A COMPARATIVE STUDY ON

INVESTMENT PATTERN OF INVESTOR TOWARDS BANKING AND SHARE

MARKET WITH SPECIAL REFERENCE TO MUMBAI REGION

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CHAPTER 1: INTRODUCTION

1) INTRODUCTION
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Investment is the employment of funds on assets with the aim of earning income
or capital appreciation. Investment means putting your money to work to earn
more money or simply speaking it is sacrificing of money today for future return.
Investment! One of the most successful way to make financial provisions for the
future, where most of the conditions are uncertain and unpredictable. With well
planned investment one can get the satisfaction of safety and surety in life. We
are familiar with investment from very early days of civilization. Initially the term
saving was more popular, and was considered as safest way of making money
stable.
Investment may be said as keeping a sum of money aside from the present savings with
the view of earning returns on it. It is done on the cost of sacrifice of present consumption
of that part of money.
The dictionary meaning of investment is to commit money in order to earn financial
return or to make use of the money for future benefits or advantages. People commit
money to investments with an expectation to increase their future wealth by investing
money to spend in future years.
All investments have some risk, whether in stock, capital market, banking, financial
sector, real estate, bullion, gold etc. The degree of risk however varies on the basis of the
features of the assets, investments instrument, the mode of investment, time frame or the
issuer of the security etc.
Investment benefits both economy and the society. It is an outgrowth of economic
development and the maturation of modern capitalism. For the economy as a whole,
aggregate investment sanctioned in the current period is a major factor in determining
aggregate demand and, hence, the level of employment.
Savings form an important part of the economy of any nation. With the savings invested in
various options available to the people, the money acts as the driver for growth of the

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country. Indian financial scene too presents a plethora of avenues to the investors. Though
certainly not the best or deepest of markets in the world, it has reasonable options for an
ordinary man to invest his savings. Banks are considered as the safest of all options, banks
have been the roots of the financial systems in India. Promoted as the means to social
development, banks in India have indeed played an important role in the rural upliftment.
For an ordinary person though, they have acted as the safest investment avenue wherein a
person deposits money and earns interest on it. The two main modes of investment in
banks, savings accounts and fixed deposits have been effectively used by one and all.

Elements of Investment
Reward
Risk and Return
Time
Why Should we Investment?
Financial reasons
1.
2.
3.
4.
5.

Other Reasons

To generate on your idle resources

1. Tax Savings
To earn returns.
2. Income
To protect and increase capital.
3. Ease of Withdrawal
To have money for important events.
Make a provision for future uncertainties.

Investing is not a game but a serious subject that can have a major impact on investor's
future wellbeing. Virtually everyone makes investments. Even if the individual does not
select specific assets such as stock, investments are still made through participation in
pension plan, and employee saving programme or through purchase of life insurance or a
home or by some other mode of investment like investing in Real Estate (Property) or in
Banks or in saving schemes of post offices. Each of this investment has common
characteristics such as potential return and the risk you must bear. The future is uncertain,
and you must determine how much risk you are willing to bear since higher return is
associated with accepting more risk. (Lopes, 1987) The individual should start by
specifying investment goals. Once these goals are established, the individual should be
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aware of the mechanics of investing and the environment in which investment decisions
are made.
TYPES OF INVESTORS:
Individual investors: (including trusts on behalf of individuals, and umbrella
companies formed for two or more to pool investment funds)
Collectors of art, antiques, and other things of value
Angel investors, either individually or in groups
Venture capital funds which serve as investment collectives on behalf
of individuals, companies, pension plans, insurance reserves, or other funds.
Investment bank
Investment trusts and
Real estate investment trusts
Where one can invest?
Securities Market:
Money Market
Bond Market
Mortgage Market
Stock Market
Foreign Exchange Market
Derivatives Securities Market

Depository Institutions:
Commercial Banks
Other Financial Institutions:
Insurance Companies
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 Securities firms and investment banks

Mutual funds
Finance companies
Pension funds
Investment Decisions are majorly affected by following factors.
1. Amount available for investment
2. Available time period for investment.
3. Return Expected
4.Investors risk bearing Capacity.

