized

to suit the needs of the investor.

 It will also help the agents and brokers in marketing the existing financial instruments.

 It will provide knowledge to the investors about the various financial services provided

by the company to their investors.

 It will also help the company to understand what is the requirement and expectations of

different categories of investors.

This analysis will be originated in order to empower the investors with detailed research

on various investments avenues available in India. The awareness lever of the investors about the

various investment options and what is the perception of the investors with regard to the

investments they want to make.

1.4 LIMITATIONS OF THE STUDY

This analysis is based upon investors’ behaviour for investment preferences during

normal time vis-à-vis recessionary period. This analysis would be focusing on the information

from the investors about their knowledge, perception and behaviour on different financial

products.

17
The various limitations of the study are:

 The total number of financial instruments in the market is so large that it needs a lot of

resources to analyze them all. There are various companies providing these financial

instruments to the public. Handling and analyzing such a varied and diversified data

needs a lot of time and resources.

 As the analysis is based on primary as well as secondary data, possibility of unauthorized

information cannot be avoided.

 Reluctance of the people to provide complete information about them can affect the

validity of the responses.

 The lack of knowledge of customers about the financial instruments can be a major

limitation.

 The information can be biased due to use of questionnaire.

1.5 INDUSTRY PROFILE

Indian financial industry is considered as one of the strongest financial sectors among the world

markets. Many industry experts may give various reasons for such Indian financial industry

reputation, but there is only one answer which no one can deny, is the effective control and

governance of the country’s supreme monetary authority the “RESERVE BANK OF INDIA”

(RBI).

18
 Financial sector in India has experienced a better environment to grow with the presence

of higher competition. The financial system in India is regulated by independent regulators in the

field of banking, insurance, mortgage and capital market. Government of India plays a

significant role in controlling the financial market in India.

Ministry of Finance, Government of India controls the financial sector in India. Every

year the finance ministry presents the annual budget on 28th February. The Reserve Bank of

India is an apex institution in controlling banking system in the country. Its monetary policy acts

as a major weapon in India's financial market.

Various governing bodies in financial sector:

1. RBI - Reserve Bank of India is the supreme authority and regulatory body for all the

monetary transactions in India. RBI is the regulatory body for various Banking and Non

Banking financial institutions in India.

2. SEBI - Securities and Exchange Board of India is one of the regulatory authorities for

India's capital market.

3. IRDA – Insurance regulatory and development authority in India regulates all the

insurance companies in India.

4. AMFI – Association of mutual funds in India regulates all the mutual fund companies in

India.

5. FIPB – Foreign investments promotion board regulates all the foreign direct investments

made in India.

19
  Ministry of housing is planning to establish a real estate regulatory and governing

body by the end of financial year 2010 - 11.

 Investments in gold is governed by the world gold council, in India we do not

have any regulatory authority for investments in gold.

 Ministry of Finance, Government of India has a control over all the financial

bodies in India.

 Government securities, Public Provident Fund (PPF), National Savings Certificate

(NSC), Post Office Savings are all under the control of the central government.

Investment are normally categorized using the risk involved in it, risk is dependent on various

factors like the past performance, its governing body, involvement of the government etc., in this

scenario Indian investments are classified in to 3 categories based on risk. They are

1. Low Risk/ No Risk Investments.

2. Medium Risk Investments.

3. High Risk Investments.

Apart from these, there are traditional investment avenues and emerging investment

avenues.

Various Investment avenues available in India

1. Safe/Low Risk Avenues:

 Savings Account

20
 Bank Fixed Deposits.

 Public Provident fund.

 National savings certificates.

 Post office savings.

 Government Securities.

2. Moderate Risk Avenues:

 Mutual Funds.

 Life Insurance.

 Debentures.

 Bonds.

3. High Risk Avenues:

 Equity Share Market.

 Commodity Market.

 FOREX Market.

4. Traditional Avenues:

 Real Estate (property).

 Gold/Silver.

 Chit Funds.

21
 5. Emerging Avenues:

 Virtual Real Estate.

 Hedge Funds/Private Equity Investments.

 Art and Passion.

DESCRIPTION ON VARIOUS INVESTMENT AVENUES

 SAVINGS ACCOUNT

As the name denotes, this account is perfect for parking your temporary savings. These

accounts are one of the most popular deposits for individual accounts. These accounts provide

cheque facility and a lot of flexibility for deposits and withdrawal of funds from the account.

Most of the banks have rules for the maximum number of withdrawals in a period and the

22
maximum amount of withdrawal, but no bank enforces these. However, banks have every right

to enforce such boundaries if it is felt that the account is being misused as a current account. At

present the interest on these accounts is regulated by Reserve Bank of India. Presently Indian

banks are offering 3.50% p.a. interest rate on such deposits.

This account gives the customer a nominal rate of interest and he can withdraw money as

and when the need arises. The position of account is depicted in a small book known as 'Pass

Book'. Such accounts should be treated as a temporary parking area because the rate of interest is

much less than Fixed Deposits. As soon as one’s savings accumulate to an amount which he can

spare for a certain period of time, shift this money to Fixed Deposit. The returns on the money

kept in Savings Bank account will be less but the freedom to withdraw is the highest.

 FIXED DEPOSITS/ TERM DEPOSITS

The term "fixed" in Fixed Deposits denotes the period of maturity or tenor. Fixed

Deposit, therefore, pre plans a length of time for which the depositor decides to keep the money

with the Bank and the rate of interest payable to the depositor is decided by this tenure. Rate of

interest differs from Bank to Bank. Normally, the rate is highest for deposits for 3-5 years. This,

however, does not mean that the depositor loses all his rights over the money for the duration of

23
the tenor decided. Deposits can be withdrawn before the period is over. However, the amount of

interest payable to the depositor, in such cases goes down.

Every Banks offer fixed deposits schemes with a wide range of tenures for periods from 7

days to 10 years. Therefore, the depositors are supposed to continue such Fixed Deposits for the

duration of time for which the depositor decides to keep the money with the bank. However, in

case of need, the depositor can ask for closing the fixed deposit in advance by paying a penalty.

Soon some banks have even introduced variable interest fixed deposits. The rate of interest in

such deposits will keep on varying with the prevalent market rates i.e. it will go up if market

interest rate goes and it will come down if the market rates fall.

Tax deduction: Banks should deduct tax at source on interest paid in excess of Rs. 5000 per

annum to any depositor. This is not per deposit but per individual. Therefore if an individual has

5 deposits and the aggregate interest earned on these is Rs. 7000 though in each individual

deposit, interest should not exceed Rs. 2000, tax must be deducted at source.

 PUBLIC PROVIDENT FUND (PPF)

PPF is a 30 year old constitutional plan of the Central Government happening with the

objective of providing old age profits security to the unorganized division workers and self

24
employed persons. Currently, there are almost 30 lakhs PPF account holders in India across

banks and post offices.

Eligibility: Any individual salaried or non-salaried can open a PPF account. He may also pledge

on behalf of a minor, HUF, AOP and BOI. Even NRIs can open PPF account. A person can

contain only one PPF account. Also two adults cannot open a combined PPF account. The

collective annual payment by an individual on account of himself his minor child and

HUF/AOP/BOI (of which individual is member) cannot exceed Rs.70, 000 or else the excess

amount will be returned without any interest.

Subscription: The yearly contribution to PPF account ranges from a least of Rs.500 to a

maximum of Rs.70, 000 payable in multiple of Rs.5 either in lump sum or in convenient

installments, not exceeding 12 in a year.

Penalty in case of non-subscription: The account will happen to obsolete if the required

minimum of Rs.500 is not deposited in any year. The amount before now deposited will continue

to earn interest but with no facility of taking loan or making withdrawals. The account can be

regularized by depositing for each year of default, arrears of Rs.500 along with penalty of

Rs.100.

25
Where to open: A PPF account can be opened at any branch of State Bank of India or its

subsidiaries or in few national banks or in post offices. On opening of account a pass book will

be issued wherein all amounts of deposits, withdrawals, loans and repayment together with

interest due shall be entered. The account can also be transferred to any bank or post office in

India.

Interest rate: Deposits in the account earn interest at the rate notify by the Central Govt from

time to time. Interest is designed on the lowest balance among the fifth day and last day of the

calendar month and is attributed to the account on 31st March every year. So to derive the

maximum, the deposits should be made between 1st and 5th day of the month, as it also enables

you to earn interest on your Savings Bank A/c for the previous month.

Tenure: Even though PPF is 15 year scheme but the effectual period works out to 16 years i.e.

the year of opening the account and adding 15 years to it. The sum made in the 16th financial

year will not earn any interest but one can take advantage of the tax rebate.

Withdrawal: The investor is allowable to make one removal every year beginning from the

seventh financial year of an amount not more than 50% of the balance at the end of the fourth

year or the financial year immediately preceding the withdrawal, whichever is less. This facility

of making partial withdrawals provide liquidity and the withdrawn amount can be used for any

purpose.

