the retail investors behaviour on equity shares …

1

THE RETAIL INVESTORS BEHAVIOUR ON

EQUITY SHARES IN CHENNAI CITY – A STUDY

Thesis submitted to the

Bharathidasan University, Tiruchirappalli

for the award of the Degree of

DOCTOR OF PHILOSOPHY IN COMMERCE

By

N.SRIVIDHYA,M.Com., M.Phil., MBA.,

Associate Professor, Dept. of Management Studies,

Sri Manakula Vinayagar College of Engineering,

Madagadipet, Puducherry.

Under the Guidance of

Dr.S.RAJKUMAR, M.Com., M.Phil., B.Ed., Ph.D.,

Principal and Research Advisor,

Naina Mohamed College of Arts and Science,

Rajendrapuram, Arantangi Taluk,

Pudukkottai District.

May - 2012

2

Dr. S. RAJKUMAR, M.Com., M.Phil., B.Ed.,

Ph.D,

Principal & Research Advisor,

Naina Mohamed College of Arts and Science,

Rajendrapuram, Aranthangi Taluk,

Pudukkottai District.

e-mail:

[email protected]

[email protected]

Mobile/ Phone:9443588201

Date:

This is to certify that the Ph.D. thesis entitled “The Retail Investors

behaviour on Equity Shares” – A Study is a bonafide record of research work done

by Mrs.N.Srividhya, under my guidance and supervision and the thesis has not

previously formed the basis for the award of any degree, diploma, fellowship or

similar title. The thesis represents entirely an independent work of the candidate.

CERTIFICATE

mailto:[email protected]

mailto:[email protected]

3

N.Srividhya, M.Com., M.Phil., M.B.A.,

Associate Professor, Dept. of Management Studies,

Sri Manakula Vinayagar Engineering college,

Madagadipet, Puducherry 605107.

Date:

I, N.Srividhya, Ph.D. Scholar, Department of Management Studies, Sri

Manakula Vinayagar Engineering college, Madagadipet, Puducherry, do hereby

declare that the thesis entitled “The Retail Investors behaviour on Equity Shares” –

A Study submitted to Bharathidasan University, Tiruchirappalli for the award of

the degree of “DOCTOR OF PHILOSOPHY IN COMMERCE” is my original

work and that the thesis has not formed the basis for the award of any degree,

diploma, associate ship, fellowship or any other similar titles.

Counter Signed Research Scholar

DECLARATION

4

ACKNOWLEDGEMENT

Dr. S. Rajkumar, my Research Advisor, Principal, Naina Mohamed

College of Arts and Science, Rajendrapuram, Aranthangi Taluk, Pudukkottai

District is the inspiring force behind this research work. He has been my Guide in

the true sense of word. He offered me valuable guidance and suggestions to

complete this work successfully. This study would not have been possible but for

his immense help.

I feel immense pleasure to express my heart-felt gratitude to my Doctoral

committee members Dr.S.Sekar, Principal, Urumu Dhanalakshmi College,

Kattur, Tiruchirappalli – 620 019 and Dr.E.Mubarak Ali, Associate Professor,

P.G. and Research Department of Commerce, Jamal Mohamed College,

(Autonomous), Tiruchirappalli, for providing me the valuable suggestions to make

this study.

The help of librarian of Bharathidasan University is gratefully

acknowledged for their assistance in literature collection.

My acknowledgements are due to all the publishers of both the research

articles and popular articles of mine in their leading national and International

Journals by giving me an opportunity to write my views and findings. I wish to

extend my heartfelt thanks to all the Colleges and Universities for giving me an

opportunity to present my papers on the emerging issues.

I render my thanks to the entire respondents for the co-operation and co-

ordination extended by them in the collection of data needed for the research.

I wish to make a special mention about my better half Mr._G.

Ravichandran, who helped in all the way from the beginning to the end of my

research journey. He gave his moral support in all spheres of my research work. I

am at a loss for words when I think about the sacrifices made by my dear daughter

Selvi._R. Vishnu Priya, and my son Selvan. R. Maadhav, who had to suffer my

absence during the period of my research work.

(N.Srividhya)

5

CONTENTS

CHAPTER TITLE PAGE

NO

I INTRODUCTION AND RESEARCH DESIGN 1

II REVIEW OF LITERATURE 17

III CONCEPTUAL FRAMEWORK OF INDIAN

CAPITAL MARKETS

66

IV ANALYSIS – I 102

V ANALYSIS - II 139

VI FINDINGS, CONCLUSIONS, SUGGESTIONS 236

BIBLIOGRAPHY

ANNEXURE - QUESTIONNAIRE

6

LIST OF TABLES

Table

No. Title

Page

No.

3.1 International Equity Markets 71

3.2 Resources Mobilised from the Primary Market 72

3.3 Secondary Markets – Selected Indicators 73

3.4 SEBI Registered Market Intermediaries 75

3.5 Trends in Resource Mobilisation by Mutual Funds 77

3.6 Derivatives Segment at BSE and NSE 79

3.7 Foreign Investment Inflows 80

3.8 Trends in FII Investment 81

3.9 Settlement Statistics for Cash Segment of BSE and NSE 84

3.10 Receipt and Redressal of Investor Grievances 93

4.1 Age of the Investors 103

4.2 Gender of the Investors 104

4.3 Marital Status of the Investors 106

4.4 Education of the Investors 107

4.5 Occupation of the Investors 108

4.6 Income of the Investors 109

4.7 Nature of Family of the Investors 111

4.8 Number of Dependents of the Investors 112

4.9 House Ownership of the Investors 113

4.10 Type of Investors 114

4.11 Category of Investors 115

4.12 Number of years of Dealing with securities Markets 116

4.13 Number of Companies Invested 117

4.14 Size of Investment 117

4.15 Source of Investment 118

7

Table

No. Title

Page

No.

4.16 Percentage of Savings invested in Securities Markets 119

4.17 Sources of Information 120

4.18 Criteria for Investments 121

4.19 Member of Investors’ Forum 121

4.20 Awareness of Malpractice of Intermediaries 122

4.21 Mode of Trading 122

4.22 Awareness of Financial Sector Reforms in India 123

4.23 Frequency Distribution of Index 124

4.24 Chi-square value for sources of Information with regard to News

papers 125

4.25 Chi-square value for sources of Information with regard to

Journals and Magazines 126

4.26 Chi-square value for sources of Information with regard to T V 126

4.27 Chi-square value for sources of Information with regard to stock

Brokers 127


Investment Consultant 128

4.29 Chi-square value for sources of Information with regard to On

line website 128


Friends and Relatives 129

4.31 Mean and Standard Deviation for preference of Investments and

their Ranks 130

4.32 Mean and Standard Deviation for Ranking of Industries 131

4.33 Mean and Standard Deviation of Reasons for Investments and

their Ranks 132

4.34 Mean and Standard Deviation of Preference of Investment Style 132

4.35 Mean and Standard Deviations for Preference in Choosing Stock

Exchanges 133

4.36 Paired Samples Statistics for the Factors of the risk and return 134

4.37 Paired Samples Correlations for the Factors of the Investment in

equity market 135

4.38 Paired samples Test Values for the Factors of the Latest Reforms

in Capital market 136

8

Table

No. Title

Page

No.

4.39 Frequency Distribution of Percentage of expected return 137

5.1 Clusters of Investors Based on Elements of Retail Investment 140

5.2 Number of cases in Each cluster of Retail Investment 140

5.3 Paired Samples statistics for the Elements of Retail Investment 141

5.4 Paired Samples correlations for the Elements of Retail

Investment 142

5.5 Paired Samples Test values for the Elements of Retail

Investment 143

5.6 Correlation Matrix for Number of year Dealing 145

5.7 Correlation co-efficient Table for percentage of savings in Share

Market 146

5.8 ANOVA for the Elements of capital investments with respect to

investment in shares 147

5.9 ANOVA for the Elements of Retail Investment with respect to

Investment in Government Bonds 148


Investment in Fixed Deposits 149


Investment in Gold 150


Investment in Debentures 151


Investment in Mutual Funds 152


Investment in Real Estate 153


the Reason for Investment - Return 155


the Reason for Investment - Liquidity 156


the Reason for Investment – Tax Benefits 157

5.18 ANOVA for the Elements of Retail Investment with regard to the

Investment Decisions influenced by Abridged Prospectus 159


Investment Decisions influenced by T V Channels 160

5.20 ANOVA for the Elements of Retail Investment with regard to the 161

9

Table

No. Title

Page

No.

Investment Decisions influenced by Consultant


Investment Decisions influenced by websites 162

5.22 Association between preference of Investment in Equity Shares

and Clusters of Investors 163

5.23 Chi-square for preference of Investments in Equity shares 164

5.24 Multivariate General Linear Model for percentage of

Investments 165

5.25 Association Criteria for Investment and Clusters of Awareness 168

5.26 Chi-square Test and criteria for Investments 169

5.27 Final Cluster Centres for Awareness of the equity Investment 170

5.28 Frequency of Clusters for Awareness of the latest Reforms in

Capital Market 170

5.29 ANOVA for the Elements of Retail investment with regard to

preference of Investment in Banking Sector 172


preference of Investment in FMCG 173


preference of Investment in Pharma Sector 174


preference of Investment in PSE Sector 175


preference of Investment in MNC Sector 176


preference of Investment in IT Sector 177


preference of Investment in Manufacturing Sector 178


preference of Investment in Service Sector 179

5.37 Investment in Equity Shares is Higher Risk and Clusters of

Awareness on Retail Investment 180

5.38 Chi-square Test Statistics for Investment in Equity Shares is

Higher Risk 181

5.39 ANOVA for the Elements of Retail Investment with regard to

preference of Stock exchanges - Sensex 182

5.40 ANOVA for the Elements of Retail Investment with regard to 183

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Table

No. Title

Page

No.

preference of Stock exchanges - Nifty

5.41 ANOVA for the Elements of Retail Investment with regard to

preference of Stock exchanges – CNX 100 184

5.42 Reason for Preference Given to Stock Exchange Dealing and

Cluster of Awareness on Retail Investment 185

5.43 Chi-square Tests for Reason of preference Given to Stock

Exchanges 186

5.44 Experience in Dealing shares through Electronic mode (demat)

and Cluster of Awareness on Elements of Retail investment 187

5.45

Chi-square Tests statistics showing Experience in Dealing shares

with Electronic mode (demat) and Cluster of Awareness on

Elements of Retail investment

187

5.46 Percentage of Different sources of Information to know About

Retail investment 189

5.47 Paired Samples statistics for the Factors of the equity investment 190

5.48 Paired Samples correlations for the Factors of the equity

investment 191

5.49 Paired Samples Test values for the Factors of the equity

investment 192

5.50 Multivariate Tests (b) for the Impact of the Latest Reforms in

Capital Market 194

5.51 Impact of the equity investment objectives on the Element of

Investment decision Tests of Between – Subjects Effects 195

5.52 ANOVA for Group means of investment options 199

5.53 Co-efficient of correlations for Number of years Dealing in

Capital market 200

5.54 ANOVA for the Latest Reforms Based on Percentage of savings 201

5.55 Variance of Independent variable on General information’s and

Cluster 1(b) 203

5.56 ANOVA (b.c) for General information’s and Cluster 1 203

5.57 Coefficients (a.b) of General information’s and Cluster 1 204

5.58 Variance of Independent variable on General information’s

and Cluster2 (b) Cluster 2(b) 205

5.59 ANOVA (b, c) for General information’s and Cluster 2 205

5.60 Coefficients (a, b) of General information’s and Cluster 2 206

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Table

No. Title

Page

No.

5.61 Variance of Independent Variable for Company

management and Cluster 1(b) 207

5.62 ANOVA (b, c) for Company management and Cluster 1 207

5.63 Coefficients (a, b) of Company management and Cluster 1 208

5.64 Variance of Independent Variable for Company management and

Cluster 2(b) 209

5.65 ANOVA (b,c) for Company management and Cluster 2 209

5.66 Coefficients (a,b) for Company management and Cluster 2 210

5.67 Variance of Independent variable on Details of present values

Cluster 1 (b) 211

5.68 ANOVA (b,c) for Details of Present values and Cluster 1 211

5.69 Coefficients (a,b) of Details of present Values and Cluster 1 212

5.70 Variance of Independent Variable on Details of present values

and Cluster 2(b) 213

5.71 ANOVA (b,c) for Details of present values and Cluster 2 213

5.72 Coefficients (a, b) for Details of present values and Cluster2 214

5.73 Variance of Independent Variable on project details and their

changes and Cluster 1(b) 215

5.74 ANOVA (b,c) for project details and their changes and Cluster 1 215

5.75 Coefficients (a,b) for project details and their changes and

Cluster 1 216

5.76 Variance of Independent Variable on Project details and their

Changes and Cluster 2(b) 217

5.77 ANOVA (b, c) for project details and their changes and Cluster 2 217

5.78 Coefficients (a,b) for project details and their changes Cluster 2 218

5.79 Variance of Independent Variable on Financial parameters and

Cluster 1 (b) 219

5.80 ANOVA (b,c) for Financial parameters for Cluster 1 219

5.81 Coefficients (a, b) for Financial Parameters and Cluster 1 220

5.82 Variance of Independent Variable on Financial parameters and

Cluster 2 (b) 221

5.83 ANOVA (b, c) for Financial parameters for Cluster 2 221

5.84 Coefficients (a.b) for Financial parameters and Cluster 2 222

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Table

No. Title

Page

No.

5.85 Impact of Retail investment preference of returns Amount

Received and Tests of Between – Subjects Effects 223

5.86 Impact of Demographic Variables on the investment objectives,

decision and satisfaction – Tests of Between –Subjects Effects 228

LIST OF FIGURES

Figure

No. Title

Page

No.

4.1 Age of the Investors 104

4.2 Gender of the Investors 105

4.3 Marital status of the Investors 106

4.4 Education of the Investors 107

4.5 Occupation of the Investors 109

4.6 Income of the Investors 110

4.7 Nature of the Family of Investors 111

4.8 Number of Dependents of the Investors 112

4.9 House ownership of the Investors 113

5.1 Investment pattern in stock market 235 - 236

13

LIST OF ABBREVIATIONS

ADRs - American Depository Receipts

AMFI - Association of Mutual Funds in India

AUM - Assets Under Management

BSE - Bombay Stock Exchange

C&D - Corporatisation and Demutualisation

CAGR - Compounded Annual Growth Rate

CC - Clearing Corporation

CDSL - Central Depositary Services (India) Limited

CH - Clearing House

MSX - Madras Stock Exchange

ECS - Electronic Clearing Scheme

EDIFAR - Electronic Data Information Filing and Retrieval

EPS - Earnings Per Share

FAQs - Frequently Asked Questions

FIIs - Foreign Institutional Investors

FMCG - Fast Moving Consumer Goods

GDP - Gross Domestic Product

GDRs - Global Depository Receipts

GDS - Gross Domestic savings

GETFs - Gold Exchange Traded Funds

GIC - General Insurance Corporation

14

HKEx - Hong Kong Exchange and Clearing Ltd

ICICI - Industrial Credit and Investment Corporation of India

IDBI - Industrial Development Bank of India

IFCI - Industrial Financial Corporation of India

IMSS - Integrated Market Surveillance System

IPF - Investor Protection Fund

IPO - Initial Public Offering

IT - Information Technology

LIC - Life Insurance Corporation

MDA - Multiple Discriminate Analysis

MF - Mutual Fund

MIDC - Maharashtra Industrial Development Corporation

MNC - Multi National Company

NCAER - National Council for Applied Economic Research

NISM - National Institute of Securities Markets

NSCCL - National Securities Clearing Corporation Limited

NSDL - National Securities Depository Limited

NSC - National Savings Certificate

NSE - The National Stock Exchange

OIAE - Office of Investor Assistance and Education

OTCEI - Over the Counter Exchange of India Limited

PAN - Permanent Account Number

15

PE ratio - Price Earnings ratio

PPF - Public Provident Fund

PSE - Public Sector Enterprises

QIBs - Qualified Institutional Buyers

RBI - Reserve Bank of India

RSEs - Regional Stock Exchanges

SEBI - Security Exchange Board of India

SGF - Settlement Guarantee Fund

SMAC - Securities Market Awareness Campaign

STP - Straight Trough Processing

UTI - Unit Trust of India

VSAT - Very Small Aperture Terminal

16

CHAPTER - I

INTRODUCTION

Introduction Chapter deals with a brief note about importance of capital

market, Statement of the problem, Objectives of the study, Hypothesis, scope of the

study, Geographical coverage, Field work and collection of data, Limitations of the

study, Research methodology, Main study, Sample size, Tools used in the study,

Operational definitions and Chapter arrangement.

The capital market is used as a main vehicle to mobilize funds for the

economic growth of the country. It performs crucial functions like the conversion of

savings of the households and institutions into investment, creation of financial

assets and development of asset-related products. A well functioning securities

market is conducive to the sustained economic growth of any country in the world1.

There exists a direct relationship between the development in the securities market

and economic growth of a country. The securities market provides a bridge between

ultimate savers and ultimate investors and creates the opportunity to put the savings

of the cautious at the disposal of the enterprising, thus promising to raise the total

level of investment and growth. It allocates scarce savings to the enterprises and

forces them to focus on their performance, which is continuously evaluated through

share prices in the market. It thus converts a given stock of investible resources to a

large flow of goods and services.

The development of the securities market changes the quantum and

composition of savings and investment of the households. The availability of yield-

bearing securities induces people to consume less and invest more in high yielding,

divisible, liquid securities. A strong domestic stock market performance forms the

basis for the well performing domestic corporate to raise capital in the international

markets. The securities market facilitates the internationalization of the economy by

linking it with the rest of the world. This linkage happens through the inflow of

capital in the form of portfolio investment.

17

Financial markets across the globe are undergoing profound, unprecedented

and fast–paced changes2. Technology has revolutionized the processes and the

information explosion has sparked off remarkable changes in the way the world

market has been operating. Change has become an inevitable phenomenon.

Indian Capital market is one of the fastest growing markets in the world. It

has grown impressively during the recent years in tune with the global financial

markets. The Indian Capital Market comprises of two segments, namely, the

Primary and the Secondary market. The fresh issue of securities takes place in

primary market and trading among investors takes place in secondary market. The

primary market is the major channel through which the savings of the households

are mobilized by the companies directly for investment purposes. It is the centre

stage of the capital market that really boosts industrial and financial activities by

providing long term funds to the corporate and the government. It infuses new

securities, adding volume and wider base of securities in the secondary market. The

secondary market affords liquidity to the investment in securities and reflects the

general health of the economy.

Indian corporates mainly raise funds through capital market. Two types of

capital are essentially raised viz., Equity and Debt. Equity forms part of the net

worth and the Debt forms part of the outside liability of the firm. The capital raised

through equity is superior to that of debt capital for both the firm and the investor.