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1.2 OBJECTIVE OF STUDY:

The main objective of the study is to find out the investment pattern of the
investors towards banking and Stock market.
To determine what factors influence them while they choose a particular
investment, a particular sector and in which particular scheme they prefer to invest
and to find out whether they are satisfied with their investment decision or not.

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1.3 RESEARCH METHODOLOGY:

Research Methodology is a way to systematically solve the research problem. The

Research Methodology includes the various methods and techniques for conducting a
research. Research is an art of scientific investigation. The logic behind taking research
methodology into consideration is that one can have knowledge about the method and
procedure adopted for achievement of objective of the project.

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Research Design: The research will be Descriptive in nature. A population of investor

who invest in banks and share market will be considered for this study. I will try to
explore the investment behaviour of the Investor. Effort will be made to throw light on
most of the factors which have either indirect or direct effect on the behaviour of the
investment.
Since the type of study is descriptive in nature hence the research design will be guided
by following parameters.
1. The Research Problem
The research problem on hand is a to find out investor preference towards the
investment in banking and share market.
2. Procedures and techniques to used for gathering information
A proper and balanced combination of observation, questionnaire and interview of
sample population will be adapted by me for gathering information.
3. The population to be studied
In order to bring our some accurate conclusions, it is decided to contact the
investor

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VARIABLE TO BE USED
Independent Variable

: Income, Age, Education, Gender

Dependant Variable

: Investment in Banking & Share Market

Moderate Variable : Economical Environment

Schematic diagram for the theoretical framework including a moderating variable

Income

Age

Investment in Banking
& Share Market

Education

Dependant Variable

Gender

Independent Variable

Economical
Environment

Moderate Variable
Sampling Design:
Sampling unit The target population must be defined that has to be sampled. The
sampling unit of research included students and professionals residing in Mumbai city.
.Sample size This refers to number of respondents to be selected from the Mumbai city
to constitute a sample. The sample size of 30 Investors will be taken.
Sampling Technique In this project, Questionnaire Method will be used for the
collecting the data.
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1.4 Tools For Data Collection

In this research two types of data were used
1. Primary data
2. Secondary data
Primary data: Primary data is that data which has been collected especially for the
purpose of this newly taken research. This preliminary data for this research project has
been collected by the means of a questionnaire designed to determine those factor which
are designated by the various investors which were important to them in the decision
making process. These questionnaires were completed by this researcher within the
confines of Mumbai area. Various Professional/investors/businessmen/student were the
locus of this interviewing/questionnaire filling procedure.
Secondary Data : secondary information was obtained from trade journal, magazines,
Newspaper and from the internet.

Tools For Data Analysis:

Appropriate Statistical tools (like Percentage, charts, etc) have been used for data
analysis.

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CHAPTER 2: MODES OF INVESTMENT

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Investment Alternatives
Non marketable financial assets: These are such financial assets which
gives moderately high return but can not be traded in market.
* Bank Deposits
* Post Office Schemes
* Company FDs
* PPF
Equity shares: These are shares of company and can be traded in
secondary market. Investors get benefit by change in price of share and
dividend given by companies. Equity shares represent ownership capital. As
an equity shareholder, a person has an ownership stake in the company. This
essentially means that the person has a residual interest in income and wealth
of the company. These can be classified into following broad categories as
per stock market:
* Blue chip shares
* Growth shares
* Income shares
* Cyclic shares
* Speculative shares

