INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

105
INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES Submitted in partial fulfillment of the requirements for the award of Master of Business Administration by RAM.G (Reg. No. 3241319) DEPARTMENT OF MANAGEMENT STUDIES FACULTY OF BUSINESS ADMINISTRATION SATHYABAMA UNIVERSITY JEPPIAAR NAGAR, RAJIV GANDHI SALAI, CHENNAI 600119. TAMILNADU. APRIL 2014

description

This is an original project undertaken by me at ICICI Securities Limited, Chennai with a project duration of 2 months. This project work is bilaterally sound as the main aim was to market a finance product.

Transcript of INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

Page 1: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

Submitted in partial fulfillment of the requirements for the award of

Master of Business Administration

by

RAM.G (Reg. No. 3241319)

DEPARTMENT OF MANAGEMENT STUDIES

FACULTY OF BUSINESS ADMINISTRATION

SATHYABAMA UNIVERSITY

JEPPIAAR NAGAR, RAJIV GANDHI SALAI,

CHENNAI – 600119. TAMILNADU.

APRIL 2014

Page 2: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

SATHYABAMA UNIVERSITY (Established under Section 3 of UGC Act, 1956)

Jeppiaar Nagar, Rajiv Gandhi Salai, Chennai - 600 119 www.sathyabamauniversity.ac.in

DEPARTMENT OF MANAGEMENT STUDIES

BONAFIDE CERTIFICATE

This is to certify that this Project Report is the bonafide work of Ram.G (Reg. No.

3241319) who carried out the project entitled “INVESTMENT OPPORTUNITIES

AVAILABLE IN ICICI SECURITIES” under our supervision from December 2013 to

February 2014.

Internal Guide External Guide

Mrs.S.JOYCE, MBA, Ph.D Mr.S.SUKUMAR

Head of the Department

Dr. S. MUTHUMANI

Submitted for Viva voce Examination held on_____________________ Internal Examiner External Examiner

Mrs.S.JOYCE, MBA, Ph.D

Page 3: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

DECLARATION

I RAM.G (Reg.No. 3241319) hereby declare that the Project Report entitled

“INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES” done by me

under the guidance of Mrs.S.JOYCE, MBA, Ph.D (Internal) and Mr.S.SUKUMAR

(External) at ICICI SECURITIES Ltd., Chennai is submitted in partial fulfillment of the

requirements for the award of Master degree in Business Administration.

SIGNATURE OF THE CANDIDATE

DATE: PLACE:

Page 4: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

ACKNOWLEDGEMENT

My sincere thanks to our Honorable Founder and Chairman Col. Dr. JEPPIAAR.,

M.A., B.L., Ph.D, Chancellor, Sathyabama University, Tamil Nadu, Chennai, India for

his sincere endeavour in educating us in this premier institution.

I would like to express my deep gratitude and heartfelt thanks to our beloved Directors

Dr. Marie Johnson B.E., M.B.A.. M.Phil., Ph.D., and Dr. Mariazeena Johnson B.E.,

M.B.A., M.Phil., Ph.D., for motivating me to complete this project work.

I would like to place my graceful thanks to Dr. B. Sheela Rani, M.S. (By

Research), Ph.D., Vice Chancellor for the assistance and encouragement offered

throughout my project work period.

I express my heartfelt thanks to Dr. S. S. Rau, M.B.A., Ph.D., Registrar and

sincere thanks to Dr. K.V. Narayanan. M.E., Ph.D., Controller of Examinations,

Sathyabama University for their valuable support offered to conclude my project. I

wish to express my deep sense of gratitude to Dr. S. Muthumani Ph.D., Head of the

Department his valuable suggestions and encouragement offered throughout my

project work.

I wish to express my sincere thanks to my Internal Project Guide Mrs.S.Joyce,

MBA, Ph.D and External Project Guide Mr.S.Sukumar, Executive Sales Manager,

ICICI Securities, for their constant support at all the stages of the project work. I would

also like to thank all the Faculty Members, Department of Management Studies for their

help rendered to complete my project work in time.

RAM.G

Page 5: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

ABSTRACT

The research work is undertaken on the Study of Investment opportunities with special

reference to ICICI Securities Ltd. The main objective of the research is to identify the

investment pattern of investors in ICICI Securities, particularly in Nanganallur area. The

secondary objective is to study the investment decisions of investors and to study the

difference between various investment options offered by ICICI Securities.

The research study conducted is descriptive in nature. Both primary and secondary

data are collected to meet the requirements. For collecting data a structured

questionnaire method is used as an instrument. The questionnaire consists of multiple

choices, open ended and close ended questions.

The sampling procedure followed in this study is convenient sampling, which is a non-

probability sampling and the sample size is 150.

Percentage analysis, Two-way ANOVA and Chi-Square Test were used for the

research purpose.

The study reveals that many investors alter their investment pattern when there are

market fluctuations.

The study found that investment objective of most of the investors’ is wealth

preservation and that most of the respondents invest daily.

The study indicated that investment in e-gold equity scheme is considered less risky.

Investments in mutual funds and F&O are considered as high risk.

The study reveals that many investors invest in the equity market with the hope of

growth of their investment in the future.

The study suggests that awareness level should be created about different investment

alternatives so that the investor may diversify his portfolio to reduce his risk.

Page 6: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

CHAPTER – 1

INTRODUCTION

Page 7: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

INTRODUCTION

Investment is an art provided it is well learnt. Learning to live with the anxiety of the

unknown is part of investing. Investing is not about gambling or speculation, it is about

taking reasonable risks to get steady rewards. Investment is as simple as jumping into

opportunities rather than conclusions. One can invest in capital market as it is beneficial

to him/her in three ways viz, Capital appreciation, Dividend and Bonus.

Out of the Indian population of 1.21 billion people (as on Dec 2013), only 2% are

into the capital market. The study is oriented with analyzing the investment opportunities

available in ICICI Securities. As such, the study also includes analysis of the investment

pattern of investors according to their portfolio and decisions taken by them when

making an investment.

An investment refers to the commitment of funds at present, in anticipation of

some positive rate of return in future. Today the spectrum of investment is indeed wide.

An investment is confronted with array of investment avenues. Among all investment,

investment in equity is in best high proportion. This is because the history of stock

market is booming and bursts overnight millionaires, an instant pauper.

Indian economy is doing indeed well in recent years. The study has been

undertaken to analyze the investment pattern of investors in ICICI Securities residing in

Nanganallur. The main reasons behind the study are the factors investment decision,

time horizon, frequency of investment and the risk taking ability of the investors. The

percentage of Indian investors investing in the Indian equity market is very less as

compared to foreign investors.

Page 8: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

A financial market is a mechanism that allows people to easily buy and sell

(trade) financial securities (such as stocks and bonds), commodities (such as precious

metals or agricultural goods), and other fungible items of value at low transaction costs

and at prices that reflect the efficient market hypothesis.

Financial markets have evolved significantly over several hundred years and are

undergoing constant innovation to improve liquidity. The Indian financial market has

also grown substantially. The Indian stock markets are now amongst the best in the

world in terms of modernizations and the technology. India was among the few

countries, which was not badly affected by the contagion effects of the Asian crisis of

1997. Policy makers attribute this to the slow and cautious pace of capital account

liberalization.

Today–with the ‘feel good’ factor about India in the global arena rising, increased

confidence of the investors in the Indian market, Sensex looking more attractive than

ever before, foreign exchange reserves at an all-time high of more than $140 billion – is

the most vulnerable period for the regulators of the Indian financial sector, particularly

SEBI and RBI.

The financial markets can be divided into different subtypes:

1. Capital market which consists of: Stock markets, which provide financing through the

issuance of shares or common stock, and enable the subsequent trading thereof.

2. Bond market, which provide financing through the issuance of Bonds, and enable the

subsequent trading thereof.

3. Commodity markets, which facilitate the trading of commodities.

4. Money market, which provide short term debt financing and investment.

Page 9: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

Money market has the following investment alternatives:

1. Derivatives market, which provide instruments for the management of financial

risk.

2. Futures market, which provide standardized forward contracts for trading

products at some future date.

3. Insurance market, which facilitates the redistribution of various risks.

4. Foreign exchange market, which facilitates the trading of foreign exchange.

The capital markets consist of primary markets and secondary markets. Newly

formed (issued) securities are bought or sold in primary markets. Secondary markets

allow investors to sell securities that they hold or buy existing securities.

ICICI Securities Limited amongst the leading Brokerage Houses and the value

based financial services which make it preferred service provider. As India’s fastest

growing financial services conglomerate, with deep moorings in the Indian economy for

over five decades, ICICI Group of companies have endeavored to contribute to address

the challenges posed to the community in multiple ways.

The ICICI group has following companies which include: ICICI Bank, ICICI

Prudential Life Insurance Company, ICICI Securities Limited, ICICI Securities Primary

Dealership Limited, ICICI Lombard General Insurance Company, ICICI Prudential Asset

Management Company, and ICICI Venture.

It provides prime brokerage services in the area of Equity, Commodities,

Derivatives Depository services, IPO Underwritings, Mutual Fund Distribution, insurance

product distribution, the company also provides investment management services like

Portfolio Management Services, Portfolio Advisory Services.

Page 10: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

The study will be focusing on the investment pattern adopted by the investors,

areas of investment available to investors and how their behavior is changing. They are

now leaving behind the traditional approach of investment like fixed deposits, gold, post

office schemes, bank deposits etc.

Investors are now looking towards new diversification of their wealth by making

investment in mutual funds, capital market, derivatives, insurance, ETF(Exchange

traded funds) etc. Like most developed and developing countries Indian investors are

searching for new investment avenues.

