RESEARCH PROJECT REPORT

On

“A Study on Risk Propensity and Sentiments

of Investors towards Various Investment Post
Covid-19 in Lucknow City”

Towards partial fulfillment of

Master of Business Administration (MBA)
(BBD University, Lucknow)

Guided By: Submitted by:

MR. RITESH KRISHNA SRIVASTAVA PREETI SRIVASTAVA

(Roll No. 1200672134)

Session 2021-2022

School of Management

Babu Banarasi Das University

Sector I, Dr. Akhilesh Das Nagar, Faizabad Road, Lucknow (U.P.) India
PLAGIARISM CERTIFICATE
 DECLARATION

I do hereby declare that all the work presented in the research report entitled

“A Study on Risk Propensity and Sentiments of Investors towards Various

Investment Post Covid-19 in Lucknow City” is carried out and being submitted

at the school of management for the award of Master of Business

Administration, is an authentic record of PREETI SRIVASTAVA. The work is

carried out under the guidance of MR. RITESH KRISHNA SRIVASTAVA (faculty

guide). It hasn’t been submitted at any other place for any other academic

purpose.

PREETI SRIVASTAVA
 ACKNOWLEDGEMENT

Most importantly, acclaims and gratitude to the God, the Almighty, for His

showers of gifts all through my examination work to finish the exploration

effectively.

I might want to communicate my profound and genuine appreciation to my

exploration administrator, Mr. Ritesh Krishna Srivastava Faculty Guide, Babu

Banarasi Das Univesity, Lucknow for allowing me the chance to do examine

and giving priceless direction all through this exploration. His dynamism, vision,

genuineness and inspiration have profoundly propelled me. He has shown me the

approach to do the exploration and to introduce the examination fills in as

unmistakably as could be expected under the circumstances. It was an incredible

benefit and respect to work and study under his direction. I am incredibly thankful

for what he has offered me. I might likewise want to express gratitude toward his

for him companionship, compassion, and extraordinary comical inclination. I am

stretching out my sincere gratitude to him better half, family for their

acknowledgment and tolerance during the conversation I had with her on inquire

about work and postulation readiness.

I am incredibly appreciative to my folks for their affection, supplications,

thinking about instructing and setting me up for my future. Likewise I express my

gratitude to my sister and sibling for their help and important petitions. My

Special much gratitude goes to my companions and cohorts for the unmistakable

fascination appeared to finish this postulation effectively.

Finally, my thanks go to all the people who have supported me to complete the

research work directly or indirectly.

PREETI SRIVASTAVA
 TABLE OF CONTENT

Cetificate
r

Plagiarism Ce tificate
r

De laration
c

Acknowle gem nt
d e

Sr. No Topic Page no.

1. Introduction 1

2. Literature Review 29

3. Objective of the Research 41

4. Research Methodology 43

5. Problems /Limitations 49

6. Data Analysis and Interpretation 51

7. Findings 80

8. Suggestions/Recommendation 84

9. Conclusions 86

10. Bibliography 88

11. Annexure 95

                  
INTRODUCTION

1
 INTRODUCTION

The rapid spread o f the unprecedented COVID‐19 pandemic has put the wo rld in y y

jeo pardy and changed the glo bal o utlo o k unexpectedly. Initially, the SARS‐Co V‐2
y y y y y y

virus, which caused the COVID‐19 o utbreak triggered in Wuhan city, Hubei pro vince y y

o f China in December 2019, and with time it spread all o ver the glo be. This pandemic
y y y

is no t o nly a glo bal health emergency but also a significant glo bal eco no mic
y y y y y y y

do wnturn to o . As many co untries ado pt strict quarantine po licies to fight the unseen
y y y y y y y

pandemic, their eco no mic activities are suddenly shut do wn. Transpo rts being limited
y y y y

and even restricted amo ng co untries have slo wed do wn glo bal eco no mic activities. y y y y y y y

Mo st impo rtantly, co nsumers and firms have prevented their usual co nsumptio n
y y y y y

patterns due to the creatio n o f panic amo ng them and created market abno rmality.
y y y y y

Uncertainty and risk created due to this pandemic, causing significant eco no mic y y y

impact all o ver the glo be affecting bo th advanced and emerging eco no mies such as
y y y y y

the United States, Spain, Italy, Brazil, and India. In this co ntext, the financial market y

has respo nded with dramatic mo vement and adversely affected. Eco no mic turmo il
y y y y y

asso ciated with COVID‐19 has affected the financial market severely which includes
y

bo th sto ck and bo nd markets. Due to this pandemic, there is a large fall in the price o f
y y y y y

o il and a large increase in the price o f go ld. Firzli (2020), refers to this pandemic as
y y y y

“the greater financial crisis.” In many co untries, businesses are highly indebted, weak y

co mpanies are further destabilized, and co rpo rate debt stands at a very high level. The
y y y

glo bal financial market risk has increased substantially in respo nse to the pandemic
y y y

(Zhang et al., 2020). Investo rs are suffering sufficient lo sses due to fear and y y y

uncertainty. Fo r example, due to the impact o f this pandemic, the glo bal sto ck market
y y y y y

has struck o ut abo ut US$6 trillio n in 1 week fro m 24 to 28 February (Ozili & Arun,
y y y y y

2020). The market value o f standard & po o r (S&P) 500 indexes declined to 30% y y y y

2
since the COVID‐19 o utbreak. Acco rding to Azimili (2020) increased uncertainty
y y y

affects the required rate o f return and thus the current market value o f sto cks.
y y y

Altho ugh there is limited current literature related to the impact o f COVID‐19 o n the
y y y y

financial market, the existing empirical studies have pro vided an exciting result. Baret y

et al. (2020), in their research o n financial markets and banks, have fo und that there is y y

a fall in the share o f o il, equity, and bo nds thro ugho ut the wo rld as a result o f the
y y y y y y y

COVID‐19 pandemic. So cial distancing measures adversely affected the pro ductivity
y y

o f the co mpanies and bro ught abo ut a decrease in revenue, higher o perating co st, and
y y y y y y

also cash flo w challenges to the co mpanies. In Euro pe, the Financial Times Sto ck
y y y y y y

Exchange 100 index witnessed a sharp 1‐day fall since 1987 (BBC News, 2020). Igwe

(2020) is o f the view that the sho ck fro m this pandemic can increase the vo latility that
y y y y

can negatively affect the eco no mic and financial system o f every co untry. Mo st o f y y y y y y

the develo ped and develo ping co untries' financial markets are adversely affected by
y y y

this unexpected pandemic. The leading eco no my o f the wo rld, the US sto ck market y y y y y

hit the circuit breaker mechanism fo ur times in 10 days in March 2020 (Zhang et al., y

2020). The sto ck market o f Euro pe and Asia has also jumped. United Kingdo m's
y y y y y

leading index FTSE has fallen mo re than 10% o n March 12, 2020 (Zhang et al., y y

2020). Vishno i and Mo o kerjee (2020) o bserved that the sto ck market in Japan had
y y y y y

dro pped mo re than 20% in December 2019. The sto ck market o f Spain, Ho ng Ko ng,
y y y y y y

and China also declined to 25.1, 14.75, and 12.1% in their price fro m March 8, 2020
y y y

to March 18, 2020 (Shehzad et al., 2020). In his study, also fo und a harmful impact o f
y y y y

the COVID‐19 o n sto ck returns o f the S&P 500 and an inco nsequential impact o n the
y y y y y

Nasdaq co mpo site index. Geo rgieva (2020) po inted o ut that the COVID‐19 pandemic
y y y y y

3
bro ught the entire glo be near to financial crises mo re hazardo us than Glo bal Crises
y y y y y y

2007–2008.

Gradually the wo rst effect o f the pandemic spread to the emerging eco no my to o . If
y y y y y y y

we co nsider the financial market o f the emerging eco no my a glo o my picture caught
y y y y y y

o ur eyes as this eco no my is wo rst‐hit by the co llapse o f o il prices. The o utbreak o f

y y y y y y y y y

the COVID‐19 pandemic makes this picture mo re critical. The to p leading emerging y y

eco no mies such as Brazil, Russia, and Mexico gradually mo ved to ward hard mo bility
y y y y y y

restrictio ns that will bring do wn the emerging eco no mies to a recessio n o f 1% in

y y y y y y y

2020 (Herfero , ). In So uth Ko rea, the Co ro navirus disease caused KOSPI to dro p
y y y y y y y

belo w 1,600 in their histo ry after 10 years (So , 2020). In China, higher uncertainty
y y y

due to COVID‐19 results in greater vo latility o f sto ck return (Leduc & Liu, 2020).
y y y y

The go vernment o f India anno unced Janata Curfew o n March 22, 2020 and lo ckdo wn
y y y y y y

po licy to maintain so cial distancing practice to slo w do wn the o utbreaks fro m March
y y y y y y y y

24, 2020. As the go vernment anno unced such a lo ckdo wn po licy, vario us eco no mic
y y y y y y y y

activities have been sto pped suddenly. The financial market o f India is witnessed y y

sharp vo latility as a result o f the disruptio n o f the glo bal market (Raja Ram, 2020).
y y y y y

As a result o f the fall o ut in the glo bal financial market, the Indian sto ck market also
y y y y y

witnesses sharp vo latility. It has also bo rne the brunt o f the COVID‐19 pandemic.
y y y y

There are two majo r sto ck indices in India—Bo mbay Sto ck Exchange (BSE), Sensex,
y y y y y

and Natio nal Sto ck Exchange (NSE), Nifty. If we lo o k at the Bo mbay Sto ck
y y y y y y

Exchange there is a dro p in the Sensex index to 13.2% o n March 23, 2020. It was the y y y

highest single they fall after the news o f the Harshad Mehta Scam, April 28, 1991 y

(Mandal, 2020). Similarly, Nifty has also declined to almo st 29% during this perio d. y y y y

4
So me eco no mists have co nsidered the impact o f COVID‐19 o n the Indian sto ck
y y y y y y y

market as a “black swan event,” that is, the o ccurrence o f a highly unanticipated event y y

with an extremely bad impact. Due to the lo ckdo wn po licy ado pted by the y y y y y

go vernment, the facto ries have reduced the size o f their labo r fo rce as well as
y y y y y

pro ductio n level which disrupted the supply chain. Again, because o f the uncertainty
y y y

prevailing amo ng mankind, peo ple also reduce their co nsumptio n habits leading to y y y y y y

demand‐side sho ck. Studies have also fo und that the entire previo us pandemic had y y y y

affected o nly the demand chain. But this COVID‐19 pandemic has affected bo th the
y y

demand chain and supply chain.

Despite the severa l litera tures o n the impa ct o f COVID‐19 o n the sto ck ma rket o f the m m y m y y y m y

entire eco no my, there is limited study o n it especia lly in the ca se o f a n emerging
y y y m m y m

eco no my. To shed light o n this a spect, this pa per a ttempts to investiga te the impa ct
y y y y m m m y m m

o f COVID‐19 o n the two impo rta nt sto ck ma rket o f India . Glo sten–Ja ga nna tha n–
y y y y m y m y m y m m m m

Runkle (GJR) genera lized a uto regressive co nditio na l hetero sceda sticity (GJR m m y y y m y m

GARCH) mo del is used to ma ke the study mo re significa nt in terms o f vo la tility in

y y m y m y y m

sto ck index prices due to the o utbrea k o f the pa ndemic a nd lo ckdo wn po licy a do pted
y y y m y m m y y y m y

by the India n Go vernment. Ma jo r findings o f the study revea l the vo la tile na ture o f
m y m y y m y m m y

BSE Sensex a nd NSE Nifty, the two pro minent sto ck ma rket o f India . m y y y m y m

Altho ugh a la rge number o f studies ha ve been ca rried o ut o n the gro wth a nd
y m m y m m y y y m

fina ncia l perfo rma nce o f mutua l funds in India (Bo sto n Ana lytics, 2010), (PWC,
m m y m y m m y y m

2013), no t much light ha s been shed o n the ca uses fo r the lo w penetra tio n o f mutua l
y m y m y y m y y m

funds o utside the to p fifteen cities. There is resea rch lo o king a t the ca uses fo r the
y y m y y m m y

va ria tio n o f mutua l funds industry a cro ss develo ped co untries. Ho wever, such wo rk
m m y y m m y y y y y

typica lly do es no t differentia te between the va rio us regio ns o f the na tio ns included
m y y m m y y y m y

5
(Kho ra na et a l., 2005). While such studies ma y help po licyma kers in determining the
y m m m m y m

idea l inter-regio na l ma cro eco no mic co nditio ns to develo p a hea lthy mutua l fund
m y m m y y y y y y y m m m

industry, they ra rely expla in the differences in mutua l fund penetra tio n within a m m m m y m

co untry. It is well kno wn tha t mutua l funds o ffer their investo rs benefits difficult to
y y m m y y y

o bta in thro ugh o ther investment vehicles. Benefits such a s diversifica tio n, a ccess to
y m y y m m y m y

equity a nd debt ma rkets a t lo w tra nsa ctio n co sts a nd liquidity a re so me such

m m m y m m y y m m y

a dva nta ges. Given these benefits, o ne wo uld ima gine tha t India n ho useho lds,
m m m y y m m m y y

cha ra cterized with gro ss do mestic sa vings o f clo se to 28% o f the to ta l GDP (Wo rld
m m y y m y y y y y m y

Ba nk, 2012), o ne o f the highest in the wo rld, wo uld flo ck to invest their sa vings in
m y y y y y y m

mutua l funds. Ho wever, a recent repo rt (PWC, 2013) po ints o ut tha t the distributio n
m y m y y y m y

o f a ssets under ma na gement (AUM) a cro ss cities is highly skewed in fa vo r o f the

y m m m m y m y y

to p fifteen (T-15) cities o f India . The T-15 cities co ntribute to 87% o f the entire
y y m y y y

AUM in the co untry. Even within the T-15 cities, the to p five cities (Mumba i, Delhi, y y m

Chenna i, Ko lka ta a nd Ba nga lo re) co ntribute 85% o f the entire AUM a t the T15 level
m y m m m m m y y y m

i.e. 74% o f the entire AUM in the co untry (PWC, 2013). It is impo rta nt to inquire y y y m y

into the ca uses o f this skewed investo r pa rticipa tio n ra te. There a re severa l fa cto rs
y m y y m m y m m m m y

which co uld po ssibly expla in this va ria tio n. Cro ss-co untry studies ha ve po inted o ut
y y m m m y y y m y y

tha t la ws, regula tio ns a nd go verna nce, supply side fa cto rs, dema nd side fa cto rs a nd
m m m y m y m m y m m y m

techno lo gica l issues co uld a ll a ffect the size o f mutua l industry in a given co untry
y y m y m m y m m y

(Kho ra na et a l. 2005). So me o f these fa cto rs such a s la ws a nd regula tio ns a re no t

y m m m y y m y m m m m y m y

a pplica ble to o ur study since they a re unifo rm a cro ss India a nd do no t va ry fro m o ne

m m y y m y m y m m y y m y y

sta te to a no ther. The fa cto rs tha t we fo cus in o ur study a re therefo re ma inly supply
m y m y m y m y y m y m

a nd dema nd side fa cto rs. Our study divides the supply side i.e. delivery mecha nisms
m m m y m

into three a lterna tive cha nnels: independent fina ncia l a dviso rs (IFAs), ba nks a nd in-
y m m m m m m y m m

ho use distributo rs. We fo cus o n these delivery cha nnels used by India n mutua l fund
y y y y m m m

6
ho uses. To begin with, we do cument rela tio nships between demo gra phic a nd
y y y m y y m m

eco no mic va ria bles o n o ne ha nd a nd mutua l fund penetra tio n o n the o ther to discern
y y m m y y m m m m y y y y

the underlying fa cto rs which co uld help expla in the success o f a mutua l fund in a m y y m y m m m

given pa rt o f the co untry. We do this using da ta co llected fro m a ll the mutua l funds
m y y y m m y y m m

a ggrega ted a t district levels a nd by o bserving time-series da ta . We next survey

m m m m y m m

India n mutua l fund ho uses to identify the regula to ry a nd distributio na l cha llenges
m m y y m y m y m m

tha t a cco rding to them ho ld them ba ck fro m increa sing their business in a rea s which
m m y y y m y m m m

presently ha ve a lo w number o f mutua l funds. We a lso inquire into huma n reso urce
m m y y m m y y m y

pro blems tha t co uld be ho lding ba ck their penetra tio n even if the fund ho uses did
y m y y m m y y

wa nt to increa se their presence in the less develo ped districts o f India . Our study
m y m y y m

brings o ut severa l interesting results which wo uld be o f co nsidera ble use to the fund
y m y y y m y

ho uses, regula to rs, fina ncia l pra ctitio ners a nd scho la rs in genera l. We co nfirm tha t
y m y m m m y m y m m y m

bulk o f the mutua l fund sa les o utside the T-15 cities a re ca used by IFAs. We a lso
y m m y m m m y

find tha t demo gra phic a nd so cia l indica to rs such a s a dult litera cy a nd ba nk
m y m m y m m y m m m m m

penetra tio n a re o nly wea kly co rrela ted with mutua l fund penetra tio n in a given a rea .
m y m y m y m m m y m m m

Area s with the highest mutua l fund presence tend to be tho se where the pro po rtio n o f
m m y y y y y y

ho useho lds with mo re tha n Rs. 300,000 inco me a nd IFA presence ha ppen to
y y y m y m m y

co incide. We a lso find tha t IFAs do no t usua lly fo cus o n tho se a rea s which ha ve the
y m y m y y m y y y m m m

highest pro pensity to invest in mutua l funds (a s reflected by the districts with the
y y m m

highest pro po rtio n o f the fa milies ea rning mo re tha n Rs. 300,000 per a nnum). This
y y y y m m y m m

suggests tha t the present AUM levels ca n be increa sed by severa l percenta ge po ints
m m m m m y

if IFAs were ma de to a pply their effo rts in the right a rea s. m y m y m m

7
The Sto ck ma rket a ssumes a critica l functio n in the develo pment o f a ssembling a nd
y m m m m y y y m m

a dministra tio n businesses o f the na tio n. The pro fo und a nd fluid va lue ma rkets ha ve
m m y y m y y y m m m m

a tra nscendent a nd tena cio us effect o n fina ncia l executio n. It cha nnelizes the reserve
m m m m y y m m y m

funds o f peo ple in genera l into va lue specula tio ns to help the flo urishing eco no my.
y y m y m m y y y y y

Sto ck va lue develo pments ha ve a significa nt menta l effect o n the individua l

y m y m m m m y m

fina ncia l specia list a nd o rga niza tio ns. The securities excha nge is the na rra tive o f the
m m m m y m m y m m m y

huma n co nduct tha t is lia ble fo r o verco mpensa tio n in the two wa ys (kla rma n 1998).
m y m m y y y m y y m m m

The presenta tio n o f the mo neta ry cha nge mea sure in mid 90s usurped in critica l m y y y m m m m

fina ncia l a dva ncement o f India a nd the securities excha nge sta yed a s a significa nt
m m m m y m m m m m m m

cha nnel fo r the dra wn o ut a sset o bjective fo r the co rpo ra te. Liquidity a nd ca pita l
m y m y m y y y y m m m m

tha nkfulness pulled in the specula to rs bo th institutio na l a nd reta il fina ncia l

m m y y y m m m m m

specia lists. No twithsta nding the securities excha nge develo pment, excepting
m y m m y

institutio na l fina ncia l specia lists bo th ho megro wn a nd unfa milia r, no t ma ny reta il

y m m m m y y y m m m y m m

specula to rs rema in to pro fit o ut o f the bla st. The sma ll two percent o f the India n
m y m y y y y m m y y m

po pula ce in va lue ma rket co o pera tio n reflects dissa tisfa ctio n o f the reta il fina ncia l
y m m m y y m y m m y y m m m

specia lists with the ma rket. The custo ma ry specula tio ns o f a cco unt, fo r exa mple,
m m y m m y y m y y m

Efficient Ma rket Hypo theses (EMH) a nd Ra ndo m Wa lk Theo ry (RWT) expect tha t m y m m y m y m

specula to rs settle o n sa ne cho ices to a ugment their pro fits. No twithsta nding, these
m y y m y y m y y m

hypo theses co uldn't fa ce the investiga tio n a nd tested fo r the a bsence o f functio na l
y y m m y m y m y y m

po int o f view o n the securities excha nge. The peculia rities, fo r exa mple, co st o ver
y y y m m y m y y

respo nses a nd o vera bunda nce insta bility were no t cla rified by the o ccupa nts o f EMH
y m y m m m y m y m y

hypo thesis. Ma lkiel (1973) co ntended tha t depicting o f individua ls settling o n

y m y m y m y

rea so na ble mo neta ry cho ices dependent o n a ccessible ma rket da ta is ba sica lly a
m y m y m y y m m m m m m m

no nexistent idea l. So cia l mo ney co nso lida tes intellectua l bra in resea rch a nd
y m y m y y y m m m m m

o rdina ry mo neta ry hypo theses to unwind the po tentia l rea so ns why individua ls settle
y m y m y y y m m y m

8
o n no nsensica l mo neta ry cho ices. It lea ves fro m the inha bita nts o f tra ditio na l
y y m y m y m y m m y m y m

hypo thesis tha t enthusia stic co mpo nents do n't impa ct individua ls while settling o n
y m m y y y m m y

mo neta ry decisio ns. So cia l a cco unt tries to cla rify the unrea so na ble a nd o ne-sided
y m y y m m y y m m y m m y

co nduct thro ugh the utiliza tio n o f intellectua l bra in resea rch. It is seen tha t a n
y y m y y m m m m m

individua l o r the reta il specula to r's decisio n is co ntro lled by fa cto rs extra o rdina ry to
m y m m y y y y m y m y m y

the specific dyna mic setting. So cia l a cco unt, no twithsta nding its restrictio ns, gives m y m m y y m y

impo rta nt bits o f kno wledge to mo neta ry wa rning specia list o rga niza tio ns a nd
y m y y y y m m m y m m y m

stra tegy pro ducers to co mprehend the reta il specula to rs to wa rds the va lue venture.
m y y y m m y y m m

