Project report

“A STUDY ON INVESTMENT PERCEPTION AND

SELECTION BEHAVIOR TOWARDS THE EQUITY SHARE
MARKET IN BENGALURU CITY”
Submitted in partial fulfilment of the requirement
For the 4rd Semester examination

MASTER OF BUSINESS ADMINISTRATION

OF
BENGALURU CITY UNIVERSITY

BY
JAYANTH KUMAR L
MB191254

Under the guidance of

ANUSHA K.M

Asst. Professor

COMMUNITY INSTITUTE OF MANAGEMENT STUDIES

2nd block, Jayanagar, BENGALURU -560011.
CHAPTER - 1

INTRODUCTION

 Financial market :- the financial markets are the platform where the financial securities are
traded in forms of currencies , equity shares , commodities and crypto currencies , etc. A financial
market plays a vital role in the economic growth of a country. It acts as an intermediatory between the
flow of funds which belong to those who save a part of their incomes and those who invest in the
productive assets. It helps in mobilization and usefully allocating scarce resources of a country . A
financial system is a complex ,well integrated set of sub-systems of financial institutions, markets,
instruments, and services which facilities the transfer and allocation of funds , efficiently and
effectively.
Financial markets, from the name itself, are a type of marketplace that provides an avenue for
the sale and purchase of assets such as bonds, stocks, foreign exchange, and derivatives. Often, they are
called by different names, including “wall street” for the us and ‘’dalal street” for india and “capital
market,” but all of them still mean one and the same thing. Simply put, businesses and investors can go to
financial markets to raise money to grow their business and to make more money, respectively.

There are so many financial markets, and every country is home to at least one, although
they vary in size. Some are small while some others are internationally known, such as the nse
(national stock exchange) and BSE ( bombay stock exchange) that trades trillions of rupees on a daily
basis. Here are some types of financial markets.

 Importance of financial markets.

There are many things that financial markets make possible, including the following:

 Financial markets provide a place where participants like investors and debtors, regardless of
their size, will receive fair and proper treatment.

 They provide individuals, companies, and government organizations with access to capital.

 Financial markets help lower the unemployment rate because of the many job opportunities it
offer.
  There are various types of markets under the financial markets they are :

1. Stock market: The stock market trades shares of ownership of public companies. Each share comes
with a price, and investors make money with the stocks when they perform well in the market. It is
easy to buy stocks. The real challenge is in choosing the right stocks that will earn money for the
investor. There are various indices that investors can use to monitor how the stock market is doing,
such as the SENSEX , NIFTY 50 and the NIFTY BANK. When stocks are bought at a cheaper price
and are sold at a higher price, the investor earns from the sale.

2. Bond market : The bond market offers opportunities for companies and the government to secure
money to finance a project or investment. In a bond market, investors buy bonds from a company, and
the company returns the amount of the bonds within an agreed period, plus interest.

3. Commodities market: The commodities market is where traders and investors buy and sell natural
resources or commodities such as corn, oil, meat, and gold. A specific market is created for such
resources because their price is unpredictable. There is a commodities futures market wherein the price of
items that are to be delivered at a given future time is already identified and sealed today.

4. Derivatives market: Such a market involves derivatives or contracts whose value is based on the market
value of the asset being traded. The futures mentioned above in the commodities market is an example of
a derivative.

 EQUITY SHARE MARKET :-

Equity market is a place where stocks and shares of companies are traded. The equities that are
traded in an equity market are either over the counter or at stock exchanges. Often called as stock
market or share market, an equity market allows sellers and buyers to deal in equity or shares in the
same platform.

First things first, it is important to begin with a good understanding of what is equity market in the
Indian context. Equity market, often called as stock market or share market, is a place where shares
of companies or entities are traded. The market allows sellers and buyers to deal in equity or shares
in the same platform.
In the global context, equities are traded either over the counter or at stock exchanges. There are multiple
buyers and sellers of the same equity/share. Hence, you stand a good chance to strike a nice deal at
the equity market. If you want to begin online equity trading in India, you have to get a demat account.

Every market is a meeting point of buyers and sellers. Markets are all about transactions. Somebody buys,
somebody sells. In the equity market, trading keeps on happening at an incredible speed. Investors are
able to deal in shares in a fraction of a second. Every day, thousands of crores worth of equities are
transacted in the equity market in India. If you are new to markets, you should gain some knowledge
before you venture into the equity market. Plus, there are different types of equity market and so you
know about them as well. In the following sections, you will know about 12 important things related to
Indian equity market. Read on.

