A STUDY ON CUSTOMER PERCEPTION TOWARDS INDIAN CAPITAL MARKET WITH SPECIAL REFERANCE TO KARVY STOCK BROKING LTD

A PROJECT REPORT
SUBMITED TO THE SCHOOL OF MANAGEMENT

In the partial fulfillment of the requirement for the award of the degree of MASTER OF BUSINESS ADMINISTRATION BY THAMIZH.P Reg.No: 35106212

Under the guidance of Mr.P.SARAVANAN B.B.A., M.B.A., PGDCA, M.Phil. Senior Lecturer

SCHOOL OF MANAGEMENT STUDIES FACULTY OF ENGINEERING AND TECHNOLOGY SRM UNIVERSITY SRM NAGAR, KATTANKULATHUR, KANCHEEPURAM DISTRICT 603203 MAY 2008

SCHOOL OF MANAGEMENT STUDIES FACULTY OF ENGINEERING AND TECHNOLOGY SRM UNIVERSITY SRM NAGAR, KATTANKULATHUR, KANCHEEPURAM DISTRICT-603203

BONAFIDE CERTIFICATE Certified that this project Report titled A STUDY ON CUSTOMER PERCEPTION TOWARDS INDIAN CAPITAL MARKET WITH SPECIAL REFERANCE TO KARVY STOCK BROKING LTD Is a bonafide work of THAMIZH.P(Reg no. 35106212) who carried out the research under my supervision. Certified further that to the best of my knowledge the work reported here in does not form part of any other project or dissertation on the basis of which a degree or award was conferred on an earlier occasion on this or any other candidate.

Signature of the Guide (P.Saravanan)

Signature of Dean/ MBA (Dr. Jayshree Suresh)

Internal Examiner

External Examiner

Date :

ABSTRACT

The project report A STUDY ON CUSTOMER PERCEPTION TOWARDS INDIAN CAPITAL MARKET WITH SPECIAL REFERANCE TO KARVY STOCK BROKING LTD, is a described study were a clear description of the organization working and to know the application of management concepts has How to manage the risk. It consists of analysis and findings of the study of the India Infoline Limited. The report talks about the Risk management. The objective of the study is to understand hedging and speculation through the derivative trading. The scope of the study is limited to the company, methodology followed is to study the company and its market analysis for a period of 3 months i.e., from February to April 2008. Calculation have been made from the information obtained from stock market price of the NSE. Finally the report ends with the finding and analysis of the study done at the company and recommendations given to the management of the company for further improvement of their working.

ACKNOWLEDGEMENT I would like to thank KARVY STOCK BROKING LTD, for giving me this opportunity to be associated with an esteemed organization. I would especially like to express my gratitude towards Mr. ANAND, Branch Manager, who was my project guide, for all the support and constant feedback on my progress made during the project. I would also like to thank Mr. SENTHIL, Manager for their support and encouragement, which helped me to complete this project successfully. I extend my sincere thanks to internal guide Mr.P. SARAVANAN, B.B.A., M.B.A., PGDCA. M.Phil. for his valuable guidance during the project work. My sincere thanks to honorable founder and chairman Mr. PACHAMUTHU, S R M UNIVERSITY, KATTANKULATHUR In particular, my sincere thanks to Dean Mrs. JAYSHREE SURESH,
SCHOOL OF MANAGEMENT, SRM UNIVERSITY, KATTANKULATHUR

for providing all the facilities to carryout the project work. Last but not the least, I extend my thanks to my family and all my friends who helped me in completing this project work successfully.

DECLARATION

I, THAMIZH.P (35106212) do here by declare that this project A STUDY

ON CUSTOMER PERCEPTION TOWARDS INDIAN CAPITAL MARKET WITH SPECIAL REFERANCE TO KARVY STOCK BROKING LTD submitted to SRM School of Management Studies, for the award of the Master of Business Administration is the record of original work done by me under guidance of

Mr.P.Saravanan.B.B.A.,M.B.A., PGDCA., M. Phil.,

faculty Guide ,

School of Management studies, and this project work has not formed the basis for the award of any other Degree/Diploma/Associate ship/Fellow ship of the similar title to any other Degree to any other University

Place : Kattankulathur

Signature of the Student

Date:

TABLE OF CONTENTS

CHAPTER. NO
1

CONTENTS
INTRODUCTION

Pg.No
1

COMPANY PROFILE

15

REVIEW OF LITERATURE

23

RESEARCH METHODOLOGY

24

DATA ANALYSIS & INTERPRETATION

46

FINDINGS

95

SUGGESTIONS

98

CONCLUSION

101 102

BIBILOGRAPHY

10

ANNEXURE

103

LIST OF TABLES

Table
5.1

PARTICULARS
Age vs. purpose of investment in share market. Gender vs information they seek for investing in stock market. Gender vs. risk taking ability of the investors. Investors perception towards stock market The most preferred sector by the investors Percentage of investors savings in stock

PAGE
46

5.2

48

5.3

50

5.4

52

5.5

54

5.6

market

56

5.7

Reasons for investing in the stock market Time frame of the investment preferred by the respondent

58

5.8

60

5.9

Risk taking ability of the investors

62 which

5.10 5.10

Information

based

on

investments are made in stock market Difficulties faced by the investors

64 66

LIST OF CHART

Chart

PARTICULARS
Investors perception towards stock

PAGE

5.1

market from risk, return and savings point of view

53

5.2

The most preferred sector by the investors Percentage of investors savings in stock

54

5.3

market

57

5.4

Reasons for investing in the stock market Time frame of the investment preferred by the respondent

59

5.5

61

5.6

Risk taking ability of the investors

63 which

5.7 5.8 5.9 5.10

Information

based

on

investments are made in stock market Difficulties faced by the investors Share Price Movement of ICICI Bank Exponential Moving Average (EMA) for ICICI Bank Relative Strength Index for ICICI Bank

65 66 70 71

5.11

72

LIST OF CHARTS Chart PARTICULARS

Comparison between ICICI Bank & NSE 5.12 73

PAGE

5.13

Share price movement for HDFC Bank Exponential Moving Average (EMA) for

76

5.14

HDFC Bank Relative Strength Index for HDFC Bank Comparison between HDFC bank and NSE index Share price movement for SBI Bank Exponential Moving Average for SBI Bank Relative Strength for SBI Bank Comparison between SBI & NSE Stock price movement on PNB bank Exponential Moving Average for PNB Relative Strength Index for PNB Comparison between PNB & NSE

77

5.15 5.16 5.17 5.18 5.19 5.20 5.21 5.22 5.23 5.24

78 79 82 83 84 85 88 89 90 91

CHAPTER-1 INTRODUCTION

INTRODUCTION OF THE STUDY

Capital market can be classified as primary and secondary market. The fresh issue of securities takes place in primary market and trading among investors takes place in secondary market. Primary market is also known as new issues market. Equity investors first enter capital market though investment in primary market. In India, common investors participating in the equity primary market is massive. The number of companies offering equity through primary markets increased continuously.

The Indian capital market saw good growth between May 2003 and January 2004 on the back of good GDP growth, encouraging corporate results, the Government's intent to invest heavily in infrastructure, a strong rupee, and mounting forex reserves. The market today is range bound and not much seems to be happening.

While this is the story of the equity market, a quick look at the debt market shows that huge liquidity and low credit off take kept interest rates down most of the period. There was mild volatility whenever there was news about U.S. interest rates. There has been higher volatility more recently because of two things concerns over fiscal deficit and inflation and rising interest rates in the key world economies. There could be inflationary pressures and rising trade deficits, particularly for the developing countries.

As for the emerging scenario India's GDP growth promises to be better than what it is now. Indian corporates may continue to show good growth and robustness. The monsoon is expected to be good as also the agriculture growth. The rupee seems to be holding fine while the forex reserves remain comfortable.

The balance sheets of Indian banks are getting stronger. The markets now seem to be waiting for the Government's moves on the economic front. The equity markets are bound to see a big rally. If this does not happen then the markets could see a choppy period ahead. On the debt side, there are indications that interest rates might rise.

It is now fairly well established that making investments only in one channel does not yield the desired results. Diversification and asset allocation is the new mantra. A person needs to diversify to optimize returns. This will involve putting money in equities choosing the type of equity fund that most suits the risk/return profile and also some money in debt funds. The combination of equity and debt will depend upon the following factors: risk orientation, quantum of return expected, time horizon and objective of making the investment.

Barometer of the economy

At the stock exchange, share prices rise and fall depending, largely, on market forces. Share prices tend to rise or remain stable when companies and the economy in general show signs of stability and growth. An economic recession, depression, or financial
crisis could eventually lead to a stock market crash. Therefore the movement of share

prices and in general of the stock indexes can be an indicator of the general trend in the economy.

INDIAN CAPITAL MARKET

The Indian capital market has undergone phenomenal changes. The magnitude of growth could be gauged in terms of massive jumps in funds mobilization, the turnover on the stock exchanges, the amount of market capitalization, and the expansion of investor population. The regulatory framework has been strengthened and streamlined in order to tackle effectively the problems associated with the massive growth of the market.

The main components of Indian Capital market are Guilt-edged Market and the Industrial Securities Market. It is further classified as primary and secondary market. Gilt-edged Market also known as Government Securities Market is the market for government and semi government securities. An important feature of the securities traded in this market is that they are stable in value and are much sought after banks. The fresh issue of securities takes place in primary market and trading among investors takes place in secondary market. Primary market is also known as new issues market. Equity investors first enter capital market though investment in primary market.