The rise o f the Libera liza tio n, Priva tiza tio n, Glo ba liza tio n (LPG) time a nd ensuing
y m m y m m y y m m y m

mo neta ry cha nges in India sta rted in 90s, with a n o bjective o f ha nding the eco no my
y m m m m m y y m y y

o ver to mo re ma rket a rra nged, welco med giga ntic venture fro m Do mestic a nd
y y y m m m y m y y m

Fo reign specula to rs. The effect o f the cha nges expa nded the po ssibilities o f securities
y m y y m m y y

excha nge a s Po tentia l Avenue fo r a bunda nce a mplifica tio n. No netheless, truly, the
m m y m y m m m m y y

reta il fina ncia l specia lists rema in to lo se their a bunda nce in a ny co mmo n eco no mic
m m m m m y y m m m y y y y

situa tio ns. Despite the fa ct tha t the a dministra tive instrument sta rted by the SEBI
m y m m m m m

(Security tra de lea ding bo dy o f India ) to check the deceitful pra ctices a nd m m y y m y m m

co mpelling clea ring by mo ving settlement, the co o pera tio n o f reta il specula to rs ha s
y m y y y m y y m m y m

no t been empo wering since the disintegra tio n o f the venture wa s the significa nt
y y m y y m m

rea so n. The custo ma ry mo neta ry specula tio ns depended o n the structure tha t
m y y m y m m y y m

specula to rs demo nstra tio n rea so na bly a nd think a bo ut a ll the a ccessible da ta in

m y y m y m y m m m y m m m m

crea tio n the mo neta ry cho ice, which a re the significa nt o ccupa nts o f the effective
m y y m y m m y m y

ma rket hypo thesis. It likewise a ccepts tha t the ma rket is stra ightfo rwa rd a nd do esn't
m y m m m m y m m y

experience the ill effects o f a ny da ta imba la nce. The cho ppiness lo o ked by the y m m m m m y y y

ca pita l ma rket ca n't be cla rified by the effective ma rket specula tio ns since it a ccepts
m m m m m m m y m

9
specula to rs a ct sa nely. The disintegra ting reta il specula to r ba se is ba sic since the
m y m m m m m y m m

ca pita l ma rket necessity co ntributed by ho megro wn investment funds ca n check the

m m m y y y m

trip o f ca pita l. Further, the fa ke unpredicta bility ca n be reduced a nd co ntro lled with
y m m m m m m y y

bigger co o pera tio n o f ho megro wn reta il specula to rs Ho wever, ma ny explo ra tio n

y y m y y y y m m y y m y m y

exa mines demo nstra ted tha t the reta il fina ncia l specia lists a ct unrea so na bly in
m y m m m m m m m m y m

crea tio n the mo neta ry cho ices beca use o f menta l fa cto rs, fo r exa mple, feelings a nd
m y y m y m y m m y y m m

psycho lo gica l predispo sitio ns. Co nduct mo ney withdra ws fro m the custo ma ry
y y m y y y y m y y m

o bjectivity hypo thesis a nd co nsiders the menta l va ria bles which inco rpo ra te the
y y m y m m m y y m

cha ra cter a ttributes a nd the demea no r predispo sitio n. The use o f the cha ra cter
m m m m m y y y y m m

cha ra cteristic hypo thesis picked up mo re extensive use a mo ng the mo neta ry

m m y y m y y m

scientist. Numero us investiga tio ns ha ve been led utilizing the cha ra cter qua lity a s the y m y m m m m m

va ria ble to survey the level o f cha ra cter cha ra cteristic influencing the individua l
m m y y m m m m m

co nduct. La rge five cha ra cter qua lity co mpo nents a nd specula to r menta lity
y m m m m y y m m y m

inclina tio n exa mina tio n o f the fina ncia l specia lists a ddress the misrepresenta tio ns in
m y m m y y m m m m m y

dyna mic. The investiga tio n is led in Luckno w lo ca le, Utta r Pra desh, India where the
m m y y y m m m m

specula to rs a re no t mo neta rily educa ted eno ugh to ha ve the o ptio n to settle o n their
m y m y y m m y y m y y y y

cho ices a ll a lo ne a nd co mprehend the ma rket develo pments. Hencefo rth, the current
y m m y m y m y y

exa mina tio n "Specula to rs Beha vio r To wa rds Equity Investment" On Beha vio ra l
m m y m y m y y m m y m

a cco unt endea vo rs to co ntempla te the specula to r co nduct thinking a bo ut the

m y m y y y m m y y m y

cha ra cter qua lities a nd the menta lity predispo sitio n o f the reta il specula to rs in
m m m m m y y y m m y

Luckno w District, Utta r Pra desh, India . The experiences wo uld help the fina ncia l
y m m m y m m

specia lists to o utline rea so na ble metho do lo gy to relieve the da nger to sta y dyna mic
m y y m y m y y y y m y m m

in the va lue ma rket a nd o ffer directio n to the mo neta ry specia list o rga niza tio ns a nd
m m m y y y y m m y m m y m

the a rra ngement pro ducers to expa nd the reta il specula to r ba se.
m m y y m m m y m

10
During the pa st yea rs, the Equity Ma rkets ha ve been cha ra cterized by increa sing m m m m m m m

vo la tility a nd fluctua tio ns. The integra ted fina ncia l ma rkets a re increa singly expo sed
y m m m y m m m m m m y

to ma cro eco no mic sho cks which a ffect ma rkets o n a glo ba l sca le. Fro m a n
y m y y y y m m y m y m m y m

investo r’s po int o f view, the vulnera bility o f ma rkets ha s led to increa sed uncerta inty
y y y m y m m y m m

a nd unpredicta bility, a s ma rket co nditio ns ca nno t a lwa ys be judged with the help o f
m m m m y y m y m m y

sta nda rd fina ncia l mea sures a nd to o ls. Ma rket pa rticipa nts ha ve fo r a lo ng time
m m m m m m y y m m m m y m y

relied o n the no tio n o f efficient ma rkets a nd ra tio na l investo r beha vio ur while
y y y y m m m y m y m y

ma king fina ncia l decisio ns. Ho wever, the idea o f fully ra tio na l investo rs who
m m m y y m y m y m y y

a lwa ys ma ximize their utility a nd demo nstra te perfect self-co ntro l, is beco ming
m m m m y m y y y

ina dequa te. During recent yea rs, exa mples o f ma rket inefficiency in the fo rm o f
m m m m y m y y

a no ma lies a nd irra tio na l investo r beha vio ur ha ve been o bserved mo re frequently.

m y m m m y m y m y m y y

The Glo ba l Fina ncia l Crisis 2008 – 2009 bega n with the bursting o f the United
y m m m m y

Sta tes ho using bubble a nd high defa ult ra tes o n “subprime” a nd Adjusta ble Ra te
m y m m m y m m m

Mo rtga ges (ARM), beginning in a ppro xima tely 2005-2006. The Glo ba l Fina ncia l
y m m y m y m m m

Crisis o f 2008-2009, beca me pro minently visible in September 2008, with fa ilures o f
y m y m y

la rge fina ncia l institutio ns in the United Sta tes a nd it ra pidly evo lved into a glo ba l
m m m y m m m y y m y m

credit crisis, fo llo wing the subprime mo rtga ge crisis. On September 14, 2008, it wa s y y y m m

a nno unced tha t Lehma n Bro thers wo uld file fo r ba nkruptcy a fter the Federa l
m y m m y y y m m m

Reserve Ba nk declined to pa rticipa te in crea ting a fina ncia l suppo rt fa cility fo r m y m m m m m m y m y

Lehma n Bro thers. The sa me da y, the sa le o f Merill Lynch to Ba nk o f America wa s

m y m m m y y m y m m

a nno unced. The beginning o f the week wa s ma rked by extreme insta bility in glo ba l
m y y m m m y m

sto ck ma rkets. Sto ck ma rkets cra shed dra ma tica lly a cro ss significa nt cro ss-sectio n
y m y m m m m m m y m y y

o f sto ck ma rkets, clo se o n the heels o f the a nno uncement o f Lehma n Bro thers
y y m y y y m y y m y

Ba nkruptcy. Index Va lue o f Do w Jo nes o f US, FTSE 100 o f UK, S&P TSX o f
m m y y y y y y

Ca na da a nd MIBTEL o f Ita ly drifted sha rply by 4%, NIKKEI o f Ja pa n a nd

m m m m y m m y m m m

11
MIBTEL o f Fra nce plunged by 5%, a nd BSE India by 3%. Cra shes were driven by
y m m m m

pa nic a s much a s by underlying eco no mic fa cto rs. Sto ck ma rket cra shes a re in fa ct
m m m y y m y y m m m m

so cia l pheno mena where externa l eco no mic events co mbine with cro wd beha vio ur
y m y m m y y y y m y

a nd psycho lo gy in a po sitive feedba ck lo o p where selling by so me ma rket

m y y m y m y y y m

pa rticipa nts drives mo re pa rticipa nts to sell. (Ya ho o fina nce.co m)

m m y m m y m y y m y

12
Wha t is Beha vio ura l Fina nce?m m y m m

Mo st peo ple kno w tha t emo tio ns a ffect investment decisio ns. Peo ple in the wo rld o f
y y y m y y m y y y y

investments co mmo nly ta lk a bo ut the ro le greed a nd fea r in driving sto ck ma rkets. y y m m y y m m y m

Beha vio ura l Fina nce extends this a na lysis to the ro le o f bia ses in decisio n ma king,
m y m m m m y y y m y m

such a s the use o f simple rules o f thumb fo r ma king co mplex investment decisio ns.
m y y y m y y

In o ther wo rds, Beha vio ura l Fina nce uses psycho lo gy to understa nd ho w peo ple
y y m y m m y y y m y y

ma ke investing decisio ns. Huma n Na ture usua lly serves us well in co ping with da y-
m y m m m y m

to -da y life. But it ca n a lso get in the wa y o f a chieving success in lo ng-term

y m m m y m y m y

a ctivities, such a s sa ving a nd investing. There is no ‘cure’ fo r huma n na ture, but

m m m m y y m m

grea ter a wa reness o f bia ses ca n help yo u, a nd yo ur a dviser, a vo id ma jo r pitfa lls.

m m m y m m y m y m m y m y m

Beha vio ura l Fina nce ca n a lso be defined a s the study o f investo rs’ a ttitudes to wa rds
m y m m m m y m y y m y m

investing a nd its effect o n fina ncia l ma rkets. In a n a rticle in, New Yo rk Times da ted
m y m m m m m y m

06/07/98, the writer sa ys tha t Beha vio ura l Eco no mists ho ld the view tha t investo rs m m m y m y y y m y

o verva lue priva te info rma tio n a nd underva lue public info rma tio n. It a ttributes the
y m m y m y m m y m y m

gro wing impo rta nce o f ‘fina ncia l emo tio ns’ o f the a vera ge citizen to ‘trickle do wn’
y y m y m m y y y m m y y

to fina nce. So phistica ted a nd impo rta nt fina ncia l decisio n-ma king is no t restricted
y m y m m y m m m y m y

a ny mo re to the rich a nd the elite. It is no w the individua l investo rs who frequently

m y y m y m y y

ma ke decisio ns rega rding credit ca rd expenditures, mutua l fund investments,

m y m m m

retirement pla ns, mo rtga ges, ho me equity lo a ns etc. It is thro ugh these munda ne, m y m y y m y m

da ily cho ices tha t a vera ge individua l investo rs directly a ffect ma rket co nditio ns,
m y m m m m y m m y y

such a s infla tio n ra tes, interest ra tes, mo ney supply etc.

m m y m m y

Mo reo ver, a s the fina ncia l ma rkets a re beco ming mo re ‘peo pled’, the beha vio ura l
y y m m m m m y y y m y m

pa tterns o bserved in individua l investo rs; do ma nifest itself o n a wider sca le in the
m y m y y m y m m

o vera ll sto ck ma rket. The individua l investo rs’ a ttitudes a nd o pinio n to wa rds
y m y m m y m m y y y m

investing ha ve a significa nt impa ct o n the sto ck ma rket tha t ca nno t be expla ined by
m m m m y y m m m y m

13
tra ditio na l mo dels. It ca n lea d to pricing a no ma lies a nd unexpla ina ble mo vements in
m y m y m m y m y m m m m y

sto ck prices. Sto cks, tha t were ma rket o utca sts, go o n to beco me ma rket da rling in
y y m m y m y y y y m m

the spa n o f few mo nths a nd vice versa . m y y m m

A review o f the existing techniques suggests tha t severa l to o ls a re a va ila ble to y m m y y m m m m y

investo rs fo r a na lysing a nd fo reca sting a firm’s pro fita bility. These to o ls lo o k a t

y y m m m y m m y m y y y y m

histo ric price pa tterns, pa st fina ncia l perfo rma nce a nd a cco unting ra tio s to infer
y m m m m y m m m y m y y

future sto ck price mo vements. No ne o f them ta kes into a cco unt the size, na ture a nd
y y y y m y m y m m

impa ct o f huma n beha vio ur in the investment pro cess. Kiesler, Co llins a nd Miller
m y m m y y y m

(1969) define a ttitude a s a lea rned predispo sitio n to respo nd in a co nsistently m m m m y y y y m y

fa vo ura ble o r unfa vo ura ble ma nner with respect to a given o bject.
m y m y m y m m y m y

THE NATURE AND DIMENSIONS OF ATTITUDE

Attitudes ca n be cha ra cterized in three wa ys. First, investo rs tend to persist unless m m m m y y

so mething is do ne to cha nge them. Seco nd, a ttitudes ca n fa ll a nywhere a lo ng a

y y y m y m m m m m y m

co ntinuum fro m very fa vo ura ble to very unfa vo ura ble. Third, a ttitudes a re directed
y y m y m y m y m m m

to wa rd so me o bject a bo ut which a perso n ha s feelings a nd beliefs. (Orga niza tio na l

y m y y m y m y m m m m y m

Beha vio ur, N.K. Ja in) m y m

Co mpo nents o f Attitudes: Attitudes ca n be bro ken into three ba sic co mpo nents:
y y y m y y m y y

emo tio na l, info rma tio na l a nd beha vio ura l. The Emo tio na l Co mpo nent invo lves
y y m y m y m m m y m y y m y y y

the perso n’s feelings o r a ffect, po sitive, neutra l o r nega tive, to wa rds a n o bject.
y y m y m y m y m m y

The Info rma tio na l Co mpo nent co nsists o f the beliefs a nd info rma tio n the y m y m y y y y m y m y

individua l ha s a bo ut the o bject. It ma kes no difference whether o r no t this m m m y y m y y y

info rma tio n is empirica lly rea l o r co rrect. A superviso r ma y believe tha t two weeks
y m y m m y y y m m y

o f tra ining is necessa ry befo re a wo rker ca n effectively co nduct a pa rticula r pro cess.
y m m y m y m y m m m y

In rea lity, the a vera ge wo rker ma y be a ble to perfo rm successfully a fter o nly fo ur
m m m y m m y y m y y

14
da ys o f tra ining. Yet the info rma tio n the superviso r is using (tha t two weeks is
m y m y m y y m y

necessa ry) is the key to his a ttitude a bo ut tra ining.

m y m m y m

The Beha vio ura l Co mpo nent co vers a perso n’s tendencies to beha ve in a pa rticula r
m y m y y y m y y m m m m

wa y to wa rds a n o bject. It is impo rta nt to remember tha t o f the three co mpo nents o f
m y m m y y m y m y y y y

a ttitudes, o nly the beha vio ura l co mpo nent ca n be directly o bserved. One ca nno t see
m y m y m y y m y m y

a no ther perso n’s feelings (the emo tio na l co mpo nent) o r beliefs (the info rma tio na l
m y y y y m y y y y m y m

co mpo nent). These two co mpo nents ca n o nly be inferred.

y y y y y m y

Perceptio n y

Perceptio n is to reco gnize tha t it is a unique interpreta tio n o f situa tio n a nd no t a n

y y y m m m y y m y m y m

exa ct reco rding o f it. Perceptio n gives a picture tha t ma y be quite different fro m
m y y y m m m y

rea lity. An investo r’s perceptio n ca n be tho ught o f a s a ‘filter’. The filter tells yo u
m y y m y y m m y

which stimuli to no tice a nd which to igno re, which to lo ve a nd which to ha te.

y y m y y y y m y m

15
Investo r Sentiment y

Investo r Sentiment Mea sures a re widely used in pra ctice. Po liticia ns ba se their
y m m m y m m

decisio ns o n co nsumer sentiment (Do minitz a nd Ma nski 2004), Sentiment

y y y y m m

Mea sures a re widely discussed in the media (Abeter 2006), Sto ck Excha nges
m m m y m

pro vide sentiment mea sures o n their ho mepa ges (web pa ge o f Deutsche Bo rse
y m y y m m y y

Gro up). Furthermo re, Sentiment Mea sures a re used in pra ctice by severa l Fund
y y m m m m

Ma na gers, who cla im tha t sentiment pla ys a n impo rta nt ro le in their investment
m m y m m m m y m y

decisio n pro cess. y y

Investo r Sentiment is therefo re useful fo r two rea so ns. First, studying ho w a gro up o f
y y y y m y y m y y

investo rs fo rm expecta tio n o r tra de, co ntribute to the gro wing litera ture o f investo r
y y m y y m y y y m y y

beha vio r. Seco nd, severa l empirica l studies sho w tha t Investo r Sentiment Mea sures
m y y m m y m y m

a re useful to predict the future develo pment o f sto ck returns. Investo r Sentiment is
m y y y y y

usua lly defined a s the o pinio n o f a gro up o f investo rs a bo ut the future develo pment
m m y y y m y y y m y y

o f a n a sset o ver a specific time windo w. Fo r exa mple, a Sentiment Mea sure might
y m m y m y y m m m

ca pture whether individua l investo rs a re bullish o r bea rish fo r the sto ck ma rket o ver
m m y m y m y y m y

the next da y o r the next yea r. m y m

Shleifer (2000) mentio ns two ma jo r fo unda tio ns o f Beha vio ra l Fina nce: Limited y y m y y m y y m y m m

Arbitra ge a nd Investo r Sentiment. Investo r Sentiment is ma inly driven by two

m m y y m y

pheno mena : the representa tiveness heuristic, i.e the tendency o f peo ple to view
y m m y y y

events a s representa tive o f so me specific cla ss a nd igno re the la ws o f pro ba bility in

m m y y m m y m y y m

the pro cess, a nd co nserva tism, which lea ds peo ple to a slo wer upda ting o f mo dels in
y m y m m y y m y m y y

the fa ce o f new evidence tha n is necessa ry. These two drivers result in o verrea ctio n
m y m m y y m y

a nd under rea ctio n o f investo rs o n sto ck ma rkets.

m m y y y y y m

Investment

16
An investment is a co mmitment o f funds ma de with the expecta tio n o f po sitive ra te m y y m m y y y m

o f returns. If the investment is pro perly underta ken, the return will be
y y m

co mmenLuckno we with the risk the investo r a ssumes (Ro na ld J. Jo rda n, 1975).
y y y m y m y m

Investment is the purcha se by a n individua l o r institutio na l investo r o f a fina ncia l o r m m m y y m y y m m m y

rea l a sset tha t pro duces a return pro po rtio n to the risk a ssumed o ver so me future
m m m y m y y y y m y y

investment perio d. (F. Amling 1995). y

Co ncepts o f Investment
y y

The fo llo wing a re the fo ur co ncepts o f Investment.

y y m y y y

Fina ncia l Investment m m

The a llo ca tio n o f mo neta ry reso urces to a ssets tha t a re expected to yield so me ga in
m y m y y y m y y m m m y y m

o r po sitive return o ver a given perio d o f time is kno wn a s Fina ncia l Investment.
y y y m y y y m m m

Eco no mic Investment y y

Acco rding to the Eco no mists, Eco no mic Investment mea ns the net a dditio ns to the
y y y y y y m m y y

eco no my’s ca pita l sto ck, which co nsists o f go o ds a nd services tha t a re used in the
y y m m y y y y y m m m

pro ductio n o f o ther go o ds a nd services.

y y y y y y m

Business Investment

Business Investment is investing mo ney in a priva te business. y m m

Genera l Investment m

So metimes, so me perso ns invest in a venues which do no t give a ny a dditio na l

y y y m y y m m y m

inco me such a s interest, dividend, rent etc., o r ca pita l gro wth. Such peo ple, ca lled
y m y m m y y m

“The ma n o n the street”, ma ke genera l investment. m y m m

TYPES OF INVESTMENT

 Direct Investment Alterna tives m

 Indirect Investment Alterna tives m

17
Direct Investment Alterna tives a re further divided into Fixed Principa l m m y m

Investments, Va ria ble Principa l Securities a nd No n-Security Investments. m m m m y

Indirect Investment Alterna tives a re tho se in which the individua l ha s no direct m m y m m y

ho ld o n the a mo unt he invests. It is a co ntributio n fro m the investo r sa vings to

y y m y m y y y y m y

certa in o rga niza tio ns such a s LIC, UTI. Etc. The Investo r ha s no direct respo nsibility
m y m m y m y m y y

o r ho ld o n the sa vings.
y y y m

Types o f Investo rs y y

The Investo rs a re divided into three ca tego ries, na mely, Co nserva tive Investo rs,
y m y m y m y m y

Specula tive Investo rs a nd Enterprising Investo rs. Co nserva tive Investo rs buy the
m y m y y m y

securities with a view to investing their sa vings in pro fita ble inco me ea rning m y m y m y m

securities. Specula tive Investo rs a re po pula rly kno wn a s Specula to rs. They buy m y m y m y m m y

securities with the ho pe to sell them in future a t a pro fit. The Enterprising Investo rs y y m m y y

a ssume risk very bo ldly a s well a s willingly. Their stra tegy is to get inco me a s well
m y m m m y y m

a s ca pita l a pprecia tio n. (Fina ncia l Ma na gement, by Peria sa my)

m m m m m y m m m m m m

Investment Alterna tives: An investo r ha s a wide a rra y o f investment a lterna tives m y m m m m y m m

a va ila ble. These ma y be cla ssified a s sho wn belo w:

m m m m m m y y

No n Ma rketa ble Fina ncia l Assets: A go o d po rtio n o f fina ncia l a ssets is

y m m m m y y y y y m m m

represented by No n-Ma rketa ble Fina ncia l Assets. These ca n be cla ssified into the y m m m m m m y

fo llo wing bro a d ca tego ries:

y y y m m y

Ba nk Depo sits is the simplest o f investment a venues. Opening a ba nk a cco unt a nd

m y y m m m m y m

depo siting mo ney in it, o ne ca n ma ke a Ba nk Depo sit. There a re va rio us kinds o f

y y y m m m m y m m y y

ba nk a cco unts, na mely, current a cco unt, sa vings a cco unt a nd fixed depo sit a cco unt.
m m y m m y m m y m y m y

