A STUDY ON THE FACTORS THAT NFLUENCE INVESTORS TO INVEST IN CAPITAL MARKET.

RAVI MANDAL(MBA FINAL YEAR)

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CHAPTER - 1

1.1.INTRODUCTION

Investment

The money you earn is partly spent and the rest saved for meeting future

expenses. Instead of keeping the savings idle you may like to use savings in order to get

return on it in the future. This is called Investment.

One needs to invest to:

earn return on your idle resources

generate a specified sum of money for a specific goal in life

make a provision for an uncertain future

One of the important reasons why one needs to invest wisely is to meet the cost of

Inflation. Inflation is the rate at which the cost of living increases. The cost of living is

simply what it costs to buy the goods and services you need to live. Inflation causes

money to lose value because it will not buy the same amount of a good or a service in the

future as it does now or did in the past. For example, if there was a 6% inflation rate for

the next 20 years, a Rs. 100 purchase today would cost Rs.321 in 20 years. This is why it

is important to consider inflation as a factor in any long-term investment strategy.

Remember to look at an investment’s ‘real’ rate of return, which is the return after

inflation. The aim of investments should be to provide a return above the inflation rate to

ensure that the investment does not decrease in value. For example, if the annual inflation

rate is 6%, then the investment will need to earn more than 6% to ensure it increases in

value. If the after-tax return on your investment is less than the inflation rate, then your

assets have actually decreased in value; that is, they won’t buy as much today as they did

last year.


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When to start Investing

The sooner one starts investing the better. By investing early you allow your

investments more time to grow, whereby the concept Basics of Financial Markets of

compounding (as we shall see later) increases your income, by a cumulating the principal

and the interest or dividend earned on it, year after year. The three golden rules for all

investors are:

Invest early

Invest regularly

Invest for long term and not short term

What care should one take while investing

Before making any investment, one must ensure to:

1. Obtain written documents explaining the investment.

2. Read and understand such documents.

3. Verify the legitimacy of the investment.

4. Find out the costs and benefits associated with the investment.

5. Assess the risk-return profile of the investment.

6. Know the liquidity and safety aspects of the investment.

7. Ascertain if it is appropriate for your specific goals.

8. Compare these details with other investment opportunities available.

9. Examine if it fits in with other investments you are considering or you have already

made.

10. Deal only through an authorized intermediary.

11. Seek all clarifications about the intermediary and the investment.

12. Explore the options available to you if something were to go wrong, and then, if

satisfied, make the investment.

These are called the Twelve Important Steps to Investing.


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Interest

When we borrow money, we are expected to pay for using it – this is known as

Interest. Interest is an amount charged to the borrower for the privilege of using the

lender’s money. Interest is usually calculated as a percentage of the principal balance (the

amount of money borrowed). The percentage rate may be fixed for the life of the loan, or

it may be variable, depending on the terms of the loan.

Factors determine interest rates

When we talk of interest rates, there are different types of interest rates - rates that

banks offer to their depositors, rates that they lend to their borrowers, the rate at which

the Government borrows in the Bond/Government Securities market, rates offered to

investors in small savings schemes like NSC, PPF, rates at which companies issue fixed

deposits etc.

The factors which govern these interest rates are mostly economy related and are

commonly referred to as macroeconomic factors. Some of these factors are:

Demand for money

Level of Government borrowings

Supply of money

Inflation rate

The Reserve Bank of India and the Government policies which determine some of

the variables mentioned above

Various options available for investment

One may invest in:

Physical assets like real estate, gold/jewellery, commodities etc. and/or

Financial assets such as fixed deposits with banks, small saving instruments with

post offices, insurance/provident/pension fund etc. or securities market related

instruments like shares, bonds, Debentures etc.


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Broadly speaking, savings bank account, money market/liquid funds and fixed

deposits with banks may be considered as short-term financial investment options:

Savings Bank Account is often the first banking product people use, which offers

low interest (4%-5% p.a.), making them only marginally better than fixed deposits.

Money Market or Liquid Funds are a specialized form of mutual funds that invest

in extremely short-term fixed income instruments and thereby provide easy liquidity.

Unlike most mutual funds, money market funds are primarily oriented towards protecting

your capital and then, aim to maximize returns. Money market funds usually yield better

returns than savings accounts, but lower than bank fixed deposits.

Fixed Deposits with Banks are also referred to as term deposits and minimum

investment period for bank FDs is 30 days. Fixed Deposits with banks are for investors

with low risk appetite, and may be considered for 6-12 months investment period as

normally interest on less than 6 months bank FDs is likely to be lower than money market

fund returns.

Various Long-term financial options available for investment

Post Office Savings Schemes, Public Provident Fund, Company Fixed Deposits,

Bonds and Debentures, Mutual Funds etc. Post Office Savings: Post Office Monthly

Income Scheme is a low risk saving instrument, which can be availed through any post

office. It provides an interest rate of 8% per annum, which is paid monthly. Minimum

amount, which can be invested, is Rs. 1,000/- and additional investment in multiples of

1,000/-. Maximum amount is Rs. 3, 00,000/- (if Single) or Rs. 6, 00,000/- (if held jointly)

during a year. It has a maturity period of 6 years. A bonus of 10% is paid at the time of

maturity. Premature withdrawal is permitted if deposit is more than one year old. A

deduction of 5% is levied from the principal amount if withdrawn prematurely; the 10%

bonus is also denied.


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Public Provident Fund:

A long term savings instrument with a maturity of 15 years and interest payable at

8% per annum compounded annually. A PPF account can be opened through a

nationalized bank at anytime during the year and is open all through the year for

depositing money. Tax benefits can be availed for the amount invested and interest

accrued is tax-free. A withdrawal is permissible every year from the seventh financial

year of the date of opening of the account and the amount of withdrawal will be limited

to 50% of the balance at credit at the end of the 4th year immediately proceeding the year

in which the amount is withdrawn or at the end of the preceding year whichever is lower

the amount of loan if any.

Company Fixed Deposits:

These are short-term (six months) to medium-term (three to five years)

borrowings by companies at a fixed rate of interest which is payable monthly, quarterly,

semi-annually or annually. They can also be cumulative fixed deposits where the entire

principal along with the interest is paid at the end of the loan period. The rate of interest

varies between 6-9% per annum for company FDs. The interest received is after

deduction of taxes.

Bonds:

It is a fixed income (debt) instrument issued for a period of more than one year

with the purpose of raising capital. The central or state government, corporations and

similar institutions sell bonds. A bond is generally a promise to repay the principal along

with a fixed rate of interest on a specified date, called the Maturity Date.

Mutual Funds:

These are funds operated by an investment company which raises money from the

public and invests in a group of assets (shares, debentures etc.), in accordance with a

stated set of objectives. It is a substitute for those who are unable to invest directly in


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equities or debt because of resource, time or knowledge constraints. Benefits include

professional money management, buying in small amounts and diversification. Mutual

fund units are issued and redeemed by the Fund Management Company based on the

fund’s net asset value (NAV), which is determined at the end of each trading session.

NAV is calculated as the value of all the shares held by the fund, minus expenses, divided

by the number of units issued. Mutual Funds are usually long term investment vehicle

though there some categories of mutual funds, such as money market mutual funds which

are short term instruments.

Stock Exchange

The Securities Contract (Regulation) Act, 1956 [SCRA] defines ‘Stock Exchange’

as any body of individuals, whether incorporated or not, constituted for the purpose of

assisting, regulating or controlling the business of buying, selling or dealing in securities.

Stock exchange could be a regional stock exchange whose area of operation/jurisdiction

is specified at the time of its recognition or national exchanges, which are permitted to

have nationwide trading since inception. NSE was incorporated as a national stock

exchange.

Equity/Share

Total equity capital of a company is divided into equal units of small

denominations, each called a share. For example, in a company the total equity capital of

Rs 2,00,00,000 is divided into 20,00,000 units of Rs 10 each. Each such unit of Rs 10 is

called a Share. Thus, the company then is 11 said to have 20, 00,000 equity shares of Rs

10 each. The holders of such shares are members of the company and have voting rights.

