Escolar Documentos
Profissional Documentos
Cultura Documentos
Submitted By:
ASHISH L. SORATHIYA
T.Y.B.B.A (Sem-VI) FINANCE
Roll No. 79
Under the guidance of
MISS KHUSHBU VORA
Submitted To:
THE CO-ORDINATOR
VIVEKANAND COLLEGE FOR B.B.A., NEAR JAHANGIRPURA,
VEER NARMAD SOUTH GUJARAT UNIVERSITY, SURAT
ACADEMIC YEAR
March 2010
I ASHISH L. SORATHIYA, here by declare that the project report entitled
“Investors Behaviour for Investing in Equity Market in
Various Sectors” Conducted on behalf of SHAREKHAN LIMITED, Surat under
the guidance of Ms. Khushbu Vora submitted in partial fulfillment of the
requirements for the award of the degree of Bachelor of Business
Administration to Veer Narmad South Gujarat University, Surat is my
original Work-Research Study-carried out during 4th January, 2010 to
4th March, 2010 and not submitted for the award of any other
degree/diploma/fellowship or other similar titles or Prizes to any other
Institutions/Organization or University by any other person.
ASHISH L. SORATHIYA
T.Y.B.B.A (Sem-VI)
Roll No. 79
This is to certify that the Project Report entitled A STUDY ON
“INVESTORS BEHAVIOUR FOR INVESTING IN EQUITY MARKET IN
VARIOUS SECTORS” IN SURAT CITY (Conducted on behalf of Sharekhan
Limited, Surat) submitted in partial Fulfillment of the requirements for the award
of the degree of BACHELOR OF BUSINESS ADMINISTRATION to VEER
NARMAD SOUTH GUJARAT UNIVERSITY, SURAT is a record of bonafide
research work carried out by ASHISH L. SORATHIYA under my supervision and
Guidance.
………………………..
Ms. Khushbu Vora
Project Guide
Days were gone when people only invest their money in Post offices or in
B
a
nks and another safely fixed return investment. Today people have several
choices for the investment alternatives. Now a day, one of the most emerging
choices is to invest in equities shares. To get good return on investment, people
are ready to take risks. Law always says that investors get HIGHER RETURN if
they take HIGH RISK. For high risk there is one avenue to invest and that is
Equity Market.
This Project Focused On “INVESTORS BEHAVIOUR FOR INVESTING
IN EQUITY MARKET IN VARIOUS SECTORS” IN SURAT CITY. Objectives
behind this project are to know investors behavior for investing in various sectors
regarding equity market, to know their preference of investment in equity market,
and to know whether potential growth of equity market is there or not.
Sample size is of 175 respondents who are the actual and potential
investors from whole of the equity market of Surat city and also from Sharekhan
Securities Pvt. Ltd. Here, each sample has the chance to be selected on an
equal basis because I have used simple random sampling method for
surveying purpose.
Means most of the customers are aware about Equity Market. There are
certain customers who are also aware about equity market but, they not want to
invest in equity market, Reasons for not investing in equity market is high risk
and there are no any fixed returns criteria and Investors age also affect in risk
factor. Means old persons risk bearing capacity is law so, investor’s also
select investment avenue as per his/her risk bearing capacity
Equity share holder is real owner of the company in spite of their priority
in getting dividend is comes last.
Lower Parel,
Surat - 395001
0261- 6560310-314
Online division as
“Sharekhan” 8th February 2000
Web Site: www.sharekhan.com
Email: surat@branch.sharekhan.com
COMPANY PROFILE
INTRODUCTION OF SHAREKHAN
Sharekhan is one of the leading share broking and retail brokerage firms
in the country. It is the retail broking arm of the Mumbai-basedSSKI Group
(Shripal Sevantilal Kantilal Ishwarlal Pvt. Ltd), which has more than 88 years
of experience in the stock broking business. SSKI is a veteran equities solutions
company with more than 8 decades of trust and credibility in the Indian stock
markets. It helps the customers/people to make informed decisions and
simplifies investing in stocks.
Sharekhan’s ground network includes over 640 Share shops across 280
cities in India. With branches and outlets across the country, Sharekhan’s
ground network is one of the biggest in India!
They have 640 share shops across 280 cities in India to get a host
of trading related services – our friendly customer service staff will also help you
with any account related queries you may have.
Sharekhan won the award by the vote of consumers around the country,
as part of India’s largest consumer study cover 7000 respondents – 21 products
and services across 21 major cities. The study, initiated by Awaaz – India’s first
dedicated Consumer Channel and member of the worldwide CNBC Network, &
AC Nielsen–ORG Marg, was aimed at understanding the brand preferences of
the consumers & to decipher what are the most important loyalty criteria for the
consumer in each vertical.
ABOUT SHAREKHAN
➢ SSKI named its online division as SHAREKHAN and it is into retail broking.
➢ It has specialized research product for the small investors and day traders.
➢ It offers its customers with the trade execution facilities on the NSE and BSE,
for cash as well as derivatives, depository services.
➢ It helps the customers meet his pay in obligations on time thereby reducing
the possibility of auctions. And execute the instruction immediately on
receiving it and thereafter the customer can view his updated account
statement on Internet.
➢ Sharekhan depository services offer Demat services to individual and
corporate investors. A customer can avail of Demat, repurchase and
transmission facilities at any of the Sharekhan branches and business
partners outlets.
BRAND NAME:
The company as a whole in its offline business
has named itself as SSKI Securities Private Limited – Shripal Sevantilal
Kantilal Ishwarlal Securities Private Limited. The company has preferred to
name themselves under a blanket family name.
But, in its online division started since 1997, the company preferred to
name itself as “SHAREKHAN”. The Brand name “SHAREKHAN” itself suggests
the business in which the company is dealing so that the customer could easily
identify the product or service category.
• MISSION
“To educate and empower the retail investor
to help him/her take better investment decisions.”
• VISION
“To be the best retail broking brand in the Indian equities market.”
ROLE OF SHAREKHAN:
As a Sharekhan customer you can decide the channel through which you
want to receive different Services.
