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CHAPTER 1 INTRODUCTION
1.1INTRODUCTION TO THE STUDY: Investment is parting with ones fund, to be used by another party, user of fund, for productive activity. It can mean giving an advance or loan or contributing to the equity (ownership capital) or debt capital of a corporate or non-corporate business unit.

Generalized, investment means conversion of cash or money into a monetary asset or a claim on future money for a return. This return is for saving, parting with saving or liquidity and lastly for taking a risk involving the uncertainty about the actual return, time of waiting and cost of getting back funds, safety of funds, and risk of the variability of the return.

The cornerstone of any investment strategy is to maximize the return while maintaining a tolerable risk. The process of allocating assets among several investment categories is a way of achieving the goal. Younger people can assume greater risk than one who is retired; a highly paid executive will be less dependent on current portfolio income than will a disabled person on workmens compensation and so forth.

The goal of an individual may be current income, capital appreciation or an acceptable balance. If the investor decides on capital appreciation, the investors should have the personality to ride out major

decline in the market . These are decisions that only the investor can make after careful consideration.

1.1.1 CHARACTERISTICS OF INVESTMENT:

1. Risk: The risk depends of maturity, creditworthiness, nature of instrument, tax liability, variability of returns, etc

2. Return: A major factor influencing the pattern of investment is its return, which is the yield plus capital appreciation.

3. Safety: The safety of capital is the certainty of return of capital without loss of money or time involved.

4. Liquidity: If a capital asset is easily realizable, saleable or marketable, then it is said to be liquid. An investor generally prefers liquidity for his investments, safety of his funds, a good return with a minimum risk and maximization of return.

1.1.2 CLASSIFICATION OF INVESTORS

Investors can be classified into different groups depending on their attitude towards risk, expectation etc., Each investor also has an indifference point at which his own expectation of return matches with the risk that he can take.

The investor should also be able to assess his own behavior pattern before he aims at a particular goal, which he wishes to attain. In some cases, most of the investors are willing to sacrifice some expected income or return if the income is certain. The higher the income group of an investor the greater will be his desire for purchasing assets which will give him a favorable tax treatment.

TABLE 1.1 Classification of Investors


TYPE
RISK AVERTERS

RISK ACCEPTABLE
LOW RISK

TYPE OF INVESTMENT
LIFE INSURANCE ,UNIT CERTIFICATES, GOVT CERTIFICATES.

BEHAVIOR
WILL PAY LESS FOR AN UNCERTAIN RETURN

RISK NEUTRALS

MEDIUM RISK

LIFE POLICIES, FIXED DEPOSITS ,MUTUAL FUNDS

WILL PAY EQUAL TO EXPECTED RETURN

RISK TAKERS

HIGH RISK

COMMON STOCKS, BONDS, CONVERTIBLE SECURITIES

WILL PAY MORE THAN EXPECTED RETURN.

1.1.3

PSYCHOLOGICAL ASPECTS OF INVESTING: It is relatively easy to gain a theoretical understanding of market

movements up and down. Beating the market on paper is not that difficult, but actually putting that knowledge to work in the market place on a day-today basis is a more difficult task. Common sense dictates that periodic monitoring of portfolio performance is a necessary part of the investment process, but if we get too close to the market, the tendency is to respond to the events and prices instead of carefully laid criteria. The asset allocation approach as described here makes a valuable contribution to this on going psychological battles that investors have to face. First, the very adoption of the principles of allocation implies that establishment of reasonable investment goals and the employment of a plan. If the investor can make a plan and stick to it, he is far less likely be side tracked by the latest news and investment fashion.

INVESTMENT AVENUES 1.2.1 FIXED DEPOSIT The term "fixed" in fixed deposits denotes the period of maturity or tenor. Fixed Deposits, therefore, presupposes a certain length of time for which the depositor decides to keep the money with the bank and the rate of interest payable to the depositor is decided by this tenor. The rate of interest differs from bank to bank and is generally higher for private sector and foreign banks. This, however, does not mean that the depositor loses all his rights over the money for the duration of the tenor decided. The deposits can be withdrawn before the period is over. However, the amount of interest payable to the depositor, in such cases goes down (usually 1% to 2% less than the original rate).

BENEFITS OF FIXED DEPOSIT:

Fixed deposits remain the most popular instrument for financial savings in India. They are the middle path investments with adequate returns and sufficient liquidity. There are basically three avenues for parking savings in the form of fixed deposits. The most common are bank deposits for nationalized banks, the yield is generally low with a maximum interest of 8 to 8.5% per annum for a period of three years or more. As opposed to that, NBFCs and company deposits are more attractive. The idea is to select the right company to minimize the risk. Company deposits as a saving instrument have declined in popularity over the last three years.

1.2.2 POST OFFICE SAVING SCHEMES:

Post office is a very safe and secure investment avenue. The money is used in the development of the society as a whole, while it provides steady returns. The biggest advantage of investing in post office schemes is the tax benefit that they provide. Thus a lot of savings go through this channel to dual advantage- tax benefits and steady returns.

There are many schemes available in post office savings schemes. The schemes are 1. National saving schemes. 2. Kisan vikas patra. 3. Monthly income schemes. 4. Recurring deposit. 5. Post office savings deposit.

1.2.3 LIFE INSURANCE: A contract of insurance can be defined as a co-operative device to spread the loss caused by a particular risk over a number of persons who are exposed to it and who agree to ensure themselves against that risk, Risk is uncertainty of a financial loss. Every risk involves of the loss of one kind or other. The object of the insurance is to spread the loss over a large number of the insurance is to spread the losses over a large number of persons who are agreed to co-operative each other at the time of loss. Though the risk cannot be averted yet the loss occurring due to a certain risk can be Distributed among the agreed persons. Such persons agree to share the loss because the chances of loss i.e., The time and amount to a persons are not known. Benefits of Insurance: 1. Risk is covered. 2. Capital Appreciation of funds. 3. Guaranteed benefits, etc

1.2.4 MUTUAL FUNDS A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal. The money thus collected is then invested in capital market instruments such as shares, debentures and other securities The income earned through these investments and the capital appreciations realized are shared by its unit holders in proportion to the number of units owned by them. 1.2.5 SHARES/DEBENTURES (NEW ISSUE MARKET):

New issue market deals with new Securities, i.e., securities which where not previously available and are offered to the investing public for the first time. The market, therefore, derives its name from the fact that it makes available a new block of securities for the public subscription. The stock market on the other hand, is a market for old securities i.e., those, which have already been issued and have been granted stock exchange listing.

