Objectives of the study:



CHAPTER 1

INTRODUCTION

INTRODUCTION

INVESTORS PREFERENCE

Preference (or “taste”) is a concept, used in the social sciences; it assumes a real or imagined “choice” between alternatives and the possibility of rank ordering of these alternatives, based on happiness, satisfaction, gratification, enjoyment, utility they provide. More generally, it can be seen as a source of motivation. In cognitive sciences, individual preferences enable choice of objectives/goals. Also more consumption of a normal good is a generally (but not always) assumed to be preferred to less consumption.

PREFERENCES OF INVESTOR:

How do you pick one portfolio out of all the rest as the perfect one for you? This turns out to be a big challenge, because it requires investors to express their preferences in risk-return space. Investors choose portfolios for a myriad of reasons, very few of which can be reduced to a two-dimensional space. In fact, investors are used to having the ability the CHANGE their investment decision if it is not developing as planned.

INVESTOR PREFERENCE ABOUT EQUITIES:

The well-known tendency of investors to favor cash dividends emerges quite naturally in two new theories of choice behavior the theory of self-control due to Thaler and Shefrin (1981), and the version of prospect theory set out by Kahneman and Tversky (1979). Although our treatment is novel when viewed from the perspective of standard financial theory, it provides explanations for a phenomenon that has long been described as perplexing.

INVESTOR PREFERENCE BASED ON WEALTH MAXIMIZATION:

As wealth increases, preference of one fixed gamble over another typically changes once or not at all. A key question is whether certain assumptions on preferences guarantee such behavior. Bell has addressed this difficult question and characterized the specific functional form of utility functions, which allow a finite number of switches between two arbitrary gambles over the entire range of initial wealth. By extending this analyzes , and linking the discussion to more recent works, the authors characterize conditions under which a large set of utility functions with respect to their switching characteristics, and discuss the results in the context of the classical notion of decreasing absolute risk aversion.

INVESTOR PREFERENCE BASED ON TIME PERIOD:

Estimate a set of ownership models that distinguish between long-and short-term investors and their largest components and which incorporate both aggregated and disaggregated measures of corporate social performance (CSP). The results suggest that long-term institutional investment is positively related to CSP providing further support for earlier studies of Desegregations of CSP into its constituent components suggests that the pattern of institutional investment is also related to the form which CSP takes. Investigation of the impact of investment screens on the selection of stocks suggests that long-term institutional investors select primarily through exclusion, rejecting those firms which have worst CSP.

NEED OF THE STUDY

The study is undertaken to understand Equity market and to find out the new opportunities to attract the investors towards the Equities according to their risk preferences.

➢ Before investing money in financial assets, investors should thoroughly know about the Economy, Industry, and Company.

➢ Along with measuring company’s financial performance investors should also need to analyze the stock’s price movements in secondary markets.

OBJECTIVES OF THE STUDY

➢ To study the impact of investors risk preferences.

➢ To find out the reasons for investing in equities.

➢ To examine the various investment options which are available in the market

➢ Investor’s demographics influence choice of investment.

LIMITATIONS OF THE STUDY

➢ Primary data that will be the sample size of a 50 investors only.

➢ The time period is only for 30 days to do a project and the study will be done based on the data available with in the time period only.

➢ The study is limited to twin cities investors only.

➢ The study is limited to only one stock broking company so we can’t predict hole data for analysis.

➢ This study was only done with the help of investors and other officials.

SCOPE OF THE STUDY

➢ The study is conducted to understand the functioning of Equities in India Equity market.

➢ The choice of location for the study is based on the responses given by the investors of who are operating the stock market in twin cities

➢ This study will helpful in understanding the behavior and risk preferences of investors.

RESEARCH METHODOLOGY

PRIMARY DATA:

The study conducted by Fairwealth. Official only subjective evaluation of indication of indication of investors risk preferences among the various investors. The ground for this study is Hyderabad. Information about the demographics of investors and risk preferences of investment among various investors collected through primary sources using a questionnaire collects the investor’s responses and their investment behaviors.

SECONDARY DATA:

Secondary data taken by through net and books.

Sample size:

50 Investors of Fairwealth. Has been taken time period is 90 days.

Pie charts, Bar charts have been used to show the investor preference.

CHAPTER2

COMPANY PROFILE

COMPANY PROFILE

ARIHANT CAPITAL MARKETS LIMITED

INTRODUCTION

Arihant Capital Markets Limited is a leading financial intermediary established in 1994.

Arihant is managed by a team of experienced and qualified professionals across all the

levels of management. The company is promoted by Mr. Ashok Kumar Jain, a Chartered

Accountant having more than 20 years of experience in capital markets . Arihant has been on a growth path under his able leadership and rich experience. He has been our guide all Throughout our success path. His values of integrity and transparency have been

inculcated in Over the years Arihant has played a successful role in client's wealth creation. In the Process Arihant also refined itself, as an investment advisor and is poised to provide Complete Investment Management Solutions Arihant's values of integrity and transparency in all its transactions are embedded deep into roots helps it to provide excellent services, steady growth and complete satisfaction to all its clients. Arihant strongly believes that success is only the end result of client's growth. Arihant has followed a consistent growth path and is established as one of the leading broking houses of the country with the support and confidence of clients, investors, employees and associates.

SERVICES

Over the period of time Arihant has acquired memberships of National Stock

Exchange (NSE), Bombay Stock Exchange (BSE), National Securities Depositories

Limited (NSDL), Central Depository Services Ltd. (CDSL), National Commodities

Exchange (NCDEX), Multi Commodities Exchange (MCX) and also registered with

SEBI for Portfolio Management Services (PMS).

VISION

“To be a leader in setting standards for quality, investor satisfaction and to

Enhance the wealth of our investors.

PHILOSOPHY

Integrity and transparency in all transactions.

Providing investment solutions based on quality and unbiased research.

Providing personalized services to all investors, institutions, business associates.

Achieving success through client's growth

STRENGTHS

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RESOURCES

PEOPLE...

Arihant has always invested in quality human resources continuously striving to provide

Best services to valued clientele. Arihant's strong pool consists of a team of 200+

Professionals including CAs, CS. MBAs. Engineers. Arihant's professionals are fully

geared towards achieving excellence in the field of equity research, investment advisory,

derivative strategies, efficient execution, customer relationship and back office

Operations.

INFRASTRUCTURE...

In its efforts to continuously provide value added services Arihant has adopted latest

technology and offers excellent execution and post sales support at all branches. Arihant's

Web enabled back office operations enables clients to have online information about their

transactions. Arihant ensures continuous information flow to clients on their mobile

phones through SMS and on their desktops through email and chat. Arihant uses latest

Software for market analysis in order to ensure continuous information flow to clients.

Arihant also provides trading terminals at client's location through CTCL technology

Providing live trading at their own locations.

NETWORK...

Arihant has a strong network of 150+ branches/business associates providing services to

a more than 5,0000+ number of active retail clients across the country. Arihant provides

Complete investment solutions to clients offering a gamut of products and services. All

branches are equipped to provide complete advisory to clients for investments in equities,

derivatives, commodities , mutual funds and bonds.