Indian Capital Market

Guilt-edged Market

Industrial Securities Market

Primary Market

Secondary Market

INDIAN STOCK MARKET

Indian Stock Markets are one of the oldest in Asia. Its history dates back to nearly 200 years ago. The earliest records of security dealings in India are meager and obscure. The 1850's witnessed a rapid development of commercial enterprise and brokerage business attracted many men into the field and by 1860 the number of brokers increased into 60.

The first stock exchange in India 1894 set up in Mumbai. These was organized as voluntary non-profit making associations of brokers to evaluate and protect their interest before the control on securities trading become a central subject under the constitution in 1950, it was a state subject and Bombay securities Contract Act 1925 used to regulate trading in securities. Under this Act, the Bombay stock exchange was recognized in 1927 and Ahmedabad in 1937. The central Legislation was proposed and a committee headed by A.D.Gorwala went into the Bill for securities regulation.

The securities contract Act become low in 1956. As per April 1998 there were 23 stock exchanges recognized by central Government. They are located in Ahmedabad, Bangalore, Calcutta, Cochin, Coimbatore, Delhi, Guwahati, Hyderabad, Jaipur, Ludhiana, Madhya Pradesh, Madras, Magadh, Mangalore, Meerut, OTC Exchange Of India (Mumbai), Pune, Saurashtra, Kutch, Uttar Pradesh, Vadodara.

A stock exchange is a market where securities i.e., shares, debentures and government securities are brought and sold. The securities contract act, 1956, defines the stock exchange as an association, organization, or body of individuals where in corporate are not established for the purpose of assisting, regulating and controlling of business in buying, selling and dealing in securities. The two main stock exchanges in India are: NSE (National Stock Exchange) BSE (Bombay stock exchange)

NSE (National Stock Exchange)

With the liberalization of the Indian economy, it was found inevitable to lift the Indian stock market trading system on par with the international standards. On the basis of the recommendations of high powered Pherwani Committee, the National Stock Exchange was incorporated in 1992 by Industrial Development Bank of India, Industrial Credit and Investment Corporation of India, Industrial Finance Corporation of India, all Insurance Corporations, selected commercial banks and others.

Trading at NSE can be classified under two broad categories:

Wholesale debt market and Capital market.

Wholesale debt market operations are similar to money market operations institutions and corporate bodies enter into high value transactions in financial instruments such as government securities, treasury bills, public sector unit bonds, commercial paper, certificate of deposit, etc.

There are two kinds of players in NSE: Trading members and Participants.

Recognized members of NSE are called trading members who trade on behalf of themselves and their clients. Participants include trading members and large players like banks who take direct settlement responsibility.

BSE (Bombay stock exchange)

Bombay Stock Exchange Limited (the Exchange) is the oldest stock exchange in Asia with a rich heritage. Popularly known as "BSE"; it was established as "The Native Share & Stock Brokers Association" in 1875. It is the first stock exchange in the country to obtain permanent recognition in 1956 from the Government of India under the Securities Contracts (Regulation) Act, 1956.The Exchange's pivotal and pre-eminent role in the development of the Indian capital market is widely recognized and its index, SENSEX, is tracked worldwide. 6

The Exchange has a nation-wide reach with a presence in 417 cities and towns of India. The systems and processes of the Exchange are designed to safeguard market integrity and enhance transparency in operations. During the year 2004-2005, the trading volumes on the Exchange showed robust growth.

The Exchange provides an efficient and transparent market for trading in equity, debt instruments and derivatives. The BSE's On Line Trading System (BOLT) is a proprietary system of the Exchange and is BS 7799-2-2002 certified. The surveillance and clearing & settlement functions of the Exchange are ISO 9001:2000 certified.

NATURE OF STOCK MARKET

A stock exchange is a market where securities i.e., shares, debentures and government securities are brought and sold. The securities contract act, 1956, defines the stock exchange as an association, organization, or body of individuals where in corporate are not established for the purpose of assisting, regulating and controlling of business in buying, selling and dealing in securities.

Members of stock exchanges

The regulations governing the members of the recognized stock exchanges are uniform in terms of the provisions of the securities contract act, 1957.

The statutory rules provide that no person shall be eligible to be elected as a member if he is: Not an Indian Citizen. Less than 21 years. A judged bankrupt to be insolvent. Convicted of an offence-involving frond. Member of any other association in India where dealings in securities are carried on. Engaged as principal or employee in any business other than that of securities.

Functions The three important functions of secondary markets are Price discovery process which results from the interactions of buyer and sellers in the market when they trade assets. Provisions of liquidity by providing a mechanism for an investor to sell financial assets. Finally low cost of transactions and information.

Trading Pattern of the Indian Stock Market

Trading in Indian stock exchanges is limited to listed securities of public limited companies. They are broadly divided into two categories, namely, specified\securities (forward list) and non-specified securities (cash list). Equity shares of dividend paying, growth-oriented companies with a paid-up capital of at least Rs.50 million and a market capitalization of at least Rs.100 million and having more than 20,000 shareholders are, normally, put in the specified group and the balance in non-specified group. 8

Two types of transactions can be carried out on the Indian stock exchanges: (a) spot delivery transactions "for delivery and payment within the time or on the date stipulated when entering into the contract which shall not be more than 14 days following the date of the contract: and (b) forward transactions "delivery and payment can be extended by further period of 14 days each so that the overall period does not exceed 90 days from the date of the contract". The latter is permitted only in the case of specified shares. The brokers who carry over the outstanding pay carry over charges (cantango or backwardation) which are usually determined by the rates of interest prevailing.

A member broker in an Indian stock exchange can act as an agent, buy and sell securities for his clients on a commission basis and also can act as a trader or dealer as a principal, buy and sell securities on his own account and risk, in contrast with the practice prevailing on New York and London Stock Exchanges, where a member can act as a jobber or a broker only. The nature of trading on Indian Stock Exchanges are that of age old conventional style of face-to-face trading with bids and offers being made by open outcry.

Over The Counter Exchange of India (OTCEI)

The traditional trading mechanism prevailed in the Indian stock markets gave way to many functional inefficiencies, such as, absence of liquidity, lack of transparency, unduly long settlement periods and benami transactions, which affected the small investors to a great extent. To provide improved services to investors, the country's first ringless, scripless, electronic stock exchange - OTCEI - was created in 1992 by country's premier financial institutions - Unit Trust of India, Industrial Credit and Investment 9

Corporation of India, Industrial Development Bank of India, SBI Capital Markets, Industrial Finance Corporation of India, General Insurance Corporation and its subsidiaries and CanBank Financial Services.

Trading at OTCEI is done over the centres spread across the country. Securities traded on the OTCEI are classified into:

Listed Securities - The shares and debentures of the companies listed on the OTC can be bought or sold at any OTC counter all over the country and they should not be listed anywhere else

Permitted Securities - Certain shares and debentures listed on other exchanges and units of mutual funds are allowed to be traded

Initiated debentures - Any equity holding at least one lakh debentures of particular scrip can offer them for trading on the OTC.

10

1.2. STATEMENT OF PROBLEM

Capital Market
Capital market is generally classified in to two Markets. They are

Primary Market Secondary Market

The fresh issue of securities takes place in primary market and trading among investors takes place in secondary market.

The Statement of Problem is

To analyze investors perception towards the Indian capital market.

11

1.3 OBJECTIVES OF THE STUDY

Primary Objectives:
To analyze investors perception towards the Indian capital market. To measure the risk taking ability of investors. To study the difficulties faced by investors while investing in stock market.

Secondary Objectives:
To determine the most preferred sector by the investors. To evaluate the performance of banking sector using technical and fundamental analysis. To find whether the continuous boom witnessed by bank sector will continue in current year.

12

1.4. SCOPE OF THE STUDY

The study covers the investors of Chennai. The study helps to know about the objective of investments in the stock market. The study provided an insight into various problems faced by the investors while investing in the stock market.

The study gave an understanding of the investors perception towards stock market. It helped in determining the saving habit, investment objective and risk taking ability of common investors.

The study also helped to evaluate the most preferred sector by the investor for making investment.

The study also helps us to know the performance of banking sector in the future.

13

1.5. LIMITATIONS OF THE STUDY

Due to geographical constraint only the investors in Chennai were surveyed. The respondents were reluctant to disclose their personal decisions on investments.

It should be noted that there is possibility for the share price to undergo changes from time to time on account of changes in the trading frequency of stocks, market factors including regulatory changes in the stock market.

All the banks would not be studied, because all of them are not listed in Nifty 50.

In- depth study of each bank was not done due to time constraint.

14

CHAPTER-2
COMPANY PROFILE
KARVY, is a premier integrated financial services provider, and ranked among the top five in the country in all its business segments, services over 16 million individual investors in various capacities, and provides investor services to over 300 corporate, KARVY covers the entire spectrum of financial services such as Stock broking, Depository Participants, Distribution of financial products like mutual funds, bonds, fixed deposit, Merchant Banking & Corporate Finance, Insurance Broking, Commodities Broking, Personal Finance Advisory Services, placement of equity, IPOs, among others. Karvy has a professional management team and ranks among the best in technology, operations, and more importantly, in research of various industrial segments.

Karvy began its journey 15 years back with total service approach, taking the investor as customer for a faster and better service. The company has come across many challenges and it has met the challenges successfully since its inception.

In January 1998, Karvy became the first Depository Participant in Andhra Pradesh. With a network of 12 branch offices and 64 services centers across the country, Karvy has built up relationships with over 16 million investors & acting on behalf of over 175 corporate clients. The company has handled more of public issues that any other registrar in the country. 15

A decade of commitment, professional integrity and vision helped Karvy attain a leadership position in its field when it handled the largest number of issues ever handled in the history of the Indian stock market in a year.

