SUMMER TRAINING PROJECT REPORT

On
(A SURVEY ON THE PREFERENCE OF SALARIED
CLASS ON VARIOUS INVESTMENT OPTIONS
AVAILABLE IN LUCKNOW CITY)

Towards partial fulfillment of

Bachelor of Business Administration (BBA)
Babasaheb Bhimrao Ambedkar University, Lucknow

SUBMITTED BY
(SHRADDHA SINGH VAISH)
VTH SEMESTER
ROLL NO- 204105

Session 2020-2023

Department of Management Studies

Babasaheb Bhimrao Ambedkar University

(A Central University)
Certificate from the Organization

ii
 BABASAHEB BHIMRAO AMBEDKAR UNIVERSITY
(A Central University)
Vidya Vihar, Rae Bareli Road, Lucknow-226025 (UP)

CERTIFICATE

This is to certify that final year project report ‘A SURVEY ON THE

PREFERENCE OF SALARIED CLASS ON VARIOUS INVESTMENT
OPTIONS AVAILABLE IN LUCKNOW CITY’ submitted by Shraddha

Singh Vaish in the partial fulfillment of the requirements for the

award of the degree of Bachelor of Business Administration of
Babasaheb Bhimrao Ambedkar University, Lucknow is a record of
students own work carried under our supervision and guidance the
final year project report embodies results of original work and
studies carried out by the students and the content do not forms the
basis for the award of any other degree to the candidate or to
anybody else.

Co-Supervisor Supervision
Dr. Ravi Kumar Sharma Dr. Khusendra Mishra
Department of Management Studies,
BBAU, Lucknow

Date:
Place: Lucknow

iii
 DECLARATION

I hereby declare that all the work presented in the Summer Training report entitled

“A SURVEY ON THE PREFERENCE OF SALARIED CLASS ON VARIOUS

INVESTMENT OPTIONS AVAILABLE IN LUCKNOW CITY” is carried out

and being submitted at the school of management for the award of Bachelor of

Business Administration (BBA), is an authentic record of SHRADDHA SINGH

VAISH. The work is carried out under the guidance of MR. RAVI KR. SHARMA

from Babasaheb Bhimrao Ambedkar University, Lucknow. It hasn‘t been

submitted at any other place for another academic purpose.

Date:

Place:Lucknow

SHRADDHA SINGH VAISH

ROLL NO.-1210672250
BBA VTH SEMESTER
BBAU, LUCKNOW

iv
 ACKNOWLEDGEMENT

It would be insufficient just to say “word of thanks” for all those people who have

been so instrumental in the success of this project. However, as a small token of my

appreciation I have named here all those wonderful people, without whom all this

would not have been possible.

I want to give my sincere thanks as I am deeply indebted to my guide, DR.

Kushendra Mishra, Head of Department of Management Studies for his guidance

and support throughout our project. It is due to his efforts that my project has gained its

present stature. And I can never thank my family enough for all they have done.

The experience which is gained by me during this project is essential for me at this turning

point of my career.

I personally would like to thank Dr. Ravi Kumar Sharma (Faculty, BBAU) for giving

me this opportunity of doing this project.

Last but not least, it was the blessing of my Parent, brother& friends for keeping me

motivated throughout the research period their close attitude and expressions of love

and patience have been nothing short of incredible.

SHRADDHA SINGH VAISH

ROLL NO.-204105
BBA VTH SEMESTER
BBAU, LUCKNOW

v
 TABLE OF CONTENT

Ce tificate
r i

Plagiarism Ce tificate
r ii

De laration
c iii

Acknowle gemntd e iv

Sr. No Topic Page no.

1. Introduction 1-37

2. Company Profile 38-40

3. Objectives of the Research 41-42

4. Research Methodology 43-47

5. Problems /Limitations 48-49

6. Data Analysis and Interpretation 50-64

7. Findings 65-68

8. Suggestions/Recommendation 69-70

9. Conclusions 71-72

10. Bibliography 73-79

11. Annexure 80-84

vi
INTRODUCTION

1
 INTRODUCTION

Although a large number of studies have been carried out on the growth and financial

performance of mutual funds in India (Boston Analytics, 2010), (PWC, 2013), not

much light has been shed on the causes for the low penetration of mutual funds

outside the top fifteen cities. There is research looking at the causes for the variation

of mutual funds industry across developed countries. However, such work typically

does not differentiate between the various regions of the nations included (Khorana et

al., 2005). While such studies may help policymakers in determining the ideal inter-

regional macroeconomic conditions to develop a healthy mutual fund industry, they

rarely explain the differences in mutual fund penetration within a country. It is well

known that mutual funds offer their investors benefits difficult to obtain through other

investment vehicles. Benefits such as diversification, access to equity and debt

markets at low transaction costs and liquidity are some such advantages. Given these

benefits, one would imagine that Indian households, characterized with gross

domestic savings of close to 28% of the total GDP (World Bank, 2012), one of the

highest in the world, would flock to invest their savings in mutual funds. However, a

recent report (PWC, 2013) points out that the distribution of assets under management

(AUM) across cities is highly skewed in favor of the top fifteen (T-15) cities of India.

The T-15 cities contribute to 87% of the entire AUM in the country. Even within the

T-15 cities, the top five cities (MuBBAi, Delhi, Chennai, Kolkata and Bangalore)

contribute 85% of the entire AUM at the T15 level i.e. 74% of the entire AUM in the

country (PWC, 2013). It is important to inquire into the causes of this skewed investor

participation rate. There are several factors which could possibly explain this

variation. Cross-country studies have pointed out that laws, regulations and

governance, supply side factors, demand side factors and technological issues could

2
all affect the size of mutual industry in a given country (Khorana et al. 2005). Some of

these factors such as laws and regulations are not applicable to our study since they

are uniform across India and do not vary from one state to another. The factors that

we focus in our study are therefore mainly supply and demand side factors. Our study

divides the supply side i.e. delivery mechanisms into three alternative channels:

independent financial advisors (IFAs), banks and in-house distributors. We focus on

these delivery channels used by Indian mutual fund houses. To begin with, we

document relationships between demographic and economic variables on one hand

and mutual fund penetration on the other to discern the underlying factors which

could help explain the success of a mutual fund in a given part of the country. We do

this using data collected from all the mutual funds aggregated at district levels and by

observing time-series data. We next survey Indian mutual fund houses to identify the

regulatory and distributional challenges that according to them hold them back from

increasing their business in areas which presently have a low number of mutual funds.

We also inquire into human resource problems that could be holding back their

penetration even if the fund houses did want to increase their presence in the less

developed districts of India. Our study brings out several interesting results which

would be of considerable use to the fund houses, regulators, financial practitioners

and scholars in general. We confirm that bulk of the mutual fund sales outside the T-

15 cities are caused by IFAs. We also find that demographic and social indicators

such as adult literacy and bank penetration are only weakly correlated with mutual

fund penetration in a given area. Areas with the highest mutual fund presence tend to

be those where the proportion of households with more than Rs. 300,000 income and

IFA presence happen to coincide. We also find that IFAs do not usually focus on

those areas which have the highest propensity to invest in mutual funds (as reflected

3
by the districts with the highest proportion of the families earning more than Rs.

300,000 per annum). This suggests that the present AUM levels can be increased by

several percentage points if IFAs were made to apply their efforts in the right areas.

The Stock market assumes a critical function in the development of assembling and

administration businesses of the nation. The profound and fluid value markets have a

transcendent and tenacious effect on financial execution. It channelizes the reserve

funds of people in general into value speculations to help the flourishing economy.

Stock value developments have a significant mental effect on the individual financial

specialist and organizations. The securities exchange is the narrative of the human

conduct that is liable for overcompensation in the two ways (klarman 1998). The

presentation of the monetary change measure in mid 90s usurped in critical financial

advancement of India and the securities exchange stayed as a significant channel for

the drawn out asset objective for the corporate. Liquidity and capital thankfulness

pulled in the speculators both institutional and retail financial specialists.

Notwithstanding the securities exchange development, excepting institutional

financial specialists both homegrown and unfamiliar, not many retail speculators

remain to profit out of the blast. The small two percent of the Indian populace in value

market cooperation reflects dissatisfaction of the retail financial specialists with the

market. The customary speculations of account, for example, Efficient Market

Hypotheses (EMH) and Random Walk Theory (RWT) expect that speculators settle

on sane choices to augment their profits. Notwithstanding, these hypotheses couldn't

face the investigation and tested for the absence of functional point of view on the

securities exchange. The peculiarities, for example, cost over responses and

overabundance instability were not clarified by the occupants of EMH hypothesis.

Malkiel (1973) contended that depicting of individuals settling on reasonable

4
monetary choices dependent on accessible market data is basically a nonexistent ideal.

Social money consolidates intellectual brain research and ordinary monetary

hypotheses to unwind the potential reasons why individuals settle on nonsensical

monetary choices. It leaves from the inhabitants of traditional hypothesis that

enthusiastic components don't impact individuals while settling on monetary

decisions. Social account tries to clarify the unreasonable and one-sided conduct

through the utilization of intellectual brain research. It is seen that an individual or the

retail speculator's decision is controlled by factors extraordinary to the specific

dynamic setting. Social account, notwithstanding its restrictions, gives important bits

of knowledge to monetary warning specialist organizations and strategy producers to

comprehend the retail speculators towards the value venture.