Mutual funds have become one of the largest financial intermediaries in the

leading world economies. Every person has his/her own set of plans for savings to meet

any financial adversity in future that suddenly occurs and to be a market leader the

company has to be aware of its competitors and investors behavior as the competition

is very high.

A mutual fund is a form of collective investment that pools money from many

investors and invests their money in stocks, bonds, short-term money market

instruments, and/or other securities. In a mutual fund, the fund manager trades the

fund’s underlying securities, realizing capital gains or losses, and collects the dividend

or interest income.

The investment proceeds are then passed along to the individual investors.

Similarly there are various other investment products in the Indian Financial Market

such as fixed income securities, bond, equity shares, public deposits, commercial

paper, certificate of deposits etc. Many individuals find investments to be fascinating

because they can actively participate in the decision making process and see the

results of their choices.

Page 11: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

Not all investment will be profitable as investors will not always

make the correct investment decision over the period of years, however one should

earn a positive return on a diversified portfolio. In addition there is a thrill from the major

success, along with the agony associated with the stock that dramatically rose after you

sold or did not buy. Both the big fish you catch and the big fish that get away can make

wonderful stories.

Investment is not a game but a serious subject that can have a major effect on

the investor’s future well being. Virtually everyone makes investment. Even if the

individual does not select specific assets such as stock, investment are still made

through participation in pension plans, and employee saving program or through

purchase of life insurance or a home. Each of these investments has a common

characteristic such as potential returns and the risk one must bear.

The future is uncertain, and one must determine how much risk he/she is willing

to bear since higher return is associated with accepting more risk. The individual should

start by specifying investment goals. Once these goals are established, the individual

should be aware of the mechanics of investing and the environment in which investment

decisions are made.

These include the processes by which securities are issued and subsequently

bought and sold, the regulations and tax laws that have been enacted by various levels

of government, and the sources of information concerning investment that are available

to the individual.

Page 12: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

This study has been undertaken in ICICI Securities Ltd., which was incorporated

in the year 2000, offering a wide range of services including investment banking,

institutional broking, retail broking and private wealth management.

This project contains the investment opportunities available in ICICI Securities as

well as the investment pattern of investors particularly in Nanganallur area, who are the

clients of ICICI Securities Ltd., which has the largest customer base of 26 lakhs

customers all over India and provides a complete bouquet of products in equity, debt,

forex, depository, derivatives and allied services in India.

Page 13: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

1.1 PROBLEM STATEMENT

The statement of the problem under study is to analyze the investment pattern of

investors and their investment decision on different investment alternatives provided by

ICICI. This problem tries to identify the investors’ framework of investment based on

different equity products offered by ICICI Securities Ltd.

FIG 1.1 CHART SHOWING PERFORMANCE OF DIFFERENT INVESTMENT

PORTFOLIOS AS ON JANUARY, 2014

Page 14: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

1.2 OBJECTIVES OF THE STUDY

PRIMARY OBJECTIVES:

To study the investment pattern of investors in ICICI Securities

Ltd., particularly in Nanganallur area.

To find the most preferred investment product by the investors

of ICICI Securities.

SECONDARY OBJECTIVES:

To study about the investment decisions of investors.

To study about the different investment alternatives provided

by ICICI Securities Ltd.

Page 15: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

1.3 SCOPE OF THE STUDY

The primary market starts from broad environmental factors to the industry, which

influences the share price and finally analyzing the companies’ potentiality by

considering possible risk associated with securities for investing public.

Since the share prices of the company is empirically found to depend up to 50%

on the performance of the industry and the economy, studying those related field

provide insights for selecting different products of ICICI Securities.

The time horizon, income and risk factors play a significant role while selecting

particular product of ICICI, as it can create an opportunity for one product and may not

for the other, the analyzing impact of income and risk on investment pattern of investors

is important.

The study shows that frequency of investment, factors determining investment

decision, income level and investment objective play more significant role in deciding

the investment pattern. So analyzing the factors that affect investment pattern of

investors and other investment criteria provide more valuable insights.

Indian capital markets have been receiving global attention, especially from

sound investors, due to the improving macroeconomic fundamentals. No two investors

are alike. Their investment depends upon the risk profile, time horizon and savings

made. There is a greater scope as ICICI Securities provide tailor made portfolio for all

class of investors and traders as well.

For the world financial markets, an exposure in a regulated market has always

been the safest investment choice. Though, currently, there are concerns about

commodities in the Indian market, these can be addressed by taking a closer look at the

scenario. A comparison of the regulated and unregulated marketplace will help to

understand how risk can be avoided.

Page 16: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

1.4 LIMITATIONS OF THE STUDY

• The study is limited only to 150 investors.

• The study is limited to investors of ICICI Securities

• The study covers the respondents in Nanganallur area alone.

• Interpretations drawn in this study are based on the assumption that the

respondents have given correct information.

• The economy and industry have a wide picture so it becomes very difficult in real

time to encompass the broader views of all the investors in the given period of

time.

• Besides the study has limitation of time, place and resources.

Page 17: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

CHAPTER - 2

COMPANY & INDUSTRY

INFORMATION

Page 18: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

2.1 INDUSTRY PROFILE

Most of the trading in the Indian stock market takes place on its two stock exchanges:

the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). The BSE

has been in existence since 1875. The NSE, on the other hand, was founded in 1992

and started trading in 1994.

However, both exchanges follow the same trading mechanism, trading hours,

settlement process, etc. At the last count, the BSE had about 4,700 listed firms,

whereas the rival NSE had about 1,200. Out of all the listed firms on the BSE, only

about 500 firms constitute more than 90% of its market capitalization; the rest of the

crowd consists of highly illiquid shares.

Almost all the significant firms of India are listed on both the exchanges. NSE enjoys a

dominant share in spot trading, with about 70% of the market share, as of 2009, and

almost a complete monopoly in derivatives trading, with about a 98% share in this

market, also as of 2009.

Emerging markets like India, are fast becoming engines for future growth.

Currently, only a very low percentage of the household savings of Indians are invested in

the domestic stock market, but with GDP growing at 7-8% annually and a stable financial

market, investors might see more money joining the race.

India started permitting outside investments only in the 1990s. Foreign

investments are classified into two categories: foreign direct investment (FDI) and

foreign portfolio investment (FPI). All investments, in which an investor takes part in the

day-to-day management and operations of the company, are treated as FDI, whereas

investments in shares without any control over management and operations, are treated

as FPI.

Page 19: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

TRADING MECHANISM

Trading at both the exchanges takes place through an open electronic limit order book,

in which order matching is done by the trading computer. There are no market

makers or specialists and the entire process is order-driven, which means that market

orders placed by investors are automatically matched with the best limit orders.

As a result, buyers and sellers remain anonymous. The advantage of an order

driven market is that it brings more transparency, by displaying all buy and sell orders in

the trading system.

However, in the absence of market makers, there is no guarantee that orders will

be executed. All orders in the trading system need to be placed through brokers, many

of which provide online trading facility to retail customers.

Institutional investors can also take advantage of the direct market access (DMA)

option, in which they use trading terminals provided by brokers for placing orders

directly into the stock market trading system.

SETTLEMENT CYCLE AND TRADING HOURS

Equity spot markets follow a T+2 rolling settlement. This means that any trade taking

place on Monday, gets settled by Wednesday. All trading on stock exchanges takes

place between 9:15 am and 3:30 pm, Indian Standard Time (+ 5.5 hours GMT), Monday

through Friday.

Delivery of shares must be made in dematerialized form, and each exchange has

its own clearing house, which assumes all settlement risk, by serving as a central

counterparty.

Page 20: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

MARKET INDEXES

The two prominent Indian market indexes are Sensex and Nifty. Sensex is the oldest

market index for equities; it includes shares of 30 firms listed on the BSE, which

represent about 45% of the index’s free-float market capitalization. It was created in

1986 and provides time series data from April 1979, onward.

Another index is the S&P CNX Nifty; it includes 50 shares listed on the NSE,

which represent about 62% of its free-float market capitalization. It was created in 1996

and provides time series data from July 1990, onward.

MARKET REGULATION

The overall responsibility of development, regulation and supervision of the stock

market rests with the Securities & Exchange Board of India (SEBI), which was formed in

1992 as an independent authority. Since then, SEBI has consistently tried to lay down

market rules in line with the best market practices. It enjoys vast powers of imposing

penalties on market participants, in case of a breach.

For making portfolio investment in India, one should be registered either

as a foreign institutional investor (FII) or as one of the sub-accounts of one of the

registered FIIs. Both registrations are granted by the market regulator, SEBI. Foreign

institutional investors mainly consist of mutual funds, pension funds, endowments,

sovereign wealth funds, insurance companies, banks, asset management companies

etc.

At present, India does not allow foreign individuals to invest directly into its

stock market. However, high-net-worth individuals (those with a net worth of at least

$US50 million) can be registered as sub-accounts of an FII.

Foreign institutional investors and their sub accounts can invest directly into any of the

stocks listed on any of the stock exchanges.

Page 21: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

Most portfolio investments consist of investment in securities in the

primary and secondary markets, including shares, debentures and warrants of

companies listed or to be listed on a recognized stock exchange in India. FIIs can also

invest in unlisted securities outside stock exchanges, subject to approval of the price by

the Reserve Bank of India.

Finally, they can invest in units of mutual funds and derivatives traded on

any stock exchange. An FII registered as a debt-only FII can invest 100% of its

investment into debt instruments. Other FIIs must invest a minimum of 70% of their

investments in equity. The balance of 30% can be invested in debt. FIIs must use

special non-resident rupee bank accounts, in order to move money in and out of India.