 EQUITY SHARE MARKET IN INDIA :-

Equities are mostly traded on the stock exchanges in India. In the Indian stock market, equities are
available for trading at the National Stock Exchange (NSE) , the Bombay Stock Exchange
(BSE) and the latest entrant, Metropolitan Stock Exchange of India (MSE). Shares of stock market
listed companies are bought /sold.

Equity share trading is roughly in two forms - spot/cash market and futures market. These are the
different types of equity market in India. The spot market or cash market is a public financial
market in which stocks are traded for immediate delivery. The futures market is a place where the
shares' delivery is due at a later date. With the help of an equity trading account, and with the help
of the broker online equity trading systems, investors can utilize the EQUITY SHARE MARKET.

 How Do Equity Markets Work?

The concept behind how the stock market works is simple. Think of an auction house where buyers
and sellers negotiate prices and make trades. Now, substitute the auction house and items
with equity market and shares. Companies list their shares on an exchange. Investors can buy
shares in the primary market i.e. IPOs, and secondary market.

The stock market is regulated by a financial watchdog. The equity market is maintained by stock
exchanges, and various stakeholders like brokers, dealers, clearing corporations etc. It is an
extended family of institutions and this is the true equity market meaning.

There is no 24 hour stock trading system yet. The normal trading time for equity market is between
9:15 am to 03:30 pm, Monday to Friday. On Saturday and Sunday, trading does not happen unless
there are special circumstances.

Every market is a meeting point of buyers and sellers. Markets are all about transactions.
Somebody buys, somebody sells. In the equity market, trading keeps on happening at an incredible
speed. Investors are able to deal in shares in a fraction of a second. Every day, thousands of crores
worth of equities are transacted in the equity market in India. If you are new to markets, you should
gain some knowledge before you venture into the equity market. Apart from weekends and non-
business days, trading does not stop. You can check equity trading holidays 2020 on NSE or BSE
website.

Equity in NSE refers to stock market. The securities market has two segments, the new issues
(primary) market and the stock (secondary) market. Currently more than 1300 securities or stocks
are available for trading on the NSE.

The stock exchange's automated screen based trading allows investors across the length and breadth
of India to trade and invest. The NSE trading system is called 'National Exchange for Automated
Trading' (NEAT). The equity space in NSE comprises of cash/spot trading and also trading in
equity derivatives.

To trade in equity share market, you will need to have the proper tools - open a demat and
trading account, have funds to buy stocks and a good broker platform to execute the trades. Thanks
 to technological advancements, you can do online equity trading, at your home, office or even
while on the move.

To begin trading, you need to select the right stocks. Follow the live equity market to some worthy
stock ideas and do some research. This will help you fine-tune equity market growth & investment
strategies.

Today, carrying out online equity trading in India is an easy process. Every user with an online
account has a user/customer ID and password. These credentials will help you do equity share
trading on the equity market live.

Do always remember that brokers take professional-grade IT security, thus ensuring high quality
online equity trading that is completely safe.

 Pros and cons of equity share market.

There are advantages and disadvantages to trading equity market. The outcome of any situation is
dependent on the way we behave. Let us look at the benefits first.

Pros of Equity Market

Great wealth creation  The biggest benefit of the equity market is the opportunity to
make huge profit. Many investors have experienced big returns that
can never be given by any other financial investment.

 
Enter and exit easily In case of equity market, you can easily enter and exit a stock.
This should be compared to when you want to sell a house, where you
cannot sell it on your own will always.
 Lower taxes  When an equity is sold for profit after holding for more than 1
year, the profit attracts 10% tax. In case of fixed deposits, the tax rate
is as per the individual's tax rate i.e up to 30%.
 There are some downsides in equity trading too.

Cons of Equity Market

 Lack of understanding can be costly  If you do not properly do research or

 Equity market can be volatile
 There is risk of capital erosion
invest in bad stocks, your chances of making
losses are high in a equity market live type
situation. So, be careful.
 Equity investment return does not move
in a straight line. There are upswings and
downswings in the live equity market.
 Equity share trading involves a chance of
capital erosion.

Early stock and commodity markets:-

The first genuine stock markets didn’t arrive until the 1500s. However, there were plenty of early
examples of markets which were similar to stock markets.
In the 1100s, for example, France had a system where courtiers change managed agricultural debts
throughout the country on behalf of banks. This can be seen as the first major example of brokerage
because the men effectively traded debts .Later on, the merchants of Venice were credited with trading
government securities as earl y as the 13th century. Soon after, bankers in the nearby Italian cities of Pisa,
Verona, Genoa, and Florence also began trading government securities.

