An Internship Experience Report by Ayush Gupta]

7/31/2019 An Internship Experience Report by Ayush Gupta]

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Summer Internship Report

Made by:-

Jenu Varghese

. j


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Acknowledgement

The project as we see today in its present form is an outcome of persistent efforts & a great

deal of dedication & has drawn intellectual support from various sources, both within the

organization & out of the organization.

I would like to thank to all those who helped me in my endeavor in achieving something

worthwhile and enduring. I have no words to express my gratitude to my industry guide Mr .

Mukesh Goel for putting his trust on me and giving me an opportunity to work at Jyoti

Portfolio Ltd. He was always there to guide me and solve my problems. His appreciation

mixed with constructive advice not only made my work interesting but also laid a strong

foundation for my project. Without his unfailing guidance, this report couldnt have been

possible. It has been a great learning experience working under him.

I genuinely offer my sincere regards and heartfelt gratitude to Mrs. Shraddha Sharma, my

faculty guide, for providing the valuable help and guidance at every step during the project.

Last but definitely not the least, I am also thankful to my friends and family for their whole-

hearted cooperation and help at all stages of my endeavor. They have been a source of

inspiration and knowledge to me during the making of the report.

Signature of the student


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TABLE OF CONTENTS

Introduction 5Main Body 6

Fundamental Analysis 8

Technical Analysis 16

Factors affecting stock market 23

Golden rules of investing 26

Derivatives Market 28

A Study of Indian Individual Investors Behavior 31


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Introduction

As we are doing a finance course, I choose my area of internship as finance. I made up my

mind to work at a broking firm because every aspect of finance revolves around stock market.

I went to Jyoti Portfolio Ltd. with my curriculum vitae on 12 th May 2010. They accepted me

and my internship began from the very next day.

I chose my title as Investment Analyst. An investment analyst analyses investment

avenues and evaluates the same. They advise their clients on where to invest. This internship

will give a start in my professional career. It will lay a foundation of knowledge and practical

experience in my career.


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Main Body

About the organization:

Jyoti Portfolio Ltd is a firm that primarily provides broking services. It is owned and

managed by Mr. Mukesh Goel. Its services include:

Trading in equities

Trading in commodities

Trading in derivatives

Mutual Funds

IPOs

Debentures/Bonds

Provide market predictions/guidance

Hierarchy of the firm

Manager

Employee 1 Employee 2 Employee 3 Employee 4

Peon


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ManagerMr. Mukesh Goel is the manager and makes all the decisions by himself. He is the

top authority there. He is the one who started this firm and has invested all the capital. He

operates on the NSE counter. At the end of the day, he clears all the transactions that took

place.

Employees 3 out of 4 employees sit at their desk with their respective computers and

operate on the terminal. They execute orders on behalf of their clients. 1 employee handles

the paper work and maintains accounts. There are four counters NSE, NSE/BSE,

Futures/Options and Commodities.

Peon He does all the travelling part as employees cant leave their counters. He collects

cheques, does the bank work, etc. Besides, he makes tea for the entire staff and clients.


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Fundamental Analysis

Fundamental analysis is the process of looking at a business at the basic or fundamentalfinancial level. This type of analysis examines key ratios of a business to determine itsfinancial health and gives you an idea of the value its stock. This type of analysis is mostlydone by medium or long-term investors.

It includes:

Economic Analysis -analyzing economic conditions

Industry Analysis -analyzing industry conditions

Company Analysis -analyzing the company

Many investors use fundamental analysis alone or in combination with other tools to evaluatestocks for investment purposes. The goal is to determine the current worth and, moreimportantly, how the market values the stock.

Basically, Fundamental Analysis is used to determine

Whether a stock is underpriced or over priced What are the future prospects or future earnings of a company

If an analyst concludes that a stock is under priced, he will buy them at that moment and sellin the near future. If a stock is overpriced, he wont buy it. Similarly if the future prospects ofa company are good, he will buy them now as the price of that stock will rise in the nearfuture.


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Various Fundamental Analysis tools and techniqes

Ratio Analysis

a) EPS (earning per share)

It can be defined as the portion of a company's profit allocated to each outstanding share ofcommon stock. Earnings per share serves as an indicator of a company's profitability.

EPS = Net Earnings / Outstanding Shares

For example, companies A and B both earn $100, but company A has 10 sharesoutstanding, while company B has 50 shares outstanding. Which companys stock do

should we own?

Company A had earnings of $100 and 10 shares outstanding, which equals an EPS of10 ($100 / 10 = 10). Company B had earnings of $100 and 50 shares outstanding,which equals an EPS of 2 ($100 / 50 = 2). Thus company As stock is a better optionto go for.

The EPS is helpful in comparing one company to another, assuming they are in thesame industry, but it doesnt tell you whether its a good stock to buy or what themarket thinks of it. For that information, we need to look at some other ratios.

b. Price-to-earnings ratio :

It is a valuation ratio of a company's current share price compared to its per-shareearnings.

Calculated as: P/E = Stock Price / EPS

For example, a company with a share price of $40 and an EPS of 8 would have a P/Eof 5 ($40 / 8 = 5).

The P/E gives us an idea of what the market is willing to pay for the companysearnings. The higher the P/E the more the market is willing to pay for the companysearnings. Some investors read a high P/E as an overpriced stock and that may be thecase, however it can also indicate the market has high hopes for this stocks future andhas bid up the price. Conversely, a low P/E may indicate a vote of no confidence bythe market or it could mean this is a sleeper that the market has overlooked. Known asvalue stocks, many investors made their fortunes spotting these diamonds in therough before the rest of the market discovered their true worth.


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The P/E is the most popular way to compare the relative value of stocks based onearnings.

c. Projected earnings growth :

Because the market is usually more concerned about the future than the present, it isalways looking for some way to project out the future earnings of a company. Thisvaluation technique has become more popular in recent years.

PEG = P/E / (projected growth in earnings)

Suppose Stock A has a p/e ratio of 15 and is expected to grow at 20%. Stock B has ap/e ratio of 30 and is expected to grow at 25%. The PEG ratio of stock A is 75%(15/20*100) and that of B is 120 % (30 /25*100). According to this ratio, stock A is a

better option.

d. Price to book ratio:

Value investors look for some other indicators besides earnings growth and so on.One of the metrics they look for is the Price to Book ratio or P/B. This measurementlooks at the value the market places on the book value of the company.