The balances held in such an account can be fully repatriated.

The government of India prescribes the FDI limit and different ceilings have been

prescribed for different sectors. Over a period of time, the government has been

progressively increasing the ceilings. FDI ceilings mostly fall in the range of 26-100%.

By default, the maximum limit for portfolio investment in a particular listed firm, is

decided by the FDI limit prescribed for the sector to which the firm belongs. However,

there are two additional restrictions on portfolio investment. First, the aggregate limit of

investment by all FIIs, inclusive of their sub-accounts in any particular firm, has been

fixed at 24% of the paid-up capital. However, the same can be raised up to the sector

cap, with the approval of the company’s boards and shareholders.

Secondly, investment by any single FII in any particular firm should not exceed

10% of the paid-up capital of the company. Regulations permit a separate 10% ceiling on

investment for each of the sub-accounts of an FII, in any particular firm. However, in

case of foreign corporations or individuals investing as a sub-account, the same ceiling is

only 5%. Regulations also impose limits for investment in equity-based derivatives

trading on stock exchanges.

Page 22: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

2.2 COMPANY PROFILE

ICICI Group offers a wide range of banking products and financial

services to corporate and retail customers through a variety of delivery channels and

through its specialized group companies and subsidiaries in the areas of personal

banking, investment banking, life and general insurance, venture capital and asset

management. With a strong customer focus, the ICICI Group Companies have

maintained and enhanced their leadership positions in their respective sectors.

ICICI Bank is India’s second-largest bank with total assets of Rs.

4,736.47 billion (US$ 93 billion) at March 31, 2012 and profit after tax Rs. 64.65 billion

(US$ 1,271 million) for the year ended March 31, 2012. The Bank has a network of 2,791

branches and 10,021 ATMs in India, and has a presence in 19 countries, including India.

ICICI Prudential Life Insurance is a joint venture between ICICI

Bank, a premier financial powerhouse, and Prudential plc, a leading international

financial services group headquartered in the United Kingdom. ICICI Prudential Life was

amongst the first private sector insurance companies to begin operations in December

2000 after receiving approval from Insurance Regulatory Development Authority (IRDA).

ICICI Prudential Life’s capital stands at Rs. 47.91 billion (as of March 31, 2012) with

ICICI Bank and Prudential plc holding 74% and 26% stake respectively. For FY 2012,

the company garnered Rs.140.22 billion of total premiums and has underwritten over 13

million policies since inception

ICICI Lombard General Insurance Company, is a joint venture

between ICICI Bank Limited, India’s second largest bank with consolidated total assets

of over USD 91 billion at March 31, 2012 and Fairfax Financial Holdings Limited, a

Canada based USD 30 billion diversified financial services company engaged in general

insurance, reinsurance, insurance claims management and investment management.

ICICI Lombard GIC Ltd. Is the largest private sector general insurance company in India.

Page 23: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

ICICI Prudential Asset Management is the third largest mutual fund with average

asset under management of Rs. 688.16 billion and a market share (mutual fund) of

10.34% as on March 31, 2012. The Company manages a comprehensive range of

mutual fund schemes and portfolio management services to meet the varying investment

needs of its investor’s through 117 branches spread across the country.

ICICI Venture is one of the largest and most successful alternative asset

managers in India with funds under management of over US$ 2 billion. It has been a

pioneer in the Indian alternative asset industry since its establishment in 1988, having

managed several funds across various asset classes over multiple economic cycles.

ICICI Venture is a wholly owned subsidiary of ICICI Bank.

ICICI Securities Ltd is the largest integrated securities firm covering the needs of

corporate and retail customers through investment banking, institutional broking, retail

broking and financial product distribution businesses. Among the many awards that ICICI

Securities has won, the noteworthy awards for 2012 were: Asiamoney `Best Domestic

Equity House for 2012; ‘BSE IPF D&B Equity Broking Awards 2012’ under two

categories:- Best Equity Broking House – Cash Segment and Largest E-Broking House;

the Chief Learning Officer Award from World HRD Congress for Innovation in Learning

category. IDG India’s CIO magazine has recognized ICICI Securities as a recipient of

CIO 100 award in 2009, 2010, 2011 and 2012. I-Sec won this awards 4 times in a row for

which the CIO Hall of Fame award was additionally conferred in 2012.

ICICI Securities Primary Dealership Limited (‘I-Sec PD’) is the largest primary

dealer in Government Securities. It is an acknowledged leader in the Indian fixed income

and money markets, with a strong franchise across the spectrum of interest rate

products and services – institutional sales and trading, resource mobilization, portfolio

management services and research. One of the first entities to be granted primary

dealership license by RBI, I-Sec PD has made pioneering contributions since inception

to debt market development in India under discretionary portfolio management.

Page 24: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

I-Sec PD’s leadership position and research expertise have been consistently

recognized by domestic and international agencies. In recognition of their performance in

the Fixed Income market, they have received the following awards:

“Best Domestic Bond House” in India – 2007, 2005, 2004, 2002 by Asia Money

“Best Bond House” – 2009, 2007, 2006, 2005, 2004, 2001 by Finance Asia

“Best Domestic Bond House” – 2009 by The Asset Magazine’s annual Triple A

Country Awards

Ranked volume leader – by Greenwich Associates in 2010 Asian Fixed-Income

Investors Study. Ranked 5th in ‘Domestic Currency Asian Credit’ with market

share of 4.5%, Only Domestic entity to be ranked.

“Best Debt House in India” – 2012 by EUROMONEY

ICICI SECURITIES LIMITED- AN OVERVIEW

ICICI Securities Ltd is an integrated securities firm offering a wide range of services

including investment banking, institutional broking, retail broking, private wealth

management, and financial product distribution.

ICICI Securities sees its role as ‘Creating Informed Access to the Wealth of the

Nation’ for its diversified set of clients that include corporates, financial institutions, high

net-worth individuals and retail investors. Headquartered in Mumbai, ICICI Securities

operates out of 66 cities and towns in India and global offices in Singapore and New

York.

ICICI Securities Inc., the step down wholly owned US subsidiary of the company

is a member of the Financial Industry Regulatory Authority (FINRA) / Securities Investors

Protection Corporation (SIPC). ICICI Securities Inc. activities include Dealing in

Securities and Corporate Advisory Services in the United States. ICICI Securities Inc. is

also registered with the Monetary Authority of Singapore (MAS) and operates a branch

office in Singapore.

Page 25: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

PRODUCTS AND SERVICES

EQUITY

o Trading in shares: ICICIdirect.com offers various options to the investors while

trading in shares.

o Cash Trading: This is a delivery based trading system, which is generally done

with the intention of taking delivery of shares or monies.

o Margin Trading: Investors can do an intra-settlement trading up to 3 to 4 times

of their available funds, wherein they take long buy/ short sell positions in

stocks with the intention of squaring off the position within the same day

settlement cycle.

o MarginPLUS Trading: Through MarginPLUS investors can do an intra-

settlement trading up to 25 times of their available funds, wherein they take

long buy/ short sell positions in stocks with the intention of squaring off the

position within the same day settlement cycle

o CallNTrade®: CallNTrade® allows investors’ to call on a local number in their

city and trade on the telephone through Customer Service Executives of ICICI.

This facility is currently available in over 11 major states across India.

o Trading on NSE/BSE: Through ICICIdirect.com, investors’ can trade on NSE

as well as BSE.

o Market Order: Investors could trade by placing market orders during market

hours that allows them to trade at the best obtainable price in the market at the

time of execution of the order.

Page 26: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

o Limit Order: Allows an investor to place a buy/sell order at a price defined by

him/her. The execution can happen at a price more favorable than the price,

which is defined by the investor. Limit orders can be placed by investor during

holidays & non market hours too.

DERIVATIVES

o FUTURES - Through ICICIdirect.com, investors can now trade in index and

stock futures on the NSE. In futures trading, investors’ can take buy/sell

positions in index or stock(s) contracts having a longer contract period of

up to 3 months.

Trading in FUTURES is simple. If, during the course of the contract

life, the price moves in investors’ favour (i.e. rises in case investor have a buy

position or falls in case investor have a sell position), investor makes a profit.

o OPTIONS - An option is a contract, which gives the buyer the right to buy

or sell shares at a specific price, on or before a specific date. For this, the

buyer has to pay to the seller some money, which is called premium. There

is no obligation on the buyer to complete the transaction if the price is not

favorable to him.

To take the buy/sell position on index/stock options, investor has to place

certain % of order value as margin. With options trading, investor can leverage

on his/her trading limit by taking buy/sell positions much more than what he/she

could have taken in cash segment.

Page 27: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

CURRENCY DERIVATIVES

ICICI Direct offers a simple and convenient way to trade and hedge the currency

risk in four pair of Currencies- Dollar, Euro, Pound and Japanese Yen against

Indian Rupee. By offering the choice of trading in different asset class of

Currencies ICICI offers investors’ the opportunity to diversify their portfolio.

MUTUAL FUNDS

Since the process of selecting the right mutual fund is complex and tedious, the

experts from ICICI have researched the funds and using certain criterion have

created a choice of funds. ICICI Direct offers facilities like making a lump sum

investment, redemption, switches within same funds, setting up systematic

investment plans etc.

EXCHANGE TRADED FUNDS

Exchange Traded Funds or ETFs are securities that are traded, like individual

stocks, on an exchange. Unlike regular open-end mutual funds, ETFs can be

bought and sold throughout the trading day like any stock. Most ETFs charge

lower annual expenses than many mutual funds. As with stocks, one must pay a

brokerage to buy and sell ETF units.

