A Research Report

On

“INVESTORS ATTITUDE TOWARDS CAPITAL MARKET”

IN THE PARTIAL FULFILLMENT FOR THE REQUIREMENT OF THE DEGREE OF

MASTERS OF BUSINESS ADMINISTRATION

SESSION: 2013-2015

UNIVERSITY SCHOOL OF MANAGEMENT

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Under the Guidance of:SEEMA KHOKHARprofessor

SUBMITED By:ANKUSH SHARMA

MBA

KURUKSHETRA UNIVERSITY, KURUKSHETRA – 136119

PREFACE

In today’s era of cut-throat competition, Masters of Business Administration (MBA) is

sure to have an edge over their counter parts.

MBA education brings its students in direct contact with the real corporate world through

industrial training. The MBA program provides its students with an in depth study of various

managerial activities that are performed in any organization.

A detailed analysis of managerial activities conducted in various departments like

production, marketing, finance, human resources, export-imports, credit department, etc. gives

the student a conceptual idea of what they are expected to manage , how to manage and how to

obtain the maximum output through minimum inputs and how to minimize the wastage of

resources.

The programme provides a specialized knowledge of the various financial activities,

markets, trading, instrument, services available in the market. Most of the people in the society

are not well aware of these markets. In this report the study of investors attitude towards capital

market is made to know the various aspects that an investor keeps in mind while investing in the

securities market and there preferred sectors for the investment in capital market.

Simple language has been used throughout the report. Report is illustrated with figures, charts and diagrams, as and when required.

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DECLARATION

I, Ankush Sharma a student of MBA, in theder class Roll No.01213020 , 4th semester for the

session 2013-15 hereby, declare that theresearch project entitled “Investors Attitude Towards

Capital Market”has been completed by me. The work reported in the training is the result of

my own efforts.

(ANKUSH SHARMA

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ACKNOWLEDGEMENT

At this stage of my long educational journey, I look back and find that though

mine is a fairly sail, it has been memorizing extravagance of memorable

experience. At this gratifying moment of completion of my project report, I feel

obliged to record my gratitude to those who have helped me.

I feel immense pleasure to thank Prof.D.D. ARORA for making available all

facilities in fulfilling the requirements for the project work & giving valuable

guidance throughout preparation of this report.

I convey my deepest gratitude to Ms. Neetu, for guiding me in each and

every area of my project work and providing precious knowledge & information

required for my project report.

MUKUL BABBAR

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CERTIFICATE

This is to certify that Mr. MUKUL BABBAR has worked under my guidance on the topic

“Investors Attitude towards Capital Market”. The Project is original work to the best of my

knowledge & belief. This work has not been submitted for any other degree/diploma exam

elsewhere. The Project work is upto the standard expected from an MBA student and I

recommend this for evaluation.

DR. D.D. Arora

Prof. (USM)

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Executive Summary

The study of Indian capital market begins with the introduction of the

capital market what is capital market and describes the role and functions of

capital market. It describes the primary market as well as secondary market and

also describes the various instruments of capital market. The main factors and

reforms that helps in the growth of capital market is also described

The secondary market or the stock exchange plays an important role in the

development of an economy the report also provides a brief introduction of the

stock exchanges. Bombay stock exchange the oldest exchange of Asia. National

stock exchange and its functioning is described in the report.

The research methodology describes the sources and method used for the

collection of data and the area of study. The observation and questionnaire

method is used for the data collection.

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The analysis of data describes the various aspects taken care by the investors to

invest in the capital market, the source of information regarding capital market

the sector preferred by the investors and the securities preferred by investors.

CONTENTS

S. NO. CONTENTS PAGE

NO.

CHAPTER 1. CAPITAL MARKET 9

ROLE AND IMPORTANCE OF CAPITAL MARKET 10

CAPITAL MARKET INSTRUMENT 14

TYPES OF CAPITAL MARKET 17

FACTORS AFFECTING CAPITAL MARKET 23

STOCK EXCHANGE 26

BOMBAY STOCK EXCHANGE 29

NATIONAL STOCK MARKET 31

CHAPTER 2. LITERATURE REVIEW 33

CHAPTER 3. RESEARCH METHODOLOGY 37

RESEARCH DESIGN 38

SAMPLIING SIZE AND DESIGN 38

DATA COLLECTION 38

AREA OF STUDY 38

OBJECTIVES OF STUDY 39

CHAPTER 4. ANALYSIS AND INTERPRETATION 41

CHAPTER 5. FINDINGS AND CONCUSION 58

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CHAPTER 6. BIBLIOGRAPHY 63

CHAPTER 7. ANNEXURE 65

CHAPTER 1.

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CAPITAL MARKET

Introduction: The capital market is a market which deals in long-term loans. It supplies

industry with fixed and working capital and finances medium-term and long-term borrowings of

the central, state and local governments. The capital market deals in ordinary stock are shares

and debentures of corporations, and bonds and securities of governments.

The funds which flow into the capital market come from individuals who have savings to invest,

the merchant banks, the commercial banks and non-bank financial intermediaries, such as

insurance companies, finance houses, unit trusts, investment trusts, venture capital, leasing

finance, mutual funds, building societies, etc.

Further, there are the issuing houses which do not provide capital but underwrite the shares and

debentures of companies and help in selling their new issues of shares and debentures. The

demand for funds comes from joint stock companies for working and fixed capital assets and

inventories and from local, state and central governments, improvement trusts, port trusts, etc. to

finance a variety of expenditures and assets.

The capital market functions through the stock exchange market. A stock exchange is a market

which facilitates buying and selling of shares, stocks, bonds, securities and debentures. It is not

only a market for old securities and shares but also for new issues shares and securities. In fact,

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the capital market is related to the supply and demand for new capital, and the stock exchange

facilitates such transactions.

Thus the capital market comprises the complex of institutions and mechanisms through which

medium-term funds and long-term funds are pooled and made available to individuals, business

and governments. It also encompasses the process by which securities already outstanding are

transferred.

ROLE AND IMPORTANCE OF CAPITAL MARKET IN INDIA

Capital market has a crucial significance to capital formation. For a speedy

economicdevelopment adequate capital formation is necessary. The significance of capital

market ineconomic development is explained below:-

1. Mobilization of Savings and Acceleration of Capital Formation In developing

countries like India the importance of capital market is self-evident. In this market,

various types of securities helps to mobilize savings from various sectors of population.

The twin features of reasonable return and liquidity in stock exchange are definite

incentives to the people to invest in securities. This accelerates the capital formation in

the country.

2. Ready and Continuous Market The stock exchange provides a central convenient place

where buyers and sellers can easily purchase and sell securities. Easy marketability

makes investment in securities more liquid as compared to other assets.

3. Technical Assistance An important shortage faced by entrepreneurs in developing

countries is technical assistance. By offering advisory services relating to preparation of

feasibility reports, identifying growth potential and training entrepreneurs in project

management, the financial intermediaries in capital market play an important role.

4. Raising Long - Term Capital The existence of a stock exchange enables companies to

raise permanent capital. The investors cannot commit their funds for a permanent period

but companies require funds permanently. The stock exchange resolves this dash of

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interests by offering an opportunity to investors to buy or sell their securities, while

permanent capital with the company remains unaffected.