RESEARCH

FUNDAMENTAL EQUITY RESEARCH

Arihant has a strong team of analysts covering large cap, mid cap & small cap companies

across sectors. Arihant research team is credited with the discovery of a number of multi-

baggers creating immense wealth for investors. Arihant's research reports have clarity,

Accuracy, in-depth coverage and the latest information about companies.

TECHNICAL EQUITY RESEARCH

Arihant provides technical analysis on various securities and markets on website as well

as on e-mail to valued clientele. Arihant also provides "On line market commentary" to

make the intra day trading more profitable and for minimizing the risk of investors.

Arihant's analysts' team keeps minute-to-minute track of the market and broadcasts buy

and sell recommendations on the basis of market momentum. Arihant's research team

sends trading and investment call alerts on daily basis on mobile phones. This facility is

available free of cost to all investors, associates and active traders.

ABOUT MANAGEMENT

Arihant is managed by a team of experienced and qualified professionals across all the

levels of management. The company is promoted by Mr. Ashok Kumar Jain, a Chartered

Accountant. The company currently employs more than 200+ professionals dedicatedly

Working in equity research, risk management, marketing and wealth management.

KEY PERSONNEL

M ASHOKJAIN, CHAIRMAN

Arihant has been on a growth path under his able leadership and rich experience. He is a

Chartered Accountant aged 50 years having more than 20 years of experience in capital

markets. He has been our guide all throughout our success path. His values of integrity

and transparency have been inculcated in all our employees. He always innovates new

ideas, adapt latest technology so as to provide quality and unbiased investment solution to t

the investors

MS ANITA GANDHI , HEAD INSTITUTIONAL BUSINESS

A Chartered Accountant having overall 12 years experience in Financial-Services and 6

Years of experience in the Manufacturing Industry. She is with the organisation since

June, 2002. She is instrumental in setting up Mutual Funds Distribution and Research

wing of the company. She is overall in-charge of the Institutional business of the

Company.

MR ARPIT AGRAWAL, HEAD EQUITY RESEARCH

A Chartered Accountant with an experience of 5 years in Financial Services,

Management Consulting and Financial Audit. He joined Arihant in Nov 2003 and played

an important role in new technology initiatives, business development and equity

research. He is presently handling portfolio management and investment advisory

division of the company.

Mr Rakesh Garg, CTO

His administrative and technical skills help us to continuously improve our operations

and provide excellent services to all our clients. A Company Secretary by profession, he

has been in the forefront of our technology drive ensuring completely web-enabled back-

office providing prompt services to our clients.

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EQUITY BROKING –BSE AND NSE

Arihant provides online trading facility to retail clients, High Net worth Individuals

(HNI's ). through branches, sub-brokers, franchisees and remisers. All its offices are

connected to the exchange through leased line or VSAT technology. Arihant also uses

CTCL technology to provide trading terminals at investors home or office. Arihant has

appointed experienced and NCFM CERTIFIED dealers at all its branches making "share

trading just a phone call away' for valued clientele. Arihant's trading facilities are

supported by equity research input which are available online as well as offline. Arihant

ensures complete client satisfaction by a routine audit of service standards.

DERIVATIVES (FUTURES AND OPTIONS)

Arihant offers online derivative trading facilities. Arihant provides support in terms of

recommending trading strategies for derivatives and monitoring of positions of clients.

Arihant has a derivative research team, which keeps working on new trading strategies on

a continuous basis. Arihant team is able to provide clients with the best possible

derivative products in the constantly expanding market.

FUTURES

A Future is financial contract obligating the buyer to purchase an asset (or the seller to

sell an asset), such as a physical commodity or a financial instrument, at a predetermined

future date and price.

Futures contracts detail the quality and quantity of the underlying asset; they are

standardized to facilitate trading on a futures exchange. Some futures contracts may call

for physical delivery of the asset, while others are settled in cash. The futures markets are

characterized by the ability to use very high leverage relative to stock markets

ABOUT ARIHANTH GROUP

Arihant Capital Markets Limited is a leading financial intermediary established in 1994.

Over the years we have played a successful role as a catalyst in our client’s growth. In the

process we have also refined ourselves as an investment advisor and are poised to

provide complete wealth management solutions to our valued clientele. Our values of

integrity and transparency in all our transactions are embedded deep into our roots and

have helped us to provide excellent services, steady growth and complete satisfaction to

all our clients. Arihant Capital Markets Limited is a SEBI registered portfolio manager.

Arihant Group is also Member of BSE, NSE, NSDL, CDSL, NCDEX and MCX. Arihant

also has a joint venture with Ace Richesse India (P) Limited,

a financial services arm Shapoorji Pallonji group, which is leading industrial house of the country.

ADVISORY SERVICES

• On Investments in Equity

• On both primary and secondary markets

• On both local and offshore

• On mutual funds

• Port folio management services

• On Commodities & Currencies

• On Arbitrage Opportunities

• Financial planning services

MARCHANT BANKING SERVICES

Arihant’s Merchant Banking Division is strongly positioned to offer perfect

financial solutions to your business. We are registered with SEBI as Category I Merchant Banker. At Arihant we believe that meeting our client’s needs requires an in-depth knowledge and understanding

of the financial markets, thorough knowledge of industry dynamics, individual strategic issues and competitive challenges.

Our merchant banking team comprises of leading professionals who deliver high-

quality strategic advice and creative financing solutions to our clients including

capital issues, corporate and financial restructuring, private equity, mergers and

acquisitions. Situations range from determining the appropriate capital s

tructure for a leveraged buy-out, advising a company on a merger, structuring the

initial public offering of a subsidiary or managing a reverse book building.

We have a devoted team and office in Mumbai which is exclusively dedicated to

financial services offerings. This office houses the Merchant banking and allied

financial services such as research, HNI services.

Our large retail base and nation-wide presence supplements the specialized

Merchant Banking activities. Our association with institutional investors and

companies via research route augments business acquisition and execution for

Investment Banking services.

Our approach is characterised by an emphasis on developing strong relationships with

clients through:

Long-term commitment

Understanding the needs and businesses of our clients

Focusing on adding value through the generation of new ideas for business development and in the structuring, negotiation and execution of transactions

Building close working relationships at all levels

DEPOSITORY SERVICES

Arihant is a depository participant with National Sercurities Depositories Limited(NSDL)

and Central Depository Services Limited(CDSL).Arihant offers depository facility at

attractive rates to investors and traders. The depository operations are net enabled and

user friendly. Arihant gives complete support to clients in dematerialization of their

physical shares. Holding statements are regularly sent to clients and are also available on

emails.

UNIQICNESS OF ARIHANTH

At Arihant, you can enjoy a personal relationship with our executives. You will benefit

from an outstanding service, up-to-date technology, comprehensive financial products

and services, complete guidance and support. That is not it. We make constant endeavour

to understand your needs and make every effort to fulfil them. We strongly believe that

our client’s growth is strongly correlated to our growth.