Bonds: Bonds are the instruments

that are considered as a relatively safer investment avenues.
* G sec bonds
* GOI relief funds
* Govt. agency funds
* PSU Bonds
* RBI BOND
* Debenture of private sector co.
Money market instrument: By convention, the term "money market"
refers to the market for short-term requirement and deployment of funds.
Money market instruments are those instruments, which have a maturity
period of less than one year.
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* T-Bills
* Certificate of Deposit
* Commercial Paper
Mutual Funds- A mutual fund is a trust that pools together the savings of
a number of investors who share a common financial goal. The fund
manager invests this pool of money in securities, ranging from shares,
debentures to money market instruments or in a mixture of equity and debt,
depending upon the objective of the scheme. The different types of schemes
are
* Balanced Funds
* Index Funds
* Sector Fund
* Equity Oriented Funds
Life insurance: Now-a-days life insurance is also being considered as an
investment avenue. Insurance premiums represent the sacrifice and the
assured sum the benefit. Under it different schemes are:
* Endowment assurance policy
* Money back policy
* Whole life policy
* Term assurance policy
Real estate: One of the most important assets in portfolio of investors is a
residential house. In addition to a residential house, the more affluent
investors are likely to be interested in the following types of real estate:
* Agricultural land
* Semi urban land
* Farm House
Precious objects: Investors can also invest in the objects which have
value. These comprises of:
* Gold
* Silver
* Precious stones
* Art objects
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Financial Derivatives: These are such instruments which derive their

value from some other underlying assets. It may be viewed as a side bet on
the asset. The most important financial derivatives from the point of view of
investors are:
* Options
* Futures

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2.1 Investment in Banking

Banking in India originated in the last decades of the 18th century. Investment in banking
is most popular way of investment in India. Majority of the Indian invest their money in
banks. It is safest but not risk free mode of investment and provide us moderate return
from our investment. Maximum wealth of the Indians is deposited in banks due to the
less risk appetite of investor. They are not willing to take risk to invest in share market or
other financial instrument apart from banking.

Advantages:
Safest Mode of Investment
Easy liquidity.
Fixed Return
Less Risky
No expertise is needed to investment in banks
Disadvantages:

Lower rate of returns.

Narrow range of options available to the Investors.

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Investment in Stock market

Stock markets refer to a market place where investors can buy and sell stocks. The price
at which each buying and selling transaction takes is determined by the market forces.
In earlier times, buyers and sellers used to assemble at stock exchanges to make a
transaction but now with the dawn of IT, most of the operations are done electronically
and the stock markets have become almost paperless. Now investors dont have to gather
at the Exchanges, and can trade freely from their home or office over the phone or
through Internet.
People have earned fortunes from the stock markets, but there are people who have lost
everything due to incorrect timings or selection of fundamentally weak companies
A stock market/share market is a public market (a loose network of economic
transactions not a physical facility or discrete entity) for the trading of company
stock and derivatives at an agreed price; these are securities listed on a stock
exchange as well as those only traded privately.
A place where shares, stocks and bonds are bought and sold.
A market in which shares of different companies are bought and sold. Technical
Analysis: Anticipating future price movements using historical prices. Trading
volume, open interest, and other trading data to study price patterns.

Advantages:
High rate of returns.
Wide range of options available to the Investors.
Easy liquidity.
Help of brokers is easily available.
Speculations can be fruitful sometimes.

Disadvantages:
Lack of expertise can cause huge losses.
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 Investors must have complete knowledge of the market.

No protection against miss happenings.

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2.2 REGULATORY BODY OF INDIAN BANKS AND SHARE MARKET

India has a financial system that is regulated by independent regulators in the sectors of
banking, insurance, capital markets and various service sectors. The Indian Financial
system is regulated by two governing agencies under the Ministry of Finance.

1. Reserve Bank of India

The RBI was set up in 1935 and is the central bank of India. It regulates the financial and
banking system. It formulates monetary policies and prescribes exchange control norms.
The current Governor of RBI is Mr. Duvvuri Subbarao.
2. The Securities Exchange Board of India (SEBI)
The Securities and Exchange Board of India (frequently abbreviated SEBI) is the
regulator for the securities market in India. It was formed officially by the Government of
India in 1992 with SEBI Act 1992 being passed by the Indian Parliament. Mr. Upendra
Kumar Sinha is the current chairmen of SEBI.
The capital markets division of the Department of Economic Affairs regulates capital
markets and securities transactions. The capital markets division has been entrusted with
the responsibility of assisting the Government in framing suitable policies for the orderly
growth and development of the securities markets with the SEBI, RBI and other agencies.
It is also responsible for the functioning of the Unit Trust of India (UTI) and Securities
and Exchange Board of India (SEBI).