The world’s first stock markets (without stocks):-

The world’s first stock markets are generally linked back to Belgium. Bruges, Flanders, Ghent, and
Rotterdam in the Netherlands all hosted their own “stock” market systems in the 1400s and 1500s.

However, it’s generally accepted that Antwerp had the world’s first stock market system. Antwerp was
the commercial canter of Belgium and it was home to the influential Van der Beurze family. As a result,
early stock markets were typically called Beurzen .

All of these early stock markets had one thing missing: stocks. Although the infrastructure and
institutions resembled today’s stock markets, nobody was actually trading shares of a company. Instead,
the markets dealt with the affairs of government, businesses, and individual debt. The system and
organization was similar, although the actual properties being traded were different.
The world’s first publically traded company:-
The East India Company is widely recognized as the world’s first publically traded company. There was
one simple reason why the East India Company became the first publically traded company: risk.

As a result, a unique corporation was formed in 1600 called “Governor and Company of Merchants of
London trading with the East Indies”. This was the famous East India Company and it was the first
company to use a limited liability formula.

Investors realized that putting all their “eggs into one basket” was not a smart way to approach investment
in East Indies trading. Let’s say that a ship returning from the East Indies had a 33% chance of being
seized by pirates. Instead of investing in one voyage and risking the loss of all invested money, investors
could purchase shares in multiple companies. Even if one ship was lost out of 3 or 4 invested companies,
the investor would still make a profit.

The formula proved to be very successful. Within a decade, similar charters had been granted to other
businesses throughout England, France, Belgium, and the Netherlands.

not allowed to issue shares until 1825, this was an extremely limited exchange. This prevented the
London Stock Exchange from preventing a true global superpower In 1602, the Dutch East India
Company officially became the world’s first publically traded company when it released shares of the
company on the Amsterdam Stock Exchange. Stocks and bonds were issued to investors and each
investor was entitled to a fixed percentage of East India Company’s profits.

The first stock exchange

Despite the ban on issuing shares, the London Stock Exchange was officially formed in 1801. Since
companies were.

That’s why the creation of the New York Stock Exchange (NYSE) in 1817 was such an important
moment in history.

THE INDIAN STOCK EXCHANGE (BSE) BOMBAY STOCK EXCHANGE :-

Bombay Stock Exchange Limited is now synonymous with Dalal Street, it was not always so. In the
1850s, five stock brokers gathered together under Banyan tree in front of Mumbai Town Hall, where
Horniman Circle is now situated. A decade later, the brokers moved their location to another leafy setting,
this time under banyan trees at the junction of Meadows Street and what was then called Esplanade Road,
now Mahatma Gandhi Road. With a rapid increase in the number of brokers, they had to shift places
repeatedly. At last, in 1874, the brokers found a permanent location, the one that they could call their
own.

The brokers group became an official organization known as "The Native Share & Stock Brokers
Association" in 1875.

The Bombay Stock Exchange continued to operate out of a building near the Town Hall until 1928. The
present site near Horniman Circle was acquired by the exchange in 1928, and a building was constructed
and occupied in 1930. The street on which the site is located came to be called Dalal Street in Hindi
(meaning "Broker Street") due to the location of the exchange.
On 31 August 1957, the BSE became the first stock exchange to be recognized by the Indian
Government under the Securities Contracts Regulation Act. Construction of the present building,
the Phiroze Jeejeebhoy Towers at Dalal Street, Fort area, began in the late 1970s and was completed and
occupied by the BSE in 1980. Initially named the BSE Towers, the name of the building was changed
soon after occupation, in memory of Sir Phiroze Jamshedji Jeejeebhoy, chairman of the BSE since 1966,
following his death.

In 1986, the BSE developed the S&P BSE SENSEX index, giving the BSE a means to measure the
overall performance of the exchange. In 2000, the BSE used this index to open its derivatives market,
trading S&P BSE SENSEX futures contracts. The development of S&P BSE SENSEX options along with
equity derivatives followed in 2001 and 2002, expanding the BSE's trading platform

INVESTORS FOR EQUITY SHARES :-

 Investor perception about an investment would mean how the investor envisions or sees the different
investment avenues. Investment perception means the investor’s point of view about any type of
investments that can be made in the financial markets or on an asset etc., which leads to gains in a period
of time. Like, wise equity share market is one of a type in the financial markets , which allows the
investors to invest or trade in shares of the listed companies under the “security exchange board of india’’
by buying it from the stock brokers who are the mediators between the investor and the equity share
market.  Investor perception about an investment would mean how the investor envisions or sees the
different investment avenues.

