ACKNOWLEDGEMENT

A research study cannot be completed without the guidance, assistance, inspiration

and co- operation from various quarters. The study also bears the imprints of many

persons. I feel pleased to have an opportunity to express my deep and sincere

feeling of gratitude towards those personalities who positively helped me to

complete my project.

For making this project possible, I am grateful to faculty members, especiallyMiss

MANISHA SIKKA . I would also like to express my thanks to my guide in this

project Miss Urvashi for hER kind Co-operation and guidance, without which this

project could have never been completed on time.

I am also grateful to all my colleagues who continuously helped me in my project

and for their kind co-operation and by spend their valuable time in providing me the

information needed.

(SAVITA HOODA)

PREFACE
Master of Business Administration is a stepping stone to the Management Career. In

order to achieve Practical, Positive and concrete result, the class room leaving needs

to be effectively collaborated with the realities of the situation existing in the real

corporate world. It has great pleasure in presenting this research project which is

essential in partial fulfillment of MBA Programme.

Research project is an integral part of curriculum and its purpose is to provide the

student with the practical exposure of the todays changing scenario. It helps in the

development of practical skills and analytical thinking process. It provides with

basic skills required to perform the survey and statistical tool needed to analyses the

data. Thus it helps in moulding the students according to the requirement of actual

world.

This research project makes the study on Investor behaviour regarding financial

services. Objective of this research were to find out the Perception of the investors

regarding different financial instrument and to examine why and where people

invest.

TABLE OF CONTENTS
CONTENTS

Industry Profile.

Conceptual Framework of Study.

Scope of Study

Objective of Study

Research Methodology

Limitations of Study

Introduction to investment.

Data Presentation & Interpretation.

Conclusion.

Recommendation

Bibliography.

Annexure.

Questionnaire

List of Tables

List of Graphs

INDUSTRY PROFILE
Financial services industry grows as the time passes.

Excluding real estate, the financial service sectors contribution to the gross

domestic product total led 7.7% in 2004, the latest data available.

The assets of the financial services sector grew 12% from $42.9 trillion in

2003 to $48 .0 trillion in 2004.

Banks acquired 54 insurance agencies and 46 securities firm in 2004.

In 2004, homeowners withdrew $160 billion in cash when they refinanced

their mortgages, compared with 138 billion in 2003.

U.S. households financial assets debt rose 94.3 % from $15.7% trillion in

1993 to $30.5 trillion in 2003.

Household debt rose 10.6 % and Business debt rose 3.7% from 2003 to

2004.

Financial Holding Companies (FHCs), a structure created by the 1999

Grame Leach Bliley act to expand the financial services activities of Bank

Holding Companies(BHCs), accounted for $8.3 trillion in assets in 2004.

Insurance underwriting assets reported by FHCs rose to $356 billion in 2004

from $347 billion in 2003. In 2000 these assets amounted to $ 116 billion.

Securities underwriting /dealing assets of FHCs increased dramatically from

$962 billion in 2000 to $ 1620 billion in 2004.

Bank post offices and pf are still dominating the investment industry it is clear form

the diagram that only bank and post offices holds 84% of the total investment

industry.

DIFFERENT INSTITUTIONS
MKT. SHARE

BANKS, POST OFFICES, PF 84%

CORPORATE BROKERS 12%

INDIVIDUAL AGENTS 4%

Only 12% share of the industry is being held by the corporate brokers and merely

4% share is with individual agents.

 FINANCIAL SERVICES PROVIDERS
MARKET SHARE

BAJAJ CAPITAL 27%

INDIA BULLS 25%

RELIANCE CAPITAL 15%

OTHERS 33%

Bajaj Capital and India Bulls are the major players in the financial services market

with 27% and 25% share of the total market. Reliance is the third largest player

with 15% market share and the rest of the market is fragmented.
MAJOR PLAYERS IN

THE INDUSTRY
 BAJAJ CAPITAL

Bajaj Capital is one of the oldest and largest Investment Advisory Companies in

India, in operation since 1964.

History

1964:- Bajaj Capital sets up its first 'Investment Centre' in New Delhi to guide

individual investors on where, when & how to invest. India's first Mutual Fund,

Unit Trust (UTI) of India is incorporated in the same year. 1965:- Bajaj Capital is

incorporated as a company and in the same year innovates a new financial

instrument Companies Fixed Deposits. EIL Ltd. (Oberoi Hotels, then known as

Associated Hotels of India Ltd.) becomes the first company to raise Fixed Deposits.

1966:- Bajaj Capital expands its product range & includes all UTI schemes and

Government saving schemes in addition to Company Fixed Deposits. 1969:- Bajaj

Capital manages its first Equity issue (through associate company) of Grauer &

Weil India Ltd. right from drafting of prospectus to marketing of issue.

1975:- Bajaj Capital starts offering need based investment advice to investors

which would later be christened as Financial Planning in the investment world.

1981:- SAIL becomes the first government company to accept deposits, later

followed by IOC, BHEL BPCL, HPCL & others. Thus opening floodgates for

growth of retail investment market in India. Bajaj Capital plays an active role in all

the schemes as Principal Brokers.

1986:- Public Sector Undertakings (PSUs) start making Public issues of Bonds-

MTNL, NHPC, IRFC offer a series of Bond Issues. Bajaj Capital tops ranking in
most of them. 1987:- Launch of Public Sector Mutual Funds in India led by SBI.

Bajaj Capital plays a significant role in fund mobilisation for all these players.

1991:- SBI issues India Development Bonds for NRIs. Bajaj Capital becomes the

top mobiliser with collections over US $ 20 million. 1993:- Launch of first Private

Sector Mutual Fund- Kothari Pioneer followed by Birla & Alliance in the following

years. Bajaj Capital plays an active role and ranked among top mobilisers for all

these schemes.

