“investor preferences & perceptions on trading in equity secondary market”

7/27/2019 “INVESTOR PREFERENCES & PERCEPTIONS ON Trading in EQUITY SECONDARY MARKET”

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June 05, 2013 – July 31, 2013

SHERYLL MENEZES

SAL Institute of Management




DESCRIPTION:

Sujish Broking is a remis ier (broking organisation) providing services in Equity, Commodity & Currenc

Segments.

It is one of the fastest growing organisations providing various kind of services which are tailor-made ato the requirements of various classes of traders, investors & speculators.

GENERAL INFORMATION:

Sujish Broking & Integrated Financial Services offers the perfect blend of financial services right from E

Commodity & Currency Broking, Research, Investment Advisory, Portfolio Management Services and

Commodity Advisory services which covers almost all the major areas of the financial markets.

We offer our tech-savvy customers an integrated and innovative platform to trade online as well as offlextra cost.




Equity Derivatives:

Invest/Trade in Share Markets(NSE, BSE, Futures & Options)

Commodity Derivatives:

Trade in various commodities like Gold, Silver, Crude Oil, Copper, Jeera, Castor Seeds, etc. (M

Currency Derivatives:

Trade in various currencies like EURO-INR, USD-INR, JPY-INR etc. (MCX-SX)

E-Broking:

Trade Online/Offline

Portfolio Management Services:

Our team of Experts will manage and help you grow your funds.

Investment Advisory & Trading Calls:

Free for all clients

Investment in IPOs & other financial instruments:

Free for all clients

Other allied financial services




Tasks Undertaken:

• Marketing Related Tasks:

The main activity carried out was creating leads of prospective & interesteorganization so that the more experienced Sales team could use resources efficie

where success rate would be high.

o One-on-one interaction with the customers

o Preparing daily report

o Potential customer list preparation

o Follow-up

• Manual Tasks:

o Filing, handling documents & parcelso Scanning the documents along with receiving & sending mail

o Transferring phone calls to the needed person

o Customer dealing

o Data entry


http://slidepdf.com/reader/full/investor-preferences-perceptions-on-trading-in-equity-secondary-market 5/21SAL Institute of Management

Qualities Learnt During The Internship:

Optimum use of resources

Time management

Coordination Co-operation

Planning

Professionalism

Clear & concise communication

Proper filing and indexing

Dealing with customers

Discipline

Punctuality



The major problems faced at the organization are as follows:

Understanding the complex industry

Notion by insiders that all aspects of the industry are well known by all

Time management: Managing internship & college responsibilities Communication barrier

Approaching new people

Getting new clients at a time when the Rupee is falling & market scenario is gloomy

The organization needs to grow & catch momentum to be a major player



RESEARCH:

The research has been done to compare and find out

the present and the future scenario of broking. If we observe, in the

past, people used to take help of agents to find out the market

situation but now we can access online; it’s quite convenient and

easy.

PROBLEM STATEMENT:

Trying to discover & understand the rationale between

the investor’s preferences & perception about the Financial

Market(Equity) & identify the reasons thereby.

RESEARCH OBJECTIVE:

The main aim of any research is to extend knowledge

in the specified field by the application & employment of usefulactivities & tools, in this case the instrument of research: structured

formatted questionnaires, & processes. The purpose of this research

is to uncover the answers to questions through the application of

scientific procedures. The main questions remain:

To find the preferences of investors

To discover the perceptions of investors

To identify potential customers

To recognize the behavior & views

To relate the rationale with market behaviour

RESEARCH DESIGN:

The research design is descriptive be

the aspects & is very descriptive.

SAMPLE DESIGN:

Here non-probability sample is taken a

DATA COLLECTION:

There are two types of data collection

Primary

Secondary

Primary data is used in form of quest

& brochures have been used for the s

MODE OF DATA COLLECTION:

Type of sampling: Non-probability convenience

Sample universe: Ahmedabad City

Size of sample: 100

Instrument of Research: Structured Formatted



PART 1: SOCIO-ECONOMIC PROFILE

1.1) Age:

1.2) Gender:

1.3) Years of schooling:

1.4) Primary Occupation:

1.5) Annual Income:

PART 2: INVESTMENT PROFILE AND PATTERN

2.1) Do you invest in equity?

2.2) If no, what are the reasons?

2.2) On what source of information you apply in the

primary market (IPO)? [multiple selections possible]

Newspaper advertisement

Application form/abridged prospectus

Advice of broker

Advice of friend/relative

Brokerage firm

Discussion in television channels

PART 3: INVESTMENT PREFERENCES & RISK

RETURN PERCEPTIONS

3.1) Which alternatives do you adopt on regular basis?

Investment: Debentures; Bonds; IPO;Secondary Market; Mutual Fund; Derivative

Savings: Post Office, Life Insurance,

Pension Schemes, Scheduled Banks

Others: Real Estate, Gold/Silver, Others

3.2) From the following, which is your preferred

alternative?

Bonds

Debentures

IPOs

Secondary Market

Mutual Funds

Derivatives

3.3) Primary source of information when applying for

IPOs.