Debt Instrument

Debt instrument represents a contract whereby one party lends money to another

on pre-determined terms with regards to rate and periodicity of interest, repayment of

principal amount by the borrower to the lender. In the Indian securities markets, the term


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‘bond’ is used for debt instruments issued by the Central and State governments and

public sector organizations and the term ‘debenture’ is used for instruments issued by

private corporate sector.

Derivative

Derivative is a product whose value is derived from the value of one or more

basic variables, called underlying. The underlying asset can be equity, index, foreign

exchange (forex), commodity or any other asset. Derivative products initially emerged as

hedging devices against fluctuations in commodity prices and commodity-linked

derivatives remained the sole form of such products for almost three hundred years. The

financial derivatives came into spotlight in post-1970 period due to growing instability in

the financial markets. However, since their emergence, these products have become very

popular and by 1990s, they accounted for about two thirds of total transactions in

derivative products.

Index

An Index shows how a specified portfolio of share prices is moving in order to

give an indication of market trends. It is a basket of securities and the average price

movement of the basket of securities indicates the index movement, whether upwards or

downwards.

Depository

A depository is like a bank wherein the deposits are securities (viz. shares,

debentures, bonds, government securities, units etc.) in electronic form.

Dematerialization

Dematerialization is the process by which physical certificates of an investor are

converted to an equivalent number of securities in electronic form and credited to the

investor’s account with his Depository Participant (DP).


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Function of Securities Market

Securities Markets is a place where buyers and sellers of securities can enter into

transactions to purchase and sell shares, bonds, debentures etc. Further, it performs an

important role of enabling Corporates, entrepreneurs to raise resources for their

companies and business ventures through public issues. Transfer of resources from those

having idle resources (investors) to others who have a need for them (corporates) is most

efficiently achieved through the securities market. Stated formally, securities markets

provide channels for reallocation of savings to investments and entrepreneurship. Savings

are linked to investments by a variety of intermediaries, through a range of financial

products, called ‘Securities’.

The securities one can invest in

Shares

Government Securities

Derivative products

Units of Mutual Funds etc., are some of the securities investors in the securities

market can invest in.

Role of the ‘Primary Market’

The primary market provides the channel for sale of new securities. Primary

market provides opportunity to issuers of securities; Government as well as corporates, to

raise resources to meet their requirements of investment and/or discharge some

obligation. They may issue the securities at face value, or at a discount/premium and

these securities may take a variety of forms such as equity, debt etc.

They may issue the securities in domestic market and/or international market.

Needs of companies to issue shares to the public

Most companies are usually started privately by their promoter(s). However, the

promoters’ capital and the borrowings from banks and financial institutions may not be


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sufficient for setting up or running the business over a long term. So companies invite the

public to contribute towards the equity and issue shares to individual investors. The way

to invite share capital from the public is through a ‘Public Issue’. Simply stated, a public

issue is an offer to the public to subscribe to the share capital of a company. Once this is

done, the company allots shares to the applicants as per the prescribed rules and

regulations laid down by SEBI.

Market Capitalization

The market value of a quoted company, which is calculated by multiplying its

current share price (market price) by the number of shares in issue is called as market

capitalization. E.g. Company A has 120 million shares in issue. The current market price

is Rs. 100. The market capitalization of company A is Rs. 12000 million.

Initial Public Offer (IPO)

An Initial Public Offer (IPO) is the selling of securities to the public in the

primary market. It is when an unlisted company makes either a fresh issue of securities or

an offer for sale of its existing securities or both for the first time to the public. This

paves way for listing and trading of the issuer’s securities. The sale of securities can be

either through book building or through normal public issue.

Prospectus

A large number of new companies float public issues. While a large number of

these companies are genuine, quite a few may want to exploit the investors. Therefore, it

is very important that an investor before applying for any issue identifies future potential

of a company. A part of the guidelines issued by SEBI (Securities and Exchange Board of

India) is the disclosure of 23 information to the public.

This disclosure includes information like the reason for raising the money, the

way money is proposed to be spent, the return expected on the money etc. This

information is in the form of ‘Prospectus’ which also includes information regarding the


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size of the issue, the current status of the company, its equity capital, its current and past

performance, the promoters, the project, cost of the project, means of financing, product

and capacity etc. It also contains lot of mandatory information regarding underwriting

and statutory compliances. This helps investors to evaluate short term and long term

prospects of the company.

Secondary Market

Secondary market refers to a market where securities are traded after being

initially offered to the public in the primary market and/or listed on the Stock Exchange.

Majority of the trading is done in the secondary market. Secondary market comprises of

equity markets and the debt markets.

Contract Note

Contract Note is a confirmation of trades done on a particular day on behalf of the

client by a trading member. It imposes a legally enforceable relationship between the

client and the trading member with respect to purchase/sale and settlement of trades. It

also helps to settle disputes/claims between the investor and the trading member. It is a

prerequisite for filing a complaint or arbitration proceeding against the trading member in

case of a dispute. A valid contract note should be in the prescribed form, contain the

details of trades, stamped with requisite value and duly signed by the authorized

signatory. Contract notes are kept in duplicate, the trading member and the client should

keep one copy each. After verifying the details contained therein, the client keeps one

copy and returns the second copy to the trading member duly acknowledged by him.

Precautions must one take before investing in the stock markets

Here are some useful pointers to bear in mind before you invest in the markets:

Make sure your broker is registered with SEBI and the exchanges and do not deal

with unregistered intermediaries.


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Ensure that you receive contract notes for all your transactions from your broker

within one working day of execution of the trades.

All investments carry risk of some kind. Investors should always know the risk

that they are taking and invest in a manner that matches their risk tolerance.

Do not be misled by market rumors, luring advertisement or ‘hot tips’ of the day.

Take informed decisions by studying the fundamentals of the company. Find out

the business the company is into, its future prospects, quality of management; past

track record etc Sources of Knowing about a company is through annual reports,

economic magazines, and databases available with vendors or your financial

advisor.

If your financial advisor or broker advises you to invest in a company you have

never heard of, be cautious. Spend some time checking out about the company

before investing.

Do not be attracted by announcements of fantastic results/news reports, about a

company. Do your own research before investing in any stock.

Do not be attracted to stocks based on what an internet website promotes, unless

you have done adequate study of the company.

Investing in very low priced stocks or what are known as penny stocks does not

guarantee high returns.

Be cautious about stocks which show a sudden spurt in price or trading activity.

Any advise or tip that claims that there are huge returns expected, especially for

acting quickly, may be risky and may to lead to losing some, most, or all of your

money.

Do have and Don’ts should an investor bear in mind when investing in

the stock markets?

Ensure that the intermediary (broker/sub-broker) has a valid SEBI registration

certificate.

Enter into an agreement with your broker/sub-broker setting out terms and

conditions clearly.

Ensure that you give all your details in the ‘Know Your Client’ form.


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Ensure that you read carefully and understand the contents of the ‘Risk Disclosure

Document’ and then acknowledge it.

Insist on a contract note issued by your broker only, for trades done each day.

Ensure that you receive the contract note from your broker within 24 hours of the

transaction.

Ensure that the contract note contains details such as the broker’s name, trade

time and number, transaction price, brokerage, service tax, securities transaction

tax etc. and is signed by the Authorized Signatory of the broker.

Issue account payee cheques/demand drafts in the name of your broker only, as it

appears on the contract note/SEBI registration certificate of the broker.

While delivering shares to your broker to meet your obligations, ensure that the

delivery instructions are made only to the designated account of your broker only.

Insist on periodical statement of accounts of funds and securities from your

broker. Cross check and reconcile your accounts promptly and in case of any

discrepancies bring it to the attention of your broker immediately.

Ensure that you receive payments/deliveries from your broker, for the transactions

entered by you, within one working day of the payout date.

Ensure that you do not undertake deals on behalf of others or trade on your own

name and then issue cheques from a family members’/ friends’ bank accounts.