PERSONAL RELATIONSHIP

At Arihant we believe that it is not just the product or service that we are offering, it is a relationship we are building with our clients. Being a client you deserve a personal relationship based on trust, reliability, understanding and respect. This relationship is the underpinning from which we will support you in meeting your financial objective. Our client’s growth is our objective.

UNBIASED AND COMPREHENSIVE RESEARCH

We can help you make more informed decisions through our in-depth, unbiased research. Whether you want help managing your own portfolio or want us to manage it for you, you’ll get investment guidance and portfolio planning that’s right for you. Our research team will offer excellent investment opportunities, will help you identify significant market trends, and will make sure that the information

reaches you at the earliest. We will provide you an integrated approach of fundamental and technical research. Short-term, long-term or intraday trading, whatever your investment objective, we will meet your needs. Our solitary objective is to help you achieve your goals.

NATIONWIDE BRANCH/FRANCHISEE NETWORK

Our offices are scattered all over the country. Get individualized assistance and personal guidance by visiting one of our nationwide branches or franchisee near you. Our executive will guide you about all the products and services we offer to help you meet your investment needs. Whatever you require, we’ll cater to your need.

POTENT TRADING AND SERVICE TOOLS

We have made transacting with markets convenient for you. You can seize potential market opportunities with our online trading tools. Whether you are at office, at home, on a holiday or on the move, with our online services you can - trade, view your trade orders and bill summary, subscribe for IPO, view your DP holdings from wherever you want[1][1]. Our internet trading portal gives you continuous flow of market information and investment opportunities. We have sophisticated, state-of- the-art order routing technology which allows speedy and accurate execution of your orders. We offer full Backoffice support through internet. All this is for you to make informed decisions on time and with convenience

EXCELLENT SERVICE AND COMPLETE SUPPORT

We’re here for you. On the phone, through email, or one-on-one through personal service. No matter what level of support you need, our executives are always ready to assist you. We have always been known to provide quality and genuine information. To make our dealings convenient for you, we offer doorstep service[i][2] to our valued clients – whether it is regarding collection of payments.

BOARD OF DIRECTORS

Size and Composition of the Board:

The current policy of your Company is to have an optimum combination of executive and

Non executive directors, with not less than 50 per cent consisting of no executivedirectors

to maintain the independence of the Board, and to separate the Board functions of

governance and management. Besides, with an Executive Director as the head of the

Board, half of the Board members are independent directors. This is aptly in conformity

with the provisions of the amendedclause 49. The Board, at present consists of 6members

and the Board believes that the current sizeis appropriate, based on the Company’s

present circumstances The composition of the Board and the number of outside directorships held by each of the Directors is given in the table below:

| |

|Mr. Ashok Kumar Jain Executive 3 |

|Mr. Sunil Kumar Jain Non-Executive 3 |

|Mr. Ashish Maheshwari Non-Executive |

|1Mr. Akhilesh Rathi Independent 1 |

|Mr. Pramod Devpura Independent NIL |

|Mr. Rakesh Jain Independent NIL |

|. |

CHAPTER3

INDUSTRY PROFILE

INDUSTRY PROFILE

ORGANIZATION ON INDIAN STOCK EXCHANGES

      The recognized stock exchanges in India vary from voluntary non-profit making organizations(Bombay, Ahmedabad,Indore) to Joint stock Companies Limited by shares (Calcutta, Delhi, Bangalore) and companies limited by guarantee (Madras & Hyderabad).

      There is a broad uniformity in the organization of stock exchanges, since  the Article of Association defining the constitution of the recognized stock exchanges is approved by the central government. BSE was the first Stock Exchange to get permanent recognisation followed by Calcutta, Delhi, Madras, Ahmedabad, Hyderabad, Indore and Bangalore. The other exchanges were official recognisation will renew for another term.

      As per the present guidelines, the proposed region in which the stock exchange is to be set up must be industrially developed with a sizeable number of industrial units and should be able to attract at least at 50 comparies independently

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FACTORS AFFECTING THE PRICES IN THE STOCK MARKET. 

 Important Factors Affecting to the Prices in the Stock Market are 

1. Monetary Policy

2. Inflation

3. FII (Foreign institutional investors)

4. Political Influence

5. Company Announcements

6. SEBI Regulation

7. Annual Budget

 1.MONETARY POLICY is the process by which the government, central bank, or monetary authority manages the supply of money, or trading in foreign exchange markets.[1] Monetary theory provides insight into how to craft optimal monetary policy.

Monetary policy is generally referred to as either being an expansionary policy, or a contractionary policy, where an expansionary policy increases the total supply of money in the economy, and a contractionary policy decreases the total money supply. Expansionary policy is traditionally used to combat unemployment in a recession by lowering interest rates, while contractionary policy has the goal of raising interest rates to combat inflation (or cool an otherwise overheated economy). Monetary policy should be contrasted with fiscal policy, which refers to government borrowing, spending and taxation

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Monetary policy rests on the relationship between the rates of interest in an economy, that is the price at which money can be borrowed, and the total supply of money. Monetary policy uses a variety of tools to control one or both of these, to influence outcomes like economic growth, inflation, exchange rates with other currencies and unemployment. Where currency is under a monopoly of issuance, or where there is a regulated system of issuing currency through banks which are tied to a central bank, the monetary authority has the ability to alter the money supply and thus influence the interest rate (in order to achieve policy goals). The beginning of monetary policy as such comes from the late 19th century, where it was used to maintain the gold standard.

There are several monetary policy tools available to achieve these ends. Increasing interest rates by fiat, reducing the monetary base, and increasing reserve requirements all have the effect of contracting the money supply, and, if reversed, expand the money supply. Since the 1970s, monetary policy has generally been formed separately from fiscal policy. And

even prior to the 1970s, the Bretton Woods system still ensured that most nations would form the two policies separately.

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15 [EDIT] HISTORY OF MONETARY POLICY

Monetary policy is associated with interest rate and credit. For many centuries there were only two forms of monetary policy: (i) Decisions about coinage; (ii) Decisions to print paper money to create credit. Interest rates, while now thought of as part of monetary authority, were not generally coordinated with the other forms of monetary policy.

The advancement of monetary policy as a pseudo scientific discipline has been quite rapid in the last 150 years, and it has increased especially rapidly in the last 50 years. Monetary policy has grown from simply increasing the monetary supply enough to keep up with both population growth and economic activity. It must now take into account such diverse factors as:

• Short term interest rates;

• Long term interest rates;

• Velocity of money through the economy;

• Exchange Rates;

• Bonds and equities (corporate ownership and debt);

• Government versus private sector spending/savings;

• International capital flows of money on large scales;

• Financial derivatives such as options, swaps, futures contracts, etc.

2. INFLATION 

Inflation is a rise in the general level of prices of goods and services in a given economy over a period of time. It may also refer to the rise in the prices of some more specific set of goods or services. In either case, it is measured as the percentage rate of change of a price index.

