Project Report Praveen Kr Singh

8/11/2019 Project Report Praveen Kr Singh

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Summer Training Project Report

On

Market research on investor attitude towards secondary market

Submitted for the partial fulfillment of the requirement for the award of Master of Business Administration (MBA) degree

from Uttar Pradesh Technical University (UPTU), Lucknow.

Submitted By:

PRAVEEN KUMAR SINGHMBA III Semester

1302970068

Under the guidance of

Swasti Panchal

2013-2014

KIET School of Management

Krishna Institute of Engineering and Technology

13 KM Stone, Ghaziabad - Meerut Road, Ghaziabad201206 (U.P.)


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MandatoryCertificates .


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CERTIFICATE OF THE HoD

To whom it may concern

This is to certify that Mr./Ms Praveen kumar Singh., Roll no1302970068., is the

student of MBA III semester and has successfully completed his/her project on Market

research on investor attitude toward secondary market

Date. HOD


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CERTIFICATE FROM THE COMPANY

Company Logo

To whom it may concern

This is to certify that Mr. /Ms Praveen kumar Singh.., Roll no 1302970068., is

the student of MBA III semester. He/she has worked on the project titled

Market research on investor towards secondary market. under my supervisionand guidance. This is an original and authenticated work done by him/her.

I wish him/her the very best in all his/her future endeavors.

Date.

Guide


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Declaration

I Praveen kumar Singh, Roll no 1302970068., student of MBA III Semester of

KIET, School of Management Ghaziabad hereby declare that the project report on Market research on investor toward secondary market.., is an original and

authenticated work done by me. I further declare that it has not been submitted else

where by any other person in any of the university for the award of any degree or

diploma.

Date

Name of student

Faculty Guide


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Acknowledgement (Sample)

It is really a great pleasure to have this opportunity to describe the feeling ofgratitude from the core of my heart who have given their immense contribution

while preparing this project report. I convey my sincere gratitude to_P. Divadi for

giving me the opportunity to prepare my project work on Market research on

investor toward secondary market___I am thankful to __Swasti Panchal__ for

her/his guidance during my project work and sparing her/his valuable time for the

same. I express my sincere obligation and thanks to all the Faculties of KIET

School of Management for their valuable advice in guiding me at every stage inbringing out this report.

I am also thankful to my family for their kind co-operation which made my take

easy.

Name:PRAVEEN KUMAR SINGH

Roll No:1302970068


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Table of contants Page noAbstract

CERTIFICATE OF GUIDE

DECLERATION

ACKNOWLEDGEMENT .

Chapter IIntroduction 8 to 13

Importance of study 14

Literature review 15 to 17

Objectives / Hypothesis .18 to 19

Chapter II

Brief Introduction about reliance leap or security & its product 20 to 30

Research design/ methodology 37 to 51

Chapter III

Data Analysis 31 to 45

Result discussion 46 to 52

Chapter IV

Conclusion and recommendations 53 to 54

Suggestions for future research 55

Limitations of the study 56 to 57.

Appendix

Bibliography 58 to 59

Table and Chart 60 to 69

Questionnaire 70 to 72


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Project on

Market research on investor

toward secondary market

PRESENTED BY:PRAVEEN KUMAR SINGH

MBAROLL NO:1302970068

8


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Secondary Market Equity

Investments

ABSTRACT: This research explores some of the

unanswered

important questions about stock markets that can be

examineand investigated by an emerging field, behavioral

finance. It also

explains the factors responsible for the unusual

movements in

the stock markets, which could not be fully explained by

the

theories of traditional finance.9


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This study shall examine three important attitudes

displayed by the investors. They are: Expectations

those investors have about the future performance of

the stock market in India; Confidence that investors

have regarding their investments; and Herd Instincts

so investors tend to herd together. Present study shall

also analyze the Investors preference towards

traditional trading and online trading.

Keywords: Behavioral Finance, gross domestic

product (GDP).