5. Foreign CapitalCapital markets makes possible to generate foreign capital. Indian firms

are able to generate capital funds from overseas markets by way of bonds and other

securities. Government has liberalised Foreign Direct Investment (FDI) in the country.

This not only brings in foreign capital but also foreign technology which is important for

economic development of the country.

6. Easy Liquidity With the help of secondary market investors can sell off their holdings

and convert them into liquid cash. Commercial banks also allow investors to withdraw

their deposits, as and when they are in need of funds.

7. Revival of Sick UnitsThe Commercial and Financial Institutions provide timely financial

assistance to viable sick units to overcome their industrial sickness. To help the weak

units to overcome their financial industrial sickness banks and FIs may write off a part of

their loan. The stock exchange is a central market through which resources are transferred

to the industrial sector of the economy. The existence of such an institution encourages

people to invest in productive channels. Thus it stimulates industrial growth and

economic development of the country by mobilising funds for investment in the corporate

securities.

8. Reliable Guide to PerformanceThe capital market serves as a reliable guide to the

performance and financial position ofcorporates, and thereby promotes efficiency.

9. Proper Channelization of Funds The prevailing market price of a security and relative

yield are the guiding factors for the people to channelize their funds in a particular

company. This ensures effective utilisation of funds in the public interest.

10. Provision of Variety of Services The financial institutions functioning in the capital

market provide a variety of services such as grant of long term and medium term loans to

entrepreneurs, provision of underwriting facilities, assistance in promotion of companies,

participation in equity capital, giving expert advice etc.

11. Development of Backward Areas Capital Markets provide funds for projects in

backward areas. This facilitates economic development of backward areas. Long term

funds are also provided for development projects in backward and rural areas.

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FACTORS RESPONSIBLE FOR GROWTH AND DEVELOPMENT OF

CAPITAL MARKET

1. Growth of Development Banks and Financial InstitutionsFor providing long term

funds to industry, the government set up Industrial Finance Corporation in India (IFCI) in

1948. This was followed by a number of other development banks and institutions like

the Industrial Credit and Investment Corporation of India (ICICI) in1955, Industrial

Development Bank of India (IDBI) in 1964, Industrial Reconstruction Corporation of

India (IRCI) in 1971, Foreign Investment Promotion Board in 1991, Over the Counter

Exchange of India (OTCEI) in 1992 etc. In 1969, 14 major commercial banks were

nationalised. Another 6 banks were nationalised in 1980. These financial institutions

andbanks have contributed in widening and strengthening of capital market in India.

2. Setting up of SEBIThe Securities Exchange Board of India (SEBI) was set up in 1988

and was given statutory recognition in 1992.

3. Increasing Awareness During the last few years there have been increasing awareness of

investment opportunities among the public. Business newspapers and financial journals

(The Economic Times, The Financial Express, Business India, Money etc.) have made

the people aware of new long-term investment opportunities in the security market.

4. Growing Public Confidence A large number of big corporations have shown impressive

growth. This has helped in building up the confidence of the public. The small investors

who were not interested to buy securities from the market are now showing preference in

favour of shares and debentures. As a result, public issues of most of the good companies

are now over-subscribed many times.

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5. Credit Rating Agencies Credit rating agencies provide guidance to investors / creditors

for determining the credit risk. The Credit Rating Information Services of India Limited

(CRISIL) was set up in 1988 and Investment Information and Credit Rating Agency of

India Ltd. (ICRA) was set up in 1991.These agencies are likely to help the development

of capital market in future.

6. Growth of Mutual Funds The mutual funds collects funds from public and other

investors and channelize them into corporate investment in the primary and secondary

markets. The first mutual fund to be setup in India was Unit Trust of India in 1964. In

2007-08 resources mobilized by mutual funds were Rs. 1,53,802crores.

7. Development of Venture Capital Funds Venture capital represents financial investment

in highly risky projects with a hope of earning high returns After 1991, economic

liberalization has made possible to provide medium and long term funds to those firms,

which find it difficult to raise funds from primary markets and by way of loans from FIs

and banks.

8. Growth of Multinationals (MNCs) The MNCs require medium and long term funds for

setting up new projects or for expansion and modernization. For this purpose, MNCs

raise funds through loans from banks and FIs. Due to the presence of MNCs, the capital

market gets a boost.

9. Growth of Underwriting Business The growing underwriting business has contributed

significantly to the development of capital market.

10. Growth of Merchant Banking The credit for initiating merchant banking services in

India goes to Grindlays Bank in 1967,followed by Citibank in 1970. Apart from capital

issue management, merchant banking divisions provide a number of other services

including provision of consultancy services relating to promotion of projects, corporate

restructuring etc.

11. Growth of EntrepreneursSince 1980s, there has been a remarkable growth in the

number of entrepreneurs. This created more demand for short term and long term funds.

FIs, banks and stock markets enable the entrepreneurs to raise the required funds. This

has led to the growth of capital market in India.

12. Legislative Measures The government passed the companies Act in 1956. The Act gave

powers to government to control and direct the development of the corporate enterprises

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in the country. The capital Issues (control) Act was passed in 1947 to regulate investment

in different enterprises, prevent diversion of funds to non-essential activities and to

protect the interest of investors. The Act was replaced in 1992.

Capital Market Instruments

1. SharesThe total capital of a company may be divided into small units called shares. For

example, if the required capital of a company is US $5,00,000 and is divided into 50,000

units of US $10 each, each unit is called a share of face value US $10. A share may be of

any face value depending upon the capital required and the number of shares into which

it is divided. The holders of the shares are called shareholders. The shares can be

purchased or sold only in integral multiples. Equity shares signify ownership in a

corporation and represent claim over the financial assets and earnings of the corporation.

Shareholders enjoy voting rights and the right to receive dividends; however in case of

liquidation they will receive residuals, after all the creditors of the company are settled in

full. A company may invite investors to subscribe for the shares by following ways:

Public issue through prospectus

Tender/ book building process

Offer for sale

Placement method

Rights issue

2. Debentures/ Bonds: The term Debenture is derived from the Latin word ‘debere’ which

means ‘to owe a debt’. A debenture is an acknowledgment of debt, taken either from the

public or a particular source. A debenture may be viewed as a loan, represented as

marketable security. The word “bond” may be used interchangeably with debentures.

Debt instruments with maturity more than 5 years are called ‘bonds’.

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3. Preference shares: Preference shares are different from ordinary equity shares.

Preference shareholders have the following preferential rights

The right to get a fixed rate of dividend before the payment of dividend to the equity

holders.

The right to get back their capital before the equity holders in case of winding up of the

company.

4. Derivatives: A derivative picks a risk or volatility in a financial asset, transaction, market

rate, or contingency, and creates a product the value of which will change as per changes

in the underlying risk or volatility. The idea is that someone may either try to safeguard

against such risk (hedging), or someone may take the risk, or may engage in a trade on

the derivative, based on the view that they want to execute. The risk that a derivative

intends to trade is called underlying. A derivative is a financial instrument, whose value

depends on the values of basicunderlying variable. In the sense, derivatives is a financial

instrument that offers return based on the return of some other underlying asset, i.e the

return is derived from another instrument.The best way will be take examples of

uncertainties and the derivatives that can be structured around the same.