P/B = Share Price / Book Value per Share

Like the P/E, the lower the P/B, the better the value. Value investors would use a lowP/B to identify potential candidates.

e. Dividend payout ratio :

The DPR measures what a company pays out to investors in the form of dividends.

DPR = Dividends per Share / EPS

For example, if a company paid out $1 per share in annual dividends and had $3 inEPS, the DPR would be 33%. ($1 / $3 = 33%)

The real question is whether 33% is good or bad and that is subject to interpretation.Growing companies will typically retain more profits to fund growth and pay lower orno dividends.

Companies that pay higher dividends may be in mature industries where there is littleroom for growth and paying higher dividends is the best use of profits.


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Either way, we must view the whole DPR issue in the context of the company and itsindustry. By itself, it tells us very little.

f. Dividend yield :

This measurement tells what percentage return a company pays out to shareholders inthe form of dividends. Older, well-established companies tend to payout a higherpercentage than younger companies and their dividend history can be more consistent.

Dividend Yield = annual dividend per share / stock's price per share

For example, if a companys annual dividend is $1.50 and the stock trades at $25, theDividend Yield is 6%. ($1.50 / $25 = 0.06)

g. Return on equity :

Return on Equity (ROE) is one measure of how efficiently a company uses its assetsto produce earnings. It compares companies in the same industry to get a betterpicture.

ROE = Net Income after Tax/ Shareholders equity

While ROE is a useful measure, it does have some flaws that can give a false picture,so we can never rely on it alone. For example, if a company carries a large debt andraises funds through borrowing rather than issuing stock it will reduce its book value.A lower book value means youre dividing by a smaller number so the RO E isartificially higher. There are other situations such as taking write-downs, stock buybacks, or any other accounting slight of hand that reduces book value, which willproduce a higher ROE without improving profits.

It may also be more meaningful to look at the ROE over a period of the past fiveyears, rather than one year to average out any abnormal numbers.

ROE is a useful tool in identifying companies with a competitive advantage. All otherthings roughly equal, the company that can consistently squeeze out more profits withtheir assets, will be a better investment in the long run.

h. Price to sales ratio :

We have a number of tools available when it comes to evaluating companies withearnings. That doesnt mean companies that dont have any earnings are badinvestment. But one should approach companies with no history of actually making

money with caution. The Internet boom of the late 1990s was a classic example ofhundreds of companies coming to the market with no history of earning. In such a


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case, we can use price to sales ratio. This metric looks at the current stock pricerelative to the total sales per share. We can calculate the P/S by dividing the marketcap of the stock by the total revenues of the company. We can also calculate the P/Sby dividing the current stock price by the sales per share.

P/S = Market Cap / RevenuesorP/S = Stock Price / Sales Price Per Share

Much like P/E, the P/S number reflects the value placed on sales by the market. Thelower the P/S, the better the value, at least thats the conventional wisdom. However,this is definitely not a number one can use in isolation. When dealing with a youngcompany, there are many questions to answer and the P/S supplies just one answer.


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Balance sheet valuation:

Analyst often look at the balance sheet of the firm to get a handle o n some valuation

measures. Three measures derived from the balance sheet are

1. Book Value- Book value per share is simply the net worth of the company(which isequal to the paid up equity capital plus reserves and surplus) divided by the number of

outstanding equity shares.

ExampleIf net worth of Z ltd is 37 million and the no. of outstanding equity shares

is 2 million, then the book value per share works out to be 37 million divided by 2

million which is equal to 18.50.

This measure can be misleading as it is firmly rooted in the financial accounting

which represents a objective measure of value. The accounting policies and

conventions are characterized by great deal of subjectivity and arbitrariness. Besides

these, historical balance sheet figures diverges the current economic value.

2. Liquidation Value- The liquidation value per share is equal to :

Value realized from - Amount to be paid to all the creditors and

liquidating all the assets of the firm preference shares

Number of Outstanding Equity Shares

This method is more realistic than book value method. But it is very difficult to

estimate what amounts would be realized from the sale of assets. And also the

liquidation value doesnt represent the earnings.

3. Replacement Cost- Another balance sheet measure considered by analysts in valuing

a firm is replacement cost of its assets less liabilities. The use of this measure is basedon the premise that the market value of a firm cannot deviate too much from its

replacement cost. The ratio of market price to replacement cost is called tobin q, after

James Tobin a Nobel Laureate in economics. A major limitation of this concept is

that organizational capital, a very valuable asset, is not shown on the balance sheet.


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Dividend Discount Model

According to dividends discount model, the value of an equity share is equal to the present

value of dividends expected from its ownership plus the present value of the sale priceexpected when the equity share is sold.

Assumptions of the model

i. Dividends are paid annually

ii. The first dividend is received one year after the equity share is received

Single-period Valuation Model: It is a case where the investors expect to hold the equity

shares for one year. The price of the equity share will be:

P0 = D1/ (1 + r) + P1/ (1 + r)

Where P0 = current price of the equity share

D1 = expected dividend

P1 = expected price of share 1 year hence

r = required rate of return on equity

ExampleX ltd. Equity shares expected dividend = Rs. 2

Expected future price of the share = Rs. 18 after 1 year.

Required rate of return = 12 %

Its current price will be: P0 = 2/ (1 + .12) + 18/( 1 + .12)

= Rs. 17.86

Multi-period Valuation Model: Since equity shares have no maturity period, they expect to

bring a dividend stream of infinite duration.

P0 = D1/ (1 + r) + D2/ (1 + r)2 + D3/ (1 + r)3. + D/ (1+r)

= Dt/ (1 + r)t + Pn/ (1 + r)

n


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There are various modifications to these models

a) Zero Growth Model In this, it is assumed that the dividend per share remains

constant year after year

b) Constant Growth Model (Gordon Model)It is one of them most popular models.

It was originally proposed by Myron J. Gordon. It assumes that dividend per share

grows at a constant rate (g).

c) H Model - The H model is a two-stage model for growth, but unlike theclassical two-stage model, the growth rate in the initial growth phase is not constant

but declines linearly over time to reach the stable growth rate in steady stage. Thismodel was presented in Fuller and Hsia (1984) and is based upon the assumptionthat the earnings growth rate starts at a high initial rate (ga) and declines linearlyover the extraordinary growth period (which is assumed to last 2H periods) to astable growth rate (gn). It also assumes that the dividend payout and cost of equityare constant over time and are not affected by the shifting growth rates.