10


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INTRODUCTION:

The economic development of a nation is reflected by theprogress of the various economic units, broadly classified

into

corporate sector, government and household sector. While

performing their activities, these units are in a surplus/deficit/

balanced budgetary situations. There are areas or people

with

surplus funds or with a deficit. A financial system or

financialsector functions as an intermediary and facilitates the flow

of

funds from the areas of surplus to the area of deficit.11


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12

about money, credit and finance. Money refers to the current medium of exchange of

exchange or means of payment. Credit or loan is a sum of money to be return- ed,

normally with interest. Finance is monetary resources comprising debt and ownership

funds of the state, company or person [4].Economic growth implies a long-term rise in per

capital national output. The basic conditions determining the

rate of growth are three- Effort', 'Capital and Knowledge. In the post Second World Warthere has been an upsurge in the desire for economic growth following

rapid political and other developments and increasing impatience in the countries of Asia,

Africa and South America with their existing economic conditions. The keen desire for

development has tended to minimize the significance of factors

associated with Efforts. As regards Knowledge it is suggested that there already

exists a vast amount of knowledge in developed countries. This reasoning has led

to emphasis being placed on increasing capital formation as the most crucial fact- or in

economic growth of the underdeveloped countries.

The rate of capital formation in the underdeveloped countries has for a long time

been with the rate of growth of national output at par with the rate of population growth.

While the developed countries have, with an average rate of population growth of 1.9

percent, been investing 15 % to 18% (gross/net) of their national income, the gross/netrate of investment in underdeveloped countries has been

only 6% or 7% in the face of population growth at the rate of 2.9 % per annum [8].


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13

Financial institutions, also called financial intermediaries, provide means and mec- hakims

of transferring command over resources from those who have an excess of income over

expenditure to those who can make use of the same for adding to the

volume of productive capital. They, on the one hand, create claims in the form of

their shares, debentures, deposits, etc., against themselves which they induce the

savers to accept in exchange for their savings (claims on society for goods and services inthe future). On the other hand, they acquire claims against the investors by investing in

their shares and debentures and by granting direct loans to them. It is here that role of

financial institutions can be traced. They provide a convenient and effective link between

savings and investment. Financial institutions channel

the funds mobilized by them to those who require more funds than they have, such as

business firms.

Important of study


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Important of study

For conducting this research following objectives were set:

1.To evaluate investors' attitude towards stock market operationsincash and derivative segments.

2. To analyze the investors preference towards traditional trading

and online trading in cash and derivative segment

3. To study the problems (both actually faced and anticipated) of

inve

ster.

4.To suggest appropriate strategies to investors for taking right

inv-14


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Literature of review

There is lot work has been done so far in this regard. Now we have

overview some of researcher works in this section of the paper as review

literature. With the reference of research topic, some of studies are beingdone in which all the variables includes Risk attitude factors i.e; Risk

Aversion, Risk Tolerance, Risk are taken into consideration to define the

impact of those variables on stock market.

Levin , Synder and chapman (1975) were concerned with the differencesbetween men and women in accepting the risks of financial investments,

they focused on a group of 110 students using a questionnaire regarding

lotteries to check the more risk aversive according to gender differentiation.

the results indicating that women are more risk aversive than men .

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16

Powell and Ansic (1997) questioned a small group regarding property

insurance and the exchange market and again found that women are more

aversive than men (this study was among the first which analyzed individual

aversion towards speculative and pure risks); using information regarding the

weight of the funds invested in risky asset.

Jaimie Sung and Hannna (1996) analyzed the risk tolerance crosspo- nding to

four ethnic groups: Caucasian, Hispanic, Black and others. Given the

substantial differences among risk tolerance capacities of these groups (the

Caucasians have the highest risk tolerance and the

Blacks the lowest) we may assert that this factor has a direct impact on the wayinvestors accept and perceive risk attached to financial investments. Education also has

a direct influence on risk tolerance, as several studies prove a direct link between

higher education and the acceptance of higher risk related investments. The analysis

was conducted on four education levels: primary school, high school, college and

postgraduate studies. The results demonstrate an intense and direct impact on

accepting financial risk: the higher the subjects education, the higher his tolerance to

risk.