Equity enhances the borrowing power of the firm from banks and financial

institutions. If a firm is able to mobilize sizable amount of equity capital through

primary market, it can approach banks to fund long-term investment. From the

investor’s point of view, it could be noticed that over the long term, the equity

investments have out-performed debt and other asset classes across the globe. In

India, looking at the 8 years Compounded Annual Growth Rate (CAGR), equity

returns have out-performed debt to the tune of 15.8 percent3.

The Indian Capital Market has witnessed unprecedented euphoria from the

early nineties and it has won critical appreciation from various quarters4. At present

there are 19 Stock Exchanges in India. The National Stock Exchange (NSE) and

18

Bombay Stock Exchange (BSE) together account for more than 99 percent of the

total turnover having a combined market capitalization of $ 125.5 billion. Around

9600 companies are listed in NSE and BSE.

Success of equity issues totally depends on the confidence of the investors. If

the investors perceive high profitability prospects, they will invest in equity. There

are two types of investors, namely, institutional investors and retail investors

(households). Institutional investors are huge investors who operate through

Portfolio Managers. Portfolio Managers only shuffle around the holdings in the

existing scrips in their basket, based on their subjective evaluation of various scrips

but they do not inject the much needed risk capital to upcoming enterprises to

undertake new industrial activities. Even Foreign Institutional Investors (FII’s)

generally bring capital into the country only to acquire shares in the existing highly

profitable companies but do not provide risk capital to the corporate world. It is the

Retail Investor i.e. the household sector, who is the only source of providing risk

capital5. The Retail Investor provides this risk capital, either directly by investing in

equity market or through collective schemes popularly called as Mutual Funds.

There are 39 Mutual Funds offering about 600 schemes to the households, managing

assets to the tune of Rs. 3,10,171 crores (US $ 68 billion) at the end of October

20066. Indian retail investors have been directly participating in equity markets and

taking price fluctuations for decades. The household sector generates more than $ 30

billion of savings every year, which is available to the Indian financial system. It is

the only source of providing risk capital within the country.

It is globally recognized that the growth of the economy depends to a large

extent on the growth of the securities market, as it provides the vehicle for raising

resources and managing risks. The growth of the securities market is the result of

high confidence of the investors, that too the retail equity investors, the only risk

capital providers of yesterday, today and tomorrow.

1.2 STATEMENT OF THE PROBLEM

The stock market is one of the most vital and dynamic sectors in the financial

system making an important contribution to the economic development of a country.

19

Investors are the backbone of the capital market and they are not alike. Institutional

investors are capable of understanding the intricacies involved in the stock market

activities but the retail investors lack adequate awareness about it. As the bulk of the

savings of the country generally emanate from the households, and the retail investor

is still the major source of risk capital to upcoming enterprises, to undertake new

industrial activities, the capital market cannot grow without their participation,

directly or indirectly.

With the liberalization of the Indian capital markets, securities market has

grown into one of the most dynamic, modern and efficient markets. The

infrastructure and operating efficiency of the Indian stock markets are well

appreciated by its global counterparts. In India, to encourage, enhance and safeguard

retail investor participation and to make the markets more efficient, a number of

reforms have been initiated by the Security Exchange Board of India (SEBI). In the

case of fixed price public issues and book built issues, 50 percent and 35 percent

shares respectively are being allotted to the retail investors7. As small investors find

it difficult to participate directly in the capital market to a significant extent, SEBI

encourages mutual fund industry to offer innovative products to suit the risk appetite

of the retail investors.

In spite of all the efforts taken by SEBI to attract and enhance retail

participation, the household (retail) savings and investment scenario is highly

disappointing. According to the SEBI – NCAER survey, only 7.4 per cent of the

Indian households directly participated in the securities market in 2000 as against

about 50 percent in the USA. As the economy grew at 8.5% in 2003-04, GDS (Gross

Domestic Savings) rate reached 28.1 percent of GDP, (Gross Domestic Product) and

the household financial savings increased to 11.4 percent of GDP, but the capital

market instruments contributed barely 1.4 percent of the financial savings and

investment. In 2004 – 2005, though India’s GDS in proportion to GDP was 29.1

percent, the investment by households in shares and debentures stood at a meager

0.8 percent of GDP8.

20

Despite the developments happening in the capital market in India and even

after a decade of existence of a vibrant capital market, the equity instruments are not

considered as an attractive household investment.

The ill effect of such a phenomenon is that, if such a situation persists, the

performance of the capital markets will be determined and dominated by a few large

and wealthy players. High dependence on FII funds will lead to a volatile and high

risk market which will make the retail investor the only risk capital provider-extinct.

This will hamper the whole growth of the securities market and in turn the economic

growth of the nation. So bringing the retail investors back into the equity market

would be a very healthy structural development for the nation itself.

The recent economic recession had a great impact on stock market. The

developing countries also taste the economic downtrend. The Indian economy is also

not left out. Before the recession, Indian economy was moving at a faster rate

because of the growth in information technology and other sectors. But after the

recession the economic level comes down and there will be some velocity in the

Indian stock market conditions. As the regulatory system is so strong in India, the

stock market is able to withstand many odds. Since the stock market is all the time

unpredictable and unstable, the investors are all the time at very high risk. They have

to consider many factors like Economic environment, Political stability, Industrial

growth etc., before they invest. Though there are many studies on the stock market

related areas, the information provided to the investor and industry is not sufficient.

As a result the investor and the stock market players will be searching for required

information. There are some research gaps in the existing literature relating to the

stock market.

Hence the current study is undertaken to fill the gaps in the existing research

in the field of stock market and also to provide required information to the investors

as well as industry.

21

1.3 OBJECTIVES OF THE STUDY

1. To study the investment pattern of retail equity investors in Chennai.

2. To analyse the information search and investment option of retail investors.

3. To identify the various investment preferences and investors perception on

risk and return.

4. To examine factors influencing investment evaluation and decision of

investors.

5. To evaluate investors level of satisfaction and their futuristic perceptions

towards retail equity investment.

6. To find the relationship between demographic variables of investors and

their investment objectives, decision and satisfaction.

1.4 RESEARCH HYPOTHESES

1. There is no significant difference between level of risk and returns of

investors.

2. There is no association between investment objectives and satisfaction.

3. There is no association between investment decision and satisfaction.

4. There is no significant influence of demographic variables of investors and

investment objectives, decision and satisfaction.

5. The factors of level of investor’s satisfaction do not differ significantly with

respect to share investments.

1.5 SCOPE OF THE STUDY

The present study covers the investment pattern with regard to retail

investment in equity shares. This study opens fascinating vistas over investor’s

22

preference, perceptional differences and their predominant objectives. This also

paves the way to study the pre and post investment satisfaction in an intensified

manner. It also focuses exact problems associated with equity investment of retail

equity investors in Chennai city.

1.6 GEOGRAPHICAL COVERAGE

The area of coverage of the study is Chennai the capital of Tamilnadu in

India. Chennai is opted for study because of its role in industrial and economic

development of the country.

1.7 FIELD WORK AND COLLECTION OF DATA

Personal interview by the researcher is the major tool used for data

collection. Structured interview schedule is used during personal interviews.

Interviews are conducted at various stock broking houses and at the residence of the

equity investors at their convenience. Before the interview, proper rapport is

established. The data collected are recorded by the researcher in the interview

schedule. The schedules thus filled up are thoroughly checked to ensure accuracy,

consistency and completeness. On an average, each interview took about an hour.

The data thus collected were categorized and posted in the master table for further

processing.

1.8 LIMITATIONS OF THE STUDY

The major limitations of the study are:-

The study is confined to Chennai District alone. Hence the findings

may not be generalised for the other parts of the country.

The study is confined to the retail equity investors alone. Institutional

investors remain uncovered.

The limitations associated with the statistical tools are applicable for the

tools employed in this study also.

23

RESEARCH METHODOLOGY

1.9 PILOT STUDY AND PRE-TESTING

A preliminary investigation is undertaken by contacting 75 investors of

equity shares to identify the important variables regarding characteristic features of

equity shares, instrument and the changes, return of investments, investment

decisions and satisfaction. The purpose of the pilot study is to test the quality of the

items in the questionnaire and to confirm the feasibility of the study. This

preliminary investigation is conducted in different parts of Chennai. The random

sampling method, Cronbach alpha method and Hotellings t-square test are applied. It

is found that the Cronbach alpha value is 0.912 and hotelling t-square value is

422.31 which are statistically significant at 5 per cent level.

It is ascertained that the items in Likert’s five point scale of the questionnaire

are highly reliable and the samples satisfy the normal distribution rationally. So, the

items in the questionnaire can be used further in the study.

1.10 MAIN STUDY

The data is collected for the study by means of a two section questionnaire

(refer Appendix). Section 1 for the questionnaire is framed to obtain the general

information about investment preferences, percentage of investment in equity shares

and different portfolio and sources of information of the equity investment. Section

II deals with the characteristic features of equity shares, their changes, and return on

investments. The section –I of the questionnaire is designed in optional type, where

as the section II is designed in Likerts 5-point scale, ranging from 5-strongly agree,

4-agree, 3-neutral, 2-disagree, 1-strongly disagree. The questionnaire with covering

letter is handed over personally to each and every respondent and they are requested

to return the filled in questionnaire after 15 days, when the researchers visit them.

The respondents took the period of 15 days to 2 months to return the completed

questionnaire.

24

1.11 SAMPLE SIZE

Initially 623 questionnaires are circulated to investors in all the areas of

Chennai city, by following simple random sampling method. Out of the 623

questionnaires only 514 respondents returned the filled in questionnaires. But only

507 of them are found usable. Hence, the exact sample of the study is 507.

1.12 DATA ANALYSIS

The sources of data are primary as well as secondary. The data collected

from the investors’ survey constitutes primary and information gathered through

books, journals, magazines, reports, dairies are considered as the secondary source.

The data collected from both the sources is scrutinized, edited and tabulated. The

data is analyzed using statistical package for social sciences (SPSS) and other

computer packages. The following statistical tools are used in the study.

1. Measures of central tendency and measures of dispersion.

2. Parametric t-test.

3. One-way analysis of variance.

4. Factor analysis.

5. K-means cluster analysis.

6. Multiple discriminant analysis

7. Multiple regression analysis.

8. Non-parametric chi-square analysis

1.13 OPERATIONAL DEFINITIONS

a. Investment

The use of capital is to create money, either through income producing

vehicles or through more risky ventures designed to create capital gains.

25

b. Investment Practices

Usual and repeated way of doing investment (i.e.) usual investment pattern,

preferences, perceptions, investment objectives, factors generally influencing

investments, investment satisfaction, investor’s confidence and problems faced by

investors regularly.

c. Retail Equity Investor

Individual share investor or households investing in shares or small investor.

d. Institutional Investor

Corporates investing huge money in securities.

e. Primary Market

A market where corporates directly issue securities i.e., where initial public

offering is made.

f. Secondary Market

A market where the already issued securities are traded.

g. Mutual Funds

Small investor, collective investment scheme.

h. Derivatives

Financial contracts, whose values are derived from the value of an

underlying primary financial instrument (i.e.) stock futures and options.

i. Dividend

The part of company’s profit distributed to shareholders.

j. Capital Gain

26

Gain arising due to sale of stock.

k. Liquidity

Availability of stock coupled with buyers and sellers for it in the market.

l. Volatility

Sharp rise or fall of share prices over a short period of time.

m. Rights, Bonus and Stock Splits

Rights : A Method of raising additional capital from the existing share

holders.

Bonus : Shares are issued to the existing shareholders at free of

cost in some decided ratio.

Stock splits : Splitting the face value of existing shares and distributing

additional shares on pro-rata to shareholders.

n. Floor Based, Forward Trading

Trading on the stock exchange floor, where contracts traded today are settled

at some future date at the price decided today.

o. Anonymous Screen Based Electronic Trading

Buying and selling of securities using computers and electronic matching of

orders on price / time priority without knowing who the trader is.

p. Clearing and T+2 Rolling Settlement

Clearing is the process by which all the transactions between members are

settled. T+2 Rolling Settlement is the system where trades executed during the day

are settled based on the net obligations for the day. The maximum time that may be

taken for settlement is T+2 (i.e.) Trading day + 2 working days.

27

q. Straight Through Processing (STP)

STP is a system, which allows electronic capturing and processing of

transactions in one pass from the point of order origination to the final settlement.

r. Dematerialisation

The process by which shares in the paper form are converted into electronic

form popularly called as demat.

s. Market Capitalisation

The market value of a company found by multiplying the number of ordinary

shares outstanding with its current market price.

t. Fundamental Analysis

Method of predicting the behaviour of company stock by looking at

fundamental information about the company such as financial health, sales, earnings

and dividends.

u. Technical Analysis

Techniques of predicting share price behaviour by studying the price

movements and trading volumes using charts.

v. Corporatisation and Demutualisation

The system where ownership, management and trading membership would

be segregated from one another.

w. Settlement Guarantee Fund

Fund maintained by the stock exchange to take care of investor claims,

which may arise out of non-settlement of obligations by the trading member as he

has been declared a defaulter or expelled.

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x. Circuit Breakers

It is an investor protection measure by SEBI to curb excessive price

volatility. It brings about a nation – wide coordinated halt in trading on all equities.

y. Mark-to-Market Margin

It is a risk containment measure computed based on mark-to-market loss of a

trading / clearing member.

z. VaR Based Margins

It is a risk containment measure intended to cover the largest loss that can be

encountered on 99% (value at risk) of the days.

1.14 CHAPTER ARRANGEMENT

Chapter - I Introduction - deals with a brief account on history of equity shares,

elements of equity shares, need and importance of the study and research

methodology.

Chapter - II Review of literature - relevant to the present study, studies on

information search, awareness of factors of characteristics of equity shares and

capital market and investment preferences are included in this chapter.

Chapter - III A conceptual frame work of Indian Equity shares - An Overview -

explains the growth of the market, trends in various years and certain important

overviews.

Chapter - IV Analysis of investment preference and decision deals with an

analysis of primary data with the help of statistical tool.

Chapter - V Analysis of investment satisfaction and portfolio choice –encounters

with multivariate statistical analysis of the primary data

29

Chapter - VI Summary of Findings, Suggestions and Conclusions - summarizes

the findings along with the suggestions to the investors for framing the investment

strategies.

1.15 SUMMARY

In this chapter, the research design is adopted as per the norms and followed

by review of literature in the next chapter.

REFERENCES

1 Levine and Ross, “Stock market Development and Economic Growth”, The

world Bank Economic Review, Vol. 1012), 2008, pp: 323 – 339.

2 Bajpai G.N, “Indian Securities Markets – New Bench Marks”, SEBI

Bulletin, Vol.1, No.8, August 2009, pp: 5-14.

3 “Retail Investments into Equity”, IIM Working paper series, E27119, p:4.

4 Tarapore wala, Russi Jai, “The Union Budget 2005 -06 and the Capital

Market”, BMA Review, Vol. III, No.26, March 14-278, 2006.

5 Ramesh Gupta, “Retail Investor – A lost Species”, IIM Working paper

series, E 15378, p:1.

6 Chopra V.K, “Capital Market Reforms in India: Recent Initiatives”, SEBI

Bulletin, Vol.4, No. 11, Nov 2008, pp: 7-11.

7 Chopra V. K, “Investor Protection: An Indian Perspective”, SEBI Bulletin,

Vol.4, No.11, Nov 2010, pp: 11-15.

8 Ibid., Pp.24-26

30

CHAPTER - II

REVIEW OF PREVIOUS STUDIES

INTRODUCTION

Chapter two portrays review of literature, which briefly discusses about six

objectives which is stated in the objectives of the study.

Behavioural Finance is the study of how humans interpret and act on

information to make informed investment decisions. It is one of the most interesting

and fascinating fields of research throwing light on the motives, preferences,

perceptions and expectations of the investors. The emergence of behavioural finance

has presented a new realm for analyzing the ways in which investors make decisions

that includes psychological factors, as well as providing new grounds of modeling

investor behaviour. The study of investor behaviour has attracted researchers with a

variety of backgrounds. In this chapter the various literatures over a period of 10

years has been reviewed and presented.

2.2 The investment profile and pattern of retail equity investors.

1. Mart Grinblatt and Matti Keloharju, (2011), in their study entitled, “The

Investment Behaviour and Performance of Various Investor Types: Study of

Finland’s Unique Data set”, analysed the extent to which past returns

determine the propensity to buy and sell. The study revealed that foreign

investors tend to be momentum investors, buying past winning stocks and

selling past losers. Domestic investors, particularly households contradicted

the same. This difference in Investor behaviour was consistent in regular

intervals. The portfolios of foreign investors outperformed the portfolios of

households, even after controlling the behaviour difference.

2. Maruthu Pandian. P, Benjamin Christopher , (2010), conducted a study

entitled, “A Study on Equity Investor Awareness” in order to study the stock

31

market literacy of the investors about the company, stock exchanges as well

as capital market regulatory bodies. The primary data using multiple

regression, path analysis and chi-square test along with ANOVA clearly

revives difference in the awareness among the investors. The research work

found that the awareness index is high among young male investor, post-

graduates and meticulous business men.

3. Society for Capital Market Research and Development, (2009), conducted a

survey entitled, “Indian Household Investors Survey-2004”, the study was

based on direct interviewing of a very large sample of 5908 household heads

over 90 cities and across 24 states. The study states that price volatility, price

manipulation and corporate mismanagement / fraud have persistently been

the household investors’ top three worries in India. A large percentage of

investors had a negative opinion on company managements. A majority of

retail investors in India do not regard mutual fund equity schemes as a

superior investment alternative to direct holding of equity shares. Retail

investors overwhelmingly prefer bank deposits rather than liquid / money

market funds. Shareholding in 3-10 companies is the dominant practice

among retail shareholders in all income and age classes. Middleclass

investors are long term and conservative. Equity shares have achieved a

much higher degree of penetration among middleclass households compared

to other capital market instruments.

4. HorstRaff and Michael J.Ryan, (2008), in their paper, “Firm-Specific

Characteristics and the Timing of Foreign Direct Investment Projects”, this

paper uses a proportional hazard model to study foreign direct investment by

Japanese manufacturers in Europe between 1970 and 1994. We divide each

firm’s investment total into a sequence of individual investment decisions

and analyze how firm-specific characteristics affect each decision. We find

that total factor productivity is a significant determinant of a firm’s initial

and subsequent investments. Parent-firm size does not have a significant

influence on the initial decision to invest. Large firms simply have more

investments than smaller firms. Other firm-specific characteristics, such as

32

the R&D intensity, export share and keiretsu membership, also play a role in

the investment process.

5. Sudershan kuntluru and D. Mohd Akbar Alikhan , (2009) , in their article,

“Financing pattern of foreign and domestic owned pharmaceutical

companies in India”, foreign Direct investment has often seen as major

source of long term capital which provides bundle of other benefits to the

host county company. In this paper, we made an attempt to examine the

financing pattern of foreign and domestic owned pharmaceutical companies

in India. It has been hypothesized that there is no significant difference

between the financing pattern of domestic and foreign owned companies.

The financing pattern has been analyzed based on traditional methodology

such as common size statement, trend analysis and ratio analysis. The results

and analysis indicate mat domestic companies are highly levered than

foreign owned companies in pharmaceutical industry.