Similarly, the Demat delivery instruction slip should be from your own Demat

account, not from any other family members’/friends’ accounts.

Do not sign blank delivery instruction slip(s) while meeting security paying

obligation.

No intermediary in the market can accept deposit assuring fixed returns. Hence do

not give your money as deposit against assurances of returns.

‘Portfolio Management Services’ could be offered only by intermediaries having

specific approval of SEBI for PMS. Hence, do not part your funds to unauthorized

persons for Portfolio Management.

Delivery Instruction Slip is a very valuable document. Do not leave signed blank

delivery instruction slip with anyone. While meeting pay in obligation make sure


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that correct ID of authorized intermediary is filled in the Delivery Instruction

Form.

Be cautious while taking funding form authorized intermediaries as these

transactions are not covered under Settlement Guarantee mechanisms of the

exchange.

Insist on execution of all orders under unique client code allotted to you. Do not

accept trades executed under some other client code to your account.

When you are authorizing someone through ‘Power of Attorney’ for operation of

your DP account, make sure that:

Your authorization is in favors of registered intermediary only.

Authorization is only for limited purpose of debits and credits arising out of valid

transactions executed through that intermediary only.

You verify DP statement periodically say every month/ fortnight to ensure that no

unauthorized transactions have taken place in your account.

Authorization given by you has been properly used for the purpose for which

authorization has been given.

In case you find wrong entries please report in writing to the authorized

intermediary.

Don’t accept unsigned/duplicate contract note.

Don’t accept contract note signed by any unauthorized person.

Don’t delay payment/deliveries of securities to broker.

In the event of any discrepancies/disputes, please bring them to the notice of the

broker immediately in writing (acknowledged by the broker) and ensure their

prompt rectification.

In case of sub-broker disputes, inform the main broker in writing about the

dispute at the earliest and in any case not later than 6 months.

If your broker/sub-broker does not resolve your complaints within a reasonable

period (say within 15 days), please bring it to the attention of the ‘Investor

Grievances Cell’ of the NSE.

While lodging a complaint with the ‘Investor Grievances Cell’ of the NSE, it is

very important that you submit copies of all relevant documents like contract


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notes, proof of payments delivery of shares etc. along with the complaint.

Remember, in the absence of sufficient documents, resolution of complaints

becomes difficult.

Familiarize yourself with the rules, regulations and circulars issued by stock

exchanges/SEBI before carrying out any transaction.


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1.2.SCOPE OF THE STUDY

In the present scenario, financial service is a growing industry. Stock broking

plays vital role in the financial services. It is big ocean. So we want to know some

information about this field. We can’t serve any organization without knowing the

information about this field.

In this project I studied about why the investor gives preference to stock broking

and how much amount they are ready to invest in this field.


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1.3.OBJECTIVE OF THE STUDY

To study the investors attitude towards investment

To study the various types of investments available for the investors

To find out the investors satisfaction in terms of select in terms of select

indicators

To study the influencing factor

To study the types of investments in equity market

To suggest measures


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1.4. LIMITATIONS OF THE STUDY

The time period of the study was confined only for 6months. So we could not

collect data from more investors.

The geographical area restricted only to Chennai area only.

Many of the investors could not be surveyed because many of them are online

trader

The offline traders cannot be surveyed in market period.

The study was conducted in Chennai city only, hence the result may not be

applicable in other areas

Since market is very speculative today, the study has its limitation of the recent

period

The result based on the information given by the respondent


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CHAPTER -II

REVIEW OF LITERATURE

It is essential for a research scholar to do a review on the related literature for his

study have a deep knowledge about the subject. It is only through this literature that the

researcher takes the initial step of fixing the problem on which the study is to be done. A

thorough review of literature will expose the researcher to previous researches conducted

and area of study etc.

The literature on previous studies will help the researcher on the limitations of the

study and there by the researcher could take proper measure to overcome them. The

review of literature gives the reader, a broader outlook on the back ground and situations

under which had been conducted.

The following earlier studies have been conducted by the various researchers in

the area of consumer behaviour. A review of these studies enabled the researcher to

formulate the research problem.

De bond and thaler(1985) while investigating the possible psychological basis for

s behaviour, argue that mean reversion in stock prices is a evidence of investor

over reaction where investors over emphasis recent firm performance in forming

future expectation. In india, one of the earliest attempts was made by ncaer in

1964 when a surveys of households was undertaken to understand the attitude

towards and motivation for saving of individuals. Another ncaer study in 1996

analysed the structure of the capital market and presented the views and attitudes

of individual shareholders.

Gupta (1994) made a household investor survey with the objective to provide data

on the investor preferences on mfs and other financial assets. the findings of the

study were more appropriate, at that time, to the policy makers and mutual funds

to design the financial products for the future.


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Anjan chakarabarthi and harsh rungta (2000) stressed the importance of brand

effect in determining the competitive position of the amcs.their study reveals that

brand image factor,though cannot cbe easily captured by computable

performance measures, influences the investor’s perception and hence his

fund/scheme selection.

Sebi-ncaer survey (2000) was carried out to estimate the number of households

and the populat ion of individual investor s, their demographic profile, portfolio

size, and investment preferences for equity as well as other savings instruments.

this is a unique and comprehensive study of Indian investors,for;data was

collected from 3,00,0000 geographically dispersed rural and urban households.

some of the relevant findings of the study are: households preferences for

instruments match their risk perception; bank deposits has an appeal across all

income class;43%of the non investors household’s equivalent to around 60

million household’s (estimated) apparently lack awareness about stock

markets;and,compared with low income groups, the higher income groups have

higher share of investments in mutual fund, share market, insurance, government

bonds signifying that mutual have still not become truly the investment vehicle

for small investors. Nevertheless, the study predicts that in the next two years

(i.e., 2000 hence) the investment of households in mutual fund, share market and

in insurance sector its likely to increase. We have to wait and watch the investors’

reaction to the July 2nd 2001, great fall of the big brother, uti.

Note: behaviour is a reaction to a situation. So as situation changes, behaviour gets

modified. Hence, findings and predictions studies should be viewed accordingly).

Excellent portfolios can be constructed by owing shares in Indian funds plus actively

managed funds. Such a blended approach fundamentally subscribes to the verdict of

financial market theory by accepting indexing as the core component and cornerstone of

a portfolio. it also satisfies the seductive instincts and competitive inclinations of that


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faction of investors whose predictions demand commitment of the analytical profitability

of delivering market beating returns with a tolerable level of risk.

De bond, w.f.m. And thaler, r, 1985,”does the stock market over react?”

Journal of finance, 40,793-805.

Gupta,l.c.,1984,mutual funds and asset preference, society for capital market

research and developement,delhi

Anjan chakarabarti and harsh rungta,2000 “mutual funds industry in india: an in

depth look into the problem of credibility, risk and brand” ,the icfai journal of

applied finance,vol.6,no.2,april,27-45

Sebi-ncaer, suvey of indian investors,sebi,Mumbai

Richard kjetsaa “the performance of share market, mutual funds relative to benchmarks”,

Journal of the academy of business and economics.february2010.findarticles.com

Prof. Dr. Uttam Jagtap** Prof. Ajay Malpani “A study of investment parameters

in equity market with special reference to professionals in indore” ( International

Referred Reseach Journal,April,2011 ISSN-0975-3486 RNI: RAJBIL

2009/30097 VOL-II *ISSUE 19 OR

(http://www.ssmrae.com/admin/images/eae09f9b7d84e8b2d09db2cd70bc7770.p

df)

Prasanna, P. K. (2008). Foreign Institutional Investors: Investment Preferences in

India, JOAAG, Vol. 3. No. 2

http://www.ssmrae.com/admin/images/eae09f9b7d84e8b2d09db2cd70bc7770.pdf

http://www.ssmrae.com/admin/images/eae09f9b7d84e8b2d09db2cd70bc7770.pdf


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CHAPTER -III

3.1.COMPANY PROFILE

Introduction

The present chapter provides a brief account of the profile of the study unit, of

India infoline’ securities ltd. This includes the formation of the company, its business

activities, quality objectives of the company and its major achievements.