Secondary Market Stock Exchange is an organized market place where securities are traded. These securities are issued by the Government, semi-Government Bodies, Public sector undertakings and companies for borrowing funds and raising resources. Securities are defined as any monetary claims (promissory notes or I.E.) and include stock, shares, debentures, bonds etc. if these securities are marketable as in the case of Government stock; they are transferable by endorsement and are like movable property. They are tradable on the stock Exchange.

Benefits of Investment in Shares 1. Investors may be entitled to bonus issue that may be made by the company out of the free reserves accumulated through retained earnings over years. 2. Rights: The equity shareholders may be entitled to any further issue of Capital, either as debentures, fully or partly convertible debentures or equity shares, as may be made by the company, depending on its requirements. 3. The equity shareholders being the owners of the company have the right to get the interim dividend within a period of 42 days from the date of declaration of dividends. 4. Any investment in shares is wealth of the investor, which is free from wealth tax.

5. In addition to all the above benefits, the investor in equities enjoys some unique advantages of safety, liquidity and marketability. The investor can readily find a market for selling the equity shares in the Stock Market and encasing the investments at short notice.

1.2.6 GOLD There are a number of ways of buying gold for investment purposes. Jewellery is not dealt with in this section, although in many countries it is purchased with the dual purposes of adornment and saving. The distinction between the purchase of physical gold and gaining an exposure to movements in the gold price is not always clear, especially since physical gold can be purchased in some forms without the owner needing to take delivery.

1.2.7 REAL ESTATE Land and house property is called real estate. This investment is taken by a large number of people for hedging against inflation rate. The investment in the real estate is also very risky. Although the average rate of return is high a cautious investor should not think of property because it has very low liquidity and subject to wide fluctuations in valuation .

1.3. COMPANY PROFILE:


Way2Wealth is a premier Investment Consultancy Firm that has been launched with the aim of making investing simpler, more understandable and profitable for the investors.

Way2Wealth brings a wide range of product offerings from Fixed Income Securities, Life Insurance and Mutual Funds to Equity and Derivatives (on the National Stock Exchange) for the convenience and benefit of it customers. Way2Wealth has over 40 easily accessible Investment Outlets spread across 20 major towns and cities in the country. Sivan Securities started in 1984, has a long and illustrious track record of being amongst the premier Financial Intermediaries in the country as well as being an incubator for IT start-up firms. The Venture Capital division came to be known as Global Technology Ventures and the Financial Intermediary Division was spun off as Way2Wealth in the year 2000.

Way2Wealth is promoted by Sivan Securities and Global Technology Ventures Ltd. Prudential ICICI provides further strength to Way2Wealth as strategic equity partner. Way2Wealth has a very credible management team, who has well over 100 man-years of experience amongst themselves. Way2Wealth has inherited these same values in addition to a base of 75,000 individual customers, over 300 corporate/institutional clients.

Other companies in the group include Amalgamated Bean Coffee Trading Company Ltd. (one of the largest Coffee Exporters in India) and Caf Coffee Day, a chain of youth hangout coffee parlors.

Mission:

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To be the pre-eminent destination for personalized financial solutions helping individuals create wealth.

Philosophy:

Our

knowledge combined with our investors trust and

involvement will lead to the growth of wealth and make it an exciting experience.

Way2wealth Research Desk:

The research cell focuses on providing data and analysis to help customers make sound investment decisions. The Research cell is managed by a highly qualified team that is handpicked and trained extensively in the proprietary Way2Wealth Investment Philosophy centered on finding the best investment solutions for the customers. Based in the commercial capital enables the team to have a pulse of the trends allowing dissemination of the most up-to-date and latest information. The Way2Wealth research cell measures up to international standards of technology and on-site resources.

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CHAPTER 2 2.1 OBJECTIVES


2.1.1 PRIMARY OBJECTIVES To study the investors perception and attitude towards different investment products To assess the awareness of investors with regard to small and medium capitalization companies.

SECONDARY OBJECTIVES

To analyze the investing habits of the investor. To analyze the factors influencing the investor in choosing the types of investments. To understand the profile of the investors. To analyze investors risk and return preferences of the investment.

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2.2

SCOPE OF THE STUDY

India is now one of the fastest economically growing nations. With its vast economy, Indians have a lot of options to invest their savings.

This study undertaken for Way2wealth Securities Pvt Ltd aims to study the investors attitude towards various investment alternatives and to study the customers perception on investing in small and medium capitalization companies. The study would also analyze the awareness level of investors in small and medium capitalization companies

The study has been done by preparing a questionnaire which contains prospective questions put forth to the investors .The responses help in analyzing the profile and investing habits of the investor and factors influencing the investor in investing in small and medium capitalization companies.

All this would help in giving suggestions to Way2wealth Securities (P) Ltd, in strengthening their marketing efforts and in determining the market potential for investments in small and medium capitalization companies.

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2.3 LIMITATIONS OF THE STUDY

The area of the study is limited to Thyagaraya Nagar, a part of Chennai only. Hence the results may not be true for other geographical locations. Validity and Reliability of the data depends on the truthfulness of the responses from the public. Time at the disposal of the researcher is limited. The size of the sample compared to the population is very small and hence it may not represent the whole population. A structured questionnaire was the basis for collecting the data, so it has the usual deficiencies attached to this technique of data collection.

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CHAPTER 3 RESEARCH METHODOLOGY


Business research is a systematic inquiry that provides information to guide business decisions and aimed to solve managerial problems. Business research is of recent origin and is largely supported by business organizations that hope to achieve competitive advantages.

Research methodology is a way to systematically solve the research problems. It may be understood as a science of studying how research is done scientifically. It includes the overall research design, the sampling procedure, data collection method and analysis procedure.