26
  NATIONAL SAVINGS CERTIFICATE (NSC)

National Savings Certificate (NSC) is a fixed interest, long term instrument for

investment. NSCs are issued by the Department of Post, Government of India. Since they are

backed by the Government of India, NSCs are a practically risk free avenue of investment. They

can be bought from authorized post offices. NSCs have a maturity of 6 years. They offer a rate of

return of 8% per annum. This interest is calculated every six months, and is merged with the

principal. That is, the interest is reinvested, and is paid along with the principal at the time of

maturity. For every Rs. 100 invested, you receive Rs. 160.10 at maturity.

NSCs qualify for investment under Section 80C of the Income Tax Act (IT Act). Even

the interest earned every year qualifies under Sec 80C. This means that investments in NSCs and

the interest earned on it every year, up to Rs. 1 Lakh, are deductible from the income of the

investor. There is no tax deducted at source (TDS).

Features of NSC

• Minimum investment Rs. 500/- No maximum limit.

• Rate of interest 8% compounded half yearly.

• Rs. 1000/- grow to Rs. 1601/- in six years.

• Two adults, Individuals, and minor through guardian can purchase.

27
 • Companies, Trusts, Societies and any other Institutions not eligible to purchase.

• Non-resident Indian/HUF cannot purchase.

• No pre-mature encashment.

 POST OFFICE SAVINGS

There are various investment schemes available in post offices, like KVP (Kisan Vikas

Patra), MIS (Monthly Income Scheme) and various others. All these schemes are completely

risk-free, and you do not need to have large sum of money to start investing in these post office

schemes. Some schemes offer Tax-saving benefits and some gives tax-free returns. So you need

to find out some scheme as per your requirements.

These are some of the safe and secure investmen that you can opt for. Though the interest rates

are not so high, but still you must invest some part of your money into any of these investment

instruments. It is your hard-earned money, so better play safe and invests some part in secure

funds also.

 GOVERNMENT SECURITIES (G-secs)

28
 Government securities (G-secs) are supreme securities which are issued by the Reserve

Bank of India on behalf of Government of India in lieu of the Central Government's market

borrowing program.

The term Government Securities includes:

• Central Government Securities.

• State Government Securities

• Treasury bills

The Central Government borrows funds to finance its 'fiscal deficit'. The market

borrowing of the Central Government is increased through the issue of dated securities and 364

days treasury bills either by auction or by floatation of loans. In addition to the above, treasury

bills of 91 days are issued for managing the temporary cash mismatches of the Government.

These do not form part of the borrowing program of the Central Government.

Features

• Issued at face value

• No default risk as the securities carry sovereign guarantee.

• Ample liquidity as the investor can sell the security in the secondary market

• Interest payment on a half yearly basis on face value

29
 • No tax deducted at source

• Can be held in Demat form.

• Redeemed at face value on maturity

• Maturity ranges from of 2-30 years.

• Securities qualify as SLR investments (unless otherwise stated).

Benefits of Investing in Government Securities

• No tax deducted at source

• Additional Income Tax benefit u/s 80L of the Income Tax Act for Individuals

• Qualifies for SLR purpose

• Zero default risk being sovereign paper

• Highly liquid.

• Transparency in transactions and simplified settlement procedures through

CSGL/NSDL.

 MUTUAL FUNDS

A mutual fund is a professionally-managed firm of collective investments that pools

money from many investors and invests it in stocks, bonds, short-term money market

30
instruments, and/or other securities. In a mutual fund, the fund manager, who is also known as

the portfolio manager, trades the fund's underlying securities, realizing capital gains or losses,

and collects the dividend or interest income. The investment proceeds are then passed along to

the individual investors. The value of a share of the mutual fund, known as the net asset value

per share (NAV), is calculated daily based on the total value of the fund divided by the number

of shares currently issued and outstanding.

Advantages of Mutual Funds

1. Diversification

2. Professional Management

3. Regulatory oversight

4. Liquidity

5. Convenience

6. Transparency

7. Flexibility

8. Choice of schemes

9. Tax benefits

10. Well regulated

11. Drawbacks of Mutual Funds

Following are the few drawbacks of Mutual Funds:

1. No Guarantees
31
 2. Fees and commissions

3. Taxes

4. Management risk

 LIFE INSURANCE

Life insurance is a contract between the policy owner and the insurer, where the insurer

agrees to pay an amount of money upon the happening of the insured individual's or individuals'

death or other event, like terminal illness, critical illness. In return, the policy owner agrees to

pay a fixed amount called a premium at regular intervals or in bulge sum.

Like other insurance policies, life insurance is also a contract between the insurer and the

policy owner whereby a benefit is paid to the nominated beneficiaries if an insured event occurs

which is covered by the policy. The assessment for the policyholder is derived not from an actual

claim event. But to a certain extent it is the value derived from the 'peace of mind' experienced

by the policyholder, because of the negating of adverse financial consequences caused by the

death of the Life Assured. To be a life policy the insured event must be based upon the lives of

the people named in the policy.

Advantages of a Life Insurance Policy

1. Financial Security

2. Helps to diverts States Resources for Other Purpose

32
 3. Facilitates Economic Movements

4. Helps to Avail Tax Exemptions

 BONDS & DEBENTURES

Bonds & Debentures, these two words can be used interchangeably. In Indian markets,

we use the word bonds to indicate debt securities issued by government, semi-government bodies

and public sector financial institutions and companies. We use the word debenture to refer to the

debt securities issued by private sector companies.

Bonds - Debt securities issued by Govt. or Public sector companies

Debentures - Debt securities issued by private sector companies

In other words we can tell that a bond is a debt security, similar to an I.O.U. When you purchase

a bond, you are lending money to a government, municipality, corporation, or Public entity

known as the issuer. The issuer promises to pay you a specified rate of interest during the life of

the bond, in return for the loan. They also promises to repay the face value of the bond (the

principal) when it “matures.”

Following are allowed to issue bonds

• Governments

• Municipalities

33
 • Variety of institutions

• Corporations

Buying and Holding of Bonds: Investors can subscribe to primary issues of Corporates

and Financial Institutions (FIs). It is common practice for FIs and Corporates to raise funds for

asset financing or capital expenditure through primary bond issues. Some bonds are also

available in the secondary market. The minimum investment for bonds can either be Rs 5,000 or

Rs 10,000. However, this amount varies from issue to issue. There is no prescribed upper limit to

your investment. The duration of a bond issue usually varies between 5 and 7 years.

Selling of Bonds: Selling bonds in the secondary market has its own drawbacks. First, there

is a liquidity problem which means that it is a tough job to find a buyer. Second, even if you find

a buyer, the prices may be at a sharp discount to its intrinsic value. Third, you are subject to

market forces and, hence, market risk. If interest rates are running high, bond prices will be down

and you may well end up incurring losses. On the other hand, Debentures are always secured.

Debentures

A debenture is similar to a bond except the securitization conditions are different. A

debenture is generally unsecured in the sense that there are no liens or pledges on specific assets.

It is defined as a certificate of agreement of loans which is given under the company's stamp and

34
carries an undertaking that the debenture holder will get a fixed return (fixed on the basis of

interest rates) and the principal amount whenever the debenture matures.

Debentures vs. Bonds:

Debentures and bonds are similar except for one difference bonds are more secure than

debentures. In case of both, you are paid a guaranteed interest that does not change in value

irrespective of the fortunes of the company. However, bonds are more secure than debentures,

but carry a lower interest rate. The company provides collateral for the loan. Moreover, in case

of liquidation, bondholders will be paid off before debenture holders.

 STOCK MARKET

The first step is to understand the stock market. A share of stock is the smallest unit of

ownership in a company. If you own a share of a company’s stock, you considered as the part

owner of the company.

Stock Market Trading

35
 Stock market trading consists of buying and selling of company stocks and as well as

stock derivatives. This type of trading usually takes place in a stock exchange, in which

companies need to be listed in order for their shares to be bought and sold. This trading market

provides with substantial earnings potential and is one among the most popular investment

options.

Working of Stock Market

Stock market trading is normally done by brokers. As a result, the first step is to seek a

reliable investment broker. Stock market trading occurs at a physical stock exchange, where

buyers and sellers of company shares meet and agree on the price at which the transactions

would materialize.

Conventional stock trading entails an investor placing an order for a specific number of

shares of a company with his/her broker present in the physical stock market. The broker

forwards the order to the floor clerk, who then attempts to locate a trader desire to sell those

shares. Bids are then exchanged. The transaction closes only after the buyer agrees on the price

quoted by the seller. This technique is also called “open outcry,” because it involves traders

crying out their bids.