Newspaper; Application Form;

Advice of Broker;

Advice of Friend/Relative;

Brokerage firm

Discussions on TV.

QUESTIONNAIRE – Specimen of Survey Instrument (Interview Schedule)

PART 4: FACTORS IN

INVESTMENT EVALU

4.1) What is the main fac

decision to invest in a paselections possible]

Suggestion/tip

Opinion of ana

Opinion of exp

like television

Research repo

newspapers/m

Research repo

websites

Advice of brok



40.89%

50.15%

8.96%

Young

Middle

Old

As can be seen from the pie-chart, majority of

securities market of equity shares is done by pe

middle-aged category. Old aged people tend to inv

GRAPHICAL REPRESENTATION

FINDINGS

SUGGESTIONS

None

CONCLUSION

As majority of the population in India fall in the yo

it doesn’t seem to be an issue for the future of the

AGE GROUP %

Young category 40.89%

Middle-aged 50.15%

Old-aged 8.96%

AGE GROUP MEANING

Young <=40 yea

Middle Between

Old > 60 year

VARIABLE DESCRIPTI




Males are the major players in the equity securiti

of the participants. Female participation is quite

the total volumes.

GRAPHICAL REPRESENTATION FINDINGS

SUGGESTIONS

Incentives could be given by government specif

them to raise their role in the secondary market. F

deductions in the income-tax act in respect of Ca

catalyst, provided their male counterparts don’t

taxes. Also, financial services meeting the specif

focussed upon.

CONCLUSIONS

A huge potential for the mobilisation of the financi

available, in case they have resources at their di

on part of the females

GENDER %

Male 94.77%

Female 05.23%

94.77%

5.23%

Male

Female




2.11%9.18%

59.93%

28.78%

Up to 5

6 to 10

11 to 15

Above 15


Respondents with higher education invest relative

Those with education of 11-15 years claim 59.

28.78% & the most active participants in this categ

FINDINGS

SUGGESTIONS

SEBI, the regulator should take steps to make

market simpler. Generation of more awareness

education too take part actively.

CONCLUSIONSNCLUSIONThere seems to be a positive correlation betwee

and participation in the equity securities market. E

on the investment in the securities market. Also

urbanisation spreads, there will be further penetra

YEARS OF SCHOOLING %

Up to 5 02.11%

6 to 10 09.18%

11 to 15 59.93%

Above 15 28.78%




4.37%

13.12%

22.22%

25.44%

34.85% Up to 10000

10001 to 15000

15001 to 20000

20001 to 25000

Above 25000


Here the highest share belongs to those fallin

income i.e. above Rs.25000 followed by Rs.20001

FINDINGS

SUGGESTIONS

None

CONCLUSIONS

Here too, there seems to be a positive correlati

person & his participation in the equity securities

to exist unless there is rise in the disposal incom

awareness amongst the investors.

INCOME %

Up to 10000 04.37%

10001 to 15000 13.12%

15001 to 20000 22.22%

20001 to 25000 25.44%

Above 25000 34.85%




Majority of the respondents(95.59%) do not inves

4.41% of the sample size invests in equity ave

8.56%) of the population opt the Mutual Fund ro

not regular followers or frequent investors in the e

4.41%

95.59%

Investor

Non-Investor

GRAPHICAL REPRESENTATION FINDINGS

SUGGESTIONS

Creating awareness should be the primary focus

shares simpler for the common man. Further, inpeople to encourage them to invest in equity shar

CONCLUSIONS

Investing in shares is not a popular option with th

market share between the two segments is huge

non-investor also includes investments Mutual

equity market. However, the overall market share

RESPONDENT TYPE %

Investor 04.41%

Non-investor 95.59%




The biggest factors are inadequate financial reso

& no skills. Very few respondents feel that t

inadequate.

4.17%

12.17%

5.74%

24.46%

15.97%

6.96%

30.00%

Inadequate returns

Not sure about safety of

investmentsInvestment not veryliquid

Inadequate information

No skills

Dissatisfied with role of regulator

Inadequate financialresources


SUGGESTIONS

A significant source of retardation in the rate

households in markets is due to information asy

information. When we examine the controllable re

markets we find that (in descending order) theylack of skills and uncertainty about safety of ret

could take additional steps to impart skills, reduc

at the time of participation and put in place m

guarantee the safety of returns.

Reasons %

Inadequate returns 04.17%

Not sure about safety of investments 12.17%

Investments not very liquid 05.74%

Inadequate information 24.46%

No skills 15.97%

Dissatisfied with the role of regulator 06.96%

Inadequate financial resources 30.00%

FINDINGS

CONCLUSIONS

A lot of factors which are controllable like no inad

not sure about the safety of investments lead to n

can be strategically tackled over a period of time b




Newspaper plays the biggest role in informing p

followed by application form & advice of Broker

with the findings that most market participants a

with the information provided by regulators and,

intermediaries such as brokers more useful.