Formation of the company

Circa 1995.A group of professionals formed a company called probity research services

pvt ltd. The name was later changed to india infoline ltd.The objective was to provide

unbiased and independent information to market intermediaries and investors. the quality

of research soon caught the imagination of all Indian financial market. In a span of 2to3

years the client list read like the who’s who of Indian financial market. The list included

consulting firms like mckinsey,companies like Hindustan leaver, banks like Citibank,

rating agencies like crisil,D&B,FIs,FIIs,foreign brokers as well as leading Indian brokers.

The going was smooth but not exciting!

One fine morning in early1999,a colleague had a crazy idea that if the company made all

the research available free on the web,the number of users may well jump from

250to2.5million!To make it true, the business required a reincarnation. And the pre-

requisite was a death .it meant that the company put up all the information free on the

website and let go of all the revenues and profits . worse, if the new avatar failed , there

would be no come backs’.

The idea was too compelling to worry about the consequence. probity took a whole-

hearted plunge. The advertisement, alongside, said it all. the new avatar business model

took off. And it took off like a rocket! All employees, angel investors and well-wishers

were ecstatic little did they know that the rocked would run out of fuel in mid-air.


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Venture capitalists and private equity investors lined up to sign term sheets without even

looking at the peak of dotcom euphoria around march 2000 and raised us$5million.

IIFL (India Infoline Ltd) - Corporate Structure

Management

Institutional Equities H.Nemkumar

Investment Banking Ajit Menon, Donald D' Souza

Consumer Finance Pratima Ram

Retail Broking Nandip Vaidya

Wealth Management Karan Bhagat

International Operations Bharat Parajia

Offshore Asset Management Deepesh Pandey

Insurance Distribution Mukesh Kumar Singh


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Important landmarks in the history of Indiainfoline Securities ltd

An Indiainfoline has emerged as one of the leading and fastest growing financial

company in less than two year, since its initial public offering in September 2004. It has a

market capitalization of around 6,300 million (31st December, 2010) and consolidated

net worth of the group is around USD 905 million.

1995

Incorporated as an Equity Research & Consulting firm

Client base included leading FIIs, Banks, Consulting firms &

Corporates

1999

Changed business model to embrace the Internet and launch

www.indiainfoline.com

First round of capital raising from reputed Private Equity

investors

2000

Started distribution of personal financial products

Launched online equity trading through www.5paisa.com

Started life insurance distribution as Corporate Agent.

2004

Acquired Commodities broking license

Launched Portfolio Management Service

2005

Debuted on the Indian stock markets

Launched proprietary trading platform Trader Terminal

Acquired membership of DGCX

Launched Wealth Advisory Services 2006


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2007 CLSA Institutional equities team joins

Formed Singapore subsidiary IIFL (Asia) Pte Ltd

Equity dilution in parent and subsidiaries to raise about

USD268Mn.

2008 Launched IIFL Wealth

Transitioned to insurance broking model

2009 Acquired registration for Housing Finance

SEBI in-principle approval for Mutual Fund

Obtained Venture Capital license

2010 Received in-principle approval for membership of the Singapore

Stock Exchange

Received membership of the Colombo Stock Exchange


25 | P a g e

3.2. INDUSTRY PROFILE

Financial Services Markets:

The process of fostering greater integration among various segments of the

financial markets which began with the financial sector reforms initiated in 1991-92,

gained further momentum in 1996-97. As a result, the role of financial markets is

increasingly becoming critical in a variety of ways:

In the mobilization and allocation of saving in the economy.

In transmitting signals for policy.

In facilitating liquidity management that is consistent with overall short-term and

medium-term objectives.

This unit, therefore, focuses on the development in different financial markets,

with emphasis on these markets.

Credit

Money

Capital

Government securities

Financial services markets play a main and a prominent role in mobilization of

savings from all quarters of economy for useful inputs for necessary formulation,

implementation of various policies. This will facilitate liquidity management in

consonance with the Macro economic environment of policy objectives. Regulators like

SEBI, RBI and the government of India monitor for the suitable sustained economic

growth in the economy.

In this context financial sector reforms like globalization, liberalization and

deregulation coupled with the technological advancement called integrated financial cum

technological innovation and creativity will us her in economic growth in the extended

economies of the world.


26 | P a g e

The Indian financial system funds flow in to the main economy for growth, from

financial institution, commercial banks, insurance companies, mutual fund, provident

funds, and from non banking finance companies, the deposits and shares are mobilized

from suppliers of funds like individuals, business and governments, financial markets

money markets and capital markets and the similar market needing funds approach the

financial institutions, private financial sources. Cyclical phenomenon is getting

established.

Stock Broking Services:

The working of the capital market is very technical, and highly sensitive, and

hence requires an expert knowledge of the rules and regulation. The stock broker acts as

an important intermediary between the investor, the company, and the stock exchange.

The stock broker is a member of a recognized stock exchange and is engaged in

buying, selling and dealing in various capital market securities. He has to observe the

discipline on maintaining adequate capital, registration with SEBI, payment of fees,

maintenance of books and records for the investors, and ensure fair play in the dealings.

He may or may not appoint a sub broker. A sub broker cannot enter into direct dealing

with stock exchange or other market players.

SEBI stock brokers rules and SEBI brokers regulations are important enactment,

which prefect the interests of the investor, the company and the stock exchange.

Bombay Stock Exchange:

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.


27 | P a g e

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 demutualised and corporative

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)

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 the participation 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-day operations 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 proprietary system of the Exchange and is BS 7799-2-2002 certified.

The surveillance and clearing & settlement functions of the Exchange are ISO

9001:2000 certified.


28 | P a g e

Stock Market:

Stock market refers to the organized market where securities are traded it

consists of investors, brokers or members of the stock exchange, companies, and

regulatory authority. The securities traded on the stock exchange include

various long term financial instruments, raised by the companies for meeting their

financial requirements.

In 2003, the Indian stock market made history. A sustained infoline run

for eight months enabled the Indian market to return the highest rise in Asia after

Thailand and much ahead of the competing regional tigers. The surge has

generated foreign institutional and individual interest in the Indian equity

market.

Today, there are 552 foreign institutional investors registered with the

market regulator and they have collectively pumped in a whopping $26.51

billion into Indian bourses as on May 31, 2010

National Stock Exchange:

The National Stock Exchange of India Limited has genesis in the report of

the High Powered Study Group on Establishment of New stock Exchanges, which

recommended promotion of a National Stock Exchange by financial institutions

(FIs) to provide access to investors from all across the country on an equal footing.

Based on the recommendations, NSE was promoted by leading Financial

Institutions at the behest of the Government of India and was incorporated in

November 1992 as a tax-paying company unlike other stock exchanges in the

country.

On its recognition as a stock exchange under the Securities Contracts

(Regulation) Act, 1956 in April 1993, NSE commenced operations in the

Wholesale Debt Market (WDM) segment in June 1994. The Capital Market

(Equities) segment commenced operations in November 1994 and operations in

Derivatives segment commenced in June 2000.


29 | P a g e

National Securities Depository Limited (NSDL):

India had a vibrant capital market which is more than a century old, the paper-

based settlement of trades caused substantial problems like bad delivery and delayed

transfer of title till recently. The enactment of | Depositories Act in August 1996 aved the

way for establishment of JSDL, the first depository in India. This depository promoted by

institutions of national stature responsible for economic development of the country has'

since established a national infrastructure of international standards-that handles most of

the securities held and settled in dematerialized form in the Indian capital market.

Using, innovative and flexible technology systems, NSDL works to support the

investors and brokers in the capital market of the country. NSDL aims at ensuring the

safety and soundness of Indian marketplaces by developing settlement solutions that

increase efficiency, minimize risk and reduce costs. At NSDL, we play a quiet but central

role in developing products and services that will continue to nurture the growing needs

of the financial services industry. In the depository system, securities are held in

depository accounts, which is more or less similar to holding funds in bank accounts.