6. William A. Birdthistle and M. Todd Henderson, (2009), in their article, “one

Hat Too many? Investment Desegregation in private Equity”, the nature of

private-equity investing has changed significantly as two dynamics have

evolved in recent years: portfolio companies have begun to experience

serious financial distress, and general partners have started to diversify and

desegregate their investment strategies. Both developments have led private-

equity shops—once exclusively interested in acquiring equity positions

through leveraged buyouts—to invest in other trenches of the investment

spectrum, most particularly public debt. By investing now in both private

equity and public debt of the same issuer, general partners are generating a

host of new conflicts of interest between themselves and their limited

partners, between multiple general partners in the same consortia, and

between private investors and public shareholders.

7. Diptendu simlai, (2009), in his paper, “An inquiry into the origin and growth

of the capital market in India”, India’s modern capital market did not emerge

in a day. This market, since its inception in the 18th century with the

33

establishment of the Bank of Hindustan (1770) in Calcutta, laid the

foundation of the modern capital market in India according to A. K. Sur, a

noted stock market economist of his time (Sur, Evolution of Capital Market

in India, Economic Affairs, Nov-Dec/1960). The objective of this paper is to

trace the evolution of this market right from the late 18th century up to our

times. For purposes of our study the entire time span has been divided into

four periods. The first covers the 18th and 19th centuries. The second

extends from the early 20th century up to 1947, the year of Independence.

For the enormous impact of the economic reforms upon the capital market,

the post-Independence era has been divided into two periods: one ending

with 1990 and the other starting with 1991.

8. Yadagiri. M and P.Rajender, (2009), in their article, “Analysis of investment

portfolio of scheduled commercial banks”, the reforms have unleased

tremendous changes in the banking sector. The government of India issued

guidelines to the banks by permitting and encouraging them to diversify their

activities and contributing to the equity of companies by offering financial

services.

2.3 The information search and investment option of retail investors.

9. Bloomfield, Libby and Nelson, (2011), in their study entitled, “Confidence

and the Welfare of Less Informed Investors”, have indicated that less

informed investors are over confident in investments. Providing more

information to professional investors only could harm the welfare of less

informed investors if less informed investors are not aware of the extent of

their informational disadvantage.

10. Statman, (2010), in his research entitled, “A Century of Investors”,

compared the investors a century ago with investors today. He concluded

that today’s investors are more rapidly informed than their predecessors, but

they are neither better informed nor better behaved.

34

11. Stout, (2010), in his study entitled, “The Investor Game”, has indicated that

investors have adaptive and not rational expectations. Adaptive expectations

result in both trust and mistrust in securities market based on past actions.

12. Shivkumar Deene, Madari D.M and Gangashetty, (2009), in their paper,

“Capital market Reforms: some issues”, capital market is vital for the

development and strength of economy. A strong and vibrant capital market

assists corporate world initiatives, finance and exploration of new processes

and instruments facilitates management of financial risk. Retail investor is

the backbone of the capital market. But with the expansion of the capital

market, scams and anomalies, also multiplies. It ultimately leads to the

dilution of the faith of the small investor, mutual funds, pension funds,

Foreign Institutional Investor and insurance companies in the capital.

Realising that the government made different as capital market reforms. This

includes educating capital market participants regarding their rights and

duties for proper functioning of capital market.

13. Alok Kumar, (2009), in his paper, “Who Gambles In the Stock Market? “this

paper examines whether socio-economic and psychological factors, which

are known to influence lottery purchases, lead to excess investment in

lottery-type stocks. The results indicate that, unlike institutional investors,

individual investors prefer stocks with lottery-type features. The demand for

lottery-type stocks increases during bad economic times and demand shifts

influence the returns and idiosyncratic volatility of those stocks. The

evidence of the study indicates that people’s attitudes towards gambling are

reflected in their stock investment choices and stock returns.

14. Nagarajan. R, (2006), in his article, “Green shoe option in IPO”, for

stabilizing post-listing share price, a company making an Initial Public Offer

(IPO) through the Book Building mechanism can hold the Green Shoe

Option. This is an option that allows underwriter of an Initial Public Offering

to sell additional shares to the public. The challenge for the regulator would

be to keep fraudulent issues away from the market. In order to avoid

35

fraudulent issues investors too should do their homework before investing in

IPO, because it is investor's hard earned money and he should invest it

carefully.

15. Subha. M.V, (2008), in her article entitled, “Indian Capital Markets–A Road

Ahead”, addressed the current issues in the Indian capital market, lack of

individual participation and the ways of restoring investor confidence. The

article concluded that the responsibility of creating an environment of trust

and confidence lies with the regulators, stock exchanges and companies.

Each of them should act in a responsible way and provide a healthy

atmosphere for the functioning of an efficient capital market.

16. Kavitha Ranganathan (2008), in their paper, “A study of fund selection

behavior of individual investors towards mutual funds: With reference to

Mumbai city”, consumer behavior from the marketing world and financial

economics has brought together to the surface an exciting area for study and

research: Behavioral finance. As this is a serious subject analysts seem to

treat financial markets as an aggregate of statistical observations, technical

and fundamental analysis. A rich view of research waits this sophisticated

understanding of how financial markets are also affected by the “financial

behavior” of investors. Hence, this study is an attempt to examine the related

aspects of the fund selection behavior of individual investors towards mutual

funds, in the city of Mumbai and it showed the way for further research in

this field.

17. Jones Nilsson , (2007), in his article, “Investment with a Conscience:

Examining the Impact of Pro-Social Attitudes and Perceived Financial

Performance on Socially Responsible Investment Behavior”, this article

addresses the growing industry of retail socially responsible investment

(SRI) profiled mutual funds. The study examined the impact of a number of

pro-social, financial performance, and socio-demographic variables on SRI

behavior in order to explain why investors choose to invest different

proportions of their investment portfolio in SRI profiled funds. Some 528

36

private investors including women were investigated the results showed that

women and better-educated investors were more likely to invest a greater

proportion of their investment portfolio in SRI. Overall, the findings indicate

that both financial perceptions and pro-social attitudes are connected to

consumer investment in SRI.

18. Mahabaleswara Bhatta. H.S., (2009), in his paper, “Behavioral Finance- A

discussion his individual investor biases”, in this article, an attempt has

been made to throw light on the investors’ biases that influence decision

making process. Empirical studies have time and again proved that the

irrational behaviors have caused stock market bubbles and crashes. The

knowledge so developed through the studies would provide a framework of

behavioral principles within which the investors react. The article suggests

for a time bound program to educate and counsel the individual investors

about the wisdom required in stock trading and be aware of unethical and

tactical practices of brokers ,shady dealings of the companies and the insider

trading.

19. Chattopadhyay. P, (2010), in his article, “Retail investors in IPO

subscription”, in the liberalization regime of India, there has been a renewed

emphasis on the equity cult and a growing stress of what is termed market

capitalization. The number of retail investors has already become substantial

and is still growing. This underlines the need for safety and security of the

money invested along with the promise of augmented yield. These have

required the government and the regulatory bodies to provide necessary

systems and methods for safeguarding the interests of the small, retail

investors The Securities and Exchange Board of India has recently mooted a

proposal to the effect that in the cases of retail investors seeking to subscribe

to the share offers by the public limited companies, cash transactions should

take place only after the allotment has been made. The proposed intention of

SEBI is to be lauded; there are other parts which are not as commendable.

The proposal does not appear fool-proof on one side, and may be easily

subject to abuse, on the other. Least of all, the proposal may not restore

37

parity between the institutional and retail investors, which is the major

objective of the new approach. The steps taken by the regulatory authorities

are not enough and the centrifugal forces triggered internally, that would lead

to undesirable repercussion.

2.4 Investment preferences and investors perception on risk and return.

20. Rajarajan. V, (2011), conducted a study entitled, “Investors Life Styles and

Investment Characteristics”, with the objective of analyzing the investors life

styles and to analyse the investment size, pattern, preference of individual

investors on the basis of their life styles. Data was collected from 405

investors in Madras using questionnaire method. The investors were

classified into 3 groups’ viz., active investors, individualists and passive

investors. Cluster Analysis, Correspondence Analysis and Kruskal Wallis

Test were used to study the association between lifestyle groups and the

various investment related characteristics. The study revealed that the level

of expenses, earnings and investment were associated with the size of the

household. Active investor group was dominated by officers, individual

group by clerical cadre and passive investors group by professionals. The

expected rate of return from investments varied between investment styles.

The study clearly indicated that market performance of the share, company’s

operating level, capital performance and the expectation of the investors

were found to influence the risk perception of the investors.

21. Bandgar. P.K, (2011), in his study entitled, “A Study of Middleclass

Investor’s Preferences for Financial Instruments in Greater Bombay”, studied

the existing pattern of financial instruments in India and the performance of

middle class investors, their behaviour and problems. Questionnaire was

administered to collect data. Average, Skewness, Chi-square test and Fisher

Irving Test were used to analyse the data. The study revealed that only 16%

of the investors were facing difficulties in buying and selling securities.

Middle-class investors were highly educated but they were lacking skill and

knowledge to invest. Female investors preferred to invest in risky securities

38

as compared to male investors. The study also revealed that there was a

moderate and continuing shift from bank deposits to shares and debentures,

and a massive shift towards traditional financial instruments namely, life

insurance policies and government securities.

22. Charles Lee, M.C and Balakrishna Radhakrishna, (2010), in an article

entitled, “Inferring Investor Behaviours: Evidence from TORQ Data”, made

an attempt to examine the several techniques commonly used to infer

investor behaviour from transaction data. They adopted Lee-Ready (1991)

algorithm for distinguishing trade decision. The results show that frequency,

size and direction of observed trades provide a reasonable basis for

evaluating the incoming flow of market orders.

23. Dechow, Hutton and Sloan, (2011), in their study entitled, “Mastering

Finance”, found that analysts’ growth forecasts are routinely over optimistic

around new equity offerings, but the most over optimistic are those analysts

employed by the lead underwriters of the offerings.

24. Malcolm Baker and Jeffrey Wurgler, (2011), in their paper, “A catering

theory of dividends”, we develop a theory in which the decision to pay

dividends is driven by investor demand. Managers cater to investors by

paying dividends when investors put a stock price premium on payers and

not paying when investors prefer nonpayer. To test this prediction, we

construct four time series measures of the investor demand for dividend

payers. By each measure, nonpayer’s initiate dividends when demand for

payers is high. By some measures, payers omit dividends when demand is

low. Further analysis confirms that the results are better explained by the

catering theory than other theories of dividends.

25. Selvam. M, et.al, (2010), in their study entitled, “Equity Culture in Indian

Capital Market’, examined the need for promoting equity culture, which

deserves special attention for the development of economic growth. The

study discussed in detail the current trend of equity culture, its implications

39

and its revival and remedial measures. The study suggested intervention by

government, SEBI and RBI and evaluation of suitable credit policy for

projects in order to assure safety and assured returns to the investors, in order

to restore investor confidence.

26. Alexander LJungquist and Matthew Richardson , (2010), in his study, “The

Investment Behaviour of Private Equity Fund managers”, using a unique

dataset of private equity funds over the last two decades, this paper analyzes

the investment behavior of private equity fund managers. Based on recent

theoretical advances, we link the timing of funds’ investment and exit

decisions, and the subsequent returns they earn on their portfolio companies,

to changes in the demand for private equity in a setting where the supply of

capital is ‘sticky’ in the short run. We show that existing funds accelerate

their investment flows and earn higher returns when investment opportunities

improve and the demand for capital increases. Increases in supply lead to

tougher competition for deal flow, and private equity fund managers respond

by cutting their investment spending. These findings provide complementary

evidence to recent papers documenting the determinants of fund-level

performance in private equity.

27. Santi Swarup. K, (2010), in his survey entitled, “Measures for Improving

Common Investor Confidence in Indian Primary Market: A Survey”,

analysed the decisions taken by the investors while investing in primary

markets in the first part: secondly the factors affecting primary market

situation in India was analysed and finally the survey evaluates various

revival measures available for improving investor confidence. The survey

was conducted in 10 cities in India by mailing questionnaire. The survey

results of 367 investors revealed that the investors give importance to own

analysis and market price as compared to broker’s advice.

28. Stephanie Desrosiers, Jean - Francois L”Her and Jean – Francois Plante ,

(2010), in their article, “Style management in Equity Country Allocation”,

strategies that entailed country selection based on relative strength

40

(momentum) posted significant market risk– adjusted returns over the past

30 years, but relative-value strategies based on book value of equity to

market value of equity did not. Because these two fixed-style strategies are

negatively correlated, using them for style diversification and for style timing

(rotation) is potentially rewarding. In the study described here, style

diversification enhanced return and lowered risk but style timing provided

consistent risk-adjusted performance that was superior to the performance of

fixed-style strategies or style diversification.

29. Jaspal Singh and subhash chandler , (2011) , in their article, “Investors’

preference for investment in mutual funds: An empirical evidence”, since

interest rates on investments like PPF, NSC, bank deposits, etc., are falling,

the question to be answered is: What investment alternative should a small

investor adopt? One of the alternatives is to invest in capital markets through

mutual funds. This helps the investor avoid the risks involved in direct

investment. Considering the state of mind of the general investor, this article

figures out: (i) the preference attached to different investment avenues by the

investors; (ii) the preference of mutual funds schemes over others for

investment; (iii) the source from which the investor gets information about

mutual funds; and (iv) the experience with regard to returns from mutual

funds. The results show that the investors consider gold to be the most

preferred form of investment, followed by NSC and post Office schemes.

Hence, the basic psyche of an Indian investor, who still prefers to keep his

savings in the form of yellow metal, is indicated. Investors belonging to the

salaried category, and in the age group of 20-35, years showed inclination

towards close-ended growth (equity-oriented) schemes over the other scheme

types. A majority of the investors based their investment decision on the

advice of brokers, professionals and financial advisors. The findings also

reveal the varied experiences of respondents regarding the returns received

from investments made in mutual funds.

30. Gnana Desigan. C. et.al, (2011), in their study entitled, “Women Investors

Perception Towards Investment–An Empirical Study”, identified the

41

investment pattern, preference, influencing factors and problems of women

investors in Erode town. The findings of the study reveal that, women

investors prefer to invest in bank deposits and jeweler, they are influenced by

safety and liquidity and the problems faced by them are cumbersome

procedures and formalities, commission and brokerage.

31. Shobana. V.K. and Jayalakshmi. J, (2010), in their study entitled, “Investor

Awareness and Preferences”, studied the investors’ preferences, the level of

investor awareness and the factors influencing investor awareness of 100

respondents in Salem District. The study reveals that real estate, bank

deposits and jeweler were the preferred investments. Investors above 50

years of age, post graduates and professionals had high level of awareness.

Age and education do not have any significant influence over investor

awareness but occupational status leads to difference in the awareness level

of people.

32. Meir Statman, Steven Thorley and Keith Vorkink, (2010), in their paper,

“Investor overconfidence and Trading volume”, the proposition that

investors are overconfident about their valuation and trading skills can

explain high observed trading volume. With biased self-attribution, the level

of investor overconfidence and thus trading volume varies with past returns.

We test the trading volume predictions of formal overconfidence models and

find that share turnover is positively related to lag returns for many months.

The relationship holds for both market-wide and individual security turnover,

which we interpret as evidence of investor overconfidence and the

disposition effect, respectively. Security volume is more responsive to

market return shocks than to security return shocks, and both relationships

are more pronounced in small-cap stocks and in earlier periods where

individual investors hold a greater proportion of shares.

33. Viswambharan A.M, (2008), in his article entitled, “Indian Primary Market –

Opportunities and Challenges”, has examined the recent trends in primary

market, the current IPO system – book building process, opportunities for

42

investors, problems faced by the investors and has suggested that investors

should rely on long term investment than speculation. Investor education

shall be strengthened. Commercial banks may take-up investment

consultancy for their clients to improve investor participation.

34. Narendra Jadhav, (2010), in his article, “Development of Securities Market –

The Indian Experience”, the Indian securities markets have witnessed far-

reaching reforms in the post-liberalization era in terms of market design,

technological developments, settlement practices and introduction of new

instruments. The markets have achieved tremendous stability and as a result,

have attracted huge investments by foreign investors. There still is

tremendous scope for improvement in both the equity market and the

government Securities market. However, it is the corporate debt market,

which needs to be given particular emphasis given its importance for

providing long-term finance for development.

35. Dan palmon and Fred Sudit, (2011), in their article, “shareholders’ defensive

security shares”, the purpose of this paper is to explore the possibilities and

merits of offering shareholders an equity instrument (new class of common

shares) designed to protect their investments from managerial opportunism.

To this end, we propose a special class of shares, the Shareholders ’

Defensive Security Shares (SDSS), which would oblige Boards of Directors

to declare a pre-specified extra dividend whenever executive pay exceeds a

contractually pre-determined threshold. SDSS could be extended into a

larger class of Defensive Security Instruments (DSI) that includes regular

bonds, convertible bonds, and preferred stocks. We argue that this defensive

equity, the Shareholders ’ Defensive Security, or SDSS, could be beneficial

to managers as well as shareholders. What’s more, the use of SDSS is

completely voluntary and requires no additional regulation.

36. Kameswari. P, (2008), in his article, “Foreign Direct investment and its role

in developing Indian economy”, investment is an important factor in

influencing the economic development of a country. Developing countries

43

like India have investment requirements far greater than their domestic

savings can meet. Their investment deficits can be bridged by foreign capital

flows in the form of Foreign Direct Investment and Portfolio Investment.

But the huge flows of foreign capital may introduce some problems like

inflation. In the interest of future economic growth and development a

developing economy has to institute some safeguards in its national interest

while welcoming the foreign investment. This article studies how India is

faring in its efforts to attract foreign direct investment and in channelising

the flows for the growth of economic development.

37. Som Sankar Sen and Santanu Kumar Ghosh , (2008) , in their paper, “Stock

Market Liquidity of BSE and NSE: A Comparative Study (1995- 2005)”, this

study compares between BSE and NSE in terms of Stock Market Liquidity

during the study period of January 1995 to December 2005. The study

reports that mean liquidity of NSE is higher than that of the BSE during this

period. It also reveals that in most of the months BSE remains more

vulnerable than NSE during this span of time in terms of liquidity. A

monthly pattern of liquidity could be observed in case of NSE but no such

monthly pattern is there in case of BSE. Finally, a positive correlation

between these two exchanges has been reported indicating no significant

movement of volume from one exchange to another.

38. Nissim Ben David, (2008), in his paper, “An indicator for internalization of

analyst’s recommendations by investors”, this paper proposes an index for

evaluating the internalization of an analyst’s recommendations by investors

at various points of time that follow the recommendation day. The model is

applied to the Israeli stock market for the years 2004 and 2005. The results

indicate that investors in the Israeli stock market internalize a

recommendation 14 days after its publication. Internalization continues 30

days after the publication day. The importance of this paper is that it is the

first time an index for evaluating investor’s reaction to analyst’s

recommendations in various stock markets has been proposed. Such

information is valuable, since it can improve investment strategies that

44

follow the publication of an analyst’s recommendation. An investor would

prefer buying a recommended stock when he expects a large return and

would sell it when the recommendation’s effect is exhausted.

