moin khan report on stock market

7/29/2019 Moin khan Report on Stock market

1/46

A RESEARCH REPORT

ON

A STUDY ON INVESTORS DECISION TO CONTINUEINVESTING IN STOCK MARKETS

Submitted in partial fulfillment for the award of the degree

Master of Business Administration

Chhattisgarh Swami Vivekananda Technical University, Bhilai

Submitted by:

Damini AgrawalVinod Kumar SahuSimran Jeet SinghMBA-Semester II(Session 2011-13)

Approved By, Guided By,Dr. Sumita Dave Ms. Meenakshee Sharma

Head of the Department Assistant Professor

SHRI SHANKARACHARYA GROUP OFINSTITUTIONS

Faculty of Management StudiesApproved by AICTE

(Managed by Shri Gangajali Education Society, Bhilai)

1


2/46

JUNWANI, BHILAI 490020 (C.G.) INDIA

DECLARATION

We the undersigned solemnly declare that the report of the research work entitled A

Study on investors decision of continue investing in Stock Market is based on our own

work carried out during the course of our study under the supervision of Prof. Meenakshi

Sharma, Faculty of MBA Department.

We assert that the statement made and conclusions drawn are an outcome of our research

work. We further declare that to the best of our knowledge and belief the report does not

contain any part of any work which has been submitted for the award of MBA degree or

any other degree/diploma/certificate in this University or any other University of India or

abroad.

Damini Agrawal

Vinod Sahu

Simran Jeet Singh

MBA II semester

2


3/46

CERTIFICATE

This is to certify that Ms. Damini Agrawal, Mr. Simranjeet Kaur, Mr. Vinod sahu, a

student of MBA II semester at Faculty of Management studies shri ShankaracharyaGroup

of Institute, Junwani, Bhilai have conducted the project titled A Study on Decision of

continue investing in Stock Market. They have conducted their project under my

guidance and supervision.

(Prof. Meenakshee Sharma)

Assistant Professor

FMS SSGI

3


4/46

ACKNOWLEDG EMENT

The project has been made possible through the direct and indirect co-operation of

various persons, for whom we wish to express our appreciation and gratitude, but a

complete acknowledgement would be encyclopedic.

First and foremost we express our profound gratitude to our project guide Prof.

Meenakshee Sharma for assigning us an interesting and challenging project. It is only

because of her invaluable guidance and encouragement; we have dared to venture this

task. If at all we have succeeded, we owe it to her and we are left with a deep sense of

gratitude for her. Under whos able guidances had the privilege to work and who guide

us at every stage.

We express our deep sense of gratitude towards Prof. Meenakshee Sharma, Lecturer of

MBA Department, consistence guidance and morale encouragement helped us to

complete the project successfully.

At last we offer my thanks to all those people and other whose efforts and contribution

had made this possible.

Damini Agrawal

Vinod Kumar Sahu

Simran Jeet Singh

MBA II semester

4


5/46

INDEX

Contents PageNumber

DeclarationCertificateAcknowledgement

Chapter 1Introduction to the studyAbout the studyLiterature review

Chapter 2ObjectivesResearch planSampling planData collectionDescriptive statistics

Chapter 3Data tabulation, analysis and resultsType of analysis used and why

Results of the analysis

Chapter 4Findings of the study

Chapter 5Recommendations

Chapter 6ConclusionsReferences

5


6/46

Chapter 1

6


7/46

Introduction of the study

a) INTRODUCTION OF THE STUDY

This study is based on investors decision to continue investing in Stock market. We have

studied investors behavior. We have used descriptive research types, and used

questionnaire techniques. We have selected convenience sampling design.

7


8/46

This study examines the percentage of factors which influence the investors decision

which they took into consideration while continue investing in stock market.

Through this study we collected data from different people who actually invested in stock

market and found the influencing percentage of all the factors.

BEHAVIOUR OF THE STOCK MARKET

From experience we know that investors may 'temporarily' move financial prices away

from their long term aggregate price 'trends'. (Positive or up trends are referred to as bull

markets; negative or down trends are referred to as bear markets.) Over-reactions may

occurso that excessive optimism (euphoria) may drive prices unduly high or excessive

pessimism may drive prices unduly low. Economists continue to debate whether financial

markets are 'generally' efficient.