1995:- IDBI & ICICI start issuing their series of Bonds for retail investors. Bajaj

Capital is Co-manager in all these offerings & rank constantly among top 5

mobilisers, on all India basis. 1997:- Private sector players lead revival of Mutual

Funds in India through Open ended Debt schemes. Bajaj Capital consolidates its

position as Indias largest retail Distributor of Mutual funds.

1999:- Bajaj Capital starts marketing Life & General Insurance Products of LIC &

GIC (through associate firm) in anticipation of opening up of the Insurance Sector.

Bajaj Capital achieves milestone of becoming top Pension Scheme seller in India

& launches marketing of Health insurance schemes of GIC.

Nationwide Presence and Modern Infrastructure

Bajaj Capital has a vast network of 109 offices spread all across the country. Our

team of over 1500 highly motivated professionals includes MBAs, CAs, Financial

Planners, Financial Analysts, Insurance Experts, Investment Experts and Law

Graduates. Our operations are fully computerized.

SEBI Authorization.

Bajaj Capital is a Securities and Exchange Board of India (SEBI) authorized

Merchant Banker and Investment Advisory Company. SEBI is a government body

specially created for investors' protection.

Range of Products and Services

Investment Advisory Products

Company fixed deposits

Bonds

Mutual funds

Life insurance

General insurance

Pension schemes

Post office schemes

Tax saving schemes

Insurance linked investment schemes

Initial public offerings

Housing loans

NRI schemes

Car insurance
Financial Planning Services

Investment planning

Retirement planning

Insurance planning

Children's future planning

Tax planning

Short-term cash flow planning

Specialty Service Groups

"Wealth Management Group" offers Wealth Management Services for High Net

worth Individuals.

Bajaj Capital offers tailor made Investment Advisory and Financial Planning

Services customized exclusively to meet the needs of high net worth individuals.

Some of the additional services offered are:

Dedicated relationship managers

Periodic portfolio review

Regular update of portfolio valuation

Need based advice

"Financial Planning Group" offers comprehensive Financial Planning Services

for long-term investors. We pride ourselves in helping you meet your life's goals.

We do this by helping you assess your goals, plan for them and finally implement
them. We take a comprehensive approach to planning your future by including in

each financial plan, solutions in all of the following areas:

Investment Planning

Insurance Planning

Cash flow Planning

Children's Future Planning

Tax Planning

Retirement Planning
 INDIABULLS

Indiabulls is India's leading retail financial services company with 135 locations

spread across 95 cities. While our size and strong balance sheet allow us to provide

you with varied products and services at very attractive prices, our over 1000 Client

Relationship Managers are dedicated to serving your unique needs.

Indiabulls is lead by a highly regarded management team that has invested crores of

rupees into a world class Infrastructure that provides our clients with real-time

service & 24/7 access to all information and products. Our flagship Indiabulls

Professional NetworkTM offers real-time prices, detailed data and news, intelligent

analytics, and electronic trading capabilities, right at your finger-tips. This powerful

technology (Click for Details) is complemented by our knowledgeable and

customer focused Relationship Managers. We are creating a world of Smart

Investor.

Indiabulls offers a full range of financial services and products ranging from

Equities to Insurance to enhance your wealth and hence, achieve your financial

goals.

Indiabulls' Client Relationship Managers are available to you to help with your

financial planning and investment needs. To provide the highest possible quality of

service, Indiabulls provides full access to all our products and services through

multi-channels.
 Indiabulls offers a full range of financial services and products ranging from

Equities to Insurance to enhance your wealth and hence achieve your financial

goals.

Our Indiabulls Professional NetworkTM offers real-time prices, detailed data and

news, intelligent analytics, and electronic trading capabilities, right at your finger-

tips. This powerful technology is complemented by our knowledgeable and

customer focused Relationship Managers.

Indiabulls' Relationship Managers are available to you to help with your financial

planning and investment needs. To provide the highest possible quality of service,

Indiabulls provides full access to all products and services through multi-channels.

SERVICES OFFERED

Equities & Derivatives

Indiabulls Equity Analysis TM

Depository Services

Insurance

Personal Loan
 RELIANCE CAPITAL

Reliance Capital Ltd. (RCL), one of India's leading private sector non-banking

financial services companies (NBFCs), has reported satisfactory financial and

operating performance during the period under review i.e. financial year 2001-02.

Gross income for the year increased 11.46% to Rs.548.59 crores compared to Rs.

492.20 crores in the previous financial year. Net profit also increased from Rs.93.45

crores to Rs.101.22 crores for the year 2001-02.

Depreciation was lower at Rs. 55.18 crores (previous year Rs.71.97 crores), and the

tax provision decreased to Nil (previous year Rs.7.50 crores). Gross profit for the

year was lower at Rs.156.40 crores as against Rs.172.92 crores in the previous year.

Resources and Liquidity:

During the financial year 2001-02, RCL redeemed preference shares of Rs. 800

crores as per the terms of the offer. RCL also redeemed non-convertible debentures

(NCDs) to the tune of Rs.700 crores and discount bonds to the tune of Rs.202 crores

during the year.

RCL's gross debt: equity ratio, including long term and short term debt, as on 31st

March, 2002, is a conservative 1.91:1 well below the comparable levels in the

industry.

During the year, the ratings on the company's long term debt were re-affirmed at

"AA+" by Credit Analysis and Research Ltd. (CARE). The instruments carrying

this rating are of high quality by all standards, and are of high investment grade.
RCL's short term borrowing programme is rated ''PR1+'' by CARE, the highest

credit rating that may be assigned to short term debt instruments.