The rise of the Liberalization, Privatization, Globalization (LPG) time and ensuing

monetary changes in India started in 90s, with an objective of handing the economy

over to more market arranged, welcomed gigantic venture from Domestic and Foreign

speculators. The effect of the changes expanded the possibilities of securities

exchange as Potential Avenue for abundance amplification. Nonetheless, truly, the

retail financial specialists remain to lose their abundance in any common economic

situations. Despite the fact that the administrative instrument started by the SEBI

(Security trade leading body of India) to check the deceitful practices and compelling

clearing by moving settlement, the cooperation of retail speculators has not been

empowering since the disintegration of the venture was the significant reason. The

customary monetary speculations depended on the structure that speculators

demonstration reasonably and think about all the accessible data in creation the

monetary choice, which are the significant occupants of the effective market

hypothesis. It likewise accepts that the market is straightforward and doesn't

5
experience the ill effects of any data iBBAlance. The choppiness looked by the capital

market can't be clarified by the effective market speculations since it accepts

speculators act sanely. The disintegrating retail speculator base is basic since the

capital market necessity contributed by homegrown investment funds can check the

trip of capital. Further, the fake unpredictability can be reduced and controlled with

bigger cooperation of homegrown retail speculators However, many exploration

examines demonstrated that the retail financial specialists act unreasonably in creation

the monetary choices because of mental factors, for example, feelings and

psychological predispositions. Conduct money withdraws from the customary

objectivity hypothesis and considers the mental variables which incorporate the

character attributes and the demeanor predisposition. The use of the character

characteristic hypothesis picked up more extensive use among the monetary scientist.

Numerous investigations have been led utilizing the character quality as the variable

to survey the level of character characteristic influencing the individual conduct.

Large five character quality components and speculator mentality inclination

examination of the financial specialists address the misrepresentations in dynamic.

The investigation is led in Lucknow locale, Uttar Pradesh, India where the speculators

are not monetarily educated enough to have the option to settle on their choices all

alone and comprehend the market developments. Henceforth, the current examination

"Speculators Behavior Towards Equity Investment" On Behavioral account endeavors

to contemplate the speculator conduct thinking about the character qualities and the

mentality predisposition of the retail speculators in Lucknow District, Uttar Pradesh,

India. The experiences would help the financial specialists to outline reasonable

methodology to relieve the danger to stay dynamic in the value market and offer

6
direction to the monetary specialist organizations and the arrangement producers to

expand the retail speculator base.

During the past years, the Equity Markets have been characterized by increasing

volatility and fluctuations. The integrated financial markets are increasingly exposed

to macroeconomic shocks which affect markets on a global scale. From an investor’s

point of view, the vulnerability of markets has led to increased uncertainty and

unpredictability, as market conditions cannot always be judged with the help of

standard financial measures and tools. Market participants have for a long time relied

on the notion of efficient markets and rational investor behaviour while making

financial decisions. However, the idea of fully rational investors who always

maximize their utility and demonstrate perfect self-control, is becoming inadequate.

During recent years, examples of market inefficiency in the form of anomalies and

irrational investor behaviour have been observed more frequently.

The Global Financial Crisis 2008 – 2009 began with the bursting of the United

States housing bubble and high default rates on “subprime” and Adjustable Rate

Mortgages (ARM), beginning in approximately 2005-2006. The Global Financial

Crisis of 2008-2009, became prominently visible in September 2008, with failures of

large financial institutions in the United States and it rapidly evolved into a global

credit crisis, following the subprime mortgage crisis. On September 14, 2008, it was

announced that Lehman Brothers would file for bankruptcy after the Federal Reserve

Bank declined to participate in creating a financial support facility for Lehman

Brothers. The same day, the sale of Merill Lynch to Bank of America was announced.

The beginning of the week was marked by extreme instability in global stock markets.

Stock markets crashed dramatically across significant cross-section of stock markets,

close on the heels of the announcement of Lehman Brothers Bankruptcy. Index Value

7
of Dow Jones of US, FTSE 100 of UK, S&P TSX of Canada and MIBTEL of Italy

drifted sharply by 4%, NIKKEI of Japan and MIBTEL of France plunged by 5%, and

BSE India by 3%. Crashes were driven by panic as much as by underlying economic

factors. Stock market crashes are in fact social phenomena where external economic

events combine with crowd behaviour and psychology in a positive feedback loop

where selling by some market participants drives more participants to sell.

(Yahoofinance.com)

WHAT IS BEHAVIOURAL FINANCE?

Most people know that emotions affect investment decisions. People in the world of

investments commonly talk about the role greed and fear in driving stock markets.

Behavioural Finance extends this analysis to the role of biases in decision making,

such as the use of simple rules of thumb for making complex investment decisions. In

other words, Behavioural Finance uses psychology to understand how people make

investing decisions. Human Nature usually serves us well in coping with day-to-day

life. But it can also get in the way of achieving success in long-term activities, such as

saving and investing. There is no ‘cure’ for human nature, but greater awareness of

biases can help you, and your adviser, avoid major pitfalls.

Behavioural Finance can also be defined as the study of investors’ attitudes towards

investing and its effect on financial markets. In an article in, New York Times dated

06/07/98, the writer says that Behavioural Economists hold the view that investors

overvalue private information and undervalue public information. It attributes the

growing importance of ‘financial emotions’ of the average citizen to ‘trickle down’ to

finance. Sophisticated and important financial decision-making is not restricted any

more to the rich and the elite. It is now the individual investors who frequently make

decisions regarding credit card expenditures, mutual fund investments, retirement

8
plans, mortgages, home equity loans etc. It is through these mundane, daily choices

that average individual investors directly affect market conditions, such as inflation

rates, interest rates, money supply etc.

Moreover, as the financial markets are becoming more ‘peopled’, the behavioural

patterns observed in individual investors; do manifest itself on a wider scale in the

overall stock market. The individual investors’ attitudes and opinion towards

investing have a significant impact on the stock market that cannot be explained by

traditional models. It can lead to pricing anomalies and unexplainable movements in

stock prices. Stocks, that were market outcasts, go on to become market darling in the

span of few months and vice versa.

A review of the existing techniques suggests that several tools are available to

investors for analysing and forecasting a firm’s profitability. These tools look at

historic price patterns, past financial performance and accounting ratios to infer future

stock price movements. None of them takes into account the size, nature and impact

of human behaviour in the investment process. Kiesler, Collins and Miller (1969)

define attitude as a learned predisposition to respond in a consistently favourable or

unfavourable manner with respect to a given object.

THE NATURE AND DIMENSIONS OF ATTITUDE

Attitudes can be characterized in three ways. First, investors tend to persist unless

something is done to change them. Second, attitudes can fall anywhere along a

continuum from very favourable to very unfavourable. Third, attitudes are directed

toward some object about which a person has feelings and beliefs. (Organizational

Behaviour, N.K. Jain).

9
Components of Attitudes: Attitudes can be broken into three basic components:

emotional, informational and behavioural. The Emotional Component involves the

person’s feelings or affect, positive, neutral or negative, towards an object.

The Informational Component consists of the beliefs and information the individual

has about the object. It makes no difference whether or not this information is

empirically real or correct. A supervisor may believe that two weeks of training is

necessary before a worker can effectively conduct a particular process. In reality, the

average worker may be able to perform successfully after only four days of training.

Yet the information the supervisor is using (that two weeks is necessary) is the key to

his attitude about training.

The Behavioural Component covers a person’s tendencies to behave in a particular

way towards an object. It is important to remember that of the three components of

attitudes, only the behavioural component can be directly observed. One cannot see

another person’s feelings (the emotional component) or beliefs (the informational

component). These two components can only be inferred.

PERCEPTION

Perception is to recognize that it is a unique interpretation of situation and not an

exact recording of it. Perception gives a picture that may be quite different from

reality. An investor’s perception can be thought of as a ‘filter’. The filter tells you

which stimuli to notice and which to ignore, which to love and which to hate.

INVESTOR SENTIMENT

Investor Sentiment Measures are widely used in practice. Politicians base their

decisions on consumer sentiment (Dominitz and Manski 2004), Sentiment Measures

are widely discussed in the media (Abeter 2006), Stock Exchanges provide sentiment

measures on their homepages (web page of Deutsche Borse Group). Furthermore,

10
Sentiment Measures are used in practice by several Fund Managers, who claim that

sentiment plays an important role in their investment decision process.

Investor Sentiment is therefore useful for two reasons. First, studying how a group of

investors form expectation or trade, contribute to the growing literature of investor

behavior. Second, several empirical studies show that Investor Sentiment Measures

are useful to predict the future development of stock returns. Investor Sentiment is

usually defined as the opinion of a group of investors about the future development of

an asset over a specific time window. For example, a Sentiment Measure might

capture whether individual investors are bullish or bearish for the stock market over

the next day or the next year.

Shleifer (2000) mentions two major foundations of Behavioral Finance: Limited

Arbitrage and Investor Sentiment. Investor Sentiment is mainly driven by two

phenomena: the representativeness heuristic, i.e the tendency of people to view events

as representative of some specific class and ignore the laws of probability in the

process, and conservatism, which leads people to a slower updating of models in the

face of new evidence than is necessary. These two drivers result in overreaction and

under reaction of investors on stock markets.

INVESTMENT

An investment is a commitment of funds made with the expectation of positive rate of

returns. If the investment is properly undertaken, the return will be commenLucknowe

with the risk the investor assumes (Ronald J. Jordan, 1975).

Investment is the purchase by an individual or institutional investor of a financial or

real asset that produces a return proportion to the risk assumed over some future

investment period. (F. Amling 1995).

11
CONCEPTS OF INVESTMENT

The following are the four concepts of Investment.

FINANCIAL INVESTMENT

The allocation of monetary resources to assets that are expected to yield some gain or

positive return over a given period of time is known as Financial Investment.

ECONOMIC INVESTMENT

According to the Economists, Economic Investment means the net additions to the

economy’s capital stock, which consists of goods and services that are used in the

production of other goods and services.

BUSINESS INVESTMENT

Business Investment is investing money in a private business.

