project on sharekhan = investors behavior for investing in equity market in various sector
DESCRIPTION
TITAL : INVESTORS BEHAVIOR FOR INVESTING IN EQUITY MARKET IN VARIOUS SECTOR PROJECT DONE ON BEHALF OF SHAREKHAN SECURITIESTRANSCRIPT
A
WINTER PROJECT REPORT
ON
“INVESTORS BEHAVIOUR FOR INVESTING IN EQUITY MARKET IN
VARIOUS SECTORS” IN SURAT CITY
(Conducted on behalf of Share khan Limited, Surat)
(From 4th January, 2010 to 4th March, 2010)
A Project Report
Submitted in partial Fulfillment of the requirements
For the award of the degree of
BACHELOR OF BUSINESS ADMINISTRATION
TO
VEER NARMAD SOUTH GUJARAT UNIVERSITY, SURAT
Submitted By:
ASHISH L. SORATHIYA
T.Y.B.B.A (Sem-VI) FINANCE
Roll No. 79
Under the guidance of
MISS KHUSHBU VORA
Submitted To:
THE CO-ORDINATOR
VIVEKANAND COLLEGE FOR B.B.A., NEAR JAHANGIRPURA,
VEER NARMAD SOUTH GUJARAT UNIVERSITY, SURAT
ACADEMIC YEAR March 2010
I ASHISH L. SORATHIYA, here by declare that the project report entitled
“Investors Behaviour for Investing in Equity Market in
Various Sectors” Conducted on behalf of SHAREKHAN LIMITED, Surat under
the guidance of Ms. Khushbu Vora submitted in partial fulfillment of the
requirements for the award of the degree of Bachelor of Business
Administration to Veer Narmad South Gujarat University, Surat is my original
Work-Research Study-carried out during 4th January, 2010 to 4th
March, 2010 and not submitted for the award of any other
degree/diploma/fellowship or other similar titles or Prizes to any other
Institutions/Organization or University by any other person.
Place: ASHISH L. SORATHIYA
T.Y.B.B.A (Sem-VI)
Roll No. 79
Date:
DECLARATION
I express my deep sense of gratitude towards my guide,
Ms. Khushbu Vora without whose kind help this project study would have been
extremely difficult. She has helped me with her valuable suggestions right from
the beginning till the final draft of the report. The sheer mention of my project
study shall ever commemorate her kind guidance.
I am also grateful to Mrs. Varsha Patel, faculty of the
Vivekanand College for B.B.A. for his kind effort to make all the required
facilities available and gave his valuable suggestions in preparing this project
report. The library facility of the college has been of immense use to me for
reference of books and old project reports.
I am also thankful to Mr. Zubin Bhatporia (Associate Vice President) of
Sharekhan Ltd., Surat for giving me an opportunity for getting in valuable
experience in such reputed organization.
I am also thankful to Mr. Darwin Variava who is presently working with
Sharekhan Limited for providing me actual training and the required knowledge
& guidance in completing this training successfully.
Finally, I would like to record my special thanks to my parents, friends,
and colleagues help me directly or indirectly in preparation of project work.
ACKNOWLEDGEMENT
ASHISH L. SORATHIYA
T.Y.B.B.A (Sem-VI)
Roll No. 79
CERTIFICATE OF
FACULTY GUIDE
This is to certify that the Project Report entitled A STUDY ON
“INVESTORS BEHAVIOUR FOR INVESTING IN EQUITY MARKET IN
VARIOUS SECTORS” IN SURAT CITY (Conducted on behalf of Sharekhan
Limited, Surat) submitted in partial Fulfillment of the requirements for the award
of the degree of BACHELOR OF BUSINESS ADMINISTRATION to VEER
NARMAD SOUTH GUJARAT UNIVERSITY, SURAT is a record of bonafide
research work carried out by ASHISH L. SORATHIYA under my supervision and
Guidance.
………………………..
Ms. Khushbu Vora
Project Guide
VIVEKANAND COLLEGE FOR B.B.A.
PREFACE
Myself Ashish L. Sorathiya, student of Vivekanand College for
B.B.A. who is presently undertaking education in the spare of “Bachelor of
Business Administration” which covers total business activities.
As students of management, I must be encouraged by the growth
and rapid developments taken place in Various Sectors, in India. Still
recently, management is growing baby. Keeping in mind the ever development
field of management and great demand for Finance in our country, our university
(VNSGU) has arranged specialization program in many field of management.
Thus, it is our moral and obligatory duty to take this part of our studies with great
enthusiasm and seriousness and give it the due importance.
My report gives information about the “Behavior of Investors for
Investing in Various sectors regarding Equity market”. The report contains
graphical representation & interpretation with each graphs and charts. For the
preparation of this report, I have used simple random sampling method for survey
purpose. This training proved to be an experience, which is required to become a
true student of management and administration.
EXECUTIVE SUMMARY
Days were gone when people only invest their money in Post offices or in
Banks and another safely fixed return investment. Today people have several
choices for the investment alternatives. Now a day, one of the most emerging
choices is to invest in equities shares. To get good return on investment, people
are ready to take risks. Law always says that investors get HIGHER RETURN if
they take HIGH RISK. For high risk there is one avenue to invest and that is
Equity Market.
This Project Focused On “INVESTORS BEHAVIOUR FOR INVESTING
IN EQUITY MARKET IN VARIOUS SECTORS” IN SURAT CITY. Objectives
behind this project are to know investors behavior for investing in various sectors
regarding equity market, to know their preference of investment in equity market,
and to know whether potential growth of equity market is there or not.
I have used Descriptive Research Design because answers the
questions who, what, where, when and how. This study is complex and
determines high degree scientific skill to study the problem. Questionnaires are
used for survey purpose and before going to actual survey pilot testing were also
done.
Sample size is of 175 respondents who are the actual and potential
investors from whole of the equity market of Surat city and also from Sharekhan
Securities Pvt. Ltd. Here, each sample has the chance to be selected on an equal
basis because I have used simple random sampling method for surveying
purpose.
From research I found that 68% of investors are investing in Equity
Market. While 36% of investors are not investing in Equity Market as per my
sample size 175.
Means most of the customers are aware about Equity Market. There are
certain customers who are also aware about equity market but, they not want to
invest in equity market, Reasons for not investing in equity market is high risk
and there are no any fixed returns criteria and Investors age also affect in risk
factor. Means old persons risk bearing capacity is law so, investor’s also
select investment avenue as per his/her risk bearing capacity
Equity share holder is real owner of the company in spite of their priority
in getting dividend is comes last.
Major Investors are investing in equity market only due to
earn high return and hedge the risk by investing their 5%-10% of income in
Equity Market. 28% of investors invest in Equity market for the period of
1 to 3 Months and the same proportion of investors are invest for
long period more than year.
On the basis of research I found that, major investors have selected
Oil & gas sector as a 1st Rank, IT sector as a 2nd Rank, Banking sector as a
3nd Rank, Automobile sector as a 4th Rank and Infrastructure sector as a 5nd
Rank.
Most of investors have considered Market trend, Price Earning Ratio,
Dividend and Profitability as a most important factor while selecting the Sector
and company under the sector.
I have used SPSS software (Statistical Package for the Social
Sciences) for analysis purpose and in that I have used graphical
representation & interpretation with each graphs and charts and Microsoft
Office is used for data typing formatting and analyzing the data.
company profile
COMPANY PROFILE
Company Name: SHAREKHAN LIMITED
Parental Company: SSKI Group
(Shripal Sevantilal Kantilal Ishwarlal Pvt. Ltd)
Establishment year: 1922
CEO of the company:
Mr. Tarun Shah
Head Office: A-206, Phoenix House,
2nd Floor, Senapati Bapat Marg,
Lower Parel,
Mumbai- 400 013.
Surat Main Branch:
(Where I have taken training)
M- 1 to 6, Jolly Plaza,
Mezzanine Floor,
Athwa Gate,
Surat - 395001
Telephone No: (022) 67482000
0261- 6560310-314
Online division as “Sharekhan”
8th February 2000
Web Site: www.sharekhan.com
Email: [email protected]
Offices(Network): More than 640 outlets in 280 cities
INTRODUCTION OF SHAREKHAN
Sharekhan is one of the leading share broking and retail brokerage firms in
the country. It is the retail broking arm of the Mumbai-basedSSKI Group (Shripal
Sevantilal Kantilal Ishwarlal Pvt. Ltd), which has more than 88 years of
experience in the stock broking business. SSKI is a veteran equities solutions
company with more than 8 decades of trust and credibility in the Indian stock
markets. It helps the customers/people to make informed decisions and simplifies
investing in stocks.
Sharekhan brings to you a user- friendly online trading facility, coupled
with a wealth of content that will help you stalk the right shares. SSKI named its
online division as a Sharekhan and it is into retail broking. The business of the
company overhauled 10 years ago on February 8, 2000. It acts as a discount
brokerage house to a full service investment solution provider. It has specialized
research product for the small investors and day traders.
Sharekhan’s online trading and investment site ww.sharekhan.com was
launched in 2000.
Though the www.sharekhan.com, have been providing investors a
powerful online trading platform, the latest news, research and other knowledge-
based tools and Sharekhan's equity related services include trade execution on
BSE, NSE, Derivatives, commodities, depository services, online trading and
investment advice.
Sharekhan’s ground network includes over 640 Share shops across 280
cities in India. With branches and outlets across the country, Sharekhan’s
ground network is one of the biggest in India!
They have talent pool of experienced professionals specially designated
to guide you when you need assistance, which is hy investigating with us is
bound to be a hassle-free experience for you!
The Sharekhan provides its Customers First Step program, built
specifically for all investors, so testament is –
“YOUR GUIDE TO THE FINANCIAL JUNGLE” means
“Our commitment to being your guide throughout your investing lifecycle”
The institutional broking arm of SSKI was also awarded ‘India’s best
broking house for 2004 by Asia Money brokers poll recently & It has also won
the prestigious Awaaz Consumer Vote Awards 2005 for the Most Preferred
Stock Broking Brand in India, in the Investment Advisors category.
They have 640 share shops across 280 cities in India to get a host of trading
related services – our friendly customer service staff will also help you with any
account related queries you may have.
Sharekhan won the award by the vote of consumers around the country,
as part of India’s largest consumer study cover 7000 respondents – 21 products
and services across 21 major cities. The study, initiated by Awaaz – India’s first
dedicated Consumer Channel and member of the worldwide CNBC Network, &
AC Nielsen–ORG Marg, was aimed at understanding the brand preferences of
the consumers & to decipher what are the most important loyalty criteria for the
consumer in each vertical.
The reasons behind the preferences for brands were unveiled by
examining the following:
Tangible features of product / service.
Softer, intangible features like imagery, equity driving preference.
Tactical measures such as promotional / pricing schemes.
Sharekhan completes 10 years in Retail Broking Business:
Sharekhan Ltd, India’s leading online retail broking house with a strong
online trading platform, has completed a decade in the business offering services
such as portfolio management, trade execution in equities, futures & options,
commodities and distribution of mutual funds, insurance and structured products.
In a short span of 10 years, the company has scripted a remarkable
growth story. Starting from beginnings in 8th February 2000 as an online trading
portal, Sharekhan today has a pan-India presence as well as global footprint in
UAE and Oman with over 1,200 outlets serving 9,50,0000 customers across
400 cities.
Mr. Tarun Shah, CEO, Sharekhan,
Says - “We are proud to be
completing a decade of setting new
standards in the industry. This
journey has been eventful. And the
journey couldn’t have been such a
rewarding one without the support of
our patrons who infused immense
faith in our services in the last 10
years. We profusely thank our
patrons for the same.”
Sharekhan in its decade-old journey has set category leadership through
pioneering initiatives like ‘Trade Tiger’; a net based executable application that
emulates a broker terminal besides providing information and tools relevant to
traders. Through its ‘First Step’ program Sharekhan has been guiding first-time
investors and helping them makes informed decisions.
ABOUT SHAREKHAN
SSKI named its online division as SHAREKHAN and it is into retail broking.
The business of the company overhauled 10 years ago on February 8,
2000.
It acts as a discount brokerage house to a full service investment solutions
provider.
It has specialized research product for the small investors and day traders.
Largest chain of 640 shares shops in 280 cities across India.
The site was also launched on February 8, 2000 and named it as
www.sharekhan.com.
The Speed Trade account of Sharekhan is the next generation technology
product launched on April 17, 2002.
It offers its customers with the trade execution facilities on the NSE and BSE,
for cash as well as derivatives, depository services.
Ensures convenience in Trading Experience: Sharekhan’s trading services are
designed to offer an easy, hassle free trading experience, whether trading is
done daily or occasionally. Sharekhan providing the customers with a multi-
channel access to the stock markets.
It gives advice based on extensive research to its customers and provides
them with relevant and updated information to help him make informed about
his investment decisions.
Sharekhan offers its customers the convenience of a broker-DP.
It helps the customers meet his pay in obligations on time thereby reducing the
possibility of auctions. And execute the instruction immediately on receiving it
and thereafter the customer can view his updated account statement on
Internet.
Sharekhan depository services offer Demat services to individual and
corporate investors. A customer can avail of Demat, repurchase and
transmission facilities at any of the Sharekhan branches and business partners
outlets.
BRAND NAME:
The company as a whole in its offline business
has named itself as SSKI Securities Private Limited – Shripal Sevantilal
Kantilal Ishwarlal Securities Private Limited. The company has preferred to
name themselves under a blanket family name.
But, in its online division started since 1997, the company preferred to
name itself as “SHAREKHAN”. The Brand name “SHAREKHAN” itself suggests
the business in which the company is dealing so that the customer could easily
identify the product or service category.
SHAREKHAN’S MISSION & VISION:
MISSION
“To educate and empower the retail investor
to help him/her take better investment decisions.”
VISION
“To be the best retail broking brand in the Indian
equities market.”
ROLE OF SHAREKHAN:
Interface between the stock
Assistance to investors in precise allocation of funds.