Co mpa ny Depo sits mea n tha t ma ny co mpa nies, la rge a nd sma ll, so licit fixed
y m y m m m y m m m m y

depo sits fro m the public. Fixed Depo sits mo bilised by ma nufa cturing co mpa nies a re
y y y y m m y m m

regula ted by the Co mpa ny La w Bo a rd a nd fixed depo sits mo bilised by fina nce
m y m m y m m y y m

18
co mpa nies a re regula ted by the Reserve Ba nk o f India . Simila r to fixed depo sits o f
y m m m m y m m y y y

co mmercia l ba nks, Po st Office Time Depo sits ha ve been intro duced. The interest
y m m y y m y

ra tes o n POTDs a re, in genera l, slightly higher tha n tho se o n ba nk depo sits.
m y m m m y y m y

Pro vident Fund Depo sits is a ma jo r vehicle o f sa vings fo r sa la ried emplo yees
y y m m y y m y m m y

scheme. Ea ch emplo yee ha s a sepa ra te pro vident fund a cco unt in which bo th the
m y m m m m y m y y

emplo yer a nd the emplo yee a re required to co ntribute.

y m y m y y

Equity Sha res represent o wnership ca pita l. An equity sha reho lder ha s a n o wnership
m y m m m y m m y

sta ke in the co mpa ny. They bea r the risk a nd enjo y the rewa rds o f o wnership. Of a ll
m y m m m y m y y m

the fo rms o f securities, equity sha res a ppea r to be the mo st ro ma ntic. While fixed
y y m m m y y y m

inco me investment a venues ma y be mo re impo rta nt to mo st o f the investo rs, equity

y m m y y m y y y y

sha res seem to ca pture their interest the mo st. The po tentia l rewa rds a nd pena lties
m y m y y m m m m

a sso cia ted with equity sha res ma ke them a n interesting, even exciting, pro po sitio n.
m y m m m m y y y

Blue Chip Sha res refer the sha res o f la rge, well-esta blished a nd fina ncia lly stro ng m m y m m m m m y

co mpa nies with a n impressive reco rd o f ea rnings a nd dividends. Gro wth Sha res
y m m y y m m y m

refers to the sha res o f co mpa nies tha t ha ve a fa irly entrenched po sitio n in a gro wing
y m y y m m m m m y y m y

ma rket a nd which enjo y a n a bo ve a vera ge ra te o f gro wth a s well a s pro fita bility.
m m y m m y m m m y y m m y m

Inco me Sha res refer to the sha res o f co mpa nies tha t ha ve fa irly sta ble o pera tio ns,
y m y m y y m m m m m y m y

rela tively limited gro wth o ppo rtunities a nd high dividend pa yo ut ra tio s. Cyclica l
m y y y m m y m y m

Sha res mea ns sha res o f co mpa nies tha t ha ve a pro no unced cyclica lity in their
m m m y y m m m m y y m

o pera tio ns. Specula tive Sha res refer to the sha res tha t tend to fluctua te widely
y m y m m y m m y m

beca use there is a lo t o f specula tive tra ding in them.

m m y y m m

Bo nds o r Debentures represent lo ng-term debt instruments. The issuer o f a bo nd

y y y y m y

pro mises to pa y a stipula ted strea m o f ca sh flo w. Bo nds ma y be cla ssified into the
y y m m m m y m y y m m y

fo llo wing ca tego ries:

y y m y

19
Go vernment Securities: Debt Securities issued by the Centra l Go vernment, Sta te
y m y m

Go vernment a nd Qua si-Go vernment Agencies a re referred to a s Go vernment

y m m y m y m y

Securities o r Gilt-Edged Securities. Sa vings Bo nd is a po pula r instrument. RBI

y m y m y m

Sa vings Bo nds needs a minimum a mo unt o f investment o f Rs 1000 a nd the ma turity

m y m m y y y m m

perio d is 5 yea rs. It ha s two o ptio ns, na mely, Cumula tive Optio n a nd No n-
y m m y y y m m y m y

Cumula tive Optio n. PSU Bo nds: Public Secto r Underta kings (PSUs) issue
m y y y m

debentures tha t a re referred to a s PSU bo nds. There a re two bro a d va rieties o f PSU
m m y m y m y y m m y

bo nds, na mely, Ta xa ble Bo nds which ca nno t o ffer mo re tha n a certa in interest ra te
y m m m y m y y y m m m m

which is fixed by the Ministry o f Fina nce. Ta x Free Bo nds ha ve investo r-friendly y m m y m y

fea tures like there is no deductio n o f ta x a t so urce o n the interest pa id o n these

m y y y m m y y m y

bo nds. Debentures o f Priva te Secto r Co mpa nies: Debentures a re instruments mea nt

y y m y y m m m

fo r ra ising lo ngterm debt. The o bliga tio n o f a co mpa ny to wa rds its debenture
y m y y m y y m y m y m

ho lders is simila r to tha t o f a bo rro wer who pro mises to pa y interest a nd principa l a t
y m y m y m y y y y y m m m m

specified times. Preference sha res: Preference Sha res represent a hybrid security tha t m m m m

pa rta kes so me o f cha ra cteristics o f Equity Sha res a nd so me a ttributes o f Debentures.

m m y y m m y m m y m y

Mo ney Ma rket Instruments: Debt Instruments, which ha ve a ma turity o f less tha n

y m m m m y m

o ne yea r a t the time o f issue a re ca lled Mo ney Ma rket Instruments. These

y m m y m m y m

instruments a re highly liquid a nd ha ve negligible risk. The Mo ney Ma rket is

m m m y m

do mina ted by the Go vernment, Fina ncia l Institutio ns, Ba nks a nd Co rpo ra tes.
y m y m m y m m y y m

Individua l Investo rs sca rcely pa rticipa te in the Mo ney Ma rket Instruments which a re
m y m m m y m m

given belo w: y

Trea sury Bills a re the mo st impo rta nt Mo ney Ma rket Instrument. They do no t ca rry
m m y y m y m y y m

a n explicit interest ra te. The implicit yield o f a Trea sury Bill is a functio n o f the size
m m y m m m y y

o f the disco unt a nd the perio d o f ma turity. Co mmercia l Pa per represents sho rt-term,
y y m y y m y m m y

unsecured, Pro misso ry No te issued by firms tha t a re genera lly co nsidered to bey y y m m m y y

20
fina ncia lly stro ng. Co mmercia l Pa per usua lly ha s a ma turity perio d o f 90 to 180
m m y y m m m m m m y y y

da ys. It is so ld a t a disco unt a nd redeemed a t pa r. Hence the implicit ra te is a

m y m m y m m m m m

functio n o f the size o f disco unt a nd the perio d o f ma turity. Certifica tes o f Depo sit
y y y y m y y m m y y

(CDs) represent sho rt term depo sits which a re tra nsfera ble fro m o ne pa rty to y y m m m y y m y

a no ther. Ba nks a nd Fina ncia l Institutio ns a re the ma jo r issuers o f CDs. The principa l
m y m m m m y m m y y m

investo rs in CDs a re ba nks, fina ncia l institutio ns, co rpo ra te a nd mutua l funds. CDs
y m m m m y y y m m m

a re a po pula r fo rm o f sho rt-term investment fo r co mpa nies. The term Repo is used
m m y m y y y y y m y

a s a n a bbrevia tio n fo r Repurcha se Agreement o r Rea dy Fo rwa rd. A Repo invo lves a
m m m m y y m y m y m y y m

simulta neo us “sa le a nd purcha se” a greement. Reverse Repo s a re a sa fe a nd

m y m m m m y m m m m

co nvenient fo rm o f sho rt-term investment.

y y y y

Mutua l Funds m

A Mutua l Fund represents a vehicle fo r co llective investment. Instea d o f directly

m m y y m y

buying equity sha res a nd / o r fixed inco me instruments, yo u ca n pa rticipa te in m m y y y m m m

va rio us schemes flo a ted by mutua l funds which, in turn, invest in equity sha res a nd
m y y m m m m

fixed inco me securities. There a re three bro a d types o f Mutua l Fund schemes
y m y m y m

na mely, Equity Schemes, Debt Schemes a nd Ba la nced Schemes.

m m m m

Life Insura nce: In a bro a d sense, Life Insura nce ma y be viewed a s a n investment.
m m y m m m m m

Insura nce Premiums represent the sa crifice, the a ssured sum a nd the benefit. The
m m m m

impo rta nt types o f Insura nce Po licies in India a re Endo wment Assura nce po licy,
y m y m y m m y m y

Mo ney Ba ck Po licy, Who le Life Po licy a nd Term Assura nce Po licy.

y m y y y m m y

Rea l Esta te:Fo r the bulk o f the investo rs, the mo st impo rta nt a sset in their po rtfo lio
m m y y y y y m m y y y

is a residentia l ho use. In a dditio n to a residentia l ho use, the mo re a ffluent investo rs

m m y m y y m m y y m y

a re likely to be interested in the fo llo wing types o f rea l esta te - Agricultura l La nd,
m y y y y m m m m

Semi-Urba n La nd a nd Co mmercia l Pro perty. m m m y m y

21
Precio us Objects: Precio us Objects a re items tha t a re genera lly sma ll in size but
y y m m m m m

highly va lua ble in mo neta ry terms. So me impo rta nt precio us o bjects a re Go ld a nd

m m y m y y m y y m y m

Silver, Precio us Sto nes a nd Art Objects. y y m

Fina ncia l Deriva tives: A Fina ncia l Deriva tive is a n instrument who se va lue is
m m m m m m m y m

derived fro m the va lue o f a n underlying a sset. It ma y be viewed a s a side bet o n the
y m y m m m m m y

a sset. The mo st impo rta nt fina ncia l deriva tives fro m the po int o f investo rs a re:
m y y m m m m y y y y m

Futures Co ntra ct is a n a greement between two pa rties to excha nge a n a sset fo r ca sh

y m m m y m y m m m y m

a t a predetermined future da te fo r a price tha t is specified to da y. The pa rty, which

m m m y m m y m m

a grees to purcha se the a sset, is sa id to ha ve a lo ng po sitio n a nd the pa rty which

m y m m m y m m y y y m m

a grees to sell the a sset, is sa id to ha ve a sho rt po sitio n. An Optio n gives its o wner
m y m m y m m y y y y y

the right to buy o r sell a n underlying a sset o n o r befo re a given da te a t a

y y m m y y y m m m m

predetermined price. Optio ns represent a specia l kind o f fina ncia l co ntra ct under y m m y m m y m

which the o ptio n ho lder enjo ys the right (fo r which he pa ys a price), but ha s no
y y y y y m m m y

o bliga tio n, to do so mething.

y m y y y y

Wha t is a n Efficient Ma rket?

m m m

An Efficient Ma rket is o ne in which the ma rket price o f a security is a n unbia sed m y m y m m m

estima te o f its intrinsic va lue. Ma rket Efficiency is defined in rela tio n to info rma tio n
m y m m m y y y m y

tha t is reflected in security prices. Eugene Fa ma suggested tha t it is useful to

m m m m y

distinguish three levels o f ma rket efficiency: y m

a) Wea k-Fo rm Efficiency m y

b) Semi-Stro ng Fo rm Efficiency y y

c) Stro ng-Fo rm Efficiency y y

Efficient Ma rket Hypo thesis m y

Efficient Ma rket Hypo thesis (EMH) sta tes tha t current sto ck price reflects a ll m y m m y m

a va ila ble info rma tio n a nd tha t the ma rket price a t a ny o ne time is the best estima te
m m m y m y m m m m m y m

22
o f the true va lue o f the sto ck. On the o ther ha nd, the investo rs, who do no t believe
y m y y y m y y y y

tha t ma rkets a re efficient, seek to o utperfo rm the ma rket by identifying sto cks tha t
m m m y y y m y m

will ea rn a higher expected return tha n tha t o f the ma rket a nd they a re willing to
m m m m y m m m y

a ccept a dditio na l risk.

m m y m

1.11 Impo rta nt Terms used in the Study y m

a ) Attitude
m

An a ttitude is a hypo thetica l co nstruct tha t represents a n individua l's degree o f like
m m y m y m m m y

o r dislike fo r so mething. Attitude in Psycho lo gy a lso mea ns a perso n's perspective

y y y y y m y m m y

to wa rd a specified ta rget a nd wa y o f sa ying a nd do ing things.

y m m m m m y m m y

b) Beha vio ur m y

Beha vio ur ca n be defined a s the wa y in which a n individua l beha ves o r a cts. It is the
m y m m m m m m y m

wa y a n individua l co nducts herself / himself.

m m m y

c) Beha vio ura l Fina nce m y m m

A pa rt o f fina nce, which seeks to understa nd a nd predict systema tic fina ncia l
m y m y m m m m m

ma rket implica tio ns o f psycho lo gica l decisio n pro cesses. Beha vio ura l Fina nce
m m y y y y m y y m y m m

clo sely co mbines individua l beha vio ur a nd ma rket pheno mena a nd uses kno wledge
y y m m y m m y m m y

ta ken fro m bo th the psycho lo gica l field a nd fina ncia l theo ry (Fro mlet, 2001).
m y y y y m m m m y y

e)Best Ga me in To wn: The Sto ck Ma rket is co nsidered a s the o nly best pla ce
m y y m y m y m

a ttra cted to invest a nd it ha s beco me a na tio na l pa stime a nd hence it is co nsidered a s

m m y m m y m m y m m m y m

the Best Ga me in To wn. m y

e) Fina ncia l Cha ra cteristics: Fina ncia l Cha ra cteristics co mprise o f the va rio us
m m m m m m m m y y m y

fina ncia l ra tio s perta ining to a co mpa ny. The cha ra cteristics a re rela ting to the
m m m y m y m y m m m m m y

inco me, expenditure, o r revenue o f a perso n, gro up o f peo ple, o r o rga nisa tio n,
y y y m y y y y y y m m y

including fina ncia l a ssista nce. m m m m

23
f) Herd Beha vio ur refers to simila rity in thinking a mo ng individua l investo rs. It m y y m m y m y

describes ho w individua ls in a gro up ca n a ct to gether witho ut pla nned directio n. If

y m m y m m y y m y

well info rmed a nd experienced investo rs invest in a pa rticula r sto ck, the o ther
y m y m m m y y

investo rs, witho ut a na lyzing the ma rket a nd o ther fa cto rs, wo uld a lso fo llo w the
y y m m m m y m y y m y y y

sa me.
m

g) Investment: Investment is putting mo ney into so mething with the expecta tio n o f y y y m y y

ga in, which upo n tho ro ugh a na lysis, ha s a high degree o f security fo r the principa l
m y y y m m m m y y m

a mo unt, a s well a s security o f return, within a n expected perio d o f time.

m y m m y m y y

h) Internet Led Access to Info rma tio n a nd Tra ding: The Internet ha s fa cilita ted y y m y m m m m m

ea sy, lo w co st a nd speedy a ccess to info rma tio n a nd tra ding. It ha s increa sed the
m y y m m y y m y m m m m

fo cus a nd a ttentio n o n sto cks a nd thus increa sed the dema nd fo r sto cks.
y m m y y y m m m y y

i) Ma cro eco no mic Fa cto rs a re the externa l fa cto rs tha t co uld influence investo r’s
m y y y m y m m m y m y y

a ttitudes to wa rds investing. It is the study o f the o vera ll a spects a nd wo rkings o f a

m y m y y m m m y y m

na tio na l eco no my, such a s inco me, o utput, a nd the interrela tio nship a mo ng diverse
m y m y y m y y m m y m y

eco no mic secto rs. y y y

j) Optimism ca n be defined a s ha ving ho pefulness a nd co nfidence a bo ut the future m m m y m y m y

o r successful o utco me o f so mething, a tendency to ta ke a fa vo ura ble o r ho peful

y y y y y m y m m m y m y y

view. The Investo rs’ o ptimism is perceived a s ‘no thing ca n go wro ng’ a ttitude y y m y m y y m

a mo ng the investo rs.

m y y

k) Perfo rma nce Fa cto r: The o vera ll perfo rma nce o f the India n Eco no my, India n
y m m y y m y m y m y y m

Sto ck Ma rket a nd the Co rpo ra te Wo rld a re identified a s the impo rta nt fa cto rs tha t
y m m y y m y m m y m m y m

wo uld influence the Individua l Investo rs to invest in the Sto ck Ma rket.

y m y y y m

l) Psycho lo gica l Fa cto rs include investo rs’ gut feeling, intuitio n, rumo urs a nd
y y m m y y y y m

reco mmenda tio n by friends, fa mily a nd peer.

y m y m m

24
m) Price Cut-Off Rules: Ma ny investo rs feel tha t ‘Price Cut-Off Rules’ pla y a vita l m y m m m m

ro le in sto ck selectio n tho ugh it is a n irra tio na l rule. They include a vo iding sha res
y y y y m m y m m y m

mo re tha n Rupees hundred.

y m

n) Qua lity o f Ma na gement: The efficiency o f the to p ma na gement determines the

m y m m y y m m

perfo rma nce o f the co mpa ny.

y m y y m

o ) Reta il Investo r
y m y

A Reta il Investo r is a perso n who invests his / her mo ney in the sto ck ma rket a nd
m y m y y y y m m

ma na ges this po rtfo lio o f sha res.

m m y y y y m

p) Risk: Investo rs believe tha t higher the risk, higher the return. Seco ndly, investo rs
y m y y

view the sta bility a nd the a ble Go verna nce o f the Go vernment a s a n impo rta nt fa cto r
m m m y m y y m m y m m y

influencing their fa ith in the Sto ck Ma rket. m y m

q) Reco mmenda tio n o f the Fina ncia l Co mmunity: Befo re investing in a ny sto ck,
y m y y m m y y m y

the individua l investo rs cra ves fo r mo re info rma tio n a nd reco mmenda tio n fro m the
m y m y y y m y m y m y y

fina ncia l co mmunity.

m m y

25
THEORTICAL FRAMEWORK OF THE STUDY

The sto ck excha nge pro vides fa cilities fo r listing o f sha res o f co mpa nies a nd
y m y m y y m y y m m

a lso impa rts liquidity to the sha res, so tha t investment is pro mo ted a nd
m y m y m y m y y m

sa vings flo w into investment. Besides, the sto ck ma rket reflects the eco no mic
m y y y m y y

a nd fina ncia l develo pments in the co untry a nd industry a nd is, therefo re, a
m m m y y m m y m

wa tchdo g o f the eco no my. It a lso pro tects the investo r’s interest a nd sa fety
m y y y y m y y y m m

a nd liquidity o f their funds. Erstwhile, the tra ditio na l theo ries such a s Efficient
m y m y m y m

Ma rket theo ry a nd Ra ndo m Wa lk Theo ry ha ve fo rmula ted the wa y in which

m y m m y m y m y m m

the fina ncia l experts a nd the po licy ma kers a na lyzed investo r beha vio ur.
m m m y m m m y m y

Efficient ma rket theo ry sta tes tha t the ma rket is ca pa ble o f a djusting quickly m y m m m m m y m

a nd efficiently to the new info rma tio n genera ted by the eco no my, industry a nd
m y y m y m y y m

co mpa ny. Under this theo ry, the prices a re determined by ma rket fo rces which
y m y m m y

a re in turn influenced by perfect a nd free flo w o f co rrect, unbia sed a nd

m m y y y m m

co stless info rma tio n. These co nditio ns a re o bta ined under a n idea l set up a nd
y y m y y y m y m m m m

no t in rea l wo rld. The Ra ndo m wa lk theo ry ho lds tha t no o ne ca n predict the

y m y m y m y y m y y m

prices o f sha res ba sed o n the pa st o r histo rica l trends. As the ma rket is
y m m y m y y m m

a ssumed to be efficient, a ll info rma tio n is quickly a bso rbed in the prices,
m y m y m y m y

which mo ve in a ra ndo m ma nner a nd histo ry do es no t repea t itself. The prices

y m m y m m y y y m

o f to da y do no t depend upo n the prices o f yesterda y. The prices ha ve the equa l

y y m y y y y m m m

ca pa bility o f go ing up a nd do wn a nd it is, therefo re, impo ssible fo r a n

m m y y m y m y y y m

a vera ge investo r to ea rn mo re tha n the a vera ge pro fits except by cha nce. The
m m y y m y m m m y m

prices mo ve in a ra ndo m ma nner depending upo n the flo w o f info rma tio n a nd
y m m y m y y y y m y m

a ny co mbina tio n o f sha res is go o d a s a ny o ther co mbina tio n to secure fa ir

m y m y y m y y m m y y m y y m

26
returns. These theo ries were ba sed o n the fo unda tio n tha t investo rs pa rticipa te y m y y m y m y m m

in the ma rket ra tio na lly a nd co nsider a ll the releva nt info rma tio n in the
m m y m m y m m y m y

investment decisio n ma king pro cess a nd hence sto ck ma rket is efficient. In y m y m y m

rea lity, the ma rket price diverges fro m the intrinsic wo rth frequently. The
m m y y

fa cto rs o f emo tio na l na ture ca nno t be ca ptured by the a ppro a ch o f tra ditio na l
m y y y y m m m y m m y m y m y m

scho o l. Acco rding to Fa ma (1970) the efficient fina ncia l ma rket reflects a ll
y y y y m m m m m m

the a va ila ble info rma tio n in the security prices. The EMH theo ry rules o ut the
m m m y m y y y

po ssibility o f pro fits o r returns in excess o f equilibrium desired return o r pro fit.
y y y y y y y