Stock market trading will also takes place online. This procedure is much quicker and

less complicated than trading in the physical stock market. Online stock market trading engrosses

36
the real time placement of buying and selling orders for stocks. The transaction is accomplished

when the trading system is capable to match bids and a confirmation is received.

Benefits of Stock Market Trading

1. It promotes economic growth.

2. It helps companies raise capital and handle financial issues.

3. It ensures that money is invested in businesses to enhance profit potential.

4. It helps investors realize substantial profits.

Drawbacks of Stock Market Trading:

1. It proposes lower leverage than other forms of trading, such as Forex trading.

2. The short selling of stocks is hard, because stock prices do not appreciate significantly in

a short span of time. Accordingly, there is a wait period before you can book healthy

profits.

3. It is traded for limited hours in a day.

37
  COMMODITY TRADING

The terms “commodities” and “futures” are often used to depict commodity trading or

futures trading. It is similar to the way “stocks” and “equities” are used when investors talk about

the stock market. Commodities are the actual physical goods like gold, crude oil, corn, soybeans,

etc. Futures are contracts of commodities that are traded at a commodity exchange like MCX.

Apart from numerous regional exchanges, India has three national commodity exchanges

namely, Multi Commodity Exchange (MCX), National Commodity and Derivatives Exchange

(NCDEX) and National Multi-Commodity Exchange (NMCE). Forward Markets Commission

(FMC) is the regulatory body of commodity market.

It is one of a few investment areas where an individual with limited capital can make

extraordinary profits in a relatively short period of time. Many people have become very rich by

investing in commodity markets. Commodity trading has a bad name as being too risky for the

average individual. The fact is that commodity trading is only as risky as you want to make it.

Those who treat trading as a get-rich-quick scheme are likely to lose because they have to take

big risks. If you act carefully, treat your trading like a business and are willing to settle for a

reasonable return, the possibility of success is very high.

The course of trading commodities is also known as futures trading. Unlike other kinds of

investments, such as stocks and bonds, when you trade futures, you do not really buy anything or

38
own anything. You are speculating on the future direction of the price in the commodity you are

trading. This is like a bet on future price direction. The terms "buy" and "sell" merely indicate

the direction you expect future prices will move. If, for example, you were speculating in wheat,

you would buy a futures contract if you thought the price would be going up in the future. You

would sell a futures contract if you thought the price of wheat would go down. For every trade,

there is always a buyer and a seller. Neither person has to own any wheat to participate. But he

has to deposit sufficient capital with a brokerage firm to insure that he will be able to pay the

losses if his trades lose money.

Working of Commodity Market: Commodity Market works Just like stock futures.

When you buy Futures, you don't have to pay the entire amount, just a fixed percentage of the

cost. This is known as the margin. Let's say you are buying a Gold Futures contract. The

minimum contract size for a gold future is 100 Gms. 100 gms of gold may be worth Rs.

1,50,000. The margin for gold set by MCX is 3.5%. So you only end up paying Rs 5,250.

The low margin means that you can buy futures representing a large amount of gold by

paying only a fraction of the price. So you bought the Gold Futures contract when it was Rs.

1,50,000 per 100 gms. The next day, the price of gold rose to Rs 1,60,000 per 100 gms. Rs

10,000 (Rs 1,60,000 - Rs 1,50,000) will be credited to your account. The following day, the price

dips to Rs 1,55,000. Rs 5000 will get debited from your account (Rs 1,60,000 - Rs 1,55,000).

39
  FOREX MARKET

Forex trading is the immediate trade of one currency and the selling of another.

Currencies are traded through an agent or dealer and are traded in pairs. For example Euro

(EUR), US dollar (USD), British pound (GBP) or Japanese Yen (JPY).

Here you are not buying anything physical; this type of trading is confused. Think of

buying a currency as buying a share of a particular country. When you purchase say Japanese

Yen, you are in effect buying a share in the Japanese financial system, as the price of the

currency is a direct reflection of what the market thinks about the current and future health of the

Japanese economy. In common, the exchange rate of a currency versus other currencies is a

reflection of the condition of that country's financial system compared to the other countries

financial system.

Unlike other financial markets like the New York Stock Exchange, the Forex spot market

has neither a physical location nor a central exchange. The Forex market is measured an Over-

the-Counter (OTC) or Interbank market, due to the fact that the entire market is run

electronically within a network of banks continuously over a 24-hour period.

Until the late 1990's only the big guys could play this game. The first requirement was

that you could trade only if you had about ten to fifty million bucks to start with Forex. Forex

was initially intended to be used by bankers and large institutions and not by small guys.

40
However because of the rise of the Internet, online Forex trading firms are now able to offer

trading accounts to 'retail' traders. All you need to get started is a computer, a high-speed Internet

connection, and the information.

The foreign exchange market is exclusive because of the following reasons;

• Its trading volumes

• The tremendous liquidity of the market

• Its geographical dispersion

• Its long trading hours

• The variety of factors that affect exchange rates.

• The low limits of profit compared with other markets of fixed income but profits

can be high due to very great trading volumes

• The use of leverage

Benefits of Forex Trading :

1. Forex is the largest market.

2. No Bulls or Bears!

3. Forex trading online offers great leverage

41
 4. Forex prices are predictable.

5. Forex trading online is commission free

6. Forex trading online is instant.

 REAL ESTATE AS AN INVESTMENT OPTION

The growth curve of Indian economy is at an all time high and contributing to the

upswing is the real estate sector in particular. Investments in Indian real estate have been

strongly taking up over other options for domestic as well as foreign investors.

The boom in the sector has been so appealing that real estate has turned out to be a

convincing investment as compared to other investment vehicles such as capital and debt

markets and bullion market. It is attracting investors by offering a possibility of stable income

yields, moderate capital appreciations, tax structuring benefits and higher security in comparison

to other investment options.

A survey by the Federation of Indian Chambers of Commerce and Industry (FICCI) and

Ernst & Young has predicted that Indian real estate industry is poised to emerge as one of the

most preferred investment destinations for global realty and investment firms in the next few

years. The potential of India's property market has a revolutionizing effect on the overall

economy of India as it transforms the skyline of the Indian cities mobilizing investments

segments ranging from commercial, residential, retail, industrial, hospitality, healthcare etc. But

42
maximum growth is attributed to its growth from the booming IT sector, since an estimated 70

per cent of the new construction is for the IT sector.

Real estate industry research has also thrown light on investment opportunities in the

commercial office segment in India. The demand for office space is expected to increase

significantly in the next few years, primarily driven by the IT and ITES industry that requires an

projected office space of more than 367 million sq ft till 2012-13.

 INVESTMENT IN GOLD

Gold has got lot of emotional value than monetary value in India. India is the largest

consumer of gold in the world. In western countries, you can find most of their gold in their

central banks. But in India, we use gold mainly as jewels. If you look at gold in a business sense,

you will understand that gold is one of the all time best investment tool. My dear readers, today I

would like to discuss on investments in gold and its potential.

Indian Gold Market Current Scenario:

 Size of the Gold Economy: more than Rs. 30,000 crores

 Number of gold jewelry manufacturing units: 1,00,000

 Number of people employed: 5,00,000

43
  Gems & Jewellery constitute 25% of India¡¦s exports about 10% of our import bill

constitute gold import.

 Number of banks allowed importing gold: 15 (While recently this has been liberalized,

detailed notification is awaited)

 Official estimates of the stock of gold in India: 9,000 tons

 Unofficial estimates of the stock of gold in India: 12,000 ¡V 14,000 tons

 Gold held by the Reserve Bank of India: 358 tons

 Gold production in India: 2 tons per annum.

Demand for gold in the Indian Market:

India has the highest demand for gold in the world and more than 90% of this gold is

acquired in the form of jewellery. Following are the factors influencing the demand for gold. The

movement of gold prices is one of the important variables determining demand for gold. The

increase in the irrigation, technological change in agriculture (through mechanization and high

yielding varieties), have generated large marketable surplus and a highly skewed rural income

distribution is another factors contributing to additional demand for gold.

Supply of Gold:

The main economic effects that arise from the changes in the supply of gold can be seen against

the quantum of gold that is already in existence in the economy. The supply of gold is not up to

44
the requirements as the production of gold is also coming down and demand for gold is going up

very sharply.

Gold as an Investment Option:

Gold as an investment tool always gives good returns, flexibility, safety and liquidity to

the investors. Therefore as a financial consultant my advice to you all is, kindly allocate a portion

of your portfolio for gold investments. Practice the habit of buying at least one gram of gold

every month.

 EMERGING INVESTMENT AVENUES

According to a study undertaken jointly by Merrill Lynch, Cap Gemini, and Ernst &

Young, High Net worth Individuals [HNIs] or wealthy investors are proactive in portfolio

management, risk management, consolidation financial assets and use of diversification

strategies as actively as large institutions. HNIs are proactive in identifying new investment

options and take inputs from professional advisors in volatile market conditions.