[1] Mainstream economists overwhelmingly agree that high rates of inflation are caused by high rates of growth of the money supply.[2] Views on the factors that determine moderate rates of inflation, especially in the short run, are more varied: changes in inflation are sometimes attributed mostly to changes in real demand for goods and services or fluctuations in available supplies (i.e. changes in scarcity), and sometimes to changes in the supply or demand for money. In the mid-twentieth century, two camps disagreed strongly on the main causes of inflation (at moderate rates): the "monetarists" argued that money supply dominated all other factors in determining inflation, while "Keynesians" argued that real demand was often more important than changes in the money supply. 

A variety of inflation measures are in use, because there are many different price indices, designed to measure different sets of prices that affect different people. Two widely known indices for which inflation rates are commonly reported are the Consumer Price Index (CPI), which measures nominal consumer prices, and the GDP deflator, which measures the nominal prices of goods and services produced by a given country or region 

A movie ticket was for a few paise in my dad’s time. Now it is worth Rs.50. My dads first salary for the month was Rs.400 and over he years it has now become Rs.75,000. This is what inflation is, the price of everything goes up. Because the price goes up, the salaries go up. 

Inflation today is caused more by global rather than by domestic factors. Naturally, as the Indian economy undergoes structural changes, the causes of domestic inflation too have undergone tectonic changes. 

Needless to emphasise, causes of today's inflation are complicated. However, it is indeed intriguing that the policy response even to this day unfortunately has been fixated on the traditional anti-inflation instruments of the pre-liberalisation era. 

Global imbalance the cause for global liquidity 

The reason for this imbalance in the global economy is the fact that after the Asian currency crisis; many countries found the virtues of a weak currency and engaged in 'competitive devaluation.' 

Under this scenario, many countries simply leveraged their weak currency vis-�-vis the US dollar to gain to the global (read US) markets. This mercantilist policy to maintain their competitiveness is achieved when their central banks intervenes in the currency markets leading to accumulation of foreign exchange, notably the US dollar, against their own currency. 

Naturally, as the players fear a fall in the value of the dollar and reach out to various assets and commodities, the prices of these commodities and assets too will rise. The psychological dimension But as the imbalance shows no sign of correcting, players seek to shift to commodities and assets across continents to hedge against the impending fall in the US dollar. Thus, it is a fight between central banks and the psychology of market players across continents. 

As a corrective measure, economists are coming to the conclusion that most of the currencies across the globe are highly undervalued vis-�-vis the dollar, which, in turn, requires a significant dose of devaluation. For instance, a consensus exists amongst economists and currency traders that the Yen is one of the most highly undervalued currencies (estimated at around 60%) along with the Chinese Yuan (estimated at 50%) followed by other countries in Asia. 

This artificial undervaluation of currencies is another fundamental cause for increasing global liquidity. 

In 2005, international crude oil prices gained another 35 per cent and global demand for oil grew by only 1.6 per cent. Nonetheless, the world's supply of dollars increased by a further $460 billion. Naturally, with all currencies refusing to be revalued, this leads to increased global liquidity. While one is not sure as to whether the increase in the prices of crude led to the increase of other commodities or vice versa, the fact of the matter is that, in the aggregate, increased liquidity has led to the increase in commodity prices as a whole. 

 This Reserve Bank of India's strategy of dealing with excessive liquidity through the Market Stabilization Scheme (MSS) has its own limitations. Similarly, the increase in repo rates (ostensibly to make credit overextension costly) and increase in CRR rates (to restrict excessive money supply) are policy interventions with serious limitations in the Indian context with such huge forex inflows.  

A consumer price index (CPI) is an index number measuring the average price of consumer goods and services purchased by households. It is one of several price indices calculated by national statistical agencies. The percent change in the CPI is a measure of inflation. The CPI can be used to index (i.e., adjust for the effects of inflation) wages, salaries, pensions, or regulated or contracted prices. The CPI is, along with the population census and the National Income and Product Accounts, one of the most closely watched national economic statistics.

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CHAPTER3

INTRODUCTION

LITERATURE REVIEW

INTRODUCTION

Two basic types of data are required to construct the CPI: price data and weighting data. The price data are collected for a sample of goods and services from a sample of sales outlets in a sample of locations for a sample of times. The weighting data are estimates of the shares of the different types of expenditure as fractions of the total expenditure covered by the index. These weights are usually based upon expenditure data obtained for sampled periods from a sample of households. Although some of the sampling is done using a sampling frame and probabilistic sampling methods, much is done in a commonsense way (purposive sampling) that does not permit estimation of confidence

ntervals. Therefore, the sampling variance is normally ignored, since a single estimate is required in most of the purposes for which the index is used. Stocks greatly affect this cause.

The coverage of the index may be limited. Consumers' expenditure abroad is usually excluded; visitors' expenditure within the country may be excluded in principle if not in practice; the rural population may or may not be included; certain groups such as the very rich or the very poor may be excluded. Black market expenditure and expenditure on illegal drugs and prostitution are often excluded for practical reasons, although the professional ethics of the statistician require objective description free of moral judgments. Saving and investment are always excluded, though the prices paid for financial services provided by financial intermediaries may be included along with insurance.

The index reference period, usually called the base year, often differs both from the weight-reference period and the price reference period. This is just a matter of rescaling the whole time-series to make the value for the index reference-period equal to 100. Annually revised weights are a desirable but expensive feature of an index, for the older the weights the greater is the divergence between the current expenditure pattern and that of the weight reference-period.

LITERATURE REVIEW

Massimo Guidolin and Giovanna Nicodano in their research on ‘small caps in international equity portfolios: The effect of variance risk’, they show that predictable covariance’s between means and variances of stock returns may have a first order effect on portfolio composition. In an international asset menu which includes small capitalization equity indices, they find that a three-state, heteroskedastic regime switching VAR model is required to provide a good fit to weekly return data and to accurately predict the dynamics in the joint density of returns. As a result of the non-linear dynamic features revealed by the data, small cap portfolios become riskier in bear markets, i.e., display negative co-skew ness with other stock indices. Because of this property, a power utility investor ought to hold a well-diversified portfolio, despite the high risk premium and Sharpe ratios offered by small capitalization stocks. On the contray, small caps command large optimal weights when the investor ignores variance risk, by incorrectly assuming joint normality of retuns.

Jamil Baz, Eric Briys and Bart.Bronneenberg in their research on ‘Risk Perception in the short Run and Long Run’ they find that there is an ongoing controversy in financial economics regarding the role of the time horizon in portfolio selection. This problem is relevant in a broader context, whatever consumers or managers make decisions that involve both time and risk. The purpose of this paper is to review recent findings from the decision making literature so as to shed new light on how the short run vs. long run contingency may determine risk taking perception.

Brue Niendorf 1 and Thomas Ottaway 2-June 2006 Individual risk preferences .By enamining the wealth characteristics of agents of different risk preferences ,we study the financial incentive of investors to demonstrate different risk preferences. To accomplish this ,we model the stock market utilizing artificial adaptive agents .If investors have incentive to very their risk preferences ,or if investors of a constant risk preferences vary the way they participate in the market conditions ,this could lead to time variation in market risk premiums .Use find that agents have significant incentive to demonstrate different risk preferences under different market conditions .