3.1 RESEARCH DESIGN


Research design stands for advance planning of the methods to be adopted for collecting the relevant data and the techniques to be used in analysis, keeping in view the objectives of the research and availability of time.

Descriptive research includes surveys and fact-finding enquiries of different kinds. The major purpose of this research is description of state of affairs as it exits at present.

In this survey the design used is descriptive in nature. The information is collected from the individuals and analyzed with the help of

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different statistical tools, for describing the relationship between various types of variables, pertaining to different investment options. Moreover Cross table Analysis has been done for processing the data and information is derived to meet the objectives of the study.

3.2

DATA

3.2.1 Nature of Data


Under Questionnaire. 3.2.2 Source of Data The Primary data was collected from the individuals residing in Chennai City, with the help of the questionnaire, which was prepared after getting inputs from the experts and executives in Way 2 wealth .Secondary data are sourced from Magazines, Books, Pamphlets, Periodical Surveys, and Websites etc. the study Primary data was collected by using

3.3

METHOD OF DATA COLLECTION


Structured Questionnaire method is used as an instrument for

collecting information from the individuals. A Pilot study was conducted based on which a few changes were made in the Questionnaire.

3.4

SAMPLING
Since the populations of consumers of Investments are large in

number, researcher was unable to collect information from all individuals due to limitation of time. So part of the population is taken for analyzing and generating the findings, which may be applicable for total market.

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3.4.1 Sampling Unit


The number of items selected from the population constitutes the sample size. The respondents of the study are present and future investors.

3.4.2 Sample Size


The sample size is calculated at 95% confidence level with +5% error level N = (z2* p*q )/e2 rate, z= confidence level at 95%(2) The sample size for the study is 410. (4.1)

Where N =Sample size, p= population proportion, q=1-p, e= error

3.4.3 Sampling Method


Sampling design is to clearly define set of objects, technically called the universe to be studied. This research has finite set of universe and the sampling design used in the study is probability sampling. Cluster Simple Random sampling method is used for the collection of data.

3.5

TOOLS USED
The data has been mainly analyzed by using the following

methods and tests. Cross Tabulation and Percentage method supplemented by appropriate charts. 1. 2. 3. Percentage Analysis Ranking Method Chi Square Test

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CHAPTER 4 ANALYSIS AND INTERPRETATION


Analysis is the process of placing the data in the ordered form, combining them with the existing information and extracting the meaning from them. In other words, analysis is an answer to the question what message is conveyed by each group of data . Data, which are otherwise raw facts and are unable to give a meaningful information. The raw data become information only when they are analyzed and when put in a meaningful form. Interpretation is the process of relating various bits of information to other existing information. Interpretation attempts to answer what relationship exists between the findings to the research objectives and hypothesis framed for the study in the beginning. STATISTICAL TOOLS 4.1 PERCENTAGE ANALYSIS Percentage refers to a special kind of ratio in making comparison between two or more data and to describe relationships. Percentage can also be used to compare the relation terms the distribution of two or more sources of data. Percentage of Respondents = Number of Respondents Total Respondents Column chart is used in showing the comparison diagrammatically. Column charts shows the number of respondents in Y-axis and their feedback in X-axis. *100 (5.1)

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TABLE 4.1 Age Group of the Respondents

S.No. 1 2 3 4 5

Age Group Below 25 Years 26-32 years 33-39 years 40-46 years Above 46 years Total

No. of Respondents Percentage 70 160 92 26 62 410 17.1 39.0 22.4 6.3 15.1 100.0

INFERENCE:
From the above table, it can be inferred that, 17.1% of the respondents are in the age group less than 25 years. 39.0 % of the respondents are in the age group between 26 to 32 years. 22.4% of the respondents are between 33 to 39 years. 6.3% of the respondents are between 40 to 46 years. 15.1% of the respondents are above 46 years.

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FIGURE - 4.1 Age Group of the Respondents

No. of Respondents
NO OF RESPONDENTS

180 160 140 120 100 80 60 40 20 0 Below 25 Years 26-32 years 33-39 years AGE IN YEARS 40-46 years Above 46 years

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TABLE 4.2 Education Profile of the Respondents

S.No. 1 2 3 4

Education HSC UG PG Others Total

No. of Respondents 40 244 113 13 410

Percentage 9.8 59.5 27.6 3.2 100.0

INFERENCE:
From the above table, it can be viewed that among the 410 respondents, 9.8% of the respondents have completed their HSC. 59.5% of the respondents have completed their Under Graduation. 27.6% of the respondents have completed their Post Graduation. 3.2% of the respondents are in the category others which include CA, ICWA, Doctors, etc.

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FIGURE 4.2 Education Profile of the Respondents

300

250
No. of Respondents NO OF RESPONDENTS

200

150

100

50

0 HSC UG PG E D U C A T IO N O th e r

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TABLE 4.3 Occupation of the Respondents


S.NO 1 2 3 4 5 OCCUPATION Salaried Self-Employed Business Retired Others Total NO. OF RESPONDENTS 301 30 44 29 6 410 PERCENTAGE 73.4 7.3 10.7 7.1 1.5 100.0

INFERENCE:
From the above table, it is inferred that, About 73.4% of the respondents belong to salaried class,

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7.3% of the respondents are self-employed. 10.7% of the respondents are doing business. 7.1% of the respondents are retired peoples and 1.5% of the respondents belong to other categories.

FIGURE - 4.3

Occupation of the Respondents

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350

300

250 NO OF RESPONDENTS No. of Respondents

200

150

100

50

0 S a la r ie d S e lf -E m p lo y e d B u s in e s s O C C U P A T IO N R e tir e d O th e r s

TABLE 4.4 Income Level of the Respondents

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S.No 1 2 3 4 5

Income/Annum Below 1 lakh 1lakh - 2 lakhs 2 lakhs - 3 lakhs 3 lakhs - 4 lakhs Above 4 lakhs Total

No. of Respondents 96 141 86 51 36 410

Percentage 23.4 34.4 21.0 12.4 8.8 100.0

INFERENCE:
From the above table, it is viewed that 23.4% of the respondents belong to the 34.4% of the respondents are in the income

income level of below 1 lakh. level between 1 lakh to 2lakhs. 21% of the respondents are between 2 lakhs to 3lakhs. 12.4% of the respondents are between 3lakhs to 4 lakhs. 8.8% of the respondents are above 4 lakhs.