GENERAL INVESTMENT

Sometimes, some persons invest in avenues which do not give any additional income

such as interest, dividend, rent etc., or capital growth. Such people, called “The man

on the street”, make general investment.

TYPES OF INVESTMENT

 Direct Investment Alternatives

 Indirect Investment Alternatives

Direct Investment Alternatives are further divided into Fixed Principal Investments,

Variable Principal Securities and Non-Security Investments.

Indirect Investment Alternatives are those in which the individual has no direct

hold on the amount he invests. It is a contribution from the investor savings to certain

organizations such as LIC, UTI. Etc. The Investor has no direct responsibility or hold

on the savings.

12
TYPES OF INVESTORS

The Investors are divided into three categories, namely, Conservative Investors,

Speculative Investors and Enterprising Investors. Conservative Investors buy the

securities with a view to investing their savings in profitable income earning

securities. Speculative Investors are popularly known as Speculators. They buy

securities with the hope to sell them in future at a profit. The Enterprising Investors

assume risk very boldly as well as willingly. Their strategy is to get income as well as

capital appreciation. (Financial Management, by Periasamy)

INVESTMENT ALTERNATIVES:

An investor has a wide array of investment alternatives available. These may be

classified as shown below:

NON MARKETABLE FINANCIAL ASSETS:

A good portion of financial assets is represented by Non-Marketable Financial Assets.

These can be classified into the following broad categories:

Bank Deposits is the simplest of investment avenues. Opening a bank account and

depositing money in it, one can make a Bank Deposit. There are various kinds of bank

accounts, namely, current account, savings account and fixed deposit account.

Company Deposits mean that many companies, large and small, solicit fixed deposits

from the public. Fixed Deposits mobilised by manufacturing companies are regulated

by the Company Law Board and fixed deposits mobilised by finance companies are

regulated by the Reserve Bank of India. Similar to fixed deposits of commercial

banks, Post Office Time Deposits have been introduced. The interest rates on POTDs

are, in general, slightly higher than those on bank deposits. Provident Fund Deposits

is a major vehicle of savings for salaried employees scheme. Each employee has a

13
separate provident fund account in which both the employer and the employee are

required to contribute.

Equity Shares represent ownership capital. An equity shareholder has an ownership

stake in the company. They bear the risk and enjoy the rewards of ownership. Of all

the forms of securities, equity shares appear to be the most romantic. While fixed

income investment avenues may be more important to most of the investors, equity

shares seem to capture their interest the most. The potential rewards and penalties

associated with equity shares make them an interesting, even exciting, proposition.

Blue Chip Shares refer the shares of large, well-established and financially strong

companies with an impressive record of earnings and dividends. Growth Shares

refers to the shares of companies that have a fairly entrenched position in a growing

market and which enjoy an above average rate of growth as well as profitability.

Income Shares refer to the shares of companies that have fairly stable operations,

relatively limited growth opportunities and high dividend payout ratios. Cyclical

Shares means shares of companies that have a pronounced cyclicality in their

operations. Speculative Shares refer to the shares that tend to fluctuate widely

because there is a lot of speculative trading in them.

Bonds or Debentures represent long-term debt instruments. The issuer of a bond

promises to pay a stipulated stream of cash flow. Bonds may be classified into the

following categories:

GOVERNMENT SECURITIES:

Debt Securities issued by the Central Government, State Government and Quasi-

Government Agencies are referred to as Government Securities or Gilt-Edged

Securities. Savings Bond is a popular instrument. RBI Savings Bonds needs a

minimum amount of investment of Rs 1000 and the maturity period is 5 years. It has

14
two options, namely, Cumulative Option and Non-Cumulative Option. PSU Bonds:

Public Sector Undertakings (PSUs) issue debentures that are referred to as PSU

bonds. There are two broad varieties of PSU bonds, namely, Taxable Bonds which

cannot offer more than a certain interest rate which is fixed by the Ministry of

Finance. Tax Free Bonds have investor-friendly features like there is no deduction of

tax at source on the interest paid on these bonds. Debentures of Private Sector

Companies: Debentures are instruments meant for raising longterm debt. The

obligation of a company towards its debenture holders is similar to that of a borrower

who promises to pay interest and principal at specified times. Preference shares:

Preference Shares represent a hybrid security that partakes some of characteristics of

Equity Shares and some attributes of Debentures.

MONEY MARKET INSTRUMENTS:

Debt Instruments, which have a maturity of less than one year at the time of issue are

called Money Market Instruments. These instruments are highly liquid and have

negligible risk. The Money Market is dominated by the Government, Financial

Institutions, Banks and Corporates. Individual Investors scarcely participate in the

Money Market Instruments which are given below:

Treasury Bills are the most important Money Market Instrument. They do not carry

an explicit interest rate. The implicit yield of a Treasury Bill is a function of the size

of the discount and the period of maturity. Commercial Paper represents short-term,

unsecured, Promissory Note issued by firms that are generally considered to be

financially strong. Commercial Paper usually has a maturity period of 90 to 180

days. It is sold at a discount and redeemed at par. Hence the implicit rate is a function

of the size of discount and the period of maturity. Certificates of Deposit (CDs)

represent short term deposits which are transferable from one party to another. Banks

15
and Financial Institutions are the major issuers of CDs. The principal investors in CDs

are banks, financial institutions, corporate and mutual funds. CDs are a popular form

of short-term investment for companies. The term Repo is used as an abbreviation for

Repurchase Agreement or Ready Forward. A Repo involves a simultaneous “sale and

purchase” agreement. Reverse Repos are a safe and convenient form of short-term

investment.

MUTUAL FUNDS

A Mutual Fund represents a vehicle for collective investment. Instead of directly

buying equity shares and / or fixed income instruments, you can participate in various

schemes floated by mutual funds which, in turn, invest in equity shares and fixed

income securities. There are three broad types of Mutual Fund schemes namely,

Equity Schemes, Debt Schemes and Balanced Schemes.

Life Insurance: In a broad sense, Life Insurance may be viewed as an investment.

Insurance Premiums represent the sacrifice, the assured sum and the benefit. The

important types of Insurance Policies in India are Endowment Assurance policy,

Money Back Policy, Whole Life Policy and Term Assurance Policy.

REAL ESTATE:

For the bulk of the investors, the most important asset in their portfolio 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

and Commercial Property.

PRECIOUS OBJECTS:

Precious Objects are items that are generally small in size but highly valuable in

monetary terms. Some important precious objects are Gold and Silver, Precious

Stones and Art Objects.

16
FINANCIAL DERIVATIVES: A Financial Derivative is an instrument whose

value is derived from the value of an underlying asset. It may be viewed as a side bet

on the asset. The most important financial derivatives from the point of investors are:

FUTURES Contract is an agreement between two parties to exchange an asset for

cash at a predetermined future date for a price that is specified today. The party,

which agrees to purchase the asset, is said to have a long position and the party which

agrees to sell the asset, is said to have a short position. An Option gives its owner the

right to buy or sell an underlying asset on or before a given date at a predetermined

price. Options represent a special kind of financial contract under which the option

holder enjoys the right (for which he pays a price), but has no obligation, to do

something.

WHAT IS AN EFFICIENT MARKET?

An Efficient Market is one in which the market price of a security is an unbiased

estimate of its intrinsic value. Market Efficiency is defined in relation to information

that is reflected in security prices. Eugene Fama suggested that it is useful to

distinguish three levels of market efficiency:

a) Weak-Form Efficiency

b) Semi-Strong Form Efficiency

c) Strong-Form Efficiency

EFFICIENT MARKET HYPOTHESIS

Efficient Market Hypothesis (EMH) states that current stock price reflects all

available information and that the market price at any one time is the best estimate of

the true value of the stock. On the other hand, the investors, who do not believe that

markets are efficient, seek to outperform the market by identifying stocks that will

17
earn a higher expected return than that of the market and they are willing to accept

additional risk.

1.11 Important Terms used in the Study

a) ATTITUDE

An attitude is a hypothetical construct that represents an individual's degree of like or

dislike for something. Attitude in Psychology also means a person's perspective

toward a specified target and way of saying and doing things.

b) BEHAVIOUR

Behaviour can be defined as the way in which an individual behaves or acts. It is the

way an individual conducts herself / himself.

c) BEHAVIOURAL FINANCE

A part of finance, which seeks to understand and predict systematic financial market

implications of psychological decision processes. Behavioural Finance closely

combines individual behaviour and market phenomena and uses knowledge taken

from both the psychological field and financial theory (Fromlet, 2001).

e) BEST GAME IN TOWN: The Stock Market is considered as the only best

place attracted to invest and it has become a national pastime and hence it is

considered as the Best Game in Town.

e) FINANCIAL CHARACTERISTICS: Financial Characteristics comprise

of the various financial ratios pertaining to a company. The characteristics are relating

to the income, expenditure, or revenue of a person, group of people, or organisation,

including financial assistance.

f) HERD BEHAVIOUR refers to similarity in thinking among individual

investors. It describes how individuals in a group can act together without planned

18
direction. If well informed and experienced investors invest in a particular stock, the

other investors, without analyzing the market and other factors, would also follow the

same.

g) INVESTMENT: Investment is putting money into something with the

expectation of gain, which upon thorough analysis, has a high degree of security for

the principal amount, as well as security of return, within an expected period of time.

h) INTERNET LED ACCESS TO INFORMATION AND

TRADING: The Internet has facilitated easy, low cost and speedy access to

information and trading. It has increased the focus and attention on stocks and thus

increased the demand for stocks.

i) MACROECONOMIC FACTORS are the external factors that could

influence investor’s attitudes towards investing. It is the study of the overall aspects

and workings of a national economy, such as income, output, and the interrelationship

among diverse economic sectors.

j) OPTIMISM can be defined as having hopefulness and confidence about the

future or successful outcome of something, a tendency to take a favourable or hopeful

view. The Investors’ optimism is perceived as ‘nothing can go wrong’ attitude among

the investors.

k) PERFORMANCE FACTOR: The overall performance of the Indian

Economy, Indian Stock Market and the Corporate World are identified as the

important factors that would influence the Individual Investors to invest in the Stock

Market.

l) PSYCHOLOGICAL FACTORS include investors’ gut feeling, intuition,

rumours and recommendation by friends, family and peer.