48.44%

23.70%

20.17%

5.82%

1.35% 0.52%

Newspaper

Application Form

Advice of Broker

Advice of Friend/Relative

Brokerage Firm

Discussions on TV

Information asymmetry and the poor quality of

retardation in the rate of participation by potential

an IPO, investors across all income/education c

the single source of information. A significant n

advice of brokers more useful.


Based on the findings of the survey, it is my

retardation in the rate of participation by Indian

due to both information asymmetry as well as th

This ought to be of serious significant concern

current and potential market participants are

inadequate source of information. SEBI must

investor camps so that households avoid t

information.

SOURCE OF INFORMATION %

Newspaper 48.44%

Application Form 23.70%

Advice of Broker 20.17%

Advice of Friend/Relative 5.82%

Brokerage Firm 1.35%

Discussions on TV 0.52%

SUGGESTIONS

FINDINGS

s

CONCLUSIONS




45.99%

19.56%

17.28%

6.40%

2.54%

8.23%Tip from friend

Opinion of analysis inprint media

Opinion of experts on TV

Research reports innewspaper/magazines

Research reports instock market relatedwebsites

Advice of broker


FACTORS AFFECTING DECISIONS %

Tip from friend 45.99%

Opinion of analysis in print media 19.56%

Opinion of experts on TV 17.28%

Research reports in newspaper/magazines 06.40%

Research reports in stock related websites 02.54%

Advice of Broker 08.23%

Word of mouth seems to be the biggest fact

decision. There might be no backing, reliability o

source of information.

SEBI could take steps to create awareness am

sources of information. Also, it could educate peo

based on word of mouth & rumours. Also, long-

encouraged by the government & SEBI to curb stax on LTCG i.e. Long Term Capital Gains is an ex

SUGGESTIONS

FINDINGS

CONCLUSIONS

Rumours & perceptions are have a significant im

This leads to people making sub-optimal investme

leads.




21.00%

46.00%

33.00%

Investors

Savers

Others


CATEGORY OF RESPONDENT %

Investors(Bonds, Debentures, IPOs, Secondary Market, Mutual Funds,

Derivatives, etc.)

21.00%

Savers(Post Office, LIC, Pension Schemes, Scheduled Banks, etc. ) 46.00%

Others(Real Estate, Gold, etc.) 33.00%

The market is fairly split among savers, investors

less risky securities attract more investors

SUGGESTIONS

It is imperative that SEBI should take drastic m

about reliable information sources. This will help

from making sub-optimal choices as well as

bottlenecks. Quality and source of information sig

participation in financial markets.

This state is likely to sustain & prevail because

people and their diverse needs.

FINDINGS

CONCLUSIONS

INVESTMENT ALTERNATIVES RERA

Investors(Bonds, Debentures, IPOs, Secondary

Market, Mutual Funds, Derivatives, etc.)

2

Savers(Post Office, LIC, Pension Schemes,

Scheduled Banks, etc.)

3

Others(Real Estate, Gold, etc.) 1




15.07%

8.57%

8.47%

21.25%

40.80%

5.85%

Bonds

Debentures

IPOs

Secondary Market

Mutual Funds

Derivatives


Encouraging & creating awareness about the tr Greater participation by SEBI & NSE/BSE as

investorsPREFERRED INVESTMENT OPTIONS %

Bonds 15.07%

Debentures 08.57%

IPOs 08.47%

Secondary Market(Equity) 21.25%

Mutual Funds 40.80%

Derivatives (Futures & Options) 05.85%

The strong preference of investors is towards

Secondary Markets(21.25%). Though equity m

accounts for just 21.25% direct investments indica

prefer to invest directly in equity securities. Other

Debentures & IPOs are not a popular option with t

FINDINGS

SUGGESTIONS

CONCLUSIONS

With the benefits that Mutual Funds offer, people

more balanced portfolio & better monitoring by ex

hand on direct investment. The players that shall r

e.g. Qualified Institutional Buyers & speculators.




Both the SEBI(7.04%) and BSE/NSE(5.27%) we

marginal role in providing information. At pres

information are indeed the print media(28.0

brokers(12.20%). Interestingly, we find that the so

on the print media, a stock market website or

significant constraint seems to be inadequate

available in the market.

7.04%

5.27%

5.95%

28.00%

7.15%

12.39%

22.01%

12.20%SEBI website

BSE or NSE website

Concerned company

websitePrint media

TV Channel

Direct communicationswith companyFriends

Brokers

This implies that a participant who is likely

decision on informal sources of information is

choices in the market place.

Inadequate information is a significant constra

not opting to invest in the secondary market.


SUGGESTIONS

Given that most investors use such informal sourc

should take drastic measures to create awarene

sources. This will help prevent market participa

choices as well as reduce existing institutional bo

of information significantly influence extent of part

The survey indicated that there is much to be do

potential participants with optimal levels of informa

MOST PREFERRED SOURCE OF INFORMATION %SEBI website 07.04%

BSE or NSE website 05.27%

Concerned company website 05.95%

Print media 28.00%

TV channel 07.15%

Direct communications with the company 12.39%

Friends 22.01%

Brokers 12.20%

CONCLUSIONS

FINDINGS




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“investor preferences & perceptions on trading in equity secondary market”

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