INTRODUCTION OF CONCEPTS OF EQUITY

EQUITY:

A fund brought into a business by its shareholders is called equity. It is a measure of a stake of a person or group of persons starting a business.

INVESTING IN EQUITY MEANS:

When you buy a company’s equity, you are in effect financing it, and being compensated with a stake in the business. You become part-owner of the company, entitled to dividends and other benefits that the company may announce, but without any guarantee of a return on your investments

FUNDAMENTAL ANALYSIS:

The analysis of factual information like financial figures, balance sheet, and other information publicly available is known as fundamental analysis. This information is used to derive a fair price of the share of the company. The faithful fundamentalists believe that the market incorporates all facts relating to the financial performance of the company. But systematic analysis use tools such as ratio analyses (P/E, MV/BV) and discounted cash flow analysis in order to arrive at the fair value of a company and hence its share.

BASICS OF EQUITY MARKET:

STOCK EXCHANGE:

A common platform where buyers and sellers come together to transact in stocks and shares. It may be a physical entity where brokers trade on a physical trading via “open outcry” system or a virtual environment.

ELECTRONIC TRADING:

Electronic trading eliminates the need for physical trading floors. Brokers can trade from their offices, using fully automated screen-based processes. Their workstations are connected to a Stock exchange’s central computer via satellite using Very Small Aperture Terminus (VSATs). The orders placed by brokers reach the Exchange’s central computer and are matched electronically.

EXCHANGES IN INDIA:

The Stock Exchange, Mumbai (BSE) and National stock Exchange (NSE) are the country’s two leading Exchanges. There are 20 other regional Exchanges, connected via the Inter-Connected stock Exchange (ICSE). The BSE and NSE allow nationwide trading via VSAT systems.

INDEX:

An index is a comprehensive measure of market trends, intended for investors who are concerned with general stock market price movements. An index comprises stocks that have large liquidity and market capitalization. Each stock is given weightage in index equivalent to its market capitalization. At the NSE, capitalization of NIFTY (fifty stocks) is taken as a base capitalization, with the value set at 1000. Similarly, BSE se3nsitive Index/Sensex comprises 30 selected stocks. The Index value compares the day’s market capitalization vis-à-vis base capitalization & indicates how prices in general have moved over period of tim

EXECUTING AN ORDER:

Select broker of your choice and enter into broker-client agreement and fill in the client registration form. Place your order with your broker preferably in writing. Get a trade confirmation slip on the day the trade is executed and ask for the contract note at the end of the trade date.

NEED OF A BROKER:

As per SEBI (Securities and Exchange Board of India) Regulations, only registered members can operate in the stock market. One can trade byexecuting deal only other through registered broker of a recognized Stock Exchange or thorough SEBI-registered sub-broker.

CONTRACT NOTE:

A contract note describes the rate, date, time at which the trade was transacted and the brokerage rate. Contract note issued in the prescribed format establishes legally enforceable relationship between the client and the member in respect of trades stated in the contract note. Those are made in duplicate and the member and the client both keep copy each. Client should receive the contract note within 24 hours of the executed trade. Corporate Benefits/Action

BOOK-CLOSURE/RECORD DATE:

Book closure and record date help a company determine exactly the shareholders of a

company as on a given date. Book closure refers to the closing of register of the names or investors in the records of company. Companies announce book closure dates from time to time. The benefits of dividends, bonus issues, rights issue accruing to investors whose name appears on the company’s records as on a given date, is known as the record date. An investor might purchase a share-cum-dividend, cum rights or cum bonus and may therefore expect to receive these benefits as the next shareholder. In order to receive this, the share has to be transferred in the investor’s name, or he would stand deprived of the benefits. The buyer of such a shares purchased at cum benefits prices are transferred before book-closure. It must be ensured that price paid for the shares is ex-benefit and cum benefit.

DIFFERENCE BETWEEN BOOK CLOSURE AND RECORD DATE:

In case of a record date, the company does not close its register of security holders. Record date is the cut off date for determining the number of registered members who are eligible for the corporate benefits. In case of book closure, shares cannot be sold on an Exchange bearing a date on the transfer deed earlier than the book closure. This does not hold good for the record date.

NO-DELIVERY PERIOD :

Whenever a company announces a book closure or record date, The Exchange sets up a no-delivery (ND) period for that security. During this period only trading is permitted in the security. However, these trades are settled only after the no-delivery period is over. This is done to ensure that investor’s entitlement for the corporate benefits is clearly determined.

EX-DIVIDEND DATE:

The date on or after which a security begins trading without the dividend (cash or stock) included in the contract price.

EX-DATE:

The first day of the no-delivery period is the ex-date. If there are any corporate benefits such as rights, the buyer of the shares on or after the ex-date will not be eligible for the benefits.

BONUS ISSUE:

While investing in shares motives is not only capital gains but also proportionate share of surplus generated from the operations once all other stakeholders have been paid. But the distribution of this surplus to shareholders seldom happens. Instead, this is transferred to the reserves and surplus account. If the reserves and surplus amount to the share capital account by mere book entry. This is done by increasing number of shares outstanding and every shareholder is given bonus shares in a ratio called the bonus ratio and such an issue is called bonus issue. If the bonus ratio 1:2, it means that for every two shares held, the shareholder is entitled to one extra share. So if a shareholder holds two shares, post bonus he will hold three.

SPLIT :

Split is book entry where in the face value of the share is altered to create greater number of shares outstanding without calling for fresh capital/altering the share capital account. For example, if a company announces a two-way split, it means that share of the face value of Rs. 10 is split into two shares of face value of Rs. 5 each and a person holding one share now holds two shares.

BUY BACK:

As the name suggests, it is a process by which company can buy back its shares from shareholders. Company may buy back shares in various ways: from existing shareholders on a proportionate basis; through a tender offer from open market; through book-building process; from the Stock Exchange; or from odd lot holders. Company cannot buy back through negotiated deals on/off the Stock Exchange, through spot transactions or through any private arrangement.

\SETTLEMENT CYCLE:

The accounting period for the securities traded on the Exchange. On the NSE, the cycle begins on Wednesday and ends on the Tuesday, and on the BSE the cycle commences on Monday and ends on Friday. At the end of this period, the obligations of each broker are calculated and the brokers settle their respective obligations as per the rules, bye-laws and regulations of the clearing corporation. If transaction is entered on the first day of the settlement, the same will be settled on the eighth working day excluding the day of transaction. However, if the same is done on the last day excluding the day of transaction. However, if the same is done on the last day of the settlement, it will be settled on the fourth working day excluding the day of transact

ROLLING SETTLEMENT:

The rolling settlements ensure that each day’s trade is settled by keeping a fixed gap of a specified number of working days between a trade and its settlement. At present, this gap is five working days after the trading day. The waiting period is uniform for all trades.Deliver the same shares and payment to broker

As a seller, in order to ensure smooth settlement you should deliver those shares to your broker immediately after getting the contract note for sale but in any case before the pay-in day. Similarly, as a buyer, one should pay immediately on the receipt of the contract note for purchase but in any case before the pay-in day.