19
m) PRICE CUT-OFF RULES: Many investors feel that ‘Price Cut-Off Rules’

play a vital role in stock selection though it is an irrational rule. They include avoiding

shares more than Rupees hundred.

n) QUALITY OF MANAGEMENT: The efficiency of the top management

determines the performance of the company.

o) RETAIL INVESTOR

A Retail Investor is a person who invests his / her money in the stock market and

manages this portfolio of shares.

p) RISK: Investors believe that higher the risk, higher the return. Secondly,

investors view the stability and the able Governance of the Government as an

important factor influencing their faith in the Stock Market.

q) RECOMMENDATION OF THE FINANCIAL COMMUNITY:

Before investing in any stock, the individual investors crave for more information and

recommendation from the financial community.

THEORTICAL FRAMEWORK OF THE STUDY

The stock exchange provides facilities for listing of shares of companies and also

imparts liquidity to the shares, so that investment is promoted and savings flow into

investment. Besides, the stock market reflects the economic and financial

developments in the country and industry and is, therefore, a watchdog of the

economy. It also protects the investor’s interest and safety and liquidity of their funds.

Erstwhile, the traditional theories such as Efficient Market theory and Random Walk

Theory have formulated the way in which the financial experts and the policy makers

analyzed investor behaviour. Efficient market theory states that the market is capable

of adjusting quickly and efficiently to the new information generated by the economy,

20
industry and company. Under this theory, the prices are determined by market forces

which are in turn influenced by perfect and free flow of correct, unbiased and costless

information. These conditions are obtained under an ideal set up and not in real world.

The Random walk theory holds that no one can predict the prices of shares based on

the past or historical trends. As the market is assumed to be efficient, all information

is quickly absorbed in the prices, which move in a random manner and history does

not repeat itself. The prices of today do not depend upon the prices of yesterday. The

prices have the equal capability of going up and down and it is, therefore, impossible

for an average investor to earn more than the average profits except by chance. The

prices move in a random manner depending upon the flow of information and any

combination of shares is good as any other combination to secure fair returns. These

theories were based on the foundation that investors participate in the market

rationally and consider all the relevant information in the investment decision making

process and hence stock market is efficient. In reality, the market price diverges from

the intrinsic worth frequently. The factors of emotional nature cannot be captured by

the approach of traditional school. According to Fama (1970) the efficient financial

market reflects all the available information in the security prices. The EMH theory

rules out the possibility of profits or returns in excess of equilibrium desired return or

profit. In other terms, an average individual investor cannot hope to consistently beat

the make with vast resources dedicated to analyzing, picking, and trading securities

based on fundamental and technical analysis. Since the inception of the theory, the

theory it turned into an enormous theoretical and empirical success and, the field of

academics finances and security analysis was created on the basis of the EMH. The

tenants of the theory rests on the weaker assumptions such as investors are assumed to

be unbiased, rational and hence securities are valued rationally. The rational investors

21
value securities based on its fundamental value, the net present value (NPV) of its

future cash values and discounting the risk characteristics. As a result, the security

price reflects all the available information almost immediately and the prices gets

adjusted corresponding to the net present value. Fama (1965) identified that stock

prices indeed approximately follow random walks and no systematic evidence of

profitability with technical trading strategies such as buying stocks when their prices

raise or selling them when their prices decline. Fama (1998) reasoned that an efficient

market generates types of events that individually suggest that prices over-react to

information. But in an efficient market, apparent under-reaction will be as frequent as

overreaction. If anomalies split randomly between under reaction and overreaction,

they are consistent with market efficiency. First, it can be seen that an even split

between apparent overreaction and under reaction is a good description of the list of

existing anomalies. Second, and more important, if the long-term return anomalies are

so large they cannot be attributed to chance, then an even split between over- and

under reaction is a victory for market efficiency. It can be found, However, that the

long-term return anomalies are sensitive to methodology. They tend to become

marginal or disappear when exposed to different models for expected (normal) returns

or when different statistical methods are used to measure them. Thus, even analyzed

one-by-one, most long-term return anomalies can reasonably be attributed to chance

event. A problem in developing an overall perspective on long-term return studies is

that they hardly test a specific alternative to market efficiency. Similarly, the

alternative hypothesis is vague, and market inefficient. This is unacceptable. Like all

models, market efficiency, the hypothesis that prices fully reflect available

information, is a wrong description of price formation. By adopting the standard

scientific rule, However, market efficiency can only be replaced by a better specific

22
model of price formation, potentially rejectable by any empirical tests. Any

alternative model has a formidable task. It must specify biases in information

processing that cause the same investors to under-react to some types of events and

overreact to other type of events. The alternative must also explain the range of

empirical results better than the simple market efficiency story; that is, the expected

value of abnormal returns is zero, but chance generates deviations from zero,

anomalies, in both directions. However, the collapse of world’s largest financial

institutions in USA during the financial crisis in 2008 indicates that the market is

inefficient. It is also very important to note that if the financial markets are efficient

and investors act rationally while taking financial decisions, the valid question

remains on the fact why investing bubbles have a regular appearance and a longer

duration in the equity market. In addition, the participation of rational investors in

arbitrage processes also is not efficient and the adjustment of stock prices is slow and

rather detrimental. According to EMH, the retail investors are assumed to be rational,

unbiased and the emotions have no place in making of rational decisions in equity

market investment. On contrary, emotions do not discriminate among both individual

and institutional investors despite the fact that the institutional investors are more

balanced. Positive and negative emotions play a detrimental role on the stock market

performance of the investor. Nevertheless, emotions of extreme nature can possibly

trigger irrational decision making process in the minds of the investors. It is also seen

in the framework of EMH, the fundamental analysis of company stocks is employed

to stock assessment rather than predicting movements and technical analysis cannot

be employed in the future changes of stock prices . On contrary, the predictions of

stock prices in modern days extensively employ both fundamental and technical

analysis. Based on the recent research in the field of Behavioural finance and

23
Psychotherapy, it is found that emotion plays a significant and pivotal role in

evaluating the risk and returns and in making financial decisions. The Human

Emotion Theory (HUEMO) revisits the traditional stock analysis techniques, which

are based on the fundamental and the technical valuations to assess the future price

level for the stock. The HUEMO theory challenges the belief that the stock market

investment decisions are made in a completely rational, proper and an unbiased

manner. On contrary, the stock investors make decisions mostly based on

psychological factors, including the moods and the emotions. The cognitive

performance on decision making is impacted by different states of moods and

emotions. On many occasions, Stock valuations do not necessarily manifest the

underlying intrinsic value of the stock; the volatility of prices of stocks is driven

largely by individual and group and collective emotions. During the stock market

boom , the optimistic and confident emotional state drive prices to astronomical

valuations whereas the investor turn pessimistic when market falls beyond its intrinsic

value. Thus it is understandable in times of financial turbulence that the emotional

investor stand on sidelines and unwilling to participate in the market to take

advantage of the stock market opportunities owning to the negative emotions

associated with recent experiences. Hence, the stock investor with the right

assessment of the emotions can possibly predict the price formation signals and take

advantage of the future market opportunities.

24
BEHAVIOURAL FINANCE

Behavioural finance is a rapidly growing area of modern finance that studies the

influence of psychology on the behaviour of the investors. It combines both

psychology and economics to explain why and how people make seemingly irrational

or illogical decisions when they invest money in equity market. According to Barber

& Odean (1999), Behavioural finance relaxes the traditionally held assumptions of

financial economics by incorporating these observable, systematic, and very human

departures from rationality into standard models of financial markets. The tendency

for human beings to be overconfident causes the first bias in investors and the human

desire to avoid regret prompts the second. In essence, Behavioural Finance seeks to

explain and increase the understanding of the reasoning patterns of market

participants, including the emotional thought processes involved and the degree to

which they influence the decision-making process in stock market investment. Thus,

Behavioural finance can be described as a field of finance that proposes explanation

of stock market anomalies using identified psychological biases, rather than

dismissing anomalies as chance results consistent with the market efficiency

hypothesis. The models of traditional finance are based on individual investor’s

rational decision making ability without any biases. However, in reality the investors

are influenced by biases which mark the deviation from the desired rational

investment behaviour. Loeb (1935) established the significance psychology in

decision making. He observed that one must experience the basic principles of

successful dealing in securities through trading in active listed leaders and acquire the

ability to control personal emotions such as fear of loss or greed for a larger profit,

which affect most people’s financial decisions. Apart from the volatile stock price

movements, there has been a numerous research indicating stock market anomalies

25
linked with IPOs, Bonus news, Rights news, mergers, stock splits and foreign listing.

Post liberalization, the increased media and online websites eBBArked in predicting

possible market movement and recommending stocks to buy/sell. It leads the

investors to take a biased view on the market and end up in making biased investment

decisions.

The anomalies, in essence, are the deviation of the stock market from its usual

behaviour. Hence, these anomalies such as the January effect, starting and closing

days of the week, derivative closing of last Thursday of the month indicate that the

underlying principles of logical and rational behaviour of the EMH are not

sufficiently correct and that other models of human behaviour also have to be studied.