39. Mohanty. B.K , (2008), in his article, “Market capitalization: A suitable

growth approach for share holders’ value creation”, before economic reforms

were initiated in 1991, companies in the Indian corporate sector had to

function amidst the license regime, quotas and restrictions, high taxes and

host of other rules and regulations. Companies are now allowed to borrow

from and invest abroad quite liberally. All this has done wonders for

corporate India. Over the past 15 years of reforms, corporate profits have

gone from Rs. 6440 crore in financial year 1991 to Rs.1,67,801 crore in

financial year 2006.

40. Henry L. Petersen and Harrie Vreden burg, (2009), in their article, “Morals

or Economics? Institutional Investor Preferences for Corporate Social

Responsibility”, this article presents the results of a study that analysed

whether social responsibility had any bearing on the decision making of

institutional investors. Being that institutional investors prefer socially

aligned organizations, this study explored to what extent the corporate

actions and/or social/environmental investments influenced their decisions.

Our results suggest that there are specific variables that affect the perceived

value of the organization, leading to decisions to not only invest, but whether

to hold or sell the shares, and therefore having a consequential impact on the

capital market’s valuation.

41. Sakthivel. N, (2010), in his paper, “EVA – MVA: Shareholders’ value

measure”, maximizing shareholders value is becoming the new corporate

standard in India. The corporate, who gave the lowest preference to the

shareholders’ inquisitiveness, are now bestowing the utmost inclination to it.

Shareholders’ value is measured in terms of the returns they receive on their

investment. The returns can either be in the form of dividends or in the form

of capital appreciation or both. For measuring the corporate financial

45

performance, there are accounting profitability measures and shareholders’

value based measures. Accounting profitability measures include ROI, ROE,

EPS, ROCE and DPS etc., Shareholders valued based measures include EVA

and MVA. EVA in Indian environment and relationship between EVA

(Economic Value Added) and MVA (Market Value Added).

2.5 Factors influencing investment evaluation and decision of investors.

42. Iran Peacock and Stuart Cooper, (2011), in their article, “Private equity:

implications for financial efficiency and Stability”, this article (1) describes

the current state of the UK private equity market. It also considers the extent

to which private equity promotes efficiency by facilitating the ‘shake-up’ of

businesses, and whether the success of investment houses in attracting

substantially increased funds for investment poses any threats to financial

stability. Private equity comprises equity investment in all types of unquoted

companies, whether provided by individuals, funds or institutions.(2) The

article concentrates on larger transactions (particularly management buy-outs

and buy-ins of over £10 million), and excludes start-up and early-stage

venture capital finance, which in effect forms a distinct market with different

characteristics.

43. Security Exchange Board of India (SEBI) along with National Council of

Applied Economic Research (NCAER), (2011), conducted a comprehensive

survey of the Indian investor households entitled, “Survey of Indian

Investors”, in order to study the impact of the growth of the securities market

on the households and to analyse the quality of its growth. 25,000 investors

were drawn from places all over India and the data were collected by

administering questionnaire and through personal interviews. The survey

was carried out with the major objective of drawing a profile of the

households and investors and to describe the demographics, economic,

financial and equity ownership characteristics. The study revealed that

majority of the equity investors had long term motive of investment.

46

Investors revealed that they had a number of broker related problems than

the issuer related problems.

44. David R. Gallagher, (2011), in his study, “Investment manager

characteristics, Strategy, top management changes and fund performance”,

this study examines the performance of Australian investment management

organisations with direct reference to their specific characteristics and

strategies employed. Using a unique information source, performance is

evaluated for actively managed institutional balanced funds, Australian share

funds and Australian bond funds. The study examines the performance of top

management and the impact on returns when turnover arises. The research

documents that a significant number of active Australian equity managers

earned superior risk-adjusted returns in the period; however active managers

perform in line with market indices for balanced funds and Australian bond

funds.

45. Hall, (2011), has conducted research entitled, “Do Brokers Buy, Hold and

Sell Recommendations of Value to Individual Investors? he found that

investors, who invested in the Johannesburg Securities Exchange (JSE)

based on their brokers’ advice, were able to get risk adjusted returns superior

or equal to the market.

46. Santi Swarup. K, (2010), in his study entitled, “Role of Mutual Funds in

Developing Investor Confidence in Indian Capital Markets”, identified safety

and tax savings as the important factors affecting investment in various

avenues by the investor and developed strategies for enhancing common

investor confidence such as good return, transparency, investor education,

guidance etc.

47. Mohammad salahuddin and Md. Rabiul Islam, (2010), in their article,

“Factors affecting investment in developing countries: A panel data study”,

this paper investigates the gross investment behavior in a panel of 97

developing countries spanning a period between 1973 and 2002. Fixed Effect

Model is employed to analyze data. Variance Inflation Factor (VIF) test is

47

conducted to ensure that the data are free from multicollinearity. Also,

Granger Causality test is conducted to see if reverse causality exists. 2- Step

1st Difference Generalized Method of Moments (GMM) dynamic panel

estimator has been employed to offset unobserved heterogeneity and

endogeneity of regressors. The results suggest that investment decisions still

seem to be significantly affected by traditional determinants such as growth,

domestic savings, trade openness etc. The variable aid appeared to

potentially affect investment which calls for developing country’s measures

to ensure proper utilization of it.

48. Alexandra Dawson , (2004), in his study, “Investigating decision- making

criteria of private equity investors in family firms”, this paper examines

decision-making models used by private equity investors in their selection of

family firms. Building on literature on investment criteria at start-up stage, a

series of hypotheses is put forward, based on decision-making, strategic

management and buyout theories. The theoretical model is tested through an

experimental design for which data have been collected among 41

respondents based in Italy. Findings are analysed using hierarchical linear

models, in order to investigate which criteria are used, assess their relative

importance and test whether decision-making models are individual-specific

or influenced by the firm individuals work for.

49. Xuewu wang, (2004), in his paper, “sentiment strategies”, this paper

documents the profitability of the sentiment strategies. Using the aggregate

closed-end fund discount as a proxy for investor sentiment, a simple

sentiment strategy is constructed on the basis of the exposure of stock returns

to the closed-end fund discount. The sentiment strategies buy stocks with

highest exposure to closed-end fund discount and sell stocks with lowest

exposure to closed-end fund discount in the past 36 months. It is shown that

such a strategy can lead to an annualized profit of 11%. The source of the

profitability is explored and it is found that neither market risk nor

momentum anomaly can account for the profitability. However, the

traditional four factor asset pricing model when augmented with an

48

additional sentiment factor can account for the profit. This finding is

interpreted as supportive evidence to the fact that the pricing of the investor

sentiment risk may be a potentially useful explanation for profitability.

50. Arvid O I Hoffmann and Wander jager, (2005), in their paper, “The effect of

different needs, decision-making processes and network-structures on

investor behavior and stock market dynamics: A simulation approach”,

striking investor and stock market behavior have been recurrent items in the

world press for the recent past. Crashes and hypes like the internet bubble are

often hard to explain using existing finance frameworks. Therefore, the

authors provide a complementing multi-theoretical framework that is built on

existing finance research to describe and explain investor’s behavior and

stock market dynamics. This framework is built on three main components:

Needs, decision-making theory, and (social) network effects. This framework

will be used to build a future simulation model of investor behavior and to

generate stock market dynamics. A brief outline of the design of these

simulation experiments as well as examples of the first results will be given.

51. Qiang Cheng and Terry D. Warfield, (2005), in their article, “Equity

incentives and earnings management”, this paper examine the link between

managers’ equity incentives. We hypothesize that managers with high equity

incentives are likely to sell shares in the future and this motivates these

managers to engage in earnings management to increase the value of the

shares to be sold. Using stock – based compensation and stock ownership

data over the 1993- 2000 time period, we document that managers with high

equity incentives sell more shares in subsequent periods. As expected, we

find that managers with high equity incentives are more likely to report

earnings that meet or just beat analysts’ forecasts. We also find that

managers with consistently high equity incentives are less likely to report

large positive earnings surprises. This finding is consistent with the wealth of

these managers being more sensitive to future stock performance, which

leads to increased reserving of current earnings to avoid future earnings

49

disappointments. Collectively, our results indicate that equity incentives lead

to incentives for earnings management.

52. Vibha Mahajan and Poonam Aggarwal, (2005), in their paper, “Foreign

investment – need for a more competitive and open policy”, the forces

driving globalization are changing the way in which MNCs pursue their

objectives of investing abroad. Traditional factors such as existence of a pro-

FDI regime, natural resources, market growth prospects and market size,

labor market conditions are important and also the surveys conducted by

UNCTAD during the first quarter of 2004. FDI flows are expected to pick up

particularly in Asia and Pacific and CEE. China and India in Asia and Poland

in CEE is considered to be especially well positioned for an upswing. This

paper is an attempt to find out ways how India can attract foreign investment.

53. Marcela Meirelles Aurelio, (2008), in his article, “Going Global: The

Changing pattern of U.S. Investment Abroad”, over the past decade, U.S.

holdings of foreign financial assets- stocks and bonds – have grown

remarkably. At the same time, foreign physical assets, such as foreign direct

investment in production plants, have also become far more common.

Overall, the share of U.S. investments allocated to foreign assets swelled

from 40 percent of GDP in 1990 to 89 percent in 2005. This article

investigates the recent behavior of U.S. foreign investment and the factors

driving the change in its fastest growing category – namely, international

equity investment. Home bias in U.S. equity investment has indeed during

the last decade. However, the propensity to invest abroad has varied

significantly across assets from different foreign economies. Specifically,

U.S. investors tend to prefer investing in other industrial countries rather than

in emerging markets. This pattern has likely been developed because the

assets of industrial countries provide a better hedge during downturns in the

U.S. business cycle.

54. Minh Quang Dao, (2009), in his paper, “The impact of investment climate

indicators on gross capital formation in developing countries”, this paper

50

examines the impact of investment climate indicators on gross capital

formation in developing countries. Based on data from the World Bank

Investment Climate Surveys for a sample of thirty-six developing countries,

we find that corruption constraint as measured by the share of senior

managers that ranked “corruption” as a major or very severe constraint in the

investment structure.

55. Maria May Seitanidi, (2007), in his paper, “Intangible economy: how can

investors deliver change in businesses? Lessons from nonprofit-business

partnerships”, the intangible economy (trust, human resources, information,

and reputation) that co-exists draws attention to new expectations that

request the continuous, active and within the public sphere involvement of

investors in order to protect their assets by prioritising intangible resources.

Design/methodology/approach – In this paper the case of non-profit-business

partnerships is employed in order to demonstrate how change can be

achieved. Findings – The paper finds that investors in intangible outcomes

who aim to achieve change in corporations share the same limitations within

the financial and non-financial field. Originality/value – The paper highlights

investment in the intangible economy as a mechanism of co-determining the

priority of responsibilities in the context of corporate social responsibility.

The role of investors is crucial in facilitating the shift from the tangible to the

intangible economy.

56. Brimberg. J , P Hansen , G Laporte , N Mladenovic and D Urosevic ,

(2008), in their article, “ The maximum return-on-investment plant location

problem with market share”, this paper examines the plant location problem

under the objective of maximizing return-on-investment. However, in place

of the standard assumption that all demands must be satisfied, we impose a

minimum acceptable level on market share. The model presented takes the

form of a linear fractional mixed integer program. Based on properties of the

model, a local search procedure is developed to solve the problem

heuristically. Variable neighbourhood search and tabu search heuristics are

also developed and tested. Thus, a useful extension of the simple plant

51

location problem is examined, and heuristics are developed for the first time

to solve realistic instances of this problem.

57. Kenneth A. Froot and Tarun Ramadorai, (2008), in their article,

“Institutional portfolio Flows and international investments”, using a new

technique, and weekly data for 25 Countries from 1994 to 1998, we analyze

the relationship between institutional cross-border portfolio flows, and

domestic and foreign equity returns. In emerging markets, institutional flows

forecast statistically indistinguishable movements in country closed-end fund

NAV returns and price returns. In contrast, closed-end fund flows forecast

price returns, but not NAV returns. Furthermore, institutional flows display

trend-following (trend-reversing) behavior in response to symmetric

(asymmetric) movements in NAV and price returns. The results suggest that

institutional cross-border flows are linked to fundamentals, while closed-end

fund flows are a source of price pressure in the short run.

58. Shollapur. M.R. and A B Kuchanur, (2008), in their article, “Identifying

perceptions and perceptual Gaps: A study on individual investors in selected

investment avenues”, investors hold different perceptions on liquidity,

profitability, collateral quality, statutory protection, etc., for various

investment avenues. In addition, they fix their own priorities for these

perceptions. The formation of perceptions triggers the investment process in

its own way, often leading to unrealistic apprehensions especially among

individual investors. This study attempts to measure the degree of investors’

agreeableness with the selected perceptions as well as to trace the gaps

between their perceptions and the underlying realities. Failure to deal with

these gaps tends to lead the investment clientele to a wrong direction. Hence,

there is a need to help investors develop a realistic perspective of the

investment avenues and their attributes.

59. Eva Hofmann, Erik Hoelzl and Erich Kirchler , (2008) , in their article, “ A

comparison of models Describing the impact of moral decision making on

investment decision”, as moral decision making in financial markets

52

incorporates moral considerations into investment decisions, some rational

decision theorists argue that moral considerations would introduce

inefficiency to investment decisions. The investment decisions are influenced

by both financial and moral considerations. Several models can be applied to

explain moral behaviour. The study tested the suitability of (a) multiple

attribute utility theory (MAUT), (b) theory of planned behavior, and (c)

issue-contingent model of ethical decision making in organizations. Results

indicate that moral considerations influence investment decisions, controlling

for profit. Differences between the three models are discussed.

60. Malcolm Baker and Yuhai xuan, (2009), in their study entitled, “Under New

management: Equity Issues and the Attribution of past Returns”, there is a

strong link between measures of stock market performance and equity issues.

Typically, this performance is considered a characteristic of the firm, not the

CEO who happens to run the firm. In contrast, we find that equity issues

depend on changes in Q and returns to a greater extent if the current CEO

was at the helm when those past returns were realized. Moreover, the

specific share price that the CEO inherited is an important reference point,

while salient share prices prior to turnover are not. A corollary is that a firm

with poor stock market performance will not raise new capital unless the

current CEO is replaced.

2.6 Investors level of satisfaction and their futuristic perceptions towards

retail equity investment.

61. Fieldstein and Yitzhaki, (2011), in their study entitled, “Are High Income

Individuals Better Stock Market Investors?” have presented evidence to

suggest that the corporate stock owned by high-income investors appreciate

substantially faster than stock owned by investors with lower incomes. They

have indicated that high-income individuals have larger portfolios and can

therefore denote more time or resources to their investments, thus resulting

in higher returns.

53

62. Panda. K, Tapan N.P and Tripathi, (2011), in their study entitled, “Recent

Trends in Marketing of Public Issues: An Empirical Study of Investors

Perception”, attempted to identify the investors awareness and attitude

towards public issues. One hundred and twenty five investors covering the

salaried and business class, from the city of Bhuvaneshwar were selected at

random. The data was collected by administering a questionnaire and was

analysed using simple percentage and weighted average analysis. The study

revealed that majority of the investors relied on newspapers as the source of

information. Financial journals and business magazines were ranked next to

newspapers. A large number of investors were of the opinion that they were

not in a position to get the required information from the company in time.

A sizable number of investors were found to face problems while selling

securities. ‘Safety and Regular Return’ stood first and second with regard to

the factors associated with investment activities. Equity shares were

preferred for their higher rate of return by the investors.

63. Hong Kong Exchanges and Clearing Ltd (HKEx) conducted the “Derivatives

Retail Investor Survey (DRIS)”, for the first time in 2001–2002 to study

retail participation in the Hong Kong derivatives market and the investment

behaviour attitude and opinions of derivative investors in Hong Kong. DRIS

was conducted in two stages through a mail questionnaire survey and

personal interviews. The survey revealed that investors were predominantly

males in their 40’s, mostly highly educated and of a high working class. HSI

futures and options were the preferred ones. The median number of years of

experience in trading was 4 years and the median trading frequency was 1-2

times a week. The median deal size was HK $ 60,000. Males were found to

trade more frequently than females. Higher income group had a higher usual

deal size. Profit was the motive behind trading derivatives. Overall, the mail

survey respondents’ perceptions of HKEx derivatives market were positive.

64. Deborah Tan and Julia Henker, (2011), in their article, “Idiosyncratic

volatility and retail investor preferences in the Australian market”, we

explore the negative relation between idiosyncratic volatility and future stock

54

returns observed by previous researchers. We argue that, based on the

observation described in prospect theory, retail investors prefer stocks with a

high level of idiosyncratic volatility and are subsequently willing to overpay

for those stocks. In support of our argument, we find that the negative

idiosyncratic-volatility return relation is present in the Australian market, and

that this relation is affected by the magnitude of retail trading. The relation is

particularly strong when returns and realized volatility are measured at a

daily frequency.

65. Julan Du, (2010), in his paper, “heterogeneity in investor confidence and

asset market under-and overreaction”, this paper develops a behavioral

finance model that may explain under reaction and overreaction in asset

markets from the perspective of heterogeneous investors with different

confidence levels. The model explains the occurrence of under reaction by

the sequential entry of investors with different confidence levels in

interpreting earnings shocks. It is shown that in repeated trading episodes

with repeated earnings shocks, the average investor confidence level would

be higher as a result of the biased self-attribution and confirmatory bias,

causing overreaction more likely to occur. Also, the higher average

confidence level of investors gauged by the later timing of winding up their

asset holding positions also makes overreaction more likely to occur.

66. Lieven Baele ,Olivier De Jonghe and Rudi Vander Vennet , (2005) , in

their paper, “ Does the stock market value bank diversification?

“this paper investigates whether or not diversified banks have a comparative

advantage in terms of long-term performance/risk profile compared to their

specialized competitors. To that end, this study uses market-based measures

of return potential and bank risk. We calculate the franchise value over time

of European banks as a measure of their long-run performance potential. In

addition, we measure risk as both the systematic and the idiosyncratic risk

sensitivities derived from a bank stock return model. Finally, we analyze the

return/risk trade-o¤ implied in different diversification strategies using a

panel data analysis over the period 1989-2004. Diversification affects banks’

55

franchise values positively. Diversification increases the systematic risk of

banks while the effect on the idiosyncratic risk component is non-linear and

predominantly downward- sloping. These findings have conflicting

implications for different stakeholders, such as investors, bank shareholders,

bank managers and bank supervisors.

67. Andreas Kemmerer and Tom Weidig, (2005), in his study, “Reporting Value

to the private Equity Fund Investor”, in this article, we look at the actual

reporting behaviour and information flow of the private equity (mainly

venture capital) fund manager to the fund investors, based on access to a

fund investor’s database. Overall, the study revealed we find that the

European private equity industry has improved their reporting qualitatively

and quantitatively, especially in terms of shorter delivery times of reports.