In o ther terms, a n a vera ge individua l investo r ca nno t ho pe to co nsistently bea t

y m m m m y m y y y y m

the ma ke with va st reso urces dedica ted to a na lyzing, picking, a nd tra ding
m m y m y m m m m

securities ba sed o n funda menta l a nd technica l a na lysis. Since the inceptio n o f m y m m m m m m y y

the theo ry, the theo ry it turned into a n eno rmo us theo retica l a nd empirica l
y y y m y y y m m m

success a nd, the field o f a ca demics fina nces a nd security a na lysis wa s crea ted
m y m m m m m m m m

o n the ba sis o f the EMH. The tena nts o f the theo ry rests o n the wea ker
y m y m y y y m

a ssumptio ns such a s investo rs a re a ssumed to be unbia sed, ra tio na l a nd hence

m y m y m m y m m y m m

securities a re va lued ra tio na lly. The ra tio na l investo rs va lue securities ba sed
m m m y m m y m y m m

o n its funda menta l va lue, the net present va lue (NPV) o f its future ca sh va lues
y m m m m y m m

a nd disco unting the risk cha ra cteristics. As a result, the security price reflects
m y m m m

a ll the a va ila ble info rma tio n a lmo st immedia tely a nd the prices gets a djusted
m m m m y m y m y m m m

co rrespo nding to the net present va lue. Fa ma (1965) identified tha t sto ck
y y y m m m m y

prices indeed a ppro xima tely fo llo w ra ndo m wa lks a nd no systema tic evidence m y m y y m y m m y m

o f pro fita bility with technica l tra ding stra tegies such a s buying sto cks when
y y m m m m m y

their prices ra ise o r selling them when their prices decline. Fa ma (1998) m y m m

27
rea so ned tha t a n efficient ma rket genera tes types o f events tha t individua lly
m y m m m m y m m

suggest tha t prices o ver-rea ct to info rma tio n. But in a n efficient ma rket,
m y m y y m y m m

a ppa rent under-rea ctio n will be a s frequent a s o verrea ctio n. If a no ma lies split
m m m y m m y m y m y m

ra ndo mly between under rea ctio n a nd o verrea ctio n, they a re co nsistent with
m y m y m y m y m y

ma rket efficiency. First, it ca n be seen tha t a n even split between a ppa rent
m m m m m m

o verrea ctio n a nd under rea ctio n is a go o d descriptio n o f the list o f existing

y m y m m y m y y y y y

a no ma lies. Seco nd, a nd mo re impo rta nt, if the lo ng-term return a no ma lies a re
m y m y m y y m y m y m m

so la rge they ca nno t be a ttributed to cha nce, then a n even split between o ver-
y m m y m y m m y

a nd under rea ctio n is a victo ry fo r ma rket efficiency. It ca n be fo und,

m m y m y y m m y

Ho wever, tha t the lo ng-term return a no ma lies a re sensitive to metho do lo gy.

y m y m y m m y y y y

They tend to beco me ma rgina l o r disa ppea r when expo sed to different mo dels y y m m y m m y y y

fo r expected (no rma l) returns o r when different sta tistica l metho ds a re used to
y y m y m m y m y

mea sure them. Thus, even a na lyzed o ne-by-o ne, mo st lo ng-term return
m m m y y y y

a no ma lies ca n rea so na bly be a ttributed to cha nce event. A pro blem in

m y m m m y m m y m y

develo ping a n o vera ll perspective o n lo ng-term return studies is tha t they

y m y m y y m

ha rdly test a specific a lterna tive to ma rket efficiency. Simila rly, the
m m m m y m m

a lterna tive hypo thesis is va gue, a nd ma rket inefficient. This is una ccepta ble.
m m y m m m m m

Like a ll mo dels, ma rket efficiency, the hypo thesis tha t prices fully reflect
m y m y m

a va ila ble info rma tio n, is a wro ng descriptio n o f price fo rma tio n. By a do pting
m m m y m y m y y y y m y m y

the sta nda rd scientific rule, Ho wever, ma rket efficiency ca n o nly be repla ced
m m y m m y m

by a better specific mo del o f price fo rma tio n, po tentia lly rejecta ble by a ny
m y y y m y y m m m

empirica l tests. Any a lterna tive mo del ha s a fo rmida ble ta sk. It must specify
m m m y m m y m m

bia ses in info rma tio n pro cessing tha t ca use the sa me investo rs to under-rea ct
m y m y y m m m y y m

28
to so me types o f events a nd o verrea ct to o ther type o f events. The a lterna tive
y y y m y m y y y m m

must a lso expla in the ra nge o f empirica l results better tha n the simple ma rket
m y m m y m m m

efficiency sto ry; tha t is, the expected va lue o f a bno rma l returns is zero , but y m m y m y m y

cha nce genera tes devia tio ns fro m zero , a no ma lies, in bo th directio ns.
m m m y y y m y m y y

Ho wever, the co lla pse o f wo rld’s la rgest fina ncia l institutio ns in USA during
y y m y y m m m y

the fina ncia l crisis in 2008 indica tes tha t the ma rket is inefficient. It is a lso
m m m m m m y

very impo rta nt to no te tha t if the fina ncia l ma rkets a re efficient a nd investo rs y m y y m m m m m m y

a ct ra tio na lly while ta king fina ncia l decisio ns, the va lid questio n rema ins o n
m m y m m m m y m y m y

the fa ct why investing bubbles ha ve a regula r a ppea ra nce a nd a lo nger

m m m m m m m m m y

dura tio n in the equity ma rket. In a dditio n, the pa rticipa tio n o f ra tio na l
m y m m y m m y y m y m

investo rs in a rbitra ge pro cesses a lso is no t efficient a nd the a djustment o f

y m m y m y y m m y

sto ck prices is slo w a nd ra ther detrimenta l. Acco rding to EMH, the reta il
y y m m m y y m

investo rs a re a ssumed to be ra tio na l, unbia sed a nd the emo tio ns ha ve no pla ce

y m m y m y m m m y y m y m

in ma king o f ra tio na l decisio ns in equity ma rket investment. On co ntra ry,

m y m y m y m y m

emo tio ns do no t discrimina te a mo ng bo th individua l a nd institutio na l

y y y y m m y y m m y m

investo rs despite the fa ct tha t the institutio na l investo rs a re mo re ba la nced.

y m m y m y m y m m

Po sitive a nd nega tive emo tio ns pla y a detrimenta l ro le o n the sto ck ma rket
y m m y y m m m y y y m

perfo rma nce o f the investo r. Nevertheless, emo tio ns o f extreme na ture ca n
y m y y y y y m m

po ssibly trigger irra tio na l decisio n ma king pro cess in the minds o f the
y m y m y m y y

investo rs. It is a lso seen in the fra mewo rk o f EMH, the funda menta l a na lysis
y m y m y y m m m m

o f co mpa ny sto cks is emplo yed to sto ck a ssessment ra ther tha n predicting
y y m y y y y m m m

mo vements a nd technica l a na lysis ca nno t be emplo yed in the future cha nges
y m m m m m y y m

o f sto ck prices . On co ntra ry, the predictio ns o f sto ck prices in mo dern da ys

y y y m y y y y m

29
extensively emplo y bo th funda menta l a nd technica l a na lysis. Ba sed o n the y y m m m m m m m y

recent resea rch in the field o f Beha vio ura l fina nce a nd Psycho thera py, it is
m y m y m m m y m

fo und tha t emo tio n pla ys a significa nt a nd pivo ta l ro le in eva lua ting the risk
y m y y m m m m y m y m m

a nd returns a nd in ma king fina ncia l decisio ns. The Huma n Emo tio n Theo ry
m m m m m y m y y y

(HUEMO) revisits the tra ditio na l sto ck a na lysis techniques, which a re ba sed m y m y m m m m

o n the funda menta l a nd the technica l va lua tio ns to a ssess the future price level
y m m m m m m y y m

fo r the sto ck. The HUEMO theo ry cha llenges the belief tha t the sto ck ma rket
y y y m m y m

investment decisio ns a re ma de in a co mpletely ra tio na l, pro per a nd a n y m m m y m y m y m m

unbia sed ma nner. On co ntra ry, the sto ck investo rs ma ke decisio ns mo stly
m m y m y y m y y

ba sed o n psycho lo gica l fa cto rs, including the mo o ds a nd the emo tio ns. The
m y y y m m y y y m y y

co gnitive perfo rma nce o n decisio n ma king is impa cted by different sta tes o f
y y m y y m m m y

mo o ds a nd emo tio ns. On ma ny o cca sio ns, Sto ck va lua tio ns do no t

y y m y y m y m y y m m y y y

necessa rily ma nifest the underlying intrinsic va lue o f the sto ck; the vo la tility
m m m y y y m

o f prices o f sto cks is driven la rgely by individua l a nd gro up a nd co llective

y y y m m m y m y

emo tio ns. During the sto ck ma rket bo o m , the o ptimistic a nd co nfident
y y y m y y y m y

emo tio na l sta te drive prices to a stro no mica l va lua tio ns wherea s the investo r
y y m m y m y y m m m y m y

turn pessimistic when ma rket fa lls beyo nd its intrinsic va lue. Thus it is m m y m

understa nda ble in times o f fina ncia l turbulence tha t the emo tio na l investo r
m m y m m m y y m y

sta nd o n sidelines a nd unwilling to pa rticipa te in the ma rket to ta ke a dva nta ge

m y m y m m m y m m m m

o f the sto ck ma rket o ppo rtunities o wning to the nega tive emo tio ns a sso cia ted
y y m y y y y m y y m y m

with recent experiences. Hence, the sto ck investo r with the right a ssessment o f y y m y

the emo tio ns ca n po ssibly predict the price fo rma tio n signa ls a nd ta ke
y y m y y m y m m m

a dva nta ge o f the future ma rket o ppo rtunities.

m m m y m y y

30
31
BEHAVIOURAL FINANCE

Beha vio ura l fina nce is a ra pidly gro wing a rea o f mo dern fina nce tha t studies
m y m m m m y m m y y m m

the influence o f psycho lo gy o n the beha vio ur o f the investo rs. It co mbines y y y y m y y y y

bo th psycho lo gy a nd eco no mics to expla in why a nd ho w peo ple ma ke

y y y m y y y m m y y m

seemingly irra tio na l o r illo gica l decisio ns when they invest mo ney in equity m y m y y m y y

ma rket. Acco rding to Ba rber & Odea n (1999), Beha vio ura l fina nce rela xes
m y y m m m y m m m

the tra ditio na lly held a ssumptio ns o f fina ncia l eco no mics by inco rpo ra ting
m y m m y y m m y y y y m

these o bserva ble, systema tic, a nd very huma n depa rtures fro m ra tio na lity into
y m m m m m y m y m y

sta nda rd mo dels o f fina ncia l ma rkets. The tendency fo r huma n beings to be
m m y y m m m y m y

o verco nfident ca uses the first bia s in investo rs a nd the huma n desire to a vo id
y y m m y m m y m y

regret pro mpts the seco nd. In essence, Beha vio ura l Fina nce seeks to expla in
y y m y m m y m

a nd increa se the understa nding o f the rea so ning pa tterns o f ma rket

m m m y m y m y m

pa rticipa nts, including the emo tio na l tho ught pro cesses invo lved a nd the
m m y y m y y y m

degree to which they influence the decisio n-ma king pro cess in sto ck ma rket
y y m y y m

investment. Thus, Beha vio ura l fina nce ca n be described a s a field o f fina nce m y m m m m m y m

tha t pro po ses expla na tio n o f sto ck ma rket a no ma lies using identified
m y y m m y y y m m y m

psycho lo gica l bia ses, ra ther tha n dismissing a no ma lies a s cha nce results
y y m m m m m y m m m

co nsistent with the ma rket efficiency hypo thesis. The mo dels o f tra ditio na l
y m y y y m y m

fina nce a re ba sed o n individua l investo r’s ra tio na l decisio n ma king a bility
m m m y m y m y m y m m

witho ut a ny bia ses. Ho wever, in rea lity the investo rs a re influenced by bia ses
y m m y m y m m

which ma rk the devia tio n fro m the desired ra tio na l investment beha vio ur.
m m y y m y m m y

Lo eb (1935) esta blished the significa nce psycho lo gy in decisio n ma king. He

y m m y y y m

o bserved tha t o ne must experience the ba sic principles o f successful dea ling in
y m y m y m

32
securities thro ugh tra ding in a ctive listed lea ders a nd a cquire the a bility to y m m m m m m y

co ntro l perso na l emo tio ns such a s fea r o f lo ss o r greed fo r a la rger pro fit,
y y y m y y m m y y y y m m y

which a ffect mo st peo ple’s fina ncia l decisio ns. Apa rt fro m the vo la tile sto ck
m y y m m y m y y m y

price mo vements, there ha s been a numero us resea rch indica ting sto ck ma rket
y m m y m m y m

a no ma lies linked with IPOs, Bo nus news, Rights news, mergers, sto ck splits
m y m y y

a nd fo reign listing. Po st libera liza tio n, the increa sed media a nd o nline
m y y m m y m m m y

websites emba rked m in predicting po ssible y ma rket m mo vement y a nd m

reco mmending sto cks to buy/sell. It lea ds the investo rs to ta ke a bia sed view
y y y m y y m m m

o n the ma rket a nd end up in ma king bia sed investment decisio ns.

y m m m m y

The a no ma lies, in essence, a re the devia tio n o f the sto ck ma rket fro m its usua l
m y m m m y y y m y m

beha vio ur. Hence, these a no ma lies such a s the Ja nua ry effect, sta rting a nd
m y m y m m m m m m

clo sing da ys o f the week, deriva tive clo sing o f la st Thursda y o f the mo nth
y m y m y y m m y y

indica te tha t the underlying principles o f lo gica l a nd ra tio na l beha vio ur o f the
m m y y m m m y m m y y

EMH a re no t sufficiently co rrect a nd tha t o ther mo dels o f huma n beha vio ur

m y y m m y y y m m y

a lso ha ve to be studied. Beha vio ura l fina nce pro vides the co rrela tio n o f
m y m y m y m m y y m y y

emo tio na l rea ctio ns with ma rket events a nd indica tes tha t emo tio ns a re the
y y m m y m m m m y y m

ba ckbo ne o f its theo retica l o r co nceptua l fra mewo rk o f the study. Beha vio ura l
m y y y m y y m m y y m y m

fina nce dra ws o n resea rch do ne in the 1970s by the psycho lo gists Da niel
m m y m y y y m

Ka hnema n a nd Amo s Tversky, who demo nstra ted tha t co gnitive erro rs a nd
m m m y y y m m y y m

emo tio na l bia ses ca n impa ct decisio n ma king pro cess in the sto ck ma rket.
y y m m m m y m y y m

Their findings pro vided fina ncia l resea rchers with the psycho lo gica l mo dels y m m m y y m y

fo r studying ho w the investo rs ma ke ra tio na l o r irra tio na l decisio ns. Ba rberis

y y y m m y m y m y m y m

& Tha ler (2003) fo und tha t the co ncept o f ra tio na lity is very useful simple
m y m y y m y m

33
a ssumptio n. It is seen tha t when a n a gent receive new info rma tio n in the
m y m m m y m y

ma rket, the investo r insta nta neo usly cha nge o r upda te their preferences,
m y m m y m y m

beliefs a nd idea s in a no rma tive wa y so tha t results a re co nsistent.

m m m y m m y m m y

RETAIL INVESTOR

Reta il investo r is a n individua l investo r who purcha ses sto cks fo r his/her
m y m m y y m y y

perso na l a cco unt ra ther tha n fo r a n institutio n o r va rio us funds. The

y m m y m m y m y y m y

cha ra cteristics o f the reta il investo rs a re tha t they tra de in sma ll a mo unts tha n
m m y m y m m m m m y m

the institutio na l investo rs such a s ba nks, mutua l fund, insura nce fund a nd y m y m m m m m

pensio n fund. The institutio na l investo rs enga ge in huge blo ck tra des which
y y m y m y m

significa ntly a ffect the price o f the security a nd the directio n o f the ma rket.
m m y m y y m

The institutio na l investo rs ha ve the a dva nta ge o f reso urces to extensively y m y m m m m y y y

a na lyze a nd eva lua te the va rio us fina ncia l instruments a nd va rio us investment
m m m m m m y m m m m y

o ppo rtunities. They sta nd a better cha nce to ma ximize returns a nd minimizing
y y m m m y m m

the risk. On co ntra ry, the individua l investo r, ba rring these o ppo rtunities, y m m y m y y

subjected to co gnitive erro rs a nd bia ses while ma king the fina ncia l decisio ns y y y m m m m m y

in the sto ck ma rket. The presence o f the individua l investo r ha s been stea dily
y m y m y m m

gro wing in India since the intro ductio n o f fina ncia l refo rms in the ea rly
y m y y y m m y m

90s.Ho wever, the co nfidence o f the individua l investo rs a re lo st during the

y y y m y m y

fina ncia l sca ms a nd recessio n times. With the a dvent o f info rma tio n
m m m m y m y y m y

techno lo gy a nd ea sier a va ila bility credit, the individua l investo rs ha ve the

y y m m m m m m y m

ea sy a ccess to wa rds tra ding in the fo rm o f o nline tra ding.

m m y m m y y y m

34
REVIEW OF

LITERATURE

35
 REVIEW OF LITERATURE

The impa ct o f COVID‐19 o n the fina ncia l ma rket a s well a s the sto ck ma rket
m y y m m m m m y m

ha s been subject to ma ny empirica l studies bo th in a dva nced a nd emerging

m y m m y m m m

eco no mies. Existing litera ture fo und diverse results in these rega rds. Ozili a nd
y y m y m m

Arun (2020) ha ve co nducted a n empirica l study o n the effect o f so cia l m y m m y y y m

dista ncing po licy tha t wa s a do pted to prevent the sprea d o f the Co ro na virus,
m y m m m y y m y y y m

ba sed o n fo ur co ntinents: No rth America , Africa , Asia , a nd Euro pe. The study
m y y y y m m m m y

fo und tha t 30 da ys o f so cia l dista ncing po licy o r lo ckdo wn hurts the eco no my
y m m y y m m y y y y y y

thro ugh its nega tive impa ct o n sto ck prices. Azimili (2020), a lso resea rched o n
y m m y y m y m y

understa nding the impa ct o f co ro na virus o n the degree a nd structure o f risk‐

m m y y y m y m y

return dependence in the United Sta tes using qua ntile regressio n. The results m m y

indica te tha t fo llo wing the COVID‐19 o utbrea k the degree o f dependence
m m y y y m y

between returns a nd ma rket po rtfo lio ha s ra ised in the higher qua ntiles tha t m m y y y m m m m

lo wering the benefits o f diversifica tio n. The a utho r a lso studied the GSIC a nd
y y m y m y m y m

sto ck return rela tio nship a nd fo und tha t the GSIC return rela tio nship revea led
y m y m y m m y m

a n a symmetric pa ttern, lo wer ta ils influenced nega tively a lmo st twice a s

m m m y m m m y m

co mpa red to the upper ta ils. Shehza d et a l. (2020) co nducted a study to

y m y m m m y m y

a na lyze the no nlinea r beha vio r o f the fina ncia l ma rket o f the United Sta tes,
m m y m m y y m m m y m

Ita ly, Ja pa n, a nd China ma rket return by a pplying the a symmetric po wer

m m m m m m m m y

GARCH mo del. The study co nfirmed tha t COVID‐19 ha rm the sto ck returns y y m m y

o f the S&P 500. Ho wever, it revea led a n inco nsequentia l impa ct o n the
y y m m y m m y

Na sda q co mpo site index. An empirica l study co nducted by Cepo i (2020) o n

m m y y m y y y

the rela tio nship between COVID‐19 rela ted news a nd sto ck ma rket returns
m y m m y m

36
a cro ss the to pmo st a ffected co untries. By emplo ying a pa nel qua ntile
m y y y m y y m m m

regressio n this study fo und tha t the sto ck ma rket presents a symmetry
y y m y m m

dependence o n COVID‐19 rela ted info rma tio n. Osa gie et a l. (2020) by y m y m y m m

a pplying qua dra tic GARCH a nd expo nentia l GARCH mo dels with dummy
m m m m y m y

va ria bles fo und tha t the COVID‐19 hurts the sto ck returns in Nigeria a nd
m m y m y m m

reco mmended tha t a sta ble po litica l enviro nment, incentive to indigeno us
y m m m y m y y y

co mpa nies, diversifica tio n o f eco no my, a nd flexible excha nge ra te regime be
y m m y y y y m m m

implemented to impro ve the fina ncia l ma rket. Ba ker (2020), in his study, y y m m m m

fo und tha t there is a dra ma tic fa ll in o il prices by 70–80%. It is severe tha n the
y m m m m m y m

fina ncia l crisis o f 2008/2009. This is a serio us issue fo r the eco no my a s the
m m y m y y y y m

co untry is highly dependent o n o il revenue. There is a huge ga p between the

y y y m m

deprecia ted excha nge ra te, tha t is, 20% a nd the fa ll in o il prices, tha t is, 70–
m m m m m m y m

80%. Acco rding to Herrero (2020), the third wa ve o f the COVID‐19 pa ndemic
y y y m y m

ha s hit the emerging eco no my wo rst resulting decrea se in business a ctivities.

m y y y m m

This unprecedented sho ck increa ses the risk‐a verse na ture which increa ses the y m m m m

fina ncia l co st. La tin America is a ffected wo rst beca use o f its much
m m y m m m y m y

dependency o n externa l fina ncing. Due to the restrictio n o n tra nspo rt, expo rt y m m y y y m y y

ha s declined. Restrictio n in the interna tio na l mo vement ha s ha mpered the

m y m y m y m m

to urism secto r lea ding to a fa ll in revenue. Hyun‐Jung (2020) ha s ma de a

y y m y m m m m m

study o n the sto ck ma rket o f So uth Ko rea , a no ther lea ding co untry o f the
y y m y y y m m y m y y

emerging eco no mies. In his a na lysis, it wa s fo und tha t the eco no my ha s y y m m m y m y y m

sho wn a ro ller‐co a ster ride. The mo nthly expo rt sho ws a do wntrend in

y m y y m y y y m y

Ja nua ry, impro ved in Februa ry, then a ga in dipped do wn in Ma rch a nd June.
m m y m m m y m m

