Comparative Study of Investors Preference Towards Banking and Stock Market

A PROJECT REPORT ON
“A COMPARATIVE STUDY OF INVESTOR’S PREFERENCE TOWARDS

BANKING AND STOCK MARKET.”
SUBMITTED TO
UNIVERSITY OF MUMBAI FOR PARTIAL COMPLETION OF
THE
DEGREE OF
BACHLOER IN COMMERCE
(ACCOUNTING AND FINANCE)
UNDER THE FACULTY OF COMMERCE
BY
Mr. SUDIP NATHURAM JADHAV.

UNDER THE GUIDENCE OF
Prof. GEETA CHAUDHARY
AVM’S KARMVEER BHAURAO PATIL DEGREE COLLEGE

ARTS, COMMERCE AND SCIENCE, THANE
FOR THE ACADEMIC YEAR 2019- 2020
1
A PROJECT REPORT ON

BANKING AND STOCK MARKET.”
SUBMITTED TO
UNIVERSITY OF MUMBAI FOR PARTIAL COMPLETION OF
THE
DEGREE OF
BACHLOER IN COMMERCE
(ACCOUNTING AND FINANCE)
UNDER THE FACULTY OF COMMERCE

BY
Mr. SUDIP NATHURAM JADHAV.

UNDER THE GUIDENCE OF
Prof. GEETA CHAUDHARY
AVM’S KARMVEER BHAURAO PATIL DEGREE COLLEGE

ARTS, COMMERCE AND SCIENCE, THANE
FOR THE ACADEMIC YEAR 2019- 2020
2
Certificate
This is to certify that Mr. Sudip Nathuram Jadav has worked and duly completed
her Project Work for the Degree of Bachelor in Commerce (Accounting and Finance)
under the Faculty of Commerce in the subject of Commerce and her project is entitled,
BANKING AND STOCK MARKET ” under my supervision.
I further certify that the entire work has been done by the learner under my guidance
and that no part of it has been submitted previously for any Degree of Diploma of any
University.
It is her own work and facts reported by her personal findings and investigation.
NAME AND SIGNATURE OF
GUIDING TEACHER
Date of submission:
3
Declaration
I the undersigned Mr. Sudip Nathuram Jadav here by, declare that the work embodied
in this project work titled “A COMPARATIVE STUDY OF INVESTOR’S
PREFERENCE TOWARDS BANKING AND STOCK MARKET”, forms my own
contribution to the research work carried out under the guidance of Prof. Geeta
Choudhary is a result of my own research work has not been previously submitted to
any other University for any other Degree/Diploma to this or any other University.
Wherever references has been made to previous works of others, it has been clearly
indicated as such and included in the bibliography.
I, here by further declare that all information of this document has been obtained and
presented in accordance with academic rules and ethical conduct.
Name and signature of the learner
Mr. Sudip Nathuram Jadav
Certified by
Prof. Geeta Choudhary
PROF.GEETA CHAUDHARY
4
ACKNOWLEDGEMENT
To list who all have helped me is difficult because they are so numerous and the depth
is so enormous.
I would like to acknowledge the following as being idealistic channels and fresh
dimension in the completion of this project.
I take this opportunity to thank the University of Mumbai for giving me chance to do
this project.
I would like to thank my Principal, Dr. Sunil Karve for providing the necessary
facilities required for completion of this project..
I take this opportunity to thank our Coordinator Prof. Santosh Gawde for his moral
support and guidance.
I would also like to express my sincere gratitude towards my Prof. GEETA

CHAUDHARY whose guidance and care made the project successful.
I would like to thanks my College Library, for having provided various reference
books and magazines related to my project.
Lastly, I would like to thank each and every person who directly or indirectly helped
me in completion of my project especially my parents and peers who supported me
throughout my project.
5
SUMMARY
In India most of the investment avenues are termed to be risky by the investors. The
major feature of investment as perceived by the investors is income stability, principal
amount, liquidity, easy transferability and approval. there are a number of investment
avenues available in India such as share, silver, real estate, gold, Life Insurance,
Bank, postal savings, etc. The desired level of Return and the tolerance for risk help
in deciding the choice of the investor. The investment may differ from provident
fund, national saving certificate, chit funds, insurance schemes, company fixed
deposits, government securities, bonds, equity, mutual fund schemes and derivatives.
It can be concluded that every investor want to save extra, be added risk directs to
more profit. This is the major reason why the perception of the investor changes
when it comes to the investment in equity and derivatives. There is lot confusion in
the investment patterns and the investment avenues to be decided between equity and
derivatives. The present research study aims to compare the perception of investors
towards Banking and equity.
The financial market in any country is vertebrae of economic scheme. The financial
market trends to help in the allotment of share capital in the sectors of an economy .
The allocation of capital helps in keeping a significant environment for investment
and savings. The financial system in India is more dynamic then the real system as it
tends to react to the changing needs of the economy. There are a number of
investment avenues in the financial system of India. There are some investment
avenues that tend to provide high returns and there are some that do not tend to
provide high returns. In addition to that the risk associated with investment avenues
is always fluctuating. Some avenues are very risky while some are not very risky .
These are the two major factors that affect the perception of the investors with respect
to the investment in equity and derivatives. Investment is termed as a perfect
investment, when the investment is able to satisfy the needs of the investors. This is
the major reason why the starting point of a perfect investment looks through the
needs of the investors
KEYWORDS: Equity, Derivatives, Investment, Risk and Saving.
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TABLE OF CONTENTS
Chapter No. Title of the chapter Page No.
1 Introduction 1
2 Research Methodology 21
3 Literature Review 27
4 Analysis and Interpretation of Data 35
5 Finding & Conclusion 52
A Bibliography 55
B Annexure 56
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DETAIL OF CONTENTS
Chapter No. Title of the chapter Page No.
1 Introduction 1
1.1 Background of the Study 1
1.2 Introduction to topic
1.3 Investment In Banking 7
1.4 Investment In Stock Market 11
2 Research Methodology 21
2.1 Rationale Of Study 21
2.2 Objectives 22
2.3 Problem Of Study 23
2.4 Factors Influencing Investment Decision 25
2.5 Limitations
2.6 Method Of Study 26
2.7 Sample Size and Sampling Method
2.8 Tools For Data collection
3 Literature Review 27
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4 Analysis and Interpretation of Data 35
Diagrams & Interpretations
5 Finding & Conclusion 52
5.1 Findings 52
5.2 Suggestions 53
5.3 Conclusions 54
A Bibliography 55
Websites
Books
B Annexure 56
Questionnaire
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CHAPTER NO. 1
INTRODUCTION
1.1 BACKGORUNF OH THE STUDY
Investment Alternatives
The problem of surplus gives rise to the question of where to invest in the past,
investment options were limited to real assets, banks and schemes of the post office. At
present a wide variety of investment avenues are open in the investors to suit their needs
and nature.
(A) BANKING
 Savings Account
It offers high liquidity and is very popular among the masses. They provide a lot of
flexibility for deposits and withdrawal of funds from the account and also have cheque
facility. The interest provided by Public sector bank is only 4%, however, some of the
private banks like Yes Bank and Kotak Bank offers interest between 6-7%.
 Recurring Deposit
It is a special type of term deposit where you do not need to deposit a lump sum savings
rather a person has to deposit a fixed sum of money every month (which can be as low
as Rs 100 per month). These accounts have maturities ranging from 6 months to 120
months. You can also give a standing order to the bank to withdraw a fixed sum of
money from your saving account on every fixed date and the same is credited to RD
account. However, the bank may charge some penalty for delay in paying the
installments.
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 Current Account
It is a demand deposit and is meant for businessmen to conduct their business

transactions smoothly. These are the most liquid deposits and there are no restrictions
on the number and the number of transactions in a day. Moreover, banks do not pay
any interest on these accounts.
 Fixed deposit
It is an instrument offered by banks which gives a higher interest than a regular savings
account and offers a wide range of tenures ranging from 7 days to 10 years. The rate of
interest varies from bank to bank, usually, it lies between 6-10%. You may or may not
have a separate bank account to open a fixed deposit with the bank. You may be charged
some penalty in case of early closure of FD account. However, with the focus of
government to have a bank account for everyone under the scheme of PRADHAN
MANTRI JAN DHAN YOJNA, you can open up a bank account for free if you do not
have one and enjoy various facilities offered by banks.
(B) Stock Market
 Equity Share
An equity investment generally refers to the buying and holding of