Eqiuty share is a tool of investment in which shareholder and people invest their money to get the higher
return. Investing in equity share is easy compared to early days of the equity share markets. Now buying
and selling of stock can be done by the investor sitting in any place of the world. Investors can invest in
different types of equity shares of various companies and can go for long term and short term
investments. The selection behavior of the investors is based on the behavioral finance and pshycological
thinking of the investors investors. Some of the investors select their stock for investment by analysis like
technical analysis , fundamental analysis and their experience in the equity share market. Of a population
of over one billion, barely 18 million invest in equity markets. According to sebi data ,new demat account
addition rose to an all time high of 10.7 million between april 2020 and january .the total number of
demat accounts in india as per march 2021 is 51.5 million. Mumbai would be number one followed by
Bengaluru, delhi and hydrabad.as mumbai is the home for the stock exchange like bombay stock
exchange from the beginning time of the share market compared to Bengaluru to mumbai its is lesser than
mumbai because of lack of knowledge and fear of losing money in the equity markets and bad assumsions
on the stock market had led to the decrease in the number of people investing in Bengaluru in the past .
But in recent times people are educated and they have the clear picture of what the are investing in the
markets and the sebi’s strict guiedlines for protecting the investors from the scams made by the big
players has made even more people to invest in the equity share markets. In the coming future alternative
source of income to the people will be a must, hence investing equity share market will top the list.

4 crore demat accounts, just 0.95 crore are active. As Per SEBI guidelines, a demat account that hasn’t
been operated for a year is considered to be inactive .India has nearly 4 crore demat accounts with two
depository participants — Central Depository Services Ltd (CDSL) and National Services and Depository
Ltd (NSDL). CDSL holds 1.97 crore demat accounts while NSDL holds 1.96 crore. Some of the leading
online brokers have a ratio of as high as 70 per cent inactive investors, the data show .Investors are
inactive mainly due to three main reasons, says RESEARCH. One is heavy equity market losses and
bitter experience in the past. Two, a busy schedule often leaves them with no time to look at their
portfolios. Three, many aren’t happy with the present broker and aren’t sure where to look for trustworthy
and reliable advice.

CHAPTER :- 2

RESEARCH DESIGN

TITLE OF THE STUDY: “A study on investment perception and selection behavior towards the
equity share market in Bengaluru city”

NEED FOR THE STUDY:

This “study on investment perception and selection behavior towards the equity share market in
Bengaluru city” is conducted in Bengaluru city with the special reference to the investors living in
Bengaluru. This project of study is undertaken in order to know the investment perception and selection
behavior towards the equity share market in Bengaluru city. The main intention behind this study is to
understand the investment perception and selection process of the equity investors that is most preferred
based on the criteria’s such as purpose of saving investment, objective, income, availability, accessibility,
percentage of gains etc.

STATEMENT OF THE PROBLEM:

This study is proposed to deal with the challenges faced by the equity share investors in the time of
selection of an equity share when it comes to investing in equity share markets and in order to know their
perception towards the equity share market. It also covers the problems that they face regarding lack of
information, the channels that they can access, with all the limitation of risk involved in it.

OBJECTIVE OF STUDY:

 To understand the perception and selection behaviour of the investors in Bengaluru city towards
equity share market.

 To study about the barriers that are holding back the investors on investing in equity share market.

 To study about the challenges faced by the investors in making investment in the equity share
market in Bengaluru city.

SCOPE OF THE STUDY:

The study benefits to the investors and to the financial institutions by providing information regarding the
challenges and barriers that are lagging the investors to invest in the equity share market in Bengaluru
city. IT also gives the brief picture of the investors perception and selection behaviour towards investing
in the equity share market .it also state’s the benefits to the investors and for financial institutions by
providing the data regarding the perception of investment and selection of equity shares in the equity
markets by the investors from Bengaluru city.

RESEARCH METHODOLOGY :

Type of research: Descriptive Research

RESEARCH DESIGN:

Type of sampling: Convenience sampling

SOURCES OF DATA COLLECTION:

Primary data

 Questionnaire

Secondary data :-
 Books, journals, Published data on websites

TOOLS OF DATA COLLECTION & PLAN OF ANALYSIS : The collection of data will
be analysed using tables, charts, images percentage and averages.

SAMPLING UNIT :

Demat account holders and equity share investors in Bengaluru.

SAMPLING SIZE: 120.

LIMITATION OF THE STUDY:

 The study is carried out in Bengaluru only.

 Time limitation is the main constrain.

 Primary data that are provided by the respondents may or may not be true.

 This study is only limited to equity share holders.