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17

Sitkin and Pablo (1992) developed a model of determinants of risk behavior. In this

model, personal risk preferences and past experiences form an important risk factor in

which to frame the problem, and social influence also affects the individuals perception.

Sitkin and Weingart (1995) extend the Sitkin-Pablo model leading to the definition that

risk perception and propensity are the mediators in risk behaviors of uncertainty decision-

making

All these studies proved the complexity of risk aversion and its subjective dimension, as

the estimates are difficult to obtain accurately. Investors have ultimately a unique

behavior which results in un balanced price, no matter how

adverse they are to risk. Understanding risk aversion offers another perspective for

constructing and optimizing risky financial portfolios.


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Hypothesis

The following Null Hypotheses were set up for the

present study:

1. Retail Investors are not aware about functioning of

capital market.

2. Retail Investors do not prefer online trading.

3. Investors with speculative attitude are not influencedby

technical factor.

4. Heuristic driven biases have no relationship with spec-

ulative attitude among investors.5. Investors level of awareness has no association with

heuristic driven biases.

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19

.6.Heuristic driven biases do not influence speculative attitude as much as

technical analysis do.

CHAPTER II


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CHAPTER II

ABOUT RELIANCE LEAP

Reliance Money as a brand is primarily associated with

provi-

ding comprehensive financial solutions to customers.

20


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Reliance Capital is one of India's leading and fastest

growing

non banking finance companies, and ranks among the

largestprivate sector financial services in terms of net worth

Reliance Money endeavors to change the way

investors

transact in financial markets and avails of financialservices.

Customers are provided with a plethora of services in

Equities, Commodities, Derivatives, Wealth

Management,

Investment Banking, Distribution of Financial Products,Insurance Broking, Money Transfer Services, Gold Coin

distribution and New Pension scheme through different

associate companies. 21

The LEAP is an initiati e b Reliance Mone Infrastr ct re


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The LEAP is an initiative by Reliance Money Infrastructure

Limited, a Reliance Capital Company that is engaged in the

distribution business to offers all financial products through a

single window approach to retails as well as corporate

clients.

Service and Products:

EQUITY FINANCIAL SERVICES

(A). DELIVERY CASH:Long-term investments are always

beneficial, as they do not respond to daily volatility inthe Stock Market and keep the investor safe.

22

As an Investor one can avail of delivery based buying /


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As an Investor, one can avail of delivery based buying /

selling based on the stock fundamentals.

(B).AFTER MARKET ORDERS (AMO): Do not be

restricted with market times and invest round theclock by placing After Market Orders (AMO).

A facility that gives usan option to place orders

even after or before the trading hours, using

our online trading platforms.Wecan place AMO on both NSE and BSE under

Equity and.

(C). TRADING INTRADAY:Active traders can take

advantage of market movements by levearging with

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our unique products. In addition, italso provide intraday

live market calls that help the customer trade efficiently.

All intraday positions need to be squared off before the

market closes.

MUTUAL FUNDS

We believe that mutual funds are the best investmentinstruments for your long term wealth creation. A Mutual

Fund is a trust that pools the savings of a number of

investors who share a common financial goal. A Mutual Fund

is the most suitable investment for the common man as it

offers an opportunity to invest in a diversified, professionally

managed basket of securities at a relatively low cost.

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Reason to investment Mutual fund:

(1). Reduces your Risks: Mutual Funds diversify your port-

folio by investing in various securities & thus minimizes

the risk.

(2). Liquidity: Mutual Funds can be bought and sold on any

dealing day as the issuer is bound by their agreement to

buy it back from you at the day's prevailing price no

matter how large the number of units you hold.

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(3). Affordability- The minimum investment in mutual

funds starts from Rs 1,000 or Rs.500/-. A Mutual Fund

allows even a small investor to take the benefit of its

investment strategy.