OTHER SERVICES PROVIDED BY
SHAREKHAN
1. Online Services
2. Offline Services
5. Commodities Trading
7. Fundamental Research
8. Technical Research
9. Portfolio Management
12. Daily research reports and market review (High Noon & Eagle Eye)
1. Online Services:
Online BSE and NSE executions (through BOLT & NEAT terminals
Mutual Funds
Commodity Futures
Technical PMS
Demat Services
Share shops
2. Offline Services:
The company provided mainly two types of services to their customers for
the Demate Accounts.
1. Online Account: -
In the Online account, the company simply provides the terminal to the
customers or clients and the clients can do trading himself/herself when he/she
wants. The charges of online account is Rs. 750 /-, which is varies from company
to company. Online accounts are most popular than the Offline accounts.
In the Online A/C, the company provides 3 types of facilities to their clients
as per the requirements.
A. Classic Accounts
C. Dial – n –Trade
A.Classic Accounts:
Classic account enables you to buy and sell shares through our website. You
get features like
Streaming Quotes
This account is same as fast trade account. But, difference between these
two accounts is that in the Tiger Trade Account the client can access more than
25 scripts at a time and buy and sell the share from wherever they wants. This
account also provides the charts and graphs, so that the clients can easily
understand about the stock of the company. This is only for big clients and dealer
kind of customers. This account is mainly for active traders who trade frequently
during the trading session.
✔ F
e
a
t
u
r
e
s
✔ Features of Dial-n-
trade:
• TWO dedicated numbers for placing your orders with your cell phone or
landline. Toll free number: 1-800-22-7050. For people with difficulty in
accessing the toll-free number, we also have a Reliance number (Your
Local STD Code) 30307600 which is charged at as a local call.
• Simple and Secure Interactive Voice Response based system for
authentication
• No waiting time. Enter your TPIN to be transferred to our telebrokers
• You also get the trusted, professional advice of our telebrokers
• After hours order placement facility between 9.00 am and 9.30 am
(timings to be extended soon)
1. Offline Account: -
This is simple way to do trading. In the offline account, the client
can place the order by telephone or through personal visit in the office.
The client who is very busy in their jobs or business, they can directly
place the order by the telephone or the client who are not much busy; they
can come to the office of Sharekhan.
Employees Strength 35
Seven Reasons
1. EXPERIENCE:
SSKI has more than eight decades of trust and Credibility in the Indian
stock market. In the Asia Money broker’s poll held recently, Sharekhan won the
‘India best broking house for 2004’ award. Ever since it launched Sharekhan
as its retail broking division in February 2000, it has been providing
institutional-level research & broking services to investors.
2. TECHNOLOGY:
With Sharekhan online trading account you can buy and sell shares in an
instant from any PC with an internet connection. You will get access to our
powerful online trading tools that will help you take complete control over your
investment in shares.
3. KNOWLEDGE:
In a business where the right information at the right time can translate
into direct profits, you get access to a wide range of information on Sharekhan’s
website www.sharekhan.com. You will also get a useful set of Knowledge-based
tools that will empower you to take informed decisions.
4. ACCESSIBILITY:
5. CONVENIENCE:
Sharekhan’s customer service team will assist you for any help that you
need relating to transactions, billing, demat and other queries. Sharekhan’s
customer service can be contacted via a toll-free number-mail or live chat on
Sharekhan.com.
7. INVESTMENT ADVICE:
• Research Center
OPPORTUNITY:
• Collaboration with international financial institution
THREATS:
• Follow government laws
• Competitors develops
• New Entrants.
An agent that charges a fee or commission for executing buys and sell
orders submitted by an
investor. The firm that acts as
an agent for a customer,
charge the customer the
commission for its service.
Roles similar to that of a
stockbroker include
investment advisor, financial
advisor and probably many
others. A stockbroker may or
may not be also an investment
advisor.
A stockbroker is a
regulated professional broker
who buys and sells shares
and other securities through market makers or Agency Only Firms on behalf of
investors.
There are several national as well as local players in stock trading services
which are providing various services to their customers like online trading,
portfolio management system, stock broking etc.
They are helping the investors to take decision about where to invest
because there is lots of Investment Avenue available with investors. Some of
them are as follows working at the national level.
• Motilal Oswal Securities - Online trading, live BSE and NSE quotes
• Sivan Securities - offers services related investment banking & stock broking
with a focus on South India.
• Etc…..etc..…
Stock Market
Stock markets refer to a market place where investors can buy and sell
stocks. The price at which each buying and selling transaction takes is
determined by the market forces (i.e. demand and supply for a particular stock).
A stock market is a public market for the trading of company stock and
derivatives at an agreed price; these are securities listed on a stock exchange as
well as those only traded privately.
The size of the world stock market was estimated at about $36.6
trillion USD at the beginning of October 2008.
The stock market is one of the most important sources for companies
to raise money. This allows businesses to be publicly traded, or raise additional
capital for expansion by selling shares of ownership of the company in a public
market.
In this way, investing in stock market, the stock exchanges also play
importance role. Exchanges also act as the clearinghouse for each transaction,
meaning that they collect and deliver the shares, and guarantee payment to the
seller of a security. This eliminates the risk to an individual buyer or seller that
the counterparty could default on the transaction. So, here we also understand
about Stock Exchanges as follows.
Stock exchange
A stock exchange is an entity
which provides "trading" facilities for stock brokers and traders, to trade stocks
and other securities.
Stock exchanges also provide facilities for the issue and redemption of
securities as well as other financial instruments and capital events including the
payment of income and dividends.
The Bombay Stock Exchange Limited is the oldest stock exchange not
only in the country, but also in Asia with a rich heritage of over 133 years of
existence. In the early days, BSE was established as "The Native Share &
Stock Brokers Association."
It was established in the year 1875 and became the first stock exchange
in the country to be recognised by the government. In 1956, BSE obtained a
permanent recognition from the Government of India under the Securities
Contracts (Regulation) Act, 1956.
BSE is the first exchange in India and the second in the world to obtain an
ISO 9001:2000 certifications. It is also the first exchange in the country and
second in the world to receive Information Security Management System
Standard BS 7799-2-2002 certification for its BSE On-line Trading System
(BOLT).