To ensure consistency in its service delivery, Karvy embarked upon the ISO 9002 certification exercise. This exercise has helped them in identifying redundancies and streamlining the operations. The registration audit was carried out by KPMG, Peat Marwick and incidentally, Karvy is the first certified company in India in their line of business. Over the past one and half decades, Karvy has evolved as a veritable link between industry, finance and people.

To achieve and retain leadership, Karvy aims for complete customer satisfaction, by combining its human and technological resources, to provide superior quality financial services. In the process, Karvy also strives to exceed Customers expectations.

MISSION
To be a leading and preferred service provider to the customer, and aim to achieve the leadership position by building an innovative, enterprising and technology driven organization which will set the highest standards of business and service ethics.

16

QUALITY OBJECTIVES
The Quality Policy of Karvy is to:

Build in-house processes that will ensure transparent and harmonious relationship with its clients and investors to provide high quality of services.

Establish a proper relationship with its investor service agents and vendors that will help in keeping up its commitments to the customers.

Provide high quality of work life for all its employees and equip them with adequate knowledge & skills so as to respond to customer's needs.

Continue to uphold the values of honesty & integrity and strive to establish unparalleled standards in business ethics.

Use state-of-the art information technology in developing new and innovative financial products and services to meet the changing needs of investors and clients.

Strive to be a reliable source of value-added financial products and services and constantly guide the individuals and institutions in making a judicious choice of same.

SERVICES OFFERED BY KARVY

They offer various services such as: Corporate Registry services Stock Broking services 17

Financial Product Distribution Corporate Financial services Depository Participant Services IT enabled Services Mutual Fund Investor Servicing Investment banking Shareholder Servicing Personal finance Advisory Services Debt Market Services Global Services

IMPORTANT CLINTELE
Reliance Industries Indian Oil Corporation IDBI LIC Mutual fund Hindustan Lever Principal Mutual Fund Marico Industries Patni Computers Morgan Stanley

18

ACHIVEMENTS
Largest mobilize of funds as per PRIME DATABASE. First ISO - 9002 Certified Registrar in India. A Category- I -Merchant banker. A Category- I -Registrar to Public Issues. Ranked as The Most Admired Registrar" by MARG. Handled the largest- ever Public Issue TCS. Handled over 700 Public issues as Registrars. Handling the Reliance Account which accounts for nearly 10 million account holders. First Depository Participant from Andhra Pradesh. Largest independent distributor of financial products.

Mutual Fund Investment Advisor

Investment is the stepping stone to achieving one's financial dreams. Mutual funds offer an opportune way to long-term wealth creation. However, with more and more funds flooding the market, the task of selecting the most suitable scheme gets even more complicated. Mutual Fund Advisory Service at Karvy guides you through this maze and ensures that your investments are backed by our quality research.

19

Products of 33 AMCs are:

Research reports (existing funds & NFOs; strategy reports etc.) Customized mutual fund portfolios Portfolio revision (depending on changing market outlook and evolving trends) Access to online consolidated portfolio statement

About KARVY Insurance Broking Ltd. (KIBL)

At KIBL we provide both life and non-life insurance products to retail individuals, high net-worth clients and corporates. With the opening up of the insurance sector, we are in a position to provide holistic and tailor made policies for different segments of customers. With Indian markets seeing a sea change, both in terms of investment pattern and attitude of investors, insurance is no more seen as only a tax saving product but also as a product which provides a financial solution for the customer. Our wide national network, spanning the length and breadth of India, further supports these initiatives. Our strengths include personalized service provided by a dedicated team committed in giving hassle-free service to the clients.

About KARVY Financial Planning

In its ambition to emerge as a complete financial advisor, KARVY has recently launched its personal financial planning wing, KARVY Financial Planning. It proposes to cater all advice to its customer pertaining to personal finance.

20

With India emerging as a strong market, the investments avenues have also increased, to advice our customers the right avenue according to their suitability Our vision is "To cater to the unique needs and requirements of the mass affluent by providing complete financial solutions and thereby enabling them to transform their dreams into reality."

KARVY as an Income Tax Advisor

In line with KARVYs ambition of emerging as a personal finance advisor, we are now launching a tax advisory module, thereby providing assistance with respect to personal income tax planning. This service inter-alia includes the following:

Investment planning. Tax planning. Preparation of theme based reports on important events like Pre budget expectations, Budget analysis, New Economic survey etc.

Regular strategy reports through a fortnightly tax refresher called HUM TUM. Personalized assistance in the context of salary structuring. Tax free retirement planning. Other innovative strategies on tax planning.

21

Fixed Income Securities & Trading (K-FIST)

Products -

Central Government securities, State Development Loans, State

Guaranteed bonds, Public Sector Undertaking Bonds, Financial Institution Bonds, and Bank bonds of SLR/Non-SLR category, both taxable and tax-free.

IPOs - Initial Public Offer

An IPO is a means of collecting money from the public by a company for the first time in the market to fund its projects. In return, the company gives the share to the investors in the company .In an IPO; the Lead managers decide the price of the issue. In a book building offer, the syndicate members decide the indicative price range and the investors decide the price of the issue through a tender method.

A draft prospectus provides the information on the financials of the company, promoters, background, tentative issue price etc. It is filed by the Lead Managers with the Securities & Exchange Board of India (SEBI) to provide issue details. The final prospectus is printed after obtaining the clearance from SEBI and the Registrar of Companies (ROC).

22

CHAPTER-3
REVIEW OF LITERATURE
Equity investors first enter in to capital market though investment in primary market. In India, common investors participating in the equity primary market is massive. The number of companies offering equity through primary markets increased continuously.

The Indian capital market saw good growth between May 2006 and January 2007 on the back of good GDP growth, encouraging corporate results, the Government's intent to invest heavily in infrastructure, a strong rupee, and mounting forex reserves. The market today is range bound and not much seems to be happening.

The study concentrates on the investment decisions taken by the investors while investing in capital markets. It appeared from the analysis that the investors give more importance to brokers advice then any other source of information. They also consider market price as a better indicator than analyst recommendations. The study also identifies risk orientation, quantum of return expected, time horizon, objective of making the investment and the difficulties faced by the investors in capital market. The study also attempts to find out the most preferred sector by the investors.

23

CHAPTER-4
RESEARCH METHODOLOGY
RESEARCH refers to the systematic method of enunciating the problem formulation of the hypothesis, collecting the facts or data analyzing the facts and reaching conclusions towards the concerned problem. METHODOLOGY is defined as the study of methods by which we gain knowledge. It deals with cognitive processes imposed on research by the problems arising from the nature of its subject matter. RESEARCH DESIGN Research design is the plan structure and the strategy of investing conceived so as to obtain answer to research questions and to control variance. According to Pavline Young (1949), a research design is the logical and systematic planning and directing a piece of research. The design according to her is the result, translating a general scientific model to a varied research procedure.

NATURE OF STUDY Descriptive Research Descriptive research is used to obtain information concerning the current status of the phenomena to describe what exists with respect to variables or conditions in a situation. The method uses the survey which describes the status quo, the correlation study which investigates the relationship between variables to developmental studies seek

24

to determine changes over time. The information has been collected by conducting a survey amongst the various retail investors available in Chennai.

Analytical Research Analytical research is designed to analyze the facts/information already available to make a critical evaluation of the material. Thus, in my study analytical research is used to evaluate the Beta behavior of the securities and the investments of the portfolio. The information for doing this research is collected from the NSE website.

Data Collection Method Data refers to information or facts. It is not only refers numerical figures but also includes descriptive facts. The method of data collection includes two types for the study, such as primary data and secondary data.

Primary Data Primary data is the data that is collected for the first time by the researcher. The primary data are collected with specific set of objective to assess the current status of any variable studied. Primary data is useful only particular period. Primary data has been collected by conducting a survey among the various investors available in Chennai.

25

Secondary Data Secondary data is the data collected from the already available data which is well structured and organized. The secondary data required for the study was obtained from already available data in different sites like nseindia.com, amfi.com, moneypore.com, etc.

Sample Size
Primary Data

For the primary data the sample size collected was 250.
Secondary Data

For the secondary data the sample size was: Banks listed in Nifty 50.

Sampling Unit
Primary Data

Retail investors in Chennai.

Secondary Data

Banks listed n the S&P CNX NIFTY for the period of 5 years (Jan 2003 Dec 2007).

Sampling Technique
Primary Data

For the primary data the sampling method used was convenience sampling. A convenience sample is obtained by selecting convenient population units.

26

Secondary Data

Closing price of each companys share price for the past five years is downloaded from www.nseindia.com Website. The sampling technique was based on the information available on stock prices over the past five years. The sample includes four banks, which have been listed in the NSE for over a period of five years and information on their share prices were already available. Hence this sample is used for the comparative study. NSE index NIFTY is used to calculate market returns.

Tools for Analysis

Primary Data

Simple Percentage Calculation Weighted Average Calculation Chi-Square Test Pie charts Bar diagrams

Secondary Data Technical analysis Fundamental analysis Candlestick method Exponential Moving Average 27

IN SHORT THE RESEARCH METHODOLOGY ARE

Primary Data Sample Size Sampling Unit Sampling Type : 250 : Retail investors of various branches in Chennai : Descriptive

Sampling Method : Convenient sampling Contact Method Tools Used : Personal interview & Telephonic Interview : Simple Percentage Calculation, Weighted Average

Calculation, and Chi - Square Test, Pie charts and Bar diagrams

Secondary Data Nature of Data Sample Size Method of Data Collection : Secondary data : Four banks listed in Nifty 50 : Secondary data collection closing price of

each banks share price for the past five years is down loaded from www.nseindia.com Tools Used : Fundamental analysis, technical analysis,

candlestick chart, exponential moving average, relative strength index.