SHORT SELLING:

Short selling is a legitimate trading strategy. It is sale of a security that the seller does not own, or any sale that is completed by the delivery of security borrowed by the seller. Sellers take the risk that the price at which they ‘sold short’.

AUCTION :

An auction is conducted for those securities that members fail to deliver/short deliver during pay-in. Three factors primarily give rise to an auction: short deliveries, un-rectified bad deliveries, and un-rectified company objections.

MARKET FOR AUCTIONS:

The buy/sell auction for a market security is managed through the auction market. As opposed to the normal market where trade matching is an on-going process, trade matching process for auction starts after auction period is over.

IF THE SHARES ARE NOT BOUGHT IN THE AUCTION:

If the shares are not bought at the auction i.e. if the shares are not offered for sale, sale Exchange squares up the transaction as per SEBI guidelines. The transaction is squared up at the highest price from the relevant trading period till the auction day or at 20% above the last available closing price whichever is higher. Pay-in and pay-out of funds for auction square up is held along with the pay-out for the relevant auction.

BAD DELIVERY:

SEBI has formulated uniform guidelines for good and bad delivery of documents. Bad delivery may pertain to transfer deed being torn, mutilated, overwritten, defaced, or if there are spelling mistakes in the name of company on the transfer. Bad delivery exists only when shares are transferred physically. In “De mat” bad delivery does not exist.

COMPANY OBJECTIONS :

the transfer of the shares. The broker must immediately be notified. Company objection cases should be reported within 12 months from the date the date of issue of the memo for the original quantity of List document reasons by company for not transferring share in the name of investors are called company objections. Rejection occurs due to a signature difference, or fake shares, or forgery, or if there is a court injunction preventing share under objection.

REPLACEMENT OF SHARES IN CASE OF COMPANY OBJECTIONS:

The member who has sold the shares first on the Exchange is responsible for replacing the shares within 21 days of the Exchange being informed. Company objection cases that are not rectified or replaced are normally auctioned.

TRANSFER OF PHYSICAL SHARES:

After a sale, the share certificate along with a proper transfer deed duly stamped and complete in all respects is sent to the company for transfer in the name of the buyer. Once the transfer is registered in the share transfer register maintained by the company, the process of transfer is complete.

1. What is your age?

TABLE 1 It shows the age group of respondents and percentage of each group.

|Type of respondents(in years) |No. of respondents |Percentage (%) |

|Below 25 |7 |14 |

|25-35 |27 |54 |

|35-50 |11 |22 |

|50 and above |5 |10 |

DATA INTERPRETATION: The above table shows that 27 respondents that means the maximum no. of investor’s ages are in between 25 to 35 and 11 respondents of investor’s age is in between 35 to 50, 7 respondents age is below 25 and 5 respondents age is 50 and above.

CHART 1 It shows the age categories of respondents and percentage of each category.

[pic]

DATA INTERPRETATION: The chart shows that 54 % of respondents that means the maximum number of investor’s ages are in between 25 to 35, 22% of investor’s ages in between 35 to 50, 14% of respondents age is below 25 and 10% of respondent’s age is in between 25-35.

2. What is your occupation?

TABLE2

This table shows the occupation of respondents and percentages of different types of respondents.

|Occupation of respondents |No. of respondents |Percentage (%) |

|Business |23 |46 |

| Salaried |27 |54 |

|Honorioum basis |0 |0 |

| Others |0 |0 |

DATA INTERPRETATION: The above table shows that 27 respondents occupation is salaried based employees and rest of them are doing business no one is there in remaining two types of respondents. CHART2 This table shows the type of occupation of respondents and percentages of different types of respondents. [pic]

DATA INTERPRETATION: The chart that 54% of respondents occupation is salaried based employees and rest of them are doing business no one is there in remaining two types of respondents.

3. What are your educational qualifications?

TABLE3

The table shows the educational qualifications of respondents and its percentages of different types of respondents.

|Type of respondents |No. of respondents |Percentage |

|Inter and below |2 |4 |

|Degree |16 |32 |

|P.G |32 |64 |

|PhD |0 |0 |

DATA INTERPRETAION: The above table shows that 32 investors are post Graduates, 16 investors of them and 2 investors qualification is inter and below.

CHART3

The table shows the types of educational qualifications of respondents and percentages of different types of respondents.

DATA INTERPRETATION: The Chart shows that 64% of investors are post graduates, 32% of them are graduates, 4% of them qualifications are inter and below.

4. What is your monthly income?

TABLE4:This table shows monthly income of respondents and their percentages of different types of respondents.

|Monthly Income |No. of respondents |Percentage |

|20000and below |13 |26 |

|20000 to 30000 |20 |40 |

|30000-40000 |14 |28 |

|40000and above |3 |6 |

DATA INTERPRETATION: The above tables shows that 20 of the respondents monthly income is between 20,000 to 30,000, 14 of them income is between 30,000 to 40,000, 13 of investors monthly income is 20,000 and below and rest of them income is 40,000.

CHART4: This chart shows monthly income of respondents and percentages of different types of respondents.

[pic]

DATA INTERPRETATION: The above chart shows that 40% of the respondent’s monthly income is between 20000 to 30000, 28% of them income is between 30000 to 40000, 26% of investors monthly income is 20000 and below and rest of them income is above 40000.

5. Number of dependents?

TABLE5

The below table shows that number of respondents and different types of investment avenues.

|Type of Investment |No. of respondents |Percentage |

|3 and below |11 |22 |

|4 |12 |24 |

|5 and above |14 |28 |

|No dependents |13 |26 |

DATA INTERPRETATION: The above table shows 14 of respondents having five and above dependents, 13 of them having no dependents, 12

of them having four dependents and rest of them having three and below dependents.

CHART5

This chart shows no.of dependents of respondents and percentages of different types of respondents.

DATA INTERPRETATION: The above chart shows 28% of respondents having five and above dependents, 26% of them having no dependendents, 24% of them having four dependents and rest of them having three and below dependents.

6. In which investment avenue have you invested?

TABLE6

The table shows that no. of respondents and different types of investment avenues.

|Type of respondents |No. of respondents |Percentage |

|Equity |22 |44 |

|Debt instruments |06 |12 |

|Insurances |12 |24 |

|Others |10 |20 |

DATA INTERPRETATION: The above table shows denoting that investors are giving priority to investment in equity funds 22 followed by insurance, 12 and debt instruments them are preferring insurance

.

CHART 6

This chart shows no. of dependents of respondents and percentages of different types of respondents.

DATA INTERPRETATION : The above chart denoting that investors giving most preference to equity i.e. 44%, 12% of them debt instruments apart from these 24% of them are preferring insurance, 78% of them prefer others.

7. Which type of stock have you invested in?

TABLE7

This table shows preferred stock of respondents and percentages of different types of respondents.

|Preferred stock of respondents |No. of respondents |Percentage |

|Speculative stocks |08 |16 |

|Blue chip stocks |14 |28 |

|Growth stocks |12 |24 |

|Income stocks |10 |20 |

DATA INTERPRETATION: The above table shows that reveals that 08 respondents re preferring speculative stocks, 14 of the investors preferring blue chip stocks, 12 of them preferring growth stock and rest them preferring income stocks.