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CHAPTER 3: FEATURES OF INVESTMENT

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FEATURES OF INVESTMENT

Safety of Principal :
The safety sought in investment is not absolute or complete; it rather
implies protection against loss under reasonably likely conditions or
variations. It calls for careful review of economic and industry trends
before deciding types and/or timing of investments. Thus, it recognizes
that errors are unavoidable for which extensive diversification is
suggested as an antidote.
Adequate diversification means assortment of investment commitments
in different ways. Those who are not familiar with the aggressivedefensive approach nevertheless often carry out the theory of hedging
against

inflation-deflation.

Diversification

may

be

geographical,

wherever possible, because regional or local storms, floods, droughts,

etc. can cause extensive real estate damage.
Another way to diversify securities is to classify them according to
bonds and shares and reclassify according to types of bonds and types of
shares. Again, they can also be classified according to the issuers,
according to the dividend or interest income dates, according to the
products which are made by the firms represented by the securities. But
over diversification is undesirable.
By limiting investments to a few issues, the investor has an excellent
opportunity to maintain knowledge of the circumstances surrounding
each issue. Probably the simplest and most effective diversification is

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accomplished by holding different media at the same time having

reasonable concentration in each.
Adequate Liquidity and Collateral Value :
An investment is a liquid asset if it can be converted into cash without
delay at full market value in any quantity. For an investment to be
liquid it must be
(1) reversible or
(2) marketable.
The

difference

between

reversibility

and

marketability

is

that

reversibility is the process whereby the transaction is reversed or

terminated while marketability involves the sale of the investment in
the market for cash.
To meet emergencies, every investor must have a sound portfolio to be
sure of the additional funds which may be needed for the business
opportunities. Whether money rising is to be done by sale or by
borrowing it will be easier if the portfolio contains a planned proportion
of high- grade and readily salable investment.
Stability of Income :
Stability of income must be looked at in different ways just as was
security of principal. An investor must consider stability of monetary
income and stability of purchasing power of income. However,
emphasis upon income stability may not always be consistent with other
investment principles. If monetary income stability is stressed, capital
growth and diversification will be limited.

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 Capital Growth:
Capital appreciation has today become an important principle.
Recognizing the connection between corporation and industry growth
and very large capital appreciation, investors and their advisers
constantly are seeking growth stocks. It is exceedingly difficult to
make a successful choice. The ideal growth stock is the right issue in
the right industry, bought at the right time.
Tax Benefits:
To plan an investment programme without regard to ones tax status
may be costly to the investor. There are really two problems involved
here, one concerned with the amount of income paid by the investment
and the other with the burden of income taxes upon that income.
When investors incomes are small, they are anxious to have maximum
cash returns on their investments, and are prone to take excessive risks.
On the other hand, investors who are not pressed for cash income often
find that income taxes deplete certain types of investment incomes less
than others, thus affecting their choices.
Purchasing Power Stability:
Since an investment nearly always involves the commitment of current
funds with the objective of receiving greater amounts of future funds,
the purchasing power of the future fund should be considered by the
investor.
For maintaining purchasing power stability, investors should carefully
study (1) the degree of price level inflation they expect, (2) the

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possibilities of gain and loss in the investment available to them, and (3)
the limitations imposed by personal and family considerations.
Concealability:
To be safe from social disorders, government confiscation, or
unacceptable levels of taxation, property must be concealable and leave
no record of income received from its use or sale. Gold and precious
stones have long been esteemed for these purposes because they
combine high value with small bulk and are readily transferable.

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CHAPTER 4 :RESEARCH ANALYSIS AND INTERPRETATION

OF RESULT

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Q. 1 Result: To know whether respondents know about stock market.

Knowledge decision

No. of Respondents

Percentage of
Respondents (%)

Yes

30

100

No

Total

30

100

Yes

Yes

Yes
no

Analysis & Interpretation:

From the survey it was found that 100% respondents know about the stock market and
0% who were unknown. Because share market consists of good instruments of money
investment.

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Q.2 Result: To know whether respondents invest.