Building awareness amongst general public about stock market.
Core Services of Sharekhan:
As a Sharekhan customer you can decide the channel through which you
want to receive different Services.
OTHER SERVICES PROVIDED BY SHAREKHAN
1. Online Services
2. Offline Services
3. Depository Services: Demat & Remat Transactions
4. Derivatives Trading (Futures and Options)
5. Commodities Trading
6. IPOs & Mutual Funds Distribution
7. Fundamental Research
8. Technical Research
9. Portfolio Management
10. Free access to investment advice from Sharekhan's Research team
11. Sharekhan Value Line (a monthly publication with reviews of
recommendations, stocks to watch out for etc)
12. Daily research reports and market review (High Noon & Eagle Eye)
13. Pre-market Report (Morning Cuppa)
14. Daily trading calls based on Technical Analysis
15. Cool trading products (Daring Derivatives and Market Strategy)
16. Personalised Advice
17. Live Market Information
18. Internet-based Online Trading: SpeedTrade
1. Online Services:
Online BSE and NSE executions (through BOLT & NEAT terminals
Mutual Funds
Commodity Futures
PMS (Portfolio Management Services)
Technical PMS
Demat Services
Share shops
TYPES OF DEMAT ACCOUNT
Online Account
Classic
Accounts
Trade Tiger Accou
nt
Dial – N –
Trade
Offline Account
2. Offline Services:
Trading with the help of Dealer
Trading without credit
By calling to the Share shops
Credit facility (Only in Delivery-based)
Special website for Offline Clients: www.mysharekhan.com
Physical contract notes
It provides various On-line trading services through various account:
The company provided mainly two types of services to their customers for
the Demate Accounts.
(1) Online Account and
(2) Offline Account
1. Online Account: -
In the Online account, the company simply provides the terminal to the
customers or clients and the clients can do trading himself/herself when he/she
wants. The charges of online account is Rs. 750 /-, which is varies from company
to company. Online accounts are most popular than the Offline accounts.
In the Online A/C, the company provides 3 types of facilities to their clients
as per the requirements.
A. Classic Accounts
B. Trade Tiger Accounts
C. Dial – n –Trade
A. Classic Accounts:
Investing Online is so much easier!
In Classic accounts, it is very simple to do trading. Here customer has first
to open a Demat account with Sharekhan and after opening an account he can
get the login ID and password. With the help of login ID and password, the client
can login to the Sharekhan.com and in the classic a/c whatever company’s
information the clients wants, he has to type the company’s name or code and he
will get all the necessary information about that company and he can buy or sell
the that company’s stock or shares. But, here in the classical account the client
can access only one scrip at a time.
Features of Classic Account:
Classic account enables you to buy and sell shares through our website. You
get features like
Online trading account for investing in Equities and Derivatives via
sharekhan.com
Integration of: Online trading + Bank + Demat account
Instant cash transfer facility against purchase & sale of shares
Make IPO bookings
You get Instant order and trade confirmations by e-mail
Streaming Quotes
Personalised Market Scan with your own customized stock ticker!
Single screen interface for cash and derivatives
Your very own Portfolio Tracker!
B. Trade Tiger Account: -
Earlier it was known as Speed Trade and now it is known as Tiger Trade.
This account is same as fast trade account. But, difference between these
two accounts is that in the Tiger Trade Account the client can access more than
25 scripts at a time and buy and sell the share from wherever they wants. This
account also provides the charts and graphs, so that the clients can easily
understand about the stock of the company. This is only for big clients and dealer
kind of customers. This account is mainly for active traders who trade frequently
during the trading session.
Features of Trade Tiger Account : -
A single platform for multiple exchange BSE & NSE (Cash & F&O),
MCX, NCDEX, Mutual Funds, IPOs
Multiple Market Watch available on Single Screen
Multiple Charts with Tick by Tick Intraday and End of Day Charting
powered with various Studies
Graph Studies include Average, Band- Bollinger, Know Sure Thing, MACD,
RSI, etc
Apply studies such as Vertical, Horizontal, Trend, Retracement & Free lines
User can save his own defined screen as well as graph template, that is,
saving the layout for future use
User-defined alert settings on an input Stock Price trigger
Tools available to gauge market such as Tick Query, Ticker, Market
Summary, Action Watch, Option Premium Calculator, Span Calculator
Shortcut key for FAST access to order placements & reports
Online fund transfer activated with 12 Banks
C. Dial-n-trade:
Features of Dial-n-trade:
TWO dedicated numbers for placing your orders with your cell phone or
landline. Toll free number: 1-800-22-7050. For people with difficulty in
accessing the toll-free number, we also have a Reliance number (Your
Local STD Code) 30307600 which is charged at as a local call.
Simple and Secure Interactive Voice Response based system for
authentication
No waiting time. Enter your TPIN to be transferred to our telebrokers
You also get the trusted, professional advice of our telebrokers
After hours order placement facility between 9.00 am and 9.30 am (timings
to be extended soon)
2. Offline Account: -
This is simple way to do trading. In the offline account, the client
can place the order by telephone or through personal visit in the office.
The client who is very busy in their jobs or business, they can directly
place the order by the telephone or the client who are not much busy; they
can come to the office of Sharekhan.
Sharekhan also provide the Dial-n-trade service to their customers.
So that customers can directly place the order by the telephone.
Demat Account Opening & Brokerage Charges: -
Fee structure for General Individual:
Charges Classic Account Trade Tiger Account
Account Opening Charges Rs. 750/- Rs. 1000/-
Brokerage Intra-day : 0.10
%
Delivery : 0.50 %
Intra-day : 0.10 %
Delivery : 0.50 %
Annual Maintenance Charges
Rs. NIL first year
Rs. 300/= p.a. from second year
onwards
For Intra-day Trades :-
This is subject to a minimum brokerage of 5 paisa per share. This means
that if the share price you trade in is Rs 50/- or less, a minimum brokerage
of 5 paisa per share will be charged.
For Delivery Based Trades :-
This is subject to a minimum brokerage of 10 paisa per share. Minimum
brokerage of 10 paisa per share will be applicable when the share price
is Rs 20/- or less.
Sharekhan launchs ShareMobile, an exclusive
live streaming quotes and trading facility for its
online trading customers
Next time when you are on move, you need
not worry about your favorite stocks price
movement. You can carry stock market
terminal with you anywhere – anytime.
Have you ever missed an investment or an
opportunity to book profit / loss, just because
you were on move?
Sharekhan brings your freedom of being
Mobile. Yes, it’s so easy with ShareMobile to
track your favorite stocks price movement tick-by-tick.
How ShareMobile does empower you?
Live tick by tick stock price.
Latest News Headlines
Track your My Trade Portfolio investments
Live Research Fundamental & Trading Calls
Sharekhan Depository Services:
Sharekhan Depository Services offers dematerialization services to individual
and corporate investors.
Sharekhan has a team of professionals and the latest technological expertise
dedicated exclusively to our Demat department, apart from a national network
of franchisee, making the services quick, convenient and efficient.
Trading in Commodity Futures:
It provides with facility to trade in commodities (Bullion: Gold, silver and
agricultural commodities) through a wholly owned subsidiary of its Parent
SSKI.
Sharekhan is a member of 2 Commodity Exchanges and offers trading
facility at both these exchanges:
1. Multi Commodity Exchange Of India (MCX)
2. National Commodity And Derivative Exchange, Mumbai (NCDEX)
Software (Technology) Used In Sharekhan : -
Sharekhan is using different technology for the running of their daily
transactions.
Mainly for the trading, the company using three software.
1. ODIN (VSAT Based)
2. Trade Tiger (WEB Based)
3. Classic/Fast Trade (WEB Based)
And also NEAT System Used for making transaction in NSE listed
company & same way BOLT System Used for making transaction BSE listed
company.
And for the client information or customer service, the company using two
software.
1. CIS – Client Information System.
2. BOC – Back Office.
Some Information about Sharekhan: Turnover Rs. 15 corers daily
Employees Strength 35
Offices More than 640 outlets in 280 cities
Clients : Demat A/c
Trading A/c
5000
3000
Head office Mumbai
Working Capital More than 400 corers
Special Features
Sharekhan Classic Account
Sharekhan Trade Tiger Account
Dial – n - Trade
Sharekhan provide right investment decision to Investors according to their needs
Seven Reasons
Why Customer’s first choice is SHARAKHAN…?
1. EXPERIENCE:
SSKI has more than eight decades of trust and Credibility in the Indian
stock market. In the Asia Money broker’s poll held recently, Sharekhan won the
‘India best broking house for 2004’ award. Ever since it launched Sharekhan
as its retail broking division in February 2000, it has been providing institutional-
level research & broking services to investors.
2. TECHNOLOGY:
With Sharekhan online trading account you can buy and sell shares in an
instant from any PC with an internet connection. You will get access to our
powerful online trading tools that will help you take complete control over your
investment in shares.
3. KNOWLEDGE: In a business where the right information at the right time can translate
into direct profits, you get access to a wide range of information on Sharekhan’s
website www.sharekhan.com. You will also get a useful set of Knowledge-based
tools that will empower you to take informed decisions.
4. ACCESSIBILITY :
In addition to Sharekhan online and phone trading services also very
useful. Sharekhan also have a ground network of 640 share shops across 280
Cities in India where you can get personalize Services.
5. CONVENIENCE:
You can call Sharekhan’s Dial-n-Trade number to get investment advice
and execute your transactions. Sharekhan have a dedicated Call Center to
provide this service via a toll-free number from anywhere in India.
6. CUSTOMER SERVICE:
Sharekhan’s customer service team will assist you for any help that you
need relating to transactions, billing, demat and other queries. Sharekhan’s
customer service can be contacted via a toll-free number-mail or live chat on
Sharekhan.com.
7. INVESTMENT ADVICE:
Sharekhan has dedicated research teams for fundamental and technical
research. Sharekhan’s analysts constantly track the pulse of the market and
provide timely investment advice to you in form of daily research e-mail, online
chat, printed reports and SMS on your phone.
SWOT ANALYSIS of Sharekhan
STRENGTHS:
Online Trading Facility
Largest Chain of Retail Share Shops in India
88 years of Experience in securities market
Dedicated and responsive workforce/staff
Value added service for HNI client
Research Center
Membership of NSE & BSE
Trading option like Future & Option and Commodities
Volume based differentiated product.
WEAKNESSES:
Less informative website
Does not have slab rate brokerage which is provided by competitors
Problems due to network crash
Unawareness Among Investors
OPPORTUNITY:
Collaboration with international financial institution
To tap the Untapped market
To capture the market lost to its Competitors.
To focus on developing a superior and powerful portal
To spread awareness of its Brand Name.
THREATS:
Follow government laws
Competitors develops
Prolonged depression and high volatility in the market
New Entrants.
Awards & Achievements of SHAREKHAN:
2001 - Web Award winner of Chip
magazines Best Financial Website
Award.
2004 - Best Local Brokerage by
Advisory Poll of Poll 2004.
2005 - Awaaz Consumer Awards Best
Broking House by CNBC channel.
Sharekhan is amongst top 3 online
Brokers in India.
INDUSTRY PROFILE
OF BROKING FIRMS
INDUSTRY PROFILE OF BROKING FIRMS
The Indian retail brokerage industry consists of companies that primarily
act as agents for the buying and selling of securities (e.g. stocks, shares, and
similar financial instruments) on a commission or transaction fee or Brokerage
basis.
An agent that charges a fee or commission for executing buys and sell
orders submitted by an investor. The firm that acts as an agent for a customer,
charge the customer the commission for its service. Roles similar to that of a
stockbroker include investment advisor, financial advisor and probably many
others. A stockbroker may or may not be also an investment advisor.
A stockbroker is a regulated professional broker who buys and sells
shares and other securities through market makers or Agency Only Firms on
behalf of investors.
Typically, a broker who receives an order from a customer will
communicate with a company employee located at a particular exchange, who
will execute the order at the exchange and report details of the transaction to the
broker. Customers typically keep their securities in an account with the broker.
Brokers charge customers commissions for conducting transactions and fees for
maintaining their accounts.
Some of the main characteristics of the brokerage industry include growth
in e-broking, decline in brokerage fees and growing derivative market and many
more.
There are several national as well as local players in stock trading services
which are providing various services to their customers like online trading,
portfolio management system, stock broking etc.
They are helping the investors to take decision about where to invest because
there is lots of Investment Avenue available with investors. Some of them are as
follows working at the national level.
5Paisa.com - Online trading, live stock quotes and market research
Anagram Capital - Stock broking, portfolio management and investment banking services
Angel Broking -Stock-Broking and Wealth Management services
Advani Share Brokers - Share broking and market research services
Anand Rathi Securities - Portfolio management, corporate finance, equity & fixed income brokerage services
Brescon Group - Advisory and broking services
CIL Securities - Stock broking & merchant banking services
CRN India - Trends of stock market, trading tips, chat etc
Churiwala Securities - Stock trading, quotes and market analysis
DSP Merrill Lynch - Investment banking and brokerage services
Dalmia Securities - Stock broking & depository services
Equity Trade - Stock trading, company news & market research
Gandhi Securities - Stock broking and investment services
Gogia Capital Services - Stock broking and market analysis
Hasmukh Lalbhai - Stock trading services
Idafa Investments - Stock broking services
India Info line Securities - Stock broking, portfolio management and investment banking services
India Market Access - Offers stock broking, portfolio management and investment banking services
Investsmart India - Personal finance advisory & online brokerage services
Kisan Ratilal Choksey Shares - Stock broking and e-trading services
Kotak Securities - Brokerage services & retail distributor of financial securities
Manubhai Mangaldas Securities - Stock broking and market analysis
Moneypore - Investment and broking services
Motilal Oswal Securities - Online trading, live BSE and NSE quotes
Navia Markets - Stock broking, IPO and mutual funds services
Parag Parikh - Stock broking and portfolio management
Parsoli Corporation - Investment management & stock trading services
Pratibhuti Viniyog - Stock broking services
Prudential - Investment management services
Quantum Securities - Offers broking and portfolio management services.