HNIs are dynamic in modifying their asset allocation and were among the first investors

to move from equities to fixed income during 2001-2002 period of downturn in equity markets.

They shifted back to equities when they identified favorable market trends.

45
Investment products and avenues

• Managed products: Managed product service is the most popular investment strategy

adopted by wealthy investors globally

• Real Estate: Wealthy investors have found this asset class very attractive and have

invested directly in real estate and indirectly through real estate investment trusts.

• Art and passion: Wealthy investors also have their investment in art, wine, antiques, and

collectibles

• Precious Metals: Gold and other precious metals are attractive investment options to

balance the asset allocation

• Commodities: Wealthy investors have turned to commodities to offset the lower returns

from fixed income securities.

• Alternative investments: Hedge funds and Private equity investments such as venture

funds are becoming increasingly popular with wealthy investors to reduce the investment risks

related to stock market fluctuations. This is because these instruments have low correlation with

equity asset class performance. Investment in non correlated assets, such as commodities helps to

improve diversification of the portfolio amidst volatile market conditions.

 INVESTMENT IN ART

Today, we find that an increasing number of individuals are looking at alternative

investments, which provide them with a diversification away from a particular asset class. People

are willing to invest and looking for areas other than the stock market for investing. Investing in

46
the vintage wine, coins, stamps and Art, is now an indulgence which gives them an opportunity

to cash in on their hobbies, without having the level of expertise that is required for other direct

investments.

Art is being incorporated into the investor's overall asset allocation decision. The art

scene around the world is growing significantly. With more and more investors looking at art as

an alternative asset class and a store of a long term value, average annual art valuations have

outpaced average annual stock market valuations by more than three times since 2000.

 HEDGE FUNDS

Over the last 15 years, hedge funds have become increasingly popular with high net

worth individuals, as well as institutional investors. The number of hedge funds has risen by

about 20% per year and the rate of growth in hedge fund assets has been even more rapid.

A hedge fund is a private investment fund, charging a performance fee and is open to

only a limited number of investors. These funds are like mutual funds, which collect money from

investors and use the proceeds to buy stocks and bonds. They can invest on almost any type of

opportunity; in any market where in good returns are expected with low risk levels.

Hedge Fund Risks:

 Lack of transparency

 Limited liquidity

47
  Difficulty accessing quality hedge funds

 Unreliable or incomplete return data

 Valuation risk

 Asymmetrical nature of Hedge fund returns distributions [SKEW]

 Counterparty risk [Leverage]

 PRIVATE EQUITY INVESTMENTS

Is the most important funding source in the entrepreneurial marketplace? Private equity

investments contribute to the funding of around 25 times the number of businesses the venture

capitalists fund each year.

Private equity investments are usually derived from a high net-worth individual who

represents an essential source of funding for early stage, high-risk ventures. It is estimated that

one-seventh of the 300,000 + start/early growth firms in the US receive funding from angel

investors. This translates into over $20 billion of investment in approximately 50,000 deals each

year. This investment group exceeds venture capital sources which are estimated at $5 - $7

billion spread over 1,000 venture capital investments each year.

A typical profile of a private equity investor:

• Is someone that prefers to invest within one day of travel?

• Is very well educated

48
• Tends to invest collectively within a group of other private equity investors

• Usually invests within the dollar range of $10,000 - $500,000, averaging $230,000

• Makes one investment every two years

Private equity investors have proven to be the single most important players in the

entrepreneurial marketplace. Private capital investors fund thirty to forty times as many

entrepreneurial companies as the entire venture capital industry and estimates put the total

amount between $20 - $60 billion annually.

49
 CHAPTER-2
LITERATURE
REVIEW

 LITERATURE REVIEW

1. Meile Jasiene (2009): It was concluded that in more rapidly developing countries the

competition between the capital and money markets is more prominent. The analysis

50
 also showed that in individual countries such as Japan, Australia and New Zealand

the prevailing macro economic environment ensures a parallel development and

movement of the share prices and the overnight interest rate, means the capital and

money market develop as two systems complementing each other.

2. P. Varadharanjan (2011): This research paper says that the scenario of this sector

keeps changing where the large cap mutual funds outperform the mid cap mutual

funds and small cap mutual funds or vice versa. This denies the criteria of depending

on the returns or experience to chosen the stocks based on the market capitalization.

The experience in the equity market, age of a person and the occupation of a person

doesn’t affect the risk appetite one takes. Gender bias was not evident.

3. Syed Tabassum Sultana (2012): In this study they use factor analysis. After applying

factor analysis it was found that all the 40 attributes are reduced to the following 10

factors; individual eccentric, wealth maximization, brand perception, risk

minimization, social responsibility, financial expectation, accounting information,

government and media, economic expectation and advocate recommendations factors.

4. Ambrose Jagongo (2014): In conclusion this study tested the tenants of the

behaviorall finance theory on the factors that influence investment decisions under

conditions of uncertainty. The analysis gives a fairly accurate view of the average

equity investor in the NSE.

51
5. Mohammad Shafi (2014): Several studies have brought out in this. The research

paper says about the behavioral finance theories which are based on psychology and

attempt to understand how emotions and cognitive errors influence individual

investors decision. The present study aims to review the research studies and

literature to gain knowledge about key factors that influence investment behavior in

different countries and the ways these factors impact investment risk tolerance and

decision making process among men and women and among different age groups.

6. S.S. Rau (2015): This study results in identifying the most and least influencing

factors and results in the principal factors do not significantly differ between male

and female respondent based on the analysis made accounting factors are ranked first

and advocate factors are ranked seventh.

7. Mehmat Apan (2015): This analysis shows that while investors in Bartin city decide

on investment, they are affected by several factors such as; level of income, past

investment experiences, expert and other investors opinion and financial stability.

They take the steps to reduce risks by having alternative plans for their investment

and they have high self esteem.

8. C. Kavitha (2015): In this study it is clearly indicated that there is a significant

relationship between the investor’s attitude and stock market investments. The more

positive attitude enhancement strategies are introduced, the more it is easy for local

investors to invest in the stock market. Further there is a significant relationship

52
 between the local investor’s perception of stock market regulations and their intention

to participate at NSE.

9. Aruna P (2016): This paper concludes the investor’s behavior depends on how the

available information is being presented to them and how much they are prone to

taking risk while making decisions; thus each variable of the factors playing a

significant role in determination of the investment style of an investor.

10. Jeet Singh (2016): This research is purely based on the hypothesis testing. Both male

and female investors concern about considering the past dividends paid by the

companies while investing in equity shares.

11. Arup Kumar Sarkar (2017): This study would help different interested parties to take

care of the factors influencing the behavior for proper planning and decision making.

This study suggests some future research to enhance our understanding about the

effect of demographic factors and perceived risk attitude on the investment behavior

of individual investors.

12. Indu Niranjan (2017): The findings of this paper are that the investment objective and

asset familiarity exert an impact on investor behavior with asset familiarity having the

strongest impact. Awareness is created by the study of the behavioral aspects.

53
 13. Gowtham Ramkumar (2017) : This research paper finds that economic factors ha s a

significant impact on investment decisions of the investors. Similarly company

factors has a significant impact on investment decision of the investors.

Literature suggests that major research in the area of investors’ behaviour has been done

by behavioural scientists such as Weber, Shiller and Shefrin. Shiller who strongly advocated that

stock market is governed by the market information which directly affects the behaviour of the

investors. Several studies have brought out the relationship between the demographics such as

Gender, Age and risk tolerance level of individuals. Of this the relationship between Age and

risk tolerance level has attracted much attention.

54
 CHAPTER-3
RESEARCH
METHODOLOGY

55
 3.1 RESEARCH METHODOLOGY

OBJECTIVE OF THE STUDY

The purpose of the analysis is to determine the investment behaviour of investors and

investment preferences for the same. Investors perception will provide a way to accurately

measure how the investors think about the products and services provided by the company.

Today’s trying economic conditions have forced difficult decisions for companies. Most are

making conservative decisions that reflect a survival mode in the business operations. During

56
these difficult times, understanding what investors on an ongoing basis is critical for survival.

Executives need a third party understanding on where investor’s loyalties stand. More than ever

management needs ongoing feedback from the investors, partners and employees in order to

continue to innovate and grow.

“The main objective of the project is to find out the needs of the current and future

investors.”

For this analysis, customer perception and awareness level will be measured in important

areas such as:

1. To understand in depth about different investment avenues available in India.

2. To find out how investors get information about the various financial instruments.

3. The type of financial instruments, they would prefer to invest.

4. The duration for which they would prefer to keep their money invested.

5. What are the factors that they consider before investing?

6. Chapter 6 covers the summary and conclusion of the report. To give a recommendations

to the investors that where they should invest.

7. To know the risk tolerance level of the individual investor and suggest a suitable

portfolio.