BSE continues to innovate. In 2006, it became the first national level stock
exchange to launch its website in Gujarati and Hindi and now Marathi to reach
out to a larger number of investors.
BSE Vision
The vision of the Bombay Stock Exchange is -
"To Emerge as the premier Indian stock exchange by
establishing global benchmarks."
BSE Profile
Address :- Phiroze Jeejeebhoy Towers, Dalal Street
Mumbai-400001, India
Telephone :-91-22-227212334
Website :-www.bseindia.com
History of BSE
The Bombay Stock Exchange is known as the oldest exchange in Asia. It
traces its history to the 1850s, when stockbrokers would gather under banyan
trees in front of Mumbai's Town Hall. The location of these meetings changed
many times, as the number of brokers constantly increased. The group
eventually moved to Dalal Street in 1874 and in 1875 became an official
organization known as 'The Native Share & Stock Brokers Association'. In 1956,
the BSE became the first stock exchange to be recognized by the Indian
Government under the Securities Contracts Regulation Act.
The Bombay Stock Exchange developed the BSE Sensex in 1986, giving
the BSE a means to measure overall performance of the exchange. In 2000 the
BSE used this index to open its derivatives market, trading Sensex futures
contracts. The development of Sensex options along with equity derivatives
followed in 2001 and 2002, expanding the BSE's trading platform.
Indices of BSE:
Sensex
BSE 100(This covers Banking Sector)
BSE 200(This covers Capital goods)
BSE 500(This covers Consumer goods)
BSE mid-cap index
BSE small-cap index
BSE mid-cap index covers the FMCG sector and BSE small-cap index
covers the IT, Metal, Oil & gas, Power industry, PSUs, etc. BSE
disseminates information on the Price-Earnings Ratio, the Price to Book Value
Ratio and the Dividend Yield Percentage on day-to-day basis of all its major
indices.
The values of all BSE indices are updated every 15 seconds during
market hours and displayed through the BOLT system, BSE website and news
wire agencies.
All BSE Indices are reviewed periodically by the BSE Index Committee.
This Committee which comprises eminent independent finance professionals
frames the broad policy guidelines for the development and maintenance of all
BSE indices. The BSE Index Cell carries out the day-to-day maintenance of all
indices and conducts research on development of new indices.
ICAI award for excellence in financial reporting for the year 2006-07
BSE has won the Asia - Pacific HRM awards for its efforts in employer
branding through talent management at work, health management at work
and excellence in HR through technology.
Origins:
The National Stock Exchange of India was promoted by leading Financial
institutions at the behest of the Government of India, and was incorporated in
November 1992 as a tax-paying company.
Markets:
Currently, NSE has the following major segments of the capital market:
• Equity
• Futures and Options
• Retail Debt Market
• Wholesale Debt Market
• Currency futures
NSE became the first stock exchange to get approval for Interest rate
futures as recommended by SEBI-RBI committee, on 31 August,2009, a futures
contract based on 7% 10 Year GOI bond (NOTIONAL) was launched with
quarterly maturities.
Hours:
NSE's normal trading sessions are conducted from 9:00 am India Time to
3:30 pm India Time on all days of the week except Saturdays, Sundays and
Official Holidays declared by the Exchange (or by the Government of India) in
advance.
However, on Dec 17, 2009, after strong protests from brokers, the
Exchange decided to postpone the change in trading hours till Jan 04, 2010.
NSE new market timing from Jan 04, 2010 is 9:00 am till 3:30 pm India
Time.
NSE Group:
History of N.S.E
Capital market reforms in India and the launch of the Securities and
Exchange Board of India (SEBI) accelerated the incorporation of the second
Indian stock exchange called the National Stock Exchange (NSE) in 1992. After
a few years of operations, the NSE has become the largest stock exchange in
India.
Three segments of the NSE trading platform were established one after
another. The Wholesale Debt Market (WDM) commenced operations in June
1994 and the Capital Market (CM) segment was opened at the end of 1994.
Finally, the Futures and Options segment began operating in 2000. Today the
NSE takes the 14th position in the top 40 futures exchanges in the world.
In 1996, the National Stock Exchange of India launched S&P CNX Nifty
and CNX Junior Indices that make up 100 most liquid stocks in India. CNX Nifty
is a diversified index of 50 stocks from 25 different economy sectors. The Indices
are owned and managed by India Index Services and Products Ltd (IISL) that
has a consulting and licensing agreement with Standard & Poor's.
In 1998, the National Stock Exchange of India launched its web-site and
was the first exchange in India that started trading stock on the Internet in 2000.
The NSE has also proved its leadership in the Indian financial market by gaining
many awards such as 'Best IT Usage Award' by Computer Society in India (in
1996 and 1997) and CHIP Web Award by CHIP magazine (1999).
Indices of N.S.E
NSE also set up as index services firm known as India Index Services &
Products Limited (IISL) and has launched several stock indices, including:
Mission of N.S.E.
NSE's mission is setting the agenda for change in the securities markets
in India. The NSE was set-up with the main objectives of:
What is Investment?
“The money you earn is partly spent and the rest saved for meeting future
expenses. Instead of keeping the savings idle you may like to use savings in
order to get return on it in the future.” This is called Investment.
Investor:
Investor's Behaviour:
While, some people are also believes in “High Risk, High Return” Many
investors purchase a particular stock with the intention of making a big
profit over a short period of time. However, this action is not investing, but a pure
gambling.
The stock market is characterized by the trade-off between
risk and return. The higher the risk the investor is willing and able to take, the
higher the potential rewards from the investment. Therefore, if a particular
investment offers you high returns, it is an indication that it will come with a high
risk burden.
Some people are also believes in that there is no safe investment that
will provide you with high returns over a short period of time. Therefore, you
should direct your resources toward long-term investments that are more likely to
reward you for the patience with high returns.
The Indian market has 22 stock exchanges. The larger companies are
enlisted with BSE and NSE. The smaller and medium companies are listed
with OTCEI (Over The counter Exchange of India). The functions of the Equity
Market in India are supervised by SEBI (Securities Exchange Board of India).