shares of stock on a stock market by individuals and firms in anticipation of income
from dividends and capital gains, as the value of the stock rises. Typically equity
holders receive voting rights, meaning that they can vote on candidates for the board
of directors as well as certain major transactions, and residual rights, meaning that
they share the company's profits, as well as recover some of the company's assets in
the event that it folds, although they generally have the lowest priority in recovering
their investment. It may also refer to the acquisition of equity (ownership)
participation in a private (unlisted) company or a startup company. When the
investment is in infant companies, it is referred to as venture capital investing and is
generally regarded as a higher risk than investment in listed going-concern
situations.
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 Preference Share
Capital stock which provides a specific dividend that is paid before any dividends
are paid to common stockholders, and which takes precedence over common stock
in the event of a liquidation. Like common stock, preference shares represent partial
ownership in a company, although stock shareholders do not enjoy any of the voting
rights of common stockholders. Also unlike common stock, preference shares pay a
fixed dividend that does not fluctuate, although the company does not have to pay
this dividend if it lacks the financial ability to do so. The main benefit to owning
preference shares are that the investor has a greater claim on the company’s assets
than common stockholders. Preferred shareholders always receive their dividends
first and, in the event the company goes bankrupt, preferred shareholders are paid
off before common stockholders. In general, there are four different types of
preferred stock: cumulative preferred stock, non-cumulative preferred stock,
participating preferred stock, and convertible preferred stock. Also called preferred
stock.
 Debenture
A debenture is a document that either creates a debt or acknowledges it, and it is a
debt without collateral. In corporate finance, the term is used for a medium- to long-
term debt instrument used by large companies to borrow money. In some countries
the term is used interchangeably with bond, loan stock or note. A debenture is thus
like a certificate of loan or a loan bond evidencing the fact that the company is liable
to pay a specified amount with interest and although the money raised by the
debentures becomes a part of the company's capital structure, it does not become
share capital. Senior debentures get paid before subordinate debentures, and there
are varying rates of risk and payoff for these categories.
Debentures are generally freely transferable by the debenture holder. Debenture
holders have no rights to vote in the company's general meetings of shareholders,
but they may have separate meetings or votes e.g. on changes to the rights attached
to the debentures. The interest paid to them is a charge against profit in the
company's financial statements.
 Bond
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A bond is an instrument of indebtedness of the bond issuer to the holders. It is a debt
security, under which the issuer owes the holders a debt and, depending on the terms
of the bond, is obliged to pay them interest (the coupon) and/or to repay the principal
at a later date, termed the maturity. Interest is usually payable at fixed intervals
(semiannual, annual, and sometimes monthly). Very often the bond is negotiable,
i.e. the ownership of the instrument can be transferred in the secondary market.
Bonds and stocks are both securities, but the major difference between the two is
that (capital) stockholders have an equity stake in the company (i.e. they are owners),
whereas bondholders have a creditor stake in the company (i.e. they are lenders).
Another difference is that bonds usually have a defined term, or maturity, after which
the bond is redeemed, whereas stocks may be outstanding indefinitely.
 Commercial Papers
In the global money market, commercial paper is an unsecured promissory note with
a fixed maturity of 1 to 271 days. Commercial paper is a money-market security
issued (sold) by large corporations to get money to meet short term debt obligations
(for example, payroll), and is only backed by an issuing bank or corporation's
promise to pay the face amount on the maturity date specified on the note. Since it
is not backed by collateral, only firms with excellent credit ratings from a recognized
rating agency will be able to sell their commercial paper at a reasonable price.
Commercial paper is usually sold at a discount from face value, and carries higher
interest repayment rates than bonds. Typically, the longer the maturity on a note, the
higher the interest rate the issuing institution must pay. Interest rates fluctuate with
market conditions, but are typically lower than banks' rates.
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1.2 Introduction to topic
Investment is the employment of funds on assets with the aim of earning income or
capital appreciation. Investment means putting your money to work to earn more money
or simply speaking it is sacrificing of money today for future return.
Investment is the employment of funds with the aim of achieving additional income or
growth in value. The essential quality of income is that, it involves waiting for a reward.
It involves the commitment of resources which have been saved or put away from
current consumption in the hope that some benefits will occur in future. The term
investment does not appear to be a simple as it has been defined. Investment has been
categorized by financial experts and economists. It has also often been confused
with the term speculation
Investment One of the most successful way to make financial provisions for the future,
where most of the conditions are uncertain and unpredictable. With well planned
investment one can get the satisfaction of safety and surety in life. We are familiar with
investment from very early days of civilization. Initially the term saving was more
popular, and was considered as safest way of making money stable.
Investment may be said as keeping a sum of money aside from the present savings with
the view of earning returns on it. It is done on the cost of sacrifice of present
consumption of that part of money.
The dictionary meaning of investment is to commit money in order to earn financial

return or to make use of the money for future benefits or advantages. People commit
money to investments with an expectation to increase their future wealth by investing
money to spend in future years.
All investments have some risk, whether in stock, capital market, banking, financial
sector, real estate, bullion, gold etc. The degree of risk however varies on the basis of
the features of the assets, investments instrument, the mode of investment, time frame
or the issuer of the security etc.
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Investment benefits both economy and the society. It is an outgrowth of economic
development and the maturation of modern capitalism.
Elements of Investment
 Reward
 Risk and Return
 Time
Why Should we Investment?
Financial reasons
1. To generate on your idle resources

2. To earn returns.
3. To protect and increase capital.
4. To have money for important events.
5. Make a provision for future uncertainties.
Other reasons
1. Tax saving
2. Income
3. Ease of withdrawal
Investing is not a game but a serious subject that can have a major impact on investor's
future wellbeing. Virtually everyone makes investments. Even if the individual does
not select specific assets such as stock, investments are still made through participation
in pension plan, and employee saving programme or through purchase of life insurance
or a home or by some other mode of investment like investing in Real Estate (Property)
or in Banks or in saving schemes of post offices. Each of this investment has common
characteristics such as potential return and the risk you must bear. The future is
uncertain, and you must determine how much risk you are willing to bear since higher
return is associated with accepting more risk. (Lopes, 1987) The individual should start
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by specifying investment goals. Once these goals are established, the individual should
be aware of the mechanics of investing and the environment in which investment
decisions are made.
Today the field of investment is even more dynamic than it was only a decade ago.
World event rapidly events that alter the values of specific assets the individual has so
many assets to choose from, and the amount of information available to the investors is
staggering and continually growing. The key to a successful financial plan is to keep
apart a larger amount of savings and invest it intelligently, by using a longer period of
time. The turnover rate in investments should exceed the inflation rate and cover
taxes as well as allow you to earn an amount that compensates the risks taken. Savings
accounts, money at low interest rates and market accounts do not contribute
significantly to future rate accumulation. While the highest rate come from stocks,
bonds and other types of investments in assets such as real estate. Nevertheless, these
investments are not totally safe from risks, so one should try to understand what kind
of risks are related to them before taking action. The lack of understanding as how
stocks work makes the
Furthermore, inflation has served to increased awareness of the importance of financial

planning and wise investing.
TYPES OF INVESTORS:
 Individual investors: (including trusts on behalf of individuals, and umbrella

companies formed for two or more to pool investment funds)
 Collectors of art, antiques, and other things of value
 Angel investors, either individually or in groups
 Venture capital funds which serve as investment collectives on behalf
of individuals, companies, pension plans, insurance reserves, or other funds.
 Investment bank
 Investment trusts and
 Real estate investment trusts
 Where one can invest?
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Securities Market:
 Money Market
 Bond Market
 Mortgage Market
 Stock Market
 Foreign Exchange Market
 Derivatives Securities Market
Depository Institutions:
 Commercial Banks
Other Financial Institutions:
 Insurance Companies
 Securities firms and investment banks
 Mutual funds
 Finance companies
 Pension funds
Investment Decisions are majorly affected by following factors.