Behavioural finance provides the correlation of emotional reactions with market

events and indicates that emotions are the backbone of its theoretical or conceptual

framework of the study. Behavioural finance draws on research done in the 1970s by

the psychologists Daniel Kahneman and Amos Tversky, who demonstrated that

cognitive errors and emotional biases can impact decision making process in the stock

market. Their findings provided financial researchers with the psychological models

for studying how the investors make rational or irrational decisions. Barberis &

Thaler (2003) found that the concept of rationality is very useful simple assumption. It

is seen that when an agent receive new information in the market, the investor

instantaneously change or update their preferences, beliefs and ideas in a normative

way so that results are consistent.

RETAIL INVESTOR

Retail investor is an individual investor who purchases stocks for his/her personal

account rather than for an institution or various funds. The characteristics of the retail

investors are that they trade in small amounts than the institutional investors such as

26
banks, mutual fund, insurance fund and pension fund. The institutional investors

engage in huge block trades which significantly affect the price of the security and the

direction of the market. The institutional investors have the advantage of resources to

extensively analyze and evaluate the various financial instruments and various

investment opportunities. They stand a better chance to maximize returns and

minimizing the risk. On contrary, the individual investor, barring these opportunities,

subjected to cognitive errors and biases while making the financial decisions in the

stock market. The presence of the individual investor has been steadily growing in

India since the introduction of financial reforms in the early 90s.However, the

confidence of the individual investors are lost during the financial scams and

recession times. With the advent of information technology and easier availability

credit, the individual investors have the easy access towards trading in the form of

online trading.

27
 REVIEW OF LITERATURE

In order to understand the Investors’ Sentiments and to formulate the research

problem for investigation, reviewing the earlier studies is necessary. The review

embodies empirical studies in books, journals and published research papers.

Mackay Charles (1841), in his book titled, “Extraordinary Popular Delusions and

the Madness of Crowds” concluded that men go mad in herds, while they only

recover their senses slowly, and one by one.

The paper entitled, “A Behavioural Approach to the Investment Management

Decision and to the Securities Market” by Rando, Lph, Westerfield (1969),

investigated the individual financial investment decision. The study used Maskowitz

/Sharpe Linear Portfolio Model to describe and evaluate the salient aspects of the

Individual investment decision. The study showed that there was a significant

difference between mature investors and non-mature investors with respect to risk

performance.2 Potter Roger Ewing (1970), carried out a study entitled, “Motivating

Factors Guiding the Common Stock Investor”, to identify those factors which

motivate (or) guide the investment decisions of the common stock investors. Those

identified are income from dividends, rapid growth and professional investment

management.

The study entitled, “Patterns of Investment Strategy and Behaviour among

Individual Investors”, by Lewellen Wilbur G, et.al (1977), examined the portfolio

decision processes of individual equity investors. The study found that age has a

strong influence on the portfolio goals of the investors in U.S.A. Older investors have

interest in long-term capital gains and young investors have a desire for short-term

capital gains. The age and risk-taking propensities were found to be inversely related.

The women investors in USA were found to be broker-reliant unlike men.

28
David S. Scharfstein and Jeremy C. Stein (1990), in their article titled, “Herd

Behaviour and Investment”, examined some of the forces that can lead to herd

behaviour in investment. The study found that under certain circumstances, the

managers simply mimic the investment decisions of other managers, ignoring

substantive private information. Although this behaviour is inefficient from a social

standpoint,, it can be rational from the perspective of managers who are concerned

about their reputations in the labour market.

Anna A. Merikas, Greece Andreas G. Merikas, Greece George S. Vozikis, Dev

Prasad, (2000), in their study entitled, “Economic Factors and Individual Investor

Behavior: The Case of The Greek Stock Exchange”, undertook an empirical survey

of the factors, which mostly influence individual investor behavior in the Greek Stock

Exchange. The study revealed that the individual behavior of active investors in the

Athens Stock Exchange (ASE) was influenced by the overall trends prevailing at the

time of the survey in the ASE.

An article entitled, “An Examination of Herd Behavior in Equity Markets: An

International Perspective”, authored by Eric C. Chang, Joseph W. Cheng and Ajay

Khorana (2000) examined the investment behavior of market participants in different

international markets namely US, Hong Kong, Japan, South Korea, and Taiwan,

specifically with regard to their tendency to exhibit herd behavior. It found no

evidence of herding on the part of market participants in the US and Hong Kong and

found partial evidence of herding in Japan. However, for South Korea and Taiwan,

the study found significant evidence of herding.

Freund, Caroline L. and Weinhold, Diana (2001), in their paper entitled, “On the

Effect of the Internet on International Trade”, found that the effect of the Internet

29
on trade has been stronger for poor countries than for rich countries, and that there is

little evidence that the Internet has reduced the impact of distance on trade.

Brad M Barber and Terrance Odean (2001), in their paper titled, “The Internet and

the Investor”, found that the internet has changed the process of how information is

delivered to the investors and the ways in which investors can act on that information.

The ILA has lowered both the fixed and marginal costs of producing financial

services, thus enabling newer, smaller companies to challenge the established

providers of these services.

An article entitled, “Investors’ Herding on the Tokyo Stock Exchange,” by Iihara,

Kato and Tokunaga (2001), documented the herding behaviour in various investors’

classes on the Tokyo Stock Exchange. The money-flow instruments allow the

separation of the measurement of sentiment from measurement of asset returns.

Krishnan and Booker (2002) in their paper entitled, “Investors’ Use of Analysts’

Recommendations, Behaviour Research in Accounting”, analyzed the factors

influencing the decisions of investors who basically used analysts’ recommendations

to arrive at a short-term decision to hold or to sell a stock.

The article entitled, “Rational Investor Sentiment”, by Gerber, Anke, Vogt, Bodo

and Hens, Thorsten (2002), studied volatility, short-term momentum and longterm

reversal of asset prices by a repeated game version of Keynes’ beauty contest. In their

model, neither have explained short-term momentum nor long term reversal of stock

prices by unpredictable switches in the coordination of the players.

Mark J. Flannery and Aris A. Protopapadakis (2002) in their paper entitled,

“Expected Utility Analysis without the Independent Axiom”, found that the stock

market returns were significantly correlated with inflation and money growth. The

30
impact of real macroeconomic variables on aggregate equity returns has been difficult

to establish.

Alok Kumar and Charles Lee (2003), in their article entitled, “Retail Investor

Sentiment and Return Co movements”, proved that more than 1.85 million

transactions made by retail investors were systematically correlated − i.e., individuals

buy (or sell) stocks in concert. As predicted by noise trader models, it is found that

systematic retail trading explains return co movements for stocks with high retail

concentration (i.e., small-cap, value, lower institutional ownership, and lower-priced

stocks).

Ryan Wood A and Judith Lynne Zaichkowsky B (2004), in their study entitled,

“Attitudes and Trading Behaviour of Stock Market Investors”, identified the

characterized segments of individual investors based on their shared investing

attitudes and behavior. Five main constructs that drive investor behaviour are

investment horizon, confidence, control, risk, attitude and personalization of loss. The

study identified four main segments of individual investors, namely, Risk – Intolerant

Traders, Confident Traders, Loss – Adverse Young Traders and Conservative Long

term Investors as the drivers for investors’ behaviour.

The paper entitled, “Behavioral Finance: Is Investor Irrationality the Norm?”, by

Shailaja Gajjala (2005), identified investment biases possessed by retail investors. The

study found that 90 % of the sample reported that their current and future investment

decisions were dependent on their past choices. Finally, the study found the evidence

of retail investment biases that lend credence to the proponents of Behavioral Finance.

Brian Zingale (2005), in his article entitled, “Investor Sentiment and the Long-run

Underperformance of New Issues”, explained that proxies for investor sentiment

predict the long-run underperformance of new issues and the volume of equity

31
issuance. The paper suggested that the asset pricing models that explain

underperformance have risk factors that are also proxy for mispricing. The factors -

SMB and HML in the three factor model of Fama and French (1993) are correlated

with these study sentiment proxies.

An article entitled, “Factors influencing Individual Investor Behaviour: An

Empirical Study of the UAE Financial Markets”, by Hussein A Hassan etal (2006),

identified the factors influencing the UAE investor behaviour. Six factors were found

as the most influencing factors on the UAE investor behaviour. The most influencing

factors were expected corporate earnings, get rich quick, past performance of the

firm’s stock. On the other hand, few factors like expected losses in international

financial markets, family member opinion, gut feeling on the economy were found to

be least influencing.

Bing Han (2006), in his paper entitled, “Investor Sentiment and Option Prices”,

examined whether investor sentiment about the stock market affects prices of the S&P

500 options. It was found that the index option volatility smile is steeper (flatter) and

the risk-neutral skewness of monthly index return is more or (less) negative when

market sentiment becomes more bearish (bullish). The changes in sentiment explain

time variation in the slope of index option smile and risk-neutral skewness beyond

factors suggested by the current models.

The paper entitled, “Women Investors Perception towards Investment–An

Empirical Study”, by Gnana Desigan C. et.al., (2006), examined the investment

pattern, preference, influencing factors and problems of women investors in Erode

Town. According to the findings of the study, women investors were interested in

investing in bank deposits and jewellery as they are influenced by safety and liquidity.

32
Totok Sugiharto, Eno L. Inanga and Roy Sembel (2007), in their study, “A Survey of

Investors Current Perceptions and Valuation Approaches at Jakarta Stock

Exchange”, studied the investment practices and perceptions by major portfolio

investors (fund managers) who were active at the Jakarta Stock Exchange (JSX) in

Indonesia. The study observed that the Social, Political, Economic, Regulatory,

Technological, Environmental and Legal (SPERTEL) factors influenced the

fundamental factors (EM metric) and values of equity shares.