The Indian Equity Market was not well organized or developed before
independence. After independence, new issues were supervised. The timing,
floatation costs, pricing, interest rates were strictly controlled by the Controller of
Capital Issue (CII).
In the 1950s, there was uncontrollable speculation and the market was
known as ‘Satta Bazaar'. Speculators aimed at companies like-Tata Steel,
Kohinoor Mills, Century Textiles, Bombay Dyeing and National Rayon. The
Securities Contracts (Regulation) Act, 1956 was enacted by the Government of
India. Financial institutions and state financial corporation were developed
through an established network.
Mortgage of Gold to tide over the foreign exchange crisis (In 1991 the
Indian Govt. mortgaged Gold to the Bank of England).
A. Meaning of Sector:
The oil and gas industry has been instrumental in fuelling the rapid growth
of the Indian economy. The petroleum and natural gas sector which includes
transportation, refining and marketing of petroleum products and gas industry
constitutes over 15 per cent of the GDP.
India's domestic demand for oil and gas is on the rise. As per the Ministry
of Petroleum, demand for oil and gas is likely to increase which is 186.54 million
tonnes in 2008-09.
India is emerging as the global hub for oil refining with capital costs
lower by 25 to 50 per cent over other Asian countries.
2. Banking Sector:
Banking in India originated in the last decades of the 18th century. The
oldest bank in existence in India is the State Bank of India, a
government-owned bank that traces its origins back to June 1806 and that is the
largest commercial bank in the country. Central banking is the responsibility of
the Reserve Bank of India, which in 1935 formally took over these
responsibilities from the then Imperial Bank of India.
The banking sector will navigate through all the aspects of the Banking
System in India. It will discuss upon the matters with the birth of the banking
concept in the country to new players adding their names in the industry in
coming few years. The banker of all banks, Reserve Bank of India (RBI), the
Indian Banks Association (IBA) & top 20 banks like IDBI, HSBC, ICICI, ABN
AMRO, etc.
In the Third Quarter Review of Monetary Policy for 2009-10, the RBI
observed that the Indian economy showed a degree of resilience as it recorded a
better-than-expected growth of 7.9 percent during the second quarter of 2009-
10.
The industry has been growing faster than the real economy, resulting in
the ratio of assets of commercial banks to GDP increasing to 92.5 per cent at
end-March 2007. The Indian banks have also been doing exceptionally well
in the financial sector with the price-to-book value being second only to china,
according to a report by (BCG) Boston Consultancy Group.
3. IT Sector:
Over the past decade, the Information Technology (IT) industry has
become one of the fastest growing industries in India. The key segments that
have contributed significantly (96 percent of total) to the industry’s exports
include – Software & services (IT services) & IT-enabled services (ITeS) i.e.
business services. Over a period of time, India has established itself as a
preferred global sourcing base in these segments & they are expected to
continue to fuel growth in the future.
The Indian information technology (IT) industry has played a key role
in putting India on the global map. Thanks to the success of the IT industry,
India is now a power to reckon with. According to the National Association of
Software and Service Companies (NASSCOM), the apex body for software
services in India, the revenue of the information technology sector has risen
from 1.2 per cent of the gross domestic product (GDP) in FY 1997-98 to an
estimated 5.8 per cent in FY 2008-09. Further, the industry body expects the
sector to grow between 4 per cent and 7 per cent during 2009-10 and return to
over 10 per cent growth next year.
India's domestic market has also become a force to reckon with, as the
existing IT infrastructure evolves both in terms of technology and depth of
penetration.
Investments:
The Andhra Pradesh Government expects the IT-related SEZs and
Software Technology Parks of India (STPI) in the State to receive about
US$ 3.27 billion investments in the next five years.
Mahindra Satyam has tied up with defence and security company Saab to
develop its operations in India for the global defence and homeland
security market. The estimated deal value is US$ 400 million.
1. Infrastructure Sector:
Infrastructure is the basic physical and organizational structures needed
for the operation of a society or enterprise, or the services and facilities
necessary for an economy to function. The term typically refers to the technical
structures that support a society, such as roads, water supply, sewers, power
grids, telecommunications, and so forth.
The growth has continued apace during the current fiscal, with the six
core-infrastructure industries growing at the rate of 6.9 percent during April-
September 2007. Significantly, electricity recorded a growth rate of 7.6 per cent
compared to 6.7 per cent in the same period last year. Other sectors recording
major growth include: petroleum refinery products (9.8 per cent), cement (8.3 per
cent) & finished (carbon) steel (6.6 per cent).
2. Automobile Sector:
Global auto majors such as Japanese auto majors Suzuki, Honda and
Korean car giant Hyundai are increasingly banking on their Indian operations to
add weight to their businesses, even as numbers stay uncertain in developed
markets due to economic recession and slowdown.
Across all categories, total sale of vehicles increased 44.94 per cent to
1,114,157 units in January 2010, against 768,698 units in the January 2009.
BANKING SECTOR:
IT SECTOR:
Infosys
TCS Limited
Wipro
Microsoft
L&T Infotech Ltd.
Lenovo
HCL
Mahindra Satyam
etc…
INFRASTRUCTURE SECTOR:
DLF
Reliance Infrastructure
HCC Infrastructure
Maytas Infra Limited
GMR Infrastructure
IBR Infrastructure
etc…
AUTOMOBILE SECTOR:
Hero Honda
Ford Motor
Honda Motors
Bajaj Auto
Tata Motors
Maruti Suzuki
TVS Motors
Mihindra Motors
Yamaha Motors
etc…
Concept:
Capital market is the markets for funds which have a long or undefined
maturity i.e. it deal with long term funds. Generally capital market supplies long
term and medium term securities and funds, which have a maturity period of
above one year. Capital market generates the funds from the saver and transfer
to user. Generally it done with ordinary share, stocks, debentures and bonds of
corporations and securities of the government. They do so by converting
financial assets into productive physical assets.