The event demonstrated that share prices can fall dramatically even though, to this day, it

is impossible to fix a generally agreed upon definite cause: a thorough search failed to

detect any 'reasonable' development that might have accounted for the crash. (But note

that such events are predicted to occur strictly by chance, although very rarely.) It seems

also to be the case more generally that many price movements (beyond that which are

predicted to occur 'randomly') are not occasioned by new information; a study of the fifty

largest one-day share price movements in the United States in the post-war period seems

to confirm this.

8


9/46

STOCK MARKET

A stock market which is also known as equity market is a public body in which a free

network of economic transactions occurs. It is not a physical facility or secret body. It is

the place for the trading of stock or shares of company and its derivatives at an agreeable

price. These shares and derivatives are securities that are listed on a stock exchange.

It was estimated that the worlds stock market size was at around $36.6 trillion at the

beginning of October 2008. The entire market of world derivative has been estimated at

around $791 trillion face or nominal value which is eleven-fold of the total world

economy. Since the value of derivative market is presented in terms of notional values, it

cannot be straightly compared to a fixed income security or a stock, which

conventionally refers t an actual value. Furthermore, the large majority of derivatives

cancels each other out which means that a derivative bet on an event that occurs is

counteracted by a comparable derivative bet on an event that does not occur. Many of the

securities that are relatively not liquid like that are valued as marked to model, instead of

valued as an actual market price.

a) LITERATURE REVIEW

INVESTMENT BEHAVIOUR

9


10/46

Psychological factors can actually explain why different investors behave in different

ways which affect their investment decisions. Investors might actually overreact towards

some information that they gained and under react towards others. One of the most

common investor behaviors is overconfidence in their judgment towards the market. This

actually happens when they actually underestimate the risk of the investment. The major

mistake of all is when they are overconfidence towards the market; they tend to trade too

much which will lead them to high transaction costs. The transaction costs might even

exceed the returns that they gained.

The second behavior is the investor tends to have biased self- attribution which means

that they will take all the credit for the returns that they received and they will blame

others for their losses that they encountered. This kind of investors will usually support

the information that favor their beliefs and they will underestimate or not considering the

information that are against them. They usually see the failure to get the returns as the

result of the factors that are beyond their control.

The third behavior is known as loss aversion. This behavior often happens to the

investors that dislikes the losses much more than the gains. For example, when a person

loss $200, the loss that he experience will have a bigger impact on him compare with

when he is gaining $200. The investor will usually hang on to the losing stock hoping the

price of the stock will bounce back. They will sell the gaining stock rather than the losing

stock.

The fourth behavior will be representativeness. The investor will usually make strong

conclusions from a very small sample. This means that they actually ignore or

underestimate the effects of random chance. One of the examples is when a stock broker

10


11/46

helps the investors to gain from the market for consecutive three months, the investor

will assume that the stock broker will maintain his performance and continue to help him

to earn the returns. But actually the investor overlooks a few matters in this case. Firstly,

the investment period is only three months which is a very short time period. Secondly,

the results of the stock broker might just be driven by random chance. The investor

should analyze the investment results for a longer time period before making the

judgment that they choose the right stock broker and they are investing at the right

investment.

Another behavior that most investor might have is the belief perseverance. This actually

means that the investor will just simply ignore the information that is against their

existing belief. They will even avoiding themselves from finding any new information

because they afraid that the new information is against their initial opinion. Once the

investor has decided that they make the right choice, they will believe it even though

there is evidence proving that their choice is wrong.

Basically, these are the few of the investor behaviors that explain their actions when

dealing with the investment. Some investors might posses one of the behaviors but some

of them might posses few of these behaviors at one time. Understand these behaviors will

help the investors to react in the market efficiently.

Behavioral finance attempts to understand and explain how human emotions influence

investors in their decision-making process. You'll be surprised at what they have found.

The facts

11


12/46

In 2001 Dalbar, a financial-services research firm, released a study entitled "Quantitative

Analysis of Investor Behavior", which concluded that average investors fail to achieve

market-index returns. It found that in the 17-year period to December 2000, the S&P 500

returned an average of 16.29% per year, while the typical equity investor achieved only

5.32% for the same period - a startling 9% difference! It also found that during the same

period, the average fixed-income investor earned only a 6.08% return per year, while the

long-term Government Bond Index reaped 11.83%.

Regret theory

Fear of regret, or simply regret, theory deals with the emotional reaction people

experience after realizing they've made an error in judgment. Faced with the prospect of

selling a stock, investors become emotionally affected by the price at which they

purchased the stock. So, they avoid selling it as a way to avoid the regret of having made

a bad investment, as well as the embarrassment of reporting a loss.