8. To develop a profile of sample Indian individual investor in terms of their demographics.

And demographics based on occupation of the sample investor.

9. To identify the objective of savings of an investor.

10. To study the dependence/independences of the demographic factors (Age) of the investor

and his/her risk tolerance level.

57
  Sampling technique

Initially, a rough draft will be prepared keeping in mind the objective of the research. A
pilot study will be undertaken in order to know the accuracy of the questionnaire. The final
questionnaire will be arrived at only after certain important changes are incorporated.
Convenience sampling technique will be used for collecting the data from different investors.
The investors are selected by the convenience sampling method. The selection of units from the
population based on their easy availability and accessibility to the researcher is known as
convenience sampling. Convenience sampling is at its best in surveys dealing with an
exploratory purpose for generating ideas and hypothesis.

 Sampling unit:

The respondents who will be asked to fill out the questionnaires are the sampling units.
These comprise of employees of MNC’s, government employees, housewives, self employed,
professionals and other investors.

 Sampling size:

The sample size will be restricted to only 100, which comprised of mainly people from
different regions of Delhi due to time constraints.

 Sampling area:
The area of the research is Delhi.

3.2 SOURCES OF INFORMATION

58
  Primary Data:

Information is collected by conducting a survey by distributing a questionnaire to 100

investors in Hyderabad. These 100 investors are of different age group, different occupation,
different income levels, and different qualifications. (A copy of the questionnaire is given in the
last as ANNEXURE 1).

 Secondary Data:
This data is collected by using the following means.
1. Articles in Financial Newspapers (‘Economic times’ and ‘Business Standard’).
2. Investment Magazines, Business Magazines, Financial chronicles.
3. Expert’s opinion published in various print media.
4. Books written by various Foreign and Indian authors on Investments.
5. Data available on internet through various websites

www.tax4India.com
www.economictimes.Indiatimes.com
www.business-standard.com
www.Indiamoney.com
www.moneymanagementideas.com
www.savingwala.com

59
CHAPTER-4
DATA ANALYSIS
AND
INTERTRETATION

60
  Analysis in this report:

An analysis is made on the responses received from 100 sample investors. The objective

of the report is to find out the investor’s behaviour on various investment avenues, to find out the

needs of the current and future investors.

The questionnaire contains various questions on the investor’s financial experience,

based on these experiences an analysis is made to find out a pattern in their investments.

Based on these investment experiences of the 100 sample investors an analysis is made

and interpretations are drawn. Interpretations are made on a rational basis, these interpretations

may be correct or may not be correct but care is taken to draw a valid and approvable

interpretation.

Analysis is made only from the information collected through questionnaires no other

data or information is taken in to consideration for purpose of the analysis.

61
  Analysis of the Survey:

TABLE 1: DEMOGRAPHICS OF THE SAMPLE

INVESTOR

PARAMETER NO: OF INVESTORS PERCENTAGE

GENDER
MALE 58 58%
FEMALE 42 42%
TOTAL 100 100%

AGE GROUP
BELOW 20 0 0%
BETWEEN 20 – 30 35 35%
BETWEEN 30 – 40 35 35%
ABOVE 40 30 30%
TOTAL 100 100%

QUALIFICATION
UNDER GRADUATES 7 7%
GRADUATES 46 46%
POST GRADUATES 39 39%
OTHERS 8 8%
TOTAL 100 100%

OCCUPATION
SALARIED 52 52%
BUSINESS 22 22%
PROFESSIONAL 14 14%
HOUSE WIFE 11 11%
RETIRED 1 1%
TOTAL 100 100%

ANNUAL INCOME
BELOW Rs. 2,00,000 37 37%
Rs. 2,00,000 - 4,00,000 31 31%
Rs. 4,00,000 - 6,00,000 18 18%
ABOVE Rs, 6,00,000 14 14%
TOTAL 100 100%

62
  Interpretation:

Table 1 above shows, that 58 (58%) of the investors are men and the rest 42(42%) are females.

Generally males bear the financial responsibility in Indian society, and therefore they have to

make investment (and other) decisions to fulfill the financial obligations.

When it comes to age, it was found that 35% are young and significant number under the

age group of 20 – 30. 35% of them are in the age group of 30 to 40. 30% of them are above 40

years of age. There are no investors below 20 years of age.

Nearly 52% of the investors belong to the salaried class, 22% were business class, 14%

were professionals, 11% were housewives and the rest were retired.

It was found that irrespective of annual income they earn all the investors interested in

investments since today’s inflated cost of living is forcing everyone to save for their future

needs, and invest those saved resources efficiently.

39(39%) of the individual investors covered in the study are postgraduates; 46(46%)

investors are graduates and 7(7%) of the investors are under-graduates, and 8(8%) investors are

categorized as others who are either illiterates, had less education than under graduation or who

are more qualified than post graduates. It is interesting to note that most investors (covered in the

study) can be said to possess higher education (Bachelor Degree and above), and this factor will

increase the reliability of conclusions drawn about the matters under

investigation.

63
 37(37%) of the investors are earning less than 2 lakhs per annum, 31(31%) investors are

earning between 2 lakhs and 4 lakhs, 18(18%) investors are earning between 4 lakhs and 6

Lakhs, 14(14%) investors are earning more than 6 lakhs per annum. Since most of the investors

are below 4 lakhs annual earnings, many of them are non risk takers.

TABLE 2 OTHER CHARACTERISTICS OF SAMPLE INVESTOR

Table 2.1 INVESTORS WILLING TO LOSE

PRINCIPAL AMOUNT
PARAMETER NO OF INVESTORS PERCENTAGE
YES 5 5
NO 95 95
TOTAL 100 100

64
  Interpretation:

Since many of the investors annual earnings are below 2 lakhs and 4 lakhs, many of

them do not take the risk of losing their principal investment amount. 95% of the sample

investors are not ready to lose their principal investment amount. 5% are ready to take

risk of losing their principal up to certain extent.

Table 2.2 TIME PERIOD PREFERED TO INVEST

NO OF
PARAMETER INVESTORS PERCENTAGE
SHORT TERM 10 10
MEDIM 60 60
LONG TERM 30 30
TOTAL 100 100

65
  Interpretation:

It’s interesting to know that many of the investors prefer to invest their money for

medium term i.e. from 1 – 5 yrs, instead of short term or long term. 10% preferred short

term, 60% preferred medium term, and 30% preferred long term.

Table 2.3 FREQUENCY OF MONITORING THE

INVESTMENT
NO OF
PARAMETER INVESTORS PERCENTAGE
DAILY 17 17
MONTHLY 35 35
OCCATIONALLY 41 41
OTHER 7 7
TOTAL 100 100

NO OF INVESTORS
OTHER, 7

DAILY, 17

DAILY
MONTHLY
OCCATIONALLY, OCCATIONALLY
41
MONTHLY, 35 OTHER

66
  Interpretation:

Due to the busy life schedule, many of the investors are not able to spend time in monitoring

their investments, only 17% of the investors are monitoring their investments daily, 35% are

monitoring on a monthly basis, 41% , the majority investors are monitoring their investments

occasionally. Many of them who have invested in safe investment avenues do not bother about

their investments, some of them forget about the investments for many years.

Table 2.4 INVESTMENT IN EQUITY MARKET

NO OF
PARAMETER INVESTORS PERCENTAGE
YES 30 30
NO 70 70
TOTAL 100 100

Out of the total sample investors only 70% of the investors invest in equity share market

through their DEMAT A/C, 30% of the investors never invested in equity shares. The investors

who invest in equity share market are asked another question, what would they do if the stock

market falls immediately after their investment, many of them replied that they would wait till

the market increases instead of selling them at a loss, very few answered that they would average

the investment by buying some more shares.

67
Table 2.5 FAMILY BUDGET
PARAMETER NO OF INVESTORS PERCENTAGE
YES 73 73
NO 27 27
TOTAL 100 100

73% of the sample investors had a monthly family budget for their daily expenditure. 27% of the

investors replied they never thought of having a budget calculation, and few think of having a

budget but never implemented so far. Many people with excess money never cared to make any

family budgets.

68
 6

Series 1
3
Series 2
Series 3
2

0
Category 1 Category 2 Category 3 Category 4

PARAMETER NO OF INVESTORS PERCENTAGE

YES 48 48
NO 52 52
TOTAL 100 100

It’s interesting to know that almost same proportion of investors have different thoughts,

48% of the investors have an investment target every year, and 52% of the investors do not go

for any targets for investment. On personal questioning many of the investors who had an

investment target every year are not able to reach their targets due to contingent expenses. Few

investors invest regularly but never thought of having a target every year.

69
Table 2.7 FINANCIAL ADVISOR
PARAMETER NO OF INVESTORS PERCENTAGE
YES 23 23
NO 77 77
TOTAL 100 100

77% of the investors never had a financial advisor, they never approached an advisor for their

financial needs, the reason may be inadequate income and excess expenditure, and there

wouldn’t be surplus money to worry about. 23 % of the investors have financial advisors, who

manage their investments.