This change is mainly due to the introduction of the EVCA reporting

guidelines and willingness by both, fund managers and investors, to report

voluntary or contractually bind by contract to report in accordance to these

standards. The study also pointed out that aspects of the relationship

between the entrepreneur and fund manager are also often found at the next

level, between fund managers and investors.

68. Masashi Toshino and megumi suto, (2005), in their paper, “Cognitive biases

of Japanese institutional investor’s consistency with behavioral finance,” this

paper investigates the cognitive biases to which Japanese institutional

investors are subjects. Investors showed optimism in forecasting market

returns, and this tendency was much more significant for domestic markets

and for longer forecasting time-horizons. This optimism is consistent with

the existence of availability heuristics. Herding behavior was also detected.

In addition, Japanese institutional investors showed loss aversion, as

suggested by Tversky and chainman (1979). The median of the relative

weight for loss versus gain was two or three, depending on the amount of

possible loss, and this number is consistent with a coefficient of 2.25 for the

value function estimated in Tversky and kahneman (1992). We conclude that

the concepts of behavioral finance have universality in the sense that they are

56

pertinent among institutional investors as well as students, and that they are

found in an Asian country as well as the U.S.

69. John R. Graham, Alokkumar, (2006), in their study entitled, “Do Dividend

Clienteles Exist? Evidence on Dividend Preferences of Retail Investors”,

studied the stockholding and trading behaviour of more than 60,000

households and found evidence consistent with dividend clienteles. Retail

investor stockholdings indicate a preference for dividend yield that increases

with age and decreases with income, consistent with age and tax clienteles

respectively. Trading patterns reinforce this evidence.

70. Ming Dong, Chris Robinson and Chris veld, (2006), in their paper, “why

individual investors want dividends”, the question of why individual

investors want dividends is investigated by submitting a questionnaire to a

Dutch investor panel. The respondents indicate that they want dividends,

partly because the transaction costs of cashing in dividends are lower than

the transaction costs involved in selling shares. Their answers provide strong

confirmation for the signaling theories of Bhattacharya (1979) and Miller

and Rock (1985). They are inconsistent with the uncertainty resolution

theory of Gordon (1961, 1962) and the agency theories of Jensen (1986) and

Easterbrook (1984). The behavioral finance theory of Shefrin and Statman

(1984) is not confirmed for cash dividends but is confirmed for stock

dividends. Finally, the results indicate that individual investors do not tend to

consume a large part of their dividends. This raises some doubt as to the

effectiveness of the reduction or elimination of dividend taxes in order to

stimulate the economy.

71. Michael Kaestner, (2006), in his article, “investors’ Misreaction to

unexpected earnings: evidence of simultaneous overreaction and under

reaction”, this article investigates the current and past earnings surprises and

subsequent market reactions for listed US companies over the period 1983-

1999. The results suggest that investors simultaneously exhibit short-term

under reaction to ‘earnings announcements’ and long-term overreaction to

57

‘past highly unexpected earnings’. A potential explanation for the reported

overreaction phenomenon is the representativeness bias. The author shows

that overreaction and the later reversal is stronger for events which exhibit a

long series of similar past earnings surprises.

72. Sadhan Kumar Chattopadhyay and Samir Ranjan Behera , (2006) , in their

paper, “Financial Integration for Indian Stock Market”, the Indian stock

market is considered to be one of the earliest in Asia, which is in operation

since 1875. However, it remained largely outside the global integration

process until 1991. The reform of the Indian stock market started with the

establishment of Securities and Exchange Board of India (SEBI), although it

became more effective after the stock market scam in 1991. With the

establishment of SEBI and technological advancement Indian stock market

has now reached the global standard. The study finds that contrary to general

belief, Indian stock market is not co-integrated with the developed market as

yet. It is derived from the study that although some positive steps have been

taken up, which are responsible for the substantial improvement of the Indian

stock market, these are perhaps not sufficient enough to become a matured

one.

73. Larry D. Wall, (2007), in his article, “on investing in the equity of small

firms”, this comment provides a brief discussion of the roles of different

investors in small business firms. It then evaluates the contribution made in

papers by in this issue by Robinson and Cottrell on informal investors in

Alberta, Canada, and by Pintado, Perez de lema, and van Auken on venture

capital investment in Spain.

74. Som Sankar Sen., Bidyut Kumar Ghosh and Dr. Santanu Kumar Ghosh,

(2007), “Stock Market Liquidity and Exchange Rate – A Case Study on BSE

& NSE “, this paper explores significant impact of exchange rate on stock

market liquidity. Taking monthly data on both BSE and NSE the paper

reveals the positive relationship between exchange rate and stock market

liquidity in concurrent, lagged and lead forms. Using R2 statistic it shows a

58

considerable variation in liquidity is explained by exchange rate in both the

major stock exchanges in India.

75. Gerben de zwart, Brian Frieser and Dick van Dijk , (2007), in their article, “

A recommitment strategy for long term Private equity fund investor”, this

paper develops a reinvestment strategy for private equity which aims to keep

its portfolio weight equal to a desired strategic allocation, while taking into

account the illiquid nature of private equity. Historical simulations

(1980{2005) show that our dynamic strategy is capable of maintaining a

stable investment level that is close to the target. This does not only hold for

unrestricted portfolios, but also for investments limited to buy-out or venture

capital, a specific region, or management experience. This finding is of great

importance for investors, because private equity funds have a finite lifetime

and uncertain cash flows.

76. Michael J. Robinson and Thomas J. Cottrell , (2007), in their article,

“ Investment patterns of Informal Investors in the Alberta Private Equity

Market”, this study identifies three main types of informal investors in

private equity markets: relationship investors, opportunity-based investors,

and angel investors. We find evidence that the first two investor types are a

major total source of capital and they prefer to invest smaller amounts close

to home and in the context of existing relationships. With respect to angel

investors, we find evidence of stratification in their desired investment

amount which is consistent with a model where their investments evolve

though a life cycle of investing. We also find evidence that change to capital

market regulations that allow for lower investment amounts by this type of

investor increase the amount of capital available for early-stage firms.

77. Costanza Consolandi, Ameeta Jaiswal-Dale, Elisa Poggiani and Alessandro

Vercelli, (2008), in their article, “Global standards and ethical stock indexes:

The case of the Dow Jones sustainability Stoxx Index”, this article examines

whether these incentives have been so far detectable with particular reference

to the Dow Jones Sustainability Stoxx Index (DJSSI) that focuses on the

59

European corporations with the highest CSR scores among those included in

the Dow Jones Stoxx 600 Index. The aim of the article is twofold. First, we

analyse the performance of the DJSSI over the period 2001–2006 compared

to that of the Surrogate Complementary Index (SCI), a new benchmark that

includes only the components of the DJ Stoxx 600 that do not belong to the

ethical index to evaluate more correctly the size of possible divergent

performances. Second, we perform an event study on the same data set to

analyse whether the stock market evaluation reacts to the inclusion (deletion)

in the DJSSI. In both cases, the results suggest that the evaluation of the CSR

performance of a firm is a significant criterion for asset allocation activities.

78. Gangadhar. V and G. Naresh Reddy , (2008), in their paper, “The Impact of

Foreign Institutional Investment on Stock Market Liquidity and Volatility in

India”, this paper is aimed at examining the investment trends and patterns of

FIIs and their impact on stock market liquidity and volatility. Liquidity with

reference to capital market refers to easy conversion of capital market

securities into cash. Whereas the stock market volatility implies the

fluctuations in the stock market returns over a time period. Volatility is the

inconsistency or variability in the returns of aggregate market portfolio.

79. AI Jun Hou , (2009), in his study, “ EMU Equity markets’ return variance

and spill over effects from short-term interest rates”, this paper examines the

spillover effects from the movement of short term interest rates to equity

markets within the Euro area. The empirical study is carried out by

estimating a Markov Switching GJR-M model with a Bayesian based

Markov Chain Monte Carlo (MCMC) methodology. The result indicates that

stock markets in the Euro area display a significant two regimes with distinct

characteristics. The study indicates that there is a significant impact of

fluctuations in the short term interest rate on the conditional variance and

conditional returns in the EMU countries. Such impact is asymmetrical, and

it appears to be stronger in the bear market and when the interest rate

changes upward.

60

80. Batni Raghavendra Rao , (2009) , in his paper, “ Exchange traded funds - the

cardinal investment option in turbulent times”, the global meltdown,

international reputed firms going bankrupt, fudging of accounting numbers

and dubious corporate governance have made equity investing more

challenging then ever before. The investors are constantly on a look out for

secure and promising bets. Stock picking is not easy as it looks and therefore

construction of equity portfolio is imperative. The premise that

diversification reduces the risk is beyond doubt. Diversification entails

scouting of investment avenues in terms of risk and return. It calls for

developing a portfolio of assets or securities in such a way to minimize the

risk. The individual investors hardly can match up to the institutional

investors in terms of the expertise and also majority of them are not market

savvy. In this context, Exchange traded funds (ETFs) come in handy to help

out the individual investors in the stock market. ETFs are the safe bets and

provide scrupulous diversification. In fact in the developed markets ETFs are

the most sought after means of investing in the equities. In India ETFs are

yet to catch up the attention of the investors.

81. Mamunur Rashid1 and Md. Ainun Nishat, (2009), in their article,

“Satisfaction of retail investors on the structural efficiency of the market:

Evidence from a developing country context”, satisfied investors are a

necessary element of the stock market. They help to finance rapid expansion

in developing countries. This study explores the components of market

structure that contribute to the satisfaction level of retail investors. Around

300 retail investors from 25 randomly selected brokerage houses registered

with the Dhaka Stock Exchange, Bangladesh were surveyed using a

structured questionnaire. Analyses reveal that most investors were young and

inexperienced but educated, with shortages of skills and income. The study

suggests the importance of effective regulation, disclosure requirements to

ensure a supply of quality information, investor education and technology

driven trading in brokerage houses for overall investor satisfaction.

61

82. Raja. M and J. Clement sudhakar, (2010), in their article, “An empirical test

of Indian stock market efficiency in respect of bonus announcement”, as

capital market is said to be efficient with respect to an information item if the

prices of securities fully impound the return implications of that item. The

efficiency with which the capital formation is carried out depends on the

efficiency of the capital markets and financial institutions. A capital market

is said to be efficient with respect to corporate event announcement (stock

split, buyback, right issue, bonus announcement, merger & acquisition,

dividend etc) contained information and its disseminations. How quickly and

correctly the security prices reflect these event contained information show

the efficiency of stock markets. Present study is an attempt to test the

efficiency of Indian stock market with respect to bonus issue announcement

by IT companies.

83. Roopam Kothari and Narendra Sharma, (2010), in their paper, “Testing the

Beta stability of banking sector over various phases in Indian stock market”,

our study aims at creating a banking stock portfolio which serves as a

representative of all the banking stocks traded on Bombay Stock Exchange

and testing the beta instability of the banking sector stock portfolio over

various phases in the Indian stock market. We also evaluate the monthly

stock price returns of the banking portfolio vis-à-vis the market portfolio

from the period ranging from July 1994 to December 2008. The journey of

Sensex during the span of past fourteen years in the post liberalization period

has been divided into three phases based upon technical analysis. An attempt

is made to evaluate the under/ over performance of the banking stock

portfolio returns under various phases.

2.7 Relationship between demographics variable of investors and their

investment objectives, decision and satisfaction.

84. Meenu Verma, (2008), in his article, “Wealth management and behavioral

finance: The effect of demographics and personality on investment choice

among Indian investors”, with the growth of the Indian economy and the rise

62

in the wealth of the people, there is a growing demand for wealth

management functions. Wealth management involves understanding the

clients’ financial and investment requirements and accordingly providing

financial planning and portfolio management services. Behavioral finance is

a nascent but growing discipline, which studies investor’s psychology while

making financial decisions. This paper aims to investigate the effect of

demographic profile and personality type of the investor on investment

choice. Such understanding could prove to be a boon for the burgeoning

wealth management industry in India.

85. Manish Mittal and R K Vyas, (2008), in their paper, “personality type and

investment choice: An empirical study”, investors have certain cognitive and

emotional weaknesses which come in the way of their investment decisions.

Over the past few years, behavioral finance researchers have scientifically

shown that investors do not always act rationally. They have behavioral

biases that lead to systematic errors in the way they process information for

investment decision. Empirical evidence also suggests that factors such as

age, income, education and marital status affect on individual’s investment

decision. This paper classifies Indian investors into different personality

types and explores the relationship between various demographic factors and

the investment personality exhibited by the investors. The results of this

study reveal that the Indian investors can be classified into four dominant

investment personalities- casual, technical, informed and cautious.

2.8 Summary

The above review of literature helps to identify the research gaps and frame

suitable objectives and hypothesis.

63

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73

CHAPTER – III

INDIAN CAPITAL MARKETS – AN OVERVIEW

INTRODUCTION

Chapter three gives brief account of capital market developments in India

under various heads like Indian capital market before 1990’s , Indian capital market

after 1990’s, primary market developments, secondary market developments, SEBI

registered market intermediaries, mutual funds, derivatives, foreign institutional

investments, screen based trading system, depositories, clearing, processing and

settlement system, risk management system, margin trading facility, Regulatory

frame work for investor protection, security Regulations in force, security guidelines

in force, grievances redressal mechanism, investor education, recent initiatives and

Indian capital market future road map.

Capital market is the backbone of any country’s economy. It is an engine for

economic growth, providing an efficient means of resource mobilisation and

allocation. The literature is full of theoretical and empirical evidence that have

established robust, statistically significant two-way relationship between the

developments in the securities market and economic growth. Levine and Zervos

(1998) argue that well developed stock markets may be able to offer financial

services of different kind that may provide a different kind of impetus to the

economic development1. In India, Agarwall’s (1999), study clearly supports the

Levine and Zervos’s argument and proves that the two main parameters of capital

market development namely, size and liquidity, are found statistically significant to

explain the economic activity.2

The Indian capital market is one of the oldest capital markets in the world. It

dates back to the 18th

century when the securities of the East India Company were

traded in Mumbai and Kolkata. However, the orderly growth of the capital market

began with the setting up of The Stock Exchange of Bombay in July 1875 and

Ahmedabad Stock Exchange in 1984. Eventually 19 other Stock Exchanges sprang

up in various parts of the country.3 In this chapter an attempt has been made by the

74

researcher to review the Capital Market Developments that has taken place in India

in two phases such as:

i. Indian Capital Market – Before 1990’s

ii. Indian Capital Market – After 1990’s

3.2. INDIAN CAPITAL MARKET – Before 1990’s

India’s Capital Market was dormant till the mid – 1980‘s.4 The long term

financing needs of the corporate sector were met by the Development Financial

Institutions (DFI’s) namely IDBI, IFCI, ICICI as well as by other investment

institutions like LIC, UTI, GIC etc. Working capital needs were met by the

Commercial Banks through an elaborate network of bank branches spread all over

the country. Capital Market activities were limited mainly due to the easy

availability of loans from banks and financial institutions and administered structure

of interest rates. However, three important legislations namely Capital Issues

(control) Act 1947: Securities Contracts (Regulation) Act, 1956; and Companies

Act, 1956 were enacted to provide suitable legal framework for the development of

capital market in India. The pricing of the primary issues was decided by the Office

of the Controller of Capital Issues. A few stock exchanges, dominated by Bombay

Stock Exchange (BSE) provided the trading platforms for the secondary market

transactions under an open outcry system.

As of 1992, the Bombay Stock Exchange (BSE) was a monopoly.5 It was an

association of brokers, and imposed entry barriers; leading to elevated costs of

intermediation. Membership was limited to individuals; limited liability firms could

not become brokerage firms. Trading took place by ‘open outcry’ on the trading

floor, which was inaccessible to users. It was routine for brokers to charge the

investor a price that was different from what is actually transacted at.

Retail investors and particularly users of the market outside Bombay,

accessed market liquidity through a chain of intermediaries called “sub–brokers”.

Each sub–broker in the chain introduced a mark-up in the price, in the absence of

unbundling of professional fees from the trade price. It was common for investors in

small towns to face four intermediaries before their order reached the BSE floor, and

to face mark-ups in excess of 10% as compared with the actual trade price. The

75

market used ‘futures–style settlement’ with fortnightly settlement. A peculiar market

practice called ‘badla’ allowed brokers to carry positions across settlement periods.

In other words, even open positions at the end of the fortnight did not always have to

be settled. The efficiencies of the exchange clearing house only applied for the

largest 100 stocks. For other stocks, clearing and settlement were done bilaterally,

which introduced further inefficiencies and costs.

The final leg of the trade was physical settlement, where the share

certificates were printed on paper. This was intrinsically vulnerable to theft,

counterfeiting, inaccurate signature verification, administrative inefficiencies, and a

variety of other malpractice. Involuntary and deliberate delays in settlement could

take place both at the BSE and at the firm. Many firms used the power of delaying

settlement as a tool to support manipulation of their own stock. The problems were

somewhat simpler for investors in Bombay, who could physically visit the BSE

broker, the BSE clearinghouse, or the company’s Registrar, and accelerates transfer.

For investors outside Bombay, who lacked this recourse and were crippled by the

exorbitantly expensive telephone system, delays of six months between purchasing a

stock and the transfer of legal title were common. If stock splits, rights issues, or

dividend pay-outs took place during this period, it was common for the purchaser

not to obtain the benefits.

Floor–based trading, the inefficiencies in clearing and settlement entry

barriers into brokerage, and the low standards of technology and organisational

complexity that accompanied the ban upon corporate membership of the BSE led to

an environment where order execution was unreliable and costly. 6

These factors led

to an extremely poor functioning of the capital markets till 1992.

3.3. INDIAN CAPITAL MARKET – After 1990’s

The Indian capital markets have witnessed a major transformation and

structural change during the past one and half decades, since the early 1990’s.7 The

Financial Sector Reforms in general and the Capital Market Reforms in particular

were initiated in India in a big way since 1991 – 1992. These reforms have been

aimed at improving market efficiency, enhancing transparency, checking unfair

trade practices and bringing the Indian capital market up to the International

76

Standards. The Capital Issues (control) Act, 1947 was repealed in May 1992 and the

office of the Controller of Capital Issues was abolished in the same year. The

National Stock Exchange (NSE) was incorporated in 1992 and was given

recognition as a Stock Exchange in April 1993, which has been playing a lead role

as a change agent in transforming the Indian Capital Market to its present form.8 The

Securities and Exchange Board of India (SEBI) was set up in 1988 and acquired the

statutory status in 1992. Since 1992, SEBI has emerged as an autonomous and

independent statutory body with definite mandate such as: (a) to protect the interests

of investors in securities, (b) to promote the development of securities market and

(c) to regulate the securities market. In order to achieve these objectives, SEBI has

been exercising power under: (a) Securities and Exchange Board of India Act, 1992,

(b) Securities Contracts (Regulation) Act, 1956, (c) Depositories Act, 1996 and

delegated powers under the (d) Companies Act, 1956. Indian Capital Market has

made commendable progress since the inception of SEBI and has been transformed

into one of the dynamic capital markets of the world.9 The statistics on International

equity Markets as on December 31, 2009 given in Table-1 clearly highlights this.