The paper entitled, “Investor Sentiment and Stock Market Response to Corporate

News”, by G. Mujtaba Mian, and Srinivasan Sankaraguruswamy (2008), examined

whether market-wide investor sentiment influences the stock price response to firm-

specific news. The results indicate that the prevailing sentiment sways stock price

response to news in the direction of the sentiment—the positive stock price response

to good news and increase with sentiment, whereas the negative stock price response

to bad news and decrease with sentiment.

Matthias Burghardt, Marcel Czink, and Ryan Riordan (2008) in their article entitled,

“Retail Investor Sentiment and the Stock Market”, computed a retail investor

sentiment index using a unique data set with 18.1 million transactions in bank issued

warrants from the European Warrant Exchange. The study showed that retail investor

sentiment is an important part of the equity pricing process and that they have a good

measure of the sentiment.

The article entitled, “The Effects of Investor Sentiment on Speculative Trading

and Prices of Stock and Index Options”, by Michael Lemmon and Sophie X. Ni

(2008), found that speculative demand for equity options was positively related to

investor sentiment, while hedging demand is invariant to sentiment. It is found that

33
sentiment is related to time-series variation in the slope of the implied volatility smile

of stock options, but has little impact on the prices of index options.

Glaser, Markus, Schmitz, Philipp and Weber, Martin (2009), in their study entitled,

“Individual Investor Sentiment and Stock Returns - What Do We Learn from

Warrant Traders?”, tested whether individual investor sentiment was related to

daily stock returns by using vector auto regressive models and Granger causality tests.

The study found out that there exists a mutual influence between sentiment and stock

market returns, but only in the very short-run (one and two trading days).

The paper entitled, “A study of Gender Differences in Investment Behaviour”, by

Madhurima Deb and Kavita Chavali (2009), evaluated the gender differences in

investment decisions. Sixteen variables were identified in terms of preinvestment,

post-investment and risk reduction strategies. It was inferred that Men were more

confident than Women. Women are more risk averse than men in their investment

strategies. Women start investing late in their age compared to their counterpart and

they expect stable growth in their investment.

Michael Lemmon and Sophie Xiaoyan Ni (2009), in their paper titled, “The Effects

of Investor Sentiment on Speculative Trading and Prices of Stock and Index

Options”, found that the synthetic stock demand for stock options was positively

related to investor sentiment and market returns, while the synthetic index demand for

SPX options is invariant to sentiment, and negatively related to market returns for

SPX put.

Alexander Kurov (2009), in his article entitled, “Investor Sentiment and the Stock

Market’s Reaction to Monetary Policy”, showed that the monetary policy decisions

have a significant effect on investor sentiment. The effect of monetary news on

sentiment depends on market conditions (bull versus bear market). The results show

34
that the investor sentiment plays a significant role in the effect of monetary policy on

the stock market.

A paper entitled, “Market Response to Investor Sentiment”, by Jördis Hengelbrock

Erik Theissen Christian Westheide (2010), suggested that measures of investor

sentiment have predictive power for future stock returns over the intermediate and

long term. The study suggested that smart investors should trade on the information

conveyed by such indicators and thus triggered an immediate market response to their

publication.

The paper entitled, “Investor Sentiment and Real Investment”, by David McLean

and Mengxin Zhao (2010), studied the effects of systematic investor sentiment on

investment and external finance over a 44-year period. Sentiment causes both

investment and external finance to be more sensitive to growth opportunities and less

sensitive to cash flow. The findings are broadly consistent with a sentiment-costly,

external financing framework in which sentiment affects the prices of risky securities.

The paper entitled, “Does Customer Sentiment Contribute to Investor Sentiment:

Glamour Brands and Glamour Stocks?”, by Matthew T. Billett, Zhan Jiang and

Lopo L. Rego (2010), explored the link between customer sentiment for corporate

brands and investor sentiment for their stocks. The study found that a portfolio of

stocks with glamorous brands, indicating high customer sentiment, have large

negative loadings on the Fama French HML Factor while those with the low

sentiment have a positive loading. It is suggested that glamorous brands can

contribute to the existence of glamour stocks.

An article entitled, “How Does Investor Sentiment Affect Stock Market Crises?

Evidence from Panel Data”, by Mohamed Zouaoui et al (2010), tested the impact of

investor sentiment on a panel of international stock markets. The study examined the

35
influence of investor sentiment on the probability of stock market crises. It is found

that the investor sentiment increases the probability of occurrence of stock market

crises within a one-year horizon.

Bennet. E, et al (2011), “Factors Influencing Retail Investors Attitude towards

Investing in Equity Stocks: A Study in Uttar Pradesh”, identified the factors

influencing the retail investor’s attitude. The top five highly influential factors were

investors’ tolerance for risk, strength of the Indian Economy, media focus on the

stock market, political stability and finally Government Policy towards business. The

four other factors like stories of successful investors; get rich quick philosophy,

information available on the internet and cost cutting by companies were given lowest

priority.

Bennet. E, and Selvam. M (2011), “Investors’ Perception of the Factors

Influencing the Stock Selection Decision”, analysed the investors’ perception of

Social, Political, Economical, Regulatory, Technological, Environmental and Legal

(SPERTEL) risks on the value of equity shares in the market. It was found that except

the social factors between married and unmarried investors, political, regulatory and

legal factors for age, occupation and all other factors seemed to be insignificant.

Bennet. E, et al (2011), “Investors’ Attitude on Stock Selection Decision”,

identified the factors influencing the stock selection decision including demographic

factors. The factors that influenced the stock selection decision were Return on

Equity, Quality of Management, Return on Investment, Price to Earnings Ratio and

various ratios of the company.

The paper entitled, “The Influence of Stock Specific Factors on Investors’

Sentiment?”, by Bennet.E, Selvam. M and Eva Esther Shalin Ebenezer (2011),

concluded that the Stock Specific Factors namely expected events surrounding the

36
stock and book value, recommendation of the financial community and price cut off

rules had significant impact on the Investors’ Sentiment.

To sum up the review of literature, many contributions have offered different

perspectives of Investors’ Sentiment worldwide and explained many variables,

models, analyzing tools, coping strategies and outcomes of sentiment. From the

reviews, it is found that there is a positive relationship between Stock Specific

Factors, Market Specific Factors and Investors’ Sentiment. This review of the

literature provided an important model and various sub models for this study.

37
COMPANY PROFILE

38
 COMPANY PROFILE

Agile Capital Services is the choice of many reputed Multinational Organizations and

businesses because of its commitment to deliver best results. ACS pride itself with the

reputation of being the trusted and reliable talent acquisition partner as well as

providing expert guidance towards achieving financial independence to its clients.

We are having experts who are providing consultancy services regarding financial and

investment sector to individual so that they can secure financial future of themselves

and their family. Providing the professional and expert advice in wealth

maximization, career planning and bridging the gap between the job seeker and talent

seeker. Our experts provide financial advice in the simplest way possible because we

believe in managing wealth in less complicated way Agile Capital Services Is One Of

India's Emerging Consulting Firm. At Agile Capital, We Provide Wealth

Management Services To High And Ultra High-Net-Worth Individuals (Hnis &

Uhnis). Our highly trained and specialized team engage with clients from across the

country as well as those based abroad. in addition to our custom-designed solutions,

we focus on 'un complicating' the entire process of investment for each client. our

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At AGILE CAPITAL, we cater to financial needs of individual and corporate clients.

OUR VISION

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39
OUR MISSION

We thrive to provide best and simplest wealth management advice through honest

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40
OBJECTIVES OF
STUDY

41
 OBJECTIVES OF THE STUDY

 To study the preference of salaried class on various investment options available in

Lucknow City.

 To study the investment characteristics of salaried class investors on various

investment options available in Lucknow City.

 To study the objectives of investment plan of an investors.

 To know the preferred investment avenues of investors.

 To identify the preferred sources of information influencing investment decisions.

42
 RESEARCH
METHODOLOGY

43
 RESEARCH METHODOLOGY

INTRODUCTION:

Research is one of the best instruments to identify the investing pattern of

investors to invest in various sectors & to study different sectors of Capital

market.

DEFINITION:

“Research is careful inquiry or examination to discover new information and

relationship and to expand and to vary existing knowledge.”

Research always starts with question or any problem and finds answer of

problem by using scientific method. It gives complete knowledge about any

problem or question.

RESEARCH DESIGN:

“Research design is the plan structure and strategy if investigation conceived so

as obtain answers to research question and to control variance”

A research design is the Bachelor plan or model for the conduct of formal

investigation and survey. It is a specification of methods and procedures for

acquiring the information needs for solving the problem. It decides the source

of information and methods for gathering the data. A questionnaire and other

forms are tested to use the collection of data. In the research study there is no

perfect study to solve the problem. The research design has broadly three

categories as follow.

44
DESCRIPTIVE RESEARCH:

Descriptive research, also known as statistical research. It describes data and

characteristics about the population or phenomenon being studied.

Descriptive research answers the questions who, what, where, when and how. This

study is complex and determines high degree scientific skill to study the problem. The

description is used for frequencies, averages and other statistical calculations. Often

the best approach, prior to writing descriptive research, is to conduct a survey

investigation. Qualitative research often has the aim of description and researchers

may follow-up with examinations of why the observations exist and what the

implications of the findings are.

In short descriptive research deals with everything that can be counted and studied.

DATA COLLECTION METHOD:

Data collection usually takes place early on in an improvement project, and is often

formalized through a data collection plan which often contains the following data

collection methods.

The source of data collection method is as follows.

 Primary Data

 Secondary Data

PRIMARY DATA:

Primary data means data collected directly from first-hand experience. Means data

collected for the first time by any researcher for any research use. There are many

methods of collecting primary data and the main methods include:

Methods of collecting the primary data are:

 Questionnaire method

 Interviews method

45
 Focus group interviews

 Observation method

 Case-studies method

 Diaries method

I have used Questionnaire method for the Primary data collection for the study.