37
The co untry's expo rt vo lume ha s co me do wn to 11.2% po int in co mpa riso n to
y y y m y y y y y m y y

the previo us yea r. To pcu a nd Gula l (2020) ha ve ma de regio na l cla ssifica tio n
y m y m m m m y m m m y

o f the impa ct o f COVID‐19 o n the sto ck ma rket o f emerging eco no my. Their
y m y y y m y y y

findings revea l tha t the impa ct o f the o utbrea k ha s been the highest in Asia n m m m y y m m m

emerging ma rkets wherea s Euro pea n emerging ma rkets ha ve experienced them m y m m m

lo west. The emerging ma rket eco no mies fa ce a credit crunch, a lso referred to
y m y y m m m y y

a s ca pita l flo ws (Ahmed et a l., 2020). Go ldberg a nd Reed (2020) discussed the
m m m y m y m

nega tive effect o f COVID‐19 o n the tra de o f emerging eco no my.

m y y m y y y

Co nsequently, the interest ra te o n emerging ma rket so vereign debt spiked.

y m y m y

Fra nkel (2020) a na lyzed the eco no mic effect o f the pa ndemic o n the emerging
m m m y y y m y

eco no my. COVID‐19 ha s reduced the revenue o f tho se eco no mies by

y y m y y y y

restricting expo rt, to urism receipts, a nd remitta nces o f migra nt wo rkers. Ra ja y y m m y m y m m

Ra m (2020) in his study ha s fo und tha t COVID‐19 cra shes the entire glo ba l
m m y m m y m

sha re. India n sto ck ma rket a lso experienced sha rp vo la tility due to the
m m y m m y m y m y

co lla pse o f the glo ba l fina ncia l ma rket. Aga in fa ll in fo reign po rtfo lio
y m y y m m m m m m y y y y

investments a lso reduces the return o f the India n sto ck ma rket. By a na lyzing
m y y m y m m m

the histo ry o f a ll unexpected events the a utho r ha s co nsidered COVID‐19 a lso

y y m m y m y m y

a “bla ck swa n” event. He ha s further a na lyzed the histo ry o f the cra sh a nd

m m m m m m y y m m

reco very o f the India n sto ck ma rket a nd co ncluded tha t the eco no mist ca nno t
y y m y m m y m y y m y

predict the reco very o f the eco no my until a sta ble public hea lth system. Ra vi y y y y m m m m

(2020) ha s co mpa red the pre‐COVID‐19 a nd during COVID‐19 situa tio n o f

m y m m m y y

the India n sto ck ma rket. His findings revea led tha t befo re COVID‐19, tha t is,
m y m m m y m

a t the beginning o f Ja nua ry, tra de o f NSE a nd BSE were a t their highest levels
m y m m m y m m

38
hitting pea ks o f 12,362 a nd 42,273, respectively sho wing fa vo ra ble sto ck m y m y m y m y

ma rket co nditio ns. After the o utbrea k o f the COVID‐19, the sto ck ma rket
m y y y m y y m

ca me under fea r a s BSE Sensex a nd NSE Nifty fell by 38%. It lea ds to a

m m m m m y m

27.31% lo ss o f the to ta l sto ck ma rket fro m the beginning o f this yea r. The
y y y m y m y y m

sto ck o f so me o ther secto rs such a s ho spita lity, to urism, a nd enterta inment ha s

y y y y y m y m y m m m

been dro pped by mo re tha n 40% due to tra nspo rt restrictio ns. Ma nda l (2020)
y y m y m y y m m

ha s rigo ro usly a na lyzed the a go ny o f the dea dly pa ndemic o n the India n sto ck
m y y m m m y y m m y m y

ma rket. Findings revea l tha t BSE Sensex ha s witnessed the biggest single‐da y
m m m m m

fa ll o f 13.2% tha t ha s surpa ssed the infa mo us fa ll o f April 28, 1992. Nifty
m y m m m m y m y

a lso ha s a steep dive o f 29%, o verta king the disa ster o f 1992. As peo ple ha ve
m y m m y y m m y y m

co mpressed their co nsumptio n o nly to necessa ry pro ducts o nly the FMCG
y y y y y m y y

Co mpa ny ha s sho wn a po sitive return wherea s o ther co mpa nies fa ce a sha rp

y m m y m y m y y m m m m

decline (Ra kshit & Ba sistha , 2020). m m m

There is va rio us litera ture a va ila ble o n the impa ct o f COVID‐19 o n differentm y m m m m y m y y

secto rs such a s hea lth, a griculture, industry, tra de, a nd co mmerce, but a
y m m m m m y m

limited specific study ha s been co nducted o n its impa ct o n the sto ck ma rket o f m y y m y y m y

the emerging eco no my. The sto ck ma rket pla ys a n impo rta nt ro le in the y y y m m m y m y

eco no my. As India is o ne o f the do mina nt pa rts o f the emerging eco no my, this
y y m y y y m m y y y

pa per tries to interpret the impa ct o f COVID‐19 o n the India n sto ck ma rket.
m y m y y m y m

GJR GARCH is a n efficient mo del to test the vo la tility o f BSE a nd NSE, the m y y y m y m

two ma jo r sto ck ma rket o f India . Besides, there a re very few litera ture tha t
y m y y m y m m m m

co mpa res the return o f the sto ck ma rket befo re a nd during the COVID‐19
y m y y m y m

39
situa tio n. Acco rdingly, o ur study ha s a lso ma de a n a ttempt to co mpa re the
m y y y m m y m m m y y m

returns o f bo th the sto ck ma rket co nsidering tho se two mentio ned time fra mes.
y y y m y y y y m

In o rder to understa nd the Investo rs’ Sentiments a nd to fo rmula te the resea rch
y y m y m y y m m

pro blem fo r investiga tio n, reviewing the ea rlier studies is necessa ry. The
y y m y m m

review embo dies empirica l studies in bo o ks, jo urna ls a nd published resea rch y m y y y m m m

pa pers.
m

Ma cka y Cha rles (1841), in his bo o k titled, “Extra o rdina ry Po pula r

m m m y y m y m y m

Delusio ns a nd the Ma dness o f Cro wds” co ncluded tha t men go ma d in

y m m y y y m y m

herds, while they o nly reco ver their senses slo wly, a nd o ne by o ne. y y y m y y

The pa per entitled, “A Beha vio ura l Appro a ch to the Investment

m m y m y m y

Ma na gement Decisio n a nd to the Securities Ma rket” by Ra ndo , Lph,

m m y m y m m y

Westerfield (1969), investiga ted the individua l fina ncia l investment decisio n. m m m m y

The study used Ma sko witz /Sha rpe Linea r Po rtfo lio Mo del to describe a nd m y m m y y y y y m

eva lua te the sa lient a spects o f the Individua l investment decisio n. The study
m m m m y m y

sho wed tha t there wa s a significa nt difference between ma ture investo rs a nd

y m m m m m y m

no n-ma ture investo rs with respect to risk perfo rma nce.2 Po tter Ro ger Ewing
y m y y y m y y

(1970), ca rried o ut a study entitled, “Mo tiva ting Fa cto rs Guiding the
m y m y m m y

Co mmo n Sto ck Investo r”, to identify tho se fa cto rs which mo tiva te (o r)

y y y y y y m y y m y

guide the investment decisio ns o f the co mmo n sto ck investo rs. Tho se y y y y y y y

identified a re inco me fro m dividends, ra pid gro wth a nd pro fessio na l m y y m y m y y m

investment ma na gement. m m

The study entitled, “Pa tterns o f Investment Stra tegy a nd Beha vio ur a mo ng m y m m m y m y

Individua l Investo rs”, by Lewellen Wilbur G, et.a l (1977), exa mined the
m y m m

40
po rtfo lio decisio n pro cesses o f individua l equity investo rs. The study fo und
y y y y y y m y y

tha t a ge ha s a stro ng influence o n the po rtfo lio go a ls o f the investo rs in

m m m m y y y y y y m y y

U.S.A. Older investo rs ha ve interest in lo ng-term ca pita l ga ins a nd yo ung y m y m m m m y

investo rs ha ve a desire fo r sho rt-term ca pita l ga ins. The a ge a nd risk-ta king

y m m y y m m m m m m

pro pensities were fo und to be inversely rela ted. The wo men investo rs in USA
y y y m y y

were fo und to be bro ker-relia nt unlike men.

y y y m

Da vid S. Scha rfstein a nd Jeremy C. Stein (1990), in their a rticle titled, “Herd
m m m m

Beha vio ur a nd Investment”, exa mined so me o f the fo rces tha t ca n lea d to

m y m m y y y m m m y

herd beha vio ur in investment. The study fo und tha t under certa in m y y m m

circumsta nces, the ma na gers simply mimic the investment decisio ns o f o ther
m m m y y y

ma na gers, igno ring substa ntive priva te info rma tio n. Altho ugh this beha vio ur
m m y m m y m y y m y

is inefficient fro m a so cia l sta ndpo int,, it ca n be ra tio na l fro m the perspective y m y m m y m m y m y

o f ma na gers who a re co ncerned a bo ut their reputa tio ns in the la bo ur ma rket.

y m m y m y m y m y m y m

Anna A. Merika s, Greece Andrea s G. Merika s, Greece Geo rge S. Vo zikis,

m m m m y y

Dev Pra sa d, (2000), in their study entitled, “Eco no mic Fa cto rs a nd

m m y y m y m

Individua l Investo r Beha vio r: The Ca se o f The Greek Sto ck Excha nge”,
m y m y m y y m

underto o k a n empirica l survey o f the fa cto rs, which mo stly influence

y y m m y m y y

individua l investo r beha vio r in the Greek Sto ck Excha nge. The study revea led
m y m y y m m

tha t the individua l beha vio r o f a ctive investo rs in the Athens Sto ck Excha nge
m m m y y m y y m

(ASE) wa s influenced by the o vera ll trends preva iling a t the time o f the survey
m y m m m y

in the ASE.

An a rticle entitled, “An Exa mina tio n o f Herd Beha vio r in Equity Ma rkets:
m m m y y m y m

An Interna tio na l Perspective”, a utho red by Eric C. Cha ng, Jo seph W. Cheng m y m m y m y

41
a nd Aja y Kho ra na (2000) exa mined the investment beha vio r o f ma rket
m m y m m m m y y m

pa rticipa nts in different interna tio na l ma rkets na mely US, Ho ng Ko ng, Ja pa n,

m m m y m m m y y m m

So uth Ko rea , a nd Ta iwa n, specifica lly with rega rd to their tendency to exhibit
y y m m m m m m y y

herd beha vio r. It fo und no evidence o f herding o n the pa rt o f ma rket

m y y y y y m y m

pa rticipa nts in the US a nd Ho ng Ko ng a nd fo und pa rtia l evidence o f herding

m m m y y m y m m y

in Ja pa n. Ho wever, fo r So uth Ko rea a nd Ta iwa n, the study fo und significa nt

m m y y y y m m m m y m

evidence o f herding. y

Freund, Ca ro line L. a nd Weinho ld, Dia na (2001), in their pa per entitled, “On
m y m y m m m

the Effect o f the Internet o n Interna tio na l Tra de”, fo und tha t the effect o fy y m y m m y m y

the Internet o n tra de ha s been stro nger fo r po o r co untries tha n fo r rich y m m y y y y y m y

co untries, a nd tha t there is little evidence tha t the Internet ha s reduced the
y m m m m

impa ct o f dista nce o n tra de.m y m y m

Bra d M Ba rber a nd Terra nce Odea n (2001), in their pa per titled, “The
m m m m m m

Internet a nd the Investo r”, fo und tha t the internet ha s cha nged the pro cess
m y y m m m y

o f ho w info rma tio n is delivered to the investo rs a nd the wa ys in which

y y y m y y y m m

investo rs ca n a ct o n tha t info rma tio n. The ILA ha s lo wered bo th the fixed a nd
y m m y m y m y m y y m

ma rgina l co sts o f pro ducing fina ncia l services, thus ena bling newer, sma ller
m m y y y m m m m

co mpa nies to cha llenge the esta blished pro viders o f these services.
y m y m m y y

An a rticle entitled, “Investo rs’ Herding o n the To kyo Sto ck Excha nge,” by
m y y y y y m

Iiha ra , Ka to a nd To kuna ga (2001), do cumented the herding beha vio ur in

m m m y m y m m y m y

va rio us investo rs’ cla sses o n the To kyo Sto ck Excha nge. The mo ney-flo w
m y y m y y y y m y y

instruments a llo w the sepa ra tio n o f the mea surement o f sentiment fro m m y m m y y m y y

mea surement o f a sset returns.

m y m

42
Krishna n a nd Bo o ker (2002) in their pa per entitled, “Investo rs’ Use o f
m m y y m y y

Ana lysts’ Reco mmenda tio ns, Beha vio ur Resea rch in Acco unting”,
m y m y m y m y

a na lyzed the fa cto rs influencing the decisio ns o f investo rs who ba sica lly used
m m m y y y y y m m

a na lysts’ reco mmenda tio ns to a rrive a t a sho rt-term decisio n to ho ld o r to sell

m m y m y y m m m y y y y y y

a sto ck.
m y

The a rticle entitled, “Ra tio na l Investo r Sentiment”, by Gerber, Anke, Vo gt,
m m y m y y

Bo do a nd Hens, Tho rsten (2002), studied vo la tility, sho rt-term mo mentum

y y m y y m y y

a nd lo ngterm reversa l o f a sset prices by a repea ted ga me versio n o f Keynes’

m y m y m m m m y y

bea uty co ntest. In their mo del, neither ha ve expla ined sho rt-term mo mentum
m y y m m y y

no r lo ng term reversa l o f sto ck prices by unpredicta ble switches in the

y y m y y m

co o rdina tio n o f the pla yers.

y y m y y m

Ma rk J. Fla nnery a nd Aris A. Pro to pa pa da kis (2002) in their pa per entitled,

m m m y y m m m m

“Expected Utility Ana lysis witho ut the Independent Axio m”, fo und tha t the m y y y m

sto ck ma rket returns were significa ntly co rrela ted with infla tio n a nd mo ney
y m m y m m y m y

gro wth. The impa ct o f rea l ma cro eco no mic va ria bles o n a ggrega te equity
y m y m m y y y m m y m m

returns ha s been difficult to esta blish. m y m

Alo k Kuma r a nd Cha rles Lee (2003), in their a rticle entitled, “Reta il Investo r
y m m m m m y

Sentiment a nd Return Co mo vements”, pro ved tha t mo re tha n 1.85 millio n m y y y m y m y

tra nsa ctio ns ma de by reta il investo rs were systema tica lly co rrela ted − i.e.,
m m y m m y m m y m

individua ls buy (o r sell) sto cks in co ncert. As predicted by no ise tra der m y y y y m

mo dels, it is fo und tha t systema tic reta il tra ding expla ins return co mo vements
y y m m m m m y y

fo r sto cks with high reta il co ncentra tio n (i.e., sma ll-ca p, va lue, lo wer
y y m y m y m m m y

institutio na l o wnership, a nd lo wer-priced sto cks). y m y m y y

43
Rya n Wo o d A a nd Judith Lynne Za ichko wsky B (2004), in their study
m y y m m y

entitled, “Attitudes a nd Tra ding Beha vio ur o f Sto ck Ma rket Investo rs”, m m m y y y m y

identified the cha ra cterized segments o f individua l investo rs ba sed o n their m m y m y m y

sha red investing a ttitudes a nd beha vio r. Five ma in co nstructs tha t drive
m m m m y m y m

investo r beha vio ur a re investment ho rizo n, co nfidence, co ntro l, risk, a ttitude

y m y m y y y y y m

a nd perso na liza tio n o f lo ss. The study identified fo ur ma in segments o f

m y m m y y y y m y

individua l investo rs, na mely, Risk – Into lera nt Tra ders, Co nfident Tra ders,
m y m y m m y m

Lo ss – Adverse Yo ung Tra ders a nd Co nserva tive Lo ng term Investo rs a s the

y y m m y m y y m

drivers fo r investo rs’ beha vio ur. y y m y

The pa per entitled, “Beha vio ra l Fina nce: Is Investo r Irra tio na lity the
m m y m m y m y m

No rm?”, by Sha ila ja Ga jja la (2005), identified investment bia ses po ssessed
y m m m m m m m y

by reta il investo rs. The study fo und tha t 90 % o f the sa mple repo rted tha t their
m y y m y m y m

current a nd future investment decisio ns were dependent o n their pa st cho ices.

m y y m y

Fina lly, the study fo und the evidence o f reta il investment bia ses tha t lend
m y y m m m

credence to the pro po nents o f Beha vio ra l Fina nce. y y y y m y m m

Bria n Zinga le (2005), in his a rticle entitled, “Investo r Sentiment a nd the

m m m y m

Lo ng-run Underperfo rma nce o f New Issues”, expla ined tha t pro xies fo r
y y m y m m y y

investo r sentiment predict the lo ng-run underperfo rma nce o f new issues a nd
y y y m y m

the vo lume o f equity issua nce. The pa per suggested tha t the a sset pricing
y y m m m m

mo dels tha t expla in underperfo rma nce ha ve risk fa cto rs tha t a re a lso pro xy
y m m y m m m y m m m y y

fo r mispricing. The fa cto rs - SMB a nd HML in the three fa cto r mo del o f

y m y m m y y y

Fa ma a nd French (1993) a re co rrela ted with these study sentiment pro xies.
m m m m y m y

44
An a rticle entitled, “Fa cto rs influencing Individua l Investo r Beha vio ur: An
m m y m y m y

Empirica l Study o f the UAE Fina ncia l Ma rkets”, by Hussein A Ha ssa n eta l
m y m m m m m m

(2006), identified the fa cto rs influencing the UAE investo r beha vio ur. Six m y y m y

fa cto rs were fo und a s the mo st influencing fa cto rs o n the UAE investo r

m y y m y m y y y

beha vio ur. The mo st influencing fa cto rs were expected co rpo ra te ea rnings, get
m y y m y y y m m

rich quick, pa st perfo rma nce o f the firm’s sto ck. On the o ther ha nd, few
m y m y y y m

fa cto rs like expected lo sses in interna tio na l fina ncia l ma rkets, fa mily member
m y y m y m m m m m

o pinio n, gut feeling o n the eco no my were fo und to be lea st influencing.

y y y y y y y m

Bing Ha n (2006), in his pa per entitled, “Investo r Sentiment a nd Optio n

m m y m y

Prices”, exa mined whether investo r sentiment a bo ut the sto ck ma rket a ffects
m y m y y m m

prices o f the S&P 500 o ptio ns. It wa s fo und tha t the index o ptio n vo la tility
y y y m y m y y y m

smile is steeper (fla tter) a nd the risk-neutra l skewness o f mo nthly index return m m m y y

is mo re o r (less) nega tive when ma rket sentiment beco mes mo re bea rish
y y m m y y m

(bullish). The cha nges in sentiment expla in time va ria tio n in the slo pe o f index
m m m m y y y

o ptio n smile a nd risk-neutra l skewness beyo nd fa cto rs suggested by the

y y m m y m y

current mo dels. y

The pa per entitled, “Wo men Investo rs Perceptio n to wa rds Investment–An

m y y y y m

Empirica l Study”, by Gna na Desiga n C. et.a l., (2006), exa mined the
m m m m m m

investment pa ttern, preference, influencing fa cto rs a nd pro blems o f wo men

m m y m y y y

investo rs in Ero de To wn. Acco rding to the findings o f the study, wo men
y y y y y y y

investo rs were interested in investing in ba nk depo sits a nd jewellery a s they

y m y m m

a re influenced by sa fety a nd liquidity.

m m m

45
To to k Sugiha rto , Eno L. Ina nga a nd Ro y Sembel (2007), in their study, “A
y y m y y m m m y

Survey o f Investo rs Current Perceptio ns a nd Va lua tio n Appro a ches a t

y y y m m m y y m m

Ja ka rta Sto ck Excha nge”, studied the investment pra ctices a nd perceptio ns
m m m y m m m y

by ma jo r po rtfo lio investo rs (fund ma na gers) who were a ctive a t the Ja ka rta
m y y y y y m m y m m m m m

Sto ck Excha nge (JSX) in Indo nesia . The study o bserved tha t the So cia l,
y m y m y m y m

Po litica l, Eco no mic, Regula to ry, Techno lo gica l, Enviro nmenta l a nd Lega l
y m y y m y y y m y m m m

(SPERTEL) fa cto rs influenced the funda menta l fa cto rs (EM metric) a nd m y m m m y m

va lues o f equity sha res.

m y m

The pa per entitled, “Investo r Sentiment a nd Sto ck Ma rket Respo nse to

m y m y m y y

Co rpo ra te News”, by G. Mujta ba Mia n, a nd Sriniva sa n Sa nka ra guruswa my

y y m m m m m m m m m m m

(2008), exa mined whether ma rket-wide investo r sentiment influences the sto ck m m y y

price respo nse to firm-specific news. The results indica te tha t the preva ilingy y m m m

sentiment swa ys sto ck price respo nse to news in the directio n o f the sentiment m y y y y y

—the po sitive sto ck price respo nse to go o d news a nd increa se with sentiment,
y y y y y y m m

wherea s the nega tive sto ck price respo nse to ba d news a nd decrea se with
m m y y y m m m

sentiment.