1. Amount available for investment
2. Available time period for investment.
3. Return Expected
4.Investors risk bearing Capacity
1.3 INVESTMENT IN BANKING
A. DEFINATION
A bank is a financial institution licensed to receive deposits and make loans. Banks
may also provide financial services such as wealth management, currency exchange,
and safe deposit boxes. There are several different kinds of banks including retail
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banks, commercial or corporate banks, and investment banks. In most countries,
banks are regulated by the national government or central bank .
B. INTRODUCTION
Banking in India originated in the last decades of the 18th century. Investment in
banking is most popular way of investment in India. Majority of the Indian invest their
money in banks. It is safest but not risk free mode of investment and provide us
moderate return from our investment. Maximum wealth of the Indians is deposited in
banks due to the less risk appetite of investor. They are not willing to take risk to invest
in share market or other financial instrument apart from banking.
C. FEAUTURES
1.Deals with money
The Main Features of a bank is that it deals with all the money-related transactions. For
example, you can deposit your money in a bank account to save it securely, and you
will also get interested in the money that you will save in the account.
2. Withdrawal and payment facilities
A Bank provides various payment and withdrawal services to customers so that they
can receive their money hassle-free. Customers can withdraw money using cheques and
drafts and also from the ATMs installed by the banks at different locations in the
city.They can withdraw money using the debit cards provided by the bank the card is
directly linked with the bank and customers can withdraw money anywhere in the world
without going to the bank and even without carrying their passbook.
3. Internet services
Another feature of a Bank is that modern banks are also providing internet services.
The development of the internet and its inclusion in the banking sector has made it even
more easy for people to carry out various transactions.
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4.Increasing functionality
Like other industries banking sector is also focused on enhancing their functionality.
Banks have developed from just providing money lending and cash deposit and
withdrawal services to providing loans and credit to cashless bank services to internet
and mobile banking.It is one of the fields which are growing fastest. It will not be wrong
to assume that banks will be providing more services in the future in addition to internet
banking and mobile banking and people’s dependency on the cash will reduce to almost
zero percent.
5.Branches at different locations
Also, the features of a bank include services to its customers wherever they live in the
whole world. Most banks are opening their branches the rural part of the country to
connect people with the banks and to gain more profit.People are not required to travel
miles like the old times to do banking.They can visit the nearest branch to them. Each
bank is opening more and more branches with the increase in the population so that
they can satisfy their customers properly by being near to them.
D. IMPORTANCE
1. Bring Economic Stability In The Country:
The banks play a prominent role in providing stability to a country

economically. It helps in getting out of depression or inflation. During depression the
banks follow a cheap money policy and generate money income which pushes up the
consumption level and the economy gets price support to reactivate production units
and the produced level is enhanced which raises the employment level.
The investment rises to stimulate saving and to expand which further increases
employment opportunities. Similarly the banks specially the central banks take certain
measures to control inflation in the economy. The central bank through it is well
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adjusted monetary policy stabilizes the internal price level and thus facilitates economic
& development in the country.
2. Co-Ordinate among All the Units:
The banking system maintains coordination among all the units which are engaged in
banking functions. It consists of collecting of surplus money from the people and
lending them to the entrepreneurs who utilize it for productive purposes.
Creating a country wide circulation of money through remittance facilities.

Activating idle money to make them productive Provide finance by credit
accommodation to different sectors of the economy.
3. Accurate Investment:
The banks constitute a source of accelerating investment in the economy. The

funds collected from the depositors are used for financing development projects in the
public and private sectors and for granting loans and advance for raising the production
level of the country.
4. Capital Formation:
In any plan of economic development capital occupies a place of pivotal

importance. Without capital nothing can be achieved effectively. Savings of the people
is capitalized through lending by banks.
5. Creation of Money:
Banks create money in the sense that through credit granted to entrepreneurs,
whether to the private or government agents they increase supply of money which they
manage because of inflow of fund through deposits. The development agencies manage
to bridge the gap between the income and expenditure and thus the development work
continues undisturbed
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C. FUNCTIONS
1. Primary Functions:
i. Accepting deposits
ii. Advancing loans
iii. Investments of funds
iv. Credit creation
2. Secondary Functions:
i. Agency functions
ii. General utility functions
1. PRIMARY FUNCTIONS:
I. ACCEPTING DEPOSITS: The most important function of commercial banks is to

accept deposits from public. This is the primary functions of a commercial bank. Banks
receives the idle savings of people in the form of deposits and finances the temporary
needs of commercial and industrial firms.
A commercial bank accepts deposit from public on various account, important deposit
account generally kept by bank are:
A. Saving Bank Deposits: This type of deposits suit to those who just want to keep
their small savings in a bank and might need to withdraw them occasionally. One or
two withdrawals up to a certain limit of total deposits are allowed in a week. The rate
of interest allowed on saving bank deposits is less than that on fixed deposits. Depositor
is given a pass book and a cheque book. Withdrawals are allowed by cheques and
withdrawal form.
B. Current Deposits: This type of account is generally kept by businessmen and

industrialists and those people who meet a large number of monetary transactions in
their routine. These deposits are known as short term deposits or demand deposits. They
are payable demand without notice. Usually no interest is paid on these deposits
because the bank cannot utilize these deposits and keep almost cent per cent reserve
against them. Overdraft facilities are also available on current account.
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C. Fixed Deposits: These are also known as time deposits. In this account a fixed
amount is deposited for a fixed period of time. Deposits are payable after the expiry of
the stipulated period. Customers keep their money in fixed deposits with the bank in
order of earn interest. The banks pay higher interest on fixed deposits. The rates depend
upon the length of the period and state of money market. Normally the withdrawals are
not allowed from fixed deposits before the stipulated date. If it happens, the depositor
entails an interest penalty.
D. Other Deposits: Banks also provide deposit facilities to different type of customers
by opening different account. They also open. ‘Home Safe Account’ for housewife or
very small savers. The other accounts are ‘Indefinite Period Deposit a/c’, ‘Recurring
Deposit a/c’, ‘Retirement Scheme’ etc.
II. ADVANCING OF LOANS: The second main function of the commercial bank is
to advance loans. Money is lent to businessmen and trade for short period only. These
banks cannot lend money for long period because they must keep themselves ready to
meet the short term deposits. The bank advances money in any one of the following
forms:
A. Cash Credit: Cash Credit is a type of advance wherein a banker permits his
customer to borrow money upto a particular limit by a bond of credit with one or more
securities. The advantage associated with this system is that a customer can withdraw
money as and when required. The bank will charge interest only on the actual amount
withdrawn by the customer. Many industrial concerns and business houses borrow
money in this form.
B. Overdraft: An overdraft is an arrangement by which the customer is allowed to

overdraw his account. It is granted against some collateral securities. The facility to
overdraw is allowed through current account only. Interest is charged on the exact
amount of overdrawn subject to the payment of minimum amount by way of interest.
C. Loan: Loan is an advance in lump sum amount the whole of which is withdrawn
and is supported to be rapid generally wholly at one time. It is made with or without
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security. It is given for a fixed period at in agreed rate of interest. Repayments may be
made in installments or at the expiry of a certain period.
D. Discounting bill of exchange: The bank also gives advances to their customers by
discounting their bills. The net amount after deducting the amount of discount is
credited to the account of customer. The bank may discount the bills with or without
any security from the debtor in addition to the personal security of one or more person
already liable on the bill.
III. INVESTMENT OF FUNDS: Besides loan and advances, banks also invest a part
of its funds in govt. and industrial securities. Banks purchases both govt. and industrial
securities like govt. bills, share, debentures, etc. from their market.
iv. Credit Creations: The banks create credit. When a bank advances a loan, it does
not give cash to the borrower. It opens an account in the name of the borrower. The
borrower is allowed to withdraw money by cheque whenever he needs. This is known
as Credit Creation.
2. SECONDARY FUNCTIONS: It is divided into two parts:
I. AGENCY SERVICES: Modern Banks render service to the individual or to the

business institutions as an agent. Banks usually charge little commission for doing these
services. These services are as follows:
A. Remittance of Funds: Banks help their customers in transferring funds from one
place to another through cheques, drafts etc.
B. Collection and Payment of Credit Instruments: Banks collects and pays various
credit instruments like cheques, bill of exchange, promissory notes etc.
C. Purchasing and Sale of Securities: Banks undertake purchase and sale of various
securities like shares, stocks, bonds, debentures etc. on behalf of their customers. Banks
neither give any advice to their customers, regarding this investment, nor levy any
charge of them for their services, but simply perform the function of a broker.
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D. Income Tax Consultancy: Sometimes bankers also employ income tax experts not
only to prepare income tax returns for their customer but to help them to get refund of
income tax in appropriate cases.
E. Acting as Trustee and Executor: Banks preserve the wills of their customers and
execute them after their death.
F. Acting as Representatives and Correspondent: Sometimes the banks act as

representatives and correspondents of their customers. They get passports, travelers
tickets secure passages for their customers and receive letters on their behalf.
G. portfolio management: large banks undertake to purchase and to sell securities