70
Table 3 Objectives of Investment

Table 3.1 SAVINGS OBJECTIVE

PARAMETER VOTES WEIGHTS RANKING
CHILDREN'S EDUCATION 71 29 1
RETIREMENT 47 19 3
HOME PURCHASE 38 15 4
CHILDREN'S MARRIAGE 30 12 5
HEALTHCARE 57 23 2
OTHERS 5 2 6
TOTAL 248 100

VOTES

OTHERS

HEALTHCARE

CHILDREN'S MARRIAGE
VOTES
HOME PURCHASE

RETIREMENT

CHILDREN'S EDUCATION

0 20 40 60 80

Table 3.1 shows the savings objectives of the sample investors, investors are given option

to select one or more savings objectives, since there may be one or more answers, weights are

given for each parameter bases on the votes given by the investors, the maximum weigthage

represents many investors have that as main objective. Based on the weights calculated ranks are

given in the order of maximum weightage given by investors. First rank is given to children’s

education, many investors feel that, investing money for the future of the Childs education is

71
very important than any other need. Many of the investors are in the age group of 20 – 30 and 30

– 40 as of now they are thinking of saving for their children’s marriage. So children’s marriage is

given last rank. After children’s education investors are saving for their own health care. There is

a greater need for Indians to save for their health care who are living a mechanical life.

Retirement and home purchase are given subsequent ranks after health care.

Table 3.2 PURPOSE BEHIND INVESTMENT

PARAMETER VOTES WEIGHTS RANK
WEALTH CREATION 37 22 4
TAX SAVING 43 25 3
EARN RETURNS 45 27 1
FUTURE EXPENDITURE 44 26 2
TOTAL 169 100

72
All the investors have very common purposes for investing, they have more than one purpose for

investing their money. Salaried people invest for tax savings, and for future expenditure,

business people invest for the purpose of earning returns. Almost all the investors have all the 4

purposes behind investing their money.

Table 3.3 FACTORS CONSIDERING BEFORE INVESTING

PARAMETER VOTES WEIGHTS RANKING
SAFETY OF
PRINCIPAL 60 43 1
LOW RISK 35 25 2
HIGH RETURNS 27 19 3
MATURITY PERIOD 16 11 4
TOTAL 138 100

73
 When the investors are asked about the factors considering before investment many of

them have voted for safety of principal and low risk. First rank is given to safety of principal and

2 nd to low risk. Here there are some contradicting results, some investors expect high returns at

a very low risk, and this is not possible in practical Indian investment avenues. Investment

believes in a proved principle, “higher the risk higher the returns, lower the risk lower the

returns”. Investors need to know about this principle before investing.

 Independent Variables and Dependent Variables

There are total four independent variables

1. Age group. 2. Occupation. 3. Qualification. 4. Annual income

There can be many dependent variables like

1. Level of risk tolerance

2. Percentage of income that can be invested

3. Time period that can be taken for investments

4. Savings objectives

5. Investment preference.

These independent variables can be compared with any dependent variables for finding the

relations between the parameters.

74
In my analysis I have taken occupation category for comparison with dependent variable

investment preference and age group comparing with the dependent variable level of risk

tolerance.

 Below are the demographics of the sample investors based on

the category occupation.

TABLE 4 : DEMOGRAPHICS BASED ON

OCCUPATION

I. SALARIED

NO: OF -
PARAMETER SALARIED PERCENTAGE
AGE GROUP
BELOW 20 0 0%
BETWEEN 20 - 30 22 42%
BETWEEN 30 - 40 18 35%
ABOVE 40 12 23%
TOTAL 52 100%

QUALIFICATION
UNDER GRADUATES 0 0%
GRADUATES 21 40%
POST GRADUATES 25 48%
OTHERS 6 12%
TOTAL 52 100%

ANNUAL INCOME
BELOW Rs. 2,00,000 15 29%
Rs. 2,00,000 - 4,00,000 15 29%
Rs. 4,00,000 - 6,00,000 17 33%
ABOVE Rs, 6,00,000 5 10%
TOTAL 52 100%

75
II. BUSINESS

PARAMETER NO: OF - BUSINESS PERCENTAGE

AGE GROUP
BELOW 20 0 0%
BETWEEN 20 - 30 2 9%
BETWEEN 30 - 40 10 45%
ABOVE 40 10 45%
TOTAL 22 100%

QUALIFICATION
UNDER
GRADUATES 5 23%
GRADUATES 11 50%
POST
GRADUATES 6 27%
OTHERS 0 0%
TOTAL 22 100%

ANNUAL
INCOME
BELOW Rs.
2,00,000 11 50%
Rs. 2,00,000 -
4,00,000 5 23%
Rs. 4,00,000 -
6,00,000 1 5%
ABOVE Rs,
6,00,000 5 23%
TOTAL 22 100%

III.
PROFESSIONAL

NO: OF -
PARAMETER PROFESSIONAL PERCENTAGE
AGE GROUP
BELOW 20 0 0%
BETWEEN 20 - 30 8 57%
BETWEEN 30 - 40 2 14%
ABOVE 40 4 29%

76
TOTAL 14 100%

QUALIFICATION
UNDER
GRADUATES 0 0%
GRADUATES 6 43%
POST
GRADUATES 6 43%
OTHERS 2 14%
TOTAL 14 100%

ANNUAL
INCOME
BELOW Rs.
2,00,000 2 14%
Rs. 2,00,000 -
4,00,000 8 57%
Rs. 4,00,000 -
6,00,000 1 7%
ABOVE Rs,
6,00,000 3 21%
TOTAL 14 100%

IV. HOUSEWIFE

NO: OF -
PARAMETER HOUSEWIFE PERCENTAGE
AGE GROUP
BELOW 20 0 0%
BETWEEN 20 - 30 4 36%
BETWEEN 30 - 40 3 27%
ABOVE 40 4 36%
TOTAL 11 100%

QUALIFICATION
UNDER
GRADUATES 1 9%
GRADUATES 6 55%
POST
GRADUATES 2 18%
OTHERS 2 18%
TOTAL 11 100%

77
ANNUAL
INCOME
BELOW Rs.
2,00,000 9 82%
Rs. 2,00,000 -
4,00,000 1 9%
Rs. 4,00,000 -
6,00,000 0 0%
ABOVE Rs,
6,00,000 1 9%
TOTAL 11 100%

ASSUMPTION

As a part of the analysis I assumed that preference for investment avenues is dependent on the

occupation of the investor. Hence preferred investment avenue are derived from the

demographics of the sample investor based on occupation.

Table 5: INVESTMENT PREFERENCE BASED ON OCCUPATION

Table 5.1 Preferred investment avenues for salaried

INVESTMENT
AVENUES VOTES WEIGHTS RANK
LIFE INSURANCE 35 16 1
GOLD 25 12 2
BANK FIXED
DEPOSITS 24 11 3
MUTUAL FUNDS 23 11 4
REAL ESTATE 23 11 5
POST OFFICE
SAVINGS 20 9 6
PPF 18 8 7
NSC 17 8 8
EQUITY SHARES 16 7 9
SAVINGS ACCOUNT 14 7 10
TOTAL 215 100

78
Since the investor has an option to invest in more than one Investment Avenue, weights are

given on the basis of preference to investment avenues. The avenue which is given maximum

weightage by the investors is ranked first. First Ten ranks are given to the first ten preferred

investment avenues. First preference is given to life insurance, second to investing in gold, third

to bank fixed deposits. Tenth preference is given to bank savings account.

Table 5.2 Preferred investment avenues for business people

INVESTMENT
AVENUES VOTES WEIGHTS RANK
BANK FIXED
DEPOSITS 13 16 1
INSURANCE 13 16 2
REAL ESTATE 11 14 3
MUTUAL FUNDS 10 12 4
GOLD 8 10 5
EQUITY SHARES 7 9 6
CHIT FUNDS 6 7 7
POST OFFICE
SAVINGS 5 6 8
SAVINGS ACCOUNT 4 5 9
NSC 4 5 10
TOTAL 81 100

Thinking of the business people is almost same to that of salaried people, both are similar in

preferring insurance and bank fixed deposits, but given third preference to real estate. Gold is

given 5th place here. Last place is given to national savings certificates.