LIFE INSURANCE

Term life insurance ensures that family of the insured receives a large lump sum

amount, called the sum assured, in the unfortunate event of death of the

policyholder. By offering this benefit at extremely competitive rates, Term

insurance plans provide an opportunity to get the protection of insurance cover at

extremely affordable prices.

Page 28: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

GENERAL INSURANCE

General Insurance products cover Health, Home, Motor and Travel, and help

protect the financial health of the investor from unforeseen events that strike close

to home. ICICI Lombard is the leading private general insurance company and

has one of the best products.

FIXED DEPOSITS & BONDS

o CORPORATE FIXED DEPOSITS: ICICI offers a range of Corporate Fixed

Deposits varying in tenures, interest rates & institutions to suit the

investment needs of the investor. The deposit schemes have been

specially chosen from high-safety options to ensure that investors’ enjoy

the twin benefits of returns and protection.

o BONDS: Bond refers to a security issued by a company, financial institution

or government which offers regular or fixed payment of interest in return on

the amount borrowed money for a certain period of time.

Thus by purchasing a bond, an investor loans money for a fixed

period of time at a predetermined interest rate. While the interest is paid to

the bond holder at regular intervals, the principal amount is repaid at a later

date, known as the maturity date.

LOANS

ICICIdirect offers a wide variety of Loan Products from ICICI bank to suit

customer requirements. ICICI strives to provide best products and services

to its customers at their doorstep.

Page 29: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

TAX SERVICES

In today's busy world assessing one's tax well in advance and investing in

right tax saving products with optimum returns seems to be a difficult task.

Along with this also comes the pain of standing in long queues for filing the

tax returns timely. ICICI offers the following tax services:

Computation of taxable income and tax payable

Advice on tax optimization investments

Filing of tax return with the tax authorities

eLOCKER

ICICIdirect.com's eLocker helps its customers with the convenience

and flexibility to store and retrieve their important documents when they

need them. They can store scanned copies of their Passport, PAN,

Agreements or even medical reports securely under their ICICI direct

account. With eLocker, they can store documents in one central secure

location and know that their documents are just a few clicks away.

TRADE RACER

Trade Racer is a trading platform which provides investors with Live

streaming quotes & Research Calls, integrated fund transfer system along

with multiple watch list facility. Power-packed with new features, Trade Racer

gives investors’ the power to identify market opportunities while enjoying the

attractive new look and feel of the trading terminal.

Page 30: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

BOARD OF DIRECTORS

ICICI Securities Limited.

Ms. Chanda D. Kochhar, Chairperson

Mr. Uday Chitale

Mr. Narendra Murkumbi

Ms. Zarin Daruwala

Mr. Anup Bagchi, Managing Director & CEO

Mr. Ajay Saraf, Executive Director

Mr. Ketan Patel

ICICI Securities Holding Inc.

Mr. Sandeep Batra, Director

Mr. Sriram Iyer, Director

Mr. Warren Law

ICICI Securities, Inc.

Mr. Anup Bagchi, Chairman

Mr. Ajay Saraf

Mr. Jaideep Goswami

Mr. Subir Saha

Mr. Robert Ng

Page 31: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

AWARDS AND RECOGNITION

RETAIL SERVICES

ICICIdirect.com, won the ‘Outlook Money Best e- Brokerage Award’ eighth time

in a row. Previously, the firm won the award in 2004, 2005, 2007, 2008, 2009,

2010 and 2011.

ICICI Securities won the ‘Outlook Smart use Technology eRetailer of the year

2013’ conferred by FIHL in association with HomeShop18.com.

ICICIdirect.com won the ‘Stock Broker of the Year’ award at the Money Today

FPCIL Awards 2012.

ICICI Securities Business Partners (Sub Broker channel) won the ‘Franchisor of

the Year’ at the Franchise Awards 2012 for the fourth time in a row.

ICICI Securities won the ‘BSE IPF D&B Equity Broking Awards 2012’ under two

categories:

o Best Equity Broking House – Cash Segment

o Largest E-Broking House

ICICI Securities won the ‘Chief Learning Officer Award’ from World HRD

Congress for Innovation in Learning category.

ICICI Securities won the ‘Grand Jury Award’ for ‘Commendable performance by

National Financial Advisor (Retail) – Online’ at the CNBC TV 18 – Financial

Advisor Awards 2011. The awards 31ecognize India’s best Financial Advisors.

ICICI Securities Business Partners (Sub Broker channel) won the ‘Franchisor of

the Year at the Franchise Awards 2011’, third time in a row.

INSTITUTIONAL SERVICES

Page 32: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

ICICI Securities awarded the Asiamoney `Best Domestic Equity House’ for 2012

Vikash Mantri tops The Wall Street Journal’s Asia’s Best Analysts survey in the

media sector for 2010

ICICI Securities has awarded as the Best Investment Bank 2008 by Global

Finance Magazine

The Corporate Finance group also was awarded a runner-up Best Merchant

Banker by Outlook Money in 2007.

ICICI Securities topped the Prime Database League Tables 2007 for money

raised through IPOs/FPOs.

The equities team was adjudged the ‘Best Indian Brokerage House-2003’ by

Asiamoney.

ICICI direct has also won the ‘CNBC AWAAZ 2007 Consumer Award’ for the

Most Preferred Brand of Financial Advisory Services.

‘Best Broker’ – Web 18 Genius of the Web Awards 2007

Page 33: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

TECHNOLOGY

Fairfax Business Media has recognized ICICI Securities as a recipient of ‘CIO

100 Asia’ award in 2013.

ICICI Securities has been awarded the ‘NASSCOM IT Innovation Awards 2013’.

‘CIO Masters for Collaboration and Cloud’ was awarded by Biztech2 (Network

18) in 2013.

ICICI Securities has been conferred by Dataquest in 2012

o Business Technology Excellence award

o Business Technology Innovation award

IDG India has recognized ICICI Securities as a recipient of CIO 100 award in

2009, 2010, 2011 and 2012, four times in a row.

IDG India has conferred the CIO Hall of Fame award in 2012.

EMC Transformers Award was presented for best use of IT to transform business

in 2012

CIO Masters for Virtualization was awarded by Biztech2 (Network 18) in 2012

ICICI Securities was the Bloomberg UTV CXO Awards Finalist for Best Utilization

of IT to Transform Business in 2011

ICICI Securities was conferred the Gold CIO award jointly by CIOL and

Dataquest at the Enterprise Awards 2010

ICICI Securities was the NASSCOM CNBC IT User Awards Finalist in 2009 and

2010

Indian Bank’s Association Business Technology Awards was presented for Best

Online Trading Platform in 2006 and 2007

Page 34: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

CHAPTER – 3

REVIEW OF LITERATURE

Page 35: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

The Indian capital market has changed dramatically over the past decade, since 2000.

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

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

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

Managing the risk is emerging as an important function of both large scale and

small-scale investors. Risk management of investing in corporate securities is under

active and extensive discussion among academicians and capital market operators.

"Switching from security to security accomplishes nothing but to increase

transactions costs and harm performance. Thus, even if markets are less than fully

efficient, indexing is likely to produce higher rates of return than active portfolio

management. Both individual and institutional investors will be well served to employ

indexing for, at the very least, the core of their equity portfolio”, (Malkiel, 2005).

While behavioral literature focuses on how individual investors manage their

portfolios and that how an active portfolio management offers various strategies for

beating the benchmarks. Among investors a common tendency of holding losers for

long and selling winners quickly has been pointed out by Shefrin and Statman (1985).

They named it as the disposition effect. They related their findings to the concepts

of “loss aversion”, the issue of “self -control”, “mental accounting”, and the “aspiration to

avoid regret”.

Diversification and risk-management techniques are crucial concepts in the

portfolio theory. However mostly investors fail to diversify their portfolios properly. It is

because they determine risks at individual asset level instead of determining at portfolio

level.

Page 36: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

3.1 PAST RESEARCH WORK ABOUT THE INVESTMENT

BASIC INVESTMENT RULES

Grewal S.S and Navjot Grewall revealed some basic investment rules and rules for

selling shares. They warned the investors not to buy unlisted shares, as Stock

Exchanges do not permit trading in unlisted shares.

Another rule that they specify is not to buy inactive shares, ie, shares in which

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

there are no buyers for them. They are mostly shares of companies, which are not

doing well.

A third rule according to them is not to buy shares in closely-held companies

because these shares tend to be less active than those of widely held ones since they

have a fewer number of shareholders. They caution not to hold the shares for a long

period, expecting a high price, but to sell whenever one earns a reasonable reward.

INVESTMENT MANAGEMENT

Preethi Singh disclosed the basic rules for selecting the company to invest in. She

opined that understanding and measuring return and risk is fundamental to the

investment process. According to her, most investors are 'risk averse'. To have a higher

return the investor has to face greater risks.

She concludes that risk is fundamental to the process of investment. Every

investor should have an understanding of the various pitfalls of investments. The

investor should carefully analyze the financial statements with special reference to

solvency, profitability, EPS, and efficiency of the company.

Page 37: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

IMPORTANCE OF THE RATE OF RETURN IN INVESTMENTS

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

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

uncertain world, investors cannot predict exactly what rate of return an investment will

yield.

However he suggested that the investors can formulate a probability distribution

of the possible rates of return. He also opined that an investor who purchases corporate

securities must face the possibility of default and bankruptcy by the issuer. Financial

analysts can foresee bankruptcy. He disclosed some easily observable warnings of a

firm's failure, which could be noticed by the investors to avoid such a risk.

IMPORTANCE OF THE RATE OF RETURN IN INVESTMENTS

David.L.Scott and William Edward4 (1990) reviewed the important risks of owning

common stocks and the ways to minimize these risks. They commented that the

severity of financial risk depends on how heavily a business relies on debt.