Transfer of ownership of securities is done through simple account transfers.

Depository Participant:

Depository Participants (DP), who as per SEBI regulations could be organizations

involved in the business of providing financial services like banks, brokers, custodians,

financial institutions, etc. This system of using the existing distribution channel helps

NSDL to reach to a wide I cross section of investors spread across a large geographical

area. The admission of the DPs involves a detailed evaluation by NSDL and a further

evaluation and approval by SEBI. Realizing the potential in this market, all the

custodians in India and a number of banks, financial institution and major brokers have

already joined NSDL as DPs and they are providing services in a number of cities. Many

more organizations are in various stages of establishing connectivity with NSDL.


30 | P a g e

3.3. PRODUCT PROFILE

Business activities of India info line

Stock broking service

It is an undisputed fact that the stock market is unpredictable and yet enjoys a

high success rate as a wealth management and wealth accumulation option. The

difference between unpredictability and a safety anchor in the markets is provided by in-

depth knowledge of market functioning and changing trends, planning with foresight and

choosing the best options with care. This is what India infoline provide in its stock

broking services.

India infoline offer services that are beyond just a medium for buying and selling

stocks and shares. Instead it provides services which are multi dimensional and multi-

focused in their scope. There are several advantages in utilizing the company’s stock

broking services, which are among the best in the country.

Issue Registry Services

India infoline voyage towards becoming the largest transaction processing house

in the Indian Corporate segment, has enabled the company to mobilize funds for

numerous corporate, India infolines has emerged as the largest transaction-processing

house for the Indian Corporate sector. With an experience of handling over 700 issues.

India infoline today, have the ability to execute voluminous transactions and hard-core

expertise in technology applications has gained the company the No.1 slot, in the

business,India infoline awarded the best broker india award by finance Asia.

India infoline have the backing of skilled human resources complemented by

requisite technological packages to ensure a faster processing capability. India infolines

have the benefit of a good synergy between depositories and registry that enables faster

resolution to related customer queries.


31 | P a g e

Apart from its unique investor servicing presence in all the phases of a public

issue, it is actively coordinating with both the main depositories to develop special

models to enable the customer to access depository (NSDL, CDSL) services during an

IPO.

The company’s trust-worthy reputation, competent manpower and high-end

technology and infrastructure are the solid foundations on which India infoline success is

built.

Depository Service

The onset of the technology revolution in financial services industry saw the

emergence of India infoline as an electronic custodian registered with NSDL & CDSL in

2000. India infoline set standards enabling further comfort to the investor by promoting

paperless trading across the country and emerged as the top three DP in the country in

terms of customer serviced.

Offering wide trading platform with a dual membership at both NSDL & CDSL,

the company is a powerful medium for trading and settlement of dematerialized shares.

The company has established live DPM’s, internet access to accounts and an easier

transaction process in order to offer more convenience to individual and corporate

investors. A team of professional and the latest technological expertise allocated

exclusively to the company’s demat division including technological enhancements like

SPEED-e; make its response time quick and the company’s delivery impeccable. A wide

national network makes the company’s efficiencies accessible to all.

Financial product distribution service

The paradigm shift from pure selling to knowledge based selling drives the

business today. With its wide portfolio offerings, IndiaInfoline occupy all segments in

the retail financial services industry. A 1600 team of highly qualified and dedicated

professionals drawn from the best of academic and professional backgrounds are

committed to maintaining high levels of client service delivery. This has propelled us to a

position among the top distributors for mutual fund and debt issues with an estimated


32 | P a g e

market share of 18 % in terms of applications mobilized; besides being established India

Infoline the leading procurer in all public issues.

Private client group services

This specialized division was set up to cater to the high net worth individuals and

institutional clients keeping in mind that will augment not just existing financial but their

life style as well. Here, the company follows a hard-nosed business approach with the

soft touch of dedicated customer care and personalized attention. For this purpose the

company offers a comprehensive and personalized service that encompasses planning and

protection of finances, planning of business needs and retirement need and a host of other

services, all provided on a one – to one basis.

Corporate Shareholder Services

An Indiainfoline has been a customer centric company since its inception. India

infolines offers a single platform servicing multiple financial instruments in its bid to

offer complete financial solutions to the varying needs of both corporate and retail

investors where an extensive range of services are provided with great volume-

management capability.

Today, Indiainfoline is recognized as a company that can exceed customer

expectations which is the reason for the loyalty of customers towards India infoline for all

his financial needs. An opinion poll commissioned by “The Merchant Banker Update”

and conducted by the reputed market research agency, MARG revealed that an India

infoline was considered the “Most Admired” in the registrar category among financial

services companies.

The company has grown from being a pure transaction processing business, to

one of complete shareholder solutions.

Planning and Advisory Services

To further tap the immense growth potential in the capital markets the company

has introduced India infoline to provide planning and advisory services to the mass


33 | P a g e

affluent. The companies study the customer needs and lifestyle in the context of present

earnings and provide adequate advisory services that will necessarily help in creating

wealth. Judicious planning that is customized to meet the future needs of the customer

deliver a service that is exemplary. The market-savvy and the ignorant investors, both

find this service very satisfactory. The edge that the company has over competition is its

portfolio of offerings and India infoline’s professional expertise. The investment planning

for each customer is done with an unbiased attitude so that the service is truly

customized. India infoline’ weekly wrap, provides up-dated market information on

market trends, investment options, opinions etc. thus empowering the investor to base

every financial move on rational thought and prudent analysis and embark on the path to

wealth creation.

Under its retail brand India infoline – the magazine, the company deliver advisory

services to a cross-section of customers. The service is backed by a team of dedicated and

expert professionals with varied experience and background in handling investment

portfolios. They are continually engaged in designing the right investment portfolio for

each customer according to individual needs and budget considerations with a

comprehensive support system that focuses on trading customers’ portfolios and

providing valuable inputs, monitoring and managing the portfolio through varied

technological initiatives. This is made possible by the expertise the company has gained

in the business over the years.

Another venture towards being investor-friendly is the circulation of a weekly

wrap called ‘India infoline weekly wrap. Covering the latest of market news,trends,

investment schemes and research-based opinions from experts in various financial fields.

IT Enabled Services

India infoline technology services division forms the ideal platform to unleash our

technology initiatives and visory Services.

India infoline through its team of professionally trained and dedicated employees

and its network of branchemake the company’s presence felt on the internet. India

infolines past achievements include many quality websites designed, developed and


34 | P a g e

deployed by it. The company also possesses its own web hosting facilities with dedicated

bandwidth and a state-of-the-art server farm (data center) with services functioning on a

variety of operating platforms such as Windows, Solaris, Linux and UNIX.

The corporate website of the company, www.indiainfoline.com”, gives access to

in-depth information on financial matters including Mutual Funds, IPO’s, Fixed Income

Schemes, Insurance, Stock Market and much more. A link call ‘Resource Center’,

devoted solely to research conducted by the company’s team of experts on various

financial aspects like ‘Sector Research’, deals exclusively with in-depth analysis of the

key sectors of the Indian economy, besides, a host of other links like ‘My portfolio’

which acts as a personalized and customized financial measure, makes this site extremely

informative about investment options, market trends, news as also about the company and

each of the services offered by it.

Mutual fund service

India infoline have attained a position of immense strength as a provider of across

the board transfer agency services to AMCs, Distribution and investors.

Nearly 40 % of the top notch AMCs including prestigious clients like deutsche

AMC and UTI swear by the quality and range of services that the company offer. Besides

providing the entire back office processing, India infoline providing the like between

various Mutual fund and the investor, including services to the distributor, the prime

channel in this operation. Carrying the limitless ideology forward, the company has

explored new dimensions in every aspect of mutual fund servicing right from volume

management, cost effective pricing, and delivery in the least turnaround time, efficient

back-office and front-office operations to customized service. The company has been

with the AMC every step of the way, helping them serves their investors better by

offering them a diverse and customized range of services. The first to market approach

that is the company’s anthem has earned India infoline the reputation of an innovative

service provider with a visionary bent of mind.