Table – 3.1

International Equity markets (End December 2010) 10

Exchange

Market

Capitalisation

(US $ Million)

No. of

Listed

Companies

Value of Share

trading

(US $ Million)

No. of

trading

days

Americans

American SE

Lima SE

Mexican Exchange

Nasdaq

NYSE

Santiago SE

Sao Paulo SE

132367

71663

352045

3239492

11837793

230732

591966

486

241

406

2852

2327

236

392

561603

4532

84255

28951349

17784586

38103

724199

253

249

252

252

252

250

249

77

Europe-Africa

Middle East

Athens Exchange

Copenhagen SE

Deutsche Borse

Euronext

Irish SE

JSE South Africa

Ljubljana SE

London SE

Luxembourg SE

Oslo Bors

Swiss Exchange

Warsaw SE

Wiener Borse

112632

-

1292355

2101746

61291

482700

12141

2796444

105048

227233

1064687

150962

114076

288

-

783

1002

64

411

76

2792

267

238

339

486

115

66702

-

2186433

4411249

35077

395235

1216

3391103

281

245008

759369

57012

47952

248

-

254

256

253

251

251

253

253

251

251

252

248

Asia – Pacific

Australian SE

BSE the SE

Mumbai

Bursa Malaysia

Colombo SE

Hong Kong

Exchanges

Jakarta SE

Korea Exchange

National SE of India

New Zealand

Exchange

Osaka SE

Philippine SE

Shanghai SE

Shenzhen SE

Singapore Exchange

Taiwan SE Corp.

Thailand SE

Tokyo SE

1261909

1306520

286157

9547

2305143

89567

834597

1224806

35507

138330

86349

2704779

868374

481247

657610

176956

3306082

1966

4955

959

231

1319

889

1788

1453

165

432

248

870

830

773

755

535

2335

931555

263352

86033

1238

1501638

31169

1559040

786684

14901

139868

20802

2061643

2774065

245425

905131

126097

3990909

254

243

250

240

249

243

253

243

252

243

242

244

244

253

251

243

243

Source: World Federation of Exchanges.

The milestones achieved during the past one and half decades are discussed

below:

78

3.3.1 Primary Market Developments

The 1990’s witnessed the emergence of the Capital Market as a major source

of finance for trade and industry in India. A growing number of companies have

been accessing the Capital Market rather than depending on loans from financial

institutions.11

Tremendous developments have taken place in the primary market

where the corporates issue fresh securities through public issues as well as private

placements. Huge amount of resources have been mobilised by the corporates from

the primary market which is shown in Table-2 below: -

Table – 3.2

Resources Mobilised from the Primary Market12

(Rs. in Crores)

Year Total Amount Instrument Wise

Equities CCPS Bonds Others

1998-99 14276 7845 75 5400 957

1999-00 4570 1881 10 1550 1128

2000-01 5587 857 78 4450 202

2001-02 7817 4566 0 3200 51

2002-03 6108 3226 142 2704 36

2003-04 7543 1272 0 5601 670

2004-05 4070 1457 0 2600 13

2005-06 23272 18958 0 4324 0

2006-07 28256 24388 0 3867 0

2007-08 27382 27372 0 0 10

2008-09 33506 32901 0 356 249

2009-10 87029 79739 5687 1603 0

2010-11 14720 14272 0 448 0

Source: SEBI

As on March 31, 2011, Rs. 14,720 crores has been mobilised from the

Primary market, out of which Rs. 14,272 crores has been raised through equities and

Rs. 448 crores through bonds capital market instruments.

Since the early 1990’s, there has been a paradigm shift from merit based

regulated regime to disclosure based regime. Comprehensive guidelines on

79

disclosures and investor protection were issued and were amended by SEBI from

time to time. The companies accessing the capital market through public issues have

to comply with adequate disclosure norms on initial as well as continuous basis.

India’s disclosure norms are considered as one of the best in the world and are often

cited as benchmark for the global standards.13

Indian accounting standards are

principle based and aligned to international accounting standards. In terms of

consolidation segmental reporting, deferred tax accounting and related party

transactions, the gap between India and the US is minimal. In addition to sound

accounting standards, the issues relating to corporate governance have been pursued

in right earnest consistent with the best international practices.

In a deregulated regime, the market determines the price of the public

issues, i.e., either by the issuer through fixed price or by the investors through book-

building process. A fair system of proportionate allotment of shares has been put in

place. The share of retail investors in the allotment of book-built issues has been

increased to 35 percent.14

Discretionary allotment to the Qualified Institutional

Buyers (QIBs) has been withdrawn. Companies are allowed to issue ADRs/ GDRs

and also raise funds through external commercial borrowing. The ADR / GDR’s

have two–way functionality. The Foreign Institutional Investors have been allowed

to invest in primary issues within the sectoral limits set by the Government.

3.3.2. Secondary Market Developments

The securities issued in the Primary Market are traded in the Secondary

Market. Exchanges in India offer screen based, electronic trading. The trading

system is connected using the VSAT technology from around 201 cities. There are

8652 trading members registered with SEBI at the end of March 2009. Enormous

amount of developments have taken place in the secondary market during the last

one decade. The selected indicators in Table-3 below clearly indicate this.

73

Table – 3.3

Secondary Markets – Selected Indicators15

(Amount in Rs. mn)

Year

Capital Market Segment of Stock Exchanges

No.

of

Brokers

No. of

Listed

Companies

S & P

CNX

Nifty

Sensex Market

Capitalisation

Market

Capitalisation

Ratio (%)

Turnover Turnover

Ratio (%)

1997-1998 8,476 9,100 985.30 3366.61 5,722,570 47.0 2,273,680 39.7

1998-1999 8,867 9,890 968.85 3360.89 4,883,320 34.6 6,461,160 132.3

1999-2000 9,005 9,833 1116.65 3892.75 5,898,750 37.7 9,086,810 154.1

2000-01 9,069 9,877 1078.05 3739.96 5,740,640 34.1 10,233,820 178.3

2001-02 9,192 9,871 1528.45 5001.28 11,926,300 84.7 20,670,310 173.3

2002-03 9,782 9,954 1148.20 3604.38 7,688,630 54.5 28,809,900 374.7

2003-04 9,687 9,644 1129.55 3469.35 7,492,480 36.4 8,958,180 119.6

2004-05 9,519 9,413 978.20 3048.72 6,319,212 28.5 9,689,098 153.3

2005-06 9,368 - 1771.90 5590.60 13,187,953 52.3 16,204,977 122.9

2006-07 9,128 - 2035.65 6492.82 16,984,280 119.1 16,668,963 98.1

2007-08 9,335 - 3402.55 11280.00 30,221,900 85.58 23,901,030 79.09

2008-09 9,443 - 3821.55 13072.10 35,488,081 86.02 29,014,715 81.76

2009-10 9,487 - 4734.50 15644.44 51,497,010 109.3 51,308,160 99.63

2010-11 9,628 - 3020.95 9708.50 30,929,738 58.12 38,520,970 124.54

Source: SEBI & NSE.

74

Market capitalization as percentage to GDP in India reached nearly 58

percent in 2008–09 and still further on a fluctuating trend. The rate of growth in

market capitalisation and turnover over the period indicates that more companies

have started using the trading platform of the Stock Exchanges. Although there are

22 stock exchanges, the National Stock Exchange (NSE) and the BSE together

account for more than 99 percent of the total turnover.

Recently, a separate trading platform, namely BSE Indonext, has been set up

jointly by BSE and the Federation of Indian Stock Exchanges to facilitate

transactions of shares exclusively relating to the small and medium enterprises. 16

3.3.3. SEBI Registered Market Intermediaries

Various institutions / intermediaries associated with primary as well as

secondary markets such as merchant bankers, registrars to issues, portfolio

managers, underwriters, bankers to issues, stock exchanges, brokers and sub-

brokers, share transfer agents, depositories, FIIs, custodians, credit rating agencies,

venture capital funds, collective investment schemes including mutual funds have to

register with SEBI and operate within the guidelines issued from time to time. SEBI

also promotes self-regulatory organizations. SEBI registered market intermediaries

from 1996 which are listed below in Table-4.

75

Table – 3.4

SEBI Registered Market Intermediaries17

Market

Intermediaries

As on 31st March

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

Stock Exchanges

(Cash Market) 22 22 22 23 23 23 23 23 23 22 22 21 19 19

Stock Exchanges

(Derivatives Market) - - - - 2 2 2 2 2 2 2 2 2 3

Brokers

(Cash Segment) 8476 8867 9005 9069 9192 9782 9687 9519 9368 9128 9335 9384 8517 8652

Corporate Brokers

(Cash Segment) 1917 2360 2976 3173 3316 3808 3862 3835 3746 3733 3961 4101 3955 4079

Sub Brokers

(Cash Segment) - 1768 3760 4589 5675 9957 12208 13291 12815 13684 23479 27540 43874 62471

76

Brokers (Derivative) - - - - - 519 705 795 829 994 1120 1258 1442 1587

Foreign Institutional

Investors 367 439 496 450 506 527 490 502 540 685 882 997 1319 1635

Custodians - - - - 15 14 12 11 11 11 11 11 15 16

Depositories - 1 1 2 2 2 2 2 2 2 2 2 2 2

Depository

Participants - 28 52 96 191 335 380 438 431 477 526 593 654 714

Merchant Bankers 1012 1163 802 415 186 233 145 124 123 128 130 152 155 134

Bankers to an issue 77 80 72 66 68 69 68 67 55 59 60 47 50 51

Underwriters 40 38 43 17 42 57 54 43 47 59 57 45 35 19

Debenture Trustees 23 27 32 34 38 37 40 35 34 35 32 30 28 30

Credit Rating

Agencies - - - - 4 4 4 4 4 4 4 4 5 5

Venture Capital

Funds - - - - - 35 34 43 45 50 80 90 106 132

Foreign Venture

Capital investors - - - - - 1 2 6 9 14 39 78 97 129

77

Registrars to an Issue

& Share Transfer

Agents

334 386 334 251 242 186 161 143 78 83 83 82 76 71

Portfolio Managers 13 16 16 18 23 39 47 54 60 84 132 158 205 232

Mutual Funds 27 37 38 41 38 39 38 38 37 39 38 40 40 44

Collective investment

Schemes - - - - 0 0 0 0 0 0 0 0 0 1

Approved

Intermediaries(Stock

Lending Schemes)

- 1 1 4 6 8 10 4 3 3 3 3 2 3

Source: SEBI

77

As on March 31, 2009, there were 19 Stock Exchanges, 8635 Brokers (cash

segment) and 62,471 Sub-brokers, over 9,000 Listed Companies, 2 Depositories,

714 Depository Participants, 134 Merchant Bankers, 19 Underwriters, 5 Credit

Rating Agencies and 1635 Foreign Institutional Investors in India.

3.3.4. Mutual Funds

In order to develop the security cult and also to encourage indirect

participation of households in the Indian Securities Market, Mutual Funds have been

encouraged, both in the public and private sectors. Huge resources have been

mobilised through Mutual Funds. The trend in resource mobilisation by Mutual

Funds is indicated in Table-5 below: -

Table – 3.5

Trends in Resource Mobilisation by Mutual Funds18

(Rs. in Crores)

Year Gross

Mobilisation Redemption Net Inflow

Assets at the

end of the

period

1993-94 62076 - - -

1994-95 13727 - - -

1995-96 6508 - - -

1996-97 4777 - - -

1997-98 11406 - - -

1998-99 22710 23660 -949 68193

1999-00 61241 52271 18970 107946

2000-01 92957 83829 9128 90587

2001-02 164523 157348 7175 100594

2002-03 314706 310510 4196 109299

2003-04 590190 543381 46808 139616

2004-05 839708 837508 2200 149600

2005-06 1098149 1045370 52779 231862

2006-07 1938493 1844508 93985 326292

2007-08 4464377 4310575 53802 505152

2008-09 5426354 5454650 - 28296 417300

Source: SEBI

78

Currently, there are 44 Mutual Funds including foreign mutual funds, offering more

than 400 schemes to the investors .The cumulative Assets Under Management

(AUM) of all the Mutual Funds which were Rs. 3,26,292 crores as on March 31,

2007 and has increased to Rs.5,05,152 crores by March 31, 2008. At the end of

March 2009 there is a sudden decrease when compared to end of March 2009. For

an orderly growth of the mutual funds, prudential regulations have been put in place

keeping in view the interest of the investors.

3.3.5. Derivatives

Introduction of securities related derivatives in India is another milestone

which provides an important avenue to the investors, mainly for hedging. The

securities contract (Regulation) Act, 1956 was amended in December 1999 to

expand the definition of securities to include derivatives so that the entire regulatory

framework governing trading of securities could apply to trading in derivatives.

Derivatives trading began in India with the launch of index futures in June 2000

followed by index options, single stock options and single stock futures in 2001. 19

Interest rate futures were introduced in June 2003. The derivative products have a

monthly maturity cycle. From September 13th

, 2004 weekly stock and index option

was launched on the derivative segment of BSE .Two premier stock exchanges,

namely BSE and NSE, provide trading platforms for derivative transactions.

The growth of the derivatives segment at BSE and NSE is indicated below in

Table-6.

79

Table – 3.6

Derivatives Segment at BSE and NSE20

Year No. of

Trading Days

No. of

Contracts

Turnover

(Rs.Crore)

BSE

2003-04 207 77743 1673

2004-05 247 99918 1812

2005-06 251 137209 2456

2006-07 254 374637 11743

2007-08 253 531630 16111

2008-09 251 201 9

2009-10 249 1781214 59006

2010-11 243 515588 12268

NSE

Jun-00 toMar01 211 90580 2365

2003-04 247 3159344 76764

2004-05 251 13245847 339731

2005-06 254 51303705 1913436

2006-07 253 71972073 2378195

2007-08 251 152378495 4643981

2008-09 249 211600263 7162459

2009-10 251 415552569 12731341

2010-11 243 644094527 10781254

Source: BSE & NSE

Bulk of the derivative trading is done in the NSE. The combined turnover in

derivatives on BSE and NSE surpassed the combined turnover in the cash segments

since early 2009. During 2009-10, the turnover in the derivative segments of NSE

was 223 percent of its cash segment turnover. Similar to international trend, single

stock futures emerged as the most popular derivative product, followed by index

futures, stock options and index options. NSE ranks first in terms of number of

contracts traded in the single stock futures, second in Asia in terms of number of

contracts traded in equity derivatives instrument. 21

80

3.3.6. Foreign Institutional Investments

The Foreign Institutional Investors (FIIs) were allowed to invest in India in

1992 under the portfolio investment scheme. They are also allowed to participate in

the public issues of debt and equities within the sectoral limits set for equities and

the overall limit fixed for the debt instruments by the Government. India has been a

centre of attraction for the FIIS. The growth in foreign investment inflows is

indicated in below in Table-7.

Table – 3.7

Foreign Investment Inflows22

Year A. Direct Investment B. Portfolio

Investment

Total (A +B)

(Rs.

Crore)

(Us $

Million)

(Rs.

Crore)

(US $

Million)

(Rs.

Crore)

(US $

Million)

1992-93 174 97 11 6 185 103

1993-94 316 129 10 4 326 133

1994-95 965 315 748 244 1713 559

1995-96 1838 586 11188 3567 13026 4153

1996-97 4126 1314 12007 3824 16133 5138

1997-98 7172 2144 9192 2748 16364 4892

1998-99 10015 2821 11758 3312 21773 6133

1999-00 13220 3557 6794 1828 20014 5385

2000-01 10358 2462 -257 -61 10101 2401

2001-02 9338 2155 13112 3026 22450 5181

2002-03 18406 4029 12609 2760 31015 6789

2003-04 29235 6130 9639 2021 38874 8151

2004-05 24367 5035 4738 979 29105 6014

2005-06 19860 4322 52279 11377 72139 15699

2006-07 27188 6051 41854 9315 69042 15366

2007-08 39674 8961 55307 12492 94981 21453

2008-09 103367 22826 31713 7003 135080 29829

2009-10 138276 34362 109741 27271 248017 61633

2010-11 161481 35168 -63618 -13855 97863 21313

Source: RBl Bulletin

81

Foreign investment inflows both by direct investment and portfolio

investment amounted to Rs. 97863 crores and US $ 21313 million as on March 31,

2009.

FIIs have been bullish on the Indian securities. Their net investment every

year was positive ever since they were allowed to invest in India except in 1998- 99

& 2008-09 as shown in Table-8 below:

Table – 3.8

Trends in FII Investment23

Year Gross

Purchases

Gross

Sales

(Rs.

Crore)

Net

Investment

(Rs. Crore)

Net

Investment

(US $ mn)

Cumulative

Net

Investment

(US $ mn)

1989-90 18 4 13 4 4

1990-91 5593 467 5127 1634 1638

1991-92 7631 2835 4796 1528 3167

1992-93 9694 2752 6942 2036 5202

1993-94 15554 6980 8575 2432 7635

1994-95 18695 12737 5958 1650 9285

1995-96 16116 17699 -1584 -386 8899

2001-02 56857 46735 10122 2474 11372

2002-03 74051 64118 9933 2160 13531

2003-04 50071 41308 8763 1839 15371

2004-05 47061 44372 2689 566 15936

2005-06 144855 99091 45764 10005 25942

2006-07 216951 171071 45880 10352 36293

82

2007-08 346976 305509 41467 9363 45657

2008-09 520506 489665 30841 6821 52477

2009-10 948018 881839 66179 16442 68919

2010-11 614576 660386 -45811 -9837 59081

Source: RBI Bulletin.

The cumulative net investment by FIIs, which stood at US $ 52,477 million

at the end of March 2010, further increased to US $ 68,919 million by the end of

March 2011. At the end of March 2009 there is a sudden decrease when compared to

end of March 2008. Net investment by FIIs to the tune of roughly US $ 10 billion

each for the last two consecutive years vindicated the growth story of the

subcontinent. As on March 31, 2010, the number of FIIs registered with SEBI stood

at 1319 which further increased to 1635 by the end of March 2011. 24

About 41

percent of total FIIs originate from the USA, followed by the UK (18 percent).

During the last two and half years, the FIIs have identified India as a

preferred destination. Strong macro economic fundamentals, favorable tax treatment,

attractive valuation of shares and encouraging corporate results have been cited as

underlying causes of large portfolio investment by the FIIs in India.

3.3.7. Screen Based Trading System

The screen based trading system is a landmark achievement of the Indian capital

market.25

The NSE introduced the screen-based trading since its inception

followed by other stock exchanges. The screen-based trading enables the

participants for online, electronic, anonymous and order-driven transaction with

the help of over 10,000 terminals spread over 400 cities in India and abroad. This

is perhaps the biggest trading network in any country of the world. The order

matching is done strictly on price/ time priority. The screen-based trading is

transparent and provides equal access to all investors irrespective of their

geographical locations. Screen-based trading has significantly improved depth

and liquidity of the market.