Industry Structure and Developments:

The Non-Banking Financial Services (NBFC) industry in the private sector in India

is represented by a mix of a few large companies with nationwide presence, and a

large number of small and medium sized companies with regional focus. These

NBFCs provide a variety of services including fund based, and fee based activities,

as well as cater to retail and non-retail markets, and niche segments.

The financial sector through the last decade has undergone wide volatility and

change. During this period, effective regulations have brought in wide ranging

changes on prudential norms and continuous monitoring mechanism, thereby

improving overall industry environment. The NBFCs with high credibility,

efficiency, and customer-oriented services will dominate the sector in future.

Business Review:

RCL continued to focus on the infrastructure projects providing immense growth

opportunities and substantial tax benefits.

Leasing:

The Company's activity in the leasing business stood at Rs. 22 crores.

Investments in the Infrastructure Sector:

RCL's investment in infrastructure sector included high growth areas of power,

telecommunications, ports etc., contributing to the overall economic development.

Your company's investment in infrastructure projects stood at Rs. 1,238 crores.

Insurance:

During the year, RCL has taken a new strategic initiative by entering into the life

insurance and general insurance business. The company's investments in the

insurance sector stood at Rs.78 crores, and upon receipt of approval from the

Reserve Bank of India, RCL intends to invest further in this sector.

Opportunities:

The Indian economy provides several attractive growth opportunities with GDP

generally forecast to grow by 5%-6% per annum over the next several years.

Development of key infrastructure sectors is a focus area for the government,

presenting additional opportunities for companies like RCL that are active in the

area of infrastructure investments. The service sector in India is expected to

contribute at a faster pace to the overall economy in the future. This is likely to

create a positive environment for the financial services industry in India. RCL is

well positioned to take advantage of emerging attractive growth opportunities in the

Indian economy by offering wide range of products to suit the needs of the Indian

consumer.
Challenges:

RCL faces normal market competition in its business. RCL's strong financial

position, reflected by healthy credit rating and low debt:equity ratio, and adoption

of prudent business strategies have enabled it to consistently post satisfactory

performance despite competitive conditions.

Outlook:

RCL is likely to maintain its focus on infrastructure investments and insurance

sector. The company will also seek attractive opportunities in other growth areas in

the financial services sector.

Risks and Concerns:

RCL is exposed to the normal industry risk factors of interest rate volatility,

economic cycle, and credit risk. RCL manages these risks by maintaining a

conservative financial profile, and by following prudent business and risk

management practices.

Adequacy of Internal Control:

RCL has a proper and adequate system of internal controls to ensure that all

activities are monitored and controlled against any unauthorised use or disposition

of assets, and that the transactions are authorised, recorded and reported correctly.

RCL ensures adherence to all internal control policies and procedures as well as
compliance with all regulatory guidelines. The audit committee of the Board of

Directors reviews the adequacy of internal controls.

Human Resource Development (HRD):

RCL has a team of able and experienced industry professionals. The number of

employees stood at 29.

 SHAREKHAN

SSKI, a veteran equities solutions company with over 8 decades of experience in

the Indian stock markets.

If you experience our language, presentation style, content or for that matter the

online trading facility, you'll find a common thread; one that helps you make

informed decisions and simplifies investing in stocks. The common thread of

empowerment is what Sharekhan's all about!

Sharekhan is also about focus. Sharekhan does not claim expertise in too many

things. Sharekhan's expertise lies in stocks and that's what he talks about with

authority. So when he says that investing in stocks should not be confused with

trading in stocks or a portfolio-based strategy is better than betting on a single

horse, it is something that is spoken with years of focused learning and experience

in the stock markets. And these beliefs are reflected in everything Sharekhan does

for you!

To sum up, Sharekhan brings to you a user- friendly online trading facility,

coupled with a wealth of content that will help you stalk the right shares.
Sharekhan Services

Sharekhan, one of India's leading brokerage houses, is the retail arm of SSKI. With

over 240 share shops in 110 cities, and India's premier online trading portal

www.sharekhan.com, our customers enjoy multi-channel access to the stock

markets.
 WAY2WEALTH

INTRODUCTION
Way2Wealth is a premier Investment Consultancy Firm that has been launched with

the aim of making investing simpler, more understandable and profitable for the

investors. Way2Wealth brings a wide range of product offerings from Fixed

Income Securities, Life Insurance and Mutual Funds to Equity and Derivatives

(on the National Stock Exchange) for the convenience and benefit of it customers.

Way2Wealth has over 40 easily accessible Investment Outlets spread across 20

major towns and cities in the country.

Mission

Way2Wealth is a premier Investment Consultancy Firm, launched with the mission

to be the pre-eminent destination for personalised financial solutions helping

individuals creates wealth.

Philosophy

We believe that our knowledge combined with our investors trust and

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

experience.
Way2Wealth has:

Its headquarter at Bangalore.

Fifty offices across the country.

Is the Member of The National Stock Exchange (NSE) of India and The Bangalore

Stock Exchange.

Experienced Research Team at Mumbai

Equity participation with Prudential Global Technology ventures and BPL

Innovision.