28

THEORY Why Investors Prefer to Invest in Share Market?

Investment in equities is one of the asset classes that bring better returns over Years Company to investment in bullion and real estate apart from conservative form of investments in fixed deposits etc. Investment equities, thus believed to be a good way of getting good returns. Secondly, unlike other assets classes, it has the benefit of liquidity that is; it could be encashed very quickly. Thirdly though investment in equities is risky, it is preferred by millions of people world over.

IMPORTANCE OF STOCK MARKET

Function and Purpose

The stock market is one of the most important sources for companies to raise money. This allows businesses to go public, or raise additional capital for expansion. The liquidity that an exchange provides affords investors the ability to quickly and easily sell securities. This is an attractive feature of investing in stocks, compared to other less liquid investments such as real estate.

History has shown that the price of shares and other assets is an important part of the dynamics of economic activity, and can influence or be an indicator of social mood. Rising share prices, for instance, tend to be associated with increased business investment and vice versa. Share prices also affect the wealth of households and their consumption. Therefore, central banks tend to keep an eye on the control and behavior of the stock 29

market and, in general, on the smooth operation of financial system functions. Financial stability is the raison d'tre of central banks.

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.

The smooth functioning of all these activities facilitates economic growth in that lower costs and enterprise risks promote the production of goods and services as well as employment. In this way the financial system contributes to increased prosperity.

Disadvantages

There are some difficulties, disadvantages and problems associated with investment in shares.

Uncertainty and changing market prices No Guarantee of Profits Problems in dealing with brokers Oversubscription of new issues Need for constant Watch Correct Timing Uncertain Government Policies Seeking professional guidance

30

Recent Trend in Share Market

Generally, trend following is the imitation of what is the current fashion also called trend. In finance, trend following is an investment strategy that tries to take advantage of long-term moves that seem to play out in various markets. The system aims to work on the market trend mechanism and take benefit from both sides of the market enjoying the profits from the ups and downs of the stock market.

Traders who use this approach can use current market price calculation, moving averages and channel breakouts to determine the general direction of the market and to generate trade signals. Traders who subscribe to a trend following strategy do not aim to forecast or predict markets or price levels; they simply jump on the trend and ride it.

Considerations
Price

One of the first rules of trend following is that price is the main concern. Traders may use other indicators showing where price will go next or what it should but as a general rule these should be disregarded. A trader need only be worried about what the market is doing, not what the market might do. The current price and only the price tell you what the market is doing.

31

Money Management

Another decisive factor of trend following is not the timing of the trade or the indicator, but rather the decision of how much to trade over the course of the trend.

Risk Control

A cut loss is the rule. This means that during periods of higher market volatility, the trading size is reduced. During losing periods, positions are reduced and trade size is cut back. The main objective is to preserve capital until more positive price trends reappear.

Rules

Trend following should be systematic. Price and time are pivotal at all times. This technique is not based on an analysis of fundamental supply or demand factors.

Trend Following answers the questions:

How and when to enter the market. How many contracts or shares to trade at any time. How much money to risk on each trade. How to exit the trade if it becomes unprofitable. How to exit the trade if it becomes profitable.

In investing, financial markets are commonly believed to have market trends that can be classified as primary trends, secondary trends (short-term), and secular trends

32

(long-term). This belief is generally consistent with the practice of technical analysis and broadly inconsistent with the standard academic view of financial markets, the efficient market hypothesis. That market prices do move in trends is one of the major assumptions of technical analysis, and the description of market trends is common to Wall Street.

Market trends are described as periods when bulls (buyers) consistently outnumber bears (sellers), or vice versa. A bull or bear market describes the trend and sentiment driving it, but can also refer to specific securities and sectors.

Primary market trends

A bull market tends to be associated with increasing investor confidence, motivating investors to buy in anticipation of further capital gains. The longest and most famous bull market was in the 1990s when the U.S. and many other global financial markets grew at their fastest pace ever.

In describing financial market behavior, the largest group of market participants is often referred to, metaphorically, as a herd. This is especially relevant to participants in bull markets since bulls are herding animals. A bull market is also described as a bull run. Dow Theory attempts to describe the character of these market movements.

Secondary market trends

A secondary trend is a temporary change in price within a primary trend. These usually last a few weeks to a few months. A temporary decrease during a bull market is 33

called a correction; a temporary increase during a bear market is called a bear market rally. Whether a change is a correction or rally can be determined only with hindsight. When trends begin to appear, market analysts debate whether it is a correction/rally or a new bull/bear market, but it is difficult to tell. A correction sometimes foreshadows a bear market.

Risk in a Traditional Sense

Risk in holding securities is generally associated with the possibility that realized the return will be less than the returns that are expected. The source of such disappointment is the failure of dividends (interest) and / or the securitys rice to materialize as expected.

Forces that contribute to variation in return- price or dividend- constitute elements of risk. Some influences are external to the firm, cannot be controlled, and affect large numbers of securities. Other influences are internal to the firm and controllable to a large degree. In investments, those forces that are uncontrollable, external, and broad in their effect are called Source of Systematic Risk. Conversely, controllable, internal factors somewhat peculiar to industries and /or firms are referred to as Sources of Unsystematic Risk.

Systematic Risk refers to that portion of total variability in return caused by factors affecting the prices of all securities. Economic, political and sociological changes are sources of systematic risk. 34

Unsystematic Risk is the portion of total risk that is unique to a firm or industry. Factors such as management capability, consumer preferences, and labor strikes cause systematic variability of return in a firm. Unsystematic factors are largely independent of factors affecting securities markets in general. Because these factors affect one firm they must be examined for each firm.

TECHNICAL ANALYSIS
Technical analysis is the study of price using charts in order to "anticipate" their future performance. The market can go up or down at any time; it is only the probability (of each move) that varies. Technical analysis isn't a crystal ball that predicts the future, but it is an investing strategy that helps to spot stock patterns that have the potential to make huge moves.

The basic premise of technical analysis is that price moves in trend or waves which may be upward or downward. It is believed that present trend are influenced by the past trends and that projections of future trend is possible by an analysis of past price trends. Technical analysis is really a study of past or historical price and volume movements so as to predict the future stock price behaviour.

Sentiment drives the market

The price at which an investor is willing to buy or sell depends primarily on his expectations. If he expects the security's price to rise, he will buy it; if the investor expects the price to fall, he will sell it. As any trade requires a buyer and seller, it

35

automatically means they have entirely opposite views on the stock. The collective majority of market participants ultimately decide the direction of the stock price and the market.

Price reflects everything

Price is a function of demand and supply and nothing else. The price of a stock reflects everything about the stock. This includes FII inflows, analyst reports, balance sheets, impact of crude and interest rates, government policies, politicians and their antics and whatever you may care add. Different people have varying degrees of access to this information and form their own perception (rightly or wrongly) - this ultimately decides the current price of the stock. Since everything about a stock is reflected in the price, it makes sense to study price movements. In other words, "what is happening" is more important than "why it is happening. Trying to identify the "why" is an exercise in futility. One can arrive at any number of reasons depending on how many "experts" you choose to listen to.

The beauty of technical analysis is that it applies to all time frames (intraday, daily, weekly, monthly charts) and across equities, commodities (rice, gold, crude oil, aluminum etc).

36

The easiest and safest way to earn excellent profits consistently is to simply follow the trend and trade

By following the trend, we can always be on the "right" side of the market.

Trend analysis helps distinguish emotional decisions ("I think it's time to sell...") from analytical decisions, ("I will hold until the current rising trend is broken"). Trend analysis will also discourage you from going short in a bullish market or going long in a bearish market

What is a trend
A trend is simply, the persistence of a security's price to move in a particular direction. A trend can be bullish, bearish or flat. Also, a trend is in effect till it is reversed.

Markets are either bullish, or bearish or flat. However markets never go up or down in a straight line. There are always corrections (in bullish markets) and pullbacks or relief rallies (in bearish markets). By identifying trends and reversals, we can enter and exit trends at the correct time and earn excellent profits with minimum risks.

This is the most basic chart. Take the following chart. A simple look reveals that the stock has been in an uptrend and has minor corrections from time to time. Line charts are plotted using the "closing" price of the stock. The red line represents the 50 day moving average (DMA). 37

Japanese Candlesticks Chart

Japanese Candle sticks (a 300 year old Japanese technique) give the same information as a bar but are visually easier to read. In this chart, the highest price, the lowest price, the opening piece and the closing price of the share on a day-to-day basis. The highest price and the lowest price are joined by vertical bar. The opening price and the closing price of the day which would fall between the highest and the lowest price would be represented by a rectangle so that the price bar chart looks like a candlestick. Red candles mean stock closed lower relative to the previous close. Blue candles means stock closed higher relative to the previous close.

38

There are three types of candlestick, the blue, the red and the doji or neutral candlestick. A blue candlestick is used is represent a situation where the closing price is higher than the opening price. A black candlestick is used when the closing price of the day is lower than the opening price. Blue candlestick indicated a bullish trend and the red indicates a bearish trend. A doji candlestick is one where the closing price and the opening of the day are same.

Moving averages provide an excellent way to identify trends or confirm reversals.

Moving averages are not "predictive" but are "lagging" indicators as a time delay is always present. Moving averages are an extremely simple and convenient way to trade. They are excellent in strongly trending markets but are practically useless in sideways markets as they tend to generate too many whipsaws. The moving average removes emotions from the stock. One should remain long as long as the stock remains above the MA. When the stock cuts the MA from above, it indicates exit position.