What investors should really ask them when contemplating selling a stock is, "What are

the consequences of repeating the same purchase if this security were already liquidated

and would I invest in it again?" If the answer is "no", it's time to sell; otherwise, the result

is regret of buying a losing stock and the regret of not selling when it became clear that a

poor investment decision was made - and a vicious cycle ensues where avoiding regret

leads to more regret.

Mental accounting

12


13/46

Say, for example, you aim to catch a show at the local theater, and tickets are $20 each.

When you get there you realize you've lost a $20 bill. Do you buy a $20 ticket for the

show anyway? Behavior finance has found that roughly 88% of people in this situation

would do so. Now, let's say you paid for the $20 ticket in advance. When you arrive at

the door, you realize your ticket is at home. Would you pay $20 to purchase another?

Only 40% of respondents would buy another. Notice, however, that in both scenarios

you're out $40: different scenarios, same amount of money, different mental

compartments.

13


14/46

Chapter 2

Research methodology

a) OBJECTIVES OF THE STUDY

14


15/46

To understand the factors influencing the investors to take decision of continue

investing in stock market.

To examine how investors understand and take decision to invest in stock market.

b) RESEARCH PLAN

RESEARCH PLAN

Research Design DescriptiveResearch Method

UsedSurvey

Research

InstrumentQuestionnaire

Data Collection Secondary Source

Sampling Design Convenience

Sample Size 157Sample Location Durg and Bhilai

Sample UnitInvestors of stock

market

RESEARCH PLAN

15


16/46

A research design is a basis of framework, which provides guidelines for the rest of

research process. It is the map of blueprint according to which, the research is to be

conducted. The research design specifies the method of study. Research design is

prepared after formulating the research problem.

Descriptive research, also known as statistical research, describes data and characteristics

about the population or phenomenon being studied. Descriptive research answers the

questions who, what, where, when and how...The description is used for frequencies,

averages and other statistical calculations. Often the best approach, prior to writing

descriptive research, is to conduct a survey investigation. Qualitative research often has

the aim of description and researchers may follow-up with examinations of why the

observations exist and what the implications of the findings are.

In this research I have conducted Descriptive research to study the Investors

decision while investing in stock market. Descriptive includes survey and fact finding

analysis of different kinds.

POPULATION

All the investors investing in stock market will constitute the population of the

study.

SAMPLE

16


17/46

It is neither feasible nor desirable for the researcher to go through the population there

Sample Method was used and the researcher has taken 157 samples, while adopting

Convenience Sampling.

QUESTIONNAIRE

For the purpose of research the researcher has used this particular researcher instrument-

Questionnaire. Keeping in mind the objective of the study questionnaire was prepared.

Questionnaire is comprised of two parts, the first part contains the questions related to the

topic of the research and second part contains the profile of respondent.

QUESTIONNAIRE DESIGN

In questionnaire, we have used Likerts measurement scale to identify the significant

factors influencing the decision of investor which he take into consideration while

investing in stock market. Here 1 to 7 scales are used to be marked their satisfaction

level, where 1 & 2 stands for strongly disagree, 3, 4 & 5 neutral, and 6, 7 stands for

strongly agree.

DATA COLLECTION

17


18/46

Data are the raw materials in which research works. The task of data collection begins

after research problem has been defined and research design chalked out. The data has

been collected by the researcher with the help of questionnaire while visiting the

respective investor.

Data collection is classified into two part, primary data and secondary data.

Primary data

Secondary data

The data referred to those which gathered for some other purpose and are already

available in the firms initial records and commercial, trade or government, publication.

On the other hand primary data dont exist in record and publication. The researcher has

to gather primary data fresh for the specific study, undertaken by him.

In this project primary data were collected by survey methods i.e. Questionnaire.

SAMPLING PLAN

The first step in sampling plan is to decide the population. Once the population is

decided the research must concern him to fine:

What sampling unit should be?

What should be the sampling size?

What sampling procedure should be used?

What sampling method should be utilized in this project?

18


19/46

Chapter 3

Data Tabulation, Analysis and Results

19


20/46

Data Analysis

Data collected during the research with the help of questionnaire is further analyzed

and interpreted in the following lines in the same sequential can be understood more

clearly with the help of interpretation then followed.

The analysis techniques used have been on SPSS and the test was performed to

ascertain the factor influencing the decision of investor while investing in stock

market.

We in our study used pie-chart to know the percentage of factors influencing the

decision of investor.

D1: I intend to continue investing in Stock Market rather than discontinue its

use.