SECONDARY DATA:

Secondary data means data which are collected by any one for a particular research

purpose and which are used by others for different purpose.

I have also used the secondary data for the study like some company resources like

broachers, websites etc.

SAMPLING PLAN:

“Sampling is the process to analyze the whole population

by analyzing a part of it.”

The effectiveness of the report depends on the sample size selected from the

population.

SAMPLING UNIT:

Here, target population is decided who are the actual and potential investors,

each sample has the chance to be selected on an equal basis & this research has

been conducted through surveying the whole of the equity market of Lucknow

city

Sample Size: = 100

I used sample size is 100

46
DATA ANALYSIS TOOLS:

 I have used SPSS software (Statistical Package for the Social Sciences) for

analysis purpose.

 In that I have used Mean, Median, Mode, Frequency Table, and Cross Tabulation,

Graphical representation & interpretation with each graphs and charts.

 Microsoft Office is used for data typing formatting and analyzing the data.

47
 PROBLEMS
AND
LIMITATIONS

48
 LIMITATIONS

THE MAIN LIMITATIONS ARE AS FOLLOWS:

 Respondents might have felt hesitation in providing information related to their

age, income etc. So, there can be some data that might questionable because of

unwillingness of respondents to give right information.

 Sample selected may not represent whole population, as sample size selected is

very small in proportion to population due to time and cost constraints.

 Even many of the respondents may give bias answer.

49
 DATA ANALYSIS
&
INTERPRETATIONS

50
 DATA ANALYSIS & INTERPRETATION

Que. 1. Do you investing in Equity Market?

Particulars Investing Percentage

Yes 68 68%

No 32 32%

Total 100 100%

Investing
Yes No

32%

68%

INTERPRETATION:

According to the above chart we can see that: 68% of investors (119) are investing in

Equity Market. While 36% of investors (56) are not investing in Equity Market.

51
Que. 2. If you want to invest, which investment option will provide the best

returns?

Investment option Investors Investors in Percentage

Equity Share 53 53%

IPO 18 18%

Mutual Funds 8 8%

Bonds 7 7%

Fixed Deposits 4 4%

Other 10 10%

Total 100 100%

10%
Investors
Equity Share IPO Mutual Funds Bonds Fixed Deposits Other

4%
7%

8%
53%
18%

INTERPRETATION: In chart 53% of investors, Equity market will provide

the best returns in compare to other investment option. 18% of investors believe that

IPO (Primary Market) will provide the best returns. 8% of investors think that

Mutual Funds will provide the best returns. 7% of investors believe that Bonds

Market will provide the best returns. 4% of investors trust that Fixed Deposits will

provide the best returns. According to 10% of investors, other investment option

will provide the best returns. According to them other investment options are:

52
 Que.3. Which factors motivate you for investing in Equity Market?

Motivation Factors Investors Investors in Percentage

Return 49 49%

Liquidity 26 26%

Safety 7 7%

Capital Appreciation 17 17%

Other 1 1%

Total 100 100%

Investors
Return Liquidity Safety Capital Appreciation Other

1%

17%

7% 49%

26%

INTERPRETATION: According to: 49% of investors are motivated by Return

to invest in Equity market. 26% of investors are motivated by Liquidity to invest in

Equity market. 6% of investors are motivated by Safety to invest in Equity

market.16% of investors are motivated by Capital Appreciation to invest in Equity

market. While 5% of investors are motivated by other factors like-Investment,

Profit etc. to invest in Equity market.

53
Que. 4. How much percentage of your income you invest in Equity Market?

Percentage of Income Investing Investors in Percentage

Less than 5% 23 23%

5%-10% 45 45%

10%-15% 17 17%

15%-20% 7 7%

20%- 25% 5 5%

More than 25% 3 3%

Total 100 100%

Investing
Less than 5% 5%-10% 10%-15% 15%-20% 20%- 25% More than 25%

5% 3%

7% 23%

17%

45%

INTERPRETATION:
According to the Previous Figure:23% of the investors are investing Less than 5%
of their income in Equity Market.45% of the investors are investing 5%-10% of
their income in Equity Market.17% of the investors are investing 10%-15% of their
income in Equity Market.7% of the investors are investing 15%- 20% of their
income in Equity Market.5% of the investors are investing 20%-25% of their
income in Equity Market.While 3% of the investors are investing More than 25%
of their income in Equity Market.

54
 Que. 5. How do you trade in Equity Market?

Types of Trade Investing Investors in Percentage

Intraday 13 13%

Delivery 31 31%

Speculation 26 26%

Arbitragers 17 17%

Hedging 11 11%

Other 2 2%

Total 100 100%

Investing 2%
Intraday Delivery Speculation Arbitragers Hedging Other

11% 13%

17%

31%

26%

INTERPRETATION:

According to the Previous Figure: 13% of the investors are doing Intraday trading

in Equity Market. 31% of the investors are investing in Equity Market as a Delivery

base Trading. 26% of the investors are trading in Equity Market as a Speculator.

17% of the investors are Arbitragers in Equity Market. 11% of the investors are

trading in Equity Market as Hedgers. While 2% of the investors are trade in Equity

Market for Other Purpose.

55
 Que.6. What is the time horizon for investing in Equity Market?

Time Horizon Investing Investors in Percentage

Less than 1 Months 14% 14%

1 to 3 Months 28% 28%

3 to 6 Months 15% 15%

6 to 12 Months 18% 18%

More than 12 Months 25% 25%

14%
25%

28%

18%

15%

INTERPRETATION:

According to the Previous Figure:

14% of investors invest in Equity market for Less than 1 Months.

28% of investors invest in Equity market for the period of 1 to 3 Months.

15% of investor’s time horizon for in Equity market is 3 to 6 Months.

18% of investor’s time horizon for in Equity market is 6 to 12 Months.

25% of investors invest in Equity market for more than 12 Months.

56
Que.7. What is the rate of return expected by you from Equity Market in a
year?
Rate of Return Investors in Percentage

5% – 10 % 12%

10% – 15 % 18%

15% – 20% 32%

20% – 25% 26%

25% –30% 8%

30% and above 4%

4% 12%
8%
Rate of Return
5% – 10 %
10% – 15 %
18%
15% – 20%
26%
20% – 25%
25% –30%
30% and above

32%

INTERPRETATION:
According to the above Figure:
12% of investors are expects 5%-10% return from Equity market.
18% of investors are expects 10%-15% return from Equity market.
32% of investors are expects 15%-20% return from Equity market.
26% of investors are expects 20%-25% return from Equity market.
Here, above two cases investors are more expects from Equity market.
8% of investors are expects 25%-30% return from Equity market.
While 4% of investors are expects more than 30% return from Equity market.

57
Que.8. Are you satisfied with the current performance of the Equity Market in

terms of expected return?

Rate of Return No. of Investors Percentage

Fully Satisfied 17 17%

Satisfied 42 42%

Neutral 28 28%

Unsatisfied 10 10%

Fully Unsatisfied 3 3%

Total 100 100%

No. of Investors
Fully Satisfied Satisfied Neutral Unsatisfied Fully Unsatisfied

3%

10% 17%

28%

42%

INTERPRETATION:

According to the Previous Figure:

30 investors are Fully Satisfied from current performance of Equity market.

73 investors are Satisfied from Equity market. 49 investors are Neutral with current

performance of Equity market. 18 investors are Unsatisfied from Equity market.

While 5 investors are Fully Unsatisfied from Equity market.

58
 Que. 9. Who advise you to enter in Equity Market?

Particulars Investors in Percentage

Friends 28%
Relatives 12%
Advisers 25%
Media 17%
Research Report 10%
Magazines 5%
Other 3%

5%
Investors in Percentage
3%
Friends Relatives Advisers
Media Research Report Magazines
Other
10% 28%

17%

12%

25%

INTERPRETATION:

According to the Above Figure: Friends motivate 28% of the investors to enter into

the equity market. Relatives motivate 12% of the investors to enter into the equity

market. 25% of investors enter in Equity market by the Advise of Financial

Advisor. Media motivate 17% of the investors to enter into the equity market.

Magazines motivate 10% of the investors to enter into the equity market. 5% of

investors are motivates by Reading Magazines to enter in Equity market.

59
 Que.10. Which Factors do you consider most important while selecting the

Sectors?

Particulars Percentage
Market Trend 29%
Profitability 23%
Economic Condition 14%
Industry Condition 16%
Existence of well established Companies under Sectors 12%
Government Policy 5%
Any Other 1%

5%
1%
12%
29%
Market Trend

Profitability
16%
Economic Condition

Industry Condition

14% 23%

INTERPRETATION:

According to the Previous Figure:

29% of the investors have considered Market Trend as a most important factor
while selecting the Sector. 23% of the investors have considered Profitability as a
most important factor while selecting the Sector. 14% of the investors have
considered Economic Condition as a most important factor while selecting the
Sector. 16% of the investors have considered Industry Condition as a most
important factor while selecting the Sector. 12% of the investors have considered
Existence of well established Companies under Sectors as a most important factor
while selecting the Sector. 5% of the investors have considered Government Policy
as a important factor while selecting the Sector. While 1% of the investors have
considers Other Factor like Global Position of the company and etc. important
factor while selecting the Sector.

60
AUTOMOBILE SECTOR:

35 Investors gave 1st rank, 30 Investors gave 2nd rank, 28 investors gave 3rd Rank, 52

Investors gave 4th Rank, & 30 Investors gave 5th Rank to this sector.

Here, over all 52 investors have selected Automobile sector as a 4th Rank in

comparison with 4th Rank of all sectors.