CHART 7

This chart shows preferred stock of respondents and percentages of different types of respondents.

[pic]

DATA INTERPRETATION: The above chart reveals that 16% of them preferring speculative stocks,28% of the investors preferring blue chip stocks , 24% of them preferring growth stocks and 20% of them preferring income stocks.

8. Which statement best describes you approach as an investor?

a) I am cautious about taking risks and I want to avoid losses.

b) I am somewhat caution about taking risks, and I can handle relatively small losses.

c) I can take some risk that is generally associated with greater account growth potential but I wish to minimize short term losses in my account.

d) I am open to taking risk for growth potential. I am less concerned about short term losses or gains; I am more invested in long term growth.

TABLE 8

This table shows preferred rate of risk of respondents and percentages of different types of respondents.

|Type of preferred rate |No .of respondents |Percentage |

|of risk | | |

|A |7 |14 |

|B |13 |26 |

|C |20 |40 |

|D |9 |18 |

|e |2 |4 |

DATA INTERPRETATION: The above table revealing that 16%of the investors are taking moderate risk and they are also not ready to face short term losses and rest of them are expecting either short term or long term returns.

CHART 8This chart shows preferred rate of risk of respondents and percentages of different types of respondents.[pic]

DATA INTERPRETATION: The above table revealing that 16%of the investors are taking moderate risk and they are also not ready to face short term losses and rest of them are expecting either short term or long term returns.

9. When is your next big spending due/ expected?

TABLE9

This table shows next big spending expected due of respondents and percentages of different types of respondents.

|Type of respondents |No. of respondents |Percentage |

|Less than 1 year |23 |46 |

|1-3 years |16 |32 |

|3-5 years |5 |10 |

|More than 5 years |6 |12 |

DATA INTERPRETAION: The above table shows 23 of the respondents are expecting their next big spending due/expected will be less than one year, 16 of them expecting it will be between 1-3 years , 05 of them expecting between 2-3 years and 06 of them are expecting more than 5 years expenditure.

CHART 9:

This charts shows next big spending due/ expected of respondents and percentages of different types of respondents.

[pic]

DATA INTERPRETATION : The 46% of the respondents are expecting their next big spending due/expected will be less than one year, 32% of them expecting it will be between 1-3 years , 10% of them expecting between 3-5 years and 12% of them are expecting more than 5 years expenditure.

10. Do you have an emergency fund set aside to meet any unexpected requirement?

TABLE10 This table shows an emergency fund set of respondents and percentages of different types of respondents.

|Type of respondents |No. of dependents |Percentage |

|No |6 |8 |

|1 month’s expenses |10 |20 |

|2-3 month’s expenses |16 |32 |

|More than 6 months |18 |36 |

DATA INTERPRETATION: The above table shows that 18 of the respondents are having emergency fund to meet above six months expenses, 16 of them having emergency fund to meet 2-3 moths 10 expenses of them having one month expenses and remaining of them are not having any emergency fund.

CHART 10

This chart shows an emergency fund set of respondents and percentages of different types of respondents.

[pic]

DATA INTERPRETATION: The above chart showing that 36% of the respondents are having emergency fund to meet above 6 months expenses, 32% of them having emergency fund to meet 3-5 years, 20% of them having 1 month’s expenses and remaining of them are not having any emergency fund.

11. If you receive an unexpected bonus equaling to 3 months salary, will you______________?

TABLE11 This table shows choice of investment of respondents and percentages of different types of respondents.

|Type of respondents |No. of respondents |Percentage |

|Bank deposit |20 |40 |

|Instruments |11 |22 |

|Shares |10 |20 |

|Personal use |9 |18 |

DATA INTERPRETATION : The above table denoting that 20 of respondents prefer a bank deposit at 5% of guaranteed returns, 11 of them are preferring instruments and 10 of them are interested to invest in shares.

CHART 11

This chart shows choice of investment of respondents and percentages of different types of respondents.

DATA INTERPRETATION: The chart denoting that 40% of respondents prefer a bank deposit at 5% of guaranteed return, 22% of them are preferring instruments and 20% of them are interested to invest in shares.

12. How often do you monitor your investments?

TABLE12

This table shows how often respondents monitor their investments.

|Type of respondents |No. of respondents |Percentage |

|Daily or weekly |14 |28 |

|Monthly |16 |32 |

|Yearly |6 |12 |

|Occasionally |14 |28 |

DATA INTERPRETATION: The above table shows that 16 of them monitor their investment monthly, 14 of the respondents monitor their investments occasionally and 14 of them monitor daily or weekly and 6 of them monitor their investments yearly.

CHART 12

This table shows how often respondents monitor their investments and their percentages.

[pic]

DATA INTERPRETATION: The 32% of them monitor their investment

smonthly, 28% of the respondents monitor their investments occasionally and 28% of them monitor daily or weekly and 12% of them monitor their investments yearly.

13. When you made an investment decision, you____?

TABLE13

This table shows how the respondents made investment decision and percentages of different types of respondents.

|Type of respondents |No. of respondents |Percentage |

|Decide on gut feel |4 |8 |

|Advice from well wishers |9 |18 |

|Rely on investment advisor |29 |58 |

|Analyzes all options thoroughly. |8 |16 |

DATA INTERPRETATION : The above table shows that 08 of the respondents are taking decision by analyzing all the option thoroughly, 29 of them are taking the advises from the investment adviser, 9 of them taking advise from well wishers and 4 of them are taking decision on gut feel.

CHART 13 This chart shows how the respondents made investment decision and percentages of different types of respondents.

[pic]

DATA INTERPRETATION: The above chart showing that 60% of the respondents are taking decision by analyzing all the options thoroughly, 58% of them are taking the advices from the investment advisor, 18% of them taking advice from well wishers and 8% of them are taking decision on gut feel.

14. Investments with higher short term volatility are more likely to have a greater chance are more likely to have a greater chance of meeting long term goals. Conversely, investments likely to provide stable returns and minimum short term losses are likely to meet long term investment goals with this mind, which of the following is most consistent with your investments attitude?

TABLE14

This table shows type of goals of respondents and percentages of different types of respondents.

|Type of respondents |No. of respondents |Percentage |

|Short term goals |9 |18 |

|Both |23 |46 |

|Long term goals |12 |24 |

|No one |6 |12 |

DATA INTERPRETATION: The above table shows that 9 of respondent are equally concerned about avoiding short term losses as well as meeting long term goals and rest of them are expecting long term profits by either avoiding short term losses or bearing losses.

CHART 14

This chart shows type of goals of respondents and percentages of different types of respondents[pic]

DATA INTERPRETATION: The 18% of respondents are equally concerned about avoiding short term losses as well as meeting long term goals and rest of them are expecting long term profits by either avoiding short term losses or bearing losses.

15. The chart below shows possible growth of Rs 100 over a five year period for a series of different investment strategies which of the five scenario’s are you most comfortable with as investor?