(shares and securities) on behalf of the client. Accordingly, the client account is debited
in case of purchase, and credit in the case of sale of securities.
II. GENERAL UTILITY SERVICES: A modern bank now a days serves its
customers in many other ways:
A. Locker Facility: Banks provides locker facility to their customers. The customers
can keep their valuables and important documents in these lockers for safe custody.
B. Traveler’s Cheques: Bank issue travelers cheque to help their customers to travel
without the fear of theft or loss of money.
C. Gift Cheque: Some banks issue Cheques of various denominators to be used on

auspicious occasions. These are known as “gift Cheques” as they are gifted to others.
D. Letter of Credit: Letter of credit is issued by the banks to their customers certifying
their credit worthiness. Letter of credit is very useful in foreign trade.
E. Foreign Exchange Business: Banks also deal in the business of foreign currencies.
Again, they may finance foreign trade by discounting foreign bills of exchange.
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F. Collection of Statistics: Banks collects statistics giving important information
relating to industry, trade and commerce, money and banking. They also publish
journals and bulletins containing research articles on economic and financial matters
G. issue of draft: a bank issues draft to its account holders as well as non-account
holders. A draft is an order to pay money from one branch of a bank to another branch
of the same bank or some other bank. Draft help to transfer money from one place to
another.
1.4 INVESTMENT IN STOCK MARKET
A. DEFINATION
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The stock market refers to the collection of markets and exchanges where regular
activities of buying, selling, and issuance of shares of publicly-held companies take
place. Such financial activities are conducted through institutionalized formal
exchanges or over-the-counter (OTC) marketplaces which operate under a defined set
of regulations. There can be multiple stock trading venues in a country or a region
which allow transactions in stocks and other forms of securities.
B. INTRODUCTION
Stock markets refer to a market place where investors can buy and sell stocks. The price
at which each buying and selling transaction takes is determined by the market forces.
In earlier times, buyers and sellers used to assemble at stock exchanges to make a
transaction but now with the dawn of IT, most of the operations are done electronically
And the stock markets have become almost paperless. Now investor’s don’t have to
gather at the Exchanges, and can trade freely from their home or office over the phone
or through Internet.
Stock exchange is an organized market where Government securities, shares, bonds and
debentures of the trading units are regularly transacted. Stock exchange provides a place
to the buyers and sellers of the shares and securities. Stock exchange indicates about
the good or bad health of economy. If the share prices are raising it means country is
running on the path of development and prosperity.
People have earned fortunes from the stock markets, but there are people who have lost
everything due to incorrect timings or selection of fundamentally weak companies
 A stock market/share market is a public market (a loose network of economic

transactions not a physical facility or discrete entity) for the trading of company
stock and derivatives at an agreed price; these are securities listed on a stock
exchange as well as those only traded privately.
 A place where shares, stocks and bonds are bought and sold.
26
A market in which shares of different companies are bought and sold. Technical
Analysis: Anticipating future price movements using historical prices. Trading volume,
open interest, and other trading data to study price patterns.
B. FEATURES OF STOCK MAKET:
• Market for securities: Stock trade is, where securities of corporate bodies, government
and semi-government bodies are purchased and sold.
• Deals in second hand securities: It manages shares, debentures bonds and such
securities as of now issued by the organizations. In short it manages existing or second
hand securities and henceforth it is called optional market.
• Regulates exchange securities: Stock trade does not purchase or offer any securities
all alone record. It simply gives the essential framework and offices for exchange
securities to its individuals and specialists who exchange securities. It controls the
exchange exercises in order to guarantee free and reasonable exchange
• Allows dealings just in recorded securities: actually, stock trades keep up an official
rundown of securities that could be obtained and sold on its floor. Securities which don't
figure in the official rundown of stock trade are called unlisted securities. Such unlisted
securities can't be exchanged the stock trade.
• Transactions affected just through individuals: All the exchanges in securities at the
stock trade are affected just through its approved representatives and individuals.
Pariahs or direct speculators are not permitted to enter in the exchanging circles of the
C. FUNCTIONS
1. Economic Barometer:
A stock exchange is a reliable barometer to measure the economic condition of a
country.
Every major change in country and economy is reflected in the prices of shares. The
rise or fall in the share prices indicates the boom or recession cycle of the economy.
27
Stock exchange is also known as a pulse of economy or economic mirror which reflects
the economic conditions of a country.
2. Pricing of Securities:
The stock market helps to value the securities on the basis of demand and supply factors.
The securities of profitable and growth oriented companies are valued higher as there
is more demand for such securities. The valuation of securities is useful for investors,
government and creditors. The investors can know the value of their investment, the
creditors can value the creditworthiness and government can impose taxes on value of
securities.
3. Safety of Transactions:
In stock market only the listed securities are traded and stock exchange authorities
include the companies names in the trade list only after verifying the soundness of
company. The companies which are listed they also have to operate within the strict
rules and regulations. This ensures safety of dealing through stock exchange.
4. Contributes to Economic Growth:

In stock exchange securities of various companies are bought and sold. This process of
disinvestment and reinvestment helps to invest in most productive investment proposal
and this leads to capital formation and economic growth.
1.5 REGULATORY BODY OF INDIAN BANKS AND SHARE

MARKET
India has a financial system that is regulated by independent regulators in the sectors of
banking, insurance, capital markets and various service sectors. The Indian Financial
system is regulated by two governing agencies under the Ministry of Finance.
1. Reserve Bank of India
The RBI was set up in 1935 and is the central bank of India. It regulates the financial
and banking system. It formulates monetary policies and prescribes exchange control
norms. The current Governor of RBI is Mr. Shaktikanta Das
28
2. The Securities Exchange Board of India (SEBI)
The Securities and Exchange Board of India (frequently abbreviated SEBI) is the
regulator for the securities market in India. It was formed officially by the Government
of India in 1992 with SEBI Act 1992 being passed by the Indian Parliament. Mr. Ajay
Tyagi is the current chairmen of SEBI.
The capital markets division of the Department of Economic Affairs regulates capital
markets and securities transactions. The capital markets division has been entrusted
with the responsibility of assisting the Government in framing suitable policies for the
orderly growth and development of the securities markets with the SEBI, RBI and other
agencies. It is also responsible for the functioning of the Unit Trust of India (UTI) and
Securities and Exchange Board of India (SEBI).
29
CHAPTER NO. 2
RESEARCH METHODOLOGY
Research is defined as human activity based on intellectual application in the

investigation of matter. The primary purpose for applied research is discovering
interpreting and the development of methods and systems for the advancement of
human knowledge on a wide variety of scientific matters of our world and the universe.
The term research is also used to describe an entire collection of information about a
particular subject.
It is the method followed while conducting the study on a particular project. Through
this methodology a systematic study is conducted on the basis of which the basis of a
report is produced. It includes not only the research methods but also considers the
logic behind the methods used in the context of the study and explains why only a
particular method or technique has been used. The methodology adopted for studying
the objectives of comparative study of investors preferences towards banking and
share market
Research is an inseparable part of human knowledge. Its role in human life is as
precious as that of salt in a vegetable. Life would lose its taste without research exactly
in the same manner as a vegetable without salt. Modern academics just cannot stand
and meet the aspirations of a matured society, if it does not provide for research and
investigation.
Research is an important pre-requisite for a dynamic social order. The society has
marched on to its present form with the help of constant research and investigation. As
far as men’s inquisition has been able to go, so far has his society progressed? Along
March from Stone Age to computer age has been the result of research and as long as
men’s inquisitive pursuits do not end, the onward march of human society to more
advanced achievements will not stop. The deepest ocean is the ocean of knowledge and
the depth of which is unknown. Shall man reach this depth is a big question, but that
man has dived deeper and deeper is certainly a reality and the manifestation of his
ingenuity, dexterity and determination and hence the optimism that man shall strive
30
hard and continuously to reach the bottom of the ocean. The shape of things and the
order of the society shall continuously change.
2.1 RATIONALE OF STUDY:
The rational of the study is to analyze the various causes of lowered investment ratio
between banking and share market. In India only 2% (approx.) people are invest in
share market and rest of the deposit their money in banks.
The project aimed at studying the investor preference towards banking and share
market. For this reason investor opinions were collected and common view was found
out. This was done with the help of questionnaire.
Questionnaire were filled by the investor of thane city
The opinion of the gave us an overall view about the investors opinion towards the
investment in bank & share market.
The data is collected and carefully analyzed then appropriate statically tool is applied.
2.2 OBJECTIVES
 To study the investment pattern of investors.