Religare Enterprises Limited - Stock broking services and diversified financial services group with in multiple international locations
Sivan Securities - offers services related investment banking & stock broking with a focus on South India.
Etc…..etc..…
Lots of brokerage companies are moving towards consolidation with the
smaller ones becoming either franchisee for the larger brokers or closing
operations. There is an increasing demand for online trading due to consumer’s
growing preference for Internet as compared to approaching the brokers.
New forms of trading including T+2 settlement system, dematerialization
etc. are strengthening the retail brokerage market and attracting foreign
companies to enter the Indian industry Various alternative forms of investment
including fixed deposits with banks and post offices etc act as substitutes to retail
broking products and services.
Stock Market
Stock markets refer to a market place where investors can buy and sell
stocks. The price at which each buying and selling transaction takes is
determined by the market forces (i.e. demand and supply for a particular stock).
A stock market is a public market for the trading of company stock and
derivatives at an agreed price; these are securities listed on a stock exchange as
well as those only traded privately.
The size of the world stock market was estimated at about $36.6 trillion
USD at the beginning of October 2008.
The stock market is one of the most important sources for companies
to raise money. This allows businesses to be publicly traded, or raise additional
capital for expansion by selling shares of ownership of the company in a public
market.
In fact, the stock market is often considered the primary indicator of a
country's economic strength and development. Rising share prices, for instance,
tend to be associated with increased business investment and vice versa.
In this way, investing in stock market, the stock exchanges also play
importance role. Exchanges also act as the clearinghouse for each transaction,
meaning that they collect and deliver the shares, and guarantee payment to the
seller of a security. This eliminates the risk to an individual buyer or seller that the
counterparty could default on the transaction. So, here we also understand about
Stock Exchanges as follows.
Stock exchange
A stock exchange is an entity which provides "trading" facilities for stock
brokers and traders, to trade stocks and other securities.
Stock Exchanges are an organised marketplace, either corporation or
mutual organisation, where members of the organisation gather to trade company
stocks or other securities.
Stock exchanges also provide facilities for the issue and redemption of
securities as well as other financial instruments and capital events including the
payment of income and dividends.
The securities traded on a stock exchange include: shares issued by
companies, unit trusts, derivatives, pooled investment products and bonds. To be
able to trade a security on a certain stock exchange, it has to be listed there.
Usually there is a central location at least for recordkeeping, but trade is less and
less linked to such a physical place, as modern markets are electronic networks,
which gives them advantages of speed and cost of transactions. Trade on an
exchange is by members only. The initial offering of stocks and bonds to
investors is by definition done in the primary market and subsequent trading is
done in the secondary market.
A stock exchange is often the most important component of a stock
market. Supply and demand in stock markets is driven by various factors which,
as in all free markets, affect the price of stocks.
There is usually no compulsion to issue stock via the stock exchange
itself, nor must stock be subsequently traded on the exchange. Such trading is
said to be off exchange or over-the-counter. This is the usual way that derivatives
and bonds are traded. Increasingly, stock exchanges are part of a global market
for securities.
Major stock exchanges in the world
Twenty Major Stock Exchanges in The World: Market Capitalization &
Year-to-date Total Turnover at the end of August 2009
Where, Two major Stock Exchanges from India, which is –
1. Bombay Stock Exchange2. National Stock Exchange
List of Stock Exchanges In India
1. Bombay Stock Exchange(BSE)
2. National Stock Exchange(NSE)
3. Regional Stock Exchanges (21)
There are 21 other regional stock exchanges, which are
Ahmedabad»Bangalore» Bhubaneshwar» Calcutta»
Cochin»Coimbatore» Delhi» Guwahati» Hyderabad» Jaipur»
Ludhiana» Madhya Pradesh» Madras» Magadh» Mangalore»
Meerut» OTC Exchange Of India» Pune» Saurashtra Kutch» Uttar
Pradesh» Vadodara etc.
Bombay Stock Exchange (BSE)
The Bombay Stock Exchange Limited is the oldest stock exchange not
only in the country, but also in Asia with a rich heritage of over 133 years of
existence. In the early days, BSE was established as "The Native Share &
Stock Brokers Association."
It was established in the year 1875 and became the first stock exchange
in the country to be recognised by the government. In 1956, BSE obtained a
permanent recognition from the Government of India under the Securities
Contracts (Regulation) Act, 1956.
Today, BSE is the world's number 1 exchange in terms of the number of
listed companies and the world's 5th in handling of transactions through its
electronic trading system.
The companies listed on BSE command a total market capitalization of
USD Trillion 1.06 as of July, 2009.
BSE reaches to over 400 cities and town nation-wide and has around
4,937 listed companies, with over 7745 scripts being traded as on
31st July 09.
1
The BSE Index, SENSEX, is India's first and most popular stock market
benchmark index. The BSE SENSEX (SENSitive indEX), also called the "BSE
30", is a widely used market index in India and Asia. Sensex is tracked
worldwide. It constitutes 30 stocks representing 12 major sectors. The SENSEX
is constructed on a 'free-float' methodology, and is sensitive to market
movements and market realities. Apart from the SENSEX, BSE offers 23 indices,
including 13 sectoral indices.
BSE provides an efficient and transparent market for trading in equity, debt
instruments and derivatives.
BSE is the first exchange in India and the second in the world to obtain an
ISO 9001:2000 certifications. It is also the first exchange in the country and
second in the world to receive Information Security Management System
Standard BS 7799-2-2002 certification for its BSE On-line Trading System
(BOLT).
BSE continues to innovate. In 2006, it became the first national level stock
exchange to launch its website in Gujarati and Hindi and now Marathi to reach
out to a larger number of investors.
The BSE On-line Trading (BOLT) :
BSE On-line Trading (BOLT) facilitates on-line screen based trading in
securities. BOLT is currently operating in 25,000 Trader Workstations
located across over 359 cities in India.
BSE Vision The vision of the Bombay Stock Exchange is -
"To Emerge as the premier Indian stock exchange by
establishing global benchmarks."
BSE Profile
Address :- Phiroze Jeejeebhoy Towers, Dalal Street
Mumbai-400001, India
Telephone :-91-22-227212334
Website :-www.bseindia.com
Trading hours :-Monday-Friday, 9:00am to 3:30pm
Securities :-Stocks, derivatives, debt
Trading System :-Electronic
MD & CEO :-Mr.Madhu Kannan
History of BSE
The Bombay Stock Exchange
is known as the oldest exchange in Asia. It traces its history to the 1850s, when
stockbrokers would gather under banyan trees in front of Mumbai's Town Hall.
The location of these meetings changed many times, as the number of brokers
constantly increased. The group eventually moved to Dalal Street in 1874 and in
1875 became an official organization known as 'The Native Share & Stock
Brokers Association'. In 1956, the BSE became the first stock exchange to be
recognized by the Indian Government under the Securities Contracts Regulation
Act.
The Bombay Stock Exchange developed the BSE Sensex in 1986, giving
the BSE a means to measure overall performance of the exchange. In 2000 the
BSE used this index to open its derivatives market, trading Sensex futures
contracts. The development of Sensex options along with equity derivatives
followed in 2001 and 2002, expanding the BSE's trading platform.
Historically an open-cry floor trading exchange, the Bombay Stock
Exchange switched to an electronic trading system in 1995. It took the exchange
only fifty days to make this transition.
Indices of BSE:
Sensex
BSE 100(This covers Banking Sector)
BSE 200(This covers Capital goods)
BSE 500(This covers Consumer goods)
BSE mid-cap index
BSE small-cap index
BSE mid-cap index covers the FMCG sector and BSE small-cap index
covers the IT, Metal, Oil & gas, Power industry, PSUs, etc. BSE
disseminates information on the Price-Earnings Ratio, the Price to Book Value
Ratio and the Dividend Yield Percentage on day-to-day basis of all its major
indices.
The values of all BSE indices are updated every 15 seconds during market
hours and displayed through the BOLT system, BSE website and news wire
agencies.
All BSE Indices are reviewed periodically by the BSE Index Committee.
This Committee which comprises eminent independent finance professionals
frames the broad policy guidelines for the development and maintenance of all
BSE indices. The BSE Index Cell carries out the day-to-day maintenance of all
indices and conducts research on development of new indices.
Awards achieved by BSE
The World Council of Corporate Governance has awarded the Golden Peacock Global CSR Award for BSE's initiatives in Corporate Social Responsibility (CSR).
ICAI award for excellence in financial reporting for the year 2006-07
BSE has won the Asia - Pacific HRM awards for its efforts in employer branding through talent management at work, health management at work and excellence in HR through technology.
National Stock Exchange (NSE)
The National Stock Exchange of India Limited (NSE), is a Mumbai-
based stock exchange. It is the largest stock exchange in India in terms of daily
turnover and number of trades, for both equities and derivative trading.
NSE has a market capitalization of around Rs 47,01,923 crore
(7 August 2009) and is expected to become the biggest stock exchange in India
in terms of market capitalization by 2009 end. Though a number of other
exchanges exist, NSE and the Bombay Stock Exchange are the two most
significant stock exchanges in India, and between them are responsible for the
vast majority of share transactions.
NSE is mutually-owned by a set of leading financial institutions, banks,
insurance companies and other financial intermediaries in India but its ownership
and management operate as separate entities.
There are at least 2 foreign investors NYSE Euro next and Goldman
Sachs who have taken a stake in the NSE. As of 2006, the NSE VSAT terminals,
2799 in total, cover more than 1500 cities across India.
In October 2007, the equity market capitalization of the companies listed
on the NSE was US$ 1.46 trillion, making it the second largest stock exchange
in South Asia.
NSE is the third largest Stock Exchange in the world in terms of the
number of trades in equities. It is the second fastest growing stock exchange in
the world with a recorded growth of 16.6%.
Origins:
The National Stock Exchange of India was promoted by leading Financial
institutions at the behest of the Government of India, and was incorporated in
November 1992 as a tax-paying company.
In April 1993, it was recognized as a stock exchange under the Securities
Contracts (Regulation) Act, 1956.
2
NSE commenced operations in the Wholesale Debt Market (WDM)
segment in June 1994.
The Capital Market (Equities) segment of the NSE commenced
operations in November 1994, while operations in the Derivatives segment
commenced in June 2000.
Markets:
Currently, NSE has the following major segments of the capital market:
Equity
Futures and Options
Retail Debt Market
Wholesale Debt Market
Currency futures
NSE became the first stock exchange to get approval for Interest rate
futures as recommended by SEBI-RBI committee, on 31 August,2009, a futures
contract based on 7% 10 Year GOI bond (NOTIONAL) was launched with
quarterly maturities.
Hours:
NSE's normal trading sessions are conducted from 9:00 am India Time to
3:30 pm India Time on all days of the week except Saturdays, Sundays and
Official Holidays declared by the Exchange (or by the Government of India) in
advance.
The exchange in association with BSE (Bombay Stock Exchange Ltd.,)
thinking to revise its timings from 9.00 am India Time till 5.00 pm India Time.
However, on Dec 17, 2009, after strong protests from brokers, the
Exchange decided to postpone the change in trading hours till Jan 04, 2010.
NSE new market timing from Jan 04, 2010 is 9:00 am till 3:30 pm India
Time.
NSE Group:
National Securities Clearing Corporation Ltd. (NSCCL)
National Securities Depository Ltd. (NSDL)
India Index Services & Products Ltd. (IISL)
NSE.ITltd.
DotEx International Limited
History of N.S.E
Capital market reforms in India and the launch of the Securities and
Exchange Board of India (SEBI) accelerated the incorporation of the second
Indian stock exchange called the National Stock Exchange (NSE) in 1992. After a
few years of operations, the NSE has become the largest stock exchange in
India.
Three segments of the NSE trading platform were established one after
another. The Wholesale Debt Market (WDM) commenced operations in June
1994 and the Capital Market (CM) segment was opened at the end of 1994.
Finally, the Futures and Options segment began operating in 2000. Today the
NSE takes the 14th position in the top 40 futures exchanges in the world.
In 1996, the National Stock Exchange of India launched S&P CNX Nifty
and CNX Junior Indices that make up 100 most liquid stocks in India. CNX Nifty
is a diversified index of 50 stocks from 25 different economy sectors. The Indices
are owned and managed by India Index Services and Products Ltd (IISL) that has
a consulting and licensing agreement with Standard & Poor's.
In 1998, the National Stock Exchange of India launched its web-site and
was the first exchange in India that started trading stock on the Internet in 2000.
The NSE has also proved its leadership in the Indian financial market by gaining
many awards such as 'Best IT Usage Award' by Computer Society in India (in
1996 and 1997) and CHIP Web Award by CHIP magazine (1999).
Indices of N.S.E
NSE also set up as index services firm known as India Index Services &
Products Limited (IISL) and has launched several stock indices, including:
S&P CNX Nifty(Standard & Poor's CRISIL NSE Index)
CNX Nifty Junior
CNX 100 (= S&P CNX Nifty + CNX Nifty Junior)
S&P CNX 500 (= CNX 100 + 400 major players across 72 industries)
CNX Midcap (introduced on 18 July 2005 replacing CNX Midcap 200)
Mission of N.S.E.
NSE's mission is setting the agenda for change in the securities markets in
India. The NSE was set-up with the main objectives of:
Establishing a nation-wide trading facility for equities, debt instruments and
hybrids,
Ensuring equal access to investors all over the country through an
appropriate communication network,
Providing a fair, efficient and transparent securities market to investors
using electronic trading systems,
Enabling shorter settlement cycles and book entry settlements systems,
and
Meeting the current international standards of securities markets.
The standards set by NSE in terms of market practices and technology
have become industry benchmarks and are being emulated by other market
participants. NSE is more than a mere market facilitator. It's that force which is
guiding the industry towards new horizons and greater opportunities.