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FIGURE 4.4 Income Level of the Respondents

160 140 120 100


No. of Respondents NO. 0F RESPONDENTS

80 60 40 20 0 B e l o w 1 l 1 lka hk h - 2 l a 2 hl a k h s - 33 l a k h s - A4 b o v e 4 l a k h s a k s la k h s la k h s

Income Per Annum

IN C O M E /A N N U M

27

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TABLE 4.5 Tax Percentage of the Respondents

S.No. 1 2 3 4

Tax Percentage 0 PERCENT 10 PERCENT 20 PERCENT 30 PERCENT Total

No. of Respondents 108 134 94 74 410

Percentage 26.3 32.7 22.9 18.0 100.0

INFERENCE:
From the above table, it is inferred that,

26.3% of the respondents are in the tax level of 0%. 32.7% of the respondents are in the tax slab of 10%. 22.9% of the respondents are in the tax level of 20%. 18% of the respondents are in the tax level of 30%.

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TABLE 4.6 Frequency of Investment of the Respondents

S.No 1 2 3 4

Frequency of Investment Every Month Once in Three Months Once in Six Months Only in the Last Quarter of the Year Total

No. of Respondents 154 109 29 118 410

Percentage 37.6 26.6 7.1 28.8 100.0

INFERENCE:
From the above table, It is inferred that, 37.6% of the respondents do their investments every month. 26.6% of the respondents invest every 3 months. 7.1% of the respondents invest once in six months 28.8% of the respondents invest only in the last quarter of the financial year.

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TABLE 4.7 Investment Portfolio of the Respondents


PERCENTAG S.NO INVESTMENT PORTFOLIO Bank Deposits Company Deposits Small Savings Shares Mutual Funds Life Insurance (For Self) Life Insurance (For others) Real Estate Jewellery INVESTE D 302 8 310 138 179 331 87 10 14 NOT INVESTED 108 402 100 272 231 79 323 400 396 E OF INVESTED PEOPLE 73.7 2.0 75.6 33.7 43.7 80.7 21.2 2.4 96.6

1 2 3 4 5 6 7 8 9

INFERENCE:
From the above table, it is inferred that among 410 respondents, 73.7% of the respondents have invested in Bank Deposits. Only 2.0% of the respondents have invested in Company deposits. 75.6% of the respondents have invested in Small Savings. 33.7% of the respondents have invested in Shares. 43.7% of the respondents have invested in Mutual funds. 21.2% of the respondents have invested in Life Insurance i.e., for themselves. 21.2% of the respondents have invested in Life Insurance i.e., for their family members. Only 2.4% of the respondents have invested in Real Estate. Only 3.4% 0f the respondents have invested in Gold.

TABLE 4.8

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Risk Profile of the Respondents

S.No. 1 2 3

Risk Profile Low Risk Takers Medium Risk Takers High Risk Takers Total

No. of Respondents 140 175 95 410

Percentage 34.1 42.7 23.2 100.0

INFERENCE:
From the above table, it is inferred that 34.1% of the respondents are low risk takers i.e., they need low returns with minimum risk. 42.7% of the respondents are medium risk takers i.e., they need medium returns with medium risk. 23.7% of the respondents are high risk takers i.e., they need high returns with high risk.

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FIGURE 4.5 Risk Profile of the Respondents

200 180 160 140

No. of Respondents

120 NO OF RESPONDENTS 100 80 60 40 20 0 L o w R is k t a k e r s M e d iu m R is k t a k e r s R IS K P R O F IL E H ig h R is k t a k e r s

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TABLE 4.9

Awareness about Small and Medium Capitalization Companies


Awareness about Mid & Small Capitalization Companies Not Aware

S.No

No. of Respondents

Percentage

247

60.2

Aware

163

39.8

Total

410

100.0

INFERENCE:
From the above table, it is inferred that, 60.2% of the respondents didnt know about the small and medium capitalization companies. Only 39.8% of the respondents know about this small and medium capitalization companies.

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TABLE 4.10 Investor Attitude towards Small and Medium Capitalization Companies
INTEREST IN INVESTMENT IN SMALL AND MEDIUM CAPITALIZATION COMPANIES Interest in Mutual Funds specializing in Small and Medium Capitalization companies

INTERESTED (88.7%)

NOT INTERESTED (11.3%)

Interested (86.6%) PUBLIC SECTOR COMPANIES (35.6%)

Not Interested (13.4%) PRIVATE SECTOR COMPANIES (64.4%)

PREFERENCE OF SECTOR

INFERENCE: From the above table, it is inferred that among the 151 respondents who knows about small and medium capitalization companies, About 88.7% of the respondents are interested in small and medium capitalization companies. Regarding the investors interest in Mutual Funds specializing in small and medium capitalization companies, about 86.6% of the respondents are interested to invest and only 13.4 % are not interested. In preference of sectors, about 35.6% of the respondents are interested to invest in Public Sector Companies and 64.4% of the respondents are interested to invest in Private sector companies

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TABLE 4.11 Interest in Learning about Small and Medium Capitalization Companies
Need knowledge about small and mid cap capitalization companies Not at all To some extent Very much Total

S.No. 1 2 3

No. of Respondents 156 191 63 410

Percentage 38.0 46.6 15.4 100.0

INFERENCE:
From the above table, it is inferred that, among the 410 respondents, 38.0% did not have an interest to learn about small and medium capitalization companies. 46.6% have some interest to learn about small and medium capitalization companies. 15.4% have very much interest to learn about small and medium capitalization companies.

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TABLE 4.12 Financial Advisors of the Respondents

S.No. 1 2 3 4

Financial Advisors Self Friends Relatives Financial consultants Total

No. of Respondents 157 121 77 55 410

Percentage 38.3 29.5 18.8 13.4 100.0

INFERENCE:
From the above table, it is inferred that 38.3% of the respondents are self financial

advisors. For 29.5% of the respondents, their friends are the financial advisors. For 18.8% of the respondents, their relatives are the financial advisors. For 13.4% of the respondents, financial consultants are financial advisors.