Exclusive tie up with ICICI Prudential

 Products & Services offered by us Way2Wealth

Products Services
PROPERTY OF WAY2WEALTH SECURITIES
Mutual Funds Investment Advice
Life Insurance Investment Facilitation
Fixed Deposits Investment Related Tax Guidance
Equity Cash Flow Management
Derivatives Retirement Planning
Secondary Debt Childrens Education & Marriage
IPOs Debt & Equity Planning
PROPERTY OF WAY2WEALTH SECURITIES
Value Added Services

Personalised service at your door step round the year by a

Dedicated relationship manager.
Regular review of both debt & equity markets.
Review of your portfolio on predefined intervals.
Daily tracking of your mutual fund Portfolio.
Specific analysis on Equity, Mutual Fund or corporate as per your
request.
Choice of product range

SWOT Analysis
 STRENGTHS WEAKNESSES
High brand equity. Rising cost
Effective network / distribution. Increased centralized trading
Rich experience in stock markets.
Good infrastructure

OPPORTUNITIES THREATS
To diversify into unexposed areas Increased competition
To develop strategies to retain and attract Lack of other trade related facilities.
customers.
Expanding markets and wider area of
operation
To encash the advantage of the urbanization
and investors awareness
 INTRODUCTION
TO INVESTMENT

PROPERTY OF WAY2WEALTH SECURITIES

PROPERTY OF WAY2WEALTH SECURITIES

 INVESTMENT

Investment is the sacrifice of certain present value for the uncertain future reward. It

entails arriving at numerous decisions such as type, mix, amount, timing, grade etc.

of investment and disinvestment. Further, such decision-making has not only to be

continuous but rational too. Broadly speaking, and investment decision is a trade off

between risk and returns. All investment choices are made at points of time in

accordance with the personal investment ends and a contemplation of an uncertain

future. Since investments in securities are revocable investment ends are transient

and investment environment is fluid, the reliable bases for reasoned expectations

become more and more vague as once conceives of the distance future. Investors in

securities will, therefore, form time to time, reappraise and re-evaluate their various

investment commitments in the light of new information, changed expectations and

ends.

Investment choices or decisions are found to be the outcome of three different but

related classes of factors. The first may be described as factual or informational

premises .The factual premises of investment decisions are provided by many

streams of data which taken together, represent to an investor, the observable

environment and general as well as particular features of the securities and firms in

which he may invest. The second class of factors, entering into investment decisions

may be described as expectation premises. Expectations relating to the outcomes of

alternative investments are subjective and hypothetical in any case but their
foundations are necessarily provided by the environmental and financial facts

available to investors. These limit not only the range of investments, which may be

undertaken, but also the expectations of outcomes, which may legitimately be

entertained. The third and final class of factors may be described as valuation

premises. For investors generally these comprise the structure of subjective

preferences for the size and regularity of the income to be received from and for the

safety and negotiability of specific investment or combinations of investments as

these are appraised from time to time.

Investment: the three things that matter

1. How much cash can I expect to receive?

2. When can I expect to receive it?

3.How confident can I be that I will get the amount of cash I

expect, and how certain can I be that I will get it when I expect

it?
 INVESTMENT/SPECULATION/GAMBLING

People usually make investments with a future end date in mind. The length of time

from the date when investment is purchased to the final date can be called the

investors planning horizon, investment horizon, or holding period. A financial asset

purchased with a very short holding period in mind probably is not really an

investment- it may be simply a gamble or a speculation.

A gamble is usually a very short- term investment in a game of chance. The holding

period for most gambles can be measured in seconds. That is, the result of so called

investment is quickly resolved by the roll of the dice or the turn of a card. Such

activities have planning horizons that are far too brief to do the research that should

precede any investment activity.

Speculation is typically last longer than gambles but is briefer than investment. A

speculation usually involves the purchase of a salable asset in hopes of making a

quick profit from an increase in the price of the asset, which expected to occur

within a few weeks or months. Those involved in speculations are reluctant to refer

to this activity as speculation because they dislike the connotations of the word;

they prefer to refer to speculations as investment activities.

There is no precise dividing line with respect to the length of investment holding

periods that could be used to separate gambles from speculations and speculations

from investments. At its best, investment is well grounded and carefully planned

speculation whereas it is an ostrich-like form of involuntary and unconscious

 speculation at its worst. There are no set rules or permanently establishing which

securities is investment and which are speculations.

Investment Management Process

The factors that drive interest rates can be broken into three broad
categories:
Economic Fundamentals
Market Psychology
Market Valuations
 A weekly checklist process that assigns a bullish or
bearish assessment to the factors that drive the
direction of interest rates

PORTFOLIO
PORTFOLIODECISION
DECISIONATTRIBUTE
ATTRIBUTE
RECOMMENDATION
RECOMMENDATION

FEATURES OF AN INVESTMENT PROGRAMME

ECONOMIC MARKET
MARKET MARKET
MARKET
ECONOMIC PSYCHOLOGY VALUATIONS
FUNDAMENTAS
FUNDAMENTAS PSYCHOLOGY VALUATIONS

FEATURES OF AN

MONEY SUPPLY
MONEY SUPPLY POLITICAL RISK
DEPOSIT GROWTH POLITICAL RISK VOLUME TRADED
DEPOSIT GROWTH EVENT RISK VOLUME TRADED
FISCAL POLICY EVENT RISK STEEPNESSOF YIELD
FISCAL POLICY MONEY FLOW STEEPNESSOF YIELD
CREDIT GROWTH MONEY FLOW CURVE
CREDIT GROWTH INDIAN RUPEE CURVE
ECONOMIC GROWTH INDIAN RUPEE OVERSEAS RATE
ECONOMIC GROWTH ECONOMIC VIEW OVERSEAS RATE
INFLATION ECONOMIC VIEW
INFLATION

INVESTMENT PROGRAMME
Objective decision making process insulates from excessive market
noise
Choosing specific investments, investors will need definite ideas regarding features

which their portfolios should posses. These features would be consistent with the

investors general objectives and, in addition, should afford them all the incidental

conveniences and advantages which are possible under the circumstances. The

following are the suggested features as the ingredients from which many successful

investors compound their selection policies.

Safety of Principal

The safety sought in investment is not absolute or complete; it rather implies

protection against loss under reasonably likely conditions or variations. It calls for

careful review of economic and industry trends before deciding types and timing of

investments. Thus, it recognized that errors are unavoidable for which extensive

diversification is suggested as an antidote.