79
Table 5.3 Preferred investment avenues for professionals

III. PROFESSIONAL
INVESTMENT
AVENUES VOTES WEIGHTS RANK
BANK FIXED
DEPOSITS 10 19 1
INSURANCE 10 18 2
GOLD 6 11 3
REAL ESTATE 6 11 4
POST OFFICE
SAVINGS 5 9 5
SAVINGS ACCOUNT 4 7 6
MUTUAL FUNDS 4 7 7
PPF 3 6 8
BONDS 3 6 9
GOVT SECURITIES 3 6 10
TOTAL 54 100

There is no much difference in the preferences of professionals when compared to salaried and

business people. Professionals does not prefer mutual funds(7th rank), where salaried and

business people prefer at 4th place. Professionals are more interested in post office savings rather

than mutual funds. As business people professionals also prefer bank fixed deposits in the first

place, then life insurance. Professionals does not prefer national saving certificates at all,

eliminated it from the top 10.

80
Table 5.4 Preferred investment avenues for housewives

INVESTMENT
AVENUES VOTES WEIGHTS RANK
GOLD 9 18 1
INSURANCE 9 18 2
BANK FIXED
DEPOSITS 8 16 3
REAL ESTATE 5 10 4
POST OFFICE
SAVINGS 5 10 5
CHIT FUNDS 4 8 6
EQUITY 4 8 7
SAVINGS ACCOUNT 3 6 8
NSC 2 4 9
MUTUAL FUNDS 1 2 10
TOTAL 50 100

Indian housewives love gold as much as themselves. Housewives have given first rank to gold

pushing insurance and bank fixed deposits to second and third place. House wives gave least

preference to mutual funds. They are more attracted to traditional investment avenues like gold,

real estate, post office savings and chit funds.

Table 5.5 Preferred investment avenues – overall

INVESTMENT
AVENUES VOTES WEIGHTS RANK
LIFE INSURANCE 67 17 1
BANK FIXED
DEPOSITS 55 14 2
GOLD 50 13 3
REAL ESTATE 45 12 4
MUTUAL FUNDS 38 10 5

81
POST OFFICE
SAVINGS 35 9 6
EQUITY SHARES 29 8 7
SAVINGS ACCOUNT 25 6 8
NSC 25 6 9
PPF 22 5 10
TOTAL 391 100

HYPOTHESIS - Increase in Age decreases the Risk tolerance level.

 Relation between Age and risk tolerance

 Level of risk tolerance dependent on the age of the investor.

 Risk tolerance of an investor shows a negative relation to the age of that investor

 Lower the age higher the risk capabilities, higher the age lower the risk capabilities.

 LEVEL OF RISK TOLERANCE WITH RESPECT TO AGE GROUP

For the purpose of analysis investors are placed under three categories.

1. Low risk category

2. Medium risk

3. High risk

Classification is done based on three factors

1. Past investments of the investor.

2. Investor experience in investing( level of experience).

3. Investor preference for investments.

82
First the total sample of 100 is divided in to 3 age groups.

Investors in each age group are classified in to 3 risk categories based on the above factors.

Table 6: Finding relationship between age group and level of risk tolerance

Table 6.1 risk tolerance of age group 20 – 30

PARAMETER 20 - 30 AGE GROUP

LEVEL OF NO OF
RISK INVESTORS PERCENTAGE

LOW RISK 13 37%

MEDIUM
RISK 17 49%
HIGH RISK 5 14%
TOTAL 35 100%

Table 6.2 risk tolerance of age group 30 - 40

PARAMETER 30 - 40 AGE GROUP

LEVEL OF NO OF
RISK INVESTORS PERCENTAGE

LOW RISK 20 57%

MEDIUM
RISK 11 32%
HIGH RISK 4 11%
TOTAL 35 100%

83
Table 6.3 risk tolerance of age group above 40

PARAMETER ABOVE 40 AGE GROUP

LEVEL OF RISK NO OF INVESTORS PERCENTAGE

LOW RISK 21 70%

MEDIUM RISK 6 20%

HIGH RISK 3 10%

TOTAL 30 100%

OBSERVATIONS:

Observations from table 6.1, 6.2, 6.3

From the table 6.1 we find that 49% of Investors between the age group of 20 – 30 came

under medium risk category, where as the percentage of investors who came under medium risk

in the age group of 30 – 40 has decreased to 32%. It still came down in the case of investors in

the age group of 40 above, which is only 20%. We can see a decreasing trend in the behaviour of

investors towards medium risk when their age increased.

37% of the investors in the age group of 20 – 30 are in the low risk category, where as

Investors under the age group 30 – 40, 57% came under the low risk category, there is a large

increase in the investors who came under low risk category in this age group. It has further

increased, 70% of the investors in the age group above 40 came under the low risk category. We

can see an increasing trend with respect to low risk category as the age increases.

84
 Same observations are arrived at, when comparing the high risk category with respect to

the age groups. As the age increases the level of risk tolerance is coming down. 14% came under

the high risk category under the age group 20 – 30, when it came to age group above 40 above

only 10% came under the high risk category.

From the above observations we can conclude that there is a strong inverse or negative

relationship between risk tolerance and age group.

Attributes Risk Tolerance Level

Age -0.74

When Karl Pearson’s correlation coefficient is calculated, it is found to be -0.74 by which

we can conclude that there is a strong negative correlation between Age and Risk tolerance. Age

accounts for the major differences in risk taking decisions by the investors. The older an

investor, the better seemed his/her performance in comparison to the younger ones. Over-

confidence in their own investment ability among the youngsters largely accounts for the

excessive trading among younger investors leading to lower returns and this direct to decline in

the risk tolerance level

85
 CHAPTER-5

FINDINGS AND

SUGGESTIONS

86
Findings:

1. The study reveals that male investors dominate the investment market in India.

2. Most of the investors possess higher education like graduation and above.

3. Majority of the active and regular Investors belong to accountancy and related

employment, non-financial management and some other occupations are very few.

4. Most investors opt for two or more sources of information to make investment decisions.

5. Most of the investors discuss with their family and friends before making an investment

decision.

6. Percentage of income that they invest depend on their annual income, more the income

more percentage of income they invest.

7. The investors’ decisions are based on their own initiative.

8. The investment habit was noted in a majority of the people who participated in the study.

9. Most Investors prefer to park their funds in avenues like Life insurance, FD, Gold and

Real Estate.

10. Most of the investors get their information related to investment through electronic media

(TV) next to print media (News paper/ Business news paper/ Magazines)

11. Most of the investors are financial illiterates.

12. Increase in age decrease the risk tolerance level.

13. Women are attracted towards investing gold than any other investment avenue.

87
Risk tolerance level and Suggestion of Suitable Portfolio to the
Investors

The role of uncertainty and the knowledge about the return on Investment Avenue are

important components of any investment. The extent of an investor’s ability to tolerate these

uncertainties of return is referred as risk tolerance level of an investor (Schaefer, 1978). Risk

tolerance tends to be subjective rather than objective.

Schaefer described the relation this way: “two persons may very well agree on the

riskiness of a set of gambles, but may nevertheless prefer different gambles, rank ordering them

differently according to their personal tolerance. There are two common methods of estimating

investors’ tolerance of risk. The first method is a clear understanding of the investor and his/her

history with investment securities. The second method is to use a questionnaire designed to elicit

feelings about risky assets and the comfort level of the investor given certain changes in the

portfolio or certain investment scenarios.

The second method is used to know the risk tolerance level of the investors. Based on the

responses to the questionnaire, the cumulative scale is constructed and scores are assigned to

each investor accordingly to categorize the respondents in to i.e. Low, Moderate and High risk

tolerance level. The investors are divided into 3 categories i.e., A, B and C depending on their

risk tolerance starting with Low risk tolerance, Moderate risk tolerance and High risk tolerance.

88
 Generally investors with a low risk tolerance act differently with regard to risk than

individuals with a high risk tolerance. Investor with a high level of risk tolerance would be

comfortable with market volatility, while low risk-tolerance individuals require stability and are

averse to uncertainties. (MacCrimmon & Wehrung, 1986). Individuals with low levels of risk

tolerance require lower chances of a loss, choose not to operate in unfamiliar situations and

require more information about the performance of an investment (MacCrimmon & Wehrung).

Table 7 SUGGESTED PORFOLIO CONSTRUCTION

BASED ON AGE GROUP AND LEVEL OF RISK

LEVEL OF RISK - PERCENTAGE OF INCOME TO BE

PARAMETER APPORTIONED TOTAL
AGE GROUP LOW RISK MEDIUM RISK HIGH RISK

BETWEEN 20 -
30 30% 50% 20% 100%
BETWEEN 30 -
40 50% 35% 15% 100%
ABOVE 40 70% 20% 10% 100%
TOTAL 100% 100% 100%

Portfolio construction:

Step 1: Identify the age group of the investor, check in which age group he comes under.
Suggest suitable portfolio from the above table.
Example: An investor of age 36 working in public sector Company has approached you to invest
his 8 lakhs of money in a suitable investment
.
Advice : the investor comes under the age group 30 – 40.

89
His suitable portfolio will be
1. 50% invest in low risk investment avenues.
2. 35% invest in medium risk avenues.
3. 15% invest in high risk avenues.