Theoretical aspect
abut topic
Theoretical aspect about topic
What is Investment?
“The money you earn is partly spent and the rest saved for meeting future
expenses. Instead of keeping the savings idle you may like to use savings in
order to get return on it in the future.” This is called Investment.
Why should one invest?
One needs to invest to:
Earn return on your idle resources
Generate a specified sum of money for a specific goal in life
Make a provision for an uncertain future
One of the important reasons why one needs to invest wisely is to meet the
cost of Inflation. Inflation is the rate at which the cost of living increases. The
cost of living is simply what it costs to buy the goods and services you need to
live.
Investor:
An investor is any party that makes an investment.
An individual who commits money to investment products with the expectation
of financial return.
The term has taken on a specific meaning in finance to describe the particular
types of people and companies that regularly purchase equity or debt
securities for financial gain in exchange for funding an expanding company.
Investor's Behaviour:
Generally, Investors Behaviour regarding the any investment is primary
concern with to minimize risk while maximizing return, as opposed to a
speculator, who is willing to accept a higher level of risk in the hopes of collecting
higher-than-average profits.
While, some people are also believes in “High Risk, High Return” Many
investors purchase a particular stock with the intention of making a big
profit over a short period of time. However, this action is not investing, but a pure
gambling.
The stock market is characterized by the trade-off between
risk and return. The higher the risk the investor is willing and able to take, the
higher the potential rewards from the investment. Therefore, if a particular
investment offers you high returns, it is an indication that it will come with a high
risk burden.
Some people are also believes in that there is no safe investment that
will provide you with high returns over a short period of time. Therefore, you
should direct your resources toward long-term investments that are more likely to
reward you for the patience with high returns.
Investors Behaviour regarding the financial investment is closely related
with the “Behavioral Finance” and “Behavioral Economics” are closely
related fields making up a separate branch of economic and financial analysis
using social, cognitive and emotional factors in understanding the economic
decisions of investors for investment, and their effects on market prices, returns
and the allocation of resources.
Information of Equity Market & various sectors
What is Equity Market ?
“A market where investors buy and sell securities
providing ownership of a company's shares.”
The market in which shares are issued and traded, either through
exchanges or over-the-counter markets. Also known as the stock market,
it is one of the most vital areas of a market economy because it gives companies
access to capital and investors a slice of ownership in a company with the
potential to realize gains based on its future performance.
Equity market, or stock market, is a system through which company
shares are traded. The equity market offers investors an opportunity to participate
in a company's success through an increase in its stock price. With enhanced
opportunity, however, the equity market usually carries greater risk than debt
markets.
Indian Equity Market
The Indian Equity Market is more popularly known as the Indian Stock
Market. The Indian equity market has become the third biggest
after China and Hong Kong in the Asian region.
According to the latest report by ADB, it has a market capitalization of
nearly $600 billion. As of March 2009, the market capitalization was around
$598.3 billion (Rs 30.13 lakh crore) which is one-tenth of the combined
valuation of the Asia region. The market was slow since early 2007 and
continued till the first quarter of 2009.
The Indian equity market depends on three factors -
Funding into equity from all over the world Corporate houses performance Monsoons
The equity market is also affected through trade integration policy. The
country has advanced both in foreign institutional investment (FII) and trade
integration since 1995. This is a very attractive field for making profit for medium
and long term investors, short-term swing and position traders and very intra day
traders.
The Indian market has 22 stock exchanges. The larger companies are
enlisted with BSE and NSE. The smaller and medium companies are listed
with OTCEI (Over The counter Exchange of India). The functions of the Equity
Market in India are supervised by SEBI (Securities Exchange Board of India).
The Indian Equity Market was not well organized or developed before
independence. After independence, new issues were supervised. The timing,
floatation costs, pricing, interest rates were strictly controlled by the Controller of
Capital Issue (CII).
In the 1950s, there was uncontrollable speculation and the market was
known as ‘Satta Bazaar'. Speculators aimed at companies like-Tata Steel,
Kohinoor Mills, Century Textiles, Bombay Dyeing and National Rayon. The
Securities Contracts (Regulation) Act, 1956 was enacted by the Government of
India. Financial institutions and state financial corporation were developed
through an established network.
Two new stock exchanges, NSE (National Stock Exchange of India)
established in 1994 and OTCEI (Over the Counter Exchange of India)
established in 1992 gave BSE a nationwide competition. In 1995-96, an
amendment was made to the Securities Contracts (Regulation) Act, 1956 for
introducing options trading. In April 1995, the National Securities Clearing
Corporation (NSCC) and in November 1996, the National Securities Depository
Limited (NSDL) were set up for demutualised trading, clearing and settlement.
!!!!.....Equity Markets climb a wall of worry…..!!!!
The Sensex
has returned about 18.62 % compounded Annual return
over the past 27 years in spite of following
1 War (With Pakistan – Kargil 1999).
Increasing Terrorism and threats to Internal Security (Punjab, J&K,
Assam , Naxalite problem in Bihar & other parts of India).
2 Major financial scandals and a number of minor ones (Harshad Mehta,
Ketan Pareikh, C.R. Bhansali,Sanjay Agarwal etc).
2 assassinations of Prime ministers (Indira Gandhi & Rajiv Gandhi).
Number of communal riots (Ayodhya, Godhra - They keep happening with
immaculate consistency).
More then 11 different Governments perusing different manifestos and
putting all of them under a common banner titled Common Minimum
Program..
Poor Monsoons on more then 3 to 4 occasions. Each year the market
speculates as to how the Monsoons have hit the coast of Kerala but over
alonger period of time they do not matter. More so with increasing irrigation
systems and development our dependence on monsons will come down
further.
Mortgage of Gold to tide over the foreign exchange crisis (In 1991 the
Indian Govt. mortgaged Gold to the Bank of England).
Coalition governments have governed major portion of the last 25 years.
Numerous numbers of natural calamities and disasters (Tsunami 2004,
Gujarat Earthquake 2001, Surat Plague 1995).
In this way, stock prices are rising regardless of market uncertainties,
so, the stock market is said to be climbing a wall of worry. These worries may
include political or economic risks etc.
INTRODUCTION OF VARIOUS SECTORS
A. Meaning of S ector:
“There are many companies or scrip that manufacturer the same
products and provide services are specified under the particular name that
called Industry or Sector.”
There are many other different kinds of industries, and often
organized into different classes or variety of industrial classifications it’s
called Sector.
In this report, I have study on these Five Sectors which are:
1. Oil & Gas Sector
2. Banking Sector
3. IT Sector
4. Infrastructure Sector
5. Automobile Sector
SECTORS
Agro Inputs Sector IT Sector
Agriculture Sector Insurance Sector
Auto Ancillaries Sector Infrastructure Sector
Automobile Sector Mining Sector
Aviation Sector Media & Entertainment Sector
Banking Sector Medical Sector
Cement Sector Oil & Gas Sector
Chemicals Sector Paint Sector
Cigarettes Sector Paper Sector
Construction Sector Pharmaceutical Sector
Consumer Durables Sector Petrochemicals
Courier & Logistic Services Sector Power Sector
Cycle & Accessories Sector Real Estate Sector
Engineering Sector Retail Sector
Financial Institutions Sector Sugar Sector
Food Products Sector Service Sector
FMCG Sector Shipping Sector
Fertilizer Sector Steel Sector
Garment Sector Tele communication Sector
Health Care Sector Textiles Sector
List of various sector :
INTRODUCTION OF selected SECTORS
1. Oil & gas Sector:
The oil & gas industry in recent years has been characterized by rising
consumption of oil products, declining crude production & low reserve accretion.
India remains one of the least-explored countries in the world, with a well density
among the lowest in the world. India is the fourth largest oil consumption
zone in Asia, even though on a per capita basis the consumption is a mere 0.1
tonne, the lowest in the region- This makes the prospects of the Indian Oil
industry even more exciting.
The oil and gas industry has been instrumental in fuelling the rapid growth
of the Indian economy. The petroleum and natural gas sector which includes
transportation, refining and marketing of petroleum products and gas industry
constitutes over 15 per cent of the GDP.
India's domestic demand for oil and gas is on the rise. As per the Ministry
of Petroleum, demand for oil and gas is likely to increase which is 186.54 million
tonnes in 2008-09.
India is emerging as the global hub for oil refining with capital costs
lower by 25 to 50 per cent over other Asian countries.
Already, the fifth largest country in the world in terms of refining
capacity, with a share of 3 per cent of the global capacity, India is likely to boost
its refining capacity by 45 per cent or 65.3 to 242 mtpa (million tonne per annum)
over the next five years.
2. Banking Sector:
Banking in India originated in the last decades of the 18th century. The
oldest bank in existence in India is the State Bank of India, a
government-owned bank that traces its origins back to June 1806 and that is the
largest commercial bank in the country. Central banking is the responsibility of
the Reserve Bank of India, which in 1935 formally took over these
responsibilities from the then Imperial Bank of India.
The banking sector will navigate through all the aspects of the Banking
System in India. It will discuss upon the matters with the birth of the banking
concept in the country to new players adding their names in the industry in
coming few years. The banker of all banks, Reserve Bank of India (RBI), the
Indian Banks Association (IBA) & top 20 banks like IDBI, HSBC, ICICI, ABN
AMRO, etc.
With the Indian economy moving on to a high growth trajectory,
consumption levels soaring & investment riding high, the Indian banking sector is
at a watershed. Further, as Indian companies globalize & people of Indian origin
increase their investment in India, several Indian banks are pursuing global
strategies,
In the Third Quarter Review of Monetary Policy for 2009-10, the RBI
observed that the Indian economy showed a degree of resilience as it recorded a
better-than-expected growth of 7.9 percent during the second quarter of 2009-
10.
The industry has been growing faster than the real economy, resulting in
the ratio of assets of commercial banks to GDP increasing to 92.5 per cent at
end-March 2007. The Indian banks have also been doing exceptionally well in
the financial sector with the price-to-book value being second only to china,
according to a report by (BCG) Boston Consultancy Group.
3. IT Sector:
Over the past decade, the Information Technology (IT) industry has
become one of the fastest growing industries in India. The key segments that
have contributed significantly (96 percent of total) to the industry’s exports
include – Software & services (IT services) & IT-enabled services (ITeS) i.e.
business services. Over a period of time, India has established itself as a
preferred global sourcing base in these segments & they are expected to
continue to fuel growth in the future.
At present, India is emerging as one of the popular Software outsourcing
locations to offer cost effective software solutions. The contribution of India in
Software Outsourcing is remarkable. One just can not reject the reality that
currently India is described as the most prospering name in software outsourcing.
Now there are several grounds for this flourishing popularity of the offshore IT
outsourcing services of India. The prime reason for choosing India, as an offshore
development partner in software outsourcing business is the availability of
enormous pool of educated manpower combined with world-class quality
offerings.
The Indian information technology (IT) industry has played a key role
in putting India on the global map. Thanks to the success of the IT industry,
India is now a power to reckon with. According to the National Association of
Software and Service Companies (NASSCOM), the apex body for software
services in India, the revenue of the information technology sector has risen from
1.2 per cent of the gross domestic product (GDP) in FY 1997-98 to an estimated
5.8 per cent in FY 2008-09. Further, the industry body expects the sector to
grow between 4 per cent and 7 per cent during 2009-10 and return to over 10 per
cent growth next year.
India's IT growth in the world is primarily dominated by IT software and
services such as Custom Application Development and Maintenance (CADM),
System Integration, IT Consulting, Application Management, Software testing,
and Web services.
According to NASSCOM, software and services exports (including exports
of IT services, business process outsourcing (BPO), engineering services and
research and development (R&D) and software products) reached US$ 47 billion
in FY 2008-09, contributing nearly 78 per cent to the total software and services
revenue of US$ 59.6 billion.
India's domestic market has also become a force to reckon with, as the
existing IT infrastructure evolves both in terms of technology and depth of
penetration.
According to NASSCOM, domestic IT market (including hardware)
reached US$ 24.3 billion in FY 2008-09 as against US$ 23.1 billion in FY 2007-
08, a growth of 5.3 per cent.
Investments:
The Andhra Pradesh Government expects the IT-related SEZs and
Software Technology Parks of India (STPI) in the State to receive about
US$ 3.27 billion investments in the next five years.
Mahindra Satyam has tied up with defence and security company Saab to
develop its operations in India for the global defence and homeland
security market. The estimated deal value is US$ 400 million.
San Francisco-based Virtualisation solutions provider VMware Inc plans to
invest US$ 100 million in India by end 2010.
The total investments of EMC Corporation, a leading global player of
information infrastructure solutions, in India will touch US$ 2 billion by
2014.
The Indian information technology sector continues to be one of the sunshine
sectors of the Indian economy showing rapid growth and promise.
4. Infrastructure Sector:
Infrastructure is the basic physical and organizational structures needed
for the operation of a society or enterprise, or the services and facilities
necessary for an economy to function. The term typically refers to the technical
structures that support a society, such as roads, water supply, sewers, power
grids, telecommunications, and so forth.
India's Infrastructure has been expanding at an accelerated pace to
support the economic growth rate of over 9 per cent. The six core-
infrastructure industries, which account for a combined weight of 26.68 percent
in the index of industrial production (IIP), registered a growth of 8.6 percent in
2006-07 as against 6.2 percent during 2005-06.
The growth has continued apace during the current fiscal, with the six
core-infrastructure industries growing at the rate of 6.9 percent during April-
September 2007. Significantly, electricity recorded a growth rate of 7.6 per cent
compared to 6.7 per cent in the same period last year. Other sectors recording
major growth include: petroleum refinery products (9.8 per cent), cement (8.3 per
cent) & finished (carbon) steel (6.6 per cent).
Infrastructure investment in India is set to grow dramatically accelerated by
5.3 percent in 2008-09. India has become a major outbound investor and people
are engaging with Indians to seek investment into their countries, said the
Minister for Road Transport and Highways, Mr
Kamal Nath,According to investment banking company Goldman Sachs,
India's infrastructure sector will require US$ 1.7 trillion investment in the
next 10-years. It also added that such investment would come more from the
domestic market than overseas.