Adequate Liquidity and Collateral Value

An investment is a liquid asset if it can be converted into cash without delay at full

market value in any quantity. For an investment to be liquid it must be (1) reversible

or (2) marketable. The difference between reversibility and marketability is that

reversibility is the process whereby the transaction is reversed or terminated while

marketability involves the sale of the investment in the market for cash.

Stability of income
Stability of income must be looked at in different ways just as was security of

principal. An investor must consider stability of monetary income and stability of

purchasing power of income. However, emphasis upon income stability may not

always be consistent with other investment principles. If monetary income stability

is stressed, capital growth and diversification will be limited.

Capital Growth

Capital appreciation has today become a important principle, recognizing the

connection between corporation and industry growth and very large capital

appreciation, investors and their advisers constantly are seeking growth stock. It is

exceedingly difficult to make a successful choice. The ideal growth stocks is the

right issue in the right industry, bought at the right time.

Tax Benefits

To plan an investment programme without regard to ones tax status may be costly

the investor. There are really two problems involved here, one concerned with the

amount of income paid by the investment and the other with the burden of income

taxes upon that income. When investors income is small, that is anxious to have

maximum cash returns on their investments, and is prone to take excessive risks. On

the other hand, investors who are not pressed for cash income often find that

income taxes deplete certain types of investment income less than others, thus

affecting their choices.

Purchasing Power Stability

Since an investment nearly always involves the commitment of current funds with

the objective of receiving greater amount of future funds, the purchasing power of

the future funds should be considered by the investors. For maintaining purchasing

power stability, investors should carefully study (1) the degree of price level

inflation they expect, (2) the possibility of gain and loss in the investment available

to them, and (3) the limitations imposed by personal and family considerations.

Concealability

To be safe from social disorders, government confiscation, or unacceptable levels of

taxation, property must be concealable and leave no record of income received from

its use or sale. Gold and precious stones have long been esteemed for this purpose

because they combine high value with small bulk and are readily transferable.

INCREASE POPULARITY OF INVESTMENTS

Investing has been an activity confined to the rich and business class in the past.

This can be attributed to the fact that availability of investible funds is a pre-

requisite to deployment of funds. But, today, we find that investment has become a

household word and is very popular with people forming all walks of life.

Increase in popularity of investments can be attributed to the following factors:

1. Increase in working population, larger family incomes and consequent higher

savings;

2. Provision of tax incentives in respect of investment in specified channels;

3. Increase in tendency of people to hedge against inflation;

4. Availability of large and attractive investment alternatives;

5. Increase in investment related publicity;

6. Ability of investments to provide income and capital gains, etc.

 INVESTMENT BEHAVIOUR

Before knowing about the investment behaviour we have to know which class we

are going to read, Retailers are the shopkeepers having different nature and

behaviour. Investment behaviour signifies the ways from when the investors get

satisfaction by investment. That satisfaction may be in the form of:

Security of money

High return of money

Tax Benefit of money.

Investment Behaviour is reflected by various factor:-

Income factor

Age factor

Educational Factor

Risk Factor

Beliefs
 Other than these, financial service market has some characteristics on which also

investment behaviour will depend:

Intangibility

Inseparability

Variability

Perishability

High involvement purchase/ complex products

High level of brand loyalty

DIFFERENT FINANCIAL
INSTRUMENTS
In this study, we consider only income factor. On the Basis of income. The Previous

belong to low income group have lack of funds and they need security first for their

investment.
EQUITY SHARES
Middle income group may go for risk investment because they are doing balanced
MUTUAL FUND
investment.
INSURANCE Where as high level income group consists of the people which like
high
BONDS
return but exception is always there.
 EQUITY SHARES

Equity represents an ownership position in a corporation. It is a residual claim, in

the sense that creditors and shareholders must be paid as scheduled before equity

shareholders can receive any payment. In bankruptcy equity holders are in principle

entitled only to assets remaining after all prior claimants have been satisfied. Thus,

risk is highest with equity shares and so must be its expected return. When investors

buy equity shares, they received certificates of ownership as proof of being owners

of company. The certificate states the number of shares purchased and their par

value.

ADVANTAGES OF EQUITY SHARES:

1. Potential for Profit

The potential for profit is greater in equity share than in any other

investment security. Current dividend yield may be low but potential of

capital gain is great. The total yield or yields to maturity may be substantial

over a period of time.

2. Limited Liability

In corporate form of organization, its owners have, generally, limited

liability. Equity Share is usually fully paid. Shareholders may lose their

investment, but no more. They are not further liable for any failure on the

part of the corporation to meet its obligation.

3. Hedge Against Inflation

The equity share is a good hedge against inflation though it does not fully

compensate for the declining purchasing power as it is subject to the money-

rate risk. But, when interest rates are high shares tend to be less attractive,

and prices tend to depress.

4. Free Transferability

The owner of shares has the right to transfer his interest to someone

elese.The buyer should ensure that the issuing corporation transfers the

ownership on its books so that dividends, voting right and other privileges

will accrue to the new owner. Although the individual has the right to sell

his shares, there is little or no trading in the shares of many corporations due

to the lack of interested buyers. For this reason, equity shares of many small

businesses are non liquid and difficult to market.

5. Share in Growth

The major advantage of investment in equity shares is its ability to increase

in value by sharing in the growth of company profits over the long run.

6. Tax Advantages

Equity shares also offer tax advantages to the investor. The larger yield on

equity shares results from an increase in principal or capital gains which are

taxed at lower rate than other incomes in most of the countries.

 BOND

Bond is a loan. The loans can be from

the federal government,

a federal agency,

municipality or

Corporation.

At the time of purchase of bonds we are lending our money to which we buy the

bonds from. As return on our money, fixed rate of interest has been paid over a set

period of time. When the bond matures the investors money is usually returned

with the earned interest included. Bonds are like stocks because they are both

traded. Therefore you can buy the bonds after they are originally issued while at the

same time you can sell bonds before they mature.