(4). Low Costs - Mutual Funds are a relatively less expensi

ve way to invest because the benefits of scale, the

brokerage, custodial and other fees translate into lowercosts for investors.

ONLINE TRADING PLATFORM:

(1). Both browser based and desktop based trading platfor

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based on our requirements


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based on ourrequirements.

(2). Integrated market watch for NSE / BSE and Derivatives

(NSE).

(3). Real time streaming quotes and Charting facility with

host of indicators.

(4). Live market research recommendations to takeinformed

decisions.

(5). Apply in IPO and Mutual Funds investments in just aclick of a button.

27

DERIVATIVES:


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DERIVATIVES:

The derivative segment is a market that gives you an

opportunity to earn greater profits by paying a nominal

amount of margin. Over past fewyears, Popularity andDealings in Future & Options segment has grown incredibly.

Future contracts are available on Equities, Indices,

Currency and commodities.

Wcan trade in Futures and Options under NSE.

Products enabled are MIS and NRML:

(1). MIS provides intraday leveraging

(2). NRML for taking carry forward positions

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POTTFOLIO MANAGEMENT


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POTTFOLIO MANAGEMENT

SERVICE:

PMS is a premium service offered to select customers

where investments are monitored by expert managers to

meet

the customer's financial goals depending on the risk s/he

iswilling to bear and the timeframe of the investment.

Why Invest using PMS?

(1).Access to a diverse range of products that would notbe available in other products like

29

mutual funds.


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mutual funds.

(2). Opportunity to invest in a customised bouquet of

products to match your investment goals.

(3). Greater flexibility that gives you the option of

buying

financial instruments depending on theopportunities

present.

(4). Regular reports and updates to give you a singleand

unified view of your investments and their status.

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Research design and Methodology

Research is an organized and systematic way of findinganswers to questions. Redmen and Mory define research as a

systematized effort to gain new knowledge (L.V. Redmen and

A.V.H. Mory, The Romance of Research, 1923, p10). It is a

careful and systematic study in the field of knowledge,

undertaken to establish facts of principles (Grinnel, 1997).

Applied research aims at finding a solution for an immediate

problem facing a society or an industrial / business

organization, whereas fundamental research is mainlyconcerned with

generalization and with the formulation of a theory.

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The aim of this study was to find out factors affecting

investors

attitude towards secondary market equity investment

hence applied research was carried out as it was designedto apply its findings to a particular situation. Questions might

be designed to gather either qualitative or quantitative data.

By their very nature, quantitative questions are more exact

than qualitative. For example, the word "easy" and difficultcan mean radically different things to different people. So,

the approach used was quantitative and based on collecting,

interpreting, summarizing and analyzing numerical data.

Positivist paradigm is the philosophy on which the currentstudy was based and the overall methodology used was

32

deductive. Within deductive methodology there are vario-


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us types of methods like descriptive survey and analytical

survey. "Descriptive survey is concerned with identifying

and counting the frequency of a specific population, either

at one point in time or at various times for comparison"(Bell, 1997). The descriptive research approach was

considered best for the current research because this study

intended to accomplish the aims by using descriptive

statistics.

The descriptive research approach gives a variety of meth-

ods and the one that was considered suitable for this study

was the survey method. Survey method was chosen

because of the need to get details from a large number ofres- pendants and as it is not limited to seven or eight

respondent as in the case of focus33

Th h i t t d f th t d


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groups. The research instruments used for the study

were

questionnaires.

Statistics is indispensable in research work. Most of the

advence- ment in knowledge has taken place because of

experiment conducted with the help of statistical methods.

In fact, there is hardly any research work today that can find

complete without statistical data and statistical methods.

Depending upon the source, statistical data are classified

under two categories-

1. Primary data2. Secondary data

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f


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The Primary data are those which are collected afresh and

for the first time, and thus happen to be original in chara-

cter. The secondary data, on the other hand, are those

which have already been collected by someone else andwhich have already been passed through the statistical

process.