Stock prices are uncertain - Lot of forwards, options or futures contracts are based

on movements in prices of individual stocks or groups of stocks.

Prices of commodities are uncertain - There are forwards, futures and options on

commodities.

Interest rates are uncertain - There are interest rate swaps and futures.

Foreign exchange rates are uncertain - There are exchange rate derivatives.

Weather is uncertain - There are weather derivatives, and so on.

Major Types of Derivatives:

a) FORWARDS :A forward contract is an agreement to buy or sell an asset on a specified

date for a specified price. One of the parties to the contract assumes a long position and

agrees to buy the underlying asset on a certain specified future date for a certain specified

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price. The other party assumes a short position and agrees to sell the asset on the same

date forthe same price, other contract details like delivery date, price and quantity are

negotiated bilaterally by the parties to the contract. The forward contracts are normally

traded outside the exchange.

b) FUTURES: Futures contract is a standardized transaction taking place on the

futuresexchange. Futures market was designed to solve the problems that exist in forward

market. A futures contract is an agreement between two parties, to buy or sell an asset at

a certain time in the future at a certain price, but unlike forward contracts, the futures

contracts are standardized and exchange traded To facilitate liquidity in the futures

contracts, the exchange specifies certain standard quantity and quality of the underlying

instrument that can be delivered, and a standard time for such a settlement. Futures’

exchange has a division or subsidiary called a clearing house that performs the specific

responsibilities of paying and collecting daily gains and losses as well as guaranteeing

performance of one party to other. A futures' contract can be offset prior to maturity by

entering into an equal and opposite transaction. The standardized items in a futures

contract are:

Quantity of the underlying

Quality of the underlying

The date and month of delivery

The units of price quotation and minimum price change

c) OPTIONS: An option is a contract, or a provision of a contract, that gives one party (the

option holder) the right, but not the obligation, to perform a specified transaction with

another party (the option issuer or option writer) according to the specified terms. The

owner of a property might sell another party an option to purchase the property any time

during the next three months at a specified price. For every buyer of an option there must

be a seller. The seller is often referred to as the writer. As with futures, options are

brought into existence by being traded, if none is traded, none exists; conversely, there is

no limit to the number of option contracts that can be in existence at any time. As with

futures, the process of closing out options positions will cause contracts to cease to exist,

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diminishing the total number. Thus an option is the right to buy or sell a specified amount

of a financial instrument at a pre-arranged price on or before a particular date. There are

two options which can be exercised:

Call option, the right to buy is referred to as a call option.

Put option, the right to sell is referred as a put option.

Types of Capital Market: There are two types of capital market. These are as follows

1. Primary Market

2. Secondary Market

Primary Market

New Issues Market is that part of capital market where dealing exchanges takes the boundaries

de-marketing the financial services are fast eroding. Thanks to the innovations in the financial

services, the movement towards made by existing companies are known as further issues.

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The primary market is that part of the capital markets that deals with the issuance of new

securities. Companies, governments or public sector institutions can obtain funding through the

sale of a new stock or bond issue. This is typically done through a syndicate of securities dealers.

The process of selling new issues to investors is called underwriting. In the case of a new stock

issue, this sale is an initial public offering (IPO). Dealers earn a commission that is built into the

price of the security offering, though it can be found in the prospectus.

Features of primary markets are:

This is the market for new long term equity capital. The primary market is the market

where the securities are sold for the first time. Therefore it is also called the new issue

market (NIM).

In a primary issue, the securities are issued by the company directly to investors.

The company receives the money and issues new security certificates to the investors.

Primary issues are used by companies for the purpose of setting up new business or for

expanding or modernizing the existing business.

The primary market performs the crucial function of facilitating capital formation in the

economy.

The new issue market does not include certain other sources of new long term external

finance, such as loans from financial institutions. Borrowers in the new issue market may

be raising capital for converting private capital into public capital; this is known as

"going public."

The financial assets sold can only be redeemed by the original holder.

Method of Floatation of Securities in Primary Market:

1. Public Issue through Prospectus:Under this method company issues a prospectus to inform

and attract general public. In prospectus company provides details about the purpose for which

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funds are being raised, past financial performance of the company, background and future

prospects of company.

The information in the prospectus helps the public to know about the risk and earning potential

of the company and accordingly they decide whether to invest or not in that company Through

IPO company can approach large number of persons and can approach public at large.

Sometimes companies involve intermediaries such as bankers, brokers and underwriters to raise

capital from general public.

2. Offer for Sale:Under this method new securities are offered to general public but not directly

by the company but by an intermediary who buys whole lot of securities from the company.

Generally the intermediaries are the firms of brokers. So sale of securities takes place in two

steps: first when the company issues securities to the intermediary at face value and second when

intermediaries issue securities to general public at higher price to earn profit. Under this method

company is saved from the formalities and complexities of issuing securities directly to public.

3. Private Placement:Under this method the securities are sold by the company to an

intermediary at a fixed price and in second step intermediaries sell these securities not to general

public but to selected clients at higher price. The issuing company issues prospectus to give

details about its objectives, future prospects so that reputed clients prefer to buy the security from

intermediary. Under this method the intermediaries issue securities to selected clients such as

UTI, LIC, General Insurance, etc.

The private placement method is a cost saving method as company is saved from the expenses of

underwriter fees, manager fees, agents’ commission, listing of company’s name in stock

exchange etc. Small and new companies prefer private placement as they cannot afford to raise

from public issue.

4. Right Issue (For Existing Companies):This is the issue of new shares to existing

shareholders. It is called right issue because it is the pre-emptive right of shareholders that

company must offer them the new issue before subscribing to outsiders. Each shareholder has the

right to subscribe to the new shares in the proportion of shares he already holds. A right issue is

mandatory for companies under Companies’ Act 1956.

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The stock exchange does not allow the existing companies to go for new issue without giving

pre-emptive rights to existing shareholders because if new issue is directly issued to new

subscribers then the existing equity shareholders may lose their share in capital and control of

company i.e., it would water their equity. To stop this the pre-emptive or right issue is

compulsory for existing company.

5. e-IPOs, (electronic Initial Public Offer):It is the new method of issuing securities through on

line system of stock exchange. In this company has to appoint registered brokers for the purpose

of accepting applications and placing orders. The company issuing security has to apply for

listing of its securities on any exchange other than the exchange it has offered its securities

earlier. The manager coordinates the activities through various intermediaries connected with the

issue.

6. BOOK BUILDING THROUGH ON-LINE IPO SYSTEM: Book building is basically a

process used in IPO for efficient price discovery, wherein during the period for which the IPO is

open, bids are collected from investors at various prices, which are above or equal to the floor

price. The offer price is determined after the bid closing date. In it’s strive to continuously

improve Indian Securities Market; NSE offers its infrastructure for conducting online IPOs

through book building. It helps to discover price as well as demand for a security to be issued

through a process of bidding by investors. The advantages of this new system are:

The investor parts with money only after allotment,

It eliminates refunds except in case of direct applications and,

It reduces the time taken for issue process.