 The main objective of the study is to find out the investment pattern of the investors
towards banking and Stock market.
 To determine what factors influence them while they choose a particular
investment, a particular sector and in which particular scheme they prefer to invest
and to find out whether they are satisfied with their investment decision.
 To study the awareness of people of thane region towards share market.
 To find out the major problems faced by investors in share market and bank.
 To study the difference between various investment options
 To study the financial performance of the banks and share market
 To suggest future prospective of these two investment avenues
 To examine the assessment, perception and evaluation of risk associated with
investments.
31
 To suggest measures to overcome the problem for enhancing small investors
participation in the Indian capital market
2.3 PROBLEM OF STUDY
The statement of the problem under study is to analyze the investment pattern of investors and the
popularity of different investment avenues for investment. This problem tries to identify the
investor’s perception and their risk taking ability while investing in bank and share market
2.4 FACTORS INFLUENCING INVESTMENT DECISION
Inflation:
The Indian investor is faced with a high rate of inflation. Price rise has been very high
since January 2008. The prices of all essential commodities rose. The prices of milk
and milk products, spices and edible oils increased. Petrol prices increased.
Under these conditions, the investor has to consider the investment opportunities in the
economy. It is to be expected that the rise in prices will reduce the ability of an average
investor to make investments and he will save not out of willingness to save, but will
make forced savings in those outlets which will give him maximum benefit out of his
limited resources.
Taxation:
The Indian investor is to a great extent affected by the taxation policy of the
Government. He would plan his investments in a manner so that he would have to pay
a minimum direct tax. His investments would be directed to those schemes which would
give him tax relief. For example, Life Insurance premium, provident fund, units and
National Savings Certificates enable the investor to save from the tax point of view.
The taxation system in the country is such that it takes away whatever surplus an
individual has unless he saves in the investment schemes which give him tax relief.
Thus, the Indian investor is forced to invest in those outlets which give him tax relief.
Currently up to Rs. 1, 00,000 in specified investments can get tax relief for an investor.
32
Stock Market Conditions:
The stock market is the nerve center of investments in a country. The Indian investor
has seen the stock exchange undergoing several changes in 2007. Due to government
policies, there was a positive climate and an individual investor’s mood and sentiment
was for investing in corporate securities, from 2005-2997.
In January 2008, the stock market crashed, and the market kept moving low up to April.
Although prices of both new companies and blue chip companies crashed, the Indian
investor is thus faced with a sluggish state of stock market at the present juncture and
it is in this context this behavior and attitude towards investments must be judged.
Manipulation of Share Prices:

Another factor which affects the Indian investor is the helpless and inadequate nature
in which he deals with the investment climate in the country. An investor who has
power either through position, status or money has great control over the investment
outlets in the country.
It is the ordinary middle class investor who suffers a great deal because he is
unprotected in the Indian environment. Despite SEBI regulations, crashes and scams
continue in the stock market in India.
Safety of principal
The investor, to be compound their selection policies. Certain of the safety of principal,
should carefully review the economic and industry trends before choosing the types of
investment. Errors are avoidable and therefore, to ensure safety of principal, the
investor should consider diversification of assets. Adequate diversification involves
mixing investment commitments by industry, geographically, by management, by
financial type and maturities. A proper combination of these factors would reduce
losses.
Liquidity
Even investor requires a minimum liquidity in his investment to meet emergencies.
Liquidity will be ensured if the investor buys a proportion of readily saleable securities
out of his total portfolio. He may therefore, keep a small proportion of cash, fixed
33
deposits and units which can be immediately made liquid investments like stocks and
property or real estate cannot ensure immediate liquidity.
Income stability
Investment pattern of investors on different products Regularity of income at a
consistent rate is necessary in any investment pattern. Not only stability, it is also
important to see that income is adequate after taxes. It is possible to find out some
good securities, which pay Appreciation and purchasing particularly all their earnings
in dividends.
Appreciation and purchasing power stability:
Investors should balance their portfolios to fight against any purchasing power stability.
Investors should judge price level inflation, explore their possibility of gain and loss in
the investments available to them, limitations of personal and family considerations.
The investor should also try and forecast which securities will possibly appreciate. A
purchase of property at the right time will lead to appreciation in time. Growth stock
will also appreciate over time. These, however, should be done thoughtfully and not
in a Legality and freedom from care all investments should manner of speculation.
And other:
34
 DISADVANTAGES
A. BANKING
1. Returns
The ironclad security of bank investments, whether in accounts or CDs, is balanced out
by the painfully low returns on these financial services. Checking accounts earn no
interest; savings accounts earn a very small amount, usually amounting to 1 or 2
percent. Even with a large amount of money invested, you'll be earning pennies with
these types of investments. Money market accounts and CDs earn more. Typical rates
for a CD are 5 percent, according to BYG Publishing.
2. Liquidity
Depending on the type of bank investment you make, liquidity can be either an
advantage or a disadvantage. It is an advantage if you possess a savings account. While
35
you may earn small returns, you typically have access to money in a savings account at
any time. For CDs and money market accounts, there are limits on when you can access
your money. In opposition to this, stock market investments are, in theory, very liquid:
You can sell your stock at any time. But, the practicalities of the market dictate that to
recoup money lost or to realize higher returns, you may be forced to leave your money
in stocks until the price reaches a point where you can make money or make back
money lost.
B. SHARE MARKET
1. Volatile Investments
Investment in BSE is subjected to many risks since the market is volatile. The shares
of a company go up and come down so many times in just a single day. These price
fluctuations are unpredictable most of the times and the investor sometimes have to
face severe loss due to such uncertainty.
2. Brokerage Commissions Kill Profit Margin
Every time an investor buys or sells his shares, he has to pay some amount as a
brokerage commission to the broker, which kills the profit margin.
3. Time Consuming
Investment in NSE is not as easy as investing in a lottery as you have to complete

many formalities in the process and hence is time consuming.
4. DIVIDEND
The dividend which a shareholder receives is neither fixed nor controllable by investor.
The management of the company decides how much dividend should be given. If there
is a loss, there is no question of dividend. If there is a profit, unless Board of Directors
propose dividend, investors will not receive dividend.
5. HIGH RISK
Equity share investment is a risky investment as compared to any other investment like
debts etc. The money is invested based on the faith an investor has in the company.
There is no collateral security attached with it.
36
6. FLUCTUATION IN MARKET PRICE
The market price of any equity share has a wide variation. It is always very difficult to
book profits from the market. On the contrary, there are equal chances of losses.
7. LIMITED CONTROL
An equity investor is a small investor in the company, therefore, it is hardly possible o
impact the decision of the company using the voting rights.
8. RESIDUAL CLAIM
An equity shareholder has a residual claim over both the assets and the income. Income
which is available to equity shareholders is after the payment of all other stakeholders’
viz. debenture holders etc.
2.5 Limitations
 On this topic secondary data is not easily available

 Most of the respondent below age 20 they earn but do not invest
 Charts on comparison between banking sector and share market are not available
 No reference books are available regarding this topic
 Share market prices are volatile in nature therefore it is difficult to compare Between
current market price and interest rate of banks
 This analysis is carried on certain assumptions hence the assumptions Would be
biased
 Limitation of area of research
 The study is primary based on secondary data.
 Different tools used for Study may suggest different results as the approach differs.
Some Changes in accounts procedure by concern may often make financial Analysis
misleading.
37
2.6 METHOD OF STUDY
Research Design:
The research will be Descriptive in nature. A population of investor who invest in

banks and share market will be considered for this study. I will try to explore the
investment behavior of the Investor. Effort will be made to throw light on most of the
factors which have either indirect or direct effect on the behavior of the investment.
Since the type of study is descriptive in nature hence the research design will be guided
by following parameters.
1. The Research Problem:
A research problem is a statement about an area of concern, a condition to be

improved, a difficulty to be eliminated, or a troubling question that exists in scholarly
literature, in theory, or in practice that points to the need for meaningful understanding
and deliberate investigation. In some social science disciplines the research problem is
typically posed in the form of a question. A research problem does not state how to do
something, offer a vague or broad proposition, or present a value question. The research
problem on hand is a to find out investor preference towards the investment in banking
and share market.
2. Procedures and techniques to use for gathering information
Observation and questionnaire is a data collection instrument consistent of a series of

questions and other prompts for the purpose of gathering information from respondents.
A proper and balanced combination of observation, questionnaire of sample population
will be adapted by me for gathering information.
3. The population to be studied
In order to bring our some accurate conclusions, it is decided to contact the investors in
thane region
38
VARIABLE TO BE USED
Independent Variable: Income, Age, Education, Gender
Dependent Variable : Investment in Banking & Share Market
Moderate Variable : Economical Environment
Schematic diagram for the theoretical framework including a moderating

variable
Income
Age
Investment in Banking & Share

Education
Market
Dependent variable
Gender
Economic
Independent Variable Environment
Moderate Variable
Sampling Design:
A sample design is the framework, or road map, that serves as the basis for the selection
of a survey sample and affects many other important aspects of a survey as well. In a
broad context, survey researchers are interested in obtaining some type of information
through a survey for some population, or universe, of interest. One must define a
sampling frame that represents the population of interest, from which a sample is to be
39
drawn. The sampling frame may be identical to the population, or it may be only part
of it and is therefore subject to some under coverage, or it may have an indirect
relationship to the population
2.7 Sample Size and Sampling Method
Sampling unit – The target population must be defined that has to be sampled. The
sampling unit of research included students and professionals residing in thane city.
.Sample size – This refers to number of respondents to be selected from the thane city
to constitute a sample. The sample size of 50 Investors will be taken.
Sampling Technique – In this project, Questionnaire Method will be used for the
collecting the data.
2.8 Tools For Data Collection
In this research two types of data were used