83

3.3.8. Depositories

Depositories Act, 1996 was another landmark development in the history of

India’s capital market.26

Thereafter two depositories namely, Central Depository

Services Limited (CDSL) and National Securities Depository Limited (NSDL) were

set up. NSDL and CDSL have been successful in the dematerialisation of securities

to the extent of 99 percent of the total market capitalisation. Currently the transfer of

ownership is mostly done through book-entry form. This has tremendously

improved the speed, accuracy and security of the settlement system. About 99.9

percent of trades in BSE and 100 percent of trades in NSE as shown in Table-9

below are currently settled through delivery, which is possible only due to

dematerialisation of scrip by the two depositories.

84

Table – 3.9

Settlement Statistics for Cash Segment of BSE and NSE27

Year N

o. of

Tra

des

Tra

ded

Qu

an

tity

(Lak

hs)

Del

iver

ed

Qu

an

tity

(L

ak

hs)

% o

f D

eliv

ered

Qu

an

tity

To

Tra

ded

Qu

an

tity

Tu

rnover

(Rs

.cro

re)

Del

iver

ed V

alu

e

(Rs.

Cro

re)

% o

f D

eliv

ered

Valu

e to

Tota

l

Tu

rnover

Del

iver

ed Q

uan

tity

In D

emat

Mod

e (L

ak

h)

% o

f D

ema

t

Del

iver

ed

Qu

an

tity

to T

ota

l

Del

iver

ed Q

uan

tity

1 2 3 4 5 6 7 8 9 10

BSE

1992- 93 126 35031 - - 45696 - - -

1993-94 123 75834 - - 84536 15861 18.76 - -

1994-95 196 107248 44696 41.68 67749 26641 39.32 - -

1995-96 171 77185 26763 34.67 50064 11527 23.02 - -

1996-97 155 80926 21188 26.18 124190 10993 8.85 - -

1997-98 196 85877 24360 28.37 207113 22512 10.87 - -

1998-99 354 129272 50570 39.12 310750 85617 27.55 - -

1999-00 740 208635 94312 45.20 686428 174740 25.46 - -

2000-01 1428 258511 86684 33.53 1000032 1666941 16.69 - -

2001-02 1277 182196 57668 31.65 307292 59980 19.52 - -

2002-03 1413 221401 69893 31.57 314073 48741 15.52 - -

2003-04 2005 385806 133240 34.54 503053 107153 21.30 132941 99.78

85

2004-05 2374 477171 187519 39.30 518716 140056 27.00 187347 99.91

2005-06 2643 664467 300653 45.25 816074 271227 33.24 300497 99.95

2006-07 3462 560780 229685 40.96 956185 297660 31.13 229573 99.95

2007-08 5303 986009 361628 36.68 1578855 476196 30.16 361542 99.98

2008-09 5408 739601 196630 26.59 1100074 230332 20.94 196096 99.73

NSE

Nov 94 –

Mar- 95 3 1330 688 51.74 1728 898 51.98 - -

1995-96 64 39010 7264 18.62 65742 11775 17.91 - -

1996-97 262 134317 16453 12.25 292314 32640 11.17 - -

1997-98 383 135217 22051 16.31 370010 59775 16.15 - -

1998-99 550 165310 27991 16.93 413573 66204 16.01 6179 22.08

1999.00 958 238605 48713 20.42 803050 82607 10.29 26063 53.50

2000-01 1614 304196 50203 16.50 1263898 106277 8.41 47257 94.13

2001-02 1720 274695 59299 21.59 508121 71766 14.12 59169 99.78

2002-03 2403 365403 82305 22.52 621569 87895 14.14 82305 100.00

2003-04 3751 704539 174538 24.77 1090963 220341 20.20 174538 100.00

2004-05 4494 787996 201405 25.56 1140969 276120 24.20 201405 100.00

2005.06 6000 818438 226346 27.66 1516839 407976 26.90 226346 100.00

2006-07 7857 850515 238571 28.05 1940094 543533 28.02 238571 100.00

2007-08 11645 1481229 366974 24.77 3519919 970618 27.58 366974 100.00

2008-09 13639 1418928 303299 21.38 2749450 610498 22.20 303299 100.00

Source: BSE & NSE

86

3.3.9. Clearing, Processing and Settlement System

The setting of the Clearing Houses / Clearing Corporations (CCs) has been a

critical institutional arrangement to improve the market microstructure of the Indian stock

market. NSE has a dedicated subsidiary namely, National Securities Clearing Corporation

Limited (NSCCL) which performs the role of a central counterparty. The CCs provide

full innovation with multilateral netting. Trade and Settlement Guarantee Funds have

been set up to guarantee settlement in case of default by brokers. There is also a system

of security lending and borrowing to obviate settlement risk .As CCs provide guaranteed

settlement, there is no counterparty risk in India. Moreover, India is one of the few

countries of the world to implement full- fledged Straight Through Processing (STP). The

STP has been made mandatory for all institutional trades.28

Another notable achievement has been the short ending of the settlement cycle

and adoption of the rolling settlement. The settlement cycle was as high as 14 days for

specified scrips and 30days for others. The settlement risk was very high as many things

can happen between the transaction and the settlement. Initially, the settlement cycle was

reduced to a week. There after the settlement vehicle was further reduced to T+3 from

April 2002 and to T+2 from April 2003. Efforts are being made to reduce the settlement

cycle further to T+1 basis. India’s settlement cycle is one of the best in the world.29

3.3.10. Risk Management System

SEBI has put in place a comprehensive risk management system. The major

features of the dynamic risk management system include, interalia, capital adequacy

norms, trading and exposure limits, margin requirement based or mark to market and Var

based margins, market-wide circuit filters, on-line position monitoring and automatic

disablement of broker’s terminals.30

Indian capital market remained insulated against the

South-East Asian meltdown in the late 90s. The May 17, 2004, crash of the stock market

in India was short-lived due to comprehensive risk management system. The T+2 trading

cycle, settlement guarantee funds, guaranteed settlement by CCs together with risk

management system have significantly reduced the risk perception of the Indian stock

market.

87

3.3.11. Margin Trading Facility

SEBI has allowed the member brokers to provide margin trading facility to their

clients in the cash segment since April 1, 2004. Securities with mean impact cost of less

than or equal to one and traded at least 80 per cent of the days during the previous 18

months would be eligible for margin trading. Only corporate brokers with net-worth of at

least Rs. 3 crore would be eligible to offer this facility after obtaining prior permission

from the exchanges.31

3.3.12. Regulatory Framework for Investor Protection

Investors are the major stakeholders in the securities market. It is mandatory for

SEBI to protect the interests of the investors. As a matter of fact, protection of investors’

interest is pursued by the securities market regulators throughout the world. Although the

objective is more or less the same for most of the regulators, the means to achieve it

varies from one jurisdiction to another. In India, one of the major achievements has been

to shift from merit-based regime to disclosure-based regime. SEBI issued Disclosure and

Investor Protection (DIP) Guidelines in 2000 and amended the same from time to time

keeping in view the investors’ interest. The disclosure norms in India are considered as

one of the best in the world.32

Listed companies have to comply with the disclosure

norms on an initial as well as on a continuous basis. The major objectives of the

disclosure norms have been to ensure transparency and provide adequate protection to the

investors.

Pricing of the public issues has been deregulated since the early 1990s. In a

deregulated regime, disclosures play a crucial role for the investors to take informed

decisions about their investment. Nevertheless, many companies, which flooded the

primary market in the early 1990s, have vanished. Hence, the disclosure norms have been

tightened from time to time.

Disclosure ought to be done on the stock exchange in addition to filing of regular

returns to stock exchange where it is listed, as well as to the Registrar of Companies. Any

price sensitive information about the company disclosed elsewhere attracts penal action.

88

Moreover, unfair trade practices, including insider trading, is prohibited in India in order

to provide a level playing field to all investors. If any person indulges in fraudulent and

unfair practices, he shall be liable to a maximum penalty of Rs. 25 crore or three times

the amount of profits made out of such practices, whichever is higher. 33

There is a system of proportional allotment of public issues in India. In case of

fixed price public issues, 50 per cent shares are being allotted to the retail investors. In

case of book-built issues, the share of allotment for the retail investors has been raised

from 25 per cent to 35 per cent. Keeping in view the possible misuse, the discretionary

allotment to the Qualified Institutional Buyers (QIBs) has been withdrawn. In a move

towards providing a level playing field, QIBs have been asked to deposit 10 per cent of

the bid amount.34

SEBI has given in-principle approval for the introduction of IPO grading at the

option of the issuer.35

IPO grading would be done by credit rating agencies registered

with SEBI. The grading is intended to be an independent and unbiased opinion of the

concerned agency. It would be a one time exercise and would focus on assisting the

investor, particularly the retail investors, for taking informed investment decision, SEBI

will not certify the assessment made by the rating agency. An issuer, who has opted for

IPO grading, has to disclose all gradings in the offer document. Cost of IPO grading can

be met by stock exchanges or out of the corpus maintained for Investor Education and

Protection Funds.

It has been recognised the world over that investors’ protection can be

strengthened by adhering to high corporate governance standards. Corporate governance

standards prescribed in India are based on international best practices.36

Following

recommendations of the expert committees, SEBI prescribed several governance

standards to be achieved by the companies by December 31, 2005, under the revised

Clause 49 of the Listing Agreement with the stock exchanges. Violation of this would

now attract penalty under the Listing Agreement. Corporate governance needs to be seen

not as compliance, but as a way of life. In this context, the quality of compliance assumes

significance. High corporate governance standards are not only desirable within the

economy, but also helpful for companies accessing the international capital market. SEBI

89

gives utmost importance to the corporate governance including mandatory induction of

independent directors.

The governance standards of the stock exchanges are also being improved

through the process called Corporatisation and Demutualisation (C & D) of stock

exchanges.37

The stock exchanges world over have been generally formed as mutual

organisations. The ownership, trading rights and management are often vested with the

same set of persons. This leads to conflicting interest between ownership and

management. In order to segregate the management function from the ownership and

trading rights, there is a need for demutualisation of stock exchanges. Moreover, stock

exchanges should function as body corporate similar to any other ‘for-profit’ corporate

entity. In India, NSE has been a corporate entity while NSE and OTCEI have been

demutualised from their inception. Corporatisation and Demutualisation of stock

exchanges is a priority item in the SEBI agenda. The oldest stock exchange of the

country, namely, the Bombay Stock Exchange became a limited company on August 19,

2005. The Corporatisation and Demutualisation process has been notified for most of the

remaining Regional Stock Exchanges (RSEs). The future of the RSEs post-

demutualisation is being worked out so that the viable among them can actively

participate in the mainstream market, besides catering to the regional requirements. A

professionally managed stock exchange with at least 50 per cent non-broking share-

holders is expected to play an important role for investor protection.

Security Regulations in Force38

The various security regulations in force are:-

1. SEBI (Stock Broker and Sub Broker) Regulations, 1992.

2. SEBI (Prohibition of Insider Trading) Regulation, 1992.

3. SEBI (Merchant Bankers) Regulations, 1992.

4. SEBI (Portfolio Managers) Regulations, 1993.

5. SEBI (Registrars to an Issue and Share Transfer Agents) Regulations, 1993.

6. SEBI (Underwriters) Regulations, 1993.

7. SEBI (Debenture Trustees) Regulations, 1993.

90

8. SEBI (Bankers to an Issue) Regulations, 1994.

9. SEBI (Foreign Institutional Investors) Regulations, 1995.

10. SEBI (Custodian of Securities) Regulations, 1996.

11. SEBI (Depositories and Participants) Regulations, 1996.

12. SEBI (Venture Capital Funds) Regulations, 1996.

13. SEBI (Mutual Funds) Regulations, 1996.

14. SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997.

15. SEBI (Buy- Back of Securities) Regulations, 1998.

16. SEBI (Credit Rating Agencies) Regulations, 1999.

17. SEBI (Collective Investment Schemes) Regulations, 1999.

18. SEBI (Foreign Venture Capital Investors) Regulations, 2000.

19. SEBI (Procedure for Board Meeting) Regulations, 2001.

20. SEBI (Issues of Sweat Equity) Regulations, 2002.

21. SEBI (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty)

Regulations, 2002.

22. SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities

Markets) Regulations, 2003.

23. SEBI (Central Listing Authority) Regulations, 2003.

24. SEBI (Ombudsman) Regulations, 2003.

25. SEBI (Central Database of Market Participants) Regulations, 2003.

26. SEBI (Criteria for Fit and Proper Person) Regulations, 2004.

27. SEBI (Self – Regulatory Organisations) Regulations, 2004.

28. SEBI (Regulatory Fee on stock exchanges) Regulations, 2006.

29. SEBI (Certification of Associated persons in the securities market) Regulations,

2007.

91

30. SEBI (Issue and listing of debt securities) Regulations, 2008.

31. SEBI (Intermediaries) Regulations, 2008.

32. SEBI (Delisting of Equity Shares) Regulations, 2009.

33. SEBI (Issue of Capital and Disclosure Requirements), 2010.

Security Guidelines in Force

The various security guidelines in force are:

1. SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme)

Guidelines, 1999.

2. Guidelines for Opening of Trading Terminals Abroad (Issued in 1999).

3. SEBI (Disclosure & Investor Protection) Guidelines, 2000.

4. SEBI (Delisting of Securities) Guidelines, 2003.

5. SEBI (STP Centralized Hub and STP Service Providers) Guidelines, 2004.

6. Comprehensive Guidelines for Investor Protection Fund / Customer protection

Fund at Stock Exchanges (Issued in 2004).

Security Schemes in Force

The various security schemes in force are:

1. Securities Lending Scheme, 1997

2. SEBI (Informal Guidance) Scheme, 2003)

3.3.13. Grievances Redressal Mechanism

There is a comprehensive investor grievances redressal mechanism at its head

office as well as at the regional offices of SEBI. The Office of Investor Assistance and

Education (OIAE) is the single window interface through which SEBI interacts with

investors. SEBI takes up investor complaints with companies and registered

intermediaries on a regular basis. In order to file complaints, there is a standardised

format which is available at all SEBI offices and on the SEBI website for the

92

convenience of investors. SEBI has a simple and efficient internet based response system

for investor complaints. A system generated acknowledgement letter is issued to the

investors as soon as a complaint is received electronically. Investors have the option of

filing the complaints online or submitting the same on plain paper. Investors who visit the

SEBI offices or access the investor helpline are guided regarding the appropriate

authority to lodge their complaints which are outside the jurisdiction of SEBI. An account

of receipt and redressal of investor grievances by SEBI is highlighted in Table-10 below:-

Table – 3.10

Receipt and Redressal of Investor Grievances39

Year Grievances Received Grievances Redressed Cumulative

Redressal

Rate (%) During the

period

Cumulative During the

period

Cumulative

1991-92 18794 18794 4061 4061 21.6

1992-93 110317 129111 22946 27007 20.9

1993-94 584662 713773 339517 366524 51.4

1994-95 516080 1229853 351842 718366 58.4

1995-96 376478 1606331 315652 1034018 64.4

1996-97 217394 1823725 431865 1465883 80.4

1997-98 511507 2335232 676555 2142438 91.7

1998-99 99132 2434364 127227 2269665 93.2

1999-00 98605 2532969 146553 2416218 95.4

2000-01 96913 2629882 85583 2501801 95.1

2001-02 81600 2711482 70328 2572129 94.9

2002.03 37434 2748916 38972 2611101 95.0

2003-04 36744 2785660 21531 2632632 94.5

2004-05 54435 2840095 53361 2685993 94.6

2005-06 40485 2880580 37067 2723060 94.5

2006-07 26473 2907053 17899 2740959 94.3

2007-08 54933 2961980 31676 2772577 93.6

2008-09 57580 3019560 75989 2848566 94.3

Source: SEBI

93

During the period 1991-92 to 2008-09, the SEBI received 30, 19,560 grievances

from the investors of which a total of 28, 48,566 grievances were redressed by the

respective entities, indicating a redressal rate of 94.3 per cent.

In case the companies fail to redress complaints in spite of repeated reminders by

SEBI, regulatory actions are initiated under section 11B (debarring companies form

accessing the capital markets) and 15C (imposing of monetary penalty) of the SEBI Act,

1992. Up to March 31, 2009, 33 companies have been referred for adjudication

proceedings under Section 15C of the SEBI Act, 1992. Prohibitory orders have also been

passed under Section 11B of the SEBI Act, 1992 against errant companies which did not

redress the investor grievances. Such orders have been passed against 12 companies and

62 directors till March 31, 2009.40

Moreover, SEBI also issues the status of investor

grievances every fortnight for public information and uploads the same on SEBI Website.

3.3.14. Investor Education41

Investor education plays a crucial role for the securities market awareness,

particularly for the retail investors. A major initiative in this regard during the recent past

has been launching of a comprehensive Securities Market Awareness Campaign (SMAC)

on January 17, 2003. The campaign includes workshops, audio-visual clippings, and

distribution of educative materials in English, Hindi and also in regional languages. There

is a dedicated investor website which archives the booklets / pamphlets / FAQs etc. SEBI,

in co-ordination with other agencies, conducted about 2188 workshops throughout the

country till date under the SMAC. (Tamilnadu-134)

SEBI recognises investor associations and extends financial support for

conducting investor education programmes. SEBI has recognised 24 investor associations

up to November 2010.

There has been a long-standing request from the financial journalists of the print

and electronic media to have an interface with SEBI on issues relating to the capital

market. As financial journalists play a critical role for investors’ education, SEBI decided

94

to conduct a one-day workshop on capital market for the financial journalists at different

centres. The objective of the programme is to provide adequate inputs to the financial

journalists for balanced reporting of financial events and shoulder the responsibility of

accurate dissemination of information on the developments that are taking place on a

day-to-day basis in the securities market. This programme was organised at New Delhi

and Chennai during 2005-06. At both the places, the programme was inaugurated by Shri

M. Damodaran, Chairman, SEBI. A few outside experts, including professors and

practitioners were invited for an interface with the participants in addition to

presentations given by the senior officers of SEBI. As the response was encouraging,

SEBI is contemplating to conduct the same programme in other centres during 2006-07.

3.4. RECENT INITIATIVES42

SEBI introduced the Application Supported by Blocked Amount (ASBA) as a new

mode of payment in public issue. In this kind of mechanism the application money

remains blocked in the bank account of the applicant till the allotment is finalized.

Direct Market Access facility was introduced for institutional investors in April

2008 by SEBI.

In an endeavour to strengthen the risk management framework, margining for

institutional trades was made mandatory by SEBI.

Reduction in time for Right Issues was reduced from 16 weeks to 6 weeks.

A change in Securities Lending and Borrowing (SLB) Scheme was introduced in

April 2008.

Currency Futures were launched on USD-INR pair in India in August 2008 by

NSE, and October 2008 by BSE and MCX.