Investment Decision

No. of Respondents

Yes
No
Total

Percentage of
Respondents(%)
40
60
100

12
18
30

Figure No. 4.2 To know whether respondents invest.

No. of Respondents

Yes; 40%
No; 60%

Analysis & Interpretation:

From the survey it was found that only 40% respondents invest in the stock market and
majority 60% who were non-investors. Because of its feature of high risk.

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Q. 3 Result: The percentage of income that respondent invest annually in share market
Annual Income Invested

No. of Respondents

Percentage of
Respondents(%)

0 to 10%

20

14

10-20%

22

20-40%

40

More than 40%

24

Total

30

100

The percentage of income that respondent invest annually in share market

Chart Title

0 to 10%; 40%
Total; 50%

20-40%; 4%

10-20%; 6%

Analysis & Interpretation:

From the above table & chart, it was found that 40% respondents invest 0-10% of their
annual income, 6% respondents invest 10-20% of their annual income, 4% respondents
invest 20-40% of their income and majority 40% respondents not invest in share market.
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Q. 4 Result: The percentage of income that respondent invest annually in bank

Annual Income Invested

No. of Respondents

Percentage of
Respondents(%)

0 to 10%

14

10-20%

12

20-40%

18

60

More than 40%

14

Total

30

100

The percentage of income that respondent invest annually in bank

Chart Title
0 to 10%

10-20%

More than 40%

Total

7%
50%

20-40%

6%
30%

7%

Analysis & Interpretation:

From the above table & chart, it was found that 7% respondents invest 0-10% of their
annual income, 6% respondents invest 10-20% of their annual income, 30% respondents
invest 20-40% of their income and 7% respondents invest more than 40% in share
market.

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Q. 5 Result: while investing in share market respondent are mostly concerned about
Investment Factors

No. of Respondents

Percentage of
Respondents

Safety of Principal

28

Risk

22

Return on investment

12

40

Tax benefits

10

Total

30

100

The Factors That Were Considered While Investing in share market

Chart Title
Safety of Principal

Risk

Tax benefits

Total

Return on investment

14%
11%

50%

20%
5%

Analysis & Interpretation:

From the survey it was found that the maximum respondents 20% considered return on
investment was most important factor, 14% respondents considered Safety of principal as
an important factor and 11% respondents considered risk as an important factor. It can be
stated that majority of investors were consider return as an important factor while
investing.

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Q. 6 Result: while investing in bank respondent are mostly concerned about

Investment Factors

No. of Respondents

Percentage of
Respondents

Liquidity

Safety of Principal

15

50

Return on investment

28

Tax benefits

14

Total

30

100

The Factors That Were Considered While Investing in bank

Chart Title
Liquidity

Safety of Principal

Return on investment

Tax benefits

14% 8%

28%

50%

Analysis & Interpretation:

From the survey it was found that the maximum respondents 50% considered Safety of
principal was most important factor, 28% respondents considered return on investment as
an important factor and 14% respondents considered Tax benefit as an important factor. It
can be stated that majority of investors were consider safety of principal s an important
factor while investing in bank.

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Q. 7 Result: why respondent prefer bank for investment over share market
Investment Factors

No. of Respondents

Low risk appetite

Convenient
Safety of principal
Tax benefits
Total

5
9
13
3
30

Percentage of
Respondents
16
32
42
10
100

The Factors That Were Considered While Investing

Chart Title

Tax benefits; 10%

Safety of principal; 42%

Low risk appetite; 16%

Convenient; 32%

Analysis & Interpretation:

From the survey it was found that the maximum respondents 42% considered Safety of
principal was most important factor, 32% respondents considered convenient as an
important factor and 16% respondents considered Low risk appetites an important factor.
It can be stated that majority of investors were consider safety of principal s an important
factor while investing in bank.

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Q. 8 Result: why respondent dont prefer share market for investment

Investment Factors

No. of Respondents

Percentage of
Respondents

High Risk

12

40

Not convenient

22

Brokerage & Fraud

20

Lack of awareness

18

Total

30

100

The Factors That Were Considered While Investing in share market

Chart Title
High Risk

Not convenient

Brokerage & Fraud

Lack of awareness

18%
40%
20%
22%

Analysis & Interpretation:

From the survey it was found that the maximum respondents 40% considered high risk
was most important factor, 22% respondents considered not convenient as an important
factor and 20% respondents considered Brokerage & fraud an important factor. It can be
stated that majority of investors were consider High Risk an important factor while
investing in share market.