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4.2 RANKING ANALYSIS


TABLE: 4.13 Ranking Of Factors Influencing Investments S.No
1 2 3 4 5

factor
SAFETY LIQUIDITY REGULAR INCOME CAPITAL APPRECIATION EASE OF INVESTMENT

WEIGHTAGE WEIGHTED RANK SCORE AVERAGE


1915 1174 1224 1307 530 4.67 2.86 2.98 3.18 1.29

1 4 3 2 5

INFERENCE:
From the above table, it is inferred that The Respondents have ranked SAFETY as First among the factors influencing Investments. The Respondents have ranked CAPITAL APPRECIATION as Second among the factors influencing Investments. The Respondents have ranked REGULAR INCOME as Third among the factors influencing Investments. The Respondents have ranked LIQUIDITY as Fourth among the factors influencing Investments. The Respondents have ranked EASE OF INVESTMENT as Fifth among the factors influencing Investments.

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TABLE 4.14

Ranking among Investments WEIGHTAGE WEIGHTED SCORE


3326 1513 1866 3321 2624 3015 3404 1218 976 1287

S.NO INVESTMENT
1 2 3 4 5 6 7 8 9 10 BANK DEPOSITS COMPANY DEPOSITS BONDS SMALL SAVINGS SHARES MUTUAL FUNDS LIFE INSURANCE GENERAL INSURANCE REAL ESTATE JEWELLERY

AVERAGE
8.11 3.7 4.55 8.1 6.4 7.35 8.3 2.97 2.38 3.13

RANK 2 7 6 3 5 4 1 9 10 8

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INFERENCE:
From the above table, The Respondents have ranked Life Insurance as First in respect to the best investment avenue, The Respondents have ranked Bank Deposits as Second in respect to the best investment avenue, The Respondents have ranked Small savings as Third in respect to the best investment avenue, The Respondents have ranked Mutual Funds as Fourth in respect to the best investment avenue, The Respondents have ranked Shares as Fifth in respect to the best investment avenue The Respondents have ranked Bonds as Sixth in respect to the best investment avenue. The Respondents have ranked Company Deposits as Seventh in respect to the best investment avenue, The Respondents have ranked Jewellery as Eighth in respect to the The Respondents have ranked General Insurance as Ninth in respect to the best investment avenue and , The Respondents have ranked Real Estate as Tenth in respect to the best investment avenue. best investment avenue,

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TABLE 4.15 Ranking among factors influencing investment in small and medium capitalization companies. s.no
1 2 3 4 5

factor
Higher returns Strong Fundamental Capital Appreciation Growth Prospects Safety

weightage score
478 424 492 272 494

weighted average
3.3 2.9 3.41 1.9 3.43

rank 3 4 2 5 1

INFERENCE:
From the above table, it is viewed that The Respondents have ranked SAFETY as First among the factors influencing Investments. The Respondents have ranked CAPITAL APPRECIATION as Second among the factors influencing Investments. The Respondents have ranked HIGHER RETURNS as Third among the factors influencing Investments. The Respondents have ranked STRONG FUNDAMENTAL as Fourth among the factors influencing Investments. The Respondents have ranked GROWTH PROSPECTS as Fifth among the factors influencing Investments.

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TABLE 4.16 Ranking among Sectors for Investing. S.NO SECTOR


1 2 3 4 5 6 7 8 9 10 IT SECTOR TEXTILE SECTOR ENGINEERING SECTOR AUTO ANCILLARIES SECTOR AUTO SECTOR FMCG SECTOR CHEMICAL SECTOR PHARMA SECTOR BANKING SECTOR OIL SECTOR

WEIGHTAGE SCORE
1232 784 706 564 750 572 368 646 1024 944

WEIGHTED AVERAGE
8.9 5.68 5.1 4.0 5.43 4.14 2.67 4.68 7.42 6.84

RANK 1 4 6 9 5 8 10 7 2 3

INFERENCE:
From the above table,

The Respondents have ranked IT sector as First in respect to the best investment avenue, The Respondents have ranked BANKING sector as Second in respect to the best investment avenue, The Respondents have ranked OIL sector as Third in respect to the best investment avenue, The Respondents have ranked TEXTILE sector as Fourth in respect to the best investment avenue,

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The Respondents have ranked AUTO sector as Fifth in respect to the best investment avenue The Respondents have ranked ENGINEERING sector as Sixth in respect to the best investment avenue. The Respondents have ranked PHARMA sector as Seventh in respect to the best investment avenue, The Respondents have ranked FMCG sector as Eighth in respect to the best investment avenue, The Respondents have ranked AUTO Ancillaries sector as Ninth in respect to the best investment avenue and , The Respondents have ranked CHEMICAL sector as Tenth in respect to the best investment avenue.

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4.3 CHI-SQUARE ANALYSIS


Chi-square is a non-parametric test of statistical significance for bivariate tabular analysis. A non-parametric test, like chi square, is a rough estimate of confidence. Chi-square is used most frequently to test the statistical significance of results reported in bivariate tables and interpreting bivariate tables is integral to interpreting the results of a chi-square test.

CHI SQUARE TEST METHOD The Chi square method is the application of testing the significant difference between observed and expected values. 1. Null Hypothesis (H0):

The hypothesis, or assumption, about a population parameter we wish to test, usually an assumption of the status quo. 2. Alternative Hypothesis (H1): The conclusion we accept when the data fail to support the null hypothesis. 3. Statistical Test: (Oi Ei )2 Chi Square ( 2) = Ei Where, Oi = Observed frequency, Ei = Expected Frequency

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4. Expected Frequency: RT * CT Ei = N Where, RT = Row Total, CT = Column Total N 5. Critical Value: The value of the standard statistic beyond which we reject the null hypothesis; the boundary the between the acceptance region and rejection region. = Number of Respondents

6. Degrees Of Freedom (df) : df = (No of Rows 1 ) * ( No of columns 1)

7. Level of Significance ():

A value indicating the percentage of sample values that is outside certain limits, assuming the null hypothesis is correct, that is, the probability of rejecting the null hypothesis when it is true.