In this research study, both the primary and secondary datawas used to get adequate information for the achievement

of the research objectives. Many methods and procedures

have been developed to help in acquiring data. The basic

methods and tools for data collection for research include

observation, questionnaire, interview and projectivetechnique.

35

A Sampling method


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A. Sampling method

"Sampling is one of the major tools of marketing research,

which is concerned with collecting, analyzing, and

interpreting market data. It involves the study, in

considerable detail, of relatively small numbers of

informants taken from a larger groupSampling is simply

the process of learning about the population on the basis ofa sample drawn from it. Thus, in the sampling technique

instead of every unit of the universe only a part of the

universe is studied and the conclusions are drawn on that

basis for theentire universe (Research Methodology, ICFAI April 2004).

The process of sampling involves 4 stages:36

. e n ng e popu a on.2. Identify a suitable sampling frame based on the


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y p g

research

objective.

3. Decide on a suitable sample size.

4. Select the most appropriate sampling technique and

obtain the sample.The various methods of sampling can

be

grouped under two broad heads1. Probability Sampling (Random Sampling).

2. Non-Probability Sampling (Non-random Sampling).

Probability methods are those in which every item in the

universe has a known chance, or probability, of being

chosen37

for the sample. This implies that the selection of sample

it i i d d t f th ki th t d N


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items is independent of the person making the study. Non-

Probability sampling methods are those which do not

provide every item in the universe with a known chance of

being included in the sample [15]. The current study shallbe using non-probability sampling. With in non-probability

sampling, convenience sampling would be used. In

convenience sampling, members of the population are

chosen based on their relative ease of access.

B. Sampling Size

The size of the sample depends on the type of

informationfrom the survey, and the cost involved.

38

s means ca cu a ng e ore an e egree o accuracyrequired in the results of the survey. Some attributes may


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q y y

be more critical than others, and the degree of precision

over these should be known. Careful thought should be

given to time constraint. Cost and accuracy are

closely linked with the time taken to complete the survey,

and to some extent there is bound to be conflict.

Considering all these factors, the sample size included was

494.

C. Scale

The study used a variety of questions to find out

complete

information about the under research. The

questionnaire

for the study was drawn from a study connected by Dr.39

by Dr Harsh Purohit (2002) on the theme Invest ors


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by Dr. Harsh Purohit (2002) on the theme Invest- ors

Attitude towards Stock Market Investment with special

reference to Bhopal and Jaipur Cities. The study was the

first of its kind after Nobel Prize award in behavioral financeto Prof. Kahnemen and experimental economist Vernon

Smith is seen by many as a vindication of the field of the

behavior finance.

Apart from dichotomous and multiple-choice questions, the

questionnaire also included statements which the

respondents were required to rate on the basis of different

scales like the Likert scale and rating scale.

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D. Secondary data collection


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D. Secondary data collectionInitially it had been assumed that the secondary data would

be

readily available. The secondary data was collected fromthe journals, books, magazines, published reports and web

portals. Secondary data on the history of stock market was

collected from site.

These days many companies are trying to increase their

client-investors in Indore and Ujjain cities so the brochures

and pamphlets are easily available and used to understand

the online trading concept, intraday trading and procedure

for share trading through brokers.

41

Many books journals related to behavior finance News


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Many books, journals related to behavior finance, News

channels like CNBC & Awaaz were followed to know the

various share market terminology, Sensex calculation,

investment in mutual funds and derivatives. Some reportslike RBI bulletin, SEBI guidelines regarding share market

investments, CMIE reports, norms for stock exchanges in

Indian budget etc. were also used as a secondary data. The

collection of data from secondary sources was not just

limited to the initial stages but continued while primary

research was in proress.

E. Primary data collectionPrimary information was collected by the administration

42

of structured questionnaires to find out investors attitude


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of structured questionnaires to find out investors attitude

towards share market investments. Present study was also

an attempt conducted to find out the trend of online trading

in Indian stocks. For conducting this study, first step was tocollect random sample.