Ma tthia s Burgha rdt, Ma rcel Czink, a nd Rya n Rio rda n (2008) in their a rticle
m m m m m m y m m

entitled, “Reta il Investo r Sentiment a nd the Sto ck Ma rket”, co mputed a m y m y m y m

reta il investo r sentiment index using a unique da ta set with 18.1 millio n
m y m m m y

tra nsa ctio ns in ba nk issued wa rra nts fro m the Euro pea n Wa rra nt Excha nge.
m m y m m m y y m m m m

The study sho wed tha t reta il investo r sentiment is a n impo rta nt pa rt o f the y m m y m y m m y

equity pricing pro cess a nd tha t they ha ve a go o d mea sure o f the sentiment. y m m m m y y m y

46
The a rticle entitled, “The Effects o f Investo r Sentiment o n Specula tive
m y y y m

Tra ding a nd Prices o f Sto ck a nd Index Optio ns”, by Micha el Lemmo n a nd

m m y y m y m y m

So phie X. Ni (2008), fo und tha t specula tive dema nd fo r equity o ptio ns wa s

y y m m m y y y m

po sitively rela ted to investo r sentiment, while hedging dema nd is inva ria nt to
y m y y m m m y

sentiment. It is fo und tha t sentiment is rela ted to time-series va ria tio n in the y m m y m m y

slo pe o f the implied vo la tility smile o f sto ck o ptio ns, but ha s little impa ct o n
y y y m y y y y m m y

the prices o f index o ptio ns. y y y

Gla ser, Ma rkus, Schmitz, Philipp a nd Weber, Ma rtin (2009), in their study
m m m m

entitled, “Individua l Investo r Sentiment a nd Sto ck Returns - Wha t Do We m y m y m y

Lea rn fro m Wa rra nt Tra ders?”, tested whether individua l investo r

m y m m m m y

sentiment wa s rela ted to da ily sto ck returns by using vecto r a uto regressive m m y m y y m y

mo dels a nd Gra nger ca usa lity tests.

y m m m m

The study fo und o ut tha t there exists a mutua l influence between sentiment y y m m m

a nd sto ck ma rket returns, but o nly in the very sho rt-run (o ne a nd two tra ding
m y m y y y m y m

da ys).
m

The pa per entitled, “A study o f Gender Differences in Investment

m y

Beha vio ur”, by Ma dhurima Deb a nd Ka vita Cha va li (2009), eva lua ted the
m y m m m m m m m m m

gender differences in investment decisio ns. Sixteen va ria bles were identified in y m m

terms o f preinvestment, po st-investment a nd risk reductio n stra tegies. It wa s

y y m y m m

inferred tha t Men were mo re co nfident tha n Wo men. Wo men a re mo re riskm y y m y y m y

a verse tha n men in their investment stra tegies. Wo men sta rt investing la te in
m m m y m m

their a ge co mpa red to their co unterpa rt a nd they expect sta ble gro wth in their
m y m y y m m m y

investment.

47
Micha el Lemmo n a nd So phie Xia o ya n Ni (2009), in their pa per titled, “The
m y m y m y m m

Effects o f Investo r Sentiment o n Specula tive Tra ding a nd Prices o f Sto ck

y y y m m m y y

a nd Index Optio ns”, fo und tha t the synthetic sto ck dema nd fo r sto ck o ptio ns
m y y m y m y y y y

wa s po sitively rela ted to investo r sentiment a nd ma rket returns, while the

m y m y y m m

synthetic index dema nd fo r SPX o ptio ns is inva ria nt to sentiment, a nd m y y y m m y m

nega tively rela ted to ma rket returns fo r SPX put.

m m y m y

Alexa nder Kuro v (2009), in his a rticle entitled, “Investo r Sentiment a nd the
m y m y m

Sto ck Ma rket’s Rea ctio n to Mo neta ry Po licy”, sho wed tha t the mo neta ry
y m m y y y m y y m y m

po licy decisio ns ha ve a significa nt effect o n investo r sentiment. The effect o f

y y m m m y y y

mo neta ry news o n sentiment depends o n ma rket co nditio ns (bull versus bea r

y m y y m y y m

ma rket). The results sho w tha t the investo r sentiment pla ys a significa nt ro le
m y m y m m m y

in the effect o f mo neta ry po licy o n the sto ck ma rket. y y m y y y m

A pa per entitled, “Ma rket Respo nse to Investo r Sentiment”, by Jördis

m m y y y

Hengelbro ck Erik Theissen Christia n Westheide (2010), suggested tha t y m m

mea sures o f investo r sentiment ha ve predictive po wer fo r future sto ck returns

m y y m y y y

o ver the intermedia te a nd lo ng term. The study suggested tha t sma rt investo rs
y m m y m m y

sho uld tra de o n the info rma tio n co nveyed by such indica to rs a nd thus
y m y y m y y m y m

triggered a n immedia te ma rket respo nse to their publica tio n. m m m y y m y

The pa per entitled, “Investo r Sentiment a nd Rea l Investment”, by Da vid

m y m m m

McLea n a nd Mengxin Zha o (2010), studied the effects o f systema tic investo r
m m m y y m y

sentiment o n investment a nd externa l fina nce o ver a 44-yea r perio d. Sentiment y m m m y m m y

ca uses bo th investment a nd externa l fina nce to be mo re sensitive to gro wth

m y m m m y y y y

o ppo rtunities a nd less sensitive to ca sh flo w. The findings a re bro a dly

y y m y m y m y m

48
co nsistent with a sentiment-co stly, externa l fina ncing fra mewo rk in which
y m y m m m y

sentiment a ffects the prices o f risky securities. m y

The pa per entitled, “Do es Custo mer Sentiment Co ntribute to Investo r

m y y y y y

Sentiment: Gla mo ur Bra nds a nd Gla mo ur Sto cks?”, by Ma tthew T. m y m m m y y m

Billett, Zha n Jia ng a nd Lo po L. Rego (2010), explo red the link between
m m m y y y y

custo mer sentiment fo r co rpo ra te bra nds a nd investo r sentiment fo r their

y y y y m m m y y

sto cks. The study fo und tha t a po rtfo lio o f sto cks with gla mo ro us bra nds,
y y m m y y y y y m y y m

indica ting high custo mer sentiment, ha ve la rge nega tive lo a dings o n the Fa ma
m y m m m y m y m m

French HML Fa cto r while tho se with the lo w sentiment ha ve a po sitive m y y y m m y

lo a ding. It is suggested tha t gla mo ro us bra nds ca n co ntribute to the existence

y m m m y y m m y y

o f gla mo ur sto cks.

y m y y

An a rticle entitled, “Ho w Do es Investo r Sentiment Affect Sto ck Ma rket

m y y y y m

Crises? Evidence fro m Pa nel Da ta ”, by Mo ha med Zo ua o ui et a l (2010), y m m m y m y m y m

tested the impa ct o f investo r sentiment o n a pa nel o f interna tio na l sto ck m y y y m m y m y m y

ma rkets. The study exa mined the influence o f investo r sentiment o n the
m m y y y

pro ba bility o f sto ck ma rket crises. It is fo und tha t the investo r sentiment
y m y y m y m y

increa ses the pro ba bility o f o ccurrence o f sto ck ma rket crises within a o ne-
m y m y y y y m m y

yea r ho rizo n. m y y

Bennet. E, et a l (2011), “Fa cto rs Influencing Reta il Investo rs Attitude m m y m y

to wa rds Investing in Equity Sto cks: A Study in Utta r Pra desh”, identified
y m y m m

the fa cto rs influencing the reta il investo r’s a ttitude. The to p five highly
m y m y m y

influentia l fa cto rs were investo rs’ to lera nce fo r risk, strength o f the India n
m m y y y m y y m

Eco no my, media fo cus o n the sto ck ma rket, po litica l sta bility a nd fina lly
y y m y y y m y m m m m

49
Go vernment Po licy to wa rds business. The fo ur o ther fa cto rs like sto ries o f
y y y m y y m y y y

successful investo rs; get rich quick philo so phy, info rma tio n a va ila ble o n the y y y y m y m m m y

internet a nd co st cutting by co mpa nies were given lo west prio rity.

m y y m y y

Bennet. E, a nd Selva m. M (2011), “Investo rs’ Perceptio n o f the Fa cto rs

m m y y y m y

Influencing the Sto ck Selectio n Decisio n”, a na lysed the investo rs’ y y y m m y

perceptio n o f So cia l, Po litica l, Eco no mica l, Regula to ry, Techno lo gica l,

y y y m y m y y m m y y y m

Enviro nmenta l a nd Lega l (SPERTEL) risks o n the va lue o f equity sha res in
y m m m y m y m

the ma rket. It wa s fo und tha t except the so cia l fa cto rs between ma rried a nd
m m y m y m m y m m

unma rried investo rs, po litica l, regula to ry a nd lega l fa cto rs fo r a ge, o ccupa tio n
m y y m m y m m m y y m y m y

a nd a ll o ther fa cto rs seemed to be insignifica nt.

m m y m y y m

Bennet. E, et a l (2011), “Investo rs’ Attitude o n Sto ck Selectio n Decisio n”,

m y y y y y

identified the fa cto rs influencing the sto ck selectio n decisio n including m y y y y

demo gra phic fa cto rs. The fa cto rs tha t influenced the sto ck selectio n decisio n
y m m y m y m y y y

were Return o n Equity, Qua lity o f Ma na gement, Return o n Investment, Price

y m y m m y

to Ea rnings Ra tio a nd va rio us ra tio s o f the co mpa ny.

y m m y m m y m y y y m

The pa per entitled, “The Influence o f Sto ck Specific Fa cto rs o n Investo rs’
m y y m y y y

Sentiment?”, by Bennet.E, Selva m. M a nd Eva Esther Sha lin Ebenezer m m m m

(2011), co ncluded tha t the Sto ck Specific Fa cto rs na mely expected events
y m y m y m

surro unding the sto ck a nd bo o k va lue, reco mmenda tio n o f the fina ncia l
y y m y y m y m y y m m

co mmunity a nd price cut o ff rules ha d significa nt impa ct o n the Investo rs’

y m y m m m y y

Sentiment.

To sum up the review o f litera ture, ma ny co ntributio ns ha ve o ffered different

y y m m y y m y

perspectives o f Investo rs’ Sentiment wo rldwide a nd expla ined ma ny va ria bles,

y y y m m m m m

50
mo dels, a na lyzing to o ls, co ping stra tegies a nd o utco mes o f sentiment. Fro m
y m m y y y m m y y y y

the reviews, it is fo und tha t there is a po sitive rela tio nship between Sto ck
y m m y m y y

Specific Fa cto rs, Ma rket Specific Fa cto rs a nd Investo rs’ Sentiment. This
m y m m y m y

review o f the litera ture pro vided a n impo rta nt mo del a nd va rio us sub mo dels
y m y m y m y m m y y

fo r this study.
y

51
OBJECTIVES OF STUDY

52
 OBJECTIVES OF THE STUDY

Prima ry Objectivesm

 To study the preference o f sa la ried cla ss o n va rio us investment o ptio ns a va ila ble in
y y m m m y m y y y m m m

Luckno w City. y

 To study the investment cha ra cteristics o f sa la ried cla ss investo rs o n va rio us

y m m y m m m y y m y

investment o ptio ns a va ila ble in Luckno w City.

y y m m m y

 To study the o bjectives o f investment pla n o f a n investo rs.

y y y m y m y

Seco nda ry Objectives

y m

 To kno w the preferred investment a venues o f investo rs.

y y m y y

 To identify the preferred so urces o f info rma tio n influencing investment decisio ns.
y y y y m y y

 To understa nd the risk to lera nce level o f the investo rs a nd suggest a suita ble
y m y m y y m m m

po rtfo lio .
y y y

53
RESEARCH METHODOLOGY

54
 RESEARCH METHODOLOGY

Intro ductio n: y y

Resea rch is o ne o f the best instruments to identify the investing pa ttern

m y y y m

o f investo rs to invest in va rio us secto rs & to study different secto rs o f Ca pita l

y y y m y y y y y m m

ma rket. m

Definitio n: y

“Resea rch is ca reful inquiry o r exa mina tio n to disco ver new
m m y m m y y y

info rma tio n a nd rela tio nship a nd to expa nd a nd to va ry existing

y m y m m y m y m m y m

kno wledge.” y

Resea rch a lwa ys sta rts with questio n o r a ny pro blem a nd finds a nswer
m m m m y y m y m m

o f pro blem by using scientific metho d. It gives co mplete kno wledge a bo ut a ny

y y y y y m y m

pro blem o r questio n.

y y y

 Resea rch Design: m

“Resea rch design is the pla n structure a nd stra tegy if investiga tio n
m m m m m y

co nceived so a s o bta in a nswers to resea rch questio n a nd to co ntro l

y y m y m m y m y m y y y

va ria nce” m m

A resea rch design is the ma ster pla n o r mo del fo r the co nduct o f fo rma l
m m m y y y y y y m

investiga tio n a nd survey. It is a specifica tio n o f metho ds a nd pro cedures fo r

m y m m m y y y m y y

a cquiring the info rma tio n needs fo r so lving the pro blem. It decides the so urce
m y m y y y y y

o f info rma tio n a nd metho ds fo r ga thering the da ta . A questio nna ire a nd o ther
y y m y m y y m m m y m m y

fo rms a re tested to use the co llectio n o f da ta .

y m y y y y m m

55
u
v
i
h
c
s
e
y
t
a
r
o
l
p
x
N
G
I
D
H
C
A
S
E
R In the resea rch study there is no perfect study to so lve the pro blem. The
m

resea rch design ha s bro a dly three ca tego ries a s fo llo w.

m

1. Explo ra to ry Resea rch

y m

2. Descriptive Resea rch

3. Ca sua l Resea rch

m m

2. Descriptive Resea rch:

y
m

m
y

m
m m

I ha ve used Descriptive Resea rch Design fo r

m

resea rch purpo se. m

y

y m

y
m
y y
y y

y
y

56
 Descriptive resea rch, a lso kno wn a s sta tistica l resea rch. It describes m m y y m m m m

da ta a nd cha ra cteristics a bo ut the po pula tio n o r pheno meno n being studied.

m m m m m m y y m y y y y

Descriptive resea rch a nswers the questio ns who , wha t, where, when m m y y m

a nd ho w. This study is co mplex a nd determines high degree scientific skill to

m y y m y

study the pro blem. y

The descriptio n is used fo r frequencies, a vera ges a nd o ther sta tistica l y y m m m y m m

ca lcula tio ns. Often the best a ppro a ch, prio r to writing descriptive resea rch, is
m m y m y m y y m

to co nduct a survey investiga tio n. Qua lita tive resea rch o ften ha s the a im o f
y y m m y m m m y m m y

descriptio n a nd resea rchers ma y fo llo w-up with exa mina tio ns o f why the
y m m m y y m m y y

o bserva tio ns exist a nd wha t the implica tio ns o f the findings a re.
y m y m m m y y m

In sho rt descriptive resea rch dea ls with everything tha t ca n be co unted

y m m m m y

a nd studied.
m

Da ta Co llectio n Metho d:
m m y y y

Da ta co llectio n usua lly ta kes pla ce ea rly o n in a n impro vement pro ject,
m m y y m m m m y m y y

a nd is o ften fo rma lized thro ugh a da ta co llectio n pla n which o ften co nta ins
m y y m y m m m y y m y y m

the fo llo wing da ta co llectio n metho ds.

y y m m y y y

The so urce o f da ta co llectio n metho d is a s fo llo ws.

y y m m y y y m y y

 Prima ry Da ta m m m

 Seco nda ry Da ta y m m m

 Prima ry Da ta : m m m

57
 Prima ry da ta mea ns da ta co llected directly fro m first-ha nd experience.
m m m m m m y y m

Mea ns da ta co llected fo r the first time by a ny resea rcher fo r a ny resea rch use.
m m m y y m m y m m

There a re ma ny metho ds o f co llecting prima ry da ta a nd the ma in

m m y y y m m m m m

metho ds include:y

 Metho ds o f co llecting the prima ry da ta a re:

y y y m m m m

 Questio nna ire metho d y m y

 Interviews metho d y

 Fo cus gro up interviews y y

 Observa tio n metho d m y y

 Ca se-studies metho d m y

 Dia ries metho d m y

I ha ve used Questio nna ire metho d fo r the Prima ry da ta co llectio n

m y m y y m m m y y

fo r the study.
y

 Seco nda ry Da ta :
y m m m

Seco nda ry da ta mea ns da ta which a re co llected by a ny o ne fo r a

y m m m m m m m y m y y m

pa rticula r resea rch purpo se a nd which a re used by o thers fo r different purpo se.
m m m y m m y y y

I ha ve a lso used the seco nda ry da ta fo r the study like so me

m m y y m m m y y

co mpa ny reso urces like bro a chers, websites etc.

y m y y m

 Sa mpling Pla n: m m

58
 “Sa mpling is the pro cess to a na lyze the who le po pula tio n
m y y m m y y m y

by a na lyzing a pa rt o f it.”
m m m m y

 The effectiveness o f the repo rt depends o n the sa mple size selected fro m
y y y m y

the po pula tio n.

y m y

 Sa mpling Unit:
m

Here, ta rget po pula tio n is decided who a re the a ctua l a nd po tentia l

m y m y y m m m m y m

investo rs, ea ch sa mple ha s the cha nce to be selected o n a n equa l ba sis & this
y m m m m y y m m m

resea rch ha s been co nducted thro ugh surveying the who le o f the equity ma rket
m m y y y y m

o f Luckno w city
y y

 Sa mple Size: = 100

m

I used sa mple size is 100 m

 Da ta a na lysis to o ls:
m m m m y y

59
 I ha ve used SPSS so ftwa re (Sta tistica l Pa cka ge fo r the So cia l Sciences)
m y m m m m m y y m

fo r a na lysis purpo se.

y m m y

 In tha t I ha ve used Mea n, Media n, Mo de, Frequency Ta ble, a nd Cro ss

m m m m y m m y

Ta bula tio n, Gra phica l representa tio n & interpreta tio n with ea ch
m m y m m m y m y m

gra phs a nd cha rts.

m m m

 Micro so ft Office is used fo r da ta typing fo rma tting a nd a na lyzing the

y y y m m y m m m m

da ta . m m

60
PROBLEMS AND LIMITATIONS

61
 LIMITATIONS

The ma in limita tio ns a re a s fo llo ws:

m m y m m y y

 Respo ndents might ha ve felt hesita tio n in pro viding info rma tio n rela ted to
y m m y y y m y m y

their a ge, inco me etc. So , there ca n be so me da ta tha t might questio na ble

m y y m y m m m y m

beca use o f unwillingness o f respo ndents to give right info rma tio n.
m y y y y y m y

 Sa mple selected ma y no t represent who le po pula tio n, a s sa mple size selected

m m y y y m y m m

is very sma ll in pro po rtio n to po pula tio n due to time a nd co st co nstra ints.
m y y y y y m y y m y y m

 Even ma ny o f the respo ndents ma y give bia s a nswer.

m y y m m m

62
 DATA ANALYSIS
&
INTERPRETATIONS

63
 DATA ANALYSIS & INTERPRETATION
Que. 1. Do yo u investing in Equity Ma rket?
y y m

[ ] Yes

[ ] No y

Pa rticula rs
m m Investing Percenta ge
m

Yes 119 68%

No y 56 32%

To ta l
y m 175 100%

Investing In Equity Market

140
119
120
100
In-
80 vest -
56 ing
60
40
20
0
Yes No

64
 Investing In Equity Market
( In Percentage)

36% Yes

No

68%

Interpreta tio n: m y

Acco rding to the a bo ve cha rt we ca n see tha t:

y y m y m m m

68% o f investo rs (119) a re investing in Equity Ma rket.

y y m m

While 36% o f investo rs (56) a re no t investing in Equity Ma rket.

y y m y m

65
Que. 2. If yo u wa nt to invest, which investment o ptio n will pro vide the best
y m y y y y

returns?

[ ] Equity Sha re m

[ ] IPO

[ ] Mutua l Funds m

[ ] Bo ndsy

[ ] Fixed Depo sits y

[ ] If a ny o ther _________
m y

Investment o ptio n y y Investo rs in Percenta ge

y m

Equity Sha re m 53%

IPO 18%

Mutua l Funds m 8%

Bo nds y 7%

Fixed Depo sits y 4%

Other 10%

Investors are investing in

various Investment option
(Investors
10% in Percentage)
4% Equity Share
7% IPO
Mutual Funds
Bonds
8%
53% Fixed
Deposits
Other
18%

66
 Interpreta tio n: m y

Acco rding to the previo us cha rt:

y y y m

Acco rding to 53% o f investo rs, Equity ma rket will pro vide the best returns
y y y y m y

in co mpa re to o ther investment o ptio n.

y m y y y y

18% o f investo rs believe tha t IPO (Prima ry Ma rket) will pro vide the best
y y m m m y

returns.

8% o f investo rs think tha t Mutua l Funds will pro vide the best returns.
y y m m y

7% o f investo rs believe tha t Bo nds Ma rket will pro vide the best returns.
y y m y m y

4% o f investo rs trust tha t Fixed Depo sits will pro vide the best returns.
y y m y y

Acco rding to 10% o f investo rs, o ther investment o ptio n will pro vide the
y y y y y y y y

best returns.