Secondary Market

In the secondary market the investors buy / sell securities through stock exchanges. Trading of

securities on stock exchange results in exchange of money and securities between the investors.

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Secondary market provides liquidity to the securities on the exchange(s) and this activity

commences subsequent to the original issue. For example, having subscribed to the securities of

a company, if one wishes to sell the same, it can be done through the secondary market.

Similarly one can also buy the securities of a company from the secondary market. A stock

exchange is the single most important institution in the secondary market for providing a

platform to the investors for buying and selling of securities through its members. In other

words, the stock exchange is the place where already issued securities of companies are bought

and sold by investors. Thus, secondary market activity is different from the primary market in

which the issuers issue securities directly to the investors. Traditionally, a stock exchange has

been an association of its members or stock brokers, formed for the purpose of facilitating the

buying and selling of securities by the public and institutions at large and regulating its day to

day operations. Of late however, stock exchanges in India now operate with due recognition

from Securities and Exchange Board of India (SEBI) / the Government of India under the

Securities Contracts (Regulation) Act, 1956. The stock exchanges are either association of

persons or are formed as companies. There are 24 recognized stock exchanges in India out of

which one has not commenced its operations.

Out of the 23 remaining stock exchanges, currently only on four stock exchanges, the trading

volumes are recorded. Most of regional stock exchanges have formed subsidiary companies and

obtained membership of Bombay Stock Exchange, (BSE) or National Stock Exchange (NSE) or

both. Members of these stock exchanges are now working as sub-brokers of BSE / NSE brokers.

Functions of Stock Exchange/Secondary Market:

1. Economic Barometer: A stock exchange is a reliable barometer to measure the economic

condition of a country. Every major change in country and economy is reflected in the prices of

shares. The rise or fall in the share prices indicates the boom or recession cycle of the economy.

Stock exchange is also known as a pulse of economy or economic mirror which reflects the

economic conditions of a country.

2. Pricing of Securities: The stock market helps to value the securities on the basis of demand

and supply factors. The securities of profitable and growth oriented companies are valued higher

as there is more demand for such securities. The valuation of securities is useful for investors,

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government and creditors. The investors can know the value of their investment, the creditors

can value the creditworthiness and government can impose taxes on value of securities.

3. Safety of Transactions: In stock market only the listed securities are traded and stock

exchange authorities include the companies names in the trade list only after verifying the

soundness of company. The companies which are listed they also have to operate within the strict

rules and regulations. This ensures safety of dealing through stock exchange.

4. Contributes to Economic Growth: In stock exchange securities of various companies are

bought and sold. This process of disinvestment and reinvestment helps to invest in most

productive investment proposal and this leads to capital formation and economic growth.

5. Spreading of Equity Cult: Stock exchange encourages people to invest in ownership

securities by regulating new issues, better trading practices and by educating public about

investment.

6. Providing Scope for Speculation: To ensure liquidity and demand of supply of securities the

stock exchange permits healthy speculation of securities.

7. Liquidity: The main function of stock market is to provide ready market for sale and purchase

of securities. The presence of stock exchange market gives assurance to investors that their

investment can be converted into cash whenever they want. The investors can invest in long term

investment projects without any hesitation, as because of stock exchange they can convert long

term investment into short term and medium term.

8. Better Allocation of Capital: The shares of profit making companies are quoted at higher

prices and are actively traded so such companies can easily raise fresh capital from stock market.

The general public hesitates to invest in securities of loss making companies. So stock exchange

facilitates allocation of investor’s fund to profitable channels.

9. Promotes the Habits of Savings and Investment: The stock market offers attractive

opportunities of investment in various securities. These attractive opportunities encourage people

to save more and invest in securities of corporate sector rather than investing in unproductive

assets such as gold, silver, etc.

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FACTORS AFFECTING CAPITAL MARKET IN INDIA

The capital market is affected by a range of factors . Some of the factors which influence capital

market are as follows:-

A) Performance of domestic companies:-The performance of the companies or rather

corporate earnings is one of the factors which has direct impact or effect on capital market in a

country. Weak corporate earnings indicate that the demand for goods and services in the

economy is less due to slow growth in per capita income of people . Because of slow growth in

demand there is slow growth in employment which means slow growth in demand in the near

future. Thus weak corporate earnings indicate average or not so good prospects for the economy

as a whole in the near term. In such a scenario the investors ( both domestic as well as foreign )

would be wary to invest in the capital market and thus there is bear market like situation. The

opposite case of it would be robust corporate earnings and it’s positive impact on the capital

market.

B) Environmental Factors :-Environmental Factor in India’s context primarily means-

Monsoon . In India around 60 % of agricultural production is dependent on monsoon. Thus there

is heavy dependence on monsoon. The major chunk of agricultural production comes from the

states of Punjab , Haryana & Uttar Pradesh. Thus deficient or delayed monsoon in this part of the

country would directly affect the agricultural output in the country. Apart from monsoon other

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natural calamities like Floods, drought, earthquake, etc. also have an impact on the capital

market of a country. The Indian Met Department (IMD) on 24th June stated that India would

receive only 93 % rainfall of Long Period Average (LPA). This piece of news directly had an

impact on Indian capital market with BSE Sensex falling by 0.5 % on the 25th June . The major

losers were

auto marketers and consumer goods firms since the below normal monsoon forecast triggered

concerns that demand in the crucial rural heartland would take a hit. This is because a deficient

monsoon could seriously squeeze rural incomes, reduce the demand for everything from

motorbikes to soaps and worsen a slowing economy.

C) Macro Economic Numbers :-The macroeconomic numbers also influence the capital

market. It includes Index of Industrial Production (IIP) which is released every month, annual

Inflation number indicated by Wholesale Price Index (WPI) which is released every week,

Export – Import numbers which are declared every month, Core Industries growth rate (It

includes Six Core infrastructure industries – Coal, Crude oil, refining, power, cement and

finished steel) which comes out every month, etc. This macro –economic indicators indicate the

state of the economy and the direction in which the economy is headed and therefore impacts the

capital market in India. A case in the point was declaration of core industries growth figure.

D) Global Cues :-In this world of globalization various economies are interdependent and

interconnected. An event in one part of the world is bound to affect other parts of the world ,

however the magnitude and intensity of impact would vary. Thus capital market in India is also

affected by developments in other parts of the world i.e. U.S. , Europe, Japan , etc.

Global cues includes corporate earnings of MNC’s, consumer confidence index in developed

countries, jobless claims in developed countries, global growth outlook given by various

agencies like IMF, economic growth of major economies, price of crude –oil, credit rating of

various economies given by Moody’s, S & P, etc.

E) Political stability and government policies:-For any economy to achieve and sustain growth

it has to have political stability and pro- growth government policies. This is because when there

is political stability there is stability and consistency in government’s attitude which is

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communicated through various government policies. The vice- versa is the case when there is no

political stability .So capital market also reacts to the nature of government, attitude of

government, and various policies of the

Government.

F) Growth prospectus of an economy:-When the national income of the country increases and

per capita income of people increases it is said that the economy is growing. Higher income also

means higher expenditure and higher savings. This augurs well for the economy as higher

expenditure means higher demand and higher savings means higher investment. Thus when an

economy is growing at a good pace capital market of the country attracts more money from

investors, both from within and outside the country and vice -versa. So we can say that growth

prospects of an economy do have an impact on capital markets.