Financial risk is relatively easy to minimize if an investor sticks to the common

stocks of companies that employ small amounts of debt. They suggested that a

relatively easy way to ensure some degree of liquidity is to restrict investment in stocks

having a history of adequate trading volume.

Page 38: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

NATURE OF MARKET RISK

Lewis Mandell (1992) reviewed the nature of market risk, which according to him is very

much 'global'. He revealed that certain risks that are so global that they affect the entire

investment market. Even the stocks and bonds of the well-managed companies face

market risk.

He concluded that market risk is influenced by factors that cannot be predicted

accurately like economic conditions, political events, mass psychological factors, etc.

Market risk is the systemic risk that affects all securities simultaneously and it cannot be

reduced through diversification.

INVESTMENT TIPS

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

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

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

in a different but equally fast growing sector of the economy.

He suggested selling the shares the moment company has or almost reached the

peak of its growth. Also, sell the shares the moment you realise you have made a

mistake in the initial selection of the shares. The only option to decide when to buy and

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

in the portfolio and arrive at a decision.

Page 39: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

PRINCIPLES DETERMINING SUCCESS IN STOCK MARKET

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

stock market. He emphasized on long-term vision and a plan to reach the goals. He

advised the investors that to be successful, they should never be pessimists.

He advised the investors to watch and invest. He insisted that investors should

do a market watch so that they would be aware of the market fluctuations which help

them to invest in growing companies that perform well in stocks as well as the market.

He revealed that though there has been a major economic crisis almost every

year, it remains true that patient investors have consistently made money in the equities

market. He concluded that investing in the stock market should be an un-emotional

endeavour and suggested that investors should own a stock if they believe it would

perform well.

SPECULATIVE CHARACTER OF INDIAN STOCK MARKET

L.C.Gupta (1992) revealed the findings of his study that there is existence of wild

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

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

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

velocities of the speculative counters.

He opined that, short- term speculation, if excessive, could lead to "artificial

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

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

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

or other as history has repeated and proved.

Page 40: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

TURNAROUND STOCKS

Yasaswy N.J. (1993) disclosed how 'turnaround stocks' offer big profits to bold investors

and also the risks involved in investing in such stocks. Turnaround stocks are stocks

with extraordinary potential and are relatively under priced at a given point of time.

He also revealed that when the economy is in recession and the fundamentals

are weak, the stock market, being a barometer of the economy, also tends to be

depressed. A depressed stock market is an ideal hunting ground for 'bargain hunters',

who are aggressive investors.

Sooner or later recovery takes place which may take a very long time. He

concluded that the investors' watch work is 'caution' as he may lose if the turnaround

strategy does not work out as anticipated.

FUTURES AS A TOOL TO COVER SHORT-TERM RISKS

Sunil Damodar (1993) evaluated the 'Derivatives' especially the 'futures' as a tool for

short-term risk control. He opined that derivatives have become an indispensable tool

for finance managers whose prime objective is to manage or reduce the risk inherent in

their portfolios.

He disclosed that the over-riding feature of 'financial futures' in risk management

is that these instruments tend to be most valuable when risk control is needed for a

short- term, ie, for a year or less.

They tend to be cheapest and easily available for protecting against or benefiting

from short term price. Their low execution costs also make them very suitable for

frequent and short term trading to manage risk, more effectively.

Page 41: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

STOCK RISKS

Yasaswy J.N. (1993) evaluated the quantum of risks involved in different types of

stocks. Defensive stocks are low risk stocks and hence the returns are relatively low but

steady. Cyclical stocks involve higher risks and hence the rewards are higher when

compared to the growth stocks. Growth stocks belong to the medium risk category and

they offer medium returns which are much better than defensive stocks, but less than

the cyclical stocks.

The market price of growth stocks does fluctuate, sometimes even violently

during short periods of boom and bust. He emphasized the financial and organizational

strength of growth stocks, which recover soon, though they may hit bad patches once in

a way.

RELATIONSHIP BETWEEN RISK, INVESTOR PREFERENCES AND INVESTOR

BEHAVIOUR

Donald E Fischer and Ronald J. Jordan(1994) analyzed the relation between risk,

investor preferences and investor behaviour. The risk return measures on portfolios are

the main determinants of an investor's attitude towards them. Most investors seek more

return for additional risk assumed.

The conservative investor requires large increase in return for assuming small

increases in risk. The more aggressive investor will accept smaller increases in return

for large increases in risk. They concluded that the psychology of the stock market is

based on how investors form judgements about uncertain future events and how they

react to these judgements.

Page 42: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

DERIVATIVES

R.Venkataramani (l994) disclosed the uses and dangers of derivatives. The derivative

products can lead us to a dangerous position if its full implications are not clearly

understood. Being off- balance shekt in nature, more and more derivative products are

traded than the cash market products and they suffer heavily due to their sensitive

nature.

He brought to the notice of the investors the 'Over the counter product' (OTC)

which are traded across the counters of a bank. OTC products (eg. Options and futures)

are tailor made for the particular need of a customer and serve as a perfect hedge. He

emphasized the use of futures as an instrument of hedge, for it is of low cost.

IDENTIFICATION OF COMPANY TO INVEST

K.Sivakumar (1994) disclosed new parameters that will help investors identify the best

company to invest in. He opined that Economic Value Added (EVA) is more powerful

than other conventional tools for investment decision making like EPS and price earning

ratio. EVA looks at how capital raised by the company from all sources has been put to

use. Higher the EVA, higher the returns to the shareholder. A company with a higher

EVA is likely to show a higher increase in the market price of its shares.

To be effective in comparing companies, he suggested that EVA per share

(EVAPS) must be calculated. It indicates the super profit per share that is available to

the investor. The higher the EVAPS, the higher is the likely appreciation in the value in

future.

He also revealed a startling result of EVA calculation of companies in which 200

companies show a negative value addition that includes some blue chip companies in

the Indian Stock Market.

Page 43: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

NEED FOR DOING FUNDAMENTAL ANALYSIS

Pattabhi Ram.V (1995) emphasized the need for doing fundamental analysis and doing

Equity Research (ER) before selecting shares for investment. He opined that the

investor should look for value with a margin of safety in relation to price. The margin of

safety is the gap between price and value. He revealed that the Indian stock market is

an inefficient market because of the absence of good communication network, rampant

price rigging, the absence of free and instantaneous flow of information, professional

broking and so on.

He concluded that in such inefficient market, equity research will produce better

results as there will be frequent mismatch between price and value that provides

opportunities to the long-term value oriented investor.

INTERNATIONAL FACTORS OF RISKS AND THEIR EFFECT ON FINANCIAL

MARKETS

Philippe Jhorion and Sarkis Joseph Khoury (1996) reviewed international factors of risks

and their effect on financial markets. He opined that domestic investment is a subset of

the global asset allocation decision and that it is impossible to evaluate the risk of

domestic securities without reference to international factors. Investors must be aware

of factors driving stock prices and the interaction between movements in stock prices

and exchange rates.

According to them the financial markets have become very much volatile over the

last decade due to the unpredictable speedy changes like oil price shocks, drive

towards economic and monetary unification in Europe, the wide scale conversion of

communist countries to free market policies etc. They emphasized the need for tightly

controlled risk management measures to guard against the unpredictable behaviour of

financial markets.

Page 44: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

RISK MANAGEMENT IN RELATION TO BANKS

S.Rajagopal. (1996) commented on risk management in relation to banks. He opined

that good risk management is good banking. A professional approach to risk

management will safeguard the interests of the banking institution in the long run.

He described risk identification as an art of combining intuition with formal

information and risk measurement is the estimation of the size, probability and timing of

a potential loss under various scenarios.

ESTIMATION OF RETURNS

Charles.P.Jones (1996) reviewed how to estimate security return and risk. To estimate

returns, the investors must estimate cash flows the securities are likely to provide. Also,

investors must be able to quantify and measure risk using variance or standard

deviation. Variance or standard deviation is the accepted measure of variability for both

realised returns and expected returns.

He suggested that the investors should use it as the situation dictates. He

revealed that over the past 12 years, returns in stocks, bonds, etc. have been normal.

Blue chip stocks have returned an average of more than 16% per year.

He warned that the investors who believe that these rates will continue in the

future also, will be in trouble. He also warned the investors not to allow themselves to

become victimised by "investment gurus".

Page 45: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

PROCESSES INVOLVED IN RISK MANAGEMENT

V.T.Godse.(1996) revealed the two separate but simultaneous processes involved in

risk management. The first process is determining risk profile and the second relates to

the risk management process itself.

Deciding risk profile is synonymous with drawing a risk picture and involves the

following steps:

1. Identifying and prioritizing the inherent risks

2. Measuring and scoring inherent risks.

3. Establishing standards for each risk component

4. Evaluating and controlling the quality of managerial controls.

5. Developing risk tolerance levels.

He opined that such an elaborate risk management process is relevant in the

Indian context. The process would facilitate better understanding of risks and their

management.

PORTFOLIO DIVERSIFICATION

Goetzmann and Kumar (2001) studied diversification in the light of demographic

variables and found that investors who are non-professionals and have low income

usually hold less diversified portfolios as they fail to do proper portfolio allocation.

They revealed that sudden investment without a proper or half-knowledge is sure

to bring potential losses to the investors. They concluded that diversified investment

portfolio of an investor is based on the awareness level of the investor and the charges

incurred then and there to trade in more than one portfolio at the same time.

Page 46: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

3.2 RESEARCH GAP

The study analyzes the investment pattern of investors which is based upon

various parameters like income of the investor, time horizon and the risk taking ability of

the investor. Modern risk management techniques help the investors to a large extent

by avoiding any further losses with the help of an intelligent guess and continuous

market watch.