4.3.1 TEST OF INDEPENDENCE: A statistical test of proportion of frequencies to determine whether membership in categories of one variable is different as a function of membership in the categories of a second variable.

45

1. AGE AND RISK PROFILE


Null Hypothesis ( H0 ) between Age and Risk profile Alternate Hypothesis ( H1 ) Age and risk profile. : There is significant relationship between : There is no significant relationship

TABLE 4.17
Relationship between Age Group and Risk Profile. RISK PROFILE OBSERVED FREQUENCY
LOW RISK 20 63 26 31 140 MEDIUM RISK 36 60 43 36 175 HIGH RISK 14 37 23 21 95

AGE Below 25 Years 26-32 years 33-39 years Above 39 years Total

TOTAL 70 160 92 88 410

EXPECTED FREQUENCY
Below 25 Years 26-32 years 33-39 years Above 39 years Total 24 55 31 30 140 30 68 39 38 175 16 37 21 20 95 70 160 92 88 410

Chi- Square (2) Value Level Of Significance Degrees Of Freedom Table Value

= 6.017 = 0.05 = 6 = 12.59

Interpretation:
Calculated 2 Value is less than the Table Value. So Null Hypothesis (H0) is accepted. Therefore, there is no significant relationship between Age group and Risk Profile.

46

2. INCOME AND FREQUENCY OF INVESTMENT


Null Hypothesis ( H0 ) Alternate Hypothesis ( H1 ) : There is no significant association between Income and Frequency Of Investment : There is significant association between Income and Frequency Of Investment

TABLE 4.18
Relationship between Income and Frequency of Investment

INCOME Below 1 lakh 1lakh - 2 lakhs 2 lakhs - 3 lakhs 3 lakhs - 4 lakhs Above 4 lakhs Total Below1 lakh 1lakh - 2 lakhs 2 lakhs - 3 lakhs 3 lakhs - 4 lakhs Above 4 lakhs Total

Every Month 18 47 48 25 16 154 36 53 32 19 14 154

FREQUENCY OF INVESTMENT OBSERVED FREQUENCY Only in the Last Quarter Once in Three Months of the Year 23 55 40 54 16 22 18 8 12 8 109 147 EXPECTED FREQUENCY 26 34 37 51 23 31 14 18 10 13 109 147

TOTAL 96 141 86 51 36 410 96 141 86 51 36 410

Chi- Square (2) Value Level Of Significance Degrees Of Freedom Table Value Interpretation:

= 46.85 = 0.05 = 6 = 15.51

Calculated 2 Value is greater than the Table Value. So Null Hypothesis ( H0 ) is Rejected. Therefore, there is significant relationship between Income and Frequency of Investment.

47

3. INCOME AND RISK PROFILE


Null Hypothesis ( H0 ) Income and Risk Profile Alternate Hypothesis ( H1 ) Income and Risk Profile : There is significant relationship between : There is no relationship between

TABLE 4.19
Relationship between Income and Risk profile
RISK PROFILE OBSERVED FREQUENCY LOW RISK MEDIUM RISK HIGH RISK 49 33 14 38 66 37 27 38 21 18 20 13 8 19 9 140 176 94 EXPECTED FREQUENCY 33 41 22 48 61 32 29 37 20 17 22 12 12 15 8 140 176 94

INCOME Below1 lakh 1lakh - 2 lakhs 2 lakhs - 3 lakhs 3 lakhs - 4 lakhs Above 4 lakhs Total Below1 lakh 1lakh - 2 lakhs 2 lakhs - 3 lakhs 3 lakhs - 4 lakhs Above 4 lakhs Total

TOTAL 96 141 86 51 36 410 96 141 86 51 36 410

Chi- Square (2) Value Level Of Significance Degrees Of Freedom Table Value @ 5% Table Value @ 1%

= 18.9 = 0.05 = 8 = 15.50 = 18.09

Interpretation:
Calculated 2 Value is greater than the Table Value @ 5% level of significance. So Null Hypothesis ( H0 ) is Rejected. Therefore, there is close relationship between Income and Risk Profile. At 1% level of significance, null hypothesis is accepted. There is no relationship between income and risk profile.

48

4. EDUCATION AND RISK PROFILE


Null Hypothesis ( H0 ) Education and Risk Profile Alternate Hypothesis ( H1 ) Education and Risk Profile : There is significant association between : There is no association between

TABLE - 4.20
Relationship between Education and Risk profile
RISK PROFILE OBSERVED FREQUENCY MEDIUM RISK HIGH RISK 6 7 96 63 74 24 176 94 EXPECTED FREQUENCY 17 9 105 56 54 29 176 94

EDUCATION HSC UG PG Total HSC UG PG Total

LOW RISK 27 85 28 140 14 83 43 140

Total 40 244 126 410 40 244 126 410

Chi- Square (2) Value Level Of Significance Degrees Of Freedom Table Value Interpretation:

= 37.24 = 0.05 = 4 = 9.488

Calculated 2 Value is greater than the Table Value. So Null Hypothesis ( H0 ) is Rejected. Therefore, there is significant relationship between Education and Risk Profile

49

5. OCCUPATION AND FREQUENCY OF INVESTMENT


Null Hypothesis ( H0 ) Alternate Hypothesis ( H1 ) : There is no significant relationship between Occupation and Frequency Of Investment : There is significant relationship between Occupation and Frequency Of Investment

TABLE 4.21
Relationship between Occupation and Frequency of Investment

OCCUPATION Salaried Business Self-Employed Retired Total Salaried Business Self-Employed Retired Total

FREQUENCY OF INVESTMENT OBSERVED FREQUENCY Every Once in Six Only in the Last Month Months Quarter of the year 125 94 82 6 22 16 8 6 12 15 6 8 154 128 118 EXPECTED FREQUENCY 113 94 87 17 14 13 14 11 10 11 9 8 154 128 118

Total 301 44 36 29 410 301 44 36 29 410

Chi- Square (2) Value Level Of Significance Degrees Of Freedom Table Value

= 17.68 = 0.05 = 6 = 12.59

Interpretation:
Calculated 2 Value is greater than the Table Value. So Null Hypothesis ( H0 ) is Rejected. Therefore, there is significant relationship between Occupation and Frequency of Investment.