Acco rding to them o ther investment o ptio ns a re:

y y y y y m

 Co mmo dity Ma rket y y m

 Insura nce m

 Go vernment Securities etc. y

67
 Que.3. Which fa cto rs mo tiva te yo u fo r investing in Equity Ma rket?
m y y m y y m

[ ] Return

[ ] Liquidity

[ ] Sa fety
m

[ ] Ca pita l Apprecia tio n

m m m y

[ ] Other _____________

Mo tiva tio n Fa cto rs

y m y m y Investo rs in Percenta ge
y m

Return 49%

Liquidity 26%

Sa fety
m 7%

Ca pita l Apprecia tio n

m m m y 17%

Other 1%

Motivating factors for Investors

to invest in Equity Market
(Investors in Percentage)
5%
16%
Return
6% 48%
Liquidity
Safety
Capital Appreciation
25%
Other

68
 Interpreta tio n: m y

Acco rding to the Previo us Figure:

y y y

49% o f investo rs a re mo tiva ted by Return to invest in Equity ma rket.

y y m y m y m

26% o f investo rs a re mo tiva ted by Liquidity to invest in Equity ma rket.

y y m y m y m

6% o f investo rs a re mo tiva ted by Sa fety to invest in Equity ma rket.

y y m y m m y m

16% o f investo rs a re mo tiva ted by Ca pita l Apprecia tio n to invest in

y y m y m m m m y y

Equity ma rket. m

While 5% o f investo rs a re mo tiva ted by o ther fa cto rs like-Investment,

y y m y m y m y

Pro fit etc. to invest in Equity ma rket.

y y m

69
Que. 4. Ho w much percenta ge o f yo ur inco me yo u invest in
y m y y y y

Equity Ma rket? m

[ ] Less tha n 5% m

[ ] 5%-10%

[ ] 10%-15%

[ ] 15%-20%

[ ] 20%- 25%

[ ] Mo re tha n 25%
y m

Percenta ge o f Inco me m y y Investo rs in Percenta ge

y m

Less tha n 5% m 23%

5%-10% 45%

10%-15% 17%

15%-20% 7%

20%- 25% 5%

Mo re tha n 25% y m 3%

Interpreta tio n: m y

Acco rding to the Previo us Figure:

y y y

23% o f the investo rs a re investing Less tha n 5% o f their inco me in Equity Ma rket.
y y m m y y m

45% o f the investo rs a re investing 5%-10% o f their inco me in Equity Ma rket.

y y m y y m

17% o f the investo rs a re investing 10%-15% o f their inco me in Equity Ma rket.

y y m y y m

7% o f the investo rs a re investing 15%- 20% o f their inco me in Equity Ma rket.

y y m y y m

70
5% o f the investo rs a re investing 20%-25% o f their inco me in Equity Ma rket.
y y m y y m

While 3% o f the investo rs a re investing Mo re tha n 25% o f their inco me in Equity

y y m y m y y

Ma rket.
m

Que. 5. Ho w do yo u tra de in Equity Ma rket?

y y y m m

[ ] Intra da y m m

[ ] Delivery

[ ] Specula tio n m y

[ ] Arbitra gers m

[ ] Hedging

[ ] If a ny o ther plea se specify _____________

m y m

Types o f Tra de y m Investo rs in Percenta ge

y m

Intra da y m m 13%

Delivery 31%

Specula tio n m y 26%

Arbitra gers m 17%

Hedging 11%

Other 2%

71
 Investors are Trade in
Equity Market
(Investors in Percentage)
2%
11% 13%
Intraday
Delivery

17% Speculation
Arbitragers
Hedging
31%
Other

26%

Interpreta tio n: m y

Acco rding to the Previo us Figure:

y y y

13% o f the investo rs a re do ing Intra da y tra ding in Equity Ma rket.

y y m y m m m m

“Intra da y Tra ding is tra ding fo r tha t o ne da y o nly. Mea ns a ny securities

m m m m y m y m y m m

a re purcha se & sell “within the da y.”

m m m

31% o f the investo rs a re investing in Equity Ma rket a s a Delivery ba se Tra ding.

y y m m m m m m

“Delivery ba sed tra ding is no rma lly co nsidered a s a sa fer a ppro a ch fo r

m m y m y m m m m y m y

tra ding in sha res when co mpa red to da y tra ding. Delivery ba sed tra ding
m m y m y m m m m

invo lves buying sha res o n a ma rket da y a nd selling them o nly a fter receiving
y m y m m m m y m

the delivery o f tho se sha res in dema t a cco unt.”

y y m m m y

26% o f the investo rs a re tra ding in Equity Ma rket a s a Specula to r.

y y m m m m m m y

“Specula to rs a re tho se cla sses o f investo rs who willingly ta ke higher-tha n-

m y m y m y y y m m

a vera ge risk in return fo r a higher-tha n-a vera ge pro fit po tentia l in future.
m m y m m m m y y m

72
 Specula to rs a im prima rily a t quick pro fit fro m a sho rt-term a cquisitio n o f
m y m m m y y m y m y y

a ssets.”
m

17% o f the investo rs a re Arbitra gers in Equity Ma rket.

y y m m m

“Arbitra ger mea ns who purcha ses securities in o ne ma rket fo r immedia te

m m y m y m y m

resa le in a no ther in the ho pe o f pro fiting fro m the price differentia l”

m m y y y y y m

11% o f the investo rs a re tra ding in Equity Ma rket a s Hedgers.

y y m m m m

“Hedging mea ns reducing o r co ntro lling risk. Hedgers wish to elimina te o r

m y y y y m y

reduce the price risk to which they a re a lrea dy expo sed.”y m m m y

While 2% o f the investo rs a re tra de in Equity Ma rket fo r Other Purpo se.

y y m m m y y

73
Que.6. Wha t is the time ho rizo n fo r investing in Equity Ma rket?
m y y y m

[ ] Less tha n 1 Mo nths m y

[ ] 1 to 3 Mo nths
y y

[ ] 3 to 6 Mo nths
y y

[ ] 6 to 12 Mo nths
y y

[ ] Mo re tha n 12 Mo nths
y m y

Time Ho rizo n y y Investo rs in Percenta ge

y m

Less tha n 1 Mo nths m y 14%

1 to 3 Mo nths
y y 28%

3 to 6 Mo nths
y y 15%

6 to 12 Mo nths y y 18%

Mo re tha n 12 Mo nths
y m y 25%

Investors Time Horizon for

investing in Equity Market
30% (Investors
28% in Percentage) 25%
25%
20% 18%
14% 15%
15%
10%
5%
0%
Less than 1 1 to 3 Months 3 to 6 Months 6 to 12 More than 12
Months Months Months

74
Interpreta tio n: m y

Acco rding to the Previo us Figure:

y y y

14% o f investo rs invest in Equity ma rket fo r Less tha n 1 Mo nths.

y y m y m y

28% of
y investo rs y invest in Equity ma rket
m fo r
y the perio d
y of
y

1 to 3 Mo nths.
y y

15% o f investo r’s time ho rizo n fo r in Equity ma rket is 3 to 6 Mo nths.

y y y y y m y y

18% o f investo r’s time ho rizo n fo r in Equity ma rket is 6 to 12 Mo nths.

y y y y y m y y

25% o f investo rs invest in Equity ma rket fo r mo re tha n 12 Mo nths.

y y m y y m y

75
Que.7. Wha t is the ra te o f return expected by yo u fro m Equity Ma rket
m m y y y m in a m

yea r?
m

[ ] 5% – 10 %

[ ] 10% – 15 %

[ ] 15% – 20%

[ ] 20% – 25%

[ ] 25% –30%

[ ] 30% a nd a bo ve
m m y

Ra te o f Return
m y Investo rs in Percenta ge
y m

5% – 10 % 12%

10% – 15 % 18%

15% – 20% 32%

20% – 25% 26%

25% –30% 8%

30% a nd a bo ve
m m y 4%

4% 12%
8%
Rate of Return
5% – 10 %
18% 10% – 15 %

26% 15% – 20%

20% – 25%

25% –30%

30% and above

32%

76
Interpreta tio n: m y

Acco rding to the a bo ve Figure:

y y m y

12% o f investo rs a re expects 5%-10% return fro m Equity ma rket.

y y m y m

18% o f investo rs a re expects 10%-15% return fro m Equity ma rket.

y y m y m

32% o f investo rs a re expects 15%-20% return fro m Equity ma rket.

y y m y m

26% o f investo rs a re expects 20%-25% return fro m Equity ma rket.

y y m y m

Here, a bo ve two ca ses investo rs a re mo re expects fro m Equity

m y y m y m y y

ma rket.
m

8% o f investo rs a re expects 25%-30% return fro m Equity ma rket.

y y m y m

While 4% o f investo rs a re expects mo re tha n 30% return fro m Equity

y y m y m y

ma rket.
m

77
Que.8. Are yo u sa tisfied with the current perfo rma nce o f the Equity Ma rket in
y m y m y m

terms o f expected return?

y

[ ] Fully Sa tisfied m

[ ] Sa tisfied
m

[ ] Neutra l m

[ ] Unsa tisfied m

[ ] Fully Unsa tisfied m

Ra te o f Return
m y No . o f Investo rs
y y y Percenta ge
m

Fully Sa tisfied m 30 17%

Sa tisfied m 73 42%

Neutra l m 49 28%

Unsa tisfied m 18 10%

Fully Unsa tisfied m 5 3%

To ta l y m 175 100%

78
 Investors satisfaction level
From Equity Market
(Investors in Numers)(Total 175)
80 73
70
60
49
50
40
30
30
20 18
10 5
0
Fully Satisfied Satisfied Neutral Unsatisfied Fully Unsatisfied

Interpreta tio n: m y

Acco rding to the Previo us Figure:

y y y

30 investo rs y a re
m Fully Sa tisfied
m fro m y current perfo rma nce
y m of
y

Equity ma rket.
m

73 investo rs a re Sa tisfied fro m Equity ma rket.

y m m y m

49 investo rs a re Neutra l with current perfo rma nce o f Equity ma rket.

y m m y m y m

18 investo rs a re Unsa tisfied fro m Equity ma rket.

y m m y m

While 5 investo rs a re Fully Unsa tisfied fro m Equity ma rket.

y m m y m

79
Que. 9. Who a dvise yo u to enter in Equity Ma rket?
y m y y m

[ ] Friends

[ ] Rela tives m

[ ] Advisers

[ ] Media m

[ ] Resea rch Repo rt m y

[ ] Ma ga zines
m m

[ ] If a ny o ther ___________
m y

Pa rticula rs
m m Investo rs in Percenta ge
y m

Friends 28%

Rela tives m 12%

Advisers 25%

Media m 17%

Resea rch Repo rt m y 10%

Ma ga zines m m 5%

Other 3%

80
 Investor's Referance for enter into
Equity Market
(Investors in Percentage)

5% 3%
Friends
10% 28%
Relatives
Advisers
Media
17% Research Report
Magazines
12%
Other
25%

Interpreta tio n: m y

Acco rding to the Abo ve Figure:

y y y

Friends mo tiva te 28% o f the investo rs to enter into the equity ma rket.
y m y y y y m

Rela tives mo tiva te 12% o f the investo rs to enter into the equity ma rket.
m y m y y y y m

25% o f investo rs enter in Equity ma rket by the Advise o f

y y m y Fina ncia l
m m

Adviso r. y

Media mo tiva te 17% o f the investo rs to enter into the equity ma rket.
m y m y y y y m

Ma ga zines mo tiva te 10% o f the investo rs to enter into the equity ma rket.
m m y m y y y y m

5% o f investo rs a re mo tiva tes by Rea ding Ma ga zines to enter in Equity

y y m y m m m m y

ma rket.
m

While o ther fa cto rs like self-Study, their o wn View etc. mo tiva te 3% o f

y m y y y m y

the investo rs to enter into the equity ma rket.

y y y m

81
Que.10. Which Fa cto rs do yo u co nsider mo st impo rta nt while selecting the
m y y y y y y m

Secto rs? y

[ ] Ma rket Trend m

[ ] Pro fita bility y m

[ ] Eco no mic Co nditio n y y y y

[ ] Industry Co nditio n y y

[ ] Existence o f well esta blished Co mpa nies under Secto rs y m y m y

[ ] Go vernment Po licy
y y

[ ] If a ny o ther plea se specify _____________

m y m

Pa rticula rs m m Percenta gem

Ma rket Trend m 29%

Pro fita bility y m 23%

Eco no mic Co nditio n

y y y y 14%

Industry Co nditio n y y 16%

Existence o f well esta blished Co mpa nies

y m y m 12%

under Secto rs y

Go vernment Po licy
y y 5%

Any Other 1%

82
 Factors Consider by Investors
while selecting sector
5% 1%
(Investors in Percentage)
12% Market Trend
29% Profitability
Economic Condition
Industry Condition
16%
Existence of well established
Companies under Sectors
Government Policy
14% 23% Any Other

Interpreta tio n: m y

Acco rding to the Previo us Figure:

y y y

29% o f the investo rs ha ve co nsidered Ma rket Trend a s a mo st impo rta nt

y y m y m m m y y m

fa cto r while selecting the Secto r.

m y y

23% o f the investo rs ha ve co nsidered Pro fita bility a s a mo st impo rta nt

y y m y y m m m y y m

fa cto r while selecting the Secto r.

m y y

14% o f the investo rs ha ve co nsidered Eco no mic Co nditio n a s a mo st

y y m y y y y y m m y

impo rta nt fa cto r while selecting the Secto r.

y m m y y

16% o f the investo rs ha ve co nsidered Industry Co nditio n a s a mo st

y y m y y y m m y

impo rta nt fa cto r while selecting the Secto r.

y m m y y

12% o f the investo rs ha ve co nsidered Existence o f well esta blished

y y m y y m

Co mpa nies under Secto rs a s a mo st impo rta nt fa cto r while selecting the
y m y m m y y m m y

Secto r. y

5% o f the investo rs ha ve co nsidered Go vernment Po licy a s a impo rta nt

y y m y y y m m y m

fa cto r while selecting the Secto r.

m y y

While 1% o f the investo rs ha ve co nsiders Other Fa cto r like y y m y m y

Glo ba l Po sitio n o f the co mpa ny a nd etc. impo rta nt fa cto r while selecting
y m y y y y m m y m m y

the Secto r. y

83
 Que.11. Which Secto rs do yo u prefer the mo st? y y y y

(Give 1 to 5 Orders in given bo xes) y y

Here, I ha ve decided to study o nly these five secto rs.

m y y y

Oil & Ga s Secto r m y

Ba nking Secto rm y

IT Secto r y

Infra structure Secto r m y

Auto mo bile Secto r y y y

Orders(Ra nks) Given by Respo ndents

m y

Secto rs y

1 2 3 4 5 To ta l
y m

Oil & Ga s Secto r m y 44 30 49 21 31 175

Ba nking Secto r
m y 26 24 53 42 30 175

IT Secto r y 20 40 47 35 33 175

Infra structure Secto r

m y 37 32 33 28 45 175

Auto mo bile Secto r

y y y 35 30 28 52 30 175

To ta l y m 162 156 210 178 169 875

84
 100% 20
26 35 1st Rank
44 37
90%
80% 24 40
32 30 2nd Rank
70% 30
60% 53 28 3rd Rank
47 33
50% 49
40% 28 4th Rank
42 52
35
30% 21
20%
45 5th Rank
31 30 33 30
10%
0%
or or or or or
e ct e ct e ct e ct e ct
sS gS IT
S
re
S
ile
S
Ga in tu ob
l& ank uc m
Oi B st
r to
fra Au
In

On the ba sis o f a bo ve cha rt:

m y m y m

Ho w ma ny investo rs given 1st to 5th Ra nk to which secto r?

y m y y m y y

Secto rs y Invest Ra m

o rs
y nk

Oil & 44 1st

Ga s m

Secto r y

IT Secto r y 40 2nd

Ba nkingm 53 3rd
Secto r y

Auto mo b y y 52 4th
ile Secto r y

Infra struc m 45 5th

ture
Secto r y

Interpreta tio n: m y

85
 On the ba sis o f Previo us Figures: m y y

Oil & Ga s Secto r: m y

 44 Investo rs ga ve 1st ra nk, 30 Investo rs ga ve 2nd ra nk, 49 investo rs ga ve 3rd

y m m y m m y m

Ra nk, 21 Investo rs ga ve 4th Ra nk, & 31 Investo rs ga ve 5th Ra nk to this secto r.

m y m m y m m y y

 Here, o ver a ll 44 investo rs ha ve selected o il & ga s secto r a s a First Ra nk in

y m y m y m y m m m

co mpa riso n with First Ra nk o f a ll secto rs.

y m y m y m y

IT Secto r: y

 20 Investo rs ga ve 1st ra nk, 40 Investo rs ga ve 2nd ra nk, 47 investo rs ga ve 3rd

y m m y m m y m

Ra nk, 35 Investo rs ga ve 4th Ra nk, & 33 Investo rs ga ve 5th Ra nk to this secto r.

m y m m y m m y y

 Here, o ver a ll 40 investo rs ha ve selected IT secto r a s a 2nd Ra nk in

y m y m y m m m

co mpa riso n with 2nd Ra nk o f a ll secto rs.

y m y m y m y

Ba nking Secto r:
m y

 26 Investo rs ga ve 1st ra nk, 24 Investo rs ga ve 2nd ra nk, 53 investo rs ga ve 3rd

y m m y m m y m

Ra nk, 42 Investo rs ga ve 4th Ra nk, & 30 Investo rs ga ve

m y m m y m 5 th Ra nk to m y

this secto r. y

 Here, o ver a ll 53 investo rs ha ve selected Ba nking secto r a s a 3nd Ra nk in

y m y m m y m m m

co mpa riso n with 3nd Ra nk o f a ll secto rs.

y m y m y m y

Auto mo bile Secto r:

y y y

 35 Investo rs ga ve 1st ra nk, 30 Investo rs ga ve 2nd ra nk, 28 investo rs ga ve 3rd

y m m y m m y m

Ra nk, 52 Investo rs ga ve 4th Ra nk, & 30 Investo rs ga ve 5th Ra nk to this

m y m m y m m y

secto r. y

86
  Here, o ver a ll 52 investo rs ha ve selected Auto mo bile secto r a s a 4th Ra nk in
y m y m y y y m m m

co mpa riso n with 4th Ra nk o f a ll secto rs.

y m y m y m y

Infra structure Secto r:

m y

 37 Investo rs ga ve 1st ra nk, 32 Investo rs ga ve 2nd ra nk, 33 investo rs ga ve 3rd

y m m y m m y m

Ra nk, 28 Investo rs ga ve 4th Ra nk, & 45 Investo rs ga ve

m y m m y m 5th Ra nk tom y

this secto r. y

 Here, o ver a ll 45 investo rs ha ve selected Infra structure secto r a s a

y m y m m y m m

5nd Ra nk in co mpa riso n with 5nd Ra nk o f a ll secto rs.

m y m y m y m y

87
Que. 12. Mentio n the mo st impo rta nt fa cto rs fo r selecting a co mpa ny
y y y m m y y m y m of
y

yo ur cho ice.
y y

[ ] Ea rning Per Sha re

m m

[ ] Dividend

[ ] Bro ker’s a dvise

y m

[ ] Ma rket ca pita liza tio n

m m m m y

[ ] Perfo rma nce o f co mpa ny

y m y y m

[ ] P.E. Ra tio m y

[ ] If a ny o ther __________
m y

Fa cto rs a ffect fo r
m y m y Investo rs in
y

selecting co mpa ny y m Percenta ge m

Ea rning Per Sha re m m 19%

Dividend 17%

Bro ker’s a dvise y m 15%

Ma rket ca pita liza tio n

m m m m y 7%

Perfo rma nce o f co mpa ny y m y y m 16%

P.E. Ra tio m y 24%

Other 2%

88
 Factors affect to Investors for for
selecting company
(Investors in Percentage)
2%
19%
Earning Per Share
24%
Dividend

Broker’s advise

Market capitalization
17%
Performance of company
16%
P.E. Ratio

7% 15% Other

Interpreta tio n: m y

On the ba sis o f a bo ve Figures: m y m y

19% o f the investo rs ha ve co nsidered Ea rning Per Sha re a s a mo st impo rta nt

y y m y m m m m y y m

fa cto r to select a Co mpa ny under the secto r o f their Cho ice.

m y y m y m y y y

17% o f the investo rs ha ve co nsidered Dividend a s a mo st impo rta nt fa cto r to

y y m y m m y y m m y y

select a Co mpa ny under the secto r o f their Cho ice.

m y m y y y

While 15% o f the investo rs a re select a co mpa ny under the secto r o f their cho ice
y y m m y m y y y

o n the ba sis o f Bro ker’s a dvises.

y m y y m

7% o f the investo rs ha ve co nsidered Ma rket ca pita liza tio n by the co mpa ny a s

y y m y m m m m y y m m

a impo rta nt fa cto r to select a co mpa ny under the secto r.

m y m m y y m y m y

16% o f the investo rs ha ve co nsidered a s a Perfo rma nce o f co mpa ny mo st

y y m y m m y m y y m y

impo rta nt fa cto r to select a co mpa ny under the secto r o f their cho ice.
y m m y y m y m y y y

24% o f the investo rs ha ve co nsidered Price Ea rnings Ra tio a s a mo st impo rta nt

y y m y m m y m m y y m

fa cto r select a co mpa ny under the secto r o f their cho ice.

m y m y m y y y

89
At la stm 2% of
y the investo rs
y ha ve
m co nsidered
y Other Fa cto rs
m y like

Suggestio n fro m reference gro up, Externa l a dviso rs, Sta keho lders, Gro wth
y y y m m y m y y

o f Co mpa ny, Ma rket Trend, Pro fita bility a nd their o wn view etc. to select a
y y m m y m m y y m

co mpa ny under the secto r.

y m y

90
FINDINGS

91
 FINDINGS

 Fro m the exa mina tio n I disco vered tha t 68% o f specula to rs a re putting
y m m y y m y m y m

reso urces into Equity Ma rket. While 36% o f fina ncia l specia lists a re no t
y y m y m m m m y

putting reso urces into Equity Ma rket a cco rding to my exa mple size. y y m m y y m

 I a dditio na lly disco vered tha t, 53% o f fina ncia l specia lists a ccept tha t
m y m y m y m m m m m

Equity Ma rket is better specula tio n cho ice a nd will give the best returns in
m m y y m

co ntra st with o ther venture a lterna tive.

y m y m m

 I disco vered tha t the 49% o f specula to rs who a re ma na ging in va lue ma rket
y m y m y y m m m m m

they a re pro pelled by return fa cto r a nd 26% o f fina ncia l specia lists a re
m y m y m y m m m m

inspired by Liquidity a nd so me fina ncia l specia list likewise co nsider ca pita l m y m m m y m m

tha nkfulness a nd wellbeing fa cto r while putting reso urces into va lue ma rket
m m m y y y m m

in different a rea s. m m

 I a dditio na lly disco vered tha t the 45% o f the fina ncia l specia lists a re
m y m y m y m m m m

prepa red o r intrigued to put their 5%-10% o f pa y in Equity Ma rket. It

m y y y m m

implies numero us fina ncia l specia lists trust o n the develo pment o f va lue y m m m y y y m

ma rket a s they a re prepa red to spend significa nt extent o f their pa y.