It is very clear that the investors are risk averse. The study covers three risk

management techniques, namely, (i) Switching, (ii) Cut-loss and (iii) Short selling.

(i) Switching technique enables an investor to switch or move to a safer investment

alternative if he/she comes to know that the market fluctuations are going to be a hard

hit. In this case, an investor just switches his/her portfolio temporarily or permanently

depending upon the market performance.

(ii) Cut-loss technique assists an investor by procuring limited order at the time of

market fluctuations. When the market is down, obviously investors do not place bulk

orders but tend to sell out the orders-in-hand.

(iii) Short selling is a brand new technique whereby an investor procrastinates any

possible losses. This technique can be adopted only in intra-day trading whereby an

investor can sell the equity shares in the first place, at ongoing price or market price.

When their share price comes down, the investor can procure or buy them at a low

price, which is a profitable transaction.

Since the risk management techniques were not used by previous researchers,

inclusion of the risk management techniques adopted by modern investors to avoid any

proposed risks involved in investment, helped to overcome the flaws and hence the

gaps in research have been filled up in this study.

Page 47: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

CHAPTER – 4

RESEARCH

METHODOLOGY

Page 48: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

DEFINITION OF POPULATION

The study is mainly related to know the investment pattern of the investors on different

products of ICICI Securities. Their investment objective, frequency of investment and

factors determining their investment decision has to be analyzed so as to reveal their

investment framework. The population here was being investors in ICICI Securities

particularly in Nanganallur area.

TYPE OF RESEARCH

This is a descriptive research where survey method is adopted to collect primary

information from the investors using required scales and the required secondary

information for the analysis.

PRIMARY DATA

A questionnaire schedule was prepared and the primary data was collected through

survey method.

SECONDARY DATA

Secondary data has been obtained from client database provided by ICICI for the

purpose of the study.

Page 49: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

SAMPLE SIZE

The population being large, the survey was carried among 150 respondents, all of them

are the investors in ICICI Securities Ltd., Nanganallur. They will be considered

adequate to represent the characteristics of the entire population of Nanganallur.

SAMPLING PROCEDURE

The sampling procedure followed in this study is non-probability convenient sampling.

Simple random sampling procedures are used to select the respondent from the client

database. The research work is carried out on the basis of structured questionnaire.

The study is restricted to the investors in ICICI Securities particularly in Nanganallur

area.

TOOLS FOR DATA ANALYSIS

The analysis of data collection is completed and presented systematically with the use

of SPSS 16.0, MS-Excel and MS-Word. The various tools which were used to analyze

data are:

Chi square test,

Two-way ANOVA and

Percentage analysis.

Page 50: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

CHAPTER – 5

DATA ANALYSIS AND

INTERPRETATION

Page 51: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

Data analysis is a body of methods that help to describe facts, detect patterns, develop

explanations, and test hypotheses. The data analysis is carried out using SPSS tool

where the variables that are to be tested for independence is entered and results are

identified. The various tests done by using Microsoft Excel and SPSS 16.0 are

percentage analysis, chi-square test and two-way ANOVA.

5.1 PERCENTAGE ANALYSIS

Percentage method refers to a specified kind which is used in making

comparison between two or more series of data. Percentages are based on descriptive

relationship. It compares the relative items. Since the percentage reduces everything to

a common base and thereby allow meaning comparison.

Percentage = Number of respondents X 100

Total no of respondents

Page 52: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

Table 5.1.1: INVESTORS KNOWLEDGE OF FINANCE

Parameter

No. of

respondents

% of

respondents

An expert in the field of finance

40

26.67

Proficient in finance

46

30.67

No idea about finance but stay up-to-date

40

26.67

Limited to knowing things about stock market

24

16

Total

150

100

INFERENCE:

From the table 5.1.1, it is inferred that out of 150 investors, 30.67% of investors

have proficient knowledge in finance, 26.67% of investors are expert in finance, 26.67%

of investors do not know much about finance and 16% of investors have limited

knowledge about finance.

Page 53: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

Fig 5.1.1: CHART SHOWING INVESTORS KNOWLEDGE OF FINANCE

To conclude from above fig 5.1.1, many investors have proficient knowledge in

finance.

Page 54: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

Table 5.1.2: INVESTORS OBJECTIVE OF INVESTMENT

Parameter

No. of

respondents

% of

respondents

Wealth preservation

70

46.67

Purchase of home

40

26.67

Education funding

30

20

Retirement planning

10

6.66

Total

150

100

INFERENCE:

From table 5.1.2, it is inferred that out of 150 investors, 46.67% of investors

invest for wealth preservation, 26.67% of investors invest with the objective of buying a

house, 20% of investors invest with the aim of education funding and 6.66% of investors

invest for retirement planning.

Page 55: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

Fig 5.1.2: CHART SHOWING INVESTORS OBJECTIVE OF INVESTMENT

To conclude, many investors invest with the objective of preserving their

wealth.

Page 56: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

Table 5.1.3: INVESTORS RESPONSE TO MARKET FLUCTUATIONS

Parameter

No. of

respondents

% of

respondents

Yes

128

85.33

No

22

14.67

Total

150

100

INFERENCE:

From the above table 5.1.3, it is inferred that out of 150 investors, 85.33% of

investors do respond to the market fluctuations by altering their investment pattern and

14.67% of investors do not get affected even when there are market fluctuations.

Page 57: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

Fig 5.1.3: CHART SHOWING INVESTORS RESPONSE TO MARKET

FLUCTUATIONS

To conclude, many investors alter their investment pattern when there are market

fluctuations.

Page 58: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

Table 5.1.4: INVESTMENT PORTFOLIO OF INVESTORS

Parameter

No. of respondents

% of respondents

Mutual funds

20

13.33

Equity

35

23.33

E-gold

45

30

Corporate debentures

18

12

IPOs

20

13.33

F&O

12

8

Total

150

100

INFERENCE:

From the above table 5.1.4, it is inferred that out of 150 investors, 30% of

investors have invested in E-Gold, 23.33% of investors have invested in Equity, 13.33

have invested in Mutual funds, 13.33 have invested in IPO’s, 12% of investors have

invested in Corporate debentures and 8% of investors have invested in Futures &

Options.

Page 59: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

Fig 5.1.4: CHART SHOWING INVESTMENT PORTFOLIO OF INVESTORS

To conclude, many investors have invested in E-Gold investment avenue,

wherein they procure the value of gold in legal papers (or) paper gold.

Page 60: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

Table 5.1.5: INVESTORS TENDENCY TO GET UPDATES FROM ICICI

Parameter

No. of

respondents

% of

respondents

Yes

143

95.33

No

7

4.67

Total

150

100

INFERENCE:

From table 5.1.5, it is inferred that out of 150 investors, 95.33% of investors

prefer to get updates from ICICI and 4.67% of investors are satisfied with existing

services and do not prefer to get any updates from ICICI.

Page 61: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

Fig 5.1.5: CHART SHOWING INVESTORS TENDENCY TO GET UPDATES FROM

ICICI

To conclude, many investors want to keep themselves updated about the

services rendered by ICICI via different communication medium.

Page 62: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

Table 5.1.6: INVESTORS NEED FOR PERSONALIZED INVESTMENT ADVISING

Parameter

No. of

respondents

% of

respondents

Yes

145

96.67

No

5

3.33

Total

150

100

INFERENCE:

From the above table 5.1.6, it is inferred that out of 150 investors, 96.67% of

investors prefer personalized investment advising from ICICI and 3.33% of investors

invest with their own insights.

Page 63: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

Fig 5.1.6: CHART SHOWING INVESTORS NEED FOR PERSONALIZED

INVESTMENT ADVISING

To conclude, many investors prefer personalized investment advising from

ICICI by matching the available portfolio with their income, risk taking ability and time

horizon.

Page 64: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

Table 5.1.7: INVESTORS NEED FOR BRANCH ADVISORY SERVICES

Parameter

No. of

respondents

% of

respondents

Yes

100

66.67

No

50

33.33

Total

150

100

INFERENCE:

From the above table 5.1.7, it is inferred that out of 150 investors, 66.67% of

investors say that they get advice from ICICI and 33.33% of investors say that they do

not get any advice from ICICI regarding their portfolio management.

Page 65: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

Fig 5.1.7: CHART SHOWING INVESTORS NEED FOR BRANCH ADVISORY

SERVICES

To conclude, many investors get the advice from the Nanganallur ICICI branch

regarding their investment and they feel that the extension of service helps them in

cautious investment.

Page 66: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

Table 5.1.8: SOURCE OF INVESTORS’ INVESTMENT IDEA

Parameter

No. of

respondents

% of

respondents

Self-awareness

57

38

Financial advisors

35

23.33

Brokers’ advice

20

13.33

Friends/relatives’ advice

20

13.33

Media

18

12

Total

150

100

INFERENCE:

From the above table 5.1.8, it is inferred that out of 150 investors, 38% of

investors are self-aware, 23.33% of investors got financial advice, 13.33% of investors

got advice from the brokers, 13.33% of investors secured advice from their close

associates and 12% of investors gained advice via media.

Page 67: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

Fig 5.1.8: CHART SHOWING SOURCE OF INVESTORS’ INVESTMENT IDEA

To conclude, many investors take investment decisions on their own and are

self-aware about what is going on around them and the equity market as well.

Page 68: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

Table 5.1.9: INVESTORS SAFETY AND SECURITY

Parameter

No. of

respondents

% of

respondents

Yes

145

96.67

No

5

3.33

Total

150

100

INFERENCE:

From the above table 5.1.9, it is inferred that out of 150 investors, 96.67% of

investors feel satisfied about the safety and security of their investment in ICICI and

3.33% of investors are unsatisfied about safety and security in ICICI.