Infrastructure Sector:

37 Investors gave 1st rank, 32 Investors gave 2nd rank, 33 investors gave 3rd Rank, 28

Investors gave 4th Rank, & 45 Investors gave 5th Rank to this sector.

Here, over all 45 investors have selected Infrastructure sector as a 5nd Rank in

comparison with 5nd Rank of all sectors.

61
Que. 12. Mention the most important factors for selecting a company of your
choice.

Factors affect for selecting company Investors in Percentage

Earning Per Share 19%
Dividend 17%
Broker’s advise 15%
Market capitalization 7%
Performance of company 16%
P.E. Ratio 24%
Other 2%

Factors affect to Investors for

for selecting company
(InvestorsOther
in Percentage)
2%
P.E. Ratio
Earning
24%
Performance Dividend Per
of company 17% Share
16% 19%
Market Broker’s
capitalizatio advise
n 15%
7%

INTERPRETATION:

On the basis of above Figures:

19% of the investors have considered Earning Per Share as a most important factor
to select a Company under the sector of their Choice. 17% of the investors have
considered Dividend as a most important factor to select a Company under the sector
of their Choice. While 15% of the investors are select a company under the sector of
their choice on the basis of Broker’s advises. 7% of the investors have considered
Market capitalization by the company as a important factor to select a company
under the sector. 16% of the investors have considered as a Performance of
company most important factor to select a company under the sector of their choice.
24% of the investors have considered Price Earnings Ratio as a most important
factor select a company under the sector of their choice. At last 2% of the investors
have considered Other Factors.

62
FINDINGS

63
 FINDINGS

 From the examination I discovered that 68% of speculators are putting resources

into Equity Market. While 36% of financial specialists are not putting resources

into Equity Market according to my example size.

 I additionally discovered that, 53% of financial specialists accept that Equity

Market is better speculation choice and will give the best returns in contrast with

other venture alternative.

 I discovered that the 49% of speculators who are managing in value market they

are propelled by return factor and 26% of financial specialists are inspired by

Liquidity and some financial specialist likewise consider capital thankfulness and

wellbeing factor while putting resources into value market in different areas.

 I additionally discovered that the 45% of the financial specialists are prepared or

intrigued to put their 5%-10% of pay in Equity Market. It implies numerous

financial specialists trust on the development of value market as they are prepared

to spend significant extent of their pay.

 Proceeding I discovered that not many speculators need to bargain in intraday

exchanging which shows that they consider wellbeing factors while contributing.

31% of the financial specialists are putting resources into Equity Market as a

Delivery base Trading and 26% of the financial specialists are exchanging Equity

Market as a Speculator. Means 26% of financial specialists who readily take

higher-than-normal danger as a trade-off for a higher-than-normal benefit potential.

 28% of speculators put resources into Equity market for the time of 1 to 3 Months

and similar extent of financial specialists are contribute for significant stretch more

than year.

64
 I likewise discovered that 32% of speculators are expects 15%-20% get back from

Equity market and 26% of financial specialists are expects 20%-25% get back from

Equity market. Here, financial specialists are more anticipates from Equity market.

 42% of speculators are happy with the current presentation of the Equity Market as

far as anticipated return, while 28% of financial specialists are Neutral about value

market.

 I found that the greater part of speculators are propelled by their companions to

enter in the value market and a few financial specialists are persuaded by Advisers,

Media, Research Report and different elements like and self investigation of

momentum situation of value market.

 Other thing I discovered that 29% of the financial specialists have considered

market pattern and 23% of the speculators have thought about Profitability as a

most significant factor as a most significant factor while choosing the Sector. There

are additionally different variables like - government strategy, industry condition,

and financial condition likewise significant factor while choosing the Sector

 At that point I found that 44 speculators chose Oil and gas area as a First Rank (in

examination with First Rank, all things considered)

 40 financial specialists have chosen IT area as a second Rank.

 53 financial specialists have chosen Banking area as a 3nd Rank.

 52 financial specialists have chosen Automobile area as a fourth Rank

 45 financial specialists chose Infrastructure area as a 5nd Rank.

 I likewise discovered that 24% of the financial specialists have thought about Price

Earning Ratio, 19% of the speculators have considered Earning per Share and17%

of the speculators have thought about Dividend as a most significant factor while

choosing an organization from these chose areas. Speculators likewise consider

65
different components like - Suggestion from reference gathering, External

counselors, Stakeholders, Growth of Company, Market Trend, Profitability and

their own view and so on are as a significant factor while choosing an organization

from these chose areas.

66
RECOMMENDATIONS

67
 RECOMMENDATION

 Prefer investment for long term investment strategy that provides you moderate

return with liquidity.

 Investors should not invest in only equity market but, also invest in other Safe

Securities Like- Fixed Deposits, Government Securities, Bonds, Mutual fund and

Insurance etc. which also provides moderate return.

 For Example: One should prefer

 Equity – 50%

 Other Safe Securities – 50%

 So, one can get moderate return with liquidity.

 Investors should invest money at lower level price and sale the stock at higher

price.

 Investors should select company on the basis of PE ratio, EPS, Current Growth of

Company and Market capitalization and many more. So, investors can get higher

return on their investment.

 Always invest extra money in stock market. Do not invest by taking loan from

banks or other resources.

68
CONCLUSION

69
 CONCLUSION

During my preparation period I have concentrate on "Speculators Behavior for

Investing in Equity Market in Various Sectors" by utilizing Descriptive Research

Design as a Questionnaire technique where respondents are from entire of the value

market of Lucknow city.

From the study I found that significant individuals are putting resources into value

market simply because of Earn High Return and Hedge the Risk by putting their

significant extent of pay in Equity Market. Here, the vast majority of individuals are

exchange value market as a theory and they are contributes for one to a quarter of a

year. By and large, the financial specialists who are contribute for extensive stretch

more than year they are doubtlessly gainful in value market. Lion's share of

individuals are spurred by their companions and medias encourage to go into value

market. Larger part individuals are expecting something more from the value market.

In this way, at last some are fulfilled and some are not fulfill with value market.

Significant financial specialists favor the Oil and gas area as a first position based on

Market pattern, Profitability, industry condition and monetary condition additionally

significant factor while choosing the Sector and speculators have likewise considered

Price Earning Ratio, Earning per Share and Dividend as a most significant factor

while choosing an organization under these chose areas.

70
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Financial Analyst. 20 :74-77.

 Yue-Cheong Chan and Danny Meidan (2005), Individual Investor Sentiment and

Long-Run Performance of IPOs. (Electronic copy available at SSRN:

http://ssrn.com/abstract=838484).

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ANNEXURE

95
 QUESTIONNAIRE
 Name: _______________________________________________

 Address: _______________________________________________

_______________________________________________

 E-mail ID: …………………………………..………………………………

 Contact No.: …………………………………..

 Gender [ ] Male [ ] Female

 Age:

[ ] Below 20 Years [ ] 21 TO 30 Years [ ] 31 TO 40

Years

[ ] 41 TO 50 Years [ ] 51 TO 60 Years [ ] Above 60

Years

 Occupation:

[ ] Business [ ] Service [ ] Employee

[ ] Student [ ] Other please specify _____________

 Income (Yearly):

[ ] Less than 100000 Rs. [ ] 100000 to 200000 Rs. [ ] 200000 to 300000

Rs.

[ ] 300000 to 400000 Rs. [ ] 400000 to 500000 Rs. [ ] Above 500000 Rs.

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1. Do you investing in Equity Market?

[ ] Yes [ ] No

2. If you want to invest, which investment option will provide the best

returns?

[ ] Equity Share [ ] IPO [ ] Mutual Funds

[ ] Bonds [ ] Fixed Deposits [ ] If any other

_________

3. Which factors motive you investing in Equity Market?

[ ] Return [ ] Liquidity [ ] Safety

[ ] Capital Appreciation [ ] If any other please specify _____________

4. How much percentage of your income you invest in Equity Market?

[ ] Less than 5% [ ] 5%-10% [ ] 10%-15%

[ ] 15%-20% [ ] 20%- 25% [ ] More than 25%

5. How do you trade in Equity Market?

[ ] Intraday [ ] Delivery [ ] Speculation [ ] Arbitragers

[ ] Hedging [ ] If any other please specify _____________

6. What is the time horizon for investing in Equity Market?

[ ] Less than 1 Months [ ] 1 to 3 Months [ ] 3 to 6

Months

[ ] 6 to 12 Months [ ] More than 12 Months

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7. What is the rate of return expected by you from Equity Market in a year?

[ ] 5% – 10 % [ ] 10% – 15 % [ ] 15% – 20%

[ ] 20% – 25% [ ] 25% –30% [ ] 30% above

8. Are you satisfied with the current performance of the Equity Market in

terms of expected return?

[ ] Fully Satisfied [ ] Satisfied [ ] Neutral

[ ] Unsatisfied [ ] Fully Unsatisfied

9. Who advise you to enter in Equity Market?

[ ] Friends [ ] Relatives [ ] Advisers [ ] Media

[ ] Research Report [ ] Magazines [ ] If any other ___________

10. Which Factors do you consider most important while selecting the

Sectors?

[ ] Market Trend [ ] Profitability [ ] Economic Condition

[ ] Industry Condition [ ] well established Companies under Sectors

[ ] Government Policy [ ] If any other please specify _____________

11. Which Sector do you prefer the most? (Give 1 to 5 Orders in given boxes)

Oil & Gas Sector Infrastructure Sector

Banking Sector Automobile Sector

IT Sector If any other please specify _____________

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12. Mention the most important factors for selecting a company of your

choice.

[ ] Earning Per Share [ ] Dividend [ ] Broker’s

advise [ ] Market capitalization [ ] Performance of company [ ] P.E.

Ratio [ ] If any other _____________

13. If any Suggestion from your side, then please specify.

99