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Technical Analysis

Technical analysis is a security analysis discipline for forecasting the direction of prices

through the study of past market data, primarily price and volume.Technical analysts seek to

identify price patterns and trends in financial markets and attempt to exploit those patterns.

While technicians use various methods and tools, the study of price charts is primary.

Technicians especially search for archetypal patterns, such as the well-known head and

shoulders or double top reversal patterns, study indicators such as moving averages, and look

for forms such as lines of support, resistance, channels, and more obscure formations such as

flags, pennants, balance days and cup and handle patterns.

Technical analysis is frequently contrasted with fundamental analysis. Technical analysis

holds that prices already reflect all such influences before investors are aware of them, hence

the study of price action alone. Some traders use technical or fundamental analysis

exclusively, while others use both types to make trading decisions.

Users of technical analysis are most often called technicians or market technicians. Some

prefer the term technical market analyst or simply market analyst. An older term, chartist, is

sometimes used, but as the discipline has expanded and modernized the use of the term

chartist has become less popular.

Technical analysis employs models and trading rules based on price and volume

transformations, such as the relative strength index, moving averages, regressions, inter-

market and intra-market price correlations, cycles or, classically, through recognition of chart

patterns.


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Some Principles:

Market action discounts everything

Based on the premise that all relevant information is already reflected by prices, pure

technical analysts believe it is redundant to do fundamental analysis they say news and

news events do not significantly influence price

Prices move in trends

A market trend is a putative tendency of a financial market to move in a particular direction

over time.These trends are classified as secular trends for long time frames, primary trends

for medium time frames, and secondary trends lasting short times. The terms bull market andbear market describe upward and downward market trends respectively.

Some market trends

Bull market:

A bull market is associated with increasing investor confidence, and increased investing in

anticipation of future price increases (capital gains). A bullish trend in the stock market often

begins before the general economy shows clear signs of recovery. It is a win-win situation forthe investors.

Example- India's Bombay Stock Exchange Index, SENSEX, was in a bull market trend for

about five years from April 2003 to January 2008 as it increased from 2,900 points to 21,000

points

Bear market:

A bear market is a general decline in the stock market over a period of time.[6] It is a

transition from high investor optimism to widespread investor fear and pessimism.

Example - A bear market followed the Wall Street Crash of 1929

Market top

A market top (or market high) is usually not a dramatic event. The market has simply reached

the highest point that it will, for some time (usually a few years). It is retroactively defined as


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market participants are not aware of it as it happens. A decline then follows, usually

gradually at first and later with more rapidity.

Example - The peak of the dot-com bubble (as measured by the NASDAQ-100) occurred on

March 24, 2000. The index closed at 4,704.73 and has not since returned to that level.

Market bottom:

A market bottom is a trend reversal, the end of a market downturn, and precedes the

beginning of an upward moving trend (bull market).

It is very difficult to identify a bottom (referred to by investors as "bottom picking") while it

is occurring. The upturn following a decline is often short-lived and prices might resume their

decline

Example - A decline associated with the subprime mortgage crisis starting at 14164.41 on 9

October 2007 and caused a bottom of 6,440.08 on 9 March 2009.

History tends to repeat itself

Technical analysts believe that investors collectively repeat the behavior of the investors that

preceded them. "Everyone wants in on the next Microsoft," "If this stock ever gets to $50

again, I will buy it," "This company's technology will revolutionize its industry, therefore this

stock will skyrocket" these are all examples of investor sentiment repeating itself. To a

technician, the emotions in the market may be irrational, but they exist. Because investor

behavior repeats itself so often, technicians believe that recognizable (and predictable) price

patterns will develop on a chart.

Technical analysis is not limited to charting, but it always considers price trends. For

example, many technicians monitor surveys of investor sentiment. These surveys gauge the

attitude of market participants, specifically whether they are bearish or bullish. Technicians

use these surveys to help determine whether a trend will continue or if a reversal could

develop; they are most likely to anticipate a change when the surveys report extreme investor

sentiment. Surveys that show overwhelming bullishness, for example, are evidence that an

uptrend may reversethe premise being that if most investors are bullish they have already

bought the market (anticipating higher prices). And because most investors are bullish and

invested, one assumes that few buyers remain. This leaves more potential sellers than buyers,

despite the bullish sentiment. This suggests that prices will trend down, and is an example of

contrarian trading.


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Some techniques of technical analysis-

Moving Averages:

Moving averages are one of the oldest and most popular technical analysis tools. Nowadays

we get moving averages readily available on most of the websites. Suppose if the stock price

is above its 25 day moving average, it means that investor's current expectations (the current

price of the stock) are higher than their average expectations over the last 25 days, and that

investors are becoming increasingly bullish on this stock and result is that the stock price may

go up. Conversely, if today's price is below then its 25 day moving average, it shows that

current expectations are below average expectations over the last 25 days and this may bring

stock price lower. The moving average is used to observe changes in prices. Investors

typically buy when a stock price rises above its moving average and sell when the price falls

below its moving average.

Line charts:

A chart shown below is the Line chart is the simplest type of chart.

As shown in the chart the single line represents the stocks closing price on each day. Dates

are displayed along the bottom of the chart and prices are displayed on the side(s).

Line charts are typically displayed using stocks closing prices.


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Candlestick charts

A candlestick chart displays stocks open high, low, and closing price.

These types of charts are the most popular type of all charts.

As shown below the top of each vertical bar represents the highest price of the stock and the

bottom of the bar represents the lowest price of the stock it reached on that day. A closing

price (last price) is displayed on the right side of the bar.

The red bar indicates that stock has closed lower then its open price and white bar indicates

that the stock has closed above its open price. At the bottom we can see time frame.

Support and Resistance

Support and Resistance prices are very important in stock market and in technical analysis.

Support - The support level is considered when the stock is falling down. The support is the

level at which the stock price gets support when the stock is falling down, and if the support

breaks then that stock may witness further down movement.

Resistance - The Resistance is taken into picture when stock price is moving up. The

resistance level is the price at which stock price get stoppage and if this stoppage/resistance

breaks then further upside is expected in that stock price.


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Generally, stocks comes to support and resistance points and get constant before further

movement and further movement either down side or upside depends on buyers expectation

and other technical aspects.

The breaking of support and resistance levels can also be triggered by fundamental changes,and that is up to investor expectations (fundamental changes like changes in profits,

expansion, takeover, management etc).

Indicators

Indicators are used to predict or analyze future changes in stock price.