G) Investor Sentiment and risk Appetite :-Another factor which influences capital market is

investor sentiment and their risk appetite .Even if the investors have the money to invest but if

they are not confident about the returns from their investment , they may stay away from

investment for some time.At the same time the investors have low risk appetite , which they were

having in global and Indian capital market some four to five months back due to global financial

meltdown and recessionary situation in U.S. & some parts of Europe , they may stay away from

investment and wait for the right time to come.

25

STOCK EXCHANGE

Stock Exchange (also called Stock Market or Share Market) is one important constituent of

capital market. Stock Exchange is an organized market for the purchase and sale of industrial and

financial security. It is convenient place where trading in securities is conducted in systematic

manner i.e. as per certain rules and regulations.

It performs various functions and offers useful services to investors and borrowing companies. It

is an investment intermediary and facilitates economic and industrial development of a country.

Stock exchange is an organized market for buying and selling corporate and other securities.

Here, securities are purchased and sold out as per certain well-defined rules and regulations. It

provides a convenient and secured mechanism or platform for transactions in different securities.

Such securities include shares and debentures issued by public companies which are duly listed

at the stock exchange, and bonds and debentures issued by government, public corporations and

municipal and port trust bodies.

Stock exchanges are indispensable for the smooth and orderly functioning of corporate sector in

a free market economy. A stock exchange need not be treated as a place for speculation or a

gambling den. It should act as a place for safe and profitable investment, for this, effective

control on the working of stock exchange is necessary. This will avoid misuse of this platform

for excessive speculation, scams and other undesirable and anti-social activities.

26

Definitions of Stock Exchange

"Stock exchanges are privately organized markets which are used to facilitate trading in

securities."

The Indian Securities Contracts (Regulation) Act of 1956, defines Stock Exchange as,

"An association, organization or body of individuals, whether incorporated or not, established for

the purpose of assisting, regulating and controlling business in buying, selling and dealing in

securities."

Features of Stock Exchange:

1. Market for securities : Stock exchange is a market, where securities of corporate bodies,

government and semi-government bodies are bought and sold.

2. Deals in second hand securities : It deals with shares, debentures bonds and such securities

already issued by the companies. In short it deals with existing or second hand securities and

hence it is called secondary market.

3. Regulates trade in securities : Stock exchange does not buy or sell any securities on its own

account. It merely provides the necessary infrastructure and facilities for trade in securities to

its members and brokers who trade in securities. It regulates the trade activities so as to ensure

free and fair trade

4. Allows dealings only in listed securities : In fact, stock exchanges maintain an official list of

securities that could be purchased and sold on its floor. Securities which do not figure in the

official list of stock exchange are called unlisted securities. Such unlisted securities cannot be

traded in the stock exchange.

5. Transactions effected only through members : All the transactions in securities at the stock

exchange are effected only through its authorised brokers and members. Outsiders or direct

investors are not allowed to enter in the trading circles of the stock exchange. Investors have

to buy or sell the securities at the stock exchange through the authorised brokers only.

6. Association of persons : A stock exchange is an association of persons or body of individuals

which may be registered or unregistered.

27

7. Recognition from Central Government : Stock exchange is an organised market. It requires

recognition from the Central Government.

8. Working as per rules : Buying and selling transactions in securities at the stock exchange are

governed by the rules and regulations of stock exchange as well as SEBI Guidelines. No

deviation from the rules and guidelines is allowed in any case.

9. Specific location : Stock exchange is a particular market place where authorised brokers come

together daily (i.e. on working days) on the floor of market called trading circles and conduct

trading activities. The prices of different securities traded are shown on electronic boards.

After the working hours market is closed. All the working of stock exchanges is conducted

and controlled through computers and electronic system.

10. Financial Barometers : Stock exchanges are the financial barometers and development

indicators of national economy of the country. Industrial growth and stability is reflected in

the index of stock exchange.

28

BOMBAY STOCK EXCHANGE LIMITED

Bombay Stock Exchange Limited is the oldest stock exchange in Asia with a rich heritage. Popularly

known as "BSE", it was established as "The Native Share & Stock Brokers Association" in 1875. It is the

first stock exchange in the country to obtain permanent recognition in 1956 from the Government of

India under the Securities Contracts (Regulation) Act, 1956.The Exchange's pivotal and pre-eminent role

in the development of the Indian capital market is widely recognized and its index, SENSEX, is tracked

worldwide. Earlier an Association of Persons (AOP), the Exchange is now a demutualized and

corporatized entity incorporated under the provisions of the Companies Act, 1956, pursuant to the

BSE(Corporatization and Demutualization) Scheme, 2005 notified by the Securities and Exchange Board

of India (SEBI).

 

29

With demutualization, the trading rights and ownership rights have been de-linked effectively addressing

concerns regarding perceived and real conflicts of interest. The Exchange is professionally managed

under the overall direction of the Board of Directors.The Board comprises eminent professionals,

representatives of Trading Members and the Managing Director of the Exchange. The Board is inclusive

and is designed to benefit from theparticipation of market intermediaries.

In terms of organization structure, the Board formulates larger policy issues and exercises over-all

control. The committees constituted by the Board are broad-based.The day-to-dayoperations of the

Exchange are managed by the Managing Director and a management team of professionals.

The Exchange has a nation-wide reach with a presence in 417 cities and towns of India. The systems and

processes of the Exchange are designed to safeguard market integrity and enhance transparency in

operations. During the year 2004-2005, the trading volumes on the Exchange showed robust growth.

The Exchange provides an efficient and transparent market for trading in equity, debt instruments and

derivatives. The BSE's On Line Trading System (BOLT) is a proprietory system of the Exchange and is

BS 7799-2-2002 certified. The surveillance and clearing & settlement functions of the Exchange are ISO

9001:2000 certified.

30

NATIONAL STOCK EXCHANGE

THE National Stock Exchange of India is a stock Exchange that is located in Mumbai,

Maharashtra. The National Stock Exchange basically function in three market sections, that

is, (CM) the Capital Market Section); F&Q (The Future and Options Market Sections) and

WDM (Wholesale Debt Market Segment).  It is important place where the trading of shares,

debt etc takes place.

It was in year 1992 that the National stock Exchange was for the first time incorporated in

India. It was not regarded as a stock exchange at once. Rather, the national Stock exchange

was incorporated as a tax paying company and had got the recognition of a stock exchange

only in year 1993 the recognition was given under the provisions of the Securities Contracts

(Regulation) Act, 1956.

31

The National Stock exchange is highly active in the field of market capitalization and thus

aiming it the ninth largest stock exchange in the said field. Similarly, the trading of the stock

exchange in equities and derivatives is so high that it has resulted in high turnovers and thus

making it the largest stock exchange in India.

It is the stock exchange wherein there is the facility of electronic exchange offering

investors. This facility is available in almost types of equitable transactions such as equities,

debentures, etc. it is also the largest stock exchange if calculated in the terms of traded

values.