Capital market provides a market mechanism for those who have savings
and to those who need funds for productive investments. It diverts resources
from wasteful and unproductive channels to productive investment.
BSE reaches to over 400 cities and town nation-wide and has around
4,937 listed companies, with over 7745 scripts being traded as on
31st July 09. The companies listed on BSE command a total market
capitalization of USD Trillion 1.06 as of July, 2009.
Two major reasons why Indian securities are now increasingly regarded as
attractive to international investors are:
1. The relatively high returns compared with more developed global markets
as well as the low correlation with world markets.
2. However until the early 90s, the foreign investors’ only way of accessing
the Indian capital markets was through listed country funds
“The capital market is one of the most exciting sectors in the financial
system, marking an important contribution to economic development.”
Asia Focus was launched by the Unit Trust of India (UTI) in London in
1986. The success of this initiative ensured that this fund was followed by
numerous others. Indian companies are now also allowed to raise equity capital
in the international market through the issue of GDRs. In 2004, there are 498
Foreign Institutional Investors who hold 1325 sub-accounts with a net investment
of approximately $15 billion. India’s regulator, the Securities Exchange Board of
India (SEBI) is playing more of a development role rather than being merely a
watchdog. Transparency, competitiveness and equal opportunity to all market
participants has been the driving philosophy behind all the development and
regulatory initiatives of SEBI. The availability of derivative products including
index futures, index options, individual stock futures and individual stock options
re-enforces the overall attractiveness of this market to foreign and domestic
investors. The derivatives market in only two years has shown spectacular
growth. Compared to last financial year the annual turnover grew by over 300%.
As if further evidence was needed of India’s willingness to embrace change, the
availability of Internet trading and dual fungibles of American Depository
Receipts (ADRs) and Global Depository Receipts (GDRs) provides a clear
indication of the vibrancy and dynamism of the Indian securities market.
OR
The capital market includes the stock market (equity securities) and the
bond market (debt).
Capital markets may be classified as:
1) Primary markets
2) Secondary markets
In primary markets, new stock or bond issues are sold to investors via a
mechanism known as underwriting.
In the secondary markets, existing securities are sold and bought among
investors or traders, usually on a securities exchange, over-the-counter, or
elsewhere.
The corporate sector raises their capital through these above three types
of securities. This is the physical or tangible asset through which the market
functions.
1. Equity Shares:
The Indian Equity Market is more popularly known as the Indian Stock
Market. The Indian equity market has become the third biggest
after China and Hong Kong in the Asian region.
According to the latest report by ADB, it has a market capitalization of
nearly $600 billion. As of March 2009, the market capitalization was around
$598.3 billion (Rs 30.13 lakh crore) which is one-tenth of the combined
valuation of the Asia region. The market was slow since early 2007 and
continued till the first quarter of 2009.
2. Preference Shares:
“Stock whose holders are guaranteed priority in the payment of
dividends but whose holders have no voting rights”
Preference shares have different features and are accordingly available as:
1. BONDS:
While the size of Indian dept market is 239.2 (US$ billion) which is
34.5% of GDP as on 2004 -05.
Many financial institutions like IDBI, ICICI, and IFCI, have been raising
capital for their operations by issuing of bonds. These too are available in a large
variety.
Primary market is the market for those securities which are issued first
time in the market for the public. The New Issue Market deals with new securities
i.e. securities which were not previously availably and are offered to the investing
public for the first time.
1) Secondary Market:
Secondary market is the market for those securities which have already
been available in the market and listed on a stock exchange. The main benefit of
Secondary market is securities sold and purchased continuously among
investors without involvement of company. This market consists of all stock
exchange recognized by the Government of India. The stock exchange in India
are regulated under the securities contracts (Regulation) Act, 1956.
Banks are the largest holders of G-secs. About one–third of the net
demand and time liabilities of the banks are partly in government securities
market mainly to meet statutory liquidity requirements and partly for investment
purpose. Other investor in G-secs includes mutual funds, primary and satellite
dealers, and trusts.
The secondary market for these securities is very narrow since most of
the institutional investors tend to retain these securities until maturity.
Government securities are sold through the Public Debt Office of the RBI
while Treasury Bills are sold through auctions.
Term loans: A loan from a bank for a specific amount that has a
specified repayment schedule and a floating interest rate. Term loans
almost always mature between 1 and 10 years.
Institutions like IDBI, IFCI, ICICI, and other state financial corporations
come under this category. These institutions meet the growing and varied long
term loans. They also help in identifying investment opportunities, encourage
new entrepreneurs and support modernization efforts.
Mortgages Market:
The mortgage market refers to these centers which supply mortgage loan
mainly to individual customers. A mortgage loan is a loan against the security
of immovable properly like real estate. The transfer of interest in a specific
immovable properly to secure a loan is called mortgage. These mortgages may
be equitable mortgage or legal one. Again it may be a first charge of title deeds
to properties as security whereas in the case of a legal mortgage the title in the
property is legally transferred to the lender by the borrower. Legal mortgage is
less risky.
Similarly, in the first charge, the mortgages transfer his interest in the
specific property to the mortgagee as security. When the properly in question is
already mortgaged once to another creditor, it becomes a second charge when it
is subsequently mortgaged to somebody else. The mortgagee can also further
transfer his interest in the mortgaged property to another, in such a case; it is
called a sub mortgage.
In India residential mortgages ate the most common ones. The Housing
and Urban Development Corporation and the LIC play a dominant role in
financing residential projects. Besides, the Land Development Banks provides
cheap mortgages loans for the development of lands, purchase of equipment etc.
These development banks raise finance through the sale of debentures which
are treated as trustee securities.
Though there are many types of guarantees, the common forms ate:
(i) Performance Guarantee
(ii) Financial Guarantee
Performance guarantees cover the payment of earnest money, retention
money, advance payments, non-completion of contracts etc. On the other hand
financial guarantees cover only financial contracts.
There are a number of capital market instruments used for market trade,
including stocks, bonds, debentures, T-bills, foreign exchange, fixed deposits,
and others. These are used by the investors to make a profit out of their
respective markets. All of these are called capital market instruments because
these are responsible for generating funds for companies, corporations, and
sometimes national governments.