There are hundreds of indicators. Some most widely used indicators are -

MACD (Moving Average Convergence Divergence)

This is one of the widely used indicator. MACD stands for Moving Average Convergence

Divergence. This indicator is based on moving averages

Nowadays MACD is readily available on any web sites.

The MACD is calculated by subtracting a long term moving average of a security's price

from a short term moving average of its price. The result is that MACD is an indicator that

goes above and below zero.

How to trade on MACD indicator?

Have a look on following chart of MACD -

Red line is short term moving average and blue line is long term moving average.

When the short term moving average crosses above the long term moving average (as shown

in following chart) in the upward direction, it means investor expectations are becoming

bullish and there may be rise in stock price. As it is shown in following chart with green lines

how price increases.

When the short term moving average crosses below the long term moving average (as shown

in following chart) in the downward direction, it means investor expectations are becoming

bearish and there may be decrease in stock price. As it shown in following chart with red

lines lines how orice decreases.


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Factors that affect stock market

Market sentiment: The price of the stock of a company is affected most of the time by the

general market direction during a session. In a bull market, the stock price of mostcompanies will rise and in a bear market the stock price of most companies will fall. One can

gauge the market sentiment by looking at stock indexes or its future price movement. The

stock indexes are S&P 500, Dow Jones Industrial Index, Nasdaq (USA), ASX100, ASX

(Australia), Nikkei 225 (Japan), Euronext 100, Euronext 150 (Europe Union), DAX,

TECDAX (Germany), FTSE 100, FTSE All Shares, FTSE Techmark (United Kingdom).

The performance of the industry: The performance of the sector or industry that the company

is in also plays in part in determining the stock price of the company. Most of the times, thestock price of the companies in the same industry will move in tandem with each other. This

is because market conditions will generally affects the companies in the same industry the

same way. Of course, there are exceptions to this. Sometimes, the stock price of a company

will benefit from a piece of bad news in its competitor if the companies are competing for the

same target market.

The earning results and earning guidance: The main objective of a company is to make

profit. Therefore, investors and traders always assess a company based on its Earning PerShare (bottom line) and Revenue (top line) and its future earning potential. In US, companies

generally report the earnings results every quarter-yearly. A company that achieves good

earning results (EPS and Revenue) expects a boost in its share price and one that delivers

poor earning result shall see a beating in its share price. Sometimes, besides reporting the

EPS and Revenue for the past quarter, a company may also issue guidance (expected value)

for the EPS and Revenue in coming quarter or coming years. This is also closely monitored

by investors and is an important factor that will affect the company stock price.

Take-over or merger: In general, a company being taken-over is anticipated to get a stock

price boost and the company taking over another company shall experience a drop in its share

price. This is assuming that the company is being taken over at a premium, meaning it is

being bought over at a higher price than its last traded stock price. Depends on the agreed

term, a company can be bought over by cash or stock (of the acquirer) or a combination of

the two. In some minority cases, the stock price of the acquirer may get a boost if it is

perceived that the acquisition shall contribute to its earning or revenue in the near future.


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New product introduction to markets or introduction of an existing product to new markets:The introduction of new product to market is seen as a revenue enhancer for a company. Thisalso applies to an existing product that breaks into new markets. Sometimes, the prospect ofa new product introduction suffices to improve the stock price of a company, this is oftenobserved in surges in stock prices of pharmaceuticals companies after the announcement

of successful clinical trials, or FDA approvals for new drugs.

New major contracts or major Government Orders: A company that is able to obtain new

major contracts or major government order is expected to see a bull run in its stock price.

Those companies that fail in the contract bidding normally experience the fate of sell-off in

its stocks.

Share buy-back: The act of share buy-back by a company will reduce the number of share

available in the open market. Due to the law of supply and demand, a reduction in share

available for trading in this case will cause a drop in supply, this will normally help increase

the share price. Also, the continuing buying back of share of a company will also acts as a

support for the share price that helps to maintain or increase the share price. The investors

may also see the share buy-back by company as a confidence booster for them in the

company itself. Therefore, share buy-back is quite often used as a tool to deliver value to the

investors.

Dividend: After the announcement of a dividend. The stock price may increase by an

amount close to the dividend per share value. However, the stock price may drop on the ex-

dividend date by the dividend per share amount. This is because anyone buying a stock on or

after the ex-dividend date are not entitled to the corresponding dividend payment.

Stock splits: Stock split in theory, should not have an impact to the stock price. However, it

is generally observed that the stock price increases (after taking into account the increase in

the number of share) after a stock split. Some attributed to the better affordability of thestock after stock split, some attributed this to the perception ofcheap stockdue to the lower

stock price after the stock split. Some however believes that stock split has no real impact on

the stock price (effective stock price, taking into account the change in number of shares), as

the stock price will increase regardless of stock split.

Insider trading: Insiders include CEO, COO, CFO, Chairman, board directors etc, who has

first hand information about the operations and the financial status of a company. Therefore,

the buying or selling of stocks by these insiders may herald some good or bad news about thecompany. This is being watched closely by savvy stock investors/traders. However, do be
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aware that due to compensation package that comes in the form of stock or stock options, the

insiders may sell their stocks/stock options to cash-in their compensation benefits. So in this

case, it may not signal anything significant about the company. A savvy investor should

know how to observe and filter out this piece of information from your investment or trading

decisions.

Investment Gurus / Hedge Funds trading: The investment decision of highly revered

investment gurus like Warren Buffett, George Soros, Carl Icahn are closely monitored by

investors and therefore will move the market. Hedge fund stock buying and selling are

another source of information regarding the flow of "smart money".

Analyst upgrade / downgrades: Analyst upgrade and downgrade to a stock may have positiveor negative impact to the stock prices. However, one needs to be wary of the fact that quite

often analysts' upgrades or downgrades happen "after" some important news about a

company. For example following a extremely disappointing earning result, many analysts

will likely to downgrade the company stock. So, it is very likely that by then the stock price

of that company has already priced-in the poor earning result, and analyst downgrade may

not have further impact to the stock price.

Addition/Removal to/from Stock Index: Stock Index Fund are those funds that invest inthose company stocks that are included in a particular stock index (e.g. S&P 500, Nasdaq-

100, Dow Jones U.S. Large Cap etc.) . Therefore, an inclusion of a company stock to a stock

index will generate buying interest in the stock for these stock index fund managers. The

stock index fund managers will dispose of the stock that has been removed from the stock

index.