TABLE15

This table shows risk preferences of respondents and percentages of different types of respondents.

|Type of respondents |No. of respondents |Percentage |

|130 to 160 |11 |22 |

|110 to 176 |18 |36 |

|90 to 200 |14 |28 |

|77 to 250 |7 |14 |

DATA INTERPRETATION: The above table shows that 18 of the respondents are comfortable with 110 to 176, 14 of them are comfortable with 90 to 200, 11 of them are comfortable with 130 to 160 and rest of them comfortable with 77 to 250.

CHART 15:This chart shows risk preferences of respondents and percentages of different types of respondents. [pic]

DATA INTERPRETATION: The 36% of the respondents are comfortable with 110 to 176, 28% of them are comfortable with90 to 200, 22% of them are comfortable with 130 to 160 and rest of them are comfortable with 77 to 25016. What percentage your portfolio is allocated to equity currently?

TABLE16

This table shows what percentage of respondent’s portfolio is allocated to equity and percentages of different types of respondents.

| Type of respondents |No. of respondents |Percentage |

|No investment in equity |2 |4 |

|Up to 10% |20 |40 |

|Between 10-30% |18 |36 |

|Between 30-60% |10 |20 |

CHART 16:

This chart shows what percentage of respondent’s portfolio is allocated to equity and percentages of different types of respondents.

[pic]

DATA INTERPRETATION : The above table denoting that 20 of the respondents allocated up to 18 of them are alloca

DATA INTERPRETATION: The chart denoting that 40% of the respondents are allocated up to 10% of their portfolio to equity, 36% of them are allocated up to 10 to 30% of their portfolio , 20% of them are allocated to equity between 30 to 60% of their portfolio and rest of them not invested in equity.

Chapter 5

FINDINGS

SUGGESTIONS

CONCLUSION

BIBLIOGRAPHY

ANNEXURE

FINDINGS

➢ The study shows that most of the investor’s lies in moderate risk preferers.

➢ The study shows that investor’s demographics lies in moderate category.

➢ The highest number of investors who operate stock market preferred to invest in Equities because of early profits.

➢ Investors utilizing the company brokers report & financial reports as their data source to invest in Equities.

➢ Investors are investing in booming sectors like I.T.

➢ Investors are investing in real-estate business also.

➢ The more number of investors who operate stock market preferred to invest in equity because of more risk and simultaneously returns also there.

SUGGESTIONS

➢ This is strongly recommended that the investor should have a proper guidance of well experienced Broker.

➢ The investor also should have the knowledge of analyzing financial position of company in which he wants to invest.

➢ The SEBI has to provide some tax benefits in order to attract investments in Equities.

➢ The investor also must be get some knowledge for other sources

CONCLUSION

• The study and analysis of the report deals with the different investment decisions made by different people.

• It explains about the investor preference towards Equities and their risk preferences.

• It explains the trading mode utilized by the people, preferable investment time, preferable data source and category of investment to invest in different market of the Equities.

BIBLIOGRAPHY

BOOKS REFERRED:

1. Alexander. G.J, Sharpe. W.F and Bailey. J.V, “Fundamentals of Investments”, PHI, 3rd Ed.

2. Prasanna Chandra, “Investment Analysis and Portfolio Management”, TMH, 3rd Ed.

3. S. Chand “Investment Management: Security Analysis & Portfolio Management”.

4. Donald E. Fisher and Ronald J. Jordan: “Securities Analysis and Portfolio Management”,Prentice Hall.

5 Graham & Dodd, “Security Analysis and Portfolio Management”, McGraw Hill.

7 Khan. M.Y., “Financial Services”, 2010, 5th Ed. Tata McGraw-Hill, Pvt. Ltd., New Delhi.

8. Dr. Gurusamy. S., “Financial Services”, Tata McGraw-Hill, Education Pvt. Ltd. 2nd Ed., New Delhi.

9. Vasant Desai, “Financial Markets and Financial Services”, 2009, HPH, 1st Ed., Mumbai.

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ANNEXURE

QUESTIONNAIRE

NAME:_______________.

1. What is your age?

a) Below 25 b) 25-35 c) 35-50 d) 50 and above

2. What is your occupation?

a) Business b) salaried c) honourium basis d) others

3. Educational qualifications?

a) Inter and below b) degree c) p.g d) PhD

4. Monthly income ____?

A) 20000 and below b) 20000-30000 c) 30000-40000 d) above 40000\

5. Number of dependents____?

a) 3 and below b) 4 c) 5 and above d) no dependents.

6. In which investment avenue have you invested___?

a) equity shares b) debt instruments c) insurance d) others.

7. Which type of stock have you invested in?

a) Speculative stocks b) Blue chip stocks c) Growth stocks

d) Income stocks

8. Which statement best describes you approach as an investor?

a) I am cautious about taking risks and I want to avoid losses.

b) I am some what caution about taking risks, and I can handle relatively can handle relatively small losses.

c) I can take some risk that is generally associated with greater account growth potential but I wish to minimize short term losses in my account.

d) I am open to taking risk for growth potential. I am less concerned about short term (less than one year) losses or gains; I am more invested in long term growth.

9. When is your next big spending due / expected?

a) Less than 1 year b) between 1-3years c) between 3-5 years

d) More than 5 years.

10. Do you have an emergency fund set aside to meet any unexpected requirement?

a) No, I don’t have any money for emergencies

b) I have enough to meet one month’s expenses.

c) I have enough to meet 2-3 month’s expenses.

d) I have enough to meet more than 6 month’s expenses.

11. Your receive an unexpected bonus equilent to 3 month’s salary, will you__

a) put it in a bank deposit at 5% guaranteed return?

b) Invest in an instrument which gives a return is arrange of 4-7%.

c) Of around 15% p.a with a downside three risk of 10%.

d) Asset for personal use.

12. How often do you monitor your investments?

a) Daily or weekly. b) Monthly.

c) Yearly. d) Occasionally.

13. When you made an investment decision, you ______?

a) Decide on gut feel.

b) Seek advice from friends and well wishes.

c) Rely on your investment advisor.

d) Analyzes all options thoroughly.

14. Investments with higher short-term volatility are more likely to have a greater chance are more likely to have a greater chance of meeting long term goals. Conversely , investments likely to provides stable returns and minimum short term losses are likely to meet long term investment goals with this is mind , which of the following is most consistent with your investments attitude.

a) Avoiding short-term losses is more important to me than meeting long term goals.

b) I am equally concerned about avoiding short term losses as well as meeting long term goals.

c) I am willing to bear short term fluctuations to maximize the chance of meeting my long term goals.

d) I am equally concerned about maximizing the short term profits and long term goals.

15. the chart below shows possible growth of Rs 100 over a five yea period for a series of different investment strategies which of the five scenario’s are you most comfortable with as investor?

a) 130 to 160. b) 110 to 176.

c) 90 to 200. d) 77 to 250.

16. What percentage your portfolio is allocated to equity currently?

a) No investment in equity. b) Up to10%.

c) Between 10 to 30%. d) Between 30 to 60%.

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