At the time of issue of bond the persons are promised to get their money back.

Bonds give income based on their rate of return. Bonds are usually much less

volatile than stocks. Some of Bonds are tax-free.

 Disadvantages of bonds are:

Lower returns than stocks and mutual funds.

Bonds are like stocks because their prices are sensitive to interest rates as

well. Bonds also carry with them some heavy terminology, which can be

confusing and hard to understand.

Types of Bonds:

Convertible Bonds

Fixed rate Bonds

Floating-rate bonds

High-yield bonds

Zero-coupon bonds

Subordinated
 INSURANCE

Insurance is a contract between two parties where by one party called insurer

undertakes in exchange for a fixed sum called premiums, to pay the other

party called insured a fixed amount of money on the happening of a certain

event.

WHY PEOPLE GO FOR INSURANCE

To ensure continuity of income

To pay off any debt left behind

To provide liquidity to ones assets

To create an asset for ones heirs

A great investment vehicle

Types of Insurance

Life insurance

General Insurance
 MUTUAL FUND

A Mutual Fund is a trust that pools the savings of a number of investors who share a

common financial goal. The money thus collected is then invested in capital market

instruments such as shares, debentures and other securities. The income earned

through these investments and the capital appreciation realised are shared by its unit

holders in proportion to the number of units owned by them. Thus a Mutual Fund is

the most suitable investment for the common man as it offers an opportunity to

invest in a diversified, professionally managed basket of securities at a relatively

low cost.

In other words we can say this is the way to make small investors to invest their

money in the share market.

Types of Mutual Funds Schemes in India

Wide variety of Mutual Fund Schemes exists some of them are as:

By Structure

Open - Ended Schemes

Close - Ended Schemes

Interval

By Investment Objective

Growth Schemes

Income Schemes
 Balanced Schemes

Other Schemes

Tax Saving Schemes

Special Schemes

Index Schemes

Sector Specific Schemes

ADVANTAGES OF MUTUAL FUNDS

The advantages of investing in a Mutual Fund are:

Professional Management

Low Costs

Liquidity

Transparency

Flexibility

Diversification

Choice of schemes

Tax benefits

Convenient Administration

Return Potential
 FREQUENTLY USED TERMS

Net Asset Value (NAV)

NAV= Mkt. Value of Assets- Liabilities

Sale Price

Also known as Offer Price. This is the price on which we invest in MF. It may

include a sales load.

Redemption Price

It is the price at which open-ended schemes repurchase their units and close-ended

schemes redeem their units on maturity. Such prices are NAV related.

Sales Load

It is charge collected by a scheme when it sells the units.

 CONCEPTUAL
FRAMEWORK OF
STUDY

Chapter 3
 RESEARCH DESIGN

OBJECTIVES OF THE STUDY

1. To find out the preferred option for investment on the basis of income group

and what they like first before investment.

2. To find out whether people like to invest in mutual fund or not. If not then

what is the reason for that.

3. To find out whether people like to invest in shares or not. If not then what is

the reason for that.

4. To find out who will be preferred as an investment guide by the public.

H SECURY2EALSECUR

METHODOLOGY CONTENT

UNIVERSE

In the present study, the universe is the investor (retailers) in Jind.

SAMPLE DESIGN

A sample design is a definite plan for obtaining a sample from a given population.

SAMPLE SIZE

For the study, judgement sampling was used and a sample of 100 investors was

selected from Jind City.

SOURCE OF DATA

For the purpose of research two types of data was required i.e. primary & secondary

data.

Primary data:

Questionnaire

Personal Interviews

Secondary data:

Books

Magazines

Websites

DATA ANALYTICAL TOOL

Percentage method

LIMITATION OF THE STUDY

Each and every study must have some limitations because no one is sufficient in

itself. So this study also has some limitations. Some of the major are as follows:

The study area is only related to the investors of Jind only and sample size may

small only 100 shopkeepers.

The study is basically based on the Primary data and observation, the

possibility of the personal control be over ruled.

As manually analysis is done, so few error may be there even lot of precautions

have been taken.

Many of respondents were not ready to give exact information because they feel

lack of their secret.

Due to lack of time and financial restrictions the study was not able to achieve

its desired target of accuracy.

 SCOPE OF THE STUDY

The study has been carried out in Jind City selecting a sample of 100 people

(Shopkeepers). The aim of the study was to analyse Peoples perception regarding

different investment instruments e.g. Mutual Fund, Equity Shares etc. An attempt

was made to understand the Investment behaviour with the help of Investors as

well as Firm. This can be done at rural area also.

 Table-1

Purpose of investment
D ATA
PRE S E N
SECURITY
RETURN TATI ON
60%
30%
&
TAX BENEFIT 10%

I N T E R P E TATI O N

ANALYSIS
GRAPH 1 AND
INTERPRETATION TAX
BENEFIT
10%

RETURN SECURITY
30% SECURITY RETURN
60% TAX BENEFIT

Interpretation:

The above table and graph shows that the security is the main purpose of the

different investors.

60% people make investment for the purpose of security,

 30% people like to invest for high return

Only 10% people want tax benefit.

Table-2

Most Preferred option for investment

BANK FDs 48%

PPF/NSC 8%
BONDS 5%
INSURANCE 30%
MUTUAL FUND 4%
SHARES 5%

GRAPH 2

60% 48%
50%
40% 30%
30%
20% 8%
10% 5% 4% 5%
0%
ES
E
C

S
s

ND
FD

C
ND
NS

AR
AN

FU
BO
F/
NK

SH
R
PP

L
SU
BA

UA
IN

UT
M
Interpretation:

The above table and graph is presenting the preferred option of different investors.