Page 69: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

Fig 5.1.9: CHART SHOWING INVESTORS SAFETY AND SECURITY

To conclude, many investors are assured of their safety and security of their

investment in ICICI securities.

Page 70: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

Table 5.1.10: RATE OF BROKERAGE PAID BY INVESTORS

Brokerage Rate

(in %)

No. of

respondents

% of

respondents

0.05

120

80

0.55

30

20

Total

150

100

INFERENCE:

From the above table 5.1.10, it is inferred that out of 150 investors, 80% of

investors’ trade in intra-day and pay 0.05% brokerage and 20% of investors’ trade in

delivery and pay 0.55% brokerage.

Page 71: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

Fig 5.1.10: CHART SHOWING RATE OF BROKERAGE PAID BY INVESTORS

To conclude, many investors are engaged in intra-day or daily trading and pay

0.05% of brokerage to ICICI.

Page 72: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

Table 5.1.11: INVESTMENT TERM OF INVESTORS

Parameter

No. of

respondents

% of

respondents

Short term

84

56

Long term

48

32

Both

18

12

Total

150

100

INFERENCE:

From the above table 5.1.11, it is inferred that out of 150 investors, 56% are short

term investors, 32% are long term investors and the remaining 12% have invested in

both short term and long term investment as well.

Page 73: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

Fig 5.1.11: CHART SHOWING INVESTMENT TERM OF INVESTORS

To conclude, many investors have invested in short term investments so as to

get faster return on investment.

Page 74: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

Table 5.1.12: INVESTORS’ FREQUENCY OF INVESTMENT

Parameter

No. of

respondents

% of

respondents

Daily 42 28

Weekly 28 18.66

Monthly 20 13.33

Quarterly 12 8

Half yearly 18 12

Annually 30 20

Total 150 100

INFERENCE:

From the above table 5.1.12, it is inferred that out of 150 investors, 28% prefer

daily investment, 20% prefer annual investment, 18.66% prefer weekly investment,

13.33% prefer monthly investment, 12% prefer half-yearly investment and 8% prefer

quarterly investment.

Page 75: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

Fig 5.1.12: CHART SHOWING INVESTORS’ FREQUENCY OF INVESTMENT

To conclude, many investors prefer daily investment in the equity market.

Page 76: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

Table 5.1.13: INVESTMENT DECISION OF INVESTORS

Parameter

No. of

respondents

% of

respondents

Risk involved

40

26.67

Return on investment

25

16.66

Past performance

15

10

Future Growth

55

36.67

Other factors

15

10

Total

150

100

INFERENCE:

From the above table 5.1.13, it is inferred that out of 150 investors, 36.67% of

investors expect future growth of their investment, 26.67% of investors invest based on

risk factor, 16.66% of investors expect return on their investment, 10% of investors

Page 77: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

invest based on their past performance and 10% of investors invest based on

miscellaneous factors like gaining firsthand experience in investment.

Fig 5.1.13: CHART SHOWING INVESTMENT DECISION OF INVESTORS

Page 78: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

To conclude, many investors invest in the equity market with the hope of growth

of their investment in the future.

Table 5.1.14: TENDENCY OF INVESTORS TO SHIFT TO A SAFER INVESTMENT

PATTERN WHEN THE MARKET FLUCTUATES

Parameter

No. of

respondents

% of

respondents

I disagree

10

6.67

I somewhat agree

54

36

I agree

86

57.33

Total

150

100

INFERENCE:

Page 79: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

From the above table 5.1.14, it is inferred that out of 150 investors, 57.33% agree

to sell their risky investments and put the money in safer investments, 36% somewhat

agree to sell their risky investments and put the money in safer investments and 6.67%

totally disagree to sell their risky investments.

Fig 5.1.14: CHART SHOWING TENDENCY OF INVESTORS TO SHIFT TO A SAFER

INVESTMENT PATTERN WHEN THE MARKET FLUCTUATES

Page 80: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

To conclude, many investors are risk averse and tend to sell their risky

investments and put the money in safer investments.

Table 5.1.15: INVESTORS TOLERANCE OF SHORT TERM FLUCTUATIONS FOR

POTENTIAL LONG-TERM GAINS

Parameter

No. of

respondents

% of

respondents

Strongly agree 15 10

Agree 27 18

Disagree 53 35.33

Strongly Disagree 55 36.67

Total 150 100

INFERENCE:

From the above table 5.1.15, it is inferred that out of 150 investors, 36.67%

strongly disagree to tolerate sharp ups and downs in the short-term value of their

investments in return for potential long-term gains, 35.33% disagree to tolerate sharp

ups and downs in the short-term value of their investments, 18% agree to tolerate sharp

Page 81: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

ups and downs in the short-term value of their investments, 10% strongly agree to

tolerate sharp ups and downs in the short-term value of their investments.

Fig 5.1.15: CHART SHOWING INVESTORS TOLERANCE OF SHORT TERM

FLUCTUATIONS FOR POTENTIAL LONG-TERM GAINS

To conclude, many investors strongly disagree to tolerate sharp ups and downs

in the short-term value of their investments in return for potential long-term gains.

Page 82: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

Table 5.1.16: RISK MANAGEMENT TECHNIQUE ADOPTED BY INVESTORS

Parameter

No. of

respondents

% of

respondents

Switching

52

34.67

Cut-loss

74

49.33

Short-selling

24

16

Total

150

100

INFERENCE:

From the above table 5.1.16, it is inferred that out of 150 investors, 49.33% of

investors follow cut-loss technique to manage their risk, 34.67% of investors follow

Page 83: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

switching technique to manage their risk and remaining 16% of investors follow short

selling investment technique to manage their risk.

Fig 5.1.16: CHART SHOWING RISK MANAGEMENT TECHNIQUE ADOPTED BY

INVESTORS

Page 84: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

To conclude, many investors follow cut-loss technique to manage their

risk, so that they can at least minimize the proposed losses by procuring limited stocks

by watching the market.

Table 5.1.17: INVESTORS SATISFACTION LEVEL OF SERVICES OFFERED BY

ICICI

Parameter

No. of

respondents

% of

respondents

Highly satisfied

78

52

Satisfied

32

21.33

Dissatisfied

26

17.33

Highly dissatisfied

14

9.33

Total

150

100

INFERENCE:

From the above table 5.1.17, it is inferred that out of 150 investors, 52% of

investors are highly satisfied with the services offered by ICICI Securities, 21% of

Page 85: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

investors are just satisfied, 17.33% of investors are dissatisfied, 9.33% of investors are

highly dissatisfied with the services offered by ICICI Securities.

Fig 5.1.17: CHART SHOWING INVESTORS SATISFACTION LEVEL OF SERVICES

OFFERED BY ICICI

Page 86: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

To conclude, many investors are highly satisfied with the services offered by

ICICI Securities.

Table 5.1.18: MODE OF INVESTMENT MADE BY THE INVESTORS

Parameter

No. of

respondents

% of

respondents

Online trading

127

84.67

Brokers

15

10

Both

8

5.33

Total

150

100

INFERENCE:

Page 87: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

From the above table 4.1.18, it is inferred that out of 150 investors, 84.67% of

investors do online trading, 10% of investors do trading through brokers and 5.33% of

investors do both online and offline trading.

Fig 5.1.18: CHART SHOWING MODE OF INVESTMENT MADE BY THE INVESTORS

Page 88: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

To conclude, many investors are engaged in online trading and trade by

themselves or by relationship managers who does market watch and assist the

investors, regarding profitable companies to invest.

5.2 CHI-SQUARE TEST

The Chi square test procedure tabulates a variable into categories and computes

Pearson chi-square statistic. This goodness-of fit test compares the observed and

expected frequencies in each category to test that all categories contain the same

proportion of values or test that each category contains a user-specified proportion of

values. It is a statistical method to test whether two variables are independent or

homogeneous.

The chi-square test for independence examines whether knowing the value of

one variable helps to estimate the value of another variable. The chi-square test

for homogeneity examines whether two populations have the same proportion of

observations with a common characteristic.

HYPOTHESIS:

Null hypothesis (H0): There is no significant difference between the investment decision

of investors and frequency of investment made by the investor.

Alternate hypothesis (H1): There is significant difference between the investment

decision of investors and the frequency of investment made by the investor.

Page 89: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

Table 5.2.1: TABLE SHOWING CROSS-TABULATION BETWEEN

INVESTMENT_DECISION VARIABLE AND FREQUENCY_OF _INVESTMENT

VARIABLE

Table 5.2.2: TABLE SHOWING PEARSON CHI-SQUARE

INFERENCE:

Page 90: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

Since p<1.20, we reject the null hypothesis in favor of the alternative hypothesis. Hence,

there is significant difference between the investment decision of investors and the

frequency of investment made by the investors.

5.3 TWO-WAY ANOVA

The two-way ANOVA compares the mean differences between groups that have been

split on two independent variables (called factors). The primary purpose of a two-way

ANOVA is to understand if there is an interaction between the two independent

variables on the dependent variable.

The two-way analysis of variance (ANOVA) test is an extension of the one-way

ANOVA test that examines the influence of different categorical independent

variables on one dependent variable. While the one-way ANOVA measures the

significant effect of one independent variable, the two-way ANOVA is used when there

are more than one independent variable and multiple observations for each

independent variable.

The two-way ANOVA can not only determine the main effect of contributions of

each independent variable but also identifies if there is a significant interaction

effect between the independent variables.