This market is also known as securities market because long term funds
are raised through trade on debt and equity securities. These activities may be
conducted by both companies and governments.
Stocks and bonds are the two basic capital market instruments used in
both the primary and secondary markets.
DEBENTURES
BONDS
PREFERENCE SHARES
EQUITY SHARES
GOVERNMENT SECURITIES
DEBENTURES:
These are issued by companies and regulated under the SEBI guidelines
of June 11, 1992.
➢ Convertible debentures
➢ Non-Convertible debentures
BONDS:
International Bond Market is very big and has an estimated size of nearly
$47 trillion. The size of the US bond market is the largest in the world. The US
bond market's outstanding debt is more than $25 trillion.
While the size of Indian dept market is 239.2 (US$ billion) which is
34.5% of GDP as on 2004 -05.
Indian development financial institutions like IDBI, ICICI, and IFCI, have
been raising capital for their operations by issuing of bonds. These too are
available in a large variety. These include:
➢ Income bonds
➢ Tax-free bonds
➢ Capital gains bonds
➢ Deep discount bonds
➢ Infrastructure bonds
➢ Retirement bonds etc…
PREFERENCE SHARES:
“Stock whose holders are guaranteed priority in the payment of
dividends but whose holders have no voting rights”
Preference shares have different features and are accordingly available as:
EQUITY SHARES:
For example, if you buy 1000 shares of stock in a company that has
issued a total of 100,000 shares, you own one per cent of the company.
A shareholder or a beneficial owner can exit from the ownership by selling
the shares. An investor can become shareholder/beneficial owner of a company
by purchasing shares of the company.
GOVERNMENT SECURITIES:
I. Dated Securities
II. Treasury Bills
Dated Securities: Dated Securities have a maturity period of more than
one year.
Treasury Bills: Treasury Bills have a maturity period of less than or up to
one year.
The Public Debt Office (PDO) of the Reserve Bank of India performs all
functions with regard to the issue management, settlement of trade, distribution
of interest and redemption. Although only corporate and institutional investors
subscribe to government securities, individual investors are also permitted to
subscribe to these securities.
➢ It acts as a link between those who want to save funds and those who
need funds and are in a position to invest them with safety and
reasonable return.
➢ It provided the capital to those enterprises which can apply it profitably,
productively and increase the aggregate national income.
➢ It provides proper flow of funds and brings about the rational allocation of
resources through the conversion of financial assets into physical assets.
Thus, the capital market facilitates capital formation.
➢ It provides incentives to saving and facilitates capital formation by offering
suitable rate of interest as the price of capital.
➢ It facilitated buying and selling of securities at listed price by providing
continuously marketability to the investors.
➢ The securities offered in the capital market are transferable in character.
➢ The changing business conditions in the economy are immediately
reflected on capital market. Booms and depression can be identified by
capital market. So suitable monitory and fiscal policies can be taken by
government.
➢ Capital market supplies securities of different kinds with different maturity
and yields in unable the investors to diversify their risk by wider portfolio of
investment.
RESEARCH METHODOLOGY
Introduction:
Research is one of the best instruments to identify the investing pattern of
investors to invest in various sectors & to study different sectors of Capital
market.
Definition:
“Research is careful inquiry or examination to discover new
information and relationship and to expand and to vary existing
knowledge.”
Research always starts with question or any problem and finds answer of
problem by using scientific method. It gives complete knowledge about any
problem or question.
Every study is conducted within for some specific purpose or to solve some
problem. When any research is conducted it has some primary objective that
helps to solve the main problem whereas a secondary objective helps to solve
peripheral problems. The primary and secondary objectives of this research are:
Primary Objective:
The primary objective of carrying out this research is:--
To know the peoples time horizon for investing in Equity Market and to
BENEFITS OF STUDY:
The study carried out under the title of “Investors Behaviour for
Investing in Equity Market in Various Sectors” will give benefits as under:
The research will be help to know in which sector investors are investing
more.
The study will be helpful in knowing that what factors consider most
important while selecting the Sectors and company under the sectors.
The study will be helpful in knowing that how the investors are trade in
Equity market.
As no human being is
perfect, it is not possible for anyone to make the best or perfect report. Each
person has some level of knowledge and is affected by some uncontrollable
factors within which he/she has to work. So, it might possible that there
can be some limitations in this report that may be due to my knowledge level or
some other factors.
A research design is the master plan or model for the conduct of formal
investigation and survey. It is a specification of methods and procedures for
acquiring the information needs for solving the problem. It decides the source of
information and methods for gathering the data. A questionnaire and other forms
are tested to use the collection of data.
In the research study there is no perfect study to solve the problem. The
research design has broadly three categories as follow.
1. Exploratory Research
I have used Descriptive
2. Descriptive Research Research Design for research purpose.
3. Casual Research
2. Descriptive Research:
Descriptive research, also known as statistical research. It describes
data and characteristics about the population or phenomenon being studied.
Primary Data
Secondary Data
Primary Data:
Primary data means data collected directly from first-hand experience.
Means data collected for the first time by any researcher for any research use.
There are many methods of collecting primary data and the main methods
include:
Questionnaire method
Interviews method
Focus group interviews
Observation method
Case-studies method
Diaries method
I have used Questionnaire method for the Primary data collection for
the study.
Secondary Data:
Secondary data means data which are collected by any one for a
particular research purpose and which are used by others for different purpose.
I have also used the secondary data for the study like some
company resources like broachers, websites etc.
Sampling Plan:
“Sampling is the process to analyze the whole population
by analyzing a part of it.”
• The effectiveness of the report depends on the sample size selected from the
population.
Sampling Unit:
Here, target population is decided who are the actual and potential
investors, each sample has the chance to be selected on an equal basis & this
research has been conducted through surveying the whole of the equity market
of Surat city
Sample Size:
For getting better result of the given problem I have to determine the
perfect sample size as on 90% confidence level which is calculated statically by
the given formula.
n = p*q (z /c) 2
Where,
n = sample size
q = (1 - p)
For Example:
p = 0.80 q = 0.20
z = 1.645 c = 0.05
n = p*q (z /c) 2
= 0.80*0.20 (1.645/0.05) 2
= 173.1856
= 175
Confidence interval:
In statistics, a confidence interval (CI) is a particular kind of interval
estimate of a population parameter. Instead of estimating the parameter by a
single value, an interval likely to include the parameter is given.