5. Automobile Sector:
Automobile industry is one of the fastest growing industries of the
world. With more than 2 million new automobiles rolling out each year, on
roads of India, the industry is set to grow further.
Automobile industry made its silent entry in India in the nineteenth century.
Since the launch of the first car in 1897, India automobile industry has come a
long way. Today India is the largest three wheeler market in the world and is
expected to take over China as the second largest automobile market, in the
coming years.
Some facts on Automobile industry in India:
India has the fourth largest car market in the world
India has the largest three wheeler market in the world
India is the second largest producer of two wheelers in the world
India ranks fifth in the production of commercial vehicles
The growth of the Indian middle class along with the growth of the
economy over the past few years has attracted global auto majors to the Indian
market. Moreover, India provides trained manpower at competitive costs
making India a favoured global manufacturing hub. The attractiveness of the
Indian markets on one hand and the stagnation of the auto sector in markets
such as Europe, US and Japan on the other have resulted in shifting of new
capacities and flow of capital to the Indian automobile industry.
Global auto majors such as Japanese auto majors Suzuki, Honda and
Korean car giant Hyundai are increasingly banking on their Indian operations to
add weight to their businesses, even as numbers stay uncertain in developed
markets due to economic recession and slowdown.
According to figures released by the Society of Indian Automobile
Manufacturers (SIAM), domestic passenger car sales have increased 32.28
percent to reach 145,905 units in January 2010 from 110,300 units in the
same month last year.
Across all categories, total sale of vehicles increased 44.94 per cent to
1,114,157 units in January 2010, against 768,698 units in the January 2009.
The Indian auto industry is likely to see a growth of 10-12 percent in
sales in 2010, according to a report by the global rating firm.
India has become the second-largest maker of small cars, overtaking
Brazil. Small cars account for 80 per cent of the domestic market (up from 75 per
cent last year) and exports are growing at top speed. According to SIAM, small
car exports rise 53 percent between April and September 2009 to 197,249 units
against 129,090 units a year ago.
In order to make India a power to reckon with in the automotive sector
the government launched the Automotive Mission Plan (AMP) 2006-2016.
The vision of the AMP is "to emerge as the destination of choice in
the world for design and manufacture of automobiles and auto components
with output reaching a level of US$ 145 billion accounting for more than 10
per cent of the GDP and providing additional employment to 25 million
people by 2016." As per the AMP, it is estimated that the total turnover of the
automotive industry in India would be in the order of US$ 122 billion - US$ 159
billion in 2016.
Further, by 2016, the automotive sector would double its contribution to
the country's GDP from current levels of five percent to 10-12 per cent.
List of companies under selected SECTORS
OIL & GAS SECTOR:
Indian Oil Corporation
ONGC (Oil and Natural Gas Corporation India.)
Essar Oil Limited
Gas Authority of India Limited
Oil India Limited
Gujarat Gas
Indian Oil
Aban
Tata Petrodyne
Gas Projects (India) Private Limited
Hindustan Oil Exploration Company Limited
India LPG
Oil Gas India
etc…
BANKING SECTOR:
State Bank of India
ICICI Bank
Unit Trust of India (UTI)
HDFC (Housing Development Financial Corporation)
ABN Amro Bank
HSBC
IDBI Bank
Union Bank of India
Central Bank of India
Bank of Baroda
etc…
IT SECTOR:
Infosys
TCS Limited
Wipro
Microsoft
L&T Infotech Ltd.
Lenovo
HCL
Mahindra Satyam
etc…
INFRASTRUCTURE SECTOR:
DLF
Reliance Infrastructure
HCC Infrastructure
Maytas Infra Limited
GMR Infrastructure
IBR Infrastructure
etc…
AUTOMOBILE SECTOR:
Hero Honda
Ford Motor
Honda Motors
Bajaj Auto
Tata Motors
Maruti Suzuki
TVS Motors
Mihindra Motors
Yamaha Motors
etc…
INTRODUCTION OF CAPITAL MARKET
Concept:
Capital market is the markets for funds which have a long or undefined
maturity i.e. it deal with long term funds. Generally capital market supplies long
term and medium term securities and funds, which have a maturity period of
above one year. Capital market generates the funds from the saver and transfer
to user. Generally it done with ordinary share, stocks, debentures and bonds of
corporations and securities of the government. They do so by converting financial
assets into productive physical assets.
Capital market provides a market mechanism for those who have savings
and to those who need funds for productive investments. It diverts resources from
wasteful and unproductive channels to productive investment.
The Capital Market:
The origination of the Indian securities market may be traced back to
1875, when 22 enterprising brokers under a Banyan tree established the Bombay
Stock Exchange (BSE). Over the last 133 years, the Indian securities market has
evolved continuously to become one of the most dynamic, modern and efficient
securities markets in Asia. Today, Indian markets conform to international
standards both in terms of structure and in terms of operating efficiency.
A capital market is a market for securities (debt or equity), where
business enterprises (companies) and governments can raise long-term funds. It is
defined as a market in which money is provided for periods longer than a year, as
the raising of short-term funds takes place on other markets
Structure and Size of the Markets:
Corporation of the exchanges assumes the counter-party risk of each
member and guarantees settlement through a fine-tuned risk management
system and an innovative method of online position monitoring. It also ensures
the financial settlement of trades on the appointed day and time irrespective of
default by members to deliver the required funds and/or securities with the help of
a settlement guarantee fund. Today India has two national exchanges, the
Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). Each
has fully electronic trading platforms with around 9400 participating broking
outfits.
BSE reaches to over 400 cities and town nation-wide and has around
4,937 listed companies, with over 7745 scripts being traded as on
31st July 09. The companies listed on BSE command a total market capitalization
of USD Trillion 1.06 as of July, 2009.
NSE has a market capitalization of around Rs 47,01,923 crore
(7 August 2009)
There are some 9600 companies listed on the respective exchanges. Any
market that has experienced this sort of growth has an equally substantial
demand for highly efficient settlement procedures.
In India 99.9% of the trades, according to the (NSDL)
National Securities Depository Limited, are settled in dematerialized form in a
T+2 rolling settlement environments. In addition, trades are guaranteed by the
National Clearing Corporation of India Ltd (NSCCL) and Bank of India
Shareholding Ltd (BOISL), Clearing Corporation houses of NSE and BSE
respectively. The main functions of the Clearing Corporation are to work out (a)
what counter parties owe and (b) what counter parties are due to receive on the
settlement date. Furthermore, each exchange has a Settlement Guarantee Fund
to meet with any unpredictable situation and a negligible trade failure of 0.003%.
Highlights of the highly attractive Indian capital markets:
Two major reasons why Indian securities are now increasingly regarded as
attractive to international investors are:
1. The relatively high returns compared with more developed global markets
as well as the low correlation with world markets.
2. However until the early 90s, the foreign investors’ only way of accessing
the Indian capital markets was through listed country funds
India’s Security Market
A Brief History
“The capital market is one of the most exciting sectors in the financial
system, marking an important contribution to economic development.”
Asia Focus was launched by the Unit Trust of India (UTI) in London in
1986. The success of this initiative ensured that this fund was followed by
numerous others. Indian companies are now also allowed to raise equity capital
in the international market through the issue of GDRs. In 2004, there are 498
Foreign Institutional Investors who hold 1325 sub-accounts with a net investment
of approximately $15 billion. India’s regulator, the Securities Exchange Board of
India (SEBI) is playing more of a development role rather than being merely a
watchdog. Transparency, competitiveness and equal opportunity to all market
participants has been the driving philosophy behind all the development and
regulatory initiatives of SEBI. The availability of derivative products including
index futures, index options, individual stock futures and individual stock options
re-enforces the overall attractiveness of this market to foreign and domestic
investors. The derivatives market in only two years has shown spectacular
growth. Compared to last financial year the annual turnover grew by over 300%.
As if further evidence was needed of India’s willingness to embrace change, the
availability of Internet trading and dual fungibles of American Depository Receipts
(ADRs) and Global Depository Receipts (GDRs) provides a clear indication of the
vibrancy and dynamism of the Indian securities market.
Meaning of Capital Market
“Capital market refers to the market for rising of financial resources
by the business enterprises, firms, government, semi-
government bodies, public sector units and other organization.”
OR
“A market where debt or equity securities are traded.”
A capital market is a market for securities (debt or equity), where
business enterprises (companies) and governments can raise long-term funds. It
is defined as a market in which money is provided for periods longer than a year,
as the raising of short-term funds takes place on other markets (e.g., the money
market).
The capital market includes the stock market (equity securities) and the
bond market (debt).
Capital markets may be classified as:
1) Primary markets
2) Secondary markets
In primary markets, new stock or bond issues are sold to investors via a
mechanism known as underwriting.
In the secondary markets, existing securities are sold and bought among
investors or traders, usually on a securities exchange, over-the-counter, or
elsewhere.
Investors purchase securities in the capital markets in order to extract a
return and earn profit on the securities.
CAPITAL MARKET
Industrial Security Market
Government Securities Market
Long term Loans Market
Primary Market
Secondary Market
CHART OF CAPITAL MARKET
Types of Capital/Security Market:
The securities market can be divided in to three parts:
A. Industrial securities market
B. Government securities market
C. Long term loans market
A. Industrial Security Market:
The industrial securities market consists of two complementary parts i.e.
the New Issue Market, and Secondary Market.
It is a market for industrial securities namely:
(i) Equity shares or ordinary shares or common stock.
(ii) Preference shares
(iii) Debenture or Bonds.
The corporate sector raises their capital through these above three types
of securities. This is the physical or tangible asset through which the market
functions.
1. Equity Shares:
Equity shares represent proportionate ownership in the company.
Investors who own equity shares of a company are entitled to ownership rights,
like voting for selection of directors on the Board, share in profits of the company,
etc.
Investors who own equity shares in a company are called shareholders.
They are ordinary shares with no guarantee of dividend. Equity shares
gain maximum returns when there are high profits.
The Indian Equity Market is more popularly known as the Indian Stock
Market. The Indian equity market has become the third biggest
after China and Hong Kong in the Asian region.
According to the latest report by ADB, it has a market capitalization of
nearly $600 billion. As of March 2009, the market capitalization was around
$598.3 billion (Rs 30.13 lakh crore) which is one-tenth of the combined
valuation of the Asia region. The market was slow since early 2007 and
continued till the first quarter of 2009.
2. Preference Shares:
“Stock whose holders are guaranteed priority in the payment of
dividends but whose holders have no voting rights”
Preference shareholders do not have voting rights. They generally bear a
fixed dividend, payable if the company declares dividends.
Preference shares have different features and are accordingly available as:
Cumulative and non-cumulative preference shares
Redeemable and non-redeemable preference shares
Convertible and non-convertible preference shares
Preference shares with a combination of the above features.
3. BONDS:
“A bond is a debt security, in which the authorized issuer owes the
holders a debt and, depending on the terms of the bond, is obliged to pay
interest (the coupon) and/or to repay the principal at a later date, termed
maturity.”
A bond is a formal contract to repay borrowed money with interest at
fixed intervals.
While the size of Indian dept market is 239.2 (US$ billion) which is
34.5% of GDP as on 2004 -05.
Many financial institutions like IDBI, ICICI, and IFCI, have been raising
capital for their operations by issuing of bonds. These too are available in a large
variety.
These include Income bonds, Tax-free bonds, Capital gains bonds,
Infrastructure bonds, Retirement bonds etc…
Company raises it capital in the primary market though:
1) Primary Market (New Issue Market):
Primary market is the market for those securities which are issued first
time in the market for the public. The New Issue Market deals with new securities
i.e. securities which were not previously availably and are offered to the investing
public for the first time.
Primary market is a market for new issues or new financial claims.
Hence, it is called New Issue Market.
In the Primary market, borrowers exchange new financial securities for
long term funds. It facilitates capital formulation.
Companies raise its capital in the primary market though:
(i) Public Issue
(ii) Right Issue
(iii) Primary placement/subscription
Public Issue is most popular method of raising capital is sale of securities
to the public by new companies is called Public Issue.
Right Issue means, when existing company first offered. The security to
existing shareholders on Pre–emptive bases, while company want to raise
additional capital is called capital is called Right Issue.
Private placement imagine private sale of securities to small group
investors.
2) Secondary Market:
Secondary market is the market for those securities which have already
been available in the market and listed on a stock exchange. The main benefit of
Secondary market is securities sold and purchased continuously among investors
without involvement of company. This market consists of all stock exchange
recognized by the Government of India. The stock exchange in India are
regulated under the securities contracts (Regulation) Act, 1956.
B. Government Security Market:
The government securities market (G-secs) is the largest segment of the
long term debt market in India, accounting for nearly two-thirds of the issues in
the primary market and more than four –fifths of the turnover in the secondary
market.
It is otherwise called Gilt-Edged securities market. It is a market where
Government securities are traded. In India there are many kinds of Government
Securities-short term and long term. Long term securities are traded in this
market while short term securities are traded in the money market. Securities
issued by the Central Government, State Government, Semi –Government
authorities like city Corporation, Port Trusts etc. Improvement Trusts, State
Electricity Boards, All India and State level financial institutions and public sector
enterprise are dealt in this market.
Participants in the G-secs Market:
Banks are the largest holders of G-secs. About one–third of the net
demand and time liabilities of the banks are partly in government securities
market mainly to meet statutory liquidity requirements and partly for investment
purpose. Other investor in G-secs includes mutual funds, primary and satellite
dealers, and trusts.
Government securities are issued in denominations of RS. 100. Interest is
payable half- yearly and they carry tax exemptions also. The role of brokers in
marketing these securities is practically very limited and the major participant in
this market in the “commercial banks” because they hold a very substantial
portion of these securities to satisfy their S.L.R. requirements.