39

The chart below has 20 DMA (grey), 50 DMA (red) and 200 DMA (blue). Sometimes, the moving average will give a "whipsaw" or false buy / sell signals. This means the stock is rangebound and the direction will be clear only a break out of the trading range. As one can see from the chart, the 20 DMA has generated the highest whipsaws while the 200 DMA has only given a hold (in relation the timeframe).

Oversold and overbought stocks

Interpretation of this is difficult and should be done in the context of the prevailing trend. Overbought means great strength. It does NOT mean stock will correct immediately. It is normal for a stock to remain overbought for considerable periods of time. Oversold means great weakness. It does NOT mean stock will rally immediately. It is normal for a stock to remain oversold for considerable periods of time. In an uptrend,

40

oversold stocks present a good buying opportunity near supports (buy on declines). In a downtrend, one should exit overbought stocks (sell on rallies).

Oscillators
Oscillators are mathematical indicators calculated with the help of the closing price data. They help to identify overbought and over sold conditions and also the possibility of the trend reversal. These indicators are called oscillators because they move across a reference point.

Rate of Change Indicator

It is a very popular oscillator which measures the rate of change of the current price as compared to the price of a certain number of days or weeks back. To calculate a 7 day rate of change, each days price is dividend by the price which prevailed 7 days ago and then 1 is subtracted from the price ratio. The ROC values may be positive, negative or zero. In ROC chart, the overbought zone is above the zero line and oversold zone is below the zero line. One should buy a share that is oversold and sell a share that is over brought. Many analysts use the zero line for identifying buying and selling opportunities. Upside crossing indicates buying opportunities, while a downside crossing indicates selling opportunities. ROC has to be used along with the price chart. The buying and the selling signals indicated by the ROC should also be confirmed by the price chart.

41

ROC is calculated by using the following formula:-

ROC =

Current Price Price n period age

-1

Relative Strength Index (RSI)

This is the most commonly used time period for the calculation of RSI I 14 days. For calculation a 14 days RSI, the gain per day or loss per day or loss per day is arrived at by comparing the closing price of a day with that of the previous day for a period of 14 days. The gains are added up and divided by 14 to get the average gain per day. Similarly losses are added up and divided by 14 to get the average loss per day.

RSI is calculated by using the following formula:-

RSI =

Average gain per day Average loss per day

Buy and Sell signals

These are generated using custom designed swing trading algorithms. As one can never know with certainty the extent of gains or losses, the concept of trailing stoplosses is used. 42

If a stock is in a downtrend, a buy signal is generated if the stock closes above its "N" days highest high. The trailing stoploss is the "N" days lowest low and will change everyday till an exit is given. Here "N" refers to 2 or 5 or 20 days. Obviously a 2 day swing will generate more signals than a 20 day swing. For best results, use the 2 day or 5 day swing to buy only if the stock is trading above the 20 day swing low. The methodology is similar moving averages / crossovers. The advantage is reduced whipsaws and more efficient stoplosses.

Rangebound trades, whipsaws and false signals

All technical indicators will fail in range bound stocks / markets and will generate whipsaws and false signals. Whenever a swing trade results in a loss, it means the stock is range bound. At this point, one should study the chart and identify areas of support and resistance. Only a break above these levels will create a new trend.

Support and Resistance levels / targets

This is nothing but a "peak" and "trough" based on 5% change. These levels form the basis for calculation of targets. A break above a "peak" gives a resistance break. Similarly a break below a "trough" generates a support break.

43

FUNDAMENTAL ANALYSIS
The earnings of the company, the growth rate and the risk exposure of the company have a direct bearing on the share .The shareholders are interested in assessing the value of the shares. The value of the share depends on the performance of the firm and the market factors. The valuation ratio provides a comprehensive measure of the performance of the firm itself.

Book Value per Share (BVP)

This ratio indicates the share of equity shareholders after the company has paid all its liabilities, creditors, debentures holders and preference shareholders. At the time of liquidation, the shareholders can know what remains after making all the payments.

BVP can be calculated as:-

BVP= Equity share capital + Reserve Total number outstanding of equity shares

Earnings per Share (EPS)

Earnings per share is the earnings after tax dividend by number of common shares outstanding. The ratio is calculated by dividing net profit after tax and dividend by number of outstanding shares. 44

EPS can be calculated as:-

EVP = Earnings After Tax Number of share outstanding

Price Earning Ratio (P/E)

One of the most common financial parameters used in the stock market is the price earning ratio. It relates the share price with earnings per share. Most of the news papers along with the stock price quotations give the P/E ratio too. Its the multiplying factor that the market is willing to offer to the companys future earning.

P/E ratio can be calculated as:-

Price Earning Ratio = Market price per share Earnings per share

45

CHAPTER-5 DATA ANALYSIS AND INTERPRETATION

CHI-SQUARE TEST-1

Background A survey had been conducted among the investors of various branches and question were asked to determine if there was a relationship between the age group of the investors and purpose of investment in share market. NULL HYPOTHESIS -HO: There is no significance difference between the age group of the investors and purpose of investment in share market. ALTERNATE HYPOTHESIS-H1: There is significance difference between the age group of the investors and purpose of investment in share market. TABLE-5.1 Table showing age vs. purpose of investment in share market Capital Appreciation

Age

Savings

Liquidity

Dividend TOTAL

18-40yrs

50

25

85

165

41-60yrs 60yrs& Above

15

10

35

65

20

TOTAL

70

40

125

15

250

46

CALCULATION: Observed Frequency O(i) 50 15 5 25 10 5 85 35 5 5 5 5 TOTAL Expected Frequency E(i) 46.2 18.2 5.6 26.4 10.4 3.2 82.5 32.5 10 9.9 3.9 1.2

O(i)-E(i) 3.8 -3.2 -0.6 -1.4 -0.4 1.8 2.5 2.5 -5 -4.9 1.1 3.8

[[O(i)-E(i)]^2]/E(i) 0.312554113 0.562637363 0.064285714 0.074242424 0.015384615 1.0125 0.075757576 0.192307692 2.5 2.425252525 0.31025641 12.03333333 19.57851177

RESULT:

Calculated Value Degree Of Freedom Table Value @ 5% Significance

19.57851 6 12.592

INFERENCE: As the calculated value is more than table value, null hypothesis H0 is rejected. There is significance difference between the age group of the investors and purpose of investment in share market. 47

CHI-SQUARE TEST-2

Background A survey had been conducted among the investors of various branches and question were asked to determine if there was a relationship between the gender and information they seek before investing in the stock market.

NULL HYPOTHESIS - HO: There is no significance difference between the gender and information they seek before investing in the stock market. ALTERNATE HYPOTHESIS - H1: There is significance difference between the gender and information they seek before investing in the stock market. TABLE-5.2 Table showing gender vs information they seek for investing in stock market.

Information

Male

Female

TOTAL

Brokers

45

30

75

TV, Newspapers, internet

40

15

55

Self analysis

40

20

60

Colleagues & Friends

40

20

60

TOTAL

165

85

250

48

CALCULATION:

Observed Frequency O(i) 45 40 40 40 30 15 20 20 Total

Expected Frequency E(i) 49.5 36.3 39.6 39.6 25.5 18.7 20.4 20.4

O(i)-E(i)

[[O(i)-E(i)]^2]/E(i)

-4.5 3.7 0.4 0.4 4.5 -3.7 -0.4 -0.4

0.409090909 0.377134986 0.004040404 0.004040404 0.794117647 0.732085561 0.007843137 0.007843137 2.336196186

RESULT:

Calculated Value 2.336196186 Degree Of Freedom 3 Table Value Significance @ 5% 7.815

INFERENCE:

As the calculated value is less than table value, null hypothesis H0 is accepted. There is no significance difference between the gender and information they seek before investing in the stock market.

49

CHI-SQUARE TEST-3

Background A survey had been conducted among the investors of various branches and questions were asked to determine if there was a relationship between the gender and risk taking ability of the investors.

NULL HYPOTHESIS - HO: There is no significance difference between the gender and risk taking ability of the investors. ALTERNATE HYPOTHESIS - H1: There is significance difference between the gender and risk taking ability of the investors. TABLE-5.3

Table showing gender vs. risk taking ability of the investors.

Risk

Male

Female

TOTAL

<10%

50

30

80

25%

60

20

80

50%

15

20

Not at all

40

30

70

TOTAL

165

85

250

50

CALCULATION:

Observed Frequency O(i)

Expected Frequency E(i)

O(i)-E(i)

[[O(i)-E(i)]^2]/E(i)

50 60 15 40 30 20 5 30 Total

52.8 52.8 13.2 46.2 27.2 27.2 6.8 23.8

-2.8 7.2 1.8 -6.2 2.8 -7.2 -1.8 6.2

0.148484848 0.981818182 0.245454545 0.832034632 0.288235294 1.905882353 0.476470588 1.61512605 6.493506494

RESULTS: Calculated Value Degree Of Freedom Table Value @ Significance 6.493506494 3 5% 7.815

INFERENCE:

As the calculated value is less than table value, null hypothesis H0 is accepted. There is no significance difference between the gender and risk taking ability of the investors. 51

INVESTORS PERCEPTION TOWARDS STOCK MARKET

Background: A survey had been conducted among the retail investors of various branches and question were asked to determine their perception towards stock market from risk, return and savings point of view. TABLE-5.4 Table showing investors perception towards stock market

Rank

Perception

Weighted Average

Return point of view

2.86

Savings point of view

2.80

Risk point of view

2.36

INFERENCE:

On the basis of weighted average method it has been found that the majority of the respondents (36%) consider stock market is a best avenue for investment from return point of view. From savings point of view 35% of the respondent consider stock market as a good option. Only 29% view it from risk point of view. 52

CHART-5.1 Chart showing investors perception towards stock market from risk, return and savings point of view