35 | P a g e

The company’s service enhancements such as India infoline covers, a full-

fledged call center, a top-line website (www.indiainfoline.com), creating a galaxy of

custom Personal Finance Ads is offering a variety of personal finance advisory services

to its clients. The services include personal loans, auto loans, home loans and insurance

services to the clients.

India infoline provide both life and non-life insurance products to retails

individuals, high net-worth clients and corporate. With the opening up of the insurance

sector, the company is in a position to provide holistic and tailor made policies for

different segments of customers. With Indian markets seeing a sea change, both in terms

of investment pattern and attitude of investors, insurance is no more seen as only a tax

saving product but also as a product which provides a financial solution for the customer.

India infoline wide national network, spanning the length and breadth of India, further

supports these initiatives. Company’s strengths include personalized service provided by

a dedicated team committed in giving hassle-free service to the clients.

India infoline Computer share

As the flagship company of the India infoline group, India infoline Consultants

Limited has always remained at the helm of organizational affairs, pioneering business

policies, work ethic and channels of progress.

Having emerged as a leader in the registry business, the first of the businesses that

the company ventured into, India infoline has now transferred this business into a joint

venture with Computer share Limited of Australia, the world’s largest registrar. With the

advent of depositories in the Indian capital market and the relationships that the company

has crated in the registry business, the company believes that the India infoline was best

positioned to venture into this activity as a Depository Participant. India infoline were

one of the early entrants registered as a Depository Participant with NSDL (National

Securities Depository Limited), the first Depository in the country and then with CDSL

(Central Depository Services Limited). Today, India infoline service over 6 lakhs

customer accounts in this business spread across over250cities/towns in India and are

ranked amongst the largest Depository Participants in the country. With a growing

http://www.indiainfoline.com/


36 | P a g e

secondary market presence, the company transferred this business to India infolines Stock

Broking Limited (ISBL), the company’s associate and a member of NSE, BSE and HSE.

Quality objectives of India info line

The Quality objectives of India infoline are as follows

Build in-house processes that will ensure transparent and harmonious relationship

with its investors to provide high quality of services.

Establish a partner relationship with its investor service agents and vendors that

will help in keeping up its commitments to the customers.

Provide high quality of work life for all its employees and equip them with

adequate knowledge & skills so as to respond to customer’s needs.

Continue to uphold the values of honesty & integrity and strive to establish

unparalleled standards in business ethics.

Use state-of-the art information technology in developing new and innovative

financial products and services to meet the changing needs of investors and

clients.

Strive to be a reliable source of value added financial products and services and

constantly guide the individuals and institutions in making a judicious choice of

same. Strive to keep all stakeholders proud and satisfied.

Major achievements of India infoline

The Major achievements of India infolines as follows

Among the top five stock brokers in India infoline (8 % of NSE volumes )

India’s No.3 registrar & securities transfer agents,

Among the two top three depository participants ,

Largest network of branches & business associates ,

ISO 9002 certified operations ,

Among top 10 investment bankers,

Largest distributor of financial products ,

Adjudged as one of the top 50 IT uses in India by MIS Asia ,

Fully fledged IT driven operations.


37 | P a g e

CHAPTER - IV

RESEARCH METHODOLOGY

4.1. OBJECTIVES OF THE STUDY

Primary Objective

To find out the factors influencing the investors’ behavior to invest in capital

market in Chennai

Secondary Objectives

To find the reasons for investors’ preference to invest in Equity share.

To study the factors for selecting specific securities on which the investors prefer to

invest their funds.

To study the problems faced by the individuals & speculators while investing in

Equity shares.

Sampling Plan

Sampling is a procedure to draw conclusion about large of population by

studying a small of the universe. It consists of 3 following parts.

Sampling Units

In this study, the research has addressed questionnaire to the clients of

India Infolines.

Sample Size

In this study, the sample size was 100.

Sampling Method

The sampling method used in this study can be defined as Random Sampling.


38 | P a g e

Sampling Design

Sampling is only a tool which helps to known the characteristics of the

universe (or) population by examining only a small part of it.

Sampling Technique

Sampling Technique were used to select the respondent to get the results

for the questionnaire was adopted because the huge mass of people. It cannot be

possible to have met all these and it is not easy to collect the information which

was with required in a short span of time. The sampling technique followed was

Random Sampling.

Random Sampling

Random Sampling is the sampling by which the data are collected from

the respondents by calling their names randomly.


39 | P a g e

CHAPTER - V

DATA COLLECTION

ANALYSIS AND INTERPRETATION

Data Collection Method:

Primary Data

Primary data refers to the data which are collected first hand by the investigation

concerned. Primary data will give scientific solution, exhibit clarity and non-offending.

So it is reliable one. Findings will be result oriented provided data are primary ones.

Questionnaire can be used on a primary data.

Secondary Data

Data which are not originally collected but collected from either published or

unpublished sources are called secondary data.

Questionnaire Construction

While designing the questionnaire for the research, basic objective for the study

was kept in mind. The questionnaire consists of 19 questions. The 19 questions have

been put under service headings “factors influencing the investors to invest in capital

market”.

Tool for Analysis

Statistical tools used for analysis are :

Chi-Squire test


40 | P a g e

ANALYSIS AND INTERPRETATION

Table - 1

Table showing the gender wise classification

S.No Option No of respondent Percentage

1 Male 71 71

2 Female 29 29

Total 100 100

Source : Primary Data

INFERENCE :

From the above table it was found that among 100 respondents 71% of them are

male and 29% of them are female.

Figure - 1

Figure showing the gender wise classification

Male

71%

Female

29%


41 | P a g e

Table-2

Table showing the age wise classification of Respondents


1 Below 30 23 23

2 31-40 35 35

3 41-50 24 24

4 Above 50 18 18

Total 100 100


INFERENCE :


between 31 – 40, 24% of them are 41 – 50, 23% are below 30 years and 18% of them are

above 50 years.

Figure -2

Figure showing the age wise classification of Respondents

23

35

24

18

0

5

10

15

20

25

30

35

40

Below 30 31-40 41-50 Above 50

Age Group

Perc

en

tag

e


42 | P a g e

Table-3

Table showing the education wise classification of Respondents


1 Up to 10th std 5 5

2 XII std 7 7

3 Degree/diploma 20 20

4 Post graduate 23 23

5 Professionals 45 45

Total 100 100


INFERENCE :


professionals, 23% of them are post graduate, 20% are Degree/ Diploma, 7% are XII

Standard and 5% of them are upto 10 standard.

Figure -3

Figure showing the education wise classification of Respondents

57

2023

45

0

5

10

15

20

25

30

35

40

45

50

Up to 10th std XII std Degree/diploma Post graduate Professionals

Education Level

Perc

en

tag

e


43 | P a g e

Table – 4

Table showing the occupation wise classification of Respondents


1 Government employee 12 12

2 Public sector undertaking 15 15

3 Private company 27 27

4 Business 30 30

5 Professional 16 16

Total 100 100


INFERENCE :


doing business, 27% are in private company, 16% are professionals, 15% are in public

sector undertaking and 12% of them are government employees.

Figure – 4

Figure showing the occupation wise classification of Respondents

12

15

27

30

16

0

5

10

15

20

25

30

Perc

en

tag

e

Government

employee

Public sector

undertaking

Private

company

Business Professional

Occupation


44 | P a g e

Table – 5

Tabling showing the monthly income of the Respondents


1 Up to 25,000 34 34

2 25,001-50,000 31 31

3 50,001-75,000 22 22

4 Above 75,000 9 9

Total 100 100


INFERENCE :

From the above table it was found that among 100 respondents, 34% of them are

earning upto Rs.25,000, 31% are earning Rs.25,001 – 50,000, 22% are between

Rs.50,001 – 75,000 and only 9% are earning above Rs.75,000 as monthly income.