50

6. OCCUPATION AND RISK PROFILE


Null Hypothesis ( H0 ) Alternate Hypothesis ( H1 ) Occupation and Risk Profile : There is no significant relationship

between Occupation and Risk Profile : There is significant relationship between

TABLE 4.22
Relationship between Occupation and Risk profile
RISK PROFILE OBSERVED FREQUENCY LOW RISK MEDIUM RISK HIGH RISK 108 128 65 12 20 12 8 18 10 12 10 7 140 176 94 EXPECTED FREQUENCY 103 129 69 15 19 10 12 15 8 10 12 7 140 176 94

OCCUPATION Salaried Business Self-Employed Retired Total Salaried Business Self-Employed Retired Total

Total 301 44 36 29 410 301 44 36 29 410

Chi- Square (2) Value Level Of Significance Degrees Of Freedom Table Value Interpretation:

= 4.77 = 0.05 = 6 = 12.59

Calculated 2 Value is less than the Table Value. So Null Hypothesis ( H0 ) is Accepted. Therefore, there is no association between Occupation and Risk Profile

51

7. INVESTMENT IN SHARES AND MUTUAL FUNDS


Null Hypothesis ( H0 ) : There is no significant relationship

between those who invested in shares and mutual funds. Alternate Hypothesis ( H1 ) : There is significant relationship between

those who invested in shares and mutual funds.

TABLE 4.23
Relationship between Investment in Shares and Mutual Funds
Investment in Mutual Funds OBSERVED FREQUENCY Not Invested Invested 206 66 25 113 231 179 EXPECTED FREQUENCY 153 119 78 60 231 179

Investment in Shares Not Invested Invested Total Not Invested Invested Total

Total 272 138 410 272 138 410

Chi- Square (2) Value Level Of Significance Degrees Of Freedom Table Value Interpretation:

= 22.355 = 0.05 = 1 = 3.84

Calculated 2 Value is greater than the Table Value. So Null Hypothesis ( H0 ) is Rejected. Therefore, there is significant relationship between those who invested in shares and mutual funds.

52

8. EDUCATION AND AWARENESS ABOUT SMALL AND MEDIUM CAPITALIZATION COMPANIES


Null Hypothesis ( H0 ) Education and Companies. Alternate Hypothesis ( H1 ) Education and Companies. : There is significant relationship between Awareness about Small and medium Capitalization : There is no association between

Awareness about Small and medium Capitalization

TABLE 4.24
Relationship between Education and Awareness about Small and Medium Capitalization Companies
AWARENESS LEVEL OBSERVED FREQUENCY NOT AWARE AWARE 26 14 166 78 55 71 247 163 EXPECTED FREQUENCY 24 16 147 97 76 50 247 163

EDUCATION HSC UG PG Total HSC UG PG Total

TOTAL 40 244 126 410 40 244 126 410

Chi- Square (2) Value Level Of Significance Degrees Of Freedom Table Value Interpretation:

= 21.031 = 0.05 = 2 = 5.99

Calculated 2 Value is greater than the Table Value. So Null Hypothesis ( H0 ) is Rejected. Companies. Therefore, there is significant relationship between Education and Awareness about Small and medium Capitalization

53

9. INVESTMENT IN SHARES AND AWARENESS ABOUT SMALL AND MEDIUM CAPITALIZATION COMPANIES
Null Hypothesis ( H0 ) : There is no significant relationship between those who invested in shares and awareness about small and medium capitalization companies. Alternate Hypothesis ( H1 ) capitalization companies. : There is significant relationship between

those who invested in shares and awareness about small and medium

TABLE 4.25
Relationship between Investment in Shares and Awareness about Small and Medium Capitalization Companies
AWARENESS LEVEL OBSERVED FREQUENCY Not aware Aware 223 49 24 114 247 163 EXPECTED FREQUENCY 164 108 83 55 247 163

INVESTMENT IN SHARES Not Invested Invested Total Not Invested Invested Total

Total 272 138 410 272 138 410

Chi- Square (2) Value Level Of Significance Degrees Of Freedom Table Value Interpretation:

= 23.87 = 0.05 = 1 = 3.04

Calculated 2 Value is greater than the Table Value. So Null Hypothesis ( H0 ) is Rejected. medium capitalization companies. Therefore, there is significant relationship between those who have invested in shares and awareness about small and

54

10. INTEREST IN SMALL AND MEDIUM CAPITALIZATION COMPANIES AND MUTUAL FUNDS SPECIALIZING IN SMALL AND MEDIUM CAPITALIZATION COMPANIES. Null Hypothesis ( H0 ) : There is no close relationship

between those who are interested in investing in small and medium capitalization companies and those who interested in investing in mutual funds specializing in small and medium capitalization companies. Alternate Hypothesis ( H1 ) : There is significant relationship between those who are interested in investing in small and medium capitalization companies and those who interested in investing in mutual funds specializing in small and medium capitalization companies.

TABLE 4.26
Relationship between .Interest in small and medium capitalization companies and mutual funds specializing in small and medium capitalization companies
INTEREST IN MUTUAL FUNDS OBSERVED FREQUENCY Not Interested Interested 8 7 12 120 20 127 EXPECTED FREQUENCY 2 13 18 114 20 127

Interest in small and mid cap Not Interested Interested Total Not Interested Interested Total

Total 15 132 147 15 132 147

Chi- Square (2) Value Level Of Significance Degrees Of Freedom Table Value Interpretation:

= 22.35 = 0.05 = 1 = 3.84

Calculated 2 Value is greater than the Table Value. So Null Hypothesis ( H0 ) is Rejected. Therefore, there is significant relationship between those who are interested in investing in small and medium capitalization companies and those who interested in investing in mutual funds specializing in small and medium capitalization companies.