News: When you get positive news about a company then it can increase the buying interest

in the market. On the other hand, when there is a negative press release, it can ruin the

prospect of a stock. In this case you should remember that news should not matter much but

the overall performance of the company matters more. So, news is another factor affecting

stock price.

Others: These include news about new technology, patent approval, war, natural disaster,product recalls and lawsuits that shall have positive and negative impact to the relevantcompany stocks. The health or mishap of a key leader in a company may also affect thestock price of the company.
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Some Golden Rules for Investors

1. Don't be greedy: Do keep in mind that it is not always that one would be able to buy a

stock when it is as its lowest price and sell it when it is at its highest. Do not be greedy. Invest

smartly, with some professional help and some study on your own.

2. Avoid 'hot tips': Stay away from 'experts'. There are a large number of so-called experts

floating all around. Stay away from them. Our broker, neighbour, cousin or business

journalist friend may suggest surefire picks. Success may not come as fast, as we are in

unchartered territory. Use your own judgement.

3. Avoid trading/timing the market: Like in the previous point, don't try to time the market by

betting on when the stock price will be highest or lowest. In most cases, such 'timing' leads to

huge monetary losses and mental tension.

4. Avoid actions based on sentiments: Don't be emotionally attached to stocks: Some people,for sentimental reasons, tend to stick with certain stocks even though they might not bring

them good value.

5. Don't panic if the market drops: Be patient and hold on to the scrip until some semblance

of sanity prevails in the market. Don't rush to sell the stock. Hold onto your winners and sell

your losers. Consult a professional and then act accordingly.

6. Stay invested, possibly continue to invest more: It is natural to book profits with the

markets at higher levels. This should be done, but we suggest people should also stay

invested in the equity markets.

7. Buy stocks if there is a 5-8 per cent drop in the market (in a Bull Market) : In a bull

market, a 5-8 per cent drop in prices offers you a good opportunity to buy scrips.

8. Avoid checking the price of stocks or mutual funds after you've sold them: The grass on

the other side will always seem greener and can rarely bring you happiness.

9. Diversify: At these record levels, there will be certain amount of risks. One should

diversify a bit, looking at stocks, mutual funds, commodities and gold (for a longer-term).

10. Don't expect to be a millionaire overnight. Patience pays, so be realistic.

11. Distinguish between stocks for keeps and trading: When you buy a stock, be clear about

your objective behind the purchase - whether you have bought the stock as an investment or a

trading bet. Trading stocks are not bad as such. But they require you to work harder and act

quicker.

Buy with adequate margin of safety: That's where attractive purchase prices can help. As a

matter of fact, selling stocks is no different from buying them. Keep a sufficient margin of

safety when buying a stock and don't rely on making a good sale ever.


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12. Sell when value is realised: Some stocks may rise sooner than you may have anticipated.

In a frenzied bull run, investors may see their target prices being met in a matter of days.

Here time should not be of any consequence.

If you feel that your investments are adequately valued, you should exit regardless of how

long you have held them. There are times when stocks begin to quote at extraordinarily high

levels within a short period after you have invested in them.

Although investors are often advised to invest for the long term in equities, if you get

extraordinarily high returns within a short span, it is wiser to get out, say experts.

13. If you realise a mistake, exit: Even while we are talking about selling stocks in a bull

market, experts emphasise that if investors make mistakes, they should exit immediately even

at a loss.

If you realise your analysis was flawed or that you got carried away for any reason, it's goodto get rid of a stock as soon as possible. Waiting for a better price at such instances may

prove to be quite dangerous.

14. Try to invest in things you know .

15. Try to adopt a long-term perspective with regard to investing.

16. Know your risk: It is critical to understand where you stand and where you want to be.

What level and amount of investment are you comfortable with, regardless of what market

experts tell you? Therefore, take some time to evaluate your risk-bearing capacity. This is a

golden rule that should be applied at almost all times.

17. Play safe, invest in a mutual fund: For those who are still not sure about their research, we

suggest you invest through a mutual fund. The advantages would be the risks would be

minimized and you would stay invested for a longer-term in equities.

18. Encash when stock prices dip: We reiterate it is important to bring some money home,

when you have made profits in earlier times. 19. Don't blindly follow media reports on

corporate developments, as they could be misleading.

19. Don't blindly imitate investment decisions of others who may have profited from theirinvestment decisions.

20. Don't fall prey to promises of guaranteed return


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Derivatives Market

A derivative is a financial instrument - or more simply, an agreement between two people or

two parties - that has a value determined by the price of something else (called the

underlying). It is a financial contract with a value linked to the expected future price

movements of the asset it is linked to - such as a share or a currency. There are many kinds of

derivatives, with the most notable being swaps, futures, and options.

Derivatives are usually broadly categorized by the:

relationship between the underlying and the derivative (e.g., forward, option, swap) type of underlying (e.g., equity derivatives, foreign exchange derivatives, interest rate

derivatives, commodity derivatives or credit derivatives) market in which they trade (e.g., exchange-traded or over-the-counter) pay-off profile (Some derivatives have non-linear payoff diagrams due to embedded

optionality)

Another arbitrary distinction is between:

vanilla derivatives (simple and more common) and exotic derivatives (more complicated and specialized)

Derivatives are used by investors to

speculate and to make a profit if the value of the underlying asset moves the way they

expect (e.g., moves in a given direction, stays in or out of a specified range, reaches a

certain level)

hedge or mitigate risk in the underlying, by entering into a derivative contract whose

value moves in the opposite direction to their underlying position and cancels part or

all of it out

arbitrage when the current buying price of an asset falls below the price specified in a

futures contract to sell the asset.
http://en.wikipedia.org/wiki/Underlyinghttp://en.wikipedia.org/wiki/Forward_contracthttp://en.wikipedia.org/wiki/Option_%28finance%29http://en.wikipedia.org/wiki/Swap_%28finance%29http://en.wikipedia.org/wiki/Equity_derivativehttp://en.wikipedia.org/wiki/Foreign_exchange_derivativehttp://en.wikipedia.org/wiki/Interest_rate_derivativehttp://en.wikipedia.org/wiki/Interest_rate_derivativehttp://en.wikipedia.org/wiki/Credit_derivativeshttp://en.wikipedia.org/wiki/Over-the-counter_%28finance%29http://en.wikipedia.org/wiki/Over-the-counter_%28finance%29http://en.wikipedia.org/wiki/Credit_derivativeshttp://en.wikipedia.org/wiki/Interest_rate_derivativehttp://en.wikipedia.org/wiki/Interest_rate_derivativehttp://en.wikipedia.org/wiki/Foreign_exchange_derivativehttp://en.wikipedia.org/wiki/Equity_derivativehttp://en.wikipedia.org/wiki/Swap_%28finance%29http://en.wikipedia.org/wiki/Option_%28finance%29http://en.wikipedia.org/wiki/Forward_contracthttp://en.wikipedia.org/wiki/Underlying