Figure – 5

Figure showing the monthly income of the Respondents

34

31

22

9

0

5

10

15

20

25

30

35

Perc

en

tag

e

Up to 25,000 25,001-50,000 50,001-75,000 Above 75,000

Monthly income


45 | P a g e

Table – 6

Table showing the Respondents’ trading experience in Capital market


1 Less than 2 years 32 32

2 2-4 years 29 29

3 4-6 years 24 24

4 Above 6 years 15 15

Total 100 100


INFERENCE :


less than 2 years, 29% of them are 2 – 4 years, 24% of them are 4 – 6 years and 15% are

above 6 years.

Figure – 6

Figure showing the Respondents’ trading experience in Capital market


46 | P a g e

Table - 7

Table showing the various investment avenues of the Respondents

S.No Option s No of respondent Percentage

1 Bank deposits 25 25

2 Postal R.D(or)savings 20 20

3 Share market 40 40

4 Insurance 15 15

Total 100 100


INFERENCE :


invested in Share Market, 25% are invested in Bank Deposits, 20% are in postal RD and

15% of them are invested in Insurance.

Figure - 7

Figure showing the various investment avenues of the Respondents

25

20

40

15

0

5

10

15

20

25

30

35

40

Perc

en

tag

e

Bank deposits Postal

R.D(or)savings

Share market Insurance

Investment Schemes


47 | P a g e

Table - 8

Table showing the interest of the respondents in the various type of trading


1 IPO 30 30

2 Equity 40 40

3 Mutuality 20 20

4 Commodity 10 10

Total 100 100


INFERENCE :


interested in equity trading, 30% are interested in IPO, 20% are interested in mutuality

and 10% of them are interested in commodity trading.

Figure -8

Figure showing the interest of the respondents in the various type of trading

IPO

30%

Equity

40%

M utuality

20%

Commodity

10%


48 | P a g e

Table-9

Table showing expected returns of Respondents in Capital Market


1 Less than 10% 30 30

2 10%-15% 24 24

3 15%-20% 28 28

4 Above 20% 18 18

Total 100 100


INFERENCE :

From the above table it was found that among 100 respondents 30% are earning

less than 10%, 28% of them are earning 15-20%, 24% of them earning 10-15%, and 20%

are earning above 18%

Figure-14

Figure showing expected returns of Respondents in Capital Market

Less than 10%

30%

10%-15%

24%

15%-20%

28%

Above 20%

18%


49 | P a g e

Table - 10

Table showing the Respondents’ portfolio size of their investment


1 Up to 1,00,000 24 24

2 Rs.1,00,001-Rs.2,00,000 25 25

3 Rs.2,00,001-Rs.3,00,000 34 34

4 Above Rs.3,00,000 17 17

Total 100 100


INFERENCE :


between Rs.2,00,001 to Rs.3,00,000, 25% are between 1 Lakh to 2 Lakh, 24% are upto

Rs.1,00,000 and 17% of them are above Rs.3,00,000.

Figure - 10

Figure showing the Respondents’ portfolio size of their investment

24 25

34

17

0

5

10

15

20

25

30

35

40

Up to 1,00,000 Rs.1,00,001-

Rs.2,00,000

Rs.2,00,001-

Rs.3,00,001

Above Rs.3,00,000

Size of the Portfolio

Perc

en

tag

e


50 | P a g e

Table – 11

Table showing the Respondents’ objective to invest in Capital Market


1 To earn dividends 15 15

2 To earn short term gains 45 45

3 To earn long term capital gains 30 30

4 To take part in management of the

company

10 10

Total 100 100


INFERENCE :

From the above table it was found that among 100 respondents, 45% of their

objective is to earn short term gains, 30% of them are to earn long term capital gains,

15% of them are to earn dividends and 10% to take part in management of the company.

Figure – 11

Figure showing the Respondents’ objective to invest in Capital Market

15

45

30

10

0

5

10

15

20

25

30

35

40

45

Perc

en

tag

e

To earn

dividends

To earn short

term gains

To earn long

term capital

gains

To take part in

management of

the company

Objectives


51 | P a g e

Table – 12

Table showing the factors that induce the respondents to invest in share


1 High return 55 55

2 Safety for funds 30 30

3 Interest rate 10 10

4 Others 5 5

Total 100 100


INFERENCE :


invest to earn high return, 30% of them are safety for funds, 10% of them are to earn

interest rate and 5% of them are investing for other purpose.

Figure – 12

Figure showing the factors that induce the respondents to invest in share

High return

55%Safety for funds

30%

Interest rate

10%

Others

5%


52 | P a g e

Table-13

Table showing the factors that influence the respondent to invest in particular share


1 Nature of industry 25 25

2 Goodwill of the company 21 21

3 Companies past performance 17 17

4 Companies future performance 18 18

5 Volume of the shares traded 19 19

Total 100 100


INFERENCE :

From the above table it was found that among 100 respondents 25% of them

because nature of thr industry, 21% are because goodwill of the company,19% are

because volume of shares traded, 18% are because companies future performance.

Figure - 13

Figure showing the factors that influence the respondent to invest in particular

share


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Table - 14

Table showing the various risk factors involved in the share market

S.No Option Yes Percentage No Percentage

1 Company specific risk 22 22 5 5

2 Interest risk 5 5 12 12

3 Inflation risk 25 25 2 2

4 Market risk 23 23 6 6

Total 75 75 25 25


INFERENCE :


feels inflation risk is there, 23% of them are feels market risk is there, 22% of them are

feels company specific risk is there and 5% of them feels interest risk is there.

Figure - 14

Figure showing the various risk factors involved in the share market


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Table-15

Table showing the various analysis done by the respondent while selecting the share


1 On the basis of fundamental analysis 25 25

2 On the basis of technical analysis 19 19

3 On the basis of tips from brokers 25 25

4 On the basis of advise from friends 20 20

5 On the basis of intuition 15 15

Total 100 100


INFERENCE :


based on fundamental analysis , 19% of them based on technical analysis, 20% of them

based on advice from friends, 25% based on tips from brokers and 15% of them are based

on the intuition.

Figure -15

Figure showing the various analysis done by the respondent while selecting the

share

25

19

25

20

15

0

5

10

15

20

25

Perc

en

tag

e

On the basis

of

fundamental

analysis

On the basis

of technical

analysis

On the basis

of tips from

brokers

On the basis

of advise

from friends

On the basis

of intuition

Selection Basis


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Table - 16

Table showing the factors that influence to select the particular investment

consultant/ broker for service


1 Cash delivery in time 25 25

2 Share delivery in time 24 24

3 Quick order receiving 19 19

4 Making the correct transfer of

shares

17 17

5 Confidentiality 15 15

Total 100 100


INFERENCE :

From the above table it was found that among 100 25% of them are selecting

because of cash delivery in time 24% of them selecting because share delivery in

time,19% because of quick order receiving, 17% of them selecting because of correct

transfer of share, and 15% are selecting because of confidentially

Figure -16

Figure showing the factors that influence to select the particular investment

consultant/ broker for service

2524

19

17

15

0

5

10

15

20

25

30

Cash delivery in

time

Share delivery in

time

Quick order

receiving

M aking the correct

transfer of shares

Confidentiality

Guidelines given by the Consultancy

Perc

en

tag

e


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Table-17

Table showing the importance of Sensex and nifty at the time of investment


1 Highly important 80 80

2 Important 18 18

3 Either important or unimportant 1 1

4 Unimportant 1 1

5 Highly unimportant 0 0

Total 100 100


INFERENCE :


feels sensex and nifty are highly important while investing, 18% of them are feels

important and 1% of them are feels unimportant.