1. Primary data
2. Secondary data
Primary data:
Primary data is that data which has been collected especially for the purpose of this
newly taken research. This preliminary data for this research project has been collected
by the means of a questionnaire designed to determine those factor which are designated
by the various investors which were important to them in the decision making process.
These questionnaires were completed by this researcher within the confines of thane
area. Various Professional/investors/student were the locus of this
interviewing/questionnaire filling procedure.
Secondary Data:
secondary information was obtained from trade journal, magazines, Newspaper and
from the internet
40
CHAPTER NO. 3
LITERATURE REVIEW
The literature review includes the academic books, journals, internet access, magazines
etc. Various studies on An Study on Awareness of People on Indian Stock Market had
been conducted in Indian context. Depending on the various issues of investment, the
review has been discussed in brief as follows:
 Grewal S.S and Navjot Grewall (1984) revealed some basic investment rules
and rules for selling shares. They warned the investors not to buy unlisted
shares, as Stock Exchanges do not permit trading in unlisted shares. Another
rule that they specify is not to buy inactive shares, i.e., shares in which
transactions take place rarely. The main reason why shares are inactive is
because there are no buyers for them. They are mostly shares of companies,
which are not doing well. A third rule according to them is not to buy shares in
closely-held companies because these shares tend to be less active than those of
widely held ones since they have a fewer number of shareholders. They caution
not to hold the shares for a long period, expecting a high price, but to sell
whenever one earns a reasonable reward.
 Jack Clark Francis (1986) revealed the importance of the rate of return in
investments and reviewed the possibility of default and bankruptcy risk. He
opined that in an uncertain world, investors cannot predict exactly what rate of
return an investment will yield. However he suggested that the investors can
formulate a probability distribution of the possible rates of return. He also
opined that an investor who purchases corporate securities must face the
possibility of default and bankruptcy by the issuer. Financial analysts can
foresee bankruptcy. He disclosed some easily observable warnings of a firm's
failure, which could be noticed by the investors to avoid such a risk.
 Preethi Singh (1986) disclosed the basic rules for selecting the company to
invest in. She opined that understanding and measuring return and risk is
fundamental to the investment process. According to her, most investors are
'risk averse'. To have a higher return the investor has to face greater risks. She
concludes that risk is fundamental to the process of investment. Every investor
should have an understanding of the various pitfalls of investments. The
41
investor should carefully analyze the financial statements with special reference
to solvency, profitability, EPS, and efficiency of the company
 Carter Randal (1992) offered to investors the underlying Principals of winning
on the stock market. He emphasized on long-term vision and a plan to reach the
goals. He advised the investors that to be successful, they should never be
pessimists. He revealed that though there has been a major economic crisis
almost every year, it remains true that patient investors have consistently made
money in the equities market. He concluded that investing in the stock market
should be an un-emotional Endeavour and suggested that investors should own
a stock if they believe it would perform well.
 Donald E Fischer and Ronald J. Jordan12 (1994) analyzed the relation
between risk, investor preferences and investor behavior. The risk return
measures on portfolios are the main determinants of an investor's attitude
towards them. Most investors seek more return for additional risk assumed. The
conservative investor requires large increase in return for assuming small
increases in risk. The more aggressive investor will accept smaller increases in
return for large increases in risk. They concluded that the psychology of the
stock market is based on how investors form judgments about uncertain future
events and how they react to these judgments.
 S. Rajagopal (1996) commented on risk management in relation to banks. He
opined that good risk management is good banking. A professional approach to
Risk Management will safeguard the interests of the banking institution in the
long run. He described risk identification as an art of combining intuition with
formal information. And risk measurement is the estimation of the size,
probability and timing of a potential loss under various scenarios.
 CRISIL Report on Risk Management (2000) stated that the loss potential
from market risk will increase in the absence of strong risk management tools.
The banks which adopt a pro-active approach to upgrading risk management
skills which are currently unsophisticated as compared to internationally best
practices, would have a competitive edge in future. The report commented that
in the increasingly deregulated and competitive environment, the risk
management strategies of banks would hold the key to differentiation in their
credit worthiness.
42
 Raghavan R.S. (2000) reviewed the need for a risk management system, which
should be a daily practice in banks. He opined that bank management should
take upon in serious terms, risk management systems, which should be a daily
practice in their operations. He is very much sure that the task is of very high
magnitude, the commitment to the exercise should be visible, and failure may
be suicidal as we are exposed to market risks at international level, which is not
under our control as it was in the insulated economy till sometime back.
 Shrotriya (2003) conducted a survey on investor preferences in which he
depicted the linkage of investment with the factor so considered while making
investment. He says “There are various factors and their linkage also. These
factors help us how to ensure safety, liquidity, capital appreciation and tax
benefits along with returns.”
 Financial Management by ‘I .M. Pandey’- The information regarding nature
of financial management, portfolio management, risk-return relationship,
options, derivatives and valuation of shares have been understood from this
book.
 Bhardwaj (2003) has stated the literature on globalization He found the
pervasiveness of the west’s perception of the world effect on Indian investors
that affects the trends in investor’s choice. They are hugely affected by the
west’s views and so changes in Indian trends occur.
 Ranganathan (2003) has stated the investor behavior from the marketing world
and financial economics has brought together to the surface an exciting area for
study and research: behavioral finance. The realization that this is a serious
subject is, however, barely dawning. Analysts seem to treat financial markets as
an aggregate of statistical observations, technical and fundamental analysis. A
rich view of research waits this sophisticated understanding of how financial
markets are also affected by the ‘financial behavior’ of investors. With the
reforms of industrial policy, public sector, financial sector and the many
developments in the Indian money market and capital market, mutual funds that
has become an important portal for the small investors, is also influenced by
their financial behavior. Hence, this study has made an attempt to examine the
related aspects of the fund selection behavior of individual investors towards
Mutual funds, in the city of Mumbai. From the researchers and academicians
43
point of view, such a study will help in developing and expanding knowledge
in this field.
From the above reviews it can be concluded that many researches had been
conducted before relating to the investment patterns and the few researchers
studied the literature only on the basis of returns. Analysts treated financial
markets as an aggregate of statistical observations, technical and fundamental
analysis but no researches had been conducted on Investment pattern of investor
towards banking and share market. This gap had been identified so that in this
respect present study had been conducted and the investors are guided towards
the positive direction.
 Meenakshi Chaturvedi, Shruti Khare (2012) proclaimed that the age of
investor cannot be taken to influence their level of awareness and it is very clear
from the results that the gender of the investor has no effect or influence on his
or level of awareness about any investment channel.
 Singh (2012) conducted an empirical study of Indian investors and observed
that most of the respondents do not have much awareness about the various
function of mutual funds and they are bit confused regarding investment in
mutual funds. The study found that some demographic factors like gender,
income and level of education have their significant impact over the attitude
towards mutual funds. On the contrary age and occupation have not been found
influencing the investor’s attitude. The study noticed that return potential and
liquidity have been perceived to be most lucrative benefits of investment in
mutual funds and the same are followed by flexibility, transparency and
affordability.
 JothiBaskara Mohan, Ramji P.R. (2013) conducted a study on „Women
Investors Recital at Rajapalayam City - A Study‟. The results of the study shows
that 92 per cent of respondents are aware of Investment and remaining 8 per
cent are unaware of Investment avenues.
 Saini et., al. (2011)analyzed investor’s behavior, investors opinion and
perception relating to various issues like type of mutual fund scheme, its
objective, role of financial advisors / brokers, sources of information,
deficiencies in the provision of services, investors opinion relating to factors
that attract them to invest in mutual and challenges before the Indian mutual
44
fund industry etc. The study found that investors seek for liquidity, simplicity
in offer documents, online trading, regular updates through SMS and stringent
follow up of provisions laid by AMFI.
 Hossein Panahianetal (2011) showed that investors' attitude towards
transparency and disclosure of financial information, Board structure and
performance, corporate issues and surveillance measures in stock market and,
finally, the ownership structure had the greatest influence in explaining
investors' behavior in Tehran Stock Exchange. Consequently, paying attention
to different aspects of such cases as providing information on time, accessibility
and reliability of information provided for investors considering the preference
of content over form as well as providing appropriate information about Board
structure and performance, corporate issues and ownership structure can be a
good strategy to attract investors and encourage them to attend more actively in
stock market.
 Kahneman and Amos Tversky (1979) originally described “Prospect Theory”
and found that individuals were much more distressed by prospective losses
than they were happy by equivalent gains. Some economists have concluded
that investors typically consider the loss of $1 twice as painful as the pleasure
received from a $ gain. Many investors do not have data analysis and
interpretation skills. This is because, data from the market supports the merits
of index investing, passive investors are more likely to base their investment
choices on information received from objective or scientific sources. Investor
fund selection behavior influences marketing decisions of fund management
and has captured the attention of researchers.
45
CHAPTER NO. 4
RESEARCH ANALYSIS AND INTERPRETATION OF
RESULT
SECTION A
Demographic Profile of investors
Demographics No. of respondents Percentage of
respondents (%)
Age
Less than 20 years 6 12
20-40 34 68
Greater than 40 10 20
Total 50 Total 100