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Q.9 Result: To know whether respondents know the procedure to invest in share market
Investment Decision

No. of Respondents

Yes
No
Total

Percentage of
Respondents (%)
40
60
100

12
18
30

Figure No. 4.2 To know whether respondents invest.

No. of Respondents

Yes; 40%
No; 60%

Analysis & Interpretation:

From the survey it was found that only 40% respondents knows the procedure to invest in
the share market and majority 60% dont know the procedure due to lack of awareness

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FINDINGS
1. Most of the respondents have given the highest summited score to investment in
bank.
2. There is significant difference between the amount of investment in bank and share
market.
3. The awareness level about investment in share market is quite low in the Mumbai
City among.
4. Approximately 40% of respondent are aware that how to investment in share
market.
5. Approximately 40% of respondent are invest in share market.
6.
7.
8.
9.

Majority of respondent 60% dont invest in share market due to the risk factor.
40% respondents invest 0-10% of their annual income in share market.
30% respondents invest 20-40% of their income in banks.
Maximum respondents 50% considered Safety of principal was most important

factor while investing in bank.

10. Maximum respondents 40% considered high risk was most important factor while
investing in share market.
11. Most of the respondents have given the highest summited score to Return on
investment. And the second most important factor is Capital appreciation which
influenced the decision regarding investment.

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Conclusion
Financial Advisor should encourage to investor for investment in

share market.

Share Market has given a new direction to the flow of personal saving and enables
investors in urban areas to reap the benefits of the stock market investment.
Indian share market is playing a very important developmental role in allocation of
scares resources in the emerging economy.
The awareness level of investor is low in advisors are interested in dealing in share
market
Very less advisors know about services provided by their group.
The Regulator of share market SEBI should make some efficient policy so that
investor can encourage for investment.
Hence, the research study concludes that financial advisors play and paramour role
to encourage the investor to invest in share market so that Indian Economy can grow
rapidly.

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QUESTIONNAIRE

PERSONAL PROFILE
(A) Name of Respondent :...............................................................
(B) Age:
Less than 20 years
20 40 years
Greater than 40 years
(D) Occupation:
a) Service
b) Profession
c) Business
d) Student
(E) Income: (per annum)
Less than Rs 3,00,000/Rs 300000 Rs 5,00,000/Greater than Rs 5,00,000/-

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Q1. Do you know about share market?

a) Yes

b) No

Q2. Do you invest in share market?

a) Yes

b) No

Q.3 What percentage of your annual income do you invest in share market?
a) 0 to 10%

b) 10% to 20%

c) 20% to 40

d) More than 40%

Q.4 What percentage of your annual income do you invest in Bank?

a) 0 to 10%

b) 10% to 20%

c) 20% to 40%

d) More than 40%

Q5.While investing in share market you are mostly concerned about?

a) Safety of principal

b) Risk

c) Return on investment

d) Tax benefits

Q6.While investing in Bank you are mostly concerned about?

a) Safety of principal

b) Safety

c) Return on investment

d) Tax benefits

Q7. Why do you prefer bank for your investment

a) Low risk appetite

b) convenient

c) Safety of Principal

d) Tax benefits

Q8. Why you do not prefer share market for your investment
a) High Risk

b) not convenient

c) Brokerage & Fraud

d) Lack of awareness
Q9. Did you know the procedure how to invest in stock market?
a) Yes

b) No

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BIBLIOGRAPHY
Newspaper The Economics Times
Websites http://www.scribd.com/doc/54705439/Investment-Pattern-of-Investors-2#
http://www.slideshare.net/hemanthcrpatna/a-study-on-nvestment-pattern-of-investors-ondifferent-products-conducted-at-asit-c-mehta-investment-intermediates-ltd
www.moneycotrol.com

CH

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