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Types of derivatives markets:

In broad terms, there are two distinct groups of derivative contracts, which are distinguished

by the way they are traded in the market:

Over-the-counter (OTC) derivatives are contracts that are traded (and privatelynegotiated) directly between two parties, without going through an exchange or other

intermediary. Products such as swaps, forward rate agreements, and exotic options are

almost always traded in this way. The OTC derivative market is the largest market for

derivatives, and is largely unregulated with respect to disclosure of information

between the parties, since the OTC market is made up of banks and other highly

sophisticated parties, such as hedge funds. Reporting of OTC amounts are difficult

because trades can occur in private, without activity being visible on any exchange.

According to the Bank for International Settlements, the total outstanding notional

amount is $684 trillion (as of June 2008). Of this total notional amount, 67% are

interest rate contracts, 8% are credit default swaps (CDS), 9% are foreign exchange

contracts, 2% are commodity contracts, 1% are equity contracts, and 12% are other.

Because OTC derivatives are not traded on an exchange, there is no central counter-

party. Therefore, they are subject to counter-party risk, like an ordinary contract, since

each counter-party relies on the other to perform.

Exchange-traded derivative contracts(ETD) are those derivatives instruments that

are traded via specialized derivatives exchanges or other exchanges. A derivatives

exchange is a market where individuals trade standardized contracts that have been

defined by the exchange. A derivatives exchange acts as an intermediary to all relatedtransactions, and takes Initial margin from both sides of the trade to act as a

guarantee. The world's largest derivatives exchanges (by number of transactions) are

the Korea Exchange (which lists KOSPI Index Futures & Options), Eurex (which lists

a wide range of European products such as interest rate & index products), and CME

Group (made up of the 2007 merger of the Chicago Mercantile Exchange and the

Chicago Board of Trade and the 2008 acquisition of the New York Mercantile

Exchange). According to BIS, the combined turnover in the world's derivatives

exchanges totaled USD 344 trillion during Q4 2005. Some types of derivative

instruments also may trade on traditional exchanges. For instance, hybrid instruments

such as convertible bonds and/or convertible preferred may be listed on stock or bond

exchanges. Also, warrants (or "rights") may be listed on equity exchanges.

Performance Rights, Cash xPRTs and various other instruments that essentially

consist of a complex set of options bundled into a simple package are routinely listed

on equity exchanges. Like other derivatives, these publicly traded derivatives provide

investors access to risk/reward and volatility characteristics that, while related to an

underlying commodity, nonetheless are distinctive.
http://en.wikipedia.org/wiki/Over-the-counter_%28finance%29http://en.wikipedia.org/wiki/Swap_%28finance%29http://en.wikipedia.org/wiki/Forward_rate_agreementhttp://en.wikipedia.org/wiki/Exotic_optionhttp://en.wikipedia.org/wiki/Hedge_fundhttp://en.wikipedia.org/wiki/Bank_for_International_Settlementshttp://en.wikipedia.org/wiki/Interest_rate_derivativehttp://en.wikipedia.org/wiki/Credit_default_swaphttp://en.wikipedia.org/wiki/Credit_risk#Counterparty_riskhttp://en.wikipedia.org/wiki/Contracthttp://en.wikipedia.org/wiki/Exchange-traded_derivative_contracthttp://en.wikipedia.org/wiki/Exchange-traded_derivative_contracthttp://en.wikipedia.org/wiki/Derivatives_exchangehttp://en.wikipedia.org/wiki/Initial_marginhttp://en.wikipedia.org/wiki/Korea_Exchangehttp://en.wikipedia.org/wiki/KOSPIhttp://en.wikipedia.org/wiki/Eurexhttp://en.wikipedia.org/wiki/CME_Grouphttp://en.wikipedia.org/wiki/CME_Grouphttp://en.wikipedia.org/wiki/Chicago_Mercantile_Exchangehttp://en.wikipedia.org/wiki/Chicago_Board_of_Tradehttp://en.wikipedia.org/wiki/New_York_Mercantile_Exchangehttp://en.wikipedia.org/wiki/New_York_Mercantile_Exchangehttp://en.wikipedia.org/wiki/Warrant_%28finance%29http://en.wikipedia.org/wiki/Warrant_%28finance%29http://en.wikipedia.org/wiki/New_York_Mercantile_Exchangehttp://en.wikipedia.org/wiki/New_York_Mercantile_Exchangehttp://en.wikipedia.org/wiki/Chicago_Board_of_Tradehttp://en.wikipedia.org/wiki/Chicago_Mercantile_Exchangehttp://en.wikipedia.org/wiki/CME_Grouphttp://en.wikipedia.org/wiki/CME_Grouphttp://en.wikipedia.org/wiki/Eurexhttp://en.wikipedia.org/wiki/KOSPIhttp://en.wikipedia.org/wiki/Korea_Exchangehttp://en.wikipedia.org/wiki/Initial_marginhttp://en.wikipedia.org/wiki/Derivatives_exchangehttp://en.wikipedia.org/wiki/Exchange-traded_derivative_contracthttp://en.wikipedia.org/wiki/Contracthttp://en.wikipedia.org/wiki/Credit_risk#Counterparty_riskhttp://en.wikipedia.org/wiki/Credit_default_swaphttp://en.wikipedia.org/wiki/Interest_rate_derivativehttp://en.wikipedia.org/wiki/Bank_for_International_Settlementshttp://en.wikipedia.org/wiki/Hedge_fundhttp://en.wikipedia.org/wiki/Exotic_optionhttp://en.wikipedia.org/wiki/Forward_rate_agreementhttp://en.wikipedia.org/wiki/Swap_%28finance%29http://en.wikipedia.org/wiki/Over-the-counter_%28finance%29


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Common derivative contract types

There are three major classes of derivatives:

1. Futures/Forwards are contracts to buy or sell an asset on or before a future date at a

price specified today. A futures contract differs from a forward contract in that thefutures contract is a standardized contract written by a clearing house that operates an

exchange where the contract can be bought and sold, whereas a forward contract is a

non-standardized contract written by the parties themselves.