29%

36%

Return point of view Savings point of view Risk point of view

35%

53

SECTOR

Background A survey had been conducted among the retail investors of various branches and question were asked to determine the most preferred sector by them. TABLE-5.5 Table showing the most preferred sector by the investors

Rank
1 2 3 4 5 6 7 8

Sector
Banking Oil & gas Construction Infrastructure Steel I.T Automobile Others

Weighted Average
4.16 3.08 2.28 1.7 0.88 0.54 0.32 0.30

INFERENCE:

The above table shows the top eight sectors from investors point of view. Its clear that majority of them prefer banking sector (52%) followed by Oil & Gas (44%), Construction (38%), Infrastructure (34%),Steel (22%), IT (18%), Automobiles (16%) and others (30%). Other sector includes FMCG, Retail, Cement and Pharmaceutical. 54

CHART-5.2

Chart showing the most preferred sector by the investors

4.5 4 3.5 3 2.5 2 1.5 1 0.5 0

4.16 3.08 2.28 1.7 0.88 0.54 0.32 0.3

I. T

St ee

on

nk in

ga

tu r

i le ob

c ti

uc

l&

t ru

Oi

Co ns

ra

In f

Au

to m

Ba

s tr

Ot

he

rs

55

PERCENTAGE OF INVESTORS SAVING IN STOCK MARKET

Background A survey had been conducted among the retail investors of various branches and question were asked to determine their percentage of savings in stock market. TABLE-5.6 Table showing the percentage of investors savings in stock market

Saving Percentage In stock market

<10% 11-30% 31-50% 50% & above Not at all investing Total

No. of Respondents
75 70 35 15 55 250

Percentage (%)
30 28 14 6 22 100

INFERENCE:

It is inferred from the above table that 30% of the investors invest less than 10% of their in share market. 28% of them invest 11-30% and 14% of them invest 31-50% of their savings in share market. Only 6% invest above 50% in the share market. However, 22 % do not invest in the market. 56

CHART-5.3

Chart showing the percentage of investors savings in stock market

80 70 60 50 40 30 20 10 0

75

70 55 35 15

<10%

11-30%

31-50%

50% & above

Not at all investing

savings in share market

57

REASON FOR INVESTING IN STOCK MARKET

Background A survey had been conducted among the retail investors of various branches and question were asked to determine different factors based on which they save in the stock market TABLE-5.7 Table showing various reasons for investing in the stock market

Reason for investing in share market

No. of Respondents

Percentage (%)

Savings Liquidity Capital Appreciation Dividend Total

70 40 125 15 250

28 16 50 6 100

INFERENCE:

Above table shows that majority of the (50%) investors invest in stock market for capital appreciation. While 28% of them invest for saving purpose and 16% for liquidity. Only 6% invest for earning dividend.

58

CHART-5.4 Chart showing various reasons for investing in the stock market

Savings

6%

28%

Liquidity Capital Appreciation

50%

16%

Dividend

59

TIME FRAME OF THE INVESTMENT PREFERRED BY THE INVESTORS

Background A survey had been conducted among the retail investors of various branches and question were asked to determine the term of investment they prefer. TABLE-5.8 Table showing the time frame of the investment preferred by the respondent

Time frame of the investment preferred by the respondent No. of Respondents Percentage (%)

Short term Medium term Long term Total

125 75 50

50 30 20

250

100

INFERENCE:

The table shows that 50% of the respondents prefer short-term investment in the stock market. While 20% of them would like to go for medium term, and only 20% of the investors prefer long term.

60

CHART-5.5

Chart showing the time frame of the investment preferred by the respondent

20% 50% 30%

Short term Medium term Long term

61

RISK TAKING ABILITY OF THE INVESTORS

Background A survey had been conducted among the retail investors of various branches and question were asked to determine risk-bearing capacity. TABLE-5.9 Table showing the risk taking ability of the investors

Risk

No. of Respondents

Percentage (%)

10% 25% 50% Not at all Total

70 90 20 70 250

28 36 8 28 100

INFERENCE:

The above table shows that majority of the investors (36%) will take 25% of risk on their invested capital. While 28% of then will bear 10% of risk. Only 8 % of them are ready to take more than 50% of risk. However, 28% of the investors are not ready to take any risk on their invested capital.

62

CHART-5.6 Chart showing the risk taking ability of the investors

10%

28%

28%
25% 50%

8% 36%
Not at all

63

\INFORMATION BASED ON WHICH INVESTMENTS ARE MADE IN THE STOCK MARKET Background A survey had been conducted among the retail investors of various branches and question were asked to determine whose advice they would seek before investing in stock market. TABLE-5.10 Table showing information based on which investments are made in stock market

Information

No. of Respondents

Percentage (%)

Brokers Self analysis TVchannels, Newspapers& Internet Colleagues & Friends Total

70 60 60

28 24 24

60 250

24 100

INFERENCE:

The table shows that 28% of the respondents will seek stockbrokers advice before investing in stock market. While rest of the investors would make investment decision based on self analysis or TV channels, internet or colleges & friend for stock market information and performances.

64

CHART-5.7 Chart showing information based on which investments are made in the stock market

Brokers

24%

28%

Self analysis

24%

24%

TVchannels, Newspapers& Internet Colleagues & Friends

65

DIFFICULTIES FACED WHILE INVESTING IN STOCK MARKET TABLE-11 Background A survey had been conducted among the retail investors of various branches and question were asked to determine what are the difficulties faced by them while investing in the stock market. showing the Difficulties faced by the investors Difficulties No difficulties Lack of knowledge about the market Being cheated by the brokers False rumors information/ No. of Respondents 60 60 Percentage (%) 24 24

25 55

10 22

Lack of funds High brokerage Total

30 20 250

12 8 100

INFERENCE:

It is inferred from above table that majority of the respondents(24%) consider lack of knowledge about the stock market is the biggest difficulty they face closely followed by false information and rumors(22%). While other difficulties includes lack of funds (12%), being cheated by brokers (10%) and high brokerage (8%). However, 24% of the respondents do not face any difficulty while trading. 66

CHART-5.8

Chart showing the Difficulties faced by the investors while investing in Stock market

No difficulties

30 55

60

Lack of knowledge about the market Being cheated by the brokers High brokerage

20

25

60
False information/ rumors Lack of funds

67

ICICI BANK

Business Profile ICICI Bank was originally promoted in 1994 by ICICI Limited, an Indian financial institution, and was its wholly-owned subsidiary. ICICI Bank is India's secondlargest bank with total assets of Rs. 3,767.00 billion (US$ 96 billion) at December 31, 2007 and profit after tax of Rs. 30.08 billion for the nine months ended December 31, 2007. ICICI Bank is second amongst all the companies listed on the Indian stock exchanges in terms of free float market capitalisation.

The Bank has a network of about 955 branches and 3,687 ATMs in India and presence in 17 countries. ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised subsidiaries and affiliates in the areas of investment banking, life and non-life insurance, venture capital and asset management. The Bank currently has subsidiaries in the United Kingdom, Russia and Canada, branches in Unites States, Singapore, Bahrain, Hong Kong, Sri Lanka, Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates, China, South Africa, Bangladesh, Thailand, Malaysia and Indonesia. UK subsidiary has established a branch in Belgium.

ICICI Bank's equity shares are listed in India on Bombay Stock Exchange and the National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE) 68

FUNDAMENTAL ANALYSIS

Date of incorporation

: 1944

Market capitalisation (Rs. in cores)

: Rs.123, 918.05

Price

: Rs.766.35

Percentage of change in price :-7.0% (For one year)

Earnings per Share (EPS)

: Rs.34.45

Price Earning Ratio (P/E)

:22.24

Book Value per Share (BVP) :3.56

Face value

: Rs.10

52 weeks high/ low

: 1456.00 / 720

Sales (Rs. in cores)

: Rs.29957.2

Asset size (Rs. in cores)

:Rs.3, 44,658.11

69

TECHNICAL ANALYSIS
CHART-5.9 Chart showing Share Price Movement of ICICI Bank

INFERENCE: The above chart shows that the performance of the bank is good. The price line shows an increasing trend. The price has increased from Rs.120 to Rs.1500. Most of the times the closing price of the day was higher than its opening price. White candles indicate bullish trend. In the last quarter of 2007 the performance of the bank was at its peak. In the beginning of 2008 do to various global phenomenons the price of the stock was affected. 70

CHART-5.10 Chart showing Exponential Moving Average (EMA) for ICICI Bank

INFERENCE: Movement of stock price line above the 200 days EMA indicates a buy signal. In the beginning of 2003, and in the second quarter 2004, 2006 and 2007 the 10-days MVA has cut 200- days EMV from below, which indicates a sell signal for the investors. Throughout the year 2005, it has been a bullish trend. Whenever the short term EMV (10 days) intersects the long term EMA (200 day) from below it indicates the buy signal, which will future increase the price of the share. Over all perform of the stock was good in the past.

71

CHART-5.11

Chart showing Relative Strength Index for ICICI Bank

INFERENCE: RSI values above 80 indicate that the stock is over bought and below 20 indicates that the stock is over sold. In the first quarter of 2003 the stocks were over sold. During the year 2005 the stock was initially over bough and quickly it reached below 20 and there was a huge selling which followed for few months. When the line cross 80 its the indication to sell the stock and below 20 indicates to buy the stock. 72

CHART-5.12

Chart showing comparison between ICICI Bank & NSE

INFERENCE: While comparing the ICICIs price line with the NSE index. The performance of the bank is good. It has out performed the market index.