Strongly

disagree

Disagree Somewh

at

disagree

neutral Somewh

at agree

Agree Strongly

agree

1 2 3 4 5 6 7

20


21/46

INTERPRETATION: 31% respondent says that they are somewhat agree with I intend

to continue investing in Stock Market rather than discontinue its use. , 23% are neutral,

16%are agree, 12%are strongly agree, 7% are disagree, 6% are strongly disagree and

only 5% are somewhat diagree.

D2: My intentions are to continue investing in Stock Market than investing

anywhere else.

Strongly

disagree

Disagree Somewh

at

disagree

neutral Somewh

at agree

Agree Strongly

agree

1 2 3 4 5 6 7

INTERPRETATION: 24% of respondent are neutral about My intentions are to

continue investing in Stock Market than investing anywhere else, 23% are

somewhat agree, 21%are agree, 13% are strongly agree, 10% are somewhat disagree,

7% are disagree and 2% are strongly disagree.

21


22/46

D3: If I could, I would like to discontinue investing in Stock Market.

Strongly

disagree

Disagree Somewh

at

disagree

neutral Somewh

at agree

Agree Strongly

agree

1 2 3 4 5 6 7

INTERPRETATION: 20% respondents are disagreeing with If I could, I would

like to discontinue investing in Stock Market. And only 2% are agreeing.

22


23/46

S1: How do you feel about your overall experience of investing in Stock Market?

Strongly

disagree

Disagree Somewh

at

disagree

neutral Somewh

at agree

Agree Strongly

agree

1 2 3 4 5 6 7

INTERPRETATION: 29% ,Majority of respondents are somewhat agree

with How do you feel about your overall experience of investing in Stock Market?

and the least 2% are disagree.

U1: Investment in Stock Market improves my overall returns.

23


24/46

Strongly

disagree

Disagree Somewh

at

disagree

neutral Somewh

at agree

Agree Strongly

agree

1 2 3 4 5 6 7

INTERPRETATION: 31% majority of people says that they are somewhat agree with

Investment in Stock Market improves my overall returns., and only 2% are disagree.

24


25/46

U2: Investment in Stock Market increases the liquidity of my investment.

Strongly

disagree

Disagree Somewh

at

disagree

neutral Somewh

at agree

Agree Strongly

agree

1 2 3 4 5 6 7

INTERPRETATION: 24%are saying that they are neutral about Investment in

Stock Market increases the liquidity of my investment. And only 3% are

disagreeing.

25


26/46

U3: Investment in Stock Market makes my investment flexible.

Strongly

disagree

Disagree Somewh

at

disagree

neutral Somewh

at agree

Agree Strongly

agree

1 2 3 4 5 6 7

INTERPRETATION: 37% respondent the majority says that they are somewhat

agree with the Investment in Stock Market makes my investment flexible. , 20%

are neutral ,15 % are agree and the least 3% are strongly disagree.

26


27/46

U4: Investment in Stock Market increases my effectiveness in managing my

personal finances.

Strongly

disagree

Disagree Somewh

at

disagree

neutral Somewh

at agree

Agree Strongly

agree

1 2 3 4 5 6 7

INTERPRETATION: There is a tie in Investment in Stock Market increases my

effectiveness in managing my personal finances.24% are somewhat agree and

neutral and the least 2% are strongly disagree.

U5: Overall, investment in Stock Market is useful for managing my finances.

27


28/46

Strongly

disagree

Disagree Somewh

at

disagree

neutral Somewh

at agree

Agree Strongly

agree

1 2 3 4 5 6 7

INTERPRETATION: 29% are neutral about Overall, investment in Stock Market

is useful for managing my finances. 25% are somewhat agree, 18% are strongly

agree and least 4% respondents are strongly disagree and somewhat disagree.

28


29/46

R1: My experience with investing in Stock Market was better than what I expected

Strongly

disagree

Disagree Somewh

at

disagree

neutral Somewh

at agree

Agree Strongly

agree

1 2 3 4 5 6 7

INTERPRETATION: 29% respondents are neutral about My experience with

investing in Stock Market was better than what I expected and the least 4 % respondents

are strongly disagreeing.

R2: The returns provided by Stock Market were better than what I expected.

29


30/46

Strongly

disagree

Disagree Somewh

at

disagree

neutral Somewh

at agree

Agree Strongly

agree

1 2 3 4 5 6 7

INTERPRETATION:

Majority of people says that they are somewhat agree with The returns provided by

Stock Market were better than what I expected 29% are in the state of somewhat agree

and 23% are saying that they are neutral.