The secondary market for these securities is very narrow since most of the
institutional investors tend to retain these securities until maturity.
The Government securities are in many forms. These are generally:
(i) Stock certificates of inscribed stock
(ii) Promissory Notes
(iii) Carrier Bonds which can be discounted.
Government securities are sold through the Public Debt Office of the RBI
while Treasury Bills are sold through auctions.
Government securities offer a good soured of raising inexpensive finance
for the Government exchequer and the interest on these securities influences the
prices and yields in this market. Hence this market also plays a vital role in
monetary management.
C. Long Term Loan Market:
Development
banks and commercial banks play a significant role in this market by supplying
Long term loans market may further be classified into:
(i) Term loans market
(ii) Mortgages market
(iii) Financial Guarantees market
Term Loans Market:
Term loans: A loan from a bank for a specific amount that has a
specified repayment schedule and a floating interest rate. Term loans
almost always mature between 1 and 10 years.
In India, many industrial financing institutions have been created by the
Government both at the national and regional levels to supply long term and
medium term loans to corporate customers directly as well as indirectly. These
development banks dominate the industrial finance in India.
Institutions like IDBI, IFCI, ICICI, and other state financial corporations
come under this category. These institutions meet the growing and varied long
term loans. They also help in identifying investment opportunities, encourage new
entrepreneurs and support modernization efforts.
Mortgages Market:
The mortgage market refers to these centers which supply mortgage loan
mainly to individual customers. A mortgage loan is a loan against the security
of immovable properly like real estate. The transfer of interest in a specific
immovable properly to secure a loan is called mortgage. These mortgages may
be equitable mortgage or legal one. Again it may be a first charge of title deeds to
properties as security whereas in the case of a legal mortgage the title in the
property is legally transferred to the lender by the borrower. Legal mortgage is
less risky.
Similarly, in the first charge, the mortgages transfer his interest in the
specific property to the mortgagee as security. When the properly in question is
already mortgaged once to another creditor, it becomes a second charge when it
is subsequently mortgaged to somebody else. The mortgagee can also further
transfer his interest in the mortgaged property to another, in such a case; it is
called a sub mortgage.
The mortgage market may have primary market as well secondary market.
The primary market consists of original extension of credit and secondary market
has sales and re-sales of existing mortgages at prevailing prices.
In India residential mortgages ate the most common ones. The Housing
and Urban Development Corporation and the LIC play a dominant role in
financing residential projects. Besides, the Land Development Banks provides
cheap mortgages loans for the development of lands, purchase of equipment etc.
These development banks raise finance through the sale of debentures which are
treated as trustee securities.
Financial Guarantees Market:
“Financial Guarantees is a non-cancelable indemnity bond guaranteeing
the timely payment interest and repayment of principal to the buyers (holders) of a
debt security at a maturity date.”
A guarantees market is a centre where finance is provide against the
guarantee of a reputed person in the financial circle. Guarantee is a contract to
discharge the liability of a third party in case of his default. Guarantee acts as a
security from the creditor’s point of view. In case the borrower fails to repay the
loan, the liability falls on the shoulders of the guarantor. Hence the guarantor
must be known to both the borrower and the lender and he must have the means
to discharge his liability.
Though there are many types of guarantees, the common forms ate:
(i) Performance Guarantee
(ii) Financial Guarantee
Performance guarantees cover the payment of earnest money, retention
money, advance payments, non-completion of contracts etc. On the other hand
financial guarantees cover only financial contracts.
In India, the market for financial guarantees is well organized. The
financial guarantees in India relate to:
(i) Deferred payments for imports and exports
(ii) Medium and long term loans raised abroad
(iii) Loans advanced by banks and other financial institutions
These guarantees ate provided mainly by commercial banks, development
banks, Governments both central and states and other specialized guarantee
institutions like ECGC (Export Credit Guarantee Corporation) and DICGO
(Deposit Insurance and Credit Guarantee Corporation). This guarantee financial
service is available to both individual and corporate customers. For a smooth
functioning of any financial system, this guarantee service is absolutely essential.
Capital Market Instruments
There are a number of capital market instruments used for market trade,
including stocks, bonds, debentures, T-bills, foreign exchange, fixed deposits,
and others. These are used by the investors to make a profit out of their
respective markets. All of these are called capital market instruments because
these are responsible for generating funds for companies, corporations, and
sometimes national governments.
This market is also known as securities market because long term funds
are raised through trade on debt and equity securities. These activities may be
conducted by both companies and governments.
Stocks and bonds are the two basic capital market instruments used in
both the primary and secondary markets.
There are different types of capital market instruments…Like….
DEBENTURES
BONDS
PREFERENCE SHARES
EQUITY SHARES
GOVERNMENT SECURITIES
DEBENTURES:
“A type of fixed-interest security, issued by companies
(as borrowers) in return for medium and long-term investment of funds. A
debenture is evidence of the borrower's debt to the lender.”
These are issued by companies and regulated under the SEBI guidelines
of June 11, 1992.
The following are types of debentures:-
Convertible debentures
Non-Convertible debentures
Zero coupon convertible notes
Zero interest fully convertible debentures
Fully convertible debentures with interest
Partly convertible debentures.
BONDS:
“A bond is a debt security, in which the authorized issuer owes the
holders a debt and, depending on the terms of the bond, is obliged to pay
interest (the coupon) and/or to repay the principal at a later date, termed
maturity.”
A bond is a formal contract to repay borrowed money with interest at
fixed intervals.
International Bond Market is very big and has an estimated size of nearly
$47 trillion. The size of the US bond market is the largest in the world. The US
bond market's outstanding debt is more than $25 trillion.
While the size of Indian dept market is 239.2 (US$ billion) which is
34.5% of GDP as on 2004 -05.
Indian development financial institutions like IDBI, ICICI, and IFCI, have
been raising capital for their operations by issuing of bonds. These too are
available in a large variety. These include:
Income bonds
Tax-free bonds
Capital gains bonds
Deep discount bonds
Infrastructure bonds
Retirement bonds etc…
PREFERENCE SHARES:
“Stock whose holders are guaranteed priority in the payment of
dividends but whose holders have no voting rights”
Preference shareholders do not have voting rights. They generally bear a
fixed dividend, payable if the company declares dividends.
Preference shares have different features and are accordingly available as:
Cumulative and non-cumulative preference shares
Redeemable and non-redeemable preference shares
Convertible and non-convertible preference shares
Preference shares with a combination of the above features.
EQUITY SHARES:
Equity shares represent proportionate ownership in the company.
Investors who own equity shares of a company are entitled to ownership rights,
like voting for selection of directors on the Board, share in profits of the company,
etc.
Investors who own equity shares in a company are called shareholders.
They are ordinary shares with no guarantee of dividend. Equity shares gain
maximum returns when there are high profits.
As a shareholder, the extent of your ownership (your stake) in a company
depends on the number of shares you own in relation to the total number of
shares available
For example, if you buy 1000 shares of stock in a company that has
issued a total of 100,000 shares, you own one per cent of the company.
A shareholder or a beneficial owner can exit from the ownership by selling
the shares. An investor can become shareholder/beneficial owner of a company
by purchasing shares of the company.
Shareholders are entitled to share profit of the company in the form of
"dividend" on "bonus shares", if Board of Directors and majority of the
shareholders agree. If a company is wound up for any reason, equity
shareholders may receive money from the residual funds after satisfying all other
liabilities.
GOVERNMENT SECURITIES:
Government securities (G-secs) are sovereign securities which are issued
by the Reserve Bank of India on behalf of Government of India.
The term Government Securities includes:
Central Government Securities
State Government Securities
Treasury bills
The Central Government or State Governments issue securities
periodically for the purpose of raising loans from the public.
There are two types of Government Securities –
I. Dated Securities
II. Treasury Bills
Dated Securities: Dated Securities have a maturity period of more than
one year.
Treasury Bills: Treasury Bills have a maturity period of less than or up to
one year.
The Public Debt Office (PDO) of the Reserve Bank of India performs all
functions with regard to the issue management, settlement of trade, distribution of
interest and redemption. Although only corporate and institutional investors
subscribe to government securities, individual investors are also permitted to
subscribe to these securities.
An investor has to approach RBI to receive government securities in
physical form. Investors can invest in book entry form with Banks and other
institutions like NSDL, SHCIL, and NSCCL etc. NSDL facility to buy and hold
government securities is convenient because of its reach and depository account
opened for other securities can be used for holding government securities.
Importance of Capital Market
Capital
market is important as it plays an important role in bringing rapid industrial
development in a country. The savings are invested profitably for economic
investable surplus and provision of expert services to investors and companies
are two significant activities undertaken by the capital market.
Capital market is importance due to: It enables the investors to adopt
their investment to their expectations which are constantly changing.
It acts as a link between those who want to save funds and those who
need funds and are in a position to invest them with safety and
reasonable return.
It provided the capital to those enterprises which can apply it profitably,
productively and increase the aggregate national income.
It provides proper flow of funds and brings about the rational allocation of
resources through the conversion of financial assets into physical assets.
Thus, the capital market facilitates capital formation.
It provides incentives to saving and facilitates capital formation by offering
suitable rate of interest as the price of capital.
It facilitated buying and selling of securities at listed price by providing
continuously marketability to the investors.
The securities offered in the capital market are transferable in character.
The changing business conditions in the economy are immediately
reflected on capital market. Booms and depression can be identified by
capital market. So suitable monitory and fiscal policies can be taken by
government.
Capital market supplies securities of different kinds with different maturity
and yields in unable the investors to diversify their risk by wider portfolio of
investment.
RESEARCH METHODOLOGY
Introduction:
Research is one of the best instruments to identify the investing pattern of
investors to invest in various sectors & to study different sectors of Capital
market.
Definition:
“Research is careful inquiry or examination to discover new
information and relationship and to expand and to vary existing
knowledge.”
Research always starts with question or any problem and finds answer of
problem by using scientific method. It gives complete knowledge about any
problem or question.
Objective of Study (research):
Every study is conducted within for some specific purpose or to solve
some problem. When any research is conducted it has some primary objective
that helps to solve the main problem whereas a secondary objective helps to
solve peripheral problems. The primary and secondary objectives of this research
are:
Primary Objective:
The primary objective of carrying out this research is:--
“Investors behaviour for Investing in Equity Market in Various Sectors”
Secondary Objectives:
To find out in which investment option people invests most.
To find out how investors are motivates for investing in Equity Market.
To study the general investment criteria of people.
To know the peoples time horizon for investing in Equity Market and to
know the rate of return expected by them.
To study the interest of people for further investment in Equity Market.
To assess the customer satisfaction level for investing in equity market.
To classify the different sector on the basis of investors behaviour
regarding investing in equity market.
To identify various motivation factor which affect to investor while investing
in various selected sectors.
BENEFITS OF STUDY:
The study carried out under the title of “Investors Behaviour for
Investing in Equity Market in Various Sectors” will give benefits as under:
The research will be help to know in which sector investors are investing
more.
The study will be helpful in knowing that what factors consider most
important while selecting the Sectors and company under the sectors.
The study will be helpful in knowing that how the investors are trade in
Equity market.
The study will be helpful in knowing responses regarding problems faced
by the investors while investing in Equity Market
The study will be helpful in knowing that what are the motivational factors
that encouraging to the investors for investing in Equity Market.
LIMITATIONS OF THE STUDY:
As no human being is perfect, it is not possible for anyone to make the
best or perfect report. Each person has some level of knowledge and is affected
by some uncontrollable factors within which he/she has to work. So, it
might possible that there can be some limitations in this report that may be due to
my knowledge level or some other factors.
According to me following limitations can be prevailing in my report:
Respondents might have felt hesitation in providing information related to
their age, income etc. So, there can be some data that might questionable
because of unwillingness of respondents to give right information.
Sample selected may not represent whole population, as sample size
selected is very small in proportion to population due to time and cost
constraints.
Even many of the respondents may give bias answer.
Research Design:
RESEARCH DESIGN
Exploratory Research
Descriptive Research
Casual Research
“Research design is the plan structure and strategy if investigation
conceived so as obtain answers to research question and to control
variance”
A research design is the master plan or model for the conduct of formal
investigation and survey. It is a specification of methods and procedures for
acquiring the information needs for solving the problem. It decides the source of
information and methods for gathering the data. A questionnaire and other forms
are tested to use the collection of data.
In the research study there is no perfect study to solve the problem. The
research design has broadly three categories as follow.
I have used Descriptive Research Design for research purpose.
1. Exploratory Research
2. Descriptive Research
3. Casual Research
2. Descriptive Research:
Descriptive research, also known as statistical research. It describes
data and characteristics about the population or phenomenon being studied.
Descriptive research answers the questions who, what, where, when and
how. This study is complex and determines high degree scientific skill to study
the problem.
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 short descriptive research deals with everything that can be counted and
studied.
In this report, I have used this Descriptive Research Design for
conducting survey on “Investors behaviour for Investing in Equity Market
in Various Sectors”
Data Collection Method:
Data collection usually takes place early on in an improvement project,
and is often formalized through a data collection plan which often contains the
following data collection methods.
I have used Descriptive Research Design for research purpose.
The source of data collection method is as follows.
Primary Data
Secondary Data
Primary Data:
Primary data means data collected directly from first-hand experience.
Means data collected for the first time by any researcher for any research use.
There are many methods of collecting primary data and the main methods
include:
Methods of collecting the primary data are:
Questionnaire method
Interviews method
Focus group interviews
Observation method
Case-studies method
Diaries method
I have used Questionnaire method for the Primary data collection for
the study.
Secondary Data:
Secondary data means data which are collected by any one for a
particular research purpose and which are used by others for different purpose.
I have also used the secondary data for the study like some company
resources like broachers, websites etc.
Sampling Plan:
“Sampling is the process to analyze the whole population
by analyzing a part of it.”
The effectiveness of the report depends on the sample size selected from the
population.