Qualification
Metric 13 26
Graduate 21 42
Post Graduate 16 32
Total 50 Total 100

Occupation
Service 17 34
Profession 14 28
Business 8 16
Student 11 22
Total 50 Total 100

Income (per month)
Less than Rs.300000 14 29.8
Rs.300000-500000 18 38.3
Greater than 500000 15 39.1
Total 50 Total 100
46
Analysis & Interpretation:
It was found that the major population of investors was greater than 40yrs and 60%
was of 20-40 yrs.5% respondent were metrics and 45% respondents were graduate and
50% were post graduate. 38% of respondents were doing service. And majority of
respondents i.e. 50% earn income between Rs.20000-40000 per month. It means
majority of investors was greater than 40 years having income in between Rs 20000-
40000. It is observed that student’s investment is zero.
47
SECTION B
Q. 7 Result: Do you know about share market?
Knowledge decision No. of Respondents Percentage of Respondents

(%)
Yes 40 80
No 10 20
Total 50 100
Figure 4.1: to know whether respondent know about share market
No
20%
Yes
80%
Yes No
From the survey it was found that 80% respondents know about the stock market and
20% who were unknown. Because share market consists of good instruments of money
investment and also the returns are very high.
48
Q.8 Result:. Do you invest in share market?
Investment Decision No. of Respondents Percentage of

Respondents (%)
Yes 41 82
No 9 18
Total 50 100
Figure No. 4.2 To know whether respondents invest.
18%
82%
Yes No
From the survey it was found that only 82% respondents invest in the stock market and
majorly 18% who were non-investors. Because of it’s feature of high risk. The market
prices fluctuate frequently and brokerage commission is very high which reduce the
profit margin of investors.
49
Q. 9Result: what percentage of your annual income do you invest in share market?
Annual Income Invested No. of Respondents Percentage of

Respondents (%)
0 to 10% 16 33
10-20% 18 37
20-40% 8 16
More than 40% 8 14
Total 50 100
Figure 4.3 The percentage of income that respondent invest annually in share market
14%
33%
16%
37%
0 to 10% 10% to 20% 20% to 40 More than 40%
From the above table & chart, it was found that 33% respondents invest 0-10% of their
annual income, 37% respondents invest 10-20% of their annual income, and 16%
respondents invest 20-40% of their income. 14% respondents invest in more than 40%
of their annual income in share market due to high risk.
50
Q. 10 Result: what percentage of your annual income do you invest in Bank?
Annual Income Invested No. of Respondents Percentage of

Respondents (%)
0 to 10% 14 29
10-20% 14 29
20-40% 12 24
More than 40% 10 18
Total 50 100
Figure 4.4 The percentage of income that respondent invest annually in bank
More than 40%

18%
0 to 10%
29%
20% to 40
24%
10% to 20%
29%
0 to 10% 10% to 20% 20% to 40 More than 40%
From the above table & chart, it was found that 29% respondents invest 0-10% of their
annual income, 29% respondents invest 10-20% of their annual income, 24%
respondents invest 20-40% of their income and 18% respondents invest more than 40%
in share market.
51
Q. 11 Result: while investing in share market respondent are mostly concerned about
Investment Factors No. of Respondents Percentage of

Respondents
Safety of Principal 10 20
Risk 19 38
Return on investment 12 24
Tax benefits 9 20
Total 50 100
Figure 4.5 While investing in share market respondent are mostly concerned about ?
18% 20%
24%
38%
Safety of Principal Risk Return on investment Tax benefits
From the survey it was found that the maximum respondents 38% considered risk, 20%
respondents considered Safety of principal as an important factor and 24% respondents
considered return on investment as an important factor. It can be stated that majority of
investors were consider risk as an important factor while investing.
Q. 12 Result: while investing in bank respondent are mostly concerned about?
52
Respondents
Liquidity 18 36
Safety of Principal 28 56
Return on investment 2 4
Tax benefits 2 4
Total 50 100
Figure 4.6 While investing in bank respondent are mostly concerned about
Return on Tax benefits

investment 4%
4%
Liquidity
36%
Safety of
Principal
56%
From the survey it was found that the maximum respondents 56% considered Safety of
principal was most important factor, 4% respondents considered return on investment
as an important factor and 4% respondents considered Tax benefit as an important
factor. It can be stated that majority of safety of principle were consider safety of
principal s an important factor while investing in bank.
Q. 13 Result: Why do you prefer bank for your investment?
53
Respondents
Low risk appetite 12 24
Convenient 8 16
Safety of principal 25 50
Tax benefits 5 10
Total 50 100
Figure 4.7 Why respondent prefer bank for investment over share market
Tax benefits
10% Low risk appetite
24%
Convenient
Safety of principal 16%
50%
Low risk appetite Convenient Safety of principal Tax benefits
From the survey it was found that the maximum respondents 50% considered Safety of
principal was most important factor, 16% respondents considered convenient as an
important factor and 24% respondents considered Low risk appetites an important
factor. It can be stated that majority of investors were consider safety of principal s an
important factor while investing in bank.
54
Q. 14 Result: Why you do not prefer share market for your investment?

Respondents
High Risk 18 36
Not convenient 8 16
Brokerage & Fraud 9 18
Lack of awareness 15 30
Total 50 100
Figure 4.8 Why respondent don’t prefer share market for investment
30%
36%
18%
16%
High Risk Not convenient Brokerage & Fraud Lack of awareness
From the survey it was found that the maximum respondents 36% considered high risk
was most important factor, 16% respondents considered not convenient as an important
factor and 18% respondents considered Brokerage & fraud an important factor. It can
be stated that majority of investors were consider High Risk an important factor while
investing in share market.
55
Q.15 Result: Did you know the procedure how to invest in stock market?
Investment Decision No. of Respondents Percentage of

Respondents (%)
Yes 39 78
No 11 22
Total 50 100
Figure No. 4.9 To know whether respondents invest.
22%
78%
Yes No
From the survey it was found that only 78% respondents knows the procedure to invest
in the share market and 22% don’t know the procedure due to lack of awareness.
56
SECONDARY DATA
Secondary data refers to data which is collected by someone who is someone other
than the user. Common sources of secondary data for social science include censuses,
information collected by government departments, organizational records and data that
was originally collected for other research purposes. Primary data, by contrast, are
collected by the investigator conducting the research.
Secondary data analysis can save time that would otherwise be spent collecting data
and, particularly in the case of quantitative data, can provide larger and higher-
quality databases that would be unfeasible for any individual researcher to collect on
their own. In addition, analysts of social and economic change consider secondary data
essential, since it is impossible to conduct a new survey that can adequately capture
past change and/or developments. However, secondary data analysis can be less useful
in marketing research, as data may be outdated or inaccurate.
Analysis and interpretation
In the above table shows that, equity share has high risk as compared to the
debentures and deposits in bank that results that investors prefer more to invest in bank
because it’s safe.
The current yield means the returns are high in debentures as compared to equity market
and bank deposits
Capital appreciation is an increase in the price or value of assets. It may refer to