This table and graph shows as:

48% people want security to invest in bank

8% people prefer PPF/NSC

5% people prefer Bonds

30% people prefer Insurance

4% people prefer Mutual Fund

5% people like Shares investment

So Bank and insurance is the most preferred option for investment, where their

money is more secured. People want security of their money thats why they go for

invest in bank and insurance mostly

 Table-3

Various Plan under insurance

TERM PLAN 23%

ENDOWMENT PLAN 25%
MONEY BACK PLAN 35%
PENSION PLAN 7%
MEDICLAIM PLAN 10%

GRAPH 3

TERM PLAN
10%
23%
7% ENDOWMENT
PLAN
MONEY BACK
PLAN
PENSION PLAN
35% 25%
MEDICLAIM PLAN
Interpretation:

The above table and graph indicates the various plan under insurance. This table

indicates that most of the people have invested in Term Plan, Endowment Plan and

Money Back Plan.

Near about 85% people have invested their money in these three plans.

In Table-1 we find out that 50% people wants security of their money and

insurance is a very-very preferred option for investments.

 Table-4

Guidance Preference
INVESTMENT CONSULTANT 30%
BANK 45%
AGENTS 25%

GRAPH 4

25%
30% INVESTMENT
CONSULTANT
BANK

AGENTS

45%

Interpretation:
The above table is showing the preferred option for guidance of the different

investors. This is clear from the table and graphs that:

30% people prefer the guidance of the investment consultant.

45% people prefer banks as guider

25% people think agents as their best guider

The reason being that the different persons have their own mind setup.

Table-5
 Investors Perception Regarding the Shares

LACK OF KNOWLEDGE 20%

RISKY 31%
NOT INTERESTED 25%
NO FUND & TIME 16%
LACK OF GUIDANCE 8%

GRAPH 5

8% LACK OF
20%
KNOWLEDGE
16% RISKY

NOT INTERESTED

NO FUND & TIME

25% 31%
LACK OF
GUIDANCE

Interpretation:
The Table-5 is indicating the investors perception regarding the shares.

It is very clear from the table that most of the people are afraid of shares and they

think those risky.

Also when asked about reason many of them answers in not interested.

There are more chances of increase in the investment in shares in the near future as

people are now wanted to go for that.

Table-6
 Perception Regarding Mutual Fund

LACK OF KNOWLEDE 45%

RISKY 10%
LACL OF GUIDANCE 17%
LACK OF INTEREST 13%
NO FUND 15%

GRAPH 6

LACK OF
15% KNOWLEDE
RISKY

13% 45% LACL OF

GUIDANCE
LACK OF
17% INTEREST
10% NO FUND

Interpretation:

The above table shows the peoples perception regarding the mutual fund.

From the above table that most of the people have not so much knowledge

regarding the MF. Around 50% people ask about Mutual Fund.

But MF is not thinking so much risky in comparison to the shares.

Table-7

Whether people invest in Mutual Funds

YES 5%
NO 95%
 GRAPH 7

YES
5%

NO
95%

YES NO

Interpretation:

The above table and graph shows that only 5% people make investment in Mutual

Funds.

Table-8

Perception regarding Mutual Fund based on Income

Group
WHY NOT MUTUAL FUND? INCOME DISTRIBUTION
 LESS THAN 1.5 1.5 TO MORE THAN 3

LAKH 3 LAKH LAKH

LACK OF KNOWLEDGE 38% 60% 33%
RISKY 12% 9% 6.5%
LACK OF GUIDANCE 18% 11% 26%
NOT INTERESTED 12% 9% 26%
LACK OF FUNDS 20% 11% 6.5%

GRAPH 8

70%

60%

50%
LESS THAN 1.5
LAKH
40%
1.5 TO 3 LAKH
30%
MORE THAN 3
LAKH
20%

10%

0%
Y

E
E

S
D
SK
G

NC

ND
TE
D

RI

ES
A

FU
LE

LA E R
W

UI

F
O
O

T
KN

IN

K
F
O

C
T
F

NO
K
O

C
K

LA
C
LA

Interpretation:

Table-8 indicates the perception of the investors relating to different income group
regarding Mutual Fund.
The reason is being lack of guidance and lack of interest.
 The reason is being lack of knowledge for middle income group.
This table also indicates that these people interested in investing in MF.

Table-9

Whether people invest in Shares

YES 5%
NO 95%

GRAPH 9

YES
5%

YES
NO

NO
95%

Interpretation:

The above table and graph shows that only 5% people make investment in Shares.
 Table-10

Perception regarding Shares based on different Income

Group
WHY NOT SHARES? DISTRIBUTION OF INCOME
LESS THAN 1.5 TO 3 LAKH MORE THAN

1.5 3 LAKH
LACK OF KNOWLEDE 26% 14% 13%
RISKY 20% 43% 40%
LACK OF GUIDANCE 4% 9% 20%
LACK OF INTEREST 30% 20% 20%
NO FUND 20% 14% 7%

GRAPH 10

50%
45% LESS THAN 1.5
40%
35%
30% 1.5 TO 3 LAKH
25%
20%
15% MORE THAN 3
10%
5% LAKH
0%
RISKY

INTEREST
GUIDANCE

NO FUND
KNOWLEDE

LACK OF
LACK OF
LACK OF

Interpretation:
The above table and graph shows the perception regarding the shares of the

different investors based on income group. It is clear from the above table that

The investors whose income is less than 1.5 lakh

They have not so much funds with them to invest in shares.

Most of the people think that it is too risky to invest in shares.

The investors whose income is more than 1.5 lakh

Those people have also a perception in the mind that it is risky.

But if we put a sight on the current situation than we find that the stock

market is performing well, so there is more chances of increase in

investment in shares in near future.