CHAPTER 2.32

REVIEW OF LITERATURE

The Indian capital market has changed dramatically over the last few years, especially since

1990. Changes have also been taking place in government regulations and technology. The

expectations of the investors are also changing. The only inherent feature of the capital market,

which has not changed is the 'risk' involved in investing in corporate securities. Managing the

risk is emerging as an important function of both large scale and small-scale investors. Risk

management of investing in corporate securities is under active and extensive discussion among

academicians and capital market operators. Surveys and research analyses have been conducted

by institutions and academicians on risk management. The mutual fund companies in India have

conducted specific studies on the 'risk element' of investing in corporate securities.

Grewal S.S and NavjotGrewall (1984) revealed some basic investment rules and rules for selling

shares. They warned the investors not to buy unlisted shares, as Stock Exchanges do not permit

trading in unlisted shares. Another rule that they specify is not to buy inactive shares, ie, shares

33

in which transactions take place rarely. The main reason why shares are inactive is because there

are no buyers for them. They are mostly shares of companies, which are not doing well. A third

rule according to them is not to buy shares in closely-held companies because these shares tend

to be less active than those of widely held ones since they have a fewer number of shareholders.

They caution not to hold the shares for a long period, expecting a high price, but to sell whenever

one earns a reasonable reward.

Jack Clark Francis2 (1986) revealed the importance of the rate of return in investments and

reviewed the possibility of default and bankruptcy risk. He opined that in an uncertain world,

investors cannot predict exactly what rate of return an investment will yield. However he

suggested that the investors can formulate a probability distribution of the possible rates of

return. He also opined that an investor who purchases corporate securities must face the

possibility of default and bankruptcy by the issuer. Financial analysts can foresee bankruptcy. He

disclosed some easily observable warnings of a firm's failure, which could be noticed by the

investors to avoid such a risk.

PreethiSingh3(1986) disclosed the basic rules for selecting the company to invest in. She opined

that understanding and measuring return md risk is fundamental to the investment process.

According to her, most investors are 'risk averse'. To have a higher return the investor has to face

greater risks. all securities simultaneously and it cannot be reduced through diversification.

Nabhi Kumar Jain6 (1992) specified certain tips for buying shares for holding and also for

selling shares. He advised the investors to buy shares of a growing company of a growing

industry. Buy shares by diversifying in a number of growth companies operating in a different

but equally fast growing sector of the economy. He suggested selling the shares the moment

company has or almost reached the peak of its growth. Also, sell the shares the moment you

realise you have made a mistake in the initial selection of the shares. The only option to decide

when to buy and sell high priced shares is to identify the individual merit or demerit of each of

the shares in the portfolio and arrive at a decision.

34

Carter Randal7 (1992) offered to investors the underlying principles of winning on the stock

market. He emphasised on long term vision and a plan to reach the goals. He advised the

investors thatto be successful, they should never be pessimists. He revealed thatthough there has

been a major economic crisis almost every year, it remains true that patient investors have

consistently made money in the equities market. He concluded that investing in the stock market

should be an un-emotional endeavour and suggested that investors should own a stock if they

believe it would perform well. L.C.Gupta8 (1992) revealed the findings of his study that there is

existence of wild speculation in the Indian stock market. The over speculative character of the

Indian stock market is reflected in extremely high concentration of the market activity in a

handful of shares to the neglect of the remaining shares and absolutely high trading velocities of

the speculative counters. He opined that, short- term speculation, if excessive, could lead to

"artificial price". An artificial price is one which is not justified by prospective earnings,

dividends, financial strength and assets or which is brought about by speculators through

rumours, manipulations, etc. He concluded that such artificial prices are bound to crash

sometime or other as history has repeated and proved.

35

CHAPTER 3.

36

Research Methodology

Research design: -In this study descriptive research design is used. As descriptive research

design is the description of state of affairs, as it exists at present. In this type of research the

researcher has no control over the variables; he can only report what has happened or what is

happening. Since the major emphasis was on the discovery of ideas and insights into the facts,

the research design most appropriate must be flexible enough to permit the consideration of

many different aspects of a phenomenon.

Collection of data:-The collection of data is a core part of every activities relating to

marketing decisions. The information derived from such data is closely analyzed, Interpreted and

a conclusion has been arrived on which other decisions are totally depends. After the research

problem has been identified and selected the next step is to gather the requisite data. While

deciding about the method of data collection to be used for the researcher should keep in mind

two types of data VIZ. primary and secondary

Sources of data collection :Data collection is intact, the most important aspect of a survey.

While collecting data utmost care must be exercised because data constitute the foundation on

37

which the superstructure of statistical analysis is built. If the data are inaccurate and inadequate

the entire analysis may be faulty and the decision taken would be misleading. In the research we

used the primary as well as secondary data. The primary data for the project regarding customer

preference toward investment alternatives were collected through questionnaire. The secondary

date for the project regarding customer preference toward investment alternatives were collected

from websites, textbooks and magazines. Datawere collected using structured questionnaires.

The sample size of area is analyzed by toolsselected for this study was one hundred were

randomly selected from the town. Data were analyzed using descriptive statistics .The research

consisted of two stages. In the first stage, a survey was conducted to collect the data about the

people. The second stage involved analysis of the data collected in the first stage.

Primary sources: The primary source of data was Questionnaire filled by people at different

places of GURGAON. After the collection of data it was arranged and the people who were

found suitable and interested were interviewed.

Secondary sourcesThe secondary sources of data were the various websites, textbook and

magazines. This mainly provided information about the various investment alternatives. These

helped in gaining knowledge about the industry. These sources are listed in References.

Descriptive Research is being done which includes surveys and fact-finding enquiries of

different kinds

Secondary data is being collected from different sources such as brand equity, brand

reporter, web sites, etc.

Structured questionnaire is being prepared so as to know consumer buying behavior

Graphs and diagrams are drawn out of the data analysis

Sampling Technique:

Simple random

Sample Size:

150 Respondents

38

Area of Study:

Gurgaon

Significance of the studySavings form an important part of the economy of any nation.

With the savings invested in various options available to the people, the money acts as the driver

for growth of the country. So before investing the funds people must know about the various

investment alternatives and also know about the various aspects like risk, return, maturity etc. so

this study helps the investors to know about the various investment alternatives. In this research

study we tried to evaluate that which is the most favorable option in which people like to invest

their savings.

Justification of study This study is helpful for the investors to know the various investment

alternatives which are available in the market. This study also analyzes the preference of

customer toward investment alternatives and why they invest in any particular alternatives. This

study also shows the various objectives for investment .To study the attitude of the respondents

towards different investment choices. This study cannot be clearly explained with the help of

books so it required practically work to explain it effectively.

OBJECTIVE OF REAEARCH

The main objective of the study or research is to know about Investors Attitude

Towards capital Market.

1. To identify the main reasons for investing in stock market.

2. To identify which type of securities and sector is preferred most by the

investors.

3. To study the awareness about the capital market.

39

CHAPTER 4.

40

ANALYSIS AND INTERPRETATION

Q.1 Which age group do you belong?

Age group No. Of respondents

18-30 9

30-45 49

45-55 48

Above 55 14

TABLE 1

41

18-308%

30-4541%45-55

40%

Above 5512%Age of the Respondents

Analysis: the above diagram shows that out of 120 respondent 9 respondents were from 18 to 30

age group, 49 respondents were from 30 to 45 age group, 48 respondents were 45 to 55 age

group and 14 respondents were from above 55 age group.