Sampling Unit:
Here, target population is decided who are the actual and potential
investors, each sample has the chance to be selected on an equal basis & this
research has been conducted through surveying the whole of the equity market
of Surat city
Sample Size:
For getting better result of the given problem I have to determine the
perfect sample size as on 90% confidence level which is calculated statically by
the given formula.
n = p*q (z /c) 2
Where,
n = sample size
p = percentage picking a choice (expressed as decimal)
q = (1 - p)
Z = Z value (e.g. 1.645 for 90% confidence level)
c = confidence interval, expressed as decimal
(e.g., 0.05 = ±5)
For Example:
p = 0.80 q = 0.20
z = 1.645 c = 0.05
n = p*q (z /c) 2
= 0.80*0.20 (1.645/0.05) 2
= 173.1856
= 175
Therefore, I used sample size is 175
Confidence interval:
In statistics, a confidence interval (CI) is a particular kind of interval
estimate of a population parameter. Instead of estimating the parameter by a
single value, an interval likely to include the parameter is given.
Thus, confidence intervals are used to indicate the reliability of an estimate.
The end points of the confidence interval are referred to as confidence
limits.
A confidence interval is always qualified by a particular confidence
level, usually expressed as a percentage.
The calculation of a confidence interval generally requires assumptions
about the nature of the estimation.
For example,
Here, I have used a confidence interval of 0.05 and 80% percent of
sample picks an answer is to be "sure" that if I had asked the question of the
entire relevant population between 80% (100-20) and 20% (100-80) would have
picked that answer.
Confidence level:
The confidence level tells you how sure you can be. It is expressed as a
percentage and represents how often the true percentage of the population who
would pick an answer lies within the confidence interval.
The confidence level associated with a confidence interval estimate is the
success rate of the method used to construct the interval.
The 90% confidence level means you can be 90% sure; When I put the
confidence level and the confidence interval together, I can say that I am 90%
sure that the true percentage of the population is between 20% and 80%.
So, I have taken 90% confidence level means I am 90% sure. As on
90% confidence level value of Z = 1.645
Here, I have calculated formula on the basis of 90% confidence level.
Sampling frame:
Sampling frame is the actual set of units from which a sample has been
drawn. In sampling frame, I have used simple random sampling method for
conducting survey. In a simple random sample ('SRS') all units from the sampling
frame have an equal chance to be drawn and to occur in the sample.
Here, I have used sampling frame as an actual and potential investors
from whole of the equity market of Surat city and also from Sharekhan Securities
Pvt. Ltd. Here, each sample has the chance to be selected on an equal basis
because I have used simple random sampling method for surveying purpose.
Response Rate:
The response rate was average.
I have used questionnaire method for the financial information of the
respondent, most of the people hesitated to provide the required information
and also the questionnaire contained some financial terms that were technical
in nature, which resulted into reduced response rate.
I have visited nearly 200 potential respondents, out of which only 175 gave
proper response.
Hence,
Response Rate = 175/200 = 87.5%
Data analysis tools:
I have used SPSS software (Statistical Package for the Social Sciences)
for analysis purpose.
In that I have used Mean, Median, Mode, Frequency Table, and Cross
Tabulation, Graphical representation & interpretation with each graphs
and charts.
Microsoft Office is used for data typing formatting and analyzing the data.
DATA ANALYSIS
ANALYSIS OF QUESTIONNAIRE
Que. 1. Do you investing in Equity Market?
[ ] Yes
[ ] No
Particulars Investing Percentage
Yes 119 68%
No 56 32%
Total 175 100%
Yes No0
20
40
60
80
100
120
140119
56
Investing In Equity Market
In-vest-ing
68%
36%
Investing In Equity Market ( In Percentage)
Yes
No
Interpretation:
According to the above chart we can see that:
68% of investors (119) are investing in Equity Market.
While 36% of investors (56) are not investing in Equity Market.
Que. 2. If you want to invest, which investment option will provide the best returns?
[ ] Equity Share
[ ] IPO
[ ] Mutual Funds
[ ] Bonds
[ ] Fixed Deposits
[ ] If any other _________
Investment option Investors in Percentage
Equity Share 53%
IPO 18%
Mutual Funds 8%
Bonds 7%
Fixed Deposits 4%
Other 10%
53%
18%
8%
7%
4%
10%
Investors are investing in various Investment option
(Investors in Percentage)
Equity Share
IPO
Mutual Funds
Bonds
Fixed Deposits
Other
Interpretation:
According to the previous chart:
According to 53% of investors, Equity market will provide the best
returns in compare to other investment option.
18% of investors believe that IPO (Primary Market) will provide the best
returns.
8% of investors think that Mutual Funds will provide the best returns.
7% of investors believe that Bonds Market will provide the best returns.
4% of investors trust that Fixed Deposits will provide the best returns.
According to 10% of investors, other investment option will provide the
best returns.
According to them other investment options are:
Commodity Market
Insurance
Government Securities etc.
Que.3. Which factors motivate you for investing in Equity Market?
[ ] Return
[ ] Liquidity
[ ] Safety
[ ] Capital Appreciation
[ ] Other _____________
Motivation FactorsInvestors in Percentage
Return 49%
Liquidity 26%
Safety 7%
Capital Appreciation 17%
Other 1%
48%
25%
6%
16%5%
Motivating factors for Investors to invest in Equity Market
(Investors in Percentage)
Return
Liquidity
Safety
Capital Appreciation
Other
Interpretation:
According to the Previous Figure:
49% of investors are motivated by Return to invest in Equity market.
26% of investors are motivated by Liquidity to invest in Equity market.
6% of investors are motivated by Safety to invest in Equity market.
16% of investors are motivated by Capital Appreciation to invest in
Equity market.
While 5% of investors are motivated by other factors like-Investment,
Profit etc. to invest in Equity market.
Que. 4. How much percentage of your income you invest in
Equity Market?
[ ] Less than 5%
[ ] 5%-10%
[ ] 10%-15%
[ ] 15%-20%
[ ] 20%- 25%
[ ] More than 25%
Percentage of Income Investors in Percentage
Less than 5% 23%
5%-10% 45%
10%-15% 17%
15%-20% 7%
20%- 25% 5%
More than 25% 3%
23%
45%
17%
7%5% 3%
Percentage of income investors are investing in Equity Market (Investors in Percentage)
Less than 5%
5%-10%
10%-15%
15%-20%
20%- 25%
More than 25%
Interpretation:
According to the Previous Figure:
23% of the investors are investing Less than 5% of their income in Equity
Market.
45% of the investors are investing 5%-10% of their income in Equity Market.
17% of the investors are investing 10%-15% of their income in Equity Market.
7% of the investors are investing 15%- 20% of their income in Equity Market.
5% of the investors are investing 20%-25% of their income in Equity Market.
While 3% of the investors are investing More than 25% of their income in
Equity Market.
Que. 5. How do you trade in Equity Market?
[ ] Intraday
[ ] Delivery
[ ] Speculation
[ ] Arbitragers
[ ] Hedging
[ ] If any other please specify _____________
Types of Trade Investors in Percentage
Intraday 13%
Delivery 31%
Speculation 26%
Arbitragers 17%
Hedging 11%
Other 2%
13%
31%
26%
17%
11%2%
Investors are Trade in Equity Market
(Investors in Percentage)
Intraday
Delivery
Speculation
Arbitragers
Hedging
Other
Interpretation:
According to the Previous Figure:
13% of the investors are doing Intraday trading in Equity Market.
“Intraday Trading is trading for that one day only. Means any securities
are purchase & sell “within the day.”
31% of the investors are investing in Equity Market as a Delivery base
Trading.
“Delivery based trading is normally considered as a safer approach for
trading in shares when compared to day trading. Delivery based trading
involves buying shares on a market day and selling them only after
receiving the delivery of those shares in demat account.”
26% of the investors are trading in Equity Market as a Speculator.
“Speculators are those classes of investors who willingly take higher-
than-average risk in return for a higher-than-average profit potential in
future. Speculators aim primarily at quick profit from a short-term
acquisition of assets.”
17% of the investors are Arbitragers in Equity Market.
“Arbitrager means who purchases securities in one market for immediate
resale in another in the hope of profiting from the price differential”
11% of the investors are trading in Equity Market as Hedgers.
“Hedging means reducing or controlling risk. Hedgers wish to eliminate or
reduce the price risk to which they are already exposed.”
While 2% of the investors are trade in Equity Market for Other Purpose.
Que.6. What is the time horizon for investing in Equity Market?
[ ] Less than 1 Months
[ ] 1 to 3 Months
[ ] 3 to 6 Months
[ ] 6 to 12 Months
[ ] More than 12 Months
Time Horizon Investors in Percentage
Less than 1 Months 14%
1 to 3 Months 28%
3 to 6 Months 15%
6 to 12 Months 18%
More than 12 Months 25%
Less than 1 Months
1 to 3 Months 3 to 6 Months 6 to 12 Months
More than 12 Months
0%
5%
10%
15%
20%
25%
30%
14%
28%
15%18%
25%
Investors Time Horizon for investing in Equity Market (Investors in Percentage)
Interpretation :
According to the Previous Figure:
14% of investors invest in Equity market for Less than 1 Months.
28% of investors invest in Equity market for the period of
1 to 3 Months.
15% of investor’s time horizon for in Equity market is 3 to 6 Months.
18% of investor’s time horizon for in Equity market is 6 to 12 Months.
25% of investors invest in Equity market for more than 12 Months.
Que.7. What is the rate of return expected by you from Equity Market
in a year?
[ ] 5% – 10 %
[ ] 10% – 15 %
[ ] 15% – 20%
[ ] 20% – 25%
[ ] 25% –30%
[ ] 30% and above
12%
18%
32%
26%
8%4%
Rate of Return
5% – 10 %
10% – 15 %
15% – 20%
20% – 25%
25% –30%
30% and above
Rate of Return Investors in Percentage
5% – 10 % 12%
10% – 15 % 18%
15% – 20% 32%
20% – 25% 26%
25% –30% 8%
30% and above 4%
Interpretation :
According to the above Figure:
12% of investors are expects 5%-10% return from Equity market.
18% of investors are expects 10%-15% return from Equity market.
32% of investors are expects 15%-20% return from Equity market.
26% of investors are expects 20%-25% return from Equity market.
Here, above two cases investors are more expects from Equity
market.
8% of investors are expects 25%-30% return from Equity market.
While 4% of investors are expects more than 30% return from Equity
market.
Que.8. Are you satisfied with the current performance of the Equity Market
in terms of expected return?
[ ] Fully Satisfied
[ ] Satisfied
[ ] Neutral
[ ] Unsatisfied
[ ] Fully Unsatisfied
Rate of Return No. of Investors Percentage
Fully Satisfied 30 17%
Satisfied 73 42%
Neutral 49 28%
Unsatisfied 18 10%
Fully Unsatisfied 5 3%
Total 175 100%
Fully Satisfied Satisfied Neutral Unsatisfied Fully Unsatisfied0
1020304050607080
30
73
49
18
5
Investors satisfaction level From Equity Market
(Investors in Numers)(Total 175)
Interpretation :
According to the Previous Figure:
30 investors are Fully Satisfied from current performance of
Equity market.
73 investors are Satisfied from Equity market.
49 investors are Neutral with current performance of Equity market.
18 investors are Unsatisfied from Equity market.
While 5 investors are Fully Unsatisfied from Equity market.
Que. 9. Who advise you to enter in Equity Market?
[ ] Friends
[ ] Relatives
[ ] Advisers
[ ] Media
[ ] Research Report
[ ] Magazines
[ ] If any other ___________
Particulars Investors in Percentage
Friends 28%
Relatives 12%
Advisers 25%
Media 17%
Research Report 10%
Magazines 5%
Other 3%
28%
12%
25%
17%
10%
5% 3%
Investor's Referance for enter into Equity Market
(Investors in Percentage)
Friends
Relatives
Advisers
Media
Research Report
Magazines
Other
Interpretation :
According to the Above Figure:
Friends motivate 28% of the investors to enter into the equity market.
Relatives motivate 12% of the investors to enter into the equity market.
25% of investors enter in Equity market by the Advise of Financial
Advisor.
Media motivate 17% of the investors to enter into the equity market.
Magazines motivate 10% of the investors to enter into the equity market.
5% of investors are motivates by Reading Magazines to enter in Equity
market.
While other factors like self-Study, their own View etc. motivate
3% of the investors to enter into the equity market.
Que.10. Which Factors do you consider most important while selecting the Sectors?
[ ] Market Trend
[ ] Profitability
[ ] Economic Condition
[ ] Industry Condition
[ ] Existence of well established Companies under Sectors
[ ] Government Policy
[ ] If any other please specify _____________
Particulars Percentage
Market Trend 29%
Profitability 23%
Economic Condition 14%
Industry Condition 16%
Existence of well established Companies under Sectors
12%
Government Policy 5%
Any Other 1%
29%
23%14%
16%
12%
5% 1%
Factors Consider by Investors while selecting sector
(Investors in Percentage)Market Trend
Profitability
Economic Condition
Industry Condition
Existence of well established Companies under Sectors
Government Policy
Any Other
Interpretation :
According to the Previous Figure:
29% of the investors have considered Market Trend as a most important
factor while selecting the Sector.
23% of the investors have considered Profitability as a most important
factor while selecting the Sector.
14% of the investors have considered Economic Condition as a most
important factor while selecting the Sector.
16% of the investors have considered Industry Condition as a most
important factor while selecting the Sector.
12% of the investors have considered Existence of well established
Companies under Sectors as a most important factor while selecting the
Sector.
5% of the investors have considered Government Policy as a important
factor while selecting the Sector.
While 1% of the investors have considers Other Factor like
Global Position of the company and etc. important factor while selecting
the Sector.
Que.11. Which Sectors do you prefer the most?
(Give 1 to 5 Orders in given boxes)
Here, I have decided to study only these five sectors.