Step 2:

Investment preference made from the table 5.5 or based on his occupation. Since he come under
the occupation salaried he can choose the preferred investment avenues from table 5.1

90
 CHAPTER-6

SUMMARY AND

CONCLUSION

91
  Summary

This report is a reflection of the behaviour of various categories of investors.

Selection of a perfect investment avenue is a difficult task to any investor. An effort is made to

identify the tastes and preferences of a sample of investors selected randomly out of a large

population. Despite of many limitations to the study I was successful in identifying some

investment patterns, there is some commonness in these investors and many of them responded

positively to the study.

This report concentrated in identifying the needs of current and future investors,

investor’s preference towards various investment avenues are identified based on their

occupation. Investors risk in selecting a particular avenue is dependent on the age of that

investor.

92
Conclusion
This study confirms the earlier findings with regard to the relationship between Age and

risk tolerance level of individual investors. The Present study has important implications for

investment managers as it has come out with certain interesting facets of an individual investor.

The individual investor still prefers to invest in financial products which give risk free returns.

This confirms that Indian investors even if they are of high income, well educated, salaried,

independent are conservative investors prefer to play safe. The investment product designers can

design products which can cater to the investors who are low risk tolerant and use TV as a

marketing media as they seem to spend long time watching TVs.

93
CHAPTER- 7

ANNEXURE

94
BIBLIOGRAPHY

 REFRENCES

1. Mohammad Shafi ;Arabian Journal of Business and Management Review(Nigerian

Chapter) Vol 2, No. 1, 2014.

2. Dr. Syed Tabassum; European Journal of Business and Management

www.iiste.org ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online) Vol 4, No.18,
2012.

3. C. Kavitha; International Journal of scientific resea rch and management (IJSRM)

||Volume||3||Issue||7||Pages|| 3356-3362||2015|| \ Website: www.ijsrm.in ISSN (e):
2321-3418.

4. P. Dinesh Kumar; International Journal of Management and Commerce Innovations

ISSN 2348-7585 (Online) Vol. 4, Issue 1, pp: (39-43), Month: April 2016 -
September 2016, Available at: www.researchpublish.com.

5. Aruna P; International Journal of Business and Management Invention ISSN

(Online): 2319 – 8028, ISSN (Print): 2319 – 801X www.ijbmi.org || Volume 5 Issue
12 || December. 2016 || PP—06-09

BOOKS

1. The Mindful Investor, by Maria Gonzalez and Graham Bayron.

2. Understanding Indian Investors, by Jawahar Lal.
3. Security Analysis and Portfolio Management by Punithavathi Pandian.
4. Investment Analysis and Portfolio Management, by Prasanna Chandra.

95
RESEARCH PAPERS

An Empirical study on Indian individual investor’s behaviour, by Syed Tabassum

Sultana.

WEB SITES

www.tax4India.com

www.economictimes.Indiatimes.com

www.business-standard.com

www.Indiamoney.com

www.moneymanagementideas.com

www.savingwala.com

96
ANNEXURE 1

G.L. BAJAJ INSTITUTE OF TECHNOLOGY AND MANAGEMENT

DEPARTMENT OF MANAGEMENT STUDIES

Dear Respondent,

SUB: “Request to fill the Questionnaire” regarding a research study.

I am a final year student currently pursuing my Master of Business Administration (MBA) at G.L.

BAJAJ INSTITUTE OF TECHNOLOGY & MANAGEMENT, Dr. ABDUL KALAM TECHNICAL

UNIVERSITY, LUCKNOW. I am conducting a research study on “ STUDY ON THE FACTORS

AFFECTING THE INVESTORS DECISION IN INVESTING IN EQUITY SHARES IN INDIA ” – an

analysis on investor behaviour on various investment avenues available in India. This research (project) is

97
taken for the completion of my MBA degree under Dr. ABDUL KALAM TECHNICAL UNIVERSITY,

LUCKNOW.

I seek your kind assistance in completing the attached questionnaire which would take approximately 10

minutes of your valuable time. Your responses will be treated as

“Strictly Confidential”.

If you have any queries or concerns about completing the questionnaire, please do not hesitate to contact

me @ email: tulikapant17@gmail.com Mobile Number: 9650639168

Note: There is no right or wrong answer. To make this study possible and successful, your kind

co-operation and honest responses are greatly valued.

Yours

Sincerely

Tulika Pant

MBA Coordinator: Project Guide:

Mr. Nitin Tripathi Mr. Sarvendu Tiwari

Assistant Professor Assistant Professor

DMS DMS

98
Questionnaire

1. Are you aware of the following investment avenues? (Tick which ever applicable
in the boxes).

Safe/Low Risk Investment Avenues: High Risk Investment Avenues:

 Savings Account.  Equity Share Market.
 Commodity Market.
 Bank Fixed Deposits.  FOREX Market.
 Public Provident Fund.

 National Savings Traditional Investment Avenues:

Certificates.  Real Estate (property).
 Post Office Savings.
 Government Securities.  Gold/Silver.
 Chit Funds.
Moderate Risk Investment Avenues:
 Mutual Funds. Emerging Investment Avenues:
 Virtual Real Estate.
 Life Insurance.  Hedge Funds.
 Private Equity Investments.
 Debentures.  Art and Passion.
 Bonds.

99
2. What do you think are the best options for investing your money? (choose
from above list) (Rank in the order of preference)

1.___________________________________ 2.___________________________________
3.______________________________________

4.___________________________________ 5.___________________________________
6.______________________________________

3. Reasons for selecting these options :

1_____________________________________________________________________________
____

2_____________________________________________________________________________
____

4. In the past, you have invested mostly in (write as many as applicable)

________________________________________________________________________
_____________________________________

________________________________________________________________________
_____________________________________

5. In which sector do you prefer to invest your money?

 Private Sector  Government Sector  Public Sector  Foreign Sector

6. What are the important factors guiding your investment decisions?

(Return, safety of principal, diversification, progressive values, etc.)?

100
7. What are your savings objectives?
 Children’s Education  Retirement  Home Purchase  Children’s
Marriage
 Healthcare 
others_______________________________________________________________

8. What is your investment objective?

 Income and Capital Preservation  Long-term Growth
 Growth and Income  short-term Growth

Others________________________________________________________________________
_________________________

9. What is the purpose behind investment?

 Wealth Creation  Tax Saving  Earn Returns  Future Expenses

Others________________________________________________________________________
________________________

10.Have you set aside funds specifically for the education and marriage of
your children?
If yes, please give amounts and how the funds are held
Education: Amount Rs.__________________________________ invested in
________________________________
Marriage: Amount Rs.__________________________________ invested in
________________________________

11.Do you have a formal budget for family expenditure?

 Yes  No

12.Do you have a savings and investment target amount you aim for each
year?
 Yes if yes:
Amount_______________________________________________________________________

101
  No

13.At which rate do you want your investment to grow?

 Steadily  At an Average Rate  Fast

14.Which factor do you consider before investing?

 Safety of Principal  Low Risk  High Returns  Maturity
Period

15. Do you invest your money in share market? (through a DEMAT A/C)
 Yes  No

If yes: Imagine that stock market drops after you invest in it then what will you do?
 Withdraw your money  Wait to increase  Invest more in it

16.How often do you monitor your investment?

 Daily  Monthly  Occasionally

17.What percentage of your income do you invest?

 0-15%  15-30%  30-50%

18.What is the time period you prefer to invest?

 Short-term (0-1yrs)  Medium-term (1-5yrs)  Long-term (>5yrs)

19.Can you take the risk of losing your principal investment amount?
 Yes  No If yes: What percentage ________________________

20.What is your source of investment advice?

 Newspapers  News Channels  Family or Friends
 Books  Internet  Magazines

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  Advisors  Certified Market Professional/Financial Planners
Personal Details
(Personal details are kept highly confidential; these details will not be revealed to any third
party)

Name: ____________________________________________________
Designation: _________________________________________

Organization: ________________________________________

Age Group:
 Below 20  Between 20-30  Between 30-40  Above 40

Qualification:
 Under Graduate  Graduate  Post Graduate
 Other: ______________________________________________

Occupation (what category do you come under):

 Salaried  Business  Housewife
 Student  Professional  Retired
 Other: ______________________________________________

Annual income:
 Below Rs. 2,00,000  Rs. 2,00,000- Rs 4,00,000
 Rs. 4,00,000-Rs 6,00,000  Above Rs. 6,00,000

Do you have a financial advisor?

 Yes  No

What best describes your investment experience?

 Beginning (no investment experience)
 Moderate (comfortable with fixed deposits, chit funds, post office)
 Knowledgeable (has bought or sold individual shares of stock or bonds)
 Experienced (frequently trade in stocks, commodities, options and futures)

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Date:

Signature:

You have successfully completed this Questionnaire

Thank you again for your time and support!

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