As this study was mainly based on primary data, so for

conducting it investors responses were collected through

pre-determined set of questions in the form of well designed

questionnaire. The questionnaire had multiple-choice

questions. Considering all the factors and constraints, the

sample size chosen for the current study was 494. The data

was collected from retail investors which were categorizedon the basis of income level, gender, age, and awareness

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level. In the second stage total sample was further

bifurc- ated in two categories-First category included

those investors who deal in internet trading (Net

Traders) and second category included those

investors who purchase/sell securities only through

brokers (Traditional traders).

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45

Classification of Retail on

investor

Income level[Rs]

Age[inyears]

Gender Aweareness leavel

[1]. Up to 200000

[2]. 200001-4000

00

[3]. 400001-6000

00

[1]. Up to 25

[2]. 25-40

[3]. 40-45

[4]. 45-above

[1]. Male

[2]. Female

[1]. Low

[2]. Medium[3]. High

CHAPTER III


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Data analysis And

Discussion

Understand the Company

My first task in analyzing a stock is to understand the

company behind it. What are its main products or service

Who are its customers? What advantage does the

company

have over its competitors? The better you understand acompany, the better youll be able to make sound

investment

decisions and stick through normal market correction. 46

Growth investors will want to pay particular attention to what


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Growth investors will want to pay particular attention to what

is new about a companys story. Large stock moves are

almost always driven by a compelling new product or service,

or by new management that brings new ideas, or by newindustry conditions that affect an entire industry group in a

positive way. In our study of the greatest stock

market winners from 1995 through 2001, we found more

than 95% met at least one of those criteria.

A good place to begin your search for this kind

information is the News section of the Related information

panel in Market Smith. Youll want to review the latest

headlines offered in the panel by Market Watch If yousubscribe to Investors Business Daily,

47

I can access IBD articles on the stock being viewedthrough this panel as well. Pay particular attention to any


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g p y p y

IBD New America articles that have been written on that

company. These articles offer a useful overview of a

companys operations.

Fundamental of data

Youll next want to take a closer look at the fundamental

data offered in the Market Smith Data Boxes on the daily

and week chart views. An overarching concept to keep in

mind is that thebiggest winners in the stock market tend to

be the number one companies in their fields.

48


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49

parame ers o use o ana yzestocks:


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(1). Earnings per share in the latest

quarter should show a major

percentage increase versus the

same quarter a year ago. At

least

18% or 20% and preferably

muchmore.

(2). Earnings growth should be

accel-erating in recent quarters

compa-

red with earlier rates of50

inrecent quarters will exceed that


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of

previous quarters.

(3). Annual earnings for the last

three

years should be increasing at a

rate

of 25% per year or even more. If

I

am looking at a younger

company

that recently had its IPO, youmight

accept the last five or six

quarters 51

more in one or more

recent


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recent

quarters, or at least

accelerat-

ing in their percentage

chang

e for the last three

quarters.

Finally, I should analyze

how

efficient the company is at

gene- rating returns given

the

amount of capital it 52

CHAPTER IV


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CONCLUSION

This study brings out the significance of investing in equity

market through the factors that influence the decision

making of an active participant in this sector. This sector hasthe great ebbs and flows and can be synonymously coded

as the marketplace with stock volatility sticking to it.

People with more experience are not the only profit makers

as the prevalent market conditions are in such a manner.This goes in with the fact that adequate experience is not

the only need to deal with high risk environments.

53

Every other person in the equity market is in need of profits.


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When there is a profit maker, there is also a loser. So taking

decisions by relying completely on others opini- on may

result in negative returns. This may also comply with thefact of risk appetite in taking decisions. The resp-

ondents could be self monitoring people if they have a good

decision making in purchasing a stock. This aspect could be

high or low in them to obtain different percentage of returns.