appreciation of company stocks or bonds held by an investor. Capital appreciation is
57
high in equity shares as compared to the debentures. However, there is no any kind of
capital appreciation in bank deposits.
The liquidity is high in equity shares and bank deposits we can liquidate our
money at any time. In debentures the liquidity is very low because the debentures are
for fixed period so it is difficult to liquidate this money.
Because of Investing in equity shares we get the tax benefit. We don’t get any
tax benefit by investing in debentures and bank deposits
58
CHAPTER NO. 5
5.1 FINDINGS
1. Most of the respondents have given the highest summated score to investment
in bank.
2. There is significant difference between the amount of investment in bank and
share market.
3. The awareness level about investment in share market is quite low in the Thane
City among.
4. Approximately 40% of respondent are aware that how to investment in share
market.
5. Approximately 40% of respondent are invest in share market.
6. Majority of respondent 60% don’t invest in share market due to the risk factor.
7. 40% respondents invest 0-10% of their annual income in share market.
8. 30% respondents invest 20-40% of their income in banks.
9. Maximum respondents 50% considered Safety of principal was most important
factor while investing in bank.
10. Maximum respondents 40% considered high risk was most important factor
while investing in share market.
Most of the respondents have given the highest summated score to Return on
investment. And the second most important factor is Capital appreciation which
influenced the decision regarding investment.
59
5.2 SUGGESTIONS
 There is high potential In share market for respondent of Thane city, but this
market needs to be explored as respondent are still hesitated to invest their
money in Share market.
 In Thane investors have inadequate knowledge about Share market, so proper
Marketing of various schemes is required, broking firm should arranges more
and more seminars on how to invest in share market.
 Most of respondent are not interested in dealing in share market because they
don’t want to expand their services due to lack of time, so company should
provide them knowledge about single window services by which investor can
get all financial services from one place.
 Company should also provide knowledge about the growth rate and the
expected growth rate of investment in share market
 Most of people aware of life insurance, NSC and PPF for tax saving so,
company should market various tax saving schemes through share market and
their benefits.
 The interface among the investors and the share market is the broker, so the
broker should have proper knowledge about investment schemes as well as
market so that they can help investors in their investment decisions. The quality
of agents performance and investors trust on them can be improved only if they
are permanent in nature.
60
5.3 CONCLUSION
 Financial Advisor should encourage to investor for investment in share market.

 Share Market has given a new direction to the flow of personal saving and enables
investors in semi urban areas to reap the benefits of the stock market investment. Indian
share market is playing a very important developmental role in allocation of scares
resources in the emerging economy.
 The awareness level of investor is low in advisors are interested in dealing in share
market
 Very less advisors know about services provided by their group.
 The Regulator of share market SEBI should make some efficient policy so that investor
can encourage for investment
As a Financial advisor’s suggestion to customer for their preferences are follows:

1. Mutual Fund
2 .Tax Bond
3. Equity Shares
As per Advisor reason to Choose these option are as follows:

Because of the
1. Return of Mutual Fund (40%).
2. Tax Benefit (25%)
3.Safety (Mutual Fund are Safer than Share Market) because investing in a Share by
single person cause loss to him because of his ignorance in share market but in mutual
fund the pool of money of several people is invested in share market with various
research.As per the advisor poll 60% people is interested in investing in mutual fund
but rest of people (40%) says no reasons are as follows:(a)High investment(b)High risk
Uncertain return.54% people are not interested to deal in mutual fund securities because
of high risk & uncertain return environment.Hence, the research study concludes that
financial advisors play and paramour role to encourage the investor to invest in share
market so that Indian Economy can grow rapidly
61
A BIBLIOGRAPHY
Books-
 Research Methods for Business
 83Meenakshi Chaturvedi, Shruti Khare (2012), Study of saving pattern and
investment preferences of individual household in India, International Journal
of Research in Commerce & Management, Vol. 3, Issue 5, pp. 115-120.
 5 JothiBaskara Mohan, Ramji P.R. (2013), Women Investors Recital at
Rajapalayam City - A Study, IOSR Journal of Business and Management, Vol.
8, Issue 3, pp. 14-18.
Newspaper-
 The Economics Times
WEBLIOGRAPHY
 Search Engine for Key words: www.google.com,
 http://www.scribd.com/doc/54705439/Investment-Pattern-of-Investors-2#
 http://www.slideshare.net/hemanthcrpatna/a-study-on-nvestment-pattern-of-
investors-on-different-products-conducted-at-asit-c-mehta-investment-
intermediates-ltd
 www.moneycotrol.com
 http://www.articlesbase.com
62
ANNEXURE
QUESTIONNAIRE
SECTTION (A)
PERSONAL PROFILE
Q.1 Name of Respondent:...............................................................
Q.2 Age:
Less than 20 years
20 – 40 years
Greater than 40 years
Q.3 Gender:
a) Male
b) Female
c) others
Q.4 Occupation:
a) Service
b) Profession
c) Business
d) Student
Q.5 Income :( per annum)

Less than Rs 3, 00,000/-
Rs 300000 – Rs 5, 00,000/-
Greater than Rs 5, 00,000/-
Q.6 Qualification:
a) Metric
b) Graduate
c) Post Graduate
63
SECTION B
Q.7 Do you know about share market?

a) Yes b) No
Q.8 Do you invest in share market?

a) Yes b) No
Q.9 what percentage of your annual income do you invest in share market?
a) 0 to 10% b) 10% to 20% c) 20% to 40 d) More than 40%
Q.10 what percentage of your annual income do you invest in Bank?

a) 0 to 10% b) 10% to 20% c) 20% to 40% d) More than 40%
Q.11 While investing in share market you are mostly concerned about?
a) Safety of principal b) Risk c) Return on investment d) Tax benefits
Q.12 While investing in Bank you are mostly concerned about?

a) Safety of principal b) Safety c) Return on investment d) Tax benefits
Q.13 Why do you prefer bank for your investment

a) Low risk appetite b) convenient c) Safety of Principal d) Tax benefits
Q.14 Why you do not prefer share market for your investment
a) High Risk b) not convenient c) Brokerage & Fraud
d) Lack of awareness
Q.15 Did you know the procedure how to invest in stock market?
a) Yes b) No
64

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A PROJECT REPORT ON

“A COMPARATIVE STUDY OF INVESTOR’S PREFERENCE TOWARDS

Mr. SUDIP NATHURAM JADHAV.

Prof. GEETA CHAUDHARY

AVM’S KARMVEER BHAURAO PATIL DEGREE COLLEGE

FOR THE ACADEMIC YEAR 2019- 2020

“A COMPARATIVE STUDY OF INVESTOR’S PREFERENCE TOWARDS

UNDER THE FACULTY OF COMMERCE

Mr. SUDIP NATHURAM JADHAV.

Prof. GEETA CHAUDHARY

AVM’S KARMVEER BHAURAO PATIL DEGREE COLLEGE

FOR THE ACADEMIC YEAR 2019- 2020

NAME AND SIGNATURE OF

Name and signature of the learner

Mr. Sudip Nathuram Jadav

Prof. Geeta Choudhary

I would also like to express my sincere gratitude towards my Prof. GEETA

KEYWORDS: Equity, Derivatives, Investment, Risk and Saving.

Chapter No. Title of the chapter Page No.

4 Analysis and Interpretation of Data 35

5 Finding & Conclusion 52

Chapter No. Title of the chapter Page No.

1.1 Background of the Study 1

1.2 Introduction to topic

1.3 Investment In Banking 7

1.4 Investment In Stock Market 11

2.1 Rationale Of Study 21

2.3 Problem Of Study 23

2.4 Factors Influencing Investment Decision 25

2.6 Method Of Study 26

2.7 Sample Size and Sampling Method

2.8 Tools For Data collection

Diagrams & Interpretations

5 Finding & Conclusion 52

1.1 BACKGORUNF OH THE STUDY

It is a demand deposit and is meant for businessmen to conduct their business

(B) Stock Market

An equity investment generally refers to the buying and holding of

The dictionary meaning of investment is to commit money in order to earn financial

Why Should we Investment?

1. To generate on your idle resources

Furthermore, inflation has served to increased awareness of the importance of financial

 Individual investors: (including trusts on behalf of individuals, and umbrella

 Where one can invest?

Other Financial Institutions:

Investment Decisions are majorly affected by following factors.

1.3 INVESTMENT IN BANKING

1.Deals with money

2. Withdrawal and payment facilities

5.Branches at different locations

1. Bring Economic Stability In The Country:

The banks play a prominent role in providing stability to a country

2. Co-Ordinate among All the Units:

Creating a country wide circulation of money through remittance facilities.

The banks constitute a source of accelerating investment in the economy. The

In any plan of economic development capital occupies a place of pivotal

I. ACCEPTING DEPOSITS: The most important function of commercial banks is to

B. Current Deposits: This type of account is generally kept by businessmen and

B. Overdraft: An overdraft is an arrangement by which the customer is allowed to

2. SECONDARY FUNCTIONS: It is divided into two parts:

I. AGENCY SERVICES: Modern Banks render service to the individual or to the

F. Acting as Representatives and Correspondent: Sometimes the banks act as