Q)2 What is your occupation ?

Occupation No. Of respondents

Businessman 50

Serviceman 16

Professional 47

Any other 7

TABLE 2

42

Businessman Serviceman Professional Any other0

10

20

30

40

50

60

50

16

47

7

Occupation

No. Of respondents

Analysis the above diagram shows that out of 120 respondent 50 are businessman, 16 are

serviceman, 47 are professional and 7 belong to other category.

Q3) what is your annual income?

Annual income No. Of respondents

50000-100000 17

100000-300000 30

Above 300000 73

TABLE 3

43

50000-100000 100000-300000 Above 3000000

10

20

30

40

50

60

70

80

17

30

73

Annual Income

No. Of respondents

Analysis the above diagram shows out of 120 respondents that 73 respondent belongs to above

300000 annual income . 30 belongs to 100000-300000 and other belongs to 50000-100000

Q4) In which which type of market you invest?

Type of market No. Of respondents

Primary 70

Secondary 30

Both 20

44

TABLE 4

Primary58%

Secondary25%

Both17%

Type of Market

Analysis:the above diagram depicts that 100 respondents said that they invest in primary market,

30 respondents said that they invest in secondary market and 20 respondents said that they invest

in both markets i.e. Primary as well as secondary.

Q)5In what type of securities you prefer to invest ?

Securities Prefer No. of Respondent

Equity 39

Mutual fund 51

Derivatives 9

Debenture 17

Other 4

TABLE 5

45

equity mutual fund

derivatives debenture other0

10

20

30

40

50

60

39

51

9

17

4

Securities Prefered

no.of respondent

ANALYSIS :the above chart depicts that investors [refer to invest in mutual funds followed by

equity shares. Among the 120 respondent 51 have choose mutual fund and 39 prefer to invest in

equityshares, 17 prefer debentures , 9 prefer derivativesand 4 other kind of securities.

Q6) what is the source of information regarding primary market?

Source of information No. Of respondents

News 16

Broker 89

Tv 6

Internet 2

46

Any other 7

News Broker TV Internet Any Other0

102030405060708090

100

16

89

6 27

Sources of Information

No. of Respondents

Table 6

Analysis:the above diagram shows that 89 respondents i.e. Maximum from total 120 respondents

said that they got the knowledge from their brokers, 16 respondents said that they got knowledge

about primary market from news/newspaper, 6 respondents got information through tv, 2 from

internet and 7 respondents said any other sources for information.

Q7)In which of the following you would like to invest your money?

Like to invest No. Of respondents

Private co. 43

Govt. Co. 18

Semi govt. 37

Any other 22

47

TABLE 7

Private Co. Govt. Co. Semi Govt. Any Other0

5

10

15

20

25

30

35

40

45

50

43

18

37

22

Prefered Companies

No. of Respondents

Analysis:the above diagram depicts that 43 respondents said that they like to invest in private

companies, 18 respondents said govt. Companies, 37 respondents said they like to invest in semi-

govt. Companies and 22 respondents said they like to invest in any other companies

Q8) In which sector you like the invest the money?

Investment sector No. Of respondents

Insurance 14

Infrastructure 40

Telecom 33

It sector 23

48

Any other 10

TABLE 8

Insurance Infrastructure Telecom It sector Any other0

5

10

15

20

25

30

35

40

45

14

40

33

23

10

Preferred Sectors

No. Of respondents

Analysis:the above diagram shows that 14 respondents said that they invest in insurance sector,

40 respondents said they invest in infrastructure sector, 33 respondents said that they invest in

telecom sector, 23 respondents said that they invest in it sector and 10 respondents said that they

invest in any other sectors.

Q9) How much % of your income you invest yearly?

% of income invest No.of respondents

0-20% 49

20-35% 32

35-50% 29

Above 50% 10

49

TABLE 9

0-20%41%

20-35%27%

35-50%24%

Above 50%8%

% of Income Invested

Analysis:the above diagram shows that 49 respondents said that they invest upto 20% of their

income in primary market, 32 respondents said that they invest upto 20% to 35% of their income,

29 respondents said they like to invest in 35% to 50% of their income, and 10 respondents said

that they invest above 50% of their income in primary market.

50

Q10) what is the limit your portfolio?

Portfolio No.of respondents

Rs.10000 to 50000 41

Rs.50000 to 1 lac 58

Above rs.1 lac 21

TABLE 10

Rs.10000 to 5000034%

Rs.50000 to 1 Lac48%

Above Rs.1 Lac18%

Portfolio limit

Analysis: the above diagram shows that 41 respondents said that their yearly portfolio has been

between Rs.10000 to 50000, 58 respondents said that their yearly portfolio has been between

Rs.50000 to 100000 and 21 respondents said that their yearly portfolio has been above Rs.

100000.

51

Q11) how much period you would prefer to invest?

Investment time No. Of respondents

Short term 96

Long term 24

TABLE 11

Short term Long term0

20

40

60

80

100

120

96

24

Invetment period

No. Of respondents

Analysis:the above diagram shows that 96 respondents said that they invest for short time and 24

respondents said that they invest for long term.

52

Q12) How much return has been earned from Capital Market?

%age of return No. Of respondents

10-50% 63

50-100% 31

100-150% 18

150-200% 8

TABLE 12

10-50% 50-100% 100-150% 150-200%0

10

20

30

40

50

60

7063

31

18

8

No. Of respondents

Analysis:the above diagram shows that 63 respondents said that they earn 10-50% return from

their primary market investments, 31 respondents earn 50-100% return, 18 respondents earn 100

to 150% return and 8 respondents said that they earn between 150 to 200% return from primary

market.

53

Q.13 what criteria you used to invest in any investment?

Criteria for invest No. Of respondents

Past experience 20

Company results 58

Any other 32

TABLE 13

Past experience Company results Any other0

10

20

30

40

50

60

70

20

58

32

No. Of respondents

No. Of respondents

Analysis: the above diagram shows that 22 respondents said that they use their past experience

for new investment into primary market, 58 respondents said they watch current results of

companies in which they want to invest and 32 respondents said they watch other things

whenever they go for investment in primary market.

54

Q14 what do you consider while investing in capital market ?

Consider while investing No.of respondent

Profit 42

Capital Appreciation 48

Tax benefit 27

Other 3

Table 14

Profit Capital Appreciation Tax benefit Other0

10

20

30

40

50

60

42

48

27

3

No.of respondent

No.of respondent

Analysis the above diagram shows that maximum of the respondent invest in the capital market

for capital appreciation. Out of 120 respondent 42 invest for profit, 48 for capital appreciation,27

for tax benefit and 3 for others.

55

Q)15 what kind of facilities your stock broker offers you?

Facilities offered by broker No of respondent

Cosultancy 30

Agreement 44

Margin tradig 21

Security lending 9

All 16

Table 15

Cosultancy Agreement Margin tradig Security lending All0

5

10

15

20

25

30

35

40

45

50

30

44

21

9

16

No of respondent

No of respondent

Analysis the above diagram represents that 44 respondent get agreement facility from their

broker, 30 get consultancy, 21 get margin trading, 9 margin landing, and 16 get all facilities from

their brokers.