HYPOTHESIS:

Null hypothesis (H0): The rate of brokerage paid by investors is independent from

primary investment objective.

Page 91: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

Alternate hypothesis (H1): The rate of brokerage paid by investors is associated with the

type of investment portfolio of investor.

Table 5.3.1: TABLE SHOWING DESCRIPTIVE STATISTICS OF

INDEPENDENT VARIABLES TYPE_OF_INVESTMENT_AVENUE &

PRIMARY_INVESTMENT_OBJECTIVE OVER DEPENDENT VARIABLE

CURRENT_BROKERAGE

Page 92: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

The above table 5.3.1 provides the mean and standard deviation for each

combination of the groups of the independent variables type_of_investment_avenue &

primary_investment_objective. In addition, the table provides "Total" rows, which allows

means and standard deviations for groups only split by one independent variable.

The plot of the mean “current brokerage” score for each combination of groups of

"primary objective of investment" and "type of investment avenue" are plotted in a line

graph, as shown below:

Fig 5.3.1: LINE-GRAPH SHOWING PLOT OF THE MEAN CURRENT_BROKERAGE

Page 93: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

STATISTICAL SIGNIFICANCE OF THE TWO-WAY ANOVA

Table 5.3.2: TABLE SHOWING TWO-WAY ANOVA

INFERENCE:

The above table 5.3.2 reveals that there is significant difference

between mean “current brokerage” and “primary investment objective” but there is no

significant difference between mean “current brokerage” and “type of investment

avenue” (p < .0005). Hence we reject null hypothesis in favor of alternate hypothesis.

So, the rate of brokerage paid by investors is associated with the type of investment

portfolio of investor.

Page 94: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

CHAPTER – 6

FINDINGS, SUGGESTIONS

AND CONCLUSION

Page 95: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

FINDINGS

The investment pattern of the investors’ depends upon their level of income,

frequency of investment, their investment portfolio, their risk taking ability and

their investment decision.

Many investors are engaged in intra-day or daily trading which is a short-term

investment and pay 0.05% of brokerage to ICICI.

Many investors take investment decisions on their own and are self-aware about

what is going on around them and the equity market as well.

Future growth of investment and risk involved are the deciding factors of

investment by the investors.

Return on investment and financial advisory services are the two important

factors for those investors who have invested in equity market.

Many investors have invested in E-Gold investment avenue, wherein they

procure the value of gold in electronic form.

Many investors follow cut-loss technique to manage their risk, so as to minimize

any proposed losses by procuring limited stocks by watching the market

movement.

Many investors alter their investment pattern by selling their risky investments

and putting the money in safer investments when there are market fluctuations.

Page 96: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

SUGGESTIONS

It is recommended that investors’ decision should be based on the broker’s

advice.

Risk and return should be evaluated before taking an investment decision.

There should be regular updates from ICICI to the investors via sms updates as it

will help them to invest with a caution.

Investors who want to avoid risk should invest in treasury notes or high-rated

municipal bonds, debentures etc.

A periodic client meet can be organized and conducted so that different investors

get to know others and can secure better ideas, share smart investment

techniques and get benefitted by the company.

Since the investors expect trading in commodities, ICICI can venture into

commodity trading and diversify its business.

As investors’ decision is based on the study of different sources, ICICI can go for

T.V commercials so as to attract interest of potential investors.

Since some of the investors’ portfolio is diversified, there is a huge scope for

ICICI to venture into new services and broaden the portfolio of other investors.

ICICI Securities can expand its business by setting up new branches where they

have high volume of clients.

Page 97: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

CONCLUSION

The study is conducted among the investors in ICICI Securities, particularly in

Nanganallur area. The investment pattern of investors’ are driven by various factors like

type of investment avenue preferred by the investor, risk taking ability of the investor,

time horizon preferred by investor to claim his/her return on investment, frequency of

investment, etc.

The study shows how different factors have an impact on the framework of

investment made by the investor. However it is very difficult to come to a definite

conclusion that how does the pattern of investment differs from one investor to that of

another investor.

But still the study concludes to an extent that investors’ alter their investment

pattern by selling their risky investments and putting the money in safer investments in

particular investment product like e-gold, which has gained increasing popularity due to

low risk involved and sequentially comes equity product, mutual funds, and other

investment avenues which has performed well in the past, and supported with strong

demands will perform well in the future.

Indian economy has not yet reached up to the mark in world equity market as

majority of the investment even in Indian equity market comes from foreign direct

investment. On a scale of 100 percent, only 2 percent of the total Indian population of

1.2 billion (as of December 2013) is engaged in equity market. Out of the 2 percent,

only 1.8 percent of the investors are active traders, rest of them are dormant traders.

The study also draws an important conclusion that the investors are keen to

invest in short term and less risky products and are very much interested in future

growth of their investments. Investors are aware about the factors affecting their short

term as well as long term investment plans and they do self-analysis before making

investment.

Page 98: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

SCOPE FOR FURTHER RESEARCH

The study is conducted by taking a limited number of sample size of 150 investors,

which is stated earlier. This study reflects the impact of various factors that determine

the investment pattern of investors who are residing in Nanganallur.

Investment is a wider concept. So the study can expand the number of investors

who are into equity market and the geographical area of the respondents governing the

study can also be expanded.

There might be a chance that the response of the investors’ of different nature

are varied due to diversity in social life, living pattern, income level, etc that needs to be

studied further.

The Indian equity market is not up to the mark when compared to world market.

This is because of the blind spots present in equity market. Many notable experts say

that it would take at least a year to get a clear view of the equity market.

The risk proportion is a notable parameter when a person decides before

investing. So in the future, the scope of the study needs to be briefed according to the

requirements of the investor.

Nowadays many housewives spend their spare time by buying and selling

securities without any assistance or advice. This lands them in trouble by causing a

dent in their wallet. In the future, the study can cover investors who invest from home.

Many experts say that investors even fail to a pilot study about the performance

of the company where they invest in. As a result they do not watch the market situation.

This leads them to buy the securities at a higher price and sell the securities at a lower

price, which is a huge loss. So the study needs to cover vital aspects of investment like

market watch, smart investment techniques, systematic investment planning, etc.

Page 99: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

REFERENCES

1) Grewal and Navjot Grewal, “Profitable Investment in shares”, Vision Books Pvt.

Ltd., Connaught Place, New Delhi 2011, Pg. 36-42.

2) Preethi Singh, “Investment Management”, Himalaya Publishing House, New

Delhi, 2006, Pg. 48-54.

3) Website: http://financenmoney.in/category/personal-financeinvestment-planning

4) “An Introduction To The Indian Stock Market”,

http:/investopedia.com/articles/stocks/09/indian-stock-market.asp, last accessed

on 27th December, 2013.

Page 100: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

APPENDIX

QUESTIONNAIRE

• Name: ___________________________

• Contact No/E-mail id: ____________________________

1) Age

Less than 20 20-30 31-40 41-60

More than 60

2) Educational level

PUC Graduate Post-Graduate Professional

Others ……………….

3) Occupation

Government employee Private Sector employee

Self-Employed Retired Others………………….

4) Annual income (in INR)

Less than 1 lakh 1-2 lakhs 2-3.5 lakhs 3.5-5 lakhs

More than 5 lakhs

Page 101: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

5) Annual investments (in INR)

Less than 25,000 25,000-50,000 50,001-1,00,000 1,00,001-2,00,000

2,00,001 & above

6) How good is your knowledge of finance?

An expert in the field of finance

Proficient in finance

Don't know much about finance but I keep myself up-to-date

Limited to knowing things like how the stock market is moving

7) What is your primary objective for accumulating assets?

Wealth preservation

Purchase of a home

Education funding

Retirement planning

8) Do you invest/ trade online?

Yes No

9) If Yes, you invest through:

Online trading

Brokers

Both

Page 102: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

10) If you are dealing through brokers (on phone), do you want to trade/ invest

online?

Yes No

11) In which of the following investment avenues have you invested?

Mutual Funds

Equity

E-Gold

Corporate Debenture

IPOs

F&O

11) State the reason behind the choice of your investment options

Self-awareness

Financial Advisors

Broker’s Advice

Friends’/Relatives’ Advice

Media

12) What is the current brokerage that you pay?

Intraday____%

Delivery____%

Futures_____%

Options____%

Page 103: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

13) Are you a short term or a long term investor?

Short term

Long term

Both

14) What is your frequency of investments?

Daily

Weekly

Monthly

Quarterly

Half-yearly

Annually

15) Your investment decision is depending on?

Risk involved

Return on Investment

Past performance

Future Growth

Other factors…………….

16) Market movement affects your investment pattern?

Yes No

Page 104: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

17) When the market goes down, I tend to sell some of my riskier investments and

put the money in safer investments.

I disagree

I somewhat agree

I agree

18) I can tolerate sharp ups and downs in the short-term value of my investments in

return for potential long-term gains

Strongly Agree

Agree

Disagree

Strongly Disagree

19) Which of the following risk management technique you use mostly?

Switching

Cut-loss

Short-selling

20) Do you expect to get regular updates about various Investment options from your

Bank?

Yes No

Page 105: INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

21) Do you want personalized Investment advising at your branch/ city?

Yes No

22) At present, is your branch advising you on your Investment Portfolio

Management?

Yes No

23) How satisfied are you with the services offered by ICICI Securities?

Highly satisfied

Satisfied

Dissatisfied

Highly Dissatisfied

24) How satisfied are you with safety and security of ICICI Securities?

Yes No

25) What kind of new product/service would you want to add to your current portfolio

from ICICI Securities?

_____________________________

26) Do you have any suggestions to make ICICI Direct product/service better?

………………………………………………………………………………………………

………………………………………………………………………………………………