Thus, confidence intervals are used to indicate the reliability of an estimate.
For example,
Confidence level:
The confidence level tells you how sure you can be. It is expressed
as a percentage and represents how often the true percentage of the population
who would pick an answer lies within the confidence interval.
The 90% confidence level means you can be 90% sure; When I put the
confidence level and the confidence interval together, I can say that I am 90%
sure that the true percentage of the population is between 20% and 80%.
Sampling frame:
Sampling frame is the actual set of units from which a sample has been
drawn. In sampling frame, I have used simple random sampling method for
conducting survey. In a simple random sample ('SRS') all units from the
sampling frame have an equal chance to be drawn and to occur in the sample.
Response Rate:
The response rate was average.
I have used questionnaire method for the financial information of the
respondent, most of the people hesitated to provide the required information
and also the questionnaire contained some financial terms that were technical
in nature, which resulted into reduced response rate.
I have visited nearly 200 potential respondents, out of which only 175 gave
proper response.
Hence,
Response Rate = 175/200 = 87.5%
I have used SPSS software (Statistical Package for the Social Sciences)
for analysis purpose.
In that I have used Mean, Median, Mode, Frequency Table, and Cross
Tabulation, Graphical representation & interpretation with each graphs
and charts.
Microsoft Office is used for data typing formatting and analyzing the data.
ANALYSIS OF QUESTIONNAIRE
[ ] Yes
[ ] No
Particulars Investing Percentage
No 56 32%
Interpretation:
[ ] Equity Share
[ ] IPO
[ ] Mutual Funds
[ ] Bonds
[ ] Fixed Deposits
[ ]
Investment option Investors in Percentage If
IPO 18%
Mutual Funds 8%
Bonds 7%
Fixed Deposits 4%
Other 10%
18% of investors believe that IPO (Primary Market) will provide the best
returns.
8% of investors think that Mutual Funds will provide the best returns.
7% of investors believe that Bonds Market will provide the best returns.
4% of investors trust that Fixed Deposits will provide the best returns.
➢ Commodity Market
➢ Insurance
➢ Government Securities etc.
Safety 7%
Other 1%
_____________
Interpretation:
[ ] Less than 5%
[ ] 5%-10%
[ ] 10%-15%
[ ] 15%-20%
[ ] 20%- 25%
[ ] More than 25%
Percentage of Income Investors in Percentage
5%-10% 45%
10%-15% 17%
15%-20% 7%
20%- 25% 5%
Interpretation:
According to the Previous Figure:
23% of the investors are investing Less than 5% of their income in Equity
Market.
45% of the investors are investing 5%-10% of their income in Equity Market.
17% of the investors are investing 10%-15% of their income in Equity Market.
7% of the investors are investing 15%- 20% of their income in Equity Market.
While 3% of the investors are investing More than 25% of their income in
Equity Market.
Que. 5. How do you trade in Equity Market?
[ ] Intraday
[ ] Delivery
[ ] Speculation
[ ] Arbitragers
[ ] Hedging
Intraday 13%
Delivery 31%
Speculation 26%
Arbitragers 17%
Hedging 11%
Other 2%
While 2% of the investors are trade in Equity Market for Other Purpose.
1 to 3 Months 28%
3 to 6 Months 15%
6 to 12 Months 18%
Que.7. What is the rate of return expected by you from Equity Market
in a year?
[ ] 5% – 10 %
[ ] 10% – 15 %
[ ] 15% – 20%
[ ] 20% – 25%
[ ] 25% –30%
[
Rate of Return Investors in Percentage ]
5% – 10 % 12%
10% – 15 % 18%
25% –30% 8%
Here, above two cases investors are more expects from Equity
market.
While 4% of investors are expects more than 30% return from Equity
market.
Que.8. Are you satisfied with the current performance of the Equity Market
in terms of expected return?
[ ] Fully Satisfied
[ ] Satisfied
[ ] Neutral
Satisfied 73 42%
Neutral 49 28%
Unsatisfied 18 10%
Fully Unsatisfied 5 3%
[ ] Unsatisfied
[ ] Fully Unsatisfied
Interpretation:
Equity market.
Friends 28%
Relatives 12%
Advisers 25%
Media 17%
Magazines 5%
Other 3%
Profitability 23%
Government Policy 5%
Any Other 1%
Interpretation:
Banking Sector
IT Sector
Infrastructure Sector
Automobile Sector
Orders(Ranks) Given by Respondents
Sectors
1 2 3 4 5 Total
IT Sector 20 40 47 35 33 175
IT Sector 40 2nd
Interpretation:
Banking Sector:
➢ 26 Investors gave 1st rank, 24 Investors gave 2nd rank, 53 investors gave
3rd Rank, 42 Investors gave 4th Rank, & 30 Investors gave 5 th
Rank to this sector.
➢ Here, over all 53 investors have selected Banking sector as a 3nd Rank
in comparison with 3nd Rank of all sectors.
Automobile Sector:
➢ 35 Investors gave 1st rank, 30 Investors gave 2nd rank, 28 investors gave
3rd Rank, 52 Investors gave 4th Rank, & 30 Investors gave 5th Rank to this
sector.
➢ Here, over all 52 investors have selected Automobile sector as a 4th
Rank in comparison with 4th Rank of all sectors.
Infrastructure Sector:
➢ 37 Investors gave 1st rank, 32 Investors gave 2nd rank, 33 investors gave
3rd Rank, 28 Investors gave 4th Rank, & 45 Investors gave 5th
Rank to this sector.
➢ Here, over all 45 investors have selected Infrastructure sector as a
5nd Rank in comparison with 5nd Rank of all sectors.
Que. 12. Mention the most important factors for selecting a company
of your choice.