56

Q)16 what will be the other option for investment, if you will not invest in

capital market?

Sector No of respondent

Insurance 27

Bank deposit 57

Property 29

Other 7

Table 16

Insurance Bank deposit Property Other0

10

20

30

40

50

60

27

57

29

7

Investment Alternatives

No of respondent

Analysis the above diagram shows that 57 respondent prefer to invest in bank deposites, 29 in

property, 27 in insurance and 7 in other.

57

CHAPTER 5.

58

FINDINGS

Most of respondents said that they are invested in the stock market and few of them said

that they did not invest in the stock market.

Maximum respondents said that they got the knowledge from their brokers, & some of

them said that they got knowledge about primary market from news/newspaper & very

few respondents got information through tv from internet and any other sources for

information.

retail investor divert their fund from the banking system to the primary market. As the

interest rate of saving account deposit decreased very much.

most of respondents said that they invest less portion of their income in primary market.

Very few investors like to invest major portion of their income in primary market.

Respondents view is that primary market investment is risky. So there is a fear in the

mind of respondents about to invest in primary market.

The study shows that maximum respondents among the sample respondents are getting

information related to the different services from the agents. It implies that most powerful

source of information about services is an agent.

There is a need to bring awareness among the general public about primary market.

59

SUGGESTIONS

On the basis of the market survey conducted has put very interesting findings in the market. The

very first suggestion to the investor is that the best thing for the investors to do to ensure that

they are not cheated in this boom, is to study the prospectus themselves, read various comments

and take their own decision. Investors have to beware as all those who are keen to grab a piece of

the cake of the impending securities boom, are doing so at their cost. Keep in mind three p’s

before investing in any securities& three p’s are

Promoter

Performance

Price

The next best suggestion to the investor is that they should be steer clear of

securities’s from lesser known industry and focus on offerings by well known

industry leader with quality management and strong financials.

The investor should not follow the securities boom blindly as they can get cheated

as they during nineties securities fiasco.

The companies should make regular contact with his customer through his

marketing executives. This would not only help in strengthening the business

relation but would also help in taking proper feedback of their products.

The majority of customers are price conscious so they should improve or decrease

their price/commission rate.

The companies should concentrate more on the sale promotion activities through

different media.

The market is not well aware of the product line of the companies, so companies

should give full information of there product line to the investors.

60

In corporate and institutions, people are looking for better service. So by

providing this it can gain the big reach its break even as soon as possible and can

earn profit from there.

Customers get dissatisfied very soon. So they must be supported by a good

customer care unit. They need care and by providing that a long customer-

organization relationship can be built.

61

CONCLUSION

This project is based on the study of “INVESTORS ATTITUDE TOWARDS CAPITAL

MARKET MARKET”. In the today scenario it’s very important to study the customer’s

psychological behaviour regarding the various services provided by them.

In the end, i conclude that investor should not invest their hard earned money blindly in the

securities but they should invest their money by taking different safeguards like understand the

company business, who its promoter are, how is its management, its risk factor and pricing of the

issue etc.

Although there is SEBI to protect the investor but the company which follow the legal binding of

the SEBI is not fool proof that the company is a good one.

It has been concluded that on the one hand the customers are somewhat satisfied but on the other

hand, still some improvements are required. So, the broking companies segment is flooded with

the new schemes from new & existing players and moreover, lot many schemes are waiting to hit

the ramp in the coming years.

The main reason behind people not wanting to have investing of a particular company is the

lack of proper information. Moreover, people don’t want to come out of cocoon of their

seemingly uncomplicated life. They seem satisfied with their old ways and are wary of

modern, new age products.

The most important factor that attracts the people towards investment in primary market is

the communication factor. This is the most important reason and for this, people feel

persuaded to buy it.

62

CHAPTER 6.

63

BIBLIOGRAPHY

1) M.Y KHAN., “FINANCIAL SERVICES”, HIMALAYA PUBLISHING HOUSE PVT.

LTD. NEW DELHI, 2001, P-10-20.

2) KOTHARI, C.R, “RESEARCH METHODOLOGY METHODS & TECHNIQUES”, 2ND

EDITION, NEW AGE INTERNATIONAL LTD. PUBLISHERS, 2005, P. NO. 27-42.

3) WILKINSON & BHANDARKAR, “BUSINESS RESEARCH METHODOLOGY”, 6TH

EDITION, TATA MCGRAW HILL PUBLICATIONS, DELHI, 2005, PP 237-243.

4) DR. BANSAL K LALIT, “MERCHANT BANKING & FINANCIAL SERVICES”

VIKAS PUBLICATIONS, 2002, (PAGE 152- 155) (PAGE 175-185)

JOURNALS AND MAGAZINES:-

1) APPLIED FINANCE, PAGE NO 261-268, VOLUME 5 / DEC.2007.

2) FINANCIAL REVIEW, EDITION JANUARY 2007, PAGES NO 34-40.

3) MANAGEMENT ACCOUNTANT, MAY 2006 P. NO.- 359-412.

WEBSITES

1. WWW.INVESTOPEDIA.COM

2. WWW.BSEINDIA.COM

3. WWW.NSEINDIA.COM

4. WWW.INDIATIMES.COM

64

CHAPTER 7.

65

QUESTIONNAIRE

PERSONAL DETAILS

NAME ------------------------------------------------------------------------------------------------

EMAIL ------------------------------------------------------------------------------------------------

ADDRESS---------------------------------------------------------------------------------------------

Q1.) Which age groupdo you belong?

18-30 30-45 45-55 above 55

Q2.) what is your Occupation ?

Businessman Serviceman

Professional Any other

Q3.) what is your Annual Income ?

Rs.50000 to 1 Lac Rs.1 Lac to 3 Lacs

Above Rs.3 Lacs

Q4) Have you ever invested in Capital Market?

Yes No

Q5) If yes, in which type of market?

Primary Market Secondary MarketBoth

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Q6.) In what type of security you will prefer to invest ?

Equity mutual fund derivatives

Debentures other

Q7) What is the source of information regarding capital market?

News Broker TV

Internet Any other

Q8) In which of the following you would like to invest your money?

Private Co. Govt. Co. Semi Govt. Any other

Q9) In which sector you like the invest the money?

Insurance Infrastructure Telecom IT Sector

Any Other

Q10) How much % of your income you invest yearly?

0-20% 20-35%

35-50% 50% & above

Q11) What is the limit of your portfolio?

Rs.10000 – 50000 Rs.50000 – 1 Lac Above 1 Lac

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Q12) For how long period you would prefer to invest?

Short term Long term (5 & above)

Q13) How much return has been earned from Capital market?

10% – 50% 50%-100% 100%-150% 150% - 200%

Q14) What do you consider while investing in capital market ?

Profit capital appreciation Tax benefit other

Q15.) What kind of facilities your stock broker offers you?

Consultancy Agreement

Margin Trading Securities Lending and Borrowing All

Q16) If you did not invest in capital market what will be the other option ?

Insurance bank deposits Property Other

Q.17) What are the factors that affects you to invest in capital market ?

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