Oil & Gas Sector
Banking Sector
IT Sector
Infrastructure Sector
Automobile Sector
Sectors Orders(Ranks) Given by Respondents
1 2 3 4 5 Total
Oil & Gas Sector 44 30 49 21 31 175
Banking Sector 26 24 53 42 30 175
IT Sector 20 40 47 35 33 175
Infrastructure Sector 37 32 33 28 45 175
Automobile Sector 35 30 28 52 30 175
Total 162 156 210 178 169 875
Oil & Gas
Secto
r
Bankin
g Secto
r
IT Se
ctor
Infrastr
ucture
Secto
r
Automobile
Secto
r0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
31 30 33 45 30
21 42 35
28 52
49
53 47 33
28
30
24 40 32 30
44 26 20
37 35 1st Rank
2nd Rank
3rd Rank
4th Rank
5th Rank
On the basis of above chart:
How many investors given 1st to 5th Rank to which sector?
Sectors Investors Rank
Oil & Gas Sector 44 1st
IT Sector 40 2nd
Banking Sector 53 3rd
Automobile Sector 52 4th
Infrastructure Sector 45 5th
Interpretation :
On the basis of Previous Figures:
Oil & Gas Sector:
44 Investors gave 1 st rank , 30 Investors gave 2nd rank, 49 investors gave
3rd Rank, 21 Investors gave 4th Rank, & 31 Investors gave 5th Rank to this
sector.
Here, over all 44 investors have selected oil & gas sector as a First Rank
in comparison with First Rank of all sectors.
IT Sector:
20 Investors gave 1st rank, 40 Investors gave 2 nd rank , 47 investors gave
3rd Rank, 35 Investors gave 4th Rank, & 33 Investors gave 5th Rank to this
sector.
Here, over all 40 investors have selected IT sector as a 2nd Rank in
comparison with 2nd Rank of all sectors.
Banking Sector:
26 Investors gave 1st rank, 24 Investors gave 2nd rank, 53 investors gave
3 rd Rank , 42 Investors gave 4th Rank, & 30 Investors gave 5 th
Rank to this sector.
Here, over all 53 investors have selected Banking sector as a 3nd Rank in
comparison with 3nd Rank of all sectors.
Automobile Sector:
35 Investors gave 1st rank, 30 Investors gave 2nd rank, 28 investors gave
3rd Rank, 52 Investors gave 4 th Rank , & 30 Investors gave 5th Rank to this
sector.
Here, over all 52 investors have selected Automobile sector as a 4th
Rank in comparison with 4th Rank of all sectors.
Infrastructure Sector:
37 Investors gave 1st rank, 32 Investors gave 2nd rank, 33 investors gave
3rd Rank, 28 Investors gave 4th Rank, & 45 Investors gave 5 th
Rank to this sector.
Here, over all 45 investors have selected Infrastructure sector as a
5nd Rank in comparison with 5nd Rank of all sectors.
Que. 12. Mention the most important factors for selecting a company
of your choice.
[ ] Earning Per Share
[ ] Dividend
[ ] Broker’s advise
[ ] Market capitalization
[ ] Performance of company
[ ] P.E. Ratio
[ ] If any other __________
Factors affect for selecting company
Investors in Percentage
Earning Per Share 19%
Dividend 17%
Broker’s advise 15%
Market capitalization 7%
Performance of company 16%
P.E. Ratio 24%
Other 2%
19%
17%
15%7%
16%
24%
2%
Factors affect to Investors for for selecting company
(Investors in Percentage)
Earning Per Share
Dividend
Broker’s advise
Market capitalization
Performance of company
P.E. Ratio
Other
Interpretation :
On the basis of above Figures:
19% of the investors have considered Earning Per Share as a most
important factor to select a Company under the sector of their Choice.
17% of the investors have considered Dividend as a most important factor to
select a Company under the sector of their Choice.
While 15% of the investors are select a company under the sector of their
choice on the basis of Broker’s advises.
7% of the investors have considered Market capitalization by the company
as a important factor to select a company under the sector.
16% of the investors have considered as a Performance of company most
important factor to select a company under the sector of their choice.
24% of the investors have considered Price Earning Ratio as a most
important factor select a company under the sector of their choice.
At last 2% of the investors have considered Other Factors like
Suggestion from reference group, External advisors, Stakeholders,
Growth of Company, Market Trend, Profitability and their own view etc.
to select a company under the sector.
As the main objective of the research is to find out the
“Investors behaviour for Investing in Equity Market in Various Sectors” in
Surat city. So, I have questionnaire method on 175 sample size for research
and found out the views of investors on various parameters.
From the research I found out that 68% of investors (119) are investing in
Equity Market. While 36% of investors (56) are not investing in Equity Market
as per my sample size 175.
I also found out that, 53% of investors believe that Equity Market is better
investment option and will provide the best returns in compare to other
investment option.
I found out that the 49% of investors who are dealing in equity market they
are motivated by return factor and 26% of investors are motivated by
Liquidity and some investor also consider capital appreciation and safety factor
while investing in equity market in various sectors.
I also found out that the 45% of the investors are ready or interested to
invest their 5%-10% of income in Equity Market. It means many investors trust
on the growth of equity market as they are ready to spend major proportion of
their income.
Going ahead I found out that very few investors want to deal in intraday
trading which shows that they consider safety factors while investing. 31% of
the investors are investing in Equity Market as a Delivery base Trading and
26% of the investors are trading in Equity Market as a Speculator. Means 26%
FINDINGS
of investors who willingly take higher-than-average risk in return for a higher-
than-average profit potential.
28% of investors invest in Equity market for the period of 1 to 3 Months and
the same proportion of investors are invest for long period more than year.
I also found out that 32% of investors are expects 15%-20% return from
Equity market and 26% of investors are expects 20%-25% return from Equity
market. Here, investors are more expects from Equity market.
42% of investors are satisfied with the current performance of the Equity
Market in terms of expected return, while 28% of investors are Neutral about
equity market.
I found that most of investors are motivated by their friends to enter in the
equity market and some investors are motivated by Advisers, Media, Research
Report and other factors like and self study of current scenario of equity market.
Other thing I found out that 29% of the investors have considered market
trend and 23% of the investors have considered Profitability as a most
important factor as a most important factor while selecting the Sector. There are
also other factors like - government policy, industry condition, and economic
condition also important factor while selecting the Sector
Then I found that 44 investors selected Oil & gas sector as a
First Rank (in comparison with First Rank of all sectors)
40 investors have selected IT sector as a 2nd Rank.
53 investors have selected Banking sector as a 3nd Rank
52 investors have selected Automobile sector as a 4th Rank
45 investors selected Infrastructure sector as a 5nd Rank
I also found out that 24% of the investors have considered Price Earning
Ratio, 19% of the investors have considered Earning per Share and 17%
of the investors have considered Dividend as a most important factor while
selecting a company from these selected sectors. Investors also consider other
factors like - Suggestion from reference group, External advisors,
Stakeholders, Growth of Company, Market Trend, Profitability and their own
view etc. are as an important factor while selecting a company from these
selected sectors.
D u r i n g m y t r a i n i n g p e r i o d I h a v e s t u d y o n
Investing in Equity Market in Various Sectors” by using Descriptive
Research Design as a Questionnaire method where respondents are from
whole of the equity market of Surat city and also from Sharekhan Securities
Pvt. Ltd.
From the survey I found that major people are investing in equity market
only due to Earn High Return and Hedge the Risk by investing their major
proportion of income in Equity Market. Here, the most of people are trade in
equity market as a speculation and they are invests for one to three months.
Generally, the investors who are invest for long period more than year they are
surely beneficial in equity market. Majority of people are motivated by their
friends & medias advise to enter into equity market. Majority people are expecting
something more from the equity market.So, finally some are satisfied and some
are not satisfy with equity market.
Major investors prefer the Oil & gas sector as a first rank on the basis of
Market trend, Profitability, industry condition and economic condition also
important factor while selecting the Sector and investors have also considered
Price Earning Ratio, Earning per Share and Dividend as a most important
factor while selecting a company under these selected sectors.
CONCLUSION
Recommendation to Investors:
Prefer investment for long term investment strategy that provides you
moderate return with liquidity.
Investors should not invest in only equity market but, also invest in other
Safe Securities Like- Fixed Deposits, Government Securities, Bonds,
Mutual fund and Insurance etc. which also provides moderate
return.
For Example: One should prefer
o Equity – 50%
o Other Safe Securities – 50%
So, one can get moderate return with liquidity.
Investors should invest money at lower level price and sale the stock at
higher price.
Investors should select company on the basis of PE ratio, EPS, Current
Growth of Company and Market capitalization and many more. So,
investors can get higher return on their investment.
Always invest extra money in stock market. Do not invest by taking
loan from banks or other resources.
RECOMMENDATION
Recommendation to Company:
From my research, I found that only 68% of investors are investing in
equity market, so more focus should on 32% of investors who are not
investing in equity market.
Broking firms or companies should promote Equity investment
aggressively for long term investment purpose.
Majority of investors (53%) are investing secondary market (equity
market) and very few (18%) investors are investing in Primary Market.
So, here broking firm should promote to their client for investing in
Primary Market also.
Company should have to concentrate on those people who are
not investing in Equity Market because of High risk than convert them
in investing other security like-Mutual Fund, Bonds, and Insurance etc.
which also provides moderate return.
The Stock Broking firm should also provide better services to the investor
to increase the satisfaction level of the investors.
Company should focus on students also because equity market has risk
and the younger generation likes to take risk.
Majority investors are investing in Oil & gas sector and IT sector.
So, Company should also suggest to investors for investing other sector
which is also profitable.
@. BOOKS:
Gordon & Natrajan, “Financial Markets And Services” Second
Revised Edition Reprint, Himalaya Publishing House, 2005.
Investment Management – V.A. AVADHANI
@. Web sites:
www.sharekhan.com
www.nseinda.com
www.bseindia.com
www. moneycontrol.com
www.investopedia.com
www.wikipedia.com
www.autherstream.com
www.myrisis.com
@. NEWS PAPER : ECONOMICS TIMES
TIMES OF INDIA
@. OTHER :
Sharekhan’s Broachers
NCFM – Capital Market Dealers Module
Other Magazines for Capitals Markets
BIBLIOGRAPHY
Questionnaire
On
“INVESTORS BEHAVIOUR FOR INVESTING IN EQUITY MARKET IN VARIOUS SECTORS” IN SURAT CITY
Student of Vivekanand College for B.B.A. is conducting a survey on
“Investors Behaviour for Investing in Equity Market in Various Sectors”
on behalf of Sharekhan Security Pvt. Ltd, Surat
for fulfillment of BBA programme.
This information is purely for an academic purpose and will be kept completely
confidential. You are requested to fill the below QUESTIONNAIRE.
1. Do you investing in Equity Market?
[ ] Yes [ ] No
2. If you want to invest, which investment option will provide the best returns?
[ ] Equity Share [ ] IPO[ ] Mutual Funds[ ] Bonds [ ] Fixed Deposits [ ] If any other _________
3. Which factors motive you investing in Equity Market?
[ ] Return [ ] Liquidity [ ] Safety [ ] Capital Appreciation [ ] If any other please specify _____________
4. How much percentage of your income you invest in Equity Market?
[ ] Less than 5% [ ] 5%-10% [ ] 10%-15%[ ] 15%-20% [ ] 20%- 25% [ ] More than 25%
5. How do you trade in Equity Market?
[ ] Intraday [ ] Delivery [ ] Speculation [ ] Arbitragers[ ] Hedging [ ] If any other please specify _____________
6. What is the time horizon for investing in Equity Market?
[ ] Less than 1 Months [ ] 1 to 3 Months [ ] 3 to 6 Months[ ] 6 to 12 Months [ ] More than 12 Months
7. What is the rate of return expected by you from Equity Market in a year?
[ ] 5% – 10 % [ ] 10% – 15 % [ ] 15% – 20%
[ ] 20% – 25% [ ] 25% –30% [ ] 30% above
8. Are you satisfied with the current performance of the Equity Market in terms
of expected return?
[ ] Fully Satisfied [ ] Satisfied [ ] Neutral
[ ] Unsatisfied [ ] Fully Unsatisfied
9. Who advise you to enter in Equity Market?
[ ] Friends [ ] Relatives [ ] Advisers [ ] Media
[ ] Research Report [ ] Magazines [ ] If any other ___________
10. Which Factors do you consider most important while selecting the Sectors?
[ ] Market Trend [ ] Profitability [ ] Economic Condition
[ ] Industry Condition [ ] well established Companies under Sectors
[ ] Government Policy [ ] If any other please specify _____________
11. Which Sector do you prefer the most? (Give 1 to 5 Orders in given boxes)
Oil & Gas Sector Infrastructure Sector
Banking Sector Automobile Sector
IT Sector If any other please specify _____________
12. Mention the most important factors for selecting a company of your choice.
[ ] Earning Per Share [ ] Dividend [ ] Broker’s advise
[ ] Market capitalization [ ] Performance of company [ ] P.E. Ratio
[ ] If any other _____________
13. If any Suggestion from your side, then please specify.
______________________________________________________________
______________________________________________________________
-: Personal Information:-
Name: _______________________________________________
Address: _______________________________________________
_______________________________________________
E-mail ID: …………………………………..………………………………
Contact No.: …………………………………..
Gender [ ] Male [ ] Female
Age:
[ ] Below 20 Years [ ] 21 TO 30 Years [ ] 31 TO 40 Years
[ ] 41 TO 50 Years [ ] 51 TO 60 Years [ ] Above 60 Years
Occupation:
[ ] Business [ ] Service [ ] Employee
[ ] Student [ ] Other please specify _____________
Income (Yearly):
[ ] Less than 100000 Rs. [ ] 100000 to 200000 Rs. [ ] 200000 to 300000 Rs.
[ ] 300000 to 400000 Rs. [ ] 400000 to 500000 Rs. [ ] Above 500000 Rs.
!!!!.....Thanking you for providing your valuable Response…..!!!!
Projected By:Ashish l. Sorathiya