Table-11
 Preferred option for investment based on income group

OPTION INCOME

LESS THAN 1.5 1.5 TO 3 LAKH MORE THAN 3 LAKH

LAKH
BANK 66% 37% 13%

PPF/NSC 2% 12% 20%

BONDS 2% 3% 20%

INSURANCE 26% 42% 14%

MUTUAL FUND 2% 3% 13%

SHARES 2% 3% 20%
 GRAPH 11

0.7
0.6 INCOME LESS
0.5 THAN 1.5
0.4 INCOME 1.5 TO
0.3 3 LAKH
0.2 INCOME MORE
0.1 THAN 3 LAKH
0 M UR DS

E
NK

ES
C

SH ND
UA NC
NS

S N

AR
BA

FU
F/

IN O

A
B
PP

L
UT

Interpretation:

The Table indicates the preferred option for investment of the different investors

based on income groups. It is quite clear form the above table that investors, whose

income is more than 3 lakh, they want to invest their money in mutual fund and

shares for high return. On the other hand investors, whose income is less than 1.5

lakh, they are more concerned about the security because they do not have so much

money. Middle income group want both security and return as a result they can take

some risk.
 Table-12

Purpose of the Investor based on

Income Group
PURPOSE INCOME
LESS THAN 1.5 LAC 1.5 TO 3 LAC ABOVE 3 LAC
SECURITY 70% 60% 27%
RETURN 26% 31% 40%
TAX BENEFIT 4% 9% 33%

GRAPH 12

80%
70%
60%
50% SECURITY
40% RETURN
30%
TAX BENEFIT
20%
10%
0%
LESS THAN 1.5 TO 3 ABOVE 3
1.5 LAC LAC LAC
Interpretation:

The Table and graph shows the purpose of investors based on income group.

Investors whose income is above three lakhs,

They are more conscious about tax benefit rather than other groups.

They are also ready to take risk for high return.

Investors whose income is less than 1.5 lakhs,

They are more conservative and want only security of their money.

Investors whose income is between 1.5 to 3 lakhs

They want security as well as high return.

 CONCLUSION

From the above study we can conclude that

Most of the people does not have any knowledge about Mutual Fund

When we talk with them about investment in shares or mutual funds then

they directly say that this is very much risky.

They are afraid of UTI scam.

Some peoples are ready for small investments in Mutual Fund scheme e.g.

SIP

Low income group like to security first due to that purpose they ignore risky

investment.

Most of them preferred that option in which they make investment earlier.
 RECOMMENDATIONS
Till Now, Indian market is in boom stage. So there is lot of scope in that

Industry. So Company has to follow these recommendation & suggestion.

A lot of work is needed to spread awareness among people.

Advertising is the best tool to create awareness among the investors for Mutual

Fund and Shares e.g. presentations, print media, and TV channels.

Their must be full customer satisfaction.

 BIBLIOGRAPHY

V.K.Bhalla, Financial Management, 3rd edition, S.Chand & Company Ltd, Ram

Nager, Delhi.

L M Bhole, Financial Institution and Markets, 3rd edition, Tata McGraw_Hill

publishing Company Ltd., New Delhi.

M Y Khan, Financial Services, Tata McGraw_Hill publishing Company Ltd.,

New Delhi.

Newspaper: Economic Times, New Delhi.

Website :www.amfiindia.com

Website: www.nseindia.com

Website: www.LICindia.com
ANNEXURE
 QUESTIONNAIRE

Personal Details:

Name :

Occupation and Designation :

Contact No. :

Age :

Marital Status :

Spouse status :

Annual household Income :

Less than 1.5 Lacs Between 1.5 to 3 Lacs

Between 3 to 5 Lacs Above 5 Lacs

Children Their age

________________ ________________
Investment Details:

1. What comes in your mind first while making an investment?

Security & Saving High returns Tax benefit

2. What is your preferred option for investment?

1. Bank FD 2. PPF/NSC 3. Govt. Bonds

4. Insurance 5. Mutual Fund 6. Shares

3. Are you adequate insured?

Yes No

If Yes, Please, Specify risk cover amount

If Yes, Please, Specify plan opted

1. Term plan 2. Endowment plan

3. Money back plan 4. Pension plan

 5. Mediclaim plan 6. Child plan

4. Do you invest in Mutual Funds?

Yes No

5. Why you dont invest in Mutual Funds?

1. Lack of knowledge 2. Risky

3. Lack of guidance 4. Lack of interest

5. No funds

6. Do you invest in Shares?

Yes No

7. Why you dont invest in Shares?

1. Lack of knowledge 2. Risky

3. Lack of guidance 4. Lack of interest

5. No funds

8. What do you think who can better guide you for investment making?

Broker/ Agent

Banks

Investment Consultants
List of Tables

Table-1 Purpose of investment

Table-2 Most Preferred option for investment

Table-3 Various Plan under insurance

Table-4 Guidance Preference

Table-5 Investors Perception Regarding the Shares

Table-6 Perception Regarding Mutual Fund

Table-7 Whether people invest in Mutual Fund

Table-8 Perception regarding Mutual Fund based on Income Group

Table-9 Whether people invest in Shares

Table-10 Perception regarding Shares based on different Income Group

Table-11 Preferred option for investment based on income group

Table-12 Purpose of the Investor based on Income Group

List of Graphs

Graph-1 Purpose of investment

Graph-2 Most Preferred option for investment

Graph-3 Various Plan under insurance

Graph-4 Guidance Preference

Graph-5 Investors Perception Regarding the Shares

Graph-6 Perception Regarding Mutual Fund

Graph-7 Whether people invest in Mutual Fund

Graph-8 Perception regarding Mutual Fund based on Income Group

Graph-9 Whether people invest in Shares

Graph-10 Perception regarding Shares based on different Income Group

Graph-11 Preferred option for investment based on income group

Graph-12 Purpose of the Investor based on Income Group