2. Options are contracts that give the owner the right, but not the obligation, to buy (in

the case of a call option) or sell (in the case of a put option) an asset. The price at

which the sale takes place is known as the strike price, and is specified at the time the

parties enter into the option. The option contract also specifies a maturity date. In the

case of a European option, the owner has the right to require the sale to take place on

(but not before) the maturity date; in the case of an American option, the owner canrequire the sale to take place at any time up to the maturity date. If the owner of the

contract exercises this right, the counter-party has the obligation to carry out the

transaction.

3. Swaps are contracts to exchange cash (flows) on or before a specified future date

based on the underlying value of currencies/exchange rates, bonds/interest rates,

commodities, stocks or other assets.

More complex derivatives can be created by combining the elements of these basic types. For

example, the holder of a swaption has the right, but not the obligation, to enter into a swap onor before a specified future date.
http://en.wikipedia.org/wiki/Futures_contracthttp://en.wikipedia.org/wiki/Forward_contracthttp://en.wikipedia.org/wiki/Contractshttp://en.wikipedia.org/wiki/Assethttp://en.wikipedia.org/wiki/Clearing_house_%28finance%29http://en.wikipedia.org/wiki/Option_%28finance%29http://en.wikipedia.org/wiki/Call_optionhttp://en.wikipedia.org/wiki/Put_optionhttp://en.wikipedia.org/wiki/Strike_pricehttp://en.wikipedia.org/wiki/European_optionhttp://en.wikipedia.org/wiki/American_optionhttp://en.wikipedia.org/wiki/Swap_%28finance%29http://en.wikipedia.org/wiki/Swaptionhttp://en.wikipedia.org/wiki/Swaptionhttp://en.wikipedia.org/wiki/Swap_%28finance%29http://en.wikipedia.org/wiki/American_optionhttp://en.wikipedia.org/wiki/European_optionhttp://en.wikipedia.org/wiki/Strike_pricehttp://en.wikipedia.org/wiki/Put_optionhttp://en.wikipedia.org/wiki/Call_optionhttp://en.wikipedia.org/wiki/Option_%28finance%29http://en.wikipedia.org/wiki/Clearing_house_%28finance%29http://en.wikipedia.org/wiki/Assethttp://en.wikipedia.org/wiki/Contractshttp://en.wikipedia.org/wiki/Forward_contracthttp://en.wikipedia.org/wiki/Futures_contract


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A Study of Indian Individual Investors Behavior

Indian investor today have to endure a sluggish economy, the steep market declines prompted

by deteriorating revenues, alarming reports of scandals ranging from illegal corporateaccounting practices like that of Satyam to insider trading to make investment decisions.Stock markets performance is not simply the result of intelligible characteristics but also dueto the emotions that are still baffling to the analysts. Despite loads of informationbombarding from all directions, it is not the cold calculations of financial wizards, orcompanys performance or widely accepted criterion of stock performance butthe investorsirrational emotions like overconfidence, fear, risk aversion, etc., seem to decisively drive anddictate the fortunes of the market.

Indian investors are high income, well educated, salaried, independent in makinginvestment decisions and conservative investors. From the empirical study it was found thatirrespective of gender, most of the investors (41%) are found have low risk tolerance level

and many others (34%) have high risk tolerance level rather than moderate risk tolerancelevel. Television is the media that is largely influencing the investors decisions.

When the BSE Sensex was hovering around the 21000 levels in the month of January 2008,

irrational exuberance was the order of the day. Then, few investors would have foreseen a fall

of over 70% in the subsequent 12 months period. Expectedly, the exuberance has been

forgotten and despondency has set in. The market is so volatile that its behavior is

unpredictable. In the past couple of years, the movement of share prices exceeded all the

limits and had gone remarkably low and high levels. These dramatic prices of the shares ruin

the concept of intrinsic value and rational investment behavior. The traditional finance

theories assume that investors are rational but they are unable to explain the behavior and

pricing of the stock market completely.

Indian Investors have to endure a sluggish economy, the steep market declines prompted

by deteriorating revenues, including alarming reports of scandals like that of Satyam

computers, ranging from illegal corporate accounting practices to insider trading etc to invest

their money in the stock market. Whether or not Stock markets performance is simply the

result of intelligible characteristics of the investor is the question that still baffles the analysts.

Despite loads of information bombarding from all directions, it is not the cold calculations of

financial wizards, company performance or widely accepted criterion of stock performancebut the investors irrational emotions like overconfidence, fear, risk aversion, etc., seem to

decisively driving and dictating the fortunes of the market is increasingly realized by the

analysts.


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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 empirical study on Individual Investors Behavior 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 gender and age on risk tolerance level of the investor.

Objectives of the Study

(1) To develop a profile of sample Indian individual investor in terms of their demographics.

(2) To identify the objective of investment plan of an Indian individual investor.

(3) To know the preferred investment avenues of the Indian individual investor.

(4) To know the extent of financial literacy of individual investors

(5) To identify the preferred sources of information influencing investment decisions.

(6) To know the risk tolerance level of the individual investor

(7) To know the demographic factors (Gender and Age) of the investor and his/her risk

tolerance level.

Sample DesignMany investors were reluctant to divulge their investment details especially the amount of

money invested so; referral sampling method is used for this empirical study. It has been

carried out with a sample size of 150 investors.

Analysis of the Survey

Table 1 and Table 2 show the Demographics and other characteristics of the sample

investors.

Table 1: Demographics of the Sample Investor.