55

11. FACTORS OF INVESTMENT


In Ranking Analysis, Safety got the first rank and Ease of investment got the least preference. Besides these two, remaining factors like Capital Appreciation. Liquidity and Regular Income. Null Hypothesis ( H0 ) = Capital Appreciation, Liquidity and Regular Income are equally preferred Alternate Hypothesis ( H1 ) = There is particular preference between the factors of Capital Appreciation, Liquidity and Regular Income

TABLE 4.27 Factors of Investment


FACTOR LIQUIDITY CAPITAL APPRECIATION REGULAR INCOME OBSERVED FREQUENCY(fo) 1174 1307 1224 EXPECTED FREQUENCY(f1) 1235 1235 1235

Calculated 2 value Degree of freedom Table value Level of Significance Interpretation:

= = = =

7.308 2 5.99 0.05

From the above analysis we find that calculated 2 value greater than the table value, i.e., Null hypothesis rejected. So, there is particular preference between the factors of Capital Appreciation, Liquidity and Regular Income .

56

12. PREFERENCE OF INVESTMENTS


Null Hypothesis ( H0 ) = The investors have no preference among various investment alternatives. Alternate Hypothesis ( H1 ) = The investors have particular preference among investment alternatives.

TABLE - 4.28
PREFERENCE OF INVESTMENTS investment Bank Deposits Company Deposits Bonds Small Saving Shares Mutual Funds Life Insurance General Insurance Real Estate Jewellery Calculated 2 value Degree of freedom Table value Level of Significance Interpretation: From the above analysis we find that calculated 2 value is greater than the table value, i.e., Null hypothesis rejected. So, the investors have particular preference among investment alternatives. observed frequency 3326 1513 1866 3321 2624 3015 3404 1218 976 1287 = = = = 3843 9 16 0.05 expected frequency 2255 2255 2255 2255 2255 2255 2255 2255 2255 2255

57

13. INVESTMENT AVENUE WHEN SAFETY IS TOP PRIORITY


Null Hypothesis ( H0 ) = All Investments are equally preferred by Investors. Alternate Hypothesis ( H1 ) = There is particular preference among investments by investors

TABLE 4.29
Investment Avenue When Safety Is Top Priority investment Bank Deposits Small Savings Shares Mutual Funds Life Insurance observed frequency 298 307 132 174 323 expected frequency 247 247 247 247 247

Calculated 2 value Degree of freedom Level of Significance Table value Interpretation:

= = = =

123.8 4 0.05 9.48

From the above analysis we find that calculated 2 values greater than the table value, i.e., Null hypothesis rejected. preference among investments by investors. So, there is particular

CHAPTER 5

58

FINDINGS Respondent Profile:

About 90% of the Respondents are Graduates, PG, etc. About 73% of the Respondents are Salaried People. About 57.80 % of the Respondents have Annual Income of below Rs.2 lakhs. About 59% of the respondents come under the tax slab of 10%. About 36% of the Respondents invest Monthly, 26% invest Quarterly and 28% invest in the last quarter of the financial year. 38.3% of the Respondents are their own financial advisors and 48% of the respondents have friends and relatives as their financial advisors

Investment preferences of Respondents:


The Respondents choose Safety as First and Capital Appreciation as their second among factors influencing investment. Most of the respondents ranked Life Insurance as first and small savings and Bank Deposits as next choice. Most of the respondents are medium risk takers i.e., they need medium returns with average risk

Investment Portfolio of Investors:


About 80% of the respondents have invested in Insurance

59

About 75.6% of the respondents have invested in Small savings 73.7% of the respondents have invested in Bank Deposits. Only 2% of the respondents have invested in company deposits 33.7% of the respondents have invested in shares 43.7% of the respondents have invested in mutual funds Only 21% of the respondents have invested in Life Insurance for other family members

Awareness companies:

about

small

and

medium

capitalization

.Only 39% of the respondents are aware about small and medium capitalization companies In that 39%, 88% of the respondents are interested to invest in small and medium capitalization companies 64% of the respondents preferred private sector companies to invest In this also most of the respondents preferred safety as their first choice IT sector and Banking sector are the top priorities for the respondents About 86% of the respondents who know about small and medium capitalization companies are interested to invest in mutual funds specializing in small and medium capitalization companies

Inter-relationship between Investor profile and Investment Preferences:

60

From the chi-square analysis, It is found that there is no relationship between Income and Frequency of Investment Occupation and risk profile.

It is found that there is significant relationship between Age and Risk Profile. Income and Risk Profile. Occupation and Frequency of Investment. Age and Safety in Investment. Those who have invested in shares and mutual funds. Education and awareness about small and medium capitalization companies. Those who are interested to invest in small and medium capitalization companies and those who interested to invest in Mutual funds specializing in small and medium capitalization companies.

There is specific preference of factors among capital appreciation, liquidity and regular income for investments by investors. There is particular preference among investment alternatives by investors. Based on safety, the investors have specific preference for investments.

CHAPTER 6

61

SUGGESTIONS
As majority of the respondents are salaried, this is the core market segment, which should be concentrated on. .Majority of the respondents showed interest in knowing about small and medium capitalization companies, seminars for investors may be organized to create awareness and interest. Majority of the respondents are salaried people. So, the company should promote schemes like Systematic Investment Plan. Since most of the people showed interest in bank deposits< small savings the company may promote these products. Nearly three-fourth of the respondents are tax payers, tax savings schemes can be preferred by the company Since company deposits are not popular, the company should not enter the distribution of company deposits Majority of the respondents may not seek the advices of Financial consultants, this provides the great opportunity for the company to increase their market penetration through promotional activities.

CHAPTER 7

62

CONCLUSION
The study was conducted in T.Nagar for Way2Wealth securities, an investment consultancy company.

The study revealed that the investors have greatest preference for safety. Most of the respondents have invested in life insurance, bank deposits and small savings.

The level of awareness about small and medium capitalization companies can be enhanced through the efforts of the company. Since many investors expressed their interesting learning more about such companies.

The statistical analysis of data has given insight into investor demographics and their investment preferences.

Based on the investor profile and investor preferences , suggestions have been made for the company to increase its market penetration.