Figure-17

Figure showing the importance of Sensex and nifty at the time of investment

80

18

1 1 0

0

10

20

30

40

50

60

70

80

90

Highly important Important Either important or

unimportant

Unimportant Highly unimportant

Guidelines given by the Consultancy

Perc

en

tag

e


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Table - 18

Table showing the various consultant through which the respondents buying the

share


1 India infoline 55 55

2 Karvy 10 10

3 Apollo 10 10

4 India Bull 20 20

5 Kodak Mahindra 5 5

Total 100 100


INFERENCE :

From the above table it was found that among 100 respondents 55 % of them are

buying through India infoline, 10% of them through karvy, 10% of them through Apollo,

20% of them through India Bull, 5% of them through Kodak Mahindra

Figure- 18

Figure showing the various consultant through which the respondents buying the

share

55

10

5

25

5

0

10

20

30

40

50

60

Percentage

India infoline Karvy Apollo India Bull

Kodak

Mahindra

Investment Consultancy


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Table - 19

Table showing the various guidelines given by the investment consultant/ brokers


1 Buy the share in time 32 32

2 Sell the share in time 24 24

3 To select the particular

company share

18 18

4 Future performance of shares 26 26

Total 100 100


INFERENCE :

From the above table it was found that among 100 respondents 32 % of them are

told to buy the shares in time, 24% of them saying to sell the share in time, 26% of the

respondents says long term preference and 18% of the respondents to select the particular

company share.

Figure- 19

Figure showing the various guidelines given by the investment consultant/ brokers


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CHISQUARE TEST

CHI SQUARE ANALYSIS I

TABLE –12

Hypothesis:

There is relationship between investor to invest in a share and

investors to invest in a particular share of the respondents to invest in share.

CHI-SQUARE TEST

Formula

(O-E) 2

2 =

E

O = Observed frequency

E = Expected frequency

2 = Chi-square value

From table 12

Observed N Expected N Residual

High return 16 15.3 .8

Safety for fund 30 15.3 14.8

Interest rate 10 15.3 -5.3

others 5 15.3 -10.3

Total 61


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From table 13

Observed N Expected N Residual

Nature of industry 25 20.0 5.0

Goodwill of the company 21 20.0 1.0

Companies past performance 17 20.0 -3.0

Companies future performance 18 20.0 -2.0

Volume of the share traded 19 20.0 -1.0

Total 100

Test Statistics

thirteen fourteen

Chi-Square 23.000a 2.000b

df 3 4

Asymp. Sig. .000 .736

a. ) 0 cells (.0%) have expected frequencies less than 5. The minimum

expected cell frequency is 15.3.

b.) 0 cells (.0%) have expected frequencies less than 5. The minimum expected

cell frequency is 20.0.

Degree of freedom 12

The calculated value is less than the table values therefore rejects the alternate hypothesis

and accepts the Null hypothesis. Hence, there is no association exists between the

importance of INVESTMENT IN SHARE AND INVESTING IN A PARTICULAR

SHARE.


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CHAPTER - VI

FINDINGS, SUGGESTIONS AND CONCLUSION

6.1.FINDINGS

1) It is found that 71% of the respondents are male and 29% is female.

2) It is found that 35% of the respondents are aged between 31 to 40 years.

3) It is found that 45% of the respondents are professions, 23% are post graduate and

only 7% of the respondents are XII standard.

4) It is found that 30% of the respondents’ occupation is business, 27% is public

undertaking company and only 12% is government employees.

5) It is found that 30% of the respondents invest their funds in share market, 25% in

bank deposits and only 15% in insurance.

6) It is found that 30% of the respondents interested to invest in IPOs and 40% of them

interested to trade in equity and only 20% of them like to invest in mutual funds.

7) It is found that 34% of the respondents are earning upto Rs.25,000/-, 31% of the

respondents are earning between Rs.25,001/- to Rs.50,000/- and only 22% of the

respondents are earning between Rs. 50,001/- to Rs.75,000/- per month.

8) It is found that 32% of the respondents have trading experience less than years, 29%

of the respondents are between below 2 to 4 years and only 24% is between below 4

to 6 years.


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9) It is found that 34% of the respondents’ portfolio size is between Rs.2,00,000 -

Rs.3,00,000 and 25% is between Rs.1,00,000 to Rs.2,00,000 and only 17% is above

Rs.3,00,000.

10) It is found that 45% of the respondents’ main objective is to earn short term gain,

30% is to earn long term gain and 10% is to take part in the management of the

company.

11) It is found that 30% of the respondents earning less than 10% return and only 18% of

the respondents earning above 20%.

12) It is found that 55% of the respondents are chosen India infoline as their consultant/

broker, and 10% each on Karvy and Apollo Sindhoori.

13) It is found that 25% of the respondents have told that broker must give their services

in cash delivery in time to select them and only 15% on maintaining confidentiality.

14) It is found that 25% of the respondents have told that nature of the industry is

important while purchasing particular company share, 21% of them told that goodwill

of the company is important and 17% have told that company’s past performance is

important.

15) It is found that 25% of the respondents told that fundamental analysis and tips from

broker are main factors to select specific securities to buy and only 15% on the basis

of their intuition to buy the securities.

16) It is found that 28% of the respondents select ‘Yes’ for market risk is the factors

involved in equity investment, 17% as company’s specific risk, 12% as ‘No’ for

interest risk and 25% chose ‘Yes’ for inflation risk.

17) It is found that 55% of the respondents are investing their money for high return, 30%

for safety of funds, 10% for interest rate and only 5% for others.


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18) It is found that 92% of the respondents told that Sensex and nifty are highly important

while buying the shares.


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6.2. SUGGESTIONS

1) Through this study it is found that 45% and 23% of the respondents are professionals

and Postgraduates respectively. So most of the investors are well educated.

2) Through this study it is found that 40% of the respondents are like to invest in share

market, it is not a big percentage, so investors should be motivated to invest in share

market to gain more profit.

3) Through this study it is found that 32% and 29% of the respondents are only less than

2 years and 2 – 4 years experienced in trading. So brokers should give guidelines to

trade in capital market to gain more profit. This automatically increase their

individual volume of trading in shares which gives more profit/ brokerage to the

company.

4) Through this study it is found that 45% of the respondents like to earn short term gain

and 30% like to earn long term gain, so brokers has to make note that they should

make profit to get short term and long term gain.

5) Through this study it is found that 30% of the respondents are getting less than 10%

return of their investment, 28% and 24% of them are earning 15% to 20% return and

10% to 15% return respectively. The guidelines given by the brokers is not much

satisfied, it is better to give more services for earning more profit to the clients so that

the clients are satisfied.

6) Through this study it is found that 55% have chosen India Infolines as their

investment consultant. This is not a satisfied percentage, so consultancy must take

steps to attract investors to invest in India infoline by giving less brokerage charges

to the clients etc.

7) Through this study it is found that delivery of cash and share in time is important for

broker to attract the investors. So the brokers should maintain the same.


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8) Through this study it is found that respondents purchase the share on the basis of

fundamental analysis and tips from brokers. So brokers should give valid tips for the

clients to gain more profit and this will help to increase their investment size. This is

good to the company.

9) Through this study it is found that 55% of the respondents want high returns, so the

brokers must make more profit to the investors.

10) Through this study it is found that 34% of the respondents maintaining their portfolio

size between Rs.2,00,000 to Rs.3,00,000. This is good to the company, but only 24%

are maintaining their portfolio size upto Rs.1,00,000/-. So brokers should give proper

service and guidelines to increase the portfolio size of all the investors.


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6.3.CONCLUSION

India infoline is one of the leading consultancies in India. It provides services to

their investors towards earn more return from their investment. And also India info line

offer services that are beyond just a medium for the buying and selling of stocks and

shares. Instead India infoline provide services which are multidimensional and multi-

focused their scope. There are several advantages in utilizing India Infolines Stock

Broking services, which are the reasons why it is one of the leading consultancy in the

country. So we believe that after some year India infoline can deserve first place in their

services.

A STUDY ON THE FACTORS THAT NFLUENCE INVESTORS TO INVEST IN CAPITAL MARKET.

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Transcript of A STUDY ON THE FACTORS THAT NFLUENCE INVESTORS TO INVEST IN CAPITAL MARKET.