73

HDFC BANK

The Housing Development Finance Corporation Limited (HDFC) was amongst the first to receive an 'in principle' approval from the Reserve Bank of India (RBI) to set up a bank in the private sector, as part of the RBI's liberalisation of the Indian Banking Industry in 1994. The bank was incorporated in August 1994 in the name of 'HDFC Bank Limited', with its registered office in Mumbai, India. HDFC Bank commenced operations as a Scheduled Commercial Bank in January 1995.

The bank has won the Business Today Best Bank Award 2008, for the fifth consecutive time... The authorised capital of HDFC Bank is Rs.450 crore (Rs.4.5 billion). The paid-up capital is Rs.311.9 crore (Rs.3.1 billion). The HDFC Group holds 22.1% of the bank's equity and about 19.4% of the equity is held by the ADS Depository (in respect of the bank's American Depository Shares (ADS) Issue). Roughly 31.3% of the equity is held by Foreign Institutional Investors (FIIs) and the bank has about 190,000 shareholders. The shares are listed on the Stock Exchange, Mumbai and the National Stock Exchange. The bank's American Depository Shares are listed on the New York Stock Exchange (NYSE) under the symbol .In a milestone transaction in the Indian banking industry, Times Bank Limited (another new private sector bank promoted by Bennett, Coleman & Co. Times Group) was merged with HDFC Bank Ltd., effective February 26, 2000. As per the scheme of amalgamation approved by the shareholders of both banks and the Reserve Bank of India, shareholders of Times Bank received 1 share of HDFC Bank for every 5.75 shares of Times Bank. 74

FUNDAMENTAL ANALYSIS

Date of incorporation

: 1994

Market capitalization (Rs. in cores) Price (Rs.)

: Rs. 51,441.31

:1272.60

Percentage of change in price : 37.1% (One year)

Earnings per Share (EPS)

: Rs.40.15

Price Earning Ratio (P/E)

:31.63

Book Value per Share (BVP) :7.15

Face value

: Rs.10

52 weeks high/ low

: 1825.00/895.00

Sales (Rs. in cores)

:Rs. 8483.6

Asset size (Rs. in cores)

:Rs.1, 09,718.39

75

TECHNICAL ANALYSIS
CHART-5.13 Chart showing share price movement for HDFC Bank

INFERENCE:

The price of the share has increased over a period from Rs200 to Rs.3000.From the white candle, it is clear that most of the day closing price of the share was higher than its opening price. This indicates a bullish trend. The price line touched Rs.3000 in the year 2007. Even the volume traded was high in 2007 it touched ten millions.

76

CHART-5.14 Chart showing Exponential Moving Average (EMA) for HDFC Bank

INFERENCE:

Through out the year there has been lots of intersection between two EMVs lines. From 2003 to 2005 there isnt much variation, it was flat. From 2006 to 2007 the 10 days MVA has moved above the 200 days EVA. Marjory of the times it has indicated the signal to buy. Only in the middle of the 2006 the stock was over sold.

77

CHART-5.15 Chart showing Relative Strength Index for HDFC Bank

INFERENCE: In the beginning of the year 2003 it was a bearish trend. Later it gained momentum and was over bought. Most of the time the line has crossed touched 80 which indicate the stock is over bought. In the last three quarter of 2007 the stock was never over sold and was bullish trend.

78

CHART-5.16

Chart showing comparison between HDFC bank and NSE index

INFERENCE: Comparing the NSE index with HDFC bank, the performance of the bank and the market index is almost same, with little variation. In the year 2007 the stock has out performed the market index. 79

STATE BANK OF INDIA

Business Profile

The Bank is actively involved since 1973 in non-profit activity called Community Services Banking. All our branches and administrative offices throughout the country sponsor and participate in large number of welfare activities and social causes.

On 1st July State Bank of India was constituted under the State Bank of India Act 1955, for the purpose of taking over the undertaking and business of the Imperial Bank of India. The Imperial Bank of India was founded in 1921 under the Imperial Bank of India Act 1920. The Bank transacts general banking business of every description including, foreign exchange, merchant banking and mutual funds. 1959 - The SBI was registered with an Authorised capital of Rs.20 crores, and an issued and paid up capital of Rs.562, 50,000 divided into 562,500 shares of Rs.100 each.

State Bank of India is the countrys largest commercial Bank in terms of profits, assets, deposits, branches and employees. SBI, with its heritage dating back to the year 1806, strives to continuously provide latest and upto date information on its financial performance. It belives on the path of transparency and allow complete access to all the stakeholders enabling total awareness about the Bank. The Bank communicates with the stakeholders through a variety of channels, such as through e-mail, website, conference call, one-on-one meeting, analysts meet and attendance at Investor Conference throughout the world.

80

FUNDAMENTAL ANALYSIS

Date of incorporation

: 1955

Market capitalization (Rs. in cores)

: Rs.1, 31,525.33

Price

: Rs.1605.05

Percentage of change in price : 83.7% (For one year)

Earnings per Share (EPS)

: Rs.120.44

Price Earning Ratio (P/E)

:13.31

Book Value per Share (BVP) :1.98

Face value

: Rs.10

52 weeks high/ low

: 2419.56/852.62

Sales (Rs. in cores) Asset size (Rs. in cores)

: 469990.0 :Rs.5, 66,565.24

81

CHART-5.17

Chart showing share price movement for SBI Bank

INFERENCE:

The price of the share has increased over a period from below Rs290 to Rs.2500. From the white candle, it is clear that most of the day closing price of the share was more than its opening price. It was bullish trend. In the beginning of 2007 the performance of the stock has come down. But in the following months it has performed well.

82

CHART-5.18 Chart showing Exponential Moving Average for SBI Bank

INFERENCE: The chart indicates that till the first quarter of 2004 the 10 days EVA was above to 200 days EVA. Later it has cut the 200 days EVA from above, which indicates a sell signal to the investors which followed for few months. In 2007 it has cut the 200 days EVA from below and the price was at its peak.

83

CHART-5.19 Chart showing Relative Strength for SBI Bank

INFERENCE: Through the period the stock was over bought. It was a bullish trend. Only on few occasions it has toughed 20. The performance of the stock was good in the year 2007. 84

CHART-5.20 Chart showing comparison between SBI & NSE

INFERENCE: While comparing the NSE market index with SBI bank, till 2006 there is little variation between the two. But in 2007 the stock movement has out performed the market index.

85

PUNJAB NATION BANK

Business Profile

With its presence virtually in all the important centres of the country, Punjab National Bank offers a wide variety of banking services which include corporate and personal banking, industrial finance, agricultural finance, financing of trade and international banking. Among the clients of the Bank are Indian conglomerates, medium and small industrial units, exporters, non-resident Indians and multinational companies. The large presence and vast resource base have helped the Bank to build strong links with trade and industry. Punjab National Bank is serving over 3.5 crore customers through 4540 Offices including 421 extension counters - largest amongst Nationalized Banks.

Bank has Rupee Drawing Arrangements with 15 exchange companies in the Gulf and one in Singapore. Bank is a member of the SWIFT and over 150 branches of the bank are connected through its computer-based terminal at Mumbai. With its state-of-art dealing rooms and well-trained dealers, the bank offers efficient forex dealing operations in India.

Another step taken by PNB in meeting the changing aspirations of its clientele is the launch of its Debit card, which is also an ATM card. It enables the card holder to buy goods and services at over 99270 merchant establishments across the country. Besides, the card can be used to withdraw cash at more than 25000 ATMs, where the 'Maestro' logo is displayed, apart from the PNB's over 1094 ATMs and tie up arrangements with other Banks. 86

FUNDAMENTAL ANALYSIS

Date of incorporation

: 1895

Market capitalization (Rs. in cores)

: Rs.18, 850.21

Price

: Rs.459.80

Earnings per Share (EPS)

: Rs.71.06

Price Earning Ratio (P/E)

:6.47

Book Value per Share (BVP) :1.31

Face value

: Rs.10

52 weeks high/ low

: 721.00/419.00

Sales (Rs. in cores)

: 13470.2

Asset size (Rs. in cores)

:Rs.1, 62,422.50

87

TECHNICAL ANALYSIS
CHART-5.21 Chart showing stock price movement on PNB bank

INFERENCE: The performance of the bank was moderate. In the year 2003 the stock was traded in the huge volume. The price was highly volatile. The trading volume has also decreased. The maximum price was reached in 2007.

88

CHART-5.22 Chart showing Exponential Moving Average for PNB

INFERENCE: There isnt huge variation between two EVA lines. The stock was over sold in middle of 2006. Even in 2007 there was both bulling and selling by the investors.

89

CHART-5.23 Chart showing Relative Strength Index for PNB

INFERENCE: Above chart shows that, majority of the times the stock of over sold. Only on few occasion it was over bought i.e. only in year the 2004 it crossed 80.

90

CHART-5.24 Chart showing comparison between PNB & NSE

INFERENCE:

Comparing the NSE market index and the price movement of PNB, the bank is traded lower then the market index. 91

CHART-5.25 Chart showing comparison between ICICI Bank & HDFC Bank

INFERENCE:

While comparing two Private sector banks performance of HDFC bank is good compare to ICICI. But in the beginning of 2008 due to various global phenomena the price of both the stock has decreased. There was a huge fall in price of ICICI bank share.

92

CHART-5.26

Chart showing comparison between SBI & PNB

INFERENCE:

While comparing two Public Sector Banks the performance of SBI is good in terms of investment and return. It is far a head of Punjab Nation Bank.