R3: Overall, most of my expectations from investing in Stock Market were fulfilled.

30


31/46

Strongly

disagree

Disagree Somewh

at

disagree

neutral Somewh

at agree

Agree Strongly

agree

1 2 3 4 5 6 7

INTERPRETATION:

In overall experience of investing is fulfilled 38% respondents are saying that they are

neutral about the statement and 4% are strongly disagree.

E1: I am able to get optimum return while investing in Stock Market.

31


32/46

Strongly

disagree

Disagree Somewh

at

disagree

neutral Somewh

at agree

Agree Strongly

agree

1 2 3 4 5 6 7

INTERPRETATION:

4% are strongly disagree, 4% are somewhat disagree, 13% are disagree, 25% are

neutral, 27% are agree, 15% are somewhat agree and 12% are strongly agree.

32


33/46

E2: Investing in Stock Market is fulfilling my overall expectation.

Strongly

disagree

Disagree Somewh

at

disagree

neutral Somewh

at agree

Agree Strongly

agree

1 2 3 4 5 6 7

INTERPRETATION:

4% are strongly disagree, 6% are somewhat agree, 13% are disagree, 32% are

neutral, 14% are agree, 22% are somewhat agree and 9% are strongly agree.

33


34/46

E3: Investment in Stock Market is given overall flexibility (Switching facility) andliquidity.

Strongly

disagree

Disagree Somewh

at

disagree

neutral Somewh

at agree

Agree Strongly

agree

1 2 3 4 5 6 7

INTERPRETATION:

34


35/46


neutral, 25% are agree, 14% are somewhat agree, 14% are strongly agree.

V1: I can reduce the level of risk while investing in Stock Market

Strongly

disagree

Disagree Somewh

at

disagree

neutral Somewh

at agree

Agree Strongly

agree

1 2 3 4 5 6 7

35


36/46

Interpretation:


neutral, 24% are agree, 13% are somewhat agree, 11% are strongly disagree.

V2: I get higher return while investing in stock market.

Strongly

disagree

Disagree Somewh

at

disagree

neutral Somewh

at agree

Agree Strongly

agree

1 2 3 4 5 6 7

36


37/46

INTERPRETATION:

19% are strongly disagree, 5% are some what disagree, 16% are disagree, 26% are

neutral, 6% are agree, 16% are some what agree and 12% are strongly agree.

V3: Before making investment decision in stock market I am taking suggestion from

my financial advisor.

Strongly

disagree

Disagree Somewh

at

disagree

neutral Somewh

at agree

Agree Strongly

agree

1 2 3 4 5 6 7

37


38/46

INTERPRETATION:


neutral, 17% are agree, 27% are some what agree, 4% are strongle disagree.

V4:Before making investment decision in stock market I am taking suggestion from

my friends and family members.

Strongly

disagree

Disagree Somewh

at

neutral Somewh

at agree

Agree Strongly

agree

38


39/46

disagree1 2 3 4 5 6 7

INTERPRETATION:

21% people strongly disagree, 3% people say that somewhat disagree, 9% are

disagree, 22% are neutral, 21% are agree, 19% are somewhat agree, 7% are strongly

agree.

39


40/46

CHAPTER 4

FINDINGS OF THE STUDY

40


41/46

It is found that investors are not ready to continue investing in stock market.

Investors consider level of risk while investing.

They are not satisfied with the return.

Their experience is somewhat neutral investing in stock market.

41


42/46

Chapter 5

Suggestion

42


43/46

To provide knowledge to the investors about the market.

They should choose optimum position for investing.

Their risk and return should be equal.

They have to consider both risk market and riskless market.

43


44/46

Chapter 6

Conclusion

CONCLUSION

44


45/46

We would like to conclude as most of the investors like to discontinue investing in

stock market because of risk factors. It is because they are not getting the same

proportion of return as risk. Some people not investing because of lack of knowledge.

People of some criteria didnt know about stock market, by providing efficient and

proper knowledge risk can be reducing and investor may increase to make them able

to invest. Investors not trust the brokers and they not prefer to ask them or to take

from advice.

REFERENCES

45


46/46

http://www.tradingeconomics.com/india/stock-market

http://www.meta4forexbroker.com/2011/10/what-is-stock-market/

www.sharekhan-firststep.com/

http://www.articles-finance.info/understanding-investor-behavior-in-stock-

market/

http://www.investopedia.com/articles/05/032905.asp#axzz1r0TCARSr

moin khan report on stock market

Documents