Parameter No. of Investors Percentage

Gender

Male 120 80

Female 30 20

Total 150 100

Age (in years)

Below 35 55 36.735-50 80 53.3


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51-60 10 06.7

60 and above 5 03.3

Total 150 100

Marital Status

Unmarried 33 22Married 117 78

Total 150 100

Employment Status

Salaried 98 65.3

Self-Employed(Business) 43 28.7

Retired 9 06

Total 150 100

Monthly Earnings (in Rs.)Up to Rs. 10000 0 0

Rs. 10001-20000 6 04

Rs. 20001-30000 35 23.3

Rs. 30000 and above 109 72.7

Total 150 100

Education Level

Under Graduate 15 10

Graduate 65 43.3

Post Graduate & Above 70 46.6

Total 150 100

Financially Responsible

Only yourself 18 12.0

1 person in addition to yourself 16 10.7

2-3 persons in addition to yourself 53 35.3

4-5 persons in addition to yourself 49 32.7

More than 5 person besides yourself 14 09.3

Total 150 100

OccupationAccounts/Finance/Investment 65 43.3

Professionals 58 38.7

Others 27 18.0

Total 150 100.0


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Interpretation

Table 1 above shows, that 120 (80%) of the investors are men and the rest 30(20%) 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. Whenit comes to age, it was found that 36.7% are young and significant number (53.3%)of them

are in the age group of 35 to 50. The marital status of 78% of the investors was found to be

married and the rest are unmarried. This is because a married individual is considered to have

dependents so relatively more invested and involved in making financial investments. Nearly

65% of the investors belong to the salaried class, 29% were business class and the rest were

retired. It was found that 109(73%) of investors whose monthly earnings above rupees 30000

are interested in investments since these people have surplus amount due to which they are

able to think of investments. 70(47%) of the individual investors covered in the study are

postgraduates; 65(43%) investors are graduates and 15(10%) of the investors are under-

graduates. From table 1, 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. 65(43%) of the

investors covered in the study have been found to be in professions related to finance,

accountancy, investment, banking, broking, and financial management etc and 58(39%) of

the respondents are software engineers, architects, medical and dental practitioners, teachers,

lawyers etc. 27(18%) of the respondents can be said to belong to 'non-accounting or non-

financial' occupations and the other occupations.

Table 2: Other Characteristics of Sample Investor.

Parameter Number of Investors Percentage

Reading Behavior4 or more sources 59 39.3

23 sources 40 26.7

Only 1 source 51 34.0

Total 150 100.0

Investment Decisions are basedTaken on own initiative 111 74.0

Taken on own initiative but with helpfrom an expert

27 18.0

Made by expert on investors behalf 12 08.0

Total 150 100.0

Regularity of Investment DecisionsFrequently 89 59.3

Not so frequently 61 40.7

Total 150 100.0


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Interpretation:

The study has attempted to enquire about other characteristics of investor such as the reading

behavior of the Investors. From table 2, it is noteworthy to find that 59 (39%) of the investorsread four or more sources, 40 (27%) of the investors read two to three sources, 51 (34%) of

the investors only one source. One may infer from the figures of table 2 that most investors

tend not to depend upon expert advice and help while making investment decisions.

However, the majority of the investors 111 (74%) make investment decisions without the

help and advice from experts; only 27 (18%) investors consult some experts, for advice in

investment decisions. And 12 (8%) of the investors allow the expert to take decision on their

behalf. Most of the investors 89 (59%) make investment decisions on a regular basis.

Objective of Investment Plan

When investor was queried about his/her objective behind any investment, given that all theavailable investment avenues available to him will assure safety, liquidity and tax benefit, theobjective of investment plan of the investors is shown in the following table 3.

Table 3: Objectives of investment plan.

Parameter Number of Investors PercentageObjective of investment PlanCapital Appreciation 63 42

Balance of capital appreciation andcurrent income

65 43.3

Supplement to their current income 22 14.7

Total 150 100

Based on table 3, we can conclude that the investors objective of investment plan is capitalappreciation or balance of capital appreciation and current income. It is clear that investorsinvest to accumulate wealth rather as an avenue to supplement their income.

Preferred Investment Avenues

Based on the quantity of risk, the investment avenues are classified as follows - FixedDeposits/Bonds, Insurance schemes, Mutual Fund Schemes, Equities, Commoditiesand Real Estate. Investors were asked to choose preferred avenues.


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Table 4: Preferred Investment Avenues.

Investment Avenues Percentage

Fixed Deposits/ Bonds/PPF 26.7

Insurance Schemes 23.3

Mutual Fund Schemes 18Equities 20

Commodities/ Derivatives 10

Real Estate 2

Total 100

From table 4, it can be concluded that the investors prefer FDs/Bonds/PPFs avenues thaninsurance schemes next to Equities and Mutual Funds. It was interesting to know that Indianindividual investors still prefer to invest their surplus amount in risk free investment avenuesnext to insurances schemes. Table 4 confirms that Indian investors are conservative investors.

Financial literacy

When investors were queried about their financial literacy i.e. their ability or knowledgeabout financial terms or aspects of investments, it was found that most of the investors arefinancial illiterates. And the responses are shown in table 5.

Table 5: Financial literacy.

Parameters No. of People Percentage

Financial Literates 56 37.3

Financial Illiterates 94 62.7

Total 150 100.0

In spite of majority of the occupants (65) are from accounts and financial related jobs most ofthem astonishingly expressed ignorance about the mechanism of investments, and thedynamics of risk and returns.

Sources of Investment Information

When investors were asked to rank their various sources of investment information,the following Weighted Mean Values were obtained which are given in table 6.


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Table 6: Sources of investment information.

Sources of Investment

InformationNo. of people who opt for

News Paper/ Magazines 103

Electronic Media (T.V) 128

Peer group/ Friends 47

Broker/ Financial Advisor 36

Internet 18

Most of the investors get their information related to investment through electronic media(TV- NDTV Profit, CNBC and some business news channels) next to print media (Newspaper/ Business news paper/ Magazines). This could be because Print/Electronic media iseasy and readily accessible investment information when compared to the other sources ofinvestment information.


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Findings

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

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

Majority of the Investors belong to accountancy and related employment, non-financial management and some other occupations are very few.

Most investors read two or more sources of information to make investmentdecisions.

The investors decisions are based on their own initiative.

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

The objective of investment was either capital appreciation or balance of capitalappreciation and current income.

Investors prefer to park their funds in avenues like PPF/FD/Bonds next to Equitiesand Mutual Funds Scheme.

Most of the investors get their information related to investment through electronicmedia (TV) next to print media (News paper/ Business news paper/

Magazines)

Most of the investors are financial illiterates.


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Conclusion

The Present study has important implications for investment managers as it has come outwith certain interesting facets of an individual investor. The individual investor still prefers toinvest in financial products which give risk free returns. This confirms that Indian investorseven if they are of high income, well educated, salaried, independent are conservativeinvestors who prefer to play safe. The investment product designers can design productswhich can cater to the investors who are low risk tolerant and use TV as a marketing media asthey seem to spend long time watching TVs.


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Bibliography

Google.com

Investment Analysys and Portfilio Management - Prasannna Chandra

About.com

Wikipedia.org

Documents

An Internship Experience Report by Ayush Gupta]