The tactics on every single aspect to deal with a stock,

lengthened continuous monitoring of a

particular equity and tracking of the market is necessary. It

is also evident that investment strategies of people keep

changing as well as the factors that influence the decisionmaking keeps changing.

54

(1) One should invest in secured and risk free investment


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(1). One should invest in secured and risk-free investment

rather than high-risk, highly profitable investment.

(2). Tracking the market environment better with sound

knowledge about a particular stock would result tter

return.

(3). Since many of the entities in this study are independentof each other, there is need to analyze on a buying

decision

specifically for respective stocks.

(4). People with less experience can also be high profit

maker

when decision are based on intricate fundamental and55

Limitation of study


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y

(1). The study area of this research is confined to Indoreand Ujjain cities only and may not give similar results

when generalized to other regions. Investors included

here are only literate males & females and not house-

wives.

(2). People have many reasons to invest their money in

different investment alternatives. It should be noted

that social, cultural, economic, political, demographic

factors may strikingly differentiate the behavior ofinvestor when investing in the stock market.

56

(3). The current research only covers factors affectinginvestors


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attitude towards secondary market equity investment in

parti-

cular and primary market & risk free securities in general,thus results may not be general and applicable to

investor to

investors attitude towards primary market investment.

(4). One more limitation is that convenient sampling

technique

is used and the sample size is too small to come to any

conclusion.

57

Angelbroking.com

Investopedia com


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Investopedia.com

Brad M. Barber and Terrance Oean (2004) All

thatGlitters: The Effect of Attention and News on the

Buying Behavior of Individual and Institutional

Investors Review of Financial Studies, Volume

21,Issue 2, pp 785-818.

David Trading Responses to Past Returns and

the

Disposition Effect.E Boehmer, EK Kelley (2009) Institutional

Investors58

nanc a u es o ume , ssue p. - .

JA Frankel and K Froot (1990) Exchange Rate

forecasting


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g

Techniques, Survey Data, and Implications for the

foreign

Exchange Market.Melanie Cao and Jason Wei (2005) Stock market

returns:

A note on temperature anomaly Journal of banking

& Finance Volume 29, Issue 6, Pages 15591573.Ning Zhu (2002) The local Bias of Individual invester

Yale

ICF Working Paper No. 02-30.

Richard W. Sias and David A. Whidbey (2008) Insider

Trades and Demand by Institutional and Individual

Investors Review of Financial Studies, Volume 23,

Issue 4 Pp. 1544-1595.59

TABLE AND CHAT


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TABLE AND CHAT

II. INVESTMENT VERSUSSPECULATION

While it is difficult to draw the line of distinction betweeninvestment and speculation, it is possible to broadly

distinguish the characteristics of an investor from those of a

speculator as follows

Table 1. Distinguish between Investor and Speculator

60

on the basis of Characteristics.


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Characteristics Investor Speculator

Planning horizon An investor has A speculator has a verya relatively longer short planning horizon.

planning horizon.

Risk disposition An investor is normally A speculator is ordinary

not willing to assume willing to assume highmore than moderate risk.

risk.

Return expectation An investor usually A speculator looks for

seeks a modest rate a high rate of returnrate of return which in exchange for the

is commensurate. High risk.

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Markets exist to facilitate the purchase and sale of goods and


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Markets exist to facilitate the purchase and sale of goods and

services. The financial market exists to facilitate sale and

purchase of financial instruments and comprises of two major

markets, namely the money market and the capital market.

Comparing the movement of the Nifty, Sensex and

NASDAQ over 2008-09 (all indices rebased for 1 April 2008),

as depicted in chart, it is seen that NASDAQ performed betterthan the Indian indices during most part of the year. The

returns on the NASDAQ were negative 33% during 2008-09,

while that on Nifty 50 and BSE Sensex were negative 36%

and 38% respectively, over the same period. About 09-10,

latest happening.

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Chart 1. Movement of Nifty 50.


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Source: Indian Securities Market- A Review, NSE, Volume X,

2009

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Table 2. Savings of Household Sector in Financial

Assets (%).