93

CHART-5.27

Chart showing comparison between SBI & HDFC

INFERENCE: While comparing the performance of HDFC bank from private sector and SBI from public sector, there isnt much variation. Most of the times SBI was trading ahead of HDFC. Its only few points a head of HDFC bank. 94

CHAPTER-6 FINDINGS
This study has dealt with investors confidence in Indian capital market and the technical and fundamental analysis of the banks that constitute the market index, namely S&P-CNX NIFTY. Most important findings of this study are as follows. Based on the survey it was found that there is significance difference between the age group of the investors and purpose of investment in share market. It was also found that there is no significance difference between the gender and information they seek before investing in the stock market. It was found that there is no significance difference between the gender and risk taking ability of the investors. Majority of the investors prefer banking sector (52%) followed by Oil & Gas (44%), Construction (38%), Infrastructure (34%), Steel (22%), IT (18%), Automobiles (16%) and others (30%). According to the 36% of the investors, stock market is better avenue for investment from return point of view closely followed by savings (35%). And 29% from risk point of view. From return point of view 36% of the investors consider stock market is average and only 14% consider it as very good. From savings point of view 32% of the investors consider stock market is average and only 8% as very good.

95

From risk point of view majority of the investors (38%) consider it as poor avenue and 3% as good.

Majority of the investors (36%) are willing to take 25% of risk on their invested capital in the share market. Only 8% of the investors take more than 50% of risk. Investors below 40yrs of the age are the maximum risk takers. But there are 28% of the investors who are not willing to take any risk

The most commonly faced difficulties by the investors, irrespective of their age, gender, occupation and education are lack of knowledge about the market and the false information & rumors.

30% of the investors would like to invest less than 10% of their saving in stock market. While 28% of the investors would like invest 11-30% of their saving in the stock market. Only 6% male investors below 40yrs of age are willing to invest above 50% of their savings in the stock market. However 26% are not interested in stock market

Majority of the investors (50%) invest in the stock market only for capital appreciation. Followed by savings (28%) and liquidity (16%).

Most of the investors prefer short-term investment (50%) for investment in stock market. Only 20% of the investors below 40yrs of age would like to invest for long term

It was determined from the study 28% of the investors take investment decision based on brokers advice. While rest of the investors would make investment decision based on self analysis or TV channels, internet or colleges & friend for stock market information and performances

96

Investors feel that the current market price is a better indicator for investors to invest.

Public Sector Banks (PSBs) are good and appear to be so. They have improved a lot in the last five years.

Public Sector Banks have positive and strong equation with the regulation by their sheer size, lineage and pan- India presence.

Strong entry barrier for foreign/private banks in growing rural market where PSBs have an edge.

Private Banks in aggregate enjoys 30% higher market capitalisation than their PSBs. One year forward target price, market capitalisation of PSBs is expected to climb 36%-Private sector-16%On Price to Book Value basis, the PSBs are trading much cheaper in the range of 1.12 to 2.91 times, while private banks trade at much expensive valuation of 1.89 to 8.89 times.

Comparing the share premium PSUs has less share premium of 3-31% as against 41-49% premium built in private banks.

Private Banks have a higher growth rate on a much smaller base compare to PSBs - be it number of branches, total credit and advances, or deposits.

PSBs have shown significant improvement in reducing gross and net Non Performing Asset (NPA), operating expenses, recoveries of NPAs and asset quality.

State Bank of India is at the top with market capitalization of Rs.1, 31,525.53 crs and asset size of Rs. 5, 66,565.24crs.

97

CHAPTER-7 SUGGESTIONS
There should be latest and easy availability of information to the public. Investors should be educated about the market trends, price movements; they should have a wide knowledge about the market. Awareness about the primary market should be improved. There should be more liquidity in primary market investment. Transparency in the system should be maintained. Insider trading should be completely curbed in order to have transparent transactions. There should be more transparency in activities of the company. Sensitive information should be made available to everyone at the same time. Information related to promoters background and project implementation experience should be made available. Advertisements on the improvements taking place in the market should be released regularly. There should be regulation to control scandals; regulatory bodies should prevent corporate frauds. Moral character of Board of Directors to be checked. Only experienced promoters should be allowed to raise funds in the capital market. Dishonest promoters should not be allowed to raise funds the promoter should at least have five years of experience in the industry.

98

More active investor associations to be provided. General investors should understand the riskiness associated with investment in shares. Grievance redresses machinery should be more efficient.

Shareholders interest should be considered while companies take decisions. Demat account information should be proper and regular. Price rigging before issue of securities to be controlled. Action should be taken against the issue managers, analysts and company for providing over optimistic and false information

Companies should be encouraged to buyback shares if not listed or saleable. Bogus companies should not be allowed to raise funds in the capital market Insurance of stock market investments should be developed. Government should improve infrastructure and economic condition. It should check corruption at various levels and take steps to protect small investors.

Government should reduce political interference in markets.

Capital Gain Tax can be reduced by the Income Tax Department out of profits
made on intra day transactions. Since most of the investors make investment decision based on brokers advice brokers should guide them properly. . Honesty and fair dealing in brokers should be encouraged Action should be take action against brokers with bad conduct Proper information on post listing activities should be made available by stock exchanges to investors.

99

Investors should not invest in the same sector. And they should make long term investment and should seek professional advice before investing.

Investors should be guided by the companys fundamental and not by expectation of immediate return. And should also have broader view about the market before investing. Do own research and not fall prey to rumors.

There is a positive correlation between stock price and the companys brand visibility.

The Indian equity markets, as experts believe, will continue to follow the global trends. This year (2008) could be a year of consolidation. Volatile will persist for few months. Sensex will be around 15000-18000points for the next six to eight months.

It is prudent to invest in large-cap stocks from these sectors-public sector banks, capital goods, infrastructure and oil refineries.

Market related investment may not pay the same level of return they have given in the last three years.

100

CHAPTER-8
CONCLUSION

The dream run in Indian capital market, which started in 2003, continued till 2007. The Sensex and the Nifty tripled during this period from 1, 912 in January 2004 to 6, 079 in December 2007, respectively. In 2007, 100 IPOs (Initial Public Offer) were floated compared to 75 in 2006. The Economic Survey says market cap was 150 percent of the GDP. In the mid January, Indian market came under global selling pressure and the global meltdown coincided with higher valuation of the market.

Four initial IPOs which were launched in 2008, were withdrawn due to poor investor interest. Investors risk appetite reduced after the sharp corrections. So, the fate of the primary market will dependent of the secondary markets. The Economic Survey points out that Indian stocks reflected price to earning multiples of around 27 times at December end 2007 , the highest among the select emerging market economies. The Indian equity markets, as experts believe, will continue to follow the global trends.

This year (2008) could be a year of consolidation. Moreover, if the economic growth moderates, as is expected, corporate earnings may get affected. That will mean a slower growth in the markets. So, market related investment may not pay the same level of return they have given in the last three years.

101

CHAPTER-9
BIBILOGRAPHY
BOOKS Bodie, Z. & Kane, A & Marcus, J.A. Investments. Tats McGraw-Hill. New Delhi. 2002. Donald E. Fisher & Ronald J.Jordan. Security Analysis And Portfolio Management (6th edition). Pretice Hall of India Orivate Ltd. New Delhi. 2006. I.M. Pandey. Financial Management (8th edition). Vikas Publishing House Private Ltd. New Delhi .2003.

WEBSITES http://finance.yahoo.com/ http://www.indiabulls.com/equities/techanalysis/tech_analysis.asp http://www.moneycontrol.com/stocksmarketsindia/ http://www.valueresearchonline.com/stocks/snapshot.asp?code=1622 http://www.equitymaster.com/tm.asp http://galatime.com/charts/banks.html www.capitalmarket.com www.nseindia.com www.investopedia.com

102

ANNEXURE
QUESTIONNAIRE 1. Name (Optional) :

2.

Age:

a.18-40 yrs (

b. 41-60yrs (

) c. 61yrs & above (

3.

Gender:

a. Male (

b. Female (

4.

Educational Qualification: a. Graduates ( ) b. Post Graduates ( ) c. Professionals ( ) d .Others ( )

5.

Occupation: a. Service ( ) b. Professional ( ) c. Business ( ) d. Others ( )

6.

What percentage of income would you save? a. <10 % ( ) b.11-20 % ( ) c. 21-30 % ( ) d. 31-50 % ( )

7.

What percentage of savings would you invest in stock market? a. 0-10 % ( e. Not investing ( ) ) b.11-30% ( ) c. 31-50% ( ) d. 50% & above ( )

8.

For what purpose investment are made in stock market? a. Saving ( ) b. Liquidity ( ) c. Capital appreciation ( ) d. Dividend ( )

9.

Time frame of investment preferred by you for making investment: a. Short term ( (<6months) ) b. Medium term ( (6months-1yr) ) c. Long term ( (>1yr) ) 103

10.

Maximum risk you are ready to take on your invested capital. a.10% ( ) b. 25% ( ) c.50% ( ) d. Not at all ( )

11.

Your general perception about the stock market. Poor Return point of view Risk point of view Savings point of view Very poor Average Good Very good

12.

Before investing in stock market whose advice do you seek? a. Brokers ( c. Self- Analysis ( ) ) b. TV channels, Newspapers or Internet ( d. Colleague & Friends ( ) )

13. Sector preferred for making investment a. Automobile b.Contruction c. FMCG d. IT e. Steel ( ( ( ( ( ) ) ) ) ) f. Oil & gas g. Banking h Cement i. Infrastructure j. Retail ( ( ( ( ( ) ) ) ) )

14.

Do you face difficulties while investing in stock market? a. Yes ( ) b. No ( )

15.

What are the difficulties faced by Investors? a. Lack of knowledge about the market ( c. Being cheated by the brokers ( e. False information / rumors ( ) b. High brokerage ( ) d. Lack of funds ( ) ) )

16.

Your suggestions so as to enable you to make stock market a good avenue for investment. 104