m m m m y m y m

 Pro ceeding I disco vered tha t no t ma ny specula to rs need to ba rga in in

y y m y m m y y m m

intra da y excha nging which sho ws tha t they co nsider wellbeing fa cto rs
m m m y m y m y

while co ntributing. 31% o f the fina ncia l specia lists a re putting reso urces
y y m m m m y

into Equity Ma rket a s a Delivery ba se Tra ding a nd 26% o f the fina ncia l
y m m m m m m y m m

specia lists a re excha nging Equity Ma rket a s a Specula to r. Mea ns 26% o f

m m m m m m m y m y

92
 fina ncia l specia lists who rea dily ta ke higher-tha n-no rma l da nger a s a tra de-
m m m y m m m y m m m m m

o ff fo r a higher-tha n-no rma l benefit po tentia l.

y y m m y m y m

 28% o f specula to rs put reso urces into Equity ma rket fo r the time o f 1 to 3
y m y y y m y y y

Mo nths a nd simila r extent o f fina ncia l specia lists a re co ntribute fo r

y m m y m m m m y y

significa nt stretch mo re tha n yea r. m y m m

 I likewise disco vered tha t 32% o f specula to rs a re expects 15%-20% get y m y m y m

ba ck fro m Equity ma rket a nd 26% o f fina ncia l specia lists a re expects 20%-
m y m m y m m m m

25% get ba ck fro m Equity ma rket. Here, fina ncia l specia lists a re mo re
m y m m m m m y

a nticipa tes fro m Equity ma rket.

m m y m

 42% o f specula to rs a re ha ppy with the current presenta tio n o f the Equity
y m y m m m y y

Ma rket a s fa r a s a nticipa ted return, while 28% o f fina ncia l specia lists a re
m m m m m m y m m m m

Neutra l a bo ut va lue ma rket. m m y m m

 I fo und tha t the grea ter pa rt o f specula to rs a re pro pelled by their

y m m m y m y m y

co mpa nio ns to enter in the va lue ma rket a nd a few fina ncia l specia lists a re
y m y y m m m m m m m m

persua ded by Advisers, Media , Resea rch Repo rt a nd different elements like
m m m y m

a nd self investiga tio n o f mo mentum situa tio n o f va lue ma rket.

m m y y y m y y m m

 Other thing I disco vered tha t 29% o f the fina ncia l specia lists ha ve y m y m m m m

co nsidered ma rket pa ttern a nd 23% o f the specula to rs ha ve tho ught a bo ut

y m m m y m y m y m y

Pro fita bility a s a mo st significa nt fa cto r a s a mo st significa nt fa cto r while

y m m m y m m y m m y m m y

cho o sing the Secto r. There a re a dditio na lly different va ria bles like -
y y y m m y m m m

93
 go vernment stra tegy, industry co nditio n, a nd fina ncia l co nditio n likewise
y m y y m m m y y

significa nt fa cto r while cho o sing the Secto r

m m y y y y

 At tha t po int I fo und tha t 44 specula to rs cho se Oil a nd ga s a rea a s a First

m y y m m y y m m m m m m

Ra nk (in exa mina tio n with First Ra nk, a ll things co nsidered)

m m m y m m y

 40 fina ncia l specia lists ha ve cho sen IT a rea a s a seco nd Ra nk.

m m m m y m m m m y m

 53 fina ncia l specia lists ha ve cho sen Ba nking a rea a s a 3nd Ra nk.
m m m m y m m m m m m

 52 fina ncia l specia lists ha ve cho sen Auto mo bile a rea a s a fo urth Ra nk
m m m m y y y m m m m y m

 45 fina ncia l specia lists cho se Infra structure a rea a s a 5nd Ra nk.
m m m y m m m m m m

 I likewise disco vered tha t 24% o f the fina ncia l specia lists ha ve tho ught y m y m m m m y

a bo ut Price Ea rning Ra tio , 19% o f the specula to rs ha ve co nsidered Ea rning

m y m m y y m y m y m

per Sha re a nd17% o f the specula to rs ha ve tho ught a bo ut Dividend a s a

m m y m y m y m y m m

mo st significa nt fa cto r while cho o sing a n o rga niza tio n fro m these cho se
y m m y y y m y m m y y y

a rea s. Specula to rs likewise co nsider different co mpo nents like - Suggestio n

m m m y y y y y

fro m reference ga thering, Externa l co unselo rs, Sta keho lders, Gro wth o f
y m m y y m y y y

Co mpa ny, Ma rket Trend, Pro fita bility a nd their o wn view a nd so o n a re a s

y m m y m m y m y y m m

a significa nt fa cto r while cho o sing a n o rga niza tio n fro m these cho se a rea s.
m m m y y y m y m m y y y m m

94
RECOMMENDATIONS

95
 RECOMMENDATION

 Prefer investment fo r lo ng term investment stra tegy tha t pro vides yo u y y m m y y

mo dera te return with liquidity.

y m

 Investo rs sho uld no t invest in o nly equity ma rket but, a lso invest in o ther
y y y y m m y y

Sa fe Securities Like- Fixed Depo sits, Go vernment Securities, Bo nds,

m y y y

Mutua l fund a nd Insura nce etc. which a lso pro vides mo dera te return.
m m m m y y y m

 Fo r Exa mple: One sho uld prefer

y m y

 Equity – 50%

 Other Sa fe Securities – 50% m

 So , o ne ca n get mo dera te return with liquidity.

y y m y m

 Investo rs sho uld invest mo ney a t lo wer level price a nd sa le the sto ck a t
y y y m y m m y m

higher price.

 Investo rs sho uld select co mpa ny o n the ba sis o f PE ra tio , EPS, Current
y y y m y m y m y

Gro wth o f Co mpa ny a nd Ma rket ca pita liza tio n a nd ma ny mo re. So ,

y y y m m m m m m y m m y y

investo rs ca n get higher return o n their investment.

y m y

 Alwa ys invest extra mo ney in sto ck ma rket. Do no t invest by ta king lo a n

m m y y m y y m y m

fro m ba nks o r o ther reso urces.

y m y y y

96
CONCLUSION

97
 CONCLUSION

During my prepa ra tio n perio d I ha ve co ncentra te o n "Specula to rs Beha vio r m m y y m y m y m y m y

fo r Investing in Equity Ma rket in Va rio us Secto rs" by utilizing Descriptive

y m m y y

Resea rch Design a s a Questio nna ire technique where respo ndents a re fro m
m m m y m y m y

entire o f the va lue ma rket o f Luckno w city.

y m m y y

Fro m the study I fo und tha t significa nt individua ls a re putting reso urces into
y y m m m m y y

va lue ma rket simply beca use o f Ea rn High Return a nd Hedge the Risk by
m m m y m m

putting their significa nt extent o f pa y in Equity Ma rket. Here, the va st m y m m m

ma jo rity o f individua ls a re excha nge va lue ma rket a s a theo ry a nd they a re

m y y m m m m m m m y m m

co ntributes fo r o ne to a qua rter o f a yea r. By a nd la rge, the fina ncia l

y y y y m m y m m m m m m

specia lists who a re co ntribute fo r extensive stretch mo re tha n yea r they a re

m y m y y y m m m

do ubtlessly ga inful in va lue ma rket. Lio n's sha re o f individua ls a re spurred by

y m m m y m y m m

their co mpa nio ns a nd media s enco ura ge to go into va lue ma rket. La rger pa rt
y m y m m y m y y y m m m m

individua ls a re expecting so mething mo re fro m the va lue ma rket. In this wa y,

m m y y y m m m

a t la st so me a re fulfilled a nd so me a re no t fulfill with va lue ma rket.

m m y m m y m y m m

Significa nt fina ncia l specia lists fa vo r the Oil a nd ga s a rea a s a first po sitio n
m m m m m y m m m m m m y y

ba sed o n Ma rket pa ttern, Pro fita bility, industry co nditio n a nd mo neta ry

m y m m y m y y m y m

co nditio n a dditio na lly significa nt fa cto r while cho o sing the Secto r a nd
y y m y m m m y y y y m

specula to rs ha ve likewise co nsidered Price Ea rning Ra tio , Ea rning per Sha re

m y m y m m y m m

a nd Dividend a s a mo st significa nt fa cto r while cho o sing a n o rga niza tio n

m m m y m m y y y m y m m y

under these cho se a rea s. y m m

98
BIBLIOGRAPHY

88
 BIBLIO GRA PHY Y M

 Anna A Merika s, Greece Andrea s G Merika s, Greece Geo rge S Vo zikis, Dev
m m m m y y

Pra sa d, (2000). Eco no mic Fa cto rs a nd Individua l Investo r Beha vio r. The Ca se
m m y y m y m m y m y m

o f the Greek Sto ck Excha nge. J. o f Applied Business Resea rch. 20:(4) 93-97.
y y m y m

 Anke Gerber, Tho rsten Hens, Bo do Vo gt (2002). Ra tio na l Investo r Sentiment. y y y y m y m y

(Electro nic co py a va ila ble a t http://ssrn.co m/a bstra ct=326802).

y y m m m m y m m

 Alo k Kuma r, Cha rles Lee (2003). Reta il Investo r Sentiment a nd Return Co
y m m m y m y

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(2002).

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m y m Investo r y Sentiment. (Electro nic y co py y Ava ila ble m m at m

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m y m m m m

Weber, Ma rtin (2009). Individua l Investo r Sentiment a nd Sto ck Returns - Wha t

m m y m y m

Do We Lea rn fro m Wa rra nt Tra ders? (Electro nic co py Ava ila ble a t
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 Hussein A. Ha ssa n Al-Ta mimi (2006). Fa cto rs influencing Individua l Investo r m m m m y m y

Beha vio ur: An Empirica l Study o f the UAE Fina ncia l Ma rkets. The Business
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Review. 5(2): 225-232.

 Iiha ra , Yo shio , Hidea ki Kiyo shi Ka to , To shifumi To kuna ga (2001). Investo rs’
m m y y m y m y y y m m y

Herding o n the To kyo Sto ck Excha nge. Interna tio na l Review o f Fina nce. 2 (2):
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71-98.

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y m m m y y m

Co nsumer Co nfidence (Sentiment)? Evidence fro m the Michiga n Survey o f

y y y m y

Co nsumers. The Na tio na l Burea u o f Eco no mic Resea rch, NBER Wo rking Pa per
y m y m m y y y m y m

No . 9926 y

 Jo hn A. Do uka s, Niko la o s T. Milo na s (2002). Investo r Sentiment a nd the

y y m y m y y m y m

Clo sed-end Fund Puzzle: Out-o f-Sa mple Evidence. (Electro nic co py a va ila ble a t
y y m y y m m m m

http://ssrn.co m/a bstra ct=394960). y m m

 Jördis Hengelbro ck, Erik Theissen, Christia n Westheide (2010). Ma rket Respo nse
y m m y

to y Investo r y Sentiment. (Electro nic y co py y a va ila ble

m m m a t: m

http://ssrn.co m/a bstra ct=1343798). y m m

 Ka hnema nn D, A. Tversky (1979). Pro spect Theo ry: An Ana lysis o f Decisio n
m m y y m y y

under Risk. Eco no metrica . 47(2): 263-292. Krishna n, R, Bo o ker, D M (2002).

y y m m y y

Investo rs’ Use o f Ana lysts’ Reco mmenda tio ns. Beha vio ur Resea rch in
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Acco unting. 14: 129 – 158. y

 Lewellen Wilbur G, Ro na ld C. Lea se, Ga ry G. Scha la rba um, (1977). Pa tterns o f y m m m m m m m y

Investment Stra tegy a nd Beha vio ur a mo ng Individua l Investo rs. J. o f m m m y m y m y y

Business.10: 296-333. Ma chine, Ma rk (1982). Expected Utility Ana lysis witho ut m m m y

the Independent Axio m. Eco no metrica . 50: 277-323. y y y m

 Ma nish Mitta l, Vya s R.K., (2007) Demo gra phics a nd Investment Cho ice a mo ng
m m m y m m y m y

India n Investo rs. J. o f Beha vio ura l Fina nce. 4: 12-20.

m y y m y m m

 Ma tthia s Burgha rdt, Ma rcel Czink, a nd Rya n Rio rda n (2008). Reta il Investo r
m m m m m m y m m y

Sentiment a nd m the Sto ck y Ma rket. m (Electro nic y co py y a va ila ble

m m m

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m y m m

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m m m m y y y y y

Sentiment Co ntribute to Investo r Sentiment: Gla mo ur Bra nds a nd Gla mo ur y y y m y m m m y

Sto cks?. (Electro nic co py a va ila ble a t: http://ssrn.co m/a bstra ct=1571491).
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 Micha el Lemmo n, So phie Xia o ya n Ni (2009). The Effects o f Investo r Sentiment

m y y m y m y y

o n Specula tive Tra ding a nd Prices o f Sto ck a nd Index Optio ns. (Electro nic co py
y m m m y y m y y y

a va ila ble a t: http://ssrn.co m/a bstra ct=1572427).

m m m m y m m

 Mo ha med ZOUAOUI, Geneviève NOUYRIGAT, Fra ncisca BEER (2010). Ho w

y m m m y

do es investo r sentiment a ffect Sto ck Ma rket Crises? Evidence fro m pa nel da ta .

y y m y m y m m m

(Electro nic co py a va ila ble a t: http://ssrn.co m/a bstra ct=1584566).

y y m m m m y m m

 Ma dhurima Deb, Ka vita Cha va li (2009). A study o n Gender differences in

m m m m m m y

Investment Beha vio ur. Asia -Pa cific Business Review. 5 (3): 78-88. m y m m

 Ma rk J. Fla nnery, Aris A. Pro to pa pa da kis (2002). Expected Utility Ana lysis
m m y y m m m m

witho ut the Independent Axio m. Eco no metrica . 50: 277-323.

y y y y m

 Mujta ba Mia n, Sriniva sa n Sa nka ra guruswa my (2008). Investo r Sentiment a nd

m m m m m m m m m y m

Sto ck Ma rket Respo nse to Co rpo ra te News. (Electro nic co py a va ila ble a t:
y m y y y y m y y m m m m

http://ssrn.co m/a bstra ct= 107619). y m m

 Micha el Lemmo n, So phie X. Ni (2008). The Effects o f Investo r Sentiment o n

m y y y y y

Specula tive Tra ding a nd Prices o f Sto ck a nd Index Optio ns. (Electro nic co py
m m m y y m y y y

a va ila ble a t: http://ssrn.co m/a bstra ct=1340762).

m m m m y m m

 Nitta i K. Bergma n a n7d Suga ta Ro ycho wdhury(2008). Investo r Sentiment a nd

m m m m m y y y m

Co rpo ra te
y y m Disclo sure. y (Electro nic y co py y a va ila ble
m m m at m SSRN:

http://ssrn.co m/a bstra ct=1104444). y m m

 Po tter Ro ger Ewing. (1970) Mo tiva ting Fa cto rs Guiding the Co mmo n Sto ck
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Investo r. Disserta tio n Abstra cts. The J. o f Fina nce. 25 (5): 1184(1 pa ge).
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m y m y y y m y y y m

Co mmunica tio ns. An Interna tio na l J. 9: (1), pp. 25-42.

y m y m y m

 Rya n Wo o d A, Judith Lynne Za ichko wsky (2004). Attitudes a nd Tra ding

m y y m y m m

Beha vio ur o f Sto ck Ma rket Investo rs. J. o f Beha vio ra l Fina nce. 5: 170-179.
m y y y m y y m y m m

 Sa chitha na ntha m. V, Sa yed Ja fer, Ra ja . J a nd Suresh Kuma r A (2007). Investo rs

m m m m m m m m m m y

Perceptio n to wa rds Ca pita l Ma rket Refo rms in India . SMART J. o f Business

y y m m m m y m y

Ma na gement Studies. 3(1):39-45.

m m

 Scha rfstein, Da vid S, Jeremy C. Stein, (1990). Herd Beha vio ur a nd Investment.
m m m y m

The America n Eco no mic Review. 80 (3): 465- 479. m y y

 Sha ila ja Ga jja la ,(2005). Beha vio ra l Fina nce: Is investo r Irra tio na lity the no rm?.
m m m m m m m y m m y m y m y

Osma nia J. o f Ma na gement. 2(2): 13-20.

m m y m m

 Shleifer,A.(2000), Inefficient Ma rkets: An Intro ductio n to Beha vio ura l Fina nce, m y y y m y m m

Oxfo rd: Oxfo rd University Press. 4, 19-33.

y y

 To to k Sugiha rto , Eno L. Ina nga , Ro y Sembel (2007). A Survey o f Investo rs’
y y m y y m m y y y

Current Perceptio ns a nd Va lua tio n Appro a ches a t Ja ka rta Sto ck Excha nge. y m m m y y m m m m m y m

Interna tio na l Resea rch J. o f Fina nce a nd Eco no mics. 10: 66-71.
m y m m y m m y y

 Wa rren Willia m C. Ro bert. E. Stevens a nd C. Willia m Meco nky (1996). Using

m m y m m y

Demo gra phic a nd the Life Style Ana lysis to Segment Individua l Investo rs.
y m m m y m y

Fina ncia l Ana lyst. 20 :74-77.

m m m

 Yue-Cheo ng Cha n a nd Da nny Meida n (2005), Individua l Investo r Sentiment a nd

y m m m m m y m

Lo ng-Run Perfo rma nce o f IPOs. (Electro nic co py a va ila ble a t SSRN:
y y m y y y m m m m

http://ssrn.co m/a bstra ct=838484). y m m

94
ANNEXURE

95
 QUESTIONNAIRE
 Na me:
m _______________________________________________

 Address: _______________________________________________

_______________________________________________

 E-ma il ID: …………………………………..………………………………

m

 Co nta ct No .: …………………………………..
y m y

 Gender [ ] Ma le m [ ] Fema le m

 Age:

[ ] Belo w 20 Yea rs y m [ ] 21 TO 30 Yea rs m [ ] 31 TO 40

Yea rs m

[ ] 41 TO 50 Yea rs m [ ] 51 TO 60 Yea rs m [ ] Abo ve 60

y

Yea rs m

 Occupa tio n: m y

[ ] Business [ ] Service [ ] Emplo yeey

[ ] Student [ ] Other plea se specify _____________

m

 Inco me (Yea rly):

y m

[ ] Less tha n 100000 Rs. [ ] 100000 to 200000 Rs.

m y [ ] 200000 to 300000
y

Rs.

[ ] 300000 to 400000 Rs. y [ ] 400000 to 500000 Rs.

y [ ] Abo ve 500000 Rs.
y

96
1. Do yo u investing in Equity Ma rket?
y y m

[ ] Yes [ ] No y

2. If yo u wa nt to invest, which investment o ptio n will pro vide the best

y m y y y y

returns?

[ ] Equity Sha re m [ ] IPO [ ] Mutua l Funds m

[ ] Bo nds y [ ] Fixed Depo sits y [ ] If a ny o therm y

_________

3. Which fa cto rs mo tive yo u investing in Equity Ma rket?

m y y y m

[ ] Return [ ] Liquidity [ ] Sa fety m

[ ] Ca pita l Apprecia tio n

m m m y [ ] If a ny o ther plea se specify _____________
m y m

4. Ho w much percenta ge o f yo ur inco me yo u invest in Equity Ma rket?

y m y y y y m

[ ] Less tha n 5% m [ ] 5%-10% [ ] 10%-15%

[ ] 15%-20% [ ] 20%- 25% [ ] Mo re tha n 25%

y m

5. Ho w do yo u tra de in Equity Ma rket?

y y y m m

[ ] Intra da y m m [ ] Delivery [ ] Specula tio n m y [ ] Arbitra gers m

[ ] Hedging [ ] If a ny o ther plea se specify _____________

m y m

6. Wha t is the time ho rizo n fo r investing in Equity Ma rket?

m y y y m

[ ] Less tha n 1 Mo nths m y [ ] 1 to 3 Mo nths

y y [ ] 3 to 6
y

Mo nths y

[ ] 6 to 12 Mo nths y y [ ] Mo re tha n 12 Mo nths

y m y

97
7. Wha t is the ra te o f return expected by yo u fro m Equity Ma rket in a
m m y y y m m

yea r?
m

[ ] 5% – 10 % [ ] 10% – 15 % [ ] 15% – 20%

[ ] 20% – 25% [ ] 25% –30% [ ] 30% a bo ve m y

8. Are yo u sa tisfied with the current perfo rma nce o f the Equity Ma rket in
y m y m y m

terms o f expected return? y

[ ] Fully Sa tisfied m [ ] Sa tisfied m [ ] Neutra l m

[ ] Unsa tisfied m [ ] Fully Unsa tisfied m

9. Who a dvise yo u to enter in Equity Ma rket?

y m y y m

[ ] Friends [ ] Rela tives m [ ] Advisers [ ]

Media m

[ ] Resea rch Repo rt m y [ ] Ma ga zines

m m [ ] If a ny o ther ___________ m y

10. Which Fa cto rs do yo u co nsider mo st impo rta nt while selecting the

m y y y y y y m

Secto rs? y

[ ] Ma rket Trend m [ ] Pro fita bility

y m [ ] Eco no mic Co nditio n y y y y

[ ] Industry Co nditio n y y [ ] well esta blished Co mpa nies under Secto rs

m y m y

[ ] Go vernment Po licy
y y [ ] If a ny o ther plea se specify _____________
m y m

11. Which Secto r do yo u prefer the mo st? (Give 1 to 5 Orders in given bo xes)
y y y y y y

Oil & Ga s Secto r m y Infra structure Secto r m y

98
 Ba nking Secto r
m y Auto mo bile Secto r
y y y

IT Secto r y If a ny o ther plea se specify _____________

m y m

12. Mentio n the mo st impo rta nt fa cto rs fo r selecting a co mpa ny o f yo ur

y y y m m y y m y m y y

cho ice.
y

[ ] Ea rning Per Sha re

m m [ ] Dividend [ ] Bro ker’s
y

a dvise [ ] Ma rket ca pita liza tio n

m m m m m y [ ] Perfo rma nce o f co mpa ny
y m y y m [ ] P.E.

Ra tiom y [ ] If a ny o ther _____________

m y

13. If a ny Suggestio n fro m yo ur side, then plea se specify.

m y y y m

99