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Assets (%).

Financial asset 2004-05 2005-06 2006-07 2007-08 2008-09

Currency 8.5 8.7 10.2 11.4 12.5Fixed Income 85.4 83.9 80.6 78.2 89.5

investment

Deposits 37 47.2 49.19 52.2 58.5

Insurance 28.9 24.2 28.80 27.9 29.6

Small Savings 19.5 12.3 2.7 -1.9 1.4

Securities market 6 7.2 6.9 10.1 -1.9

Mutual Funds .4 3.6 5.20 7.7 -1.8

Govt Securities 4.9 2.4 .3 -2.1 -4.5

Other Securities .7 1.2 3.70 4.5 4.4

TOTAL 100 100 100 100 100

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According to the RBI data, the household sector

accounteed for 84 8 % of gross domestic savings in


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accounteed for 84.8 % of gross domestic savings in

fixed income investment instruments during 2006-07;

which has increased in comparison to 83.9% in 2005-06 (Table 1 & 2). In fiscal 2006-07, the household

sector has invested 55.7 % of financial savings in

deposits, 24.2 % in insurance / provident funds, 4.9 %

in small savings, and 6.5 % in securities marketincluding government securities , units of mutual funds

and other securities (out of which the investment in

Gilts has been 0.2 %) Thus, the fixed income bearing

instruments are the most preferred assets of thehousehold sector.

65


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Chart 2. Savings of Household Sector in

Financial

Assets.

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A new area of financial research, Behavioral Finance is

receiving a lot of attention from individual and institution al


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receiving a lot of attention from individual and institutional

investors. Behavioral finance draws inputs from the field of

psychology and finance in an attempt to understand andexplain irrational stock market and investor behavior.

At the end of March 2010 a total number of 363 members

were permitted to allow investors web based access to NSEs

trading system. The members of the exchange in turn hadregistered 51,43,705 for web based access as on March 31,

2010. On the capital market segment, the trading volume of

Rs. 9,21,380 crore during the year 2009-10 constituting 11.13

of total trading volume was routed and executed through theinternet.

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Table 3. Growth of Internet Trading.


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Source: NSE-Fact Book 2010

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Year EnabledMembers*

Registered

Clients*

Internet

Trading

Volume (Rs.

crore)

% of total

Trading

volume

2006-07 242 22,79098 3,37,554 17.35

2007-08 305 4405,134 668,399 18.82

2008-09 349 5,627,789 692,789 25.17

2009-10 363 5,143,705 921,380 11.13


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Chart 3. Growth of Internet Trading: NSE-Fact

Book 2010.

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QUESTIONNIRE


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(1). Name:_____________________________________

(2).Age______

(3). Gender:

(a). Male

(b). Female

(4). Occupation:

(a). Government Employee (b). Private Employee

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. ncome er nnum(a). Less than 2 Lakhs

(b). Between 2-4 Lakhs


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( )

(c). Between 4-6 Lakhs d) Above 6 Lakhs

(6). Experience in Investment?

(a). Less than 1 Year

(b). Between 1-3 Years

(c). Between 3-5 Years

(7). Which of the following consist your portfolio?

(Rank

the following 1- least important, 5moreimportant)

(a). Commodities/Gold71

(b). Saving bank

(c). Mutual Funds


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( )

(d). Stock Market

(8). What kind of Investment do u prefer?

(a). Intraday

(b). Short Term Investment

(c). Medium Term investment

(d). Long Term Investment

(9). The Large Cap stocks are less risky than small & Mid-

cap stock.

(a). I strongly agree(b). I agree

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(c). Neutral

(d) I disagree


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(d). I disagree

(10). How do you make your investment decisions?(Rank

the following 1- least important, 6more

important.

(a). Market condition(b). Brokers advise

(c). Self analysis

(d). Professional advisors recommendation

(e). Friends advise

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Documents

Project Report Praveen Kr Singh