Dividend 17%
Market capitalization 7%
Other 2%
Interpretation:
On the basis of above Figures:
While 15% of the investors are select a company under the sector of their
choice on the basis of Broker’s advises.
➢ From the research I found out that 68% of investors (119) are investing in
Equity Market. While 36% of investors (56) are not investing in Equity Market
as per my sample size 175.
➢ I also found out that, 53% of investors believe that Equity Market is better
investment option and will provide the best returns in compare to other
investment option.
➢ I found out that the 49% of investors who are dealing in equity market they
are motivated by return factor and 26% of investors are motivated by
Liquidity and some investor also consider capital appreciation and safety factor
while investing in equity market in various sectors.
➢ I also found out that the 45% of the investors are ready or interested to
invest their 5%-10% of income in Equity Market. It means many investors trust
on the growth of equity market as they are ready to spend major proportion of
their income.
➢ Going ahead I found out that very few investors want to deal in intraday
trading which shows that they consider safety factors while investing. 31% of
the investors are investing in Equity Market as a Delivery base Trading and
26% of the investors are trading in Equity Market as a Speculator. Means 26%
of investors who willingly take higher-than-average risk in return for a higher-
than-average profit potential.
➢ 28% of investors invest in Equity market for the period of 1 to 3 Months and
the same proportion of investors are invest for long period more than year.
➢ I also found out that 32% of investors are expects 15%-20% return from
Equity market and 26% of investors are expects 20%-25% return from Equity
market. Here, investors are more expects from Equity market.
➢ 42% of investors are satisfied with the current performance of the Equity
Market in terms of expected return, while 28% of investors are Neutral about
equity market.
➢ I found that most of investors are motivated by their friends to enter in the
equity market and some investors are motivated by Advisers, Media,
Research Report and other factors like and self study of current scenario of
equity market.
➢ Other thing I found out that 29% of the investors have considered market
trend and 23% of the investors have considered Profitability as a most
important factor as a most important factor while selecting the Sector. There are
also other factors like - government policy, industry condition, and economic
condition also important factor while selecting the Sector
➢ Then I found that 44 investors selected Oil & gas sector as a
First Rank (in comparison with First Rank of all sectors)
➢ 40 investors have selected IT sector as a 2nd Rank.
➢ 53 investors have selected Banking sector as a 3nd Rank
➢ 52 investors have selected Automobile sector as a 4th Rank
➢ 45 investors selected Infrastructure sector as a 5nd Rank
➢ I also found out that 24% of the investors have considered Price
Earning Ratio, 19% of the investors have considered Earning per Share
and 17% of the investors have considered Dividend as a most
important factor while selecting a company from these selected sectors.
Investors also consider other factors like - Suggestion from reference
group, External advisors, Stakeholders, Growth of Company, Market
Trend, Profitability and their own view etc. are as an important factor
while selecting a company from these selected sectors.
From the survey I found that major people are investing in equity market
only due to Earn High Return and Hedge the Risk by investing their major
proportion of income in Equity Market. Here, the most of people are trade in
equity market as a speculation and they are invests for one to three months.
Generally, the investors who are invest for long period more than year they are
surely beneficial in equity market. Majority of people are motivated by their
friends & medias advise to enter into equity market. Majority people are
expecting something more from the equity market.So, finally some are satisfied
and some are not satisfy with equity market.
Major investors prefer the Oil & gas sector as a first rank on the basis of
Market trend, Profitability, industry condition and economic condition also
important factor while selecting the Sector and investors have also considered
Price Earning Ratio, Earning per Share and Dividend as a most important
factor while selecting a company under these selected sectors.
Recommendation to Investors:
➢ Prefer investment for long term investment strategy that provides you
moderate return with liquidity.
➢ Investors should not invest in only equity market but, also invest in
other Safe Securities Like- Fixed Deposits, Government Securities,
Bonds, Mutual fund and Insurance etc. which also provides
moderate return.
For Example: One should prefer
○ Equity – 50%
○ Other Safe Securities – 50%
So, one can get moderate return with liquidity.
➢ Investors should invest money at lower level price and sale the stock at
higher price.
➢ The Stock Broking firm should also provide better services to the investor
to increase the satisfaction level of the investors.
➢ Company should focus on students also because equity market has risk
and the younger generation likes to take risk.
➢ Majority investors are investing in Oil & gas sector and IT sector.
So, Company should also suggest to investors for investing other sector
which is also profitable.
@. BOOKS:
Gordon & Natrajan, “Financial Markets And Services” Second
Revised Edition Reprint, Himalaya Publishing House, 2005.
Investment Management – V.A. AVADHANI
@. Websites:
✔ www.sharekhan.com
✔ www.nseinda.com
✔ www.bseindia.com
✔ www.moneycontrol.com
✔ www.investopedia.com
✔ www.wikipedia.com
✔ www.autherstream.com
✔ www.myrisis.com
@. NEWS PAPER:
✔ ECONOMICS TIMES
✔ TIMES OF INDIA
@. OTHER:
✔ Sharekhan’s Broachers
✔ NCFM – Capital Market Dealers Module
✔ Other Magazines for Capitals Markets
Q
uestionnaire
On
“INVESTORS BEHAVIOUR FOR INVESTING IN EQUITY
MARKET IN VARIOUS
SECTORS” IN SURAT CITY
[ ] Yes [ ] No
2. If you want to invest, which investment option will provide the best returns?
7. What is the rate of return expected by you from Equity Market in a year?
8. Are you satisfied with the current performance of the Equity Market in terms
of expected return?
10. Which Factors do you consider most important while selecting the Sectors?
11.Which Sector do you prefer the most? (Give 1 to 5 Orders in given boxes)
12. Mention the most important factors for selecting a company of your choice.
______________________________________________________________
______________________________________________________________
-: Personal Information:-
• Name: _______________________________________________
• Address: _______________________________________________
_______________________________________________
• Age:
• Income (Yearly):
[ ] Less than 100000 Rs. [ ] 100000 to 200000 Rs. [ ] 200000 to 300000 Rs.
Projected By:
Ashish l. Sorathiya