Removal of Quantitative restrictions imposed on the Overseas Derivatives

Instruments (ODIs) for FII.

95

Exit Option to Regional Stock Exchanges (RSEs).

Listing of close-ended schemes launched on or after December 12, 2008 along with

daily computation of NAV was made compulsory.

SEBI permitted NSE to launch Interest Rate Futures on August 31, 2009.

3.5. INDIAN CAPITAL MARKET – FUTURE ROAD MAP43

SEBI may go in for fresh investor survey at the earliest to understand the

investment behaviour of the households during the more recent period.

Hon’ble Union Finance Minister has proposed to set up an investor protection

fund under the aegis of SEBI which would be funded by fines and penalties

recovered by SEBI.

SEBI would continue to nurture the Mutual Fund Industry and thereby attract

more and more household participation in the capital market.

Gold Exchange Traded Fund (GETF) has been introduced in India and in

addition, SEBI is also working for the introduction of the Real Estate Mutual

Fund, which is likely to mitigate the housing requirement of many households.

SEBI has been authorized to set up a National Institute of Securities Markets

(NISM) for teaching and training intermediaries in the securities market and

promoting research.

3.6. SUMMARY

Thus the Indian Capital Market is in transition. There has been a revolutionary

change over a period of time. In fact, on almost all the operational and systematic risk

management parameters, settlement system, disclosures, accounting standards, the Indian

Capital Market is at par with the global standards. The goal of SEBI is to make the

Indian Capital Market truly world class, competitive, transparent and efficient. A

96

perception is steadily growing about the Indian Capital Market, as a dynamic market,

among the international community. Let us dream to make our Indian Capital Market a

benchmark for the rest of the world.

REFERENCES

1. Levine, Ross and S. Zervos, “Stock Market Development and Economic Growth”,

The World Bank Economic Review, Vol.1012, PP.323-339, 2006.

2. Agarwal R.N, “Financial Liberalization in India: Banking system and stock

Markets”, Delhi: D.K. Publishers, 2007.

3. Bajpai G.N., “Developments of capital Markets in India”, cited at London

School of Economics on 2nd

October 2009, www.sebi.gov.in

4. Fama E, “Efficient Capital Markets: II”, Journal of Finance, Vol. XLVI(5),

PP.1575-1617

5. Shah. A and Thomas., S, “Developing the Indian Capital Markets” in J.A.

Hanson and S.Kasthuria, eds, “A Financial sector for the Twenty first century,

India,”: Oxford University Press, Chapter 71, PP.225 -265

6. Ibid., P.270

7. Shirin Rathore, Muneesh Kumar, Amitabh Gupta, “Indian Capital Market – An

Empirical Study”, New Delhi: Anmol publications Pvt. Ltd., Cover page.

8. NSE-Fact book: 2009, www.nseindia.com,p.1.

9. Damodharan.M, “Capital Market in India: A country Profile”, SEBI bulletin,

Vol.3, No.11, Nov2009,P 5.

10. SEBI, Handbook of Statistics on the Indian Securities Market: 2009,

www.sebi.gov.in, PP. 247-250.

97

11. Indian Securities Market – A Review: 2005, National Stock Exchange

publication, Vol.VIII, P.5.


www.sebi.gov.in PP.22-23.

13. Sachdeva, “Emerging Securities Market – Challenges and Prospects”, Chartered

Financial Analyst, Feb 2005, PP.53-56.

14. Ibid., pp.70-75


publication, PP.15.


PP.6.

17. SEBI, Handbook of Statistics on the Indian Securities Market:2009,

www.sebi.gov.in PP.3

18. Ibid., PP.52

19. NSE-Fact book: 2011, www.nseindia.com,p.1, PP.85


www.sebi.gov.in, PP.43.44.


publication, PP.85.

22. Ibid., PP.50.

23. Ibid., PP.51.

24. Ibid., PP.3.

98


Vol.3, No.11, Nov2010 PP.7.

26. Ibid., pp.10-12.


www.sebi.gov.in, PP.40-43.


Vol.3, No.11, Nov2005

29. Ibid.,

30. Ibid., PP.8.


publication, Vol.VIII, PP:112-113.

32. Chopra V.K, “Investor Protection: An Indian Perspective”, SEBI bulletin, Nov

2006,

33. Chopra V.K. “Capital Market Reforms in India: Recent Initiatives”, SEBI bulletin

Nov 2011,

34. Ibid.,pp.5


2010,

36. Ibid.,pp.6.


Nov 2006

38. Security Regulations, Guidelines, Schemes in Force, SEBI bulletin, Vol.3, No.11,

Nov 2010, PP.13

99


www.sebi.gov.in PP.70.


2009,

41. Ibid., pp. 20


Nov 2008


2011.

100

CHAPTER - IV

INVESTMENT PREFERENCE AND DECISION

INTRODUCTION

This Chapter examines the investment pattern of the retail equity investors in

general and investment preferences, risk-return perceptions and investment objectives of

the retail equity investors based on the socio-economic variables and selective investment

profile factors.

An investment in equity shares is one of the welcoming trends in the investment

sector. These investments have been found in the primary market, secondary market,

changes in project details and financial parameters. The equity share is always dominated

by the primary market and secondary market and the investors select one of these to their

investment processes and lucrative approach. In this chapter, perception of investors on

primary and Details of present values are analysed with respect to their various

investment options and procedures. The ideas of financial parameters and changes of

project details contribute to the retail investment and their progress. So their elements and

consequences in the present scenario are ascertained through the opinions of respondents.

Several sophisticated and multivariate tools are exploited to obtain the torrent of results

useful for the study. The general impact of financial investments on the equity shares will

be analysed with the support of data collected by using appropriate statistical tools, of

course with necessary interpretations.

As already mentioned though the study related to financial investments and their

impact on the equity shares, the main concentration will be on the perception of the

investors, who are the part and parcel of the equity shares. Hence, the study of

demographic variables regarding the investors is necessary and let us book at them in the

following lines.

101

4.2 Age of the Investors

Investment factor often goes with age. Age factor distinguishes the investor

behaviour. Many investing options have carved out a place in the equity shares by

concentrating on a specific age segment. The age of the investors plays a crucial role to

identify the investment behaviour. It is considered as a useful demographic variable to

segment the investors based on their perception of the investment pattern. The

respondents have been divided into four groups, namely, less than 25, 26-40, 41-60 and

above 60. Table 4.1 shows the age of frequency distribution of the sample investors.

Table - 4.1 Age Frequency of Investors

Age Frequency Percentage

Below 25 29 5.7

26-40 278 54.9

41-60 169 33.3

Above 60 31 6.2

Total 507 100

Source: Primary Data

The above table clearly indicates that a maximum percentage of 54.9% of

investors are in the age group of 26 to 40 followed by the investors in the age group 41 to

60 which is 33.3%. It is also found that a less percent of 6.2% of the investors are in the

age group of above 60.

102

Figure – 4.1: Age of the Investors

4.3 Gender of the Investors

Gender is a useful variable for the equity shares investment because it seems to

reflect the attitudes, options and prudential motives of the investors. Gender is an

important factor to identify the behaviour of the investors. In general, most of the

investors in the equity shares are males. Females are not much exposed to the

effectiveness of retail investment and their consequences. Table - 4.2 shows the

distribution of male and female investors.

Table - 4.2: Gender of the Investors

Gender Frequency Percentage

Male 468 92.4

Female 39 7.6

Total 507 100

103


From the above table, it is clear that 92.4% of the investors are males and 7.6%

are females. This profoundly reveals that males are more enthusiastic than females in

equity shares investment. These results are also shown in Figure – 4.2.

Figure – 4.2: Gender of the Investors

4.4 Marital Status of the Investors

Marital status affects the investment pattern of investors. The marital sentiments

force them to invest for their future prospects. This state makes the investor to think twice

before investment. The martial status is considered to be one of the major determinants

for investors. Due to various family commitments, the married investors are not able to

concentrate more on investment in the equity shares. Table - 4.3 indicates the marital

status of the investors.

Percentage

104

Table - 4.3: Marital Status of the Investors

Marital Status Frequency Percentage

Married 407 80.3

Unmarried 93 18.4

Separated 07 1.2

Total 507 100


It is found from the above table that 80.3% investors are married and 18.4% are

unmarried and the remaining 1.2% is separated according to martial status. The married

investors view these investments for their prudential purpose. The graphic figure – 4.3

also supports the above interpretation.

Figure – 4.3: Marital Status of the Investors

4.5 Education of the Investors

Education completely expresses the values of investment, creates attitudinal

changes among investors, more broadly, it reflects a life style with many investment

options in the equity shares. Education is a powerful background for the investor’s

analysis about the pros and cons of investment in equity shares. Table - 4.4 presents

education wise distribution of the investors.

Percentage

105

Table - 4.4: Education of the Investors

Education Frequency Percentage

School 40 7.9

Diploma 54 10.7

Graduate 247 48.8

Postgraduate 104 20.6

Professional 62 12.0

Total 507 100


It is found that most of the investors are have a good education background.

48.8% of the investors are graduates, 20.6% are post graduates and 12% are

professionals. This shows that the educated investors are able to analyze the advantages

and disadvantages of investment in equity shares and they also concede that they are able

to get transparent information through television and magazines regarding equity shares

in India.

Figure – 4.4: Education of the Investors

0

10

20

30

40

50

60

Education of the investors

Percentage

106

4.6 Occupation of the Investors

Many investment companies and stock brokers have found that occupational

category can also be used to distinguish the investment pattern. Occupation of the

investors paves the way and also induces the investment pattern of the investors. Table -

4.5 depicts the occupation of investors surveyed, among five groups according to their

occupation.

Table - 4.5: Occupation of the Investors

Occupation Frequency Percentage

Government 70 13.8

Private 218 43.0

Self-employed 166 32.7

Agriculture 07 1.3

Retired 46 9.2

Total 507 100


In this table, it is identified that most of the investors are working in private

concerns or running their own business, that is 43% and 32.7% of investors are employed

in private or in their business concerns. The Government employees are not enthusiastic

more in equity shares investment and retired people and agriculturalists also show the

least interest in investing their surplus in equity shares project details. The above facts

have been shown in Figure – 4.5 also.

107

Figure – 4.5: Occupation of the Investors

4.7 Income of the Investors

Income has long been an important variable for distinguishing investment

segments. It is known that affluent investors are much enthusiastic in investment and

need better returns. The respondents are divided into four income groups according to

their annual income. Income is the most important factor for all the investors to allot

separate amount for the investment, which will be used for their future purpose. Table -

4.6 explicitly shows the income of the respondents.

Table - 4.6: Income of the Investors

Income Frequency Percentage

Below 1 lakh 135 26.6

1-2 lakhs 198 39.1

2-3 lakhs 116 22.9

Above 3 lakhs 58 11.4

Total 507 100


108

It is found from the table that 39.1% investors belong to the income groups of Rs.

1 - 2 lakhs and 26.6% investors have the income less then Rs. 1 lakhs, 22.9% are in the

income of groups of Rs. 2 - 3 lakhs. The investors with more than Rs. 3 lakhs income do

not show more interest on investments in equity shares. Figure – 4.6 also illustrates the

above data.

Figure – 4.6: Income of the Investors

4.8 Nature of Family of the Investors

Nature of family is an important factor affecting the regular investment pattern.

Family nature is considered as one of the burdens affecting the investment behaviour of

investors. Family members of investors are classified into three groups as shown in the

table - 4.7.

109

Table - 4.7: Nature of Family of the Investors

Nature of family Frequency Percentage

Joint 194 38.3

Nuclear 313 61.7

Total 507 100


From the above table, it is clear that the investors in the joint family are not much

enthusiastic in investment in the equity shares and the investors of nuclear family are able

to invest more amount of their income in equity shares. Figure – 4.7 also indicates the

above observation.

Figure – 4.7: Nature of the Family of Investors

4.9 Number of Dependents of the Investors

The number of dependents is playing a significant role in deciding the investment

amount of the investors and it is presented in table - 4.8.

110

Table - 4.8: Number of Dependents of the Investors

Number of Dependents Frequency Percentage

No dependents 70 13.8

1 dependent 49 9.7

2 dependents 121 23.9



More than 4 dependents 69 13.5

Total 507 100


When the number of dependents is more in the family, their investment behaviour

pattern also changes significantly. The number of dependents and investment are

inversely proportional to each other. When the number of dependents is more in the

family, they do not have ample money for investment in this present economic situation.

Figure – 4.8 also indicates the same inference.

Figure – 4.8: Number of Dependents of the Investors

111

4.10 House Ownership of the Investors

Own house and rented house investors behave in a different manner during their

investment proceedings. Rented house exploits their income and hampers them from

investment. Table - 4.9 indicates two types of investors.

Table - 4.9: House Ownership of the Investors

House Ownership Frequency Percentage

Own 434 85.7

Rented 73 14.3

Total 507 100


It is inferred from the table that most of the investors in equity shares have their

own house. If they have their own houses, they divert their income in the form of

investment in equity shares. It is also found that 85.7% of the investors have their own

houses and 14.3% are in rented house. Figure – 4.9 also supports the above facts.

Figure – 4.9: House Ownership of the Investors

112

4.11 Type of Investors

There are two types’ of investors in share market of India. The hereditary

investors develop the investment habit as their character and some investors are induced

by the liberalization and transparency of share market investment. The following

Frequency Distribution Table 4.10 reveals the response of investors about their type

towards share market investment:

Table -4.10: Type of investors

Type Frequency Percentage Valid

Percentage

Cumulative

Percentage

Options

New

generation 428 84.4 84.4 84.4

Hereditary 79 15.6 15.6 100.0

Total 507 100.0 100.0

From the above table it is found that 84.4% of the respondents in Chennai are new

generation investors who know about the risk and return in equities, whereas, 15.6% of

them are hereditary investors. This implies that maximum number of investors is new

generation and induced by policies of liberalization and transparency in Indian capital

market.

4.12 Category of investors

The investors differ in their category based on their long term investment pattern

and daily trading approach in Indian share market. The following frequency distribution

Table 4.11 presents two different categories of investors

113

Table – 4.11: Category of Investors

Category Frequency Valid Percent Cumulative Percent

Both 365 72 72

Daily traders 64 12.6 84.6

Long term 78 15.4 100

Total 507 100

From the above table it is found that 72% of the respondents establish

themselves as both long term investors and daily traders and 12.6%of them operate

equity investment daily. It is also found that 15.4% of the investors have the habit of long

term investment in equities.

From the above analysis it is inferred that maximum number of respondents are

interested towards long term investment and daily trading of shares.

4.13 Number of Years of Dealing with Securities Markets

Investment Behaviour of the investor can be easily analyzed through the number

of years of dealing with securities markets. In fact, the experience makes a man perfect

by dealing in the securities markets so that the investor may come to know the changes in

securities markets. It is believed that wisdom comes only form ones own experience. In

this study four classification have been considered namely below 5 years, 6 – 10 years,

11 - 15 years and above 15 years. The following frequency distribution Table 4.12

expresses the distribution of the samples according to the number of years dealing with

securities markets.

114

Table-4.12: Frequency Distribution of Number of Years of Dealing with Securities

Markets

years Frequency Valid Percent Cumulative

Percent

Valid

Below 5 years 277 54.7 54.7

6 – 10 years 130 25.6 80.2

11 – 15 years 89 17.6 97.8

Above 15 years 11 2.2 100.0

Total 507 100.0

Source: Primary data

From the above table it is revealed that a maximum of 54.7% of investors are

dealing less then 5 years of experience in the securities market followed by 25.6% of

investors are having the experience in the securities market for 6 to 10 years , 17.6% of

the investors have been dealing for the period of more than 11 years but less than 15

years of experience and only 2.2% of the investors are dealing in the securities market

with the experience of more than 15 years of experience with securities market. So the

percentage analysis revealed that most of the investors are having the experience in the

securities market just below 5 years which shows that young investors and educated

person are now entering into the securities markets.

4.14 Number of companies invested.

People have several means to get to know about the available investment schemes

in different companies in different sectors and these sources are motivating the potential

investors to make investments in particular companies.

The following Frequency Distribution Table 4.13 reveals the response of

investors pertaining to number of companies invested:

115

Table-4.13: Number of companies invested

Number of companies Frequency Percent Valid Percent Cumulative

Percent

Response Less than 10 376 74.1 74.1 74.1

More than 10 131 25.9 25.9 100.0

Total 507 100.0 100.0

From the above table it is found that 74.1% of the respondents in Chennai

invested in less than 10 companies and remaining 25.9% of them are attracted towards

more than 10 companies share market investment. This denotes that maximum number of

customers possess the updated knowledge about less than 10 companies for their

investment.

4.15 Size of Investment

The size of investment has an important bearing on the share market investment

of the individuals. The investment habits of the individuals will be highly influenced by

the size of investment in their hands. The following frequency distribution Table 4.14

expresses the distribution of the samples according Size of investment dealing with

securities markets.

Table-4.14 Distribution of Samples on the Basis of size of investment

Size of Investment Frequency Valid Percent Cumulative Percent

Less than Rs. 1,00,000 54 10.7 10.7

Rs. 1,00,000- Rs. 2,00,000 180 35.4 46.1

116

Rs. 2,00,000-Rs. 3,00,000 119 23.5 69.6

Rs. 3,00,000 and above 154 30.4 100.0

Total 507 100.0

From the above table it is found that 10.7 % of the respondents have an

investment of less than Rs. 1, 00,000. The investment level of 35.4 % of the respondents

is between Rs. 1, 00,000 and Rs. 2, 00,000. 23.5 % of them have an investment size

which ranges from Rs.2, 00,000 to Rs. 3, 00,000. The annual size of 30.4 % of the sample

ranges above Rs.3, 00,000. From the above analysis it is clear that large number of

respondents have an annual income ranging between Rs. 1, 00,000 and Rs.2, 00,000.

4.16 Source of Investment.

The investors enthusiastically invest their own funds or borrowed funds to derive

maximum return with in the short span of time.

The following Frequency Distribution Table 4.15 reveals the response of

investors about their source of funds to invest in equities:

Table-4.15 Source of Investment

Internet Banking Frequency Percent Valid

Percent

Cumulative

Percent

Response Own funds 489 90.6 90.6 90.6

Borrowed

funds 51 9.4 9.4 100.0

Total 540 100.0 100.0

117

From the above table it is found that 90.6% of the respondents in Chennai are able

to invest own funds in equities whereas, 9.4% of them borrow funds to invest in equities.

This indicates that maximum number of investors invest own funds to obtain better

returns.

4.17 Percentage of Savings Invested In Securities Markets

The Behaviour of investors can be easily analyzed through the percentage of

savings invested in the securities markets. In fact the surplus income induces the

investors to participate in the securities market in order to earn high returns. Propensity to

invest can be defined as the percentage of current income invested; it’s known that

investments are made out of surplus income. If the proportion of investment to income is

higher, then the propensity is said to be higher. In this study four classifications have

been considered namely below 25%, 26 – 50%, 51 – 75%, and 76 – 100 % of savings

invested in to the securities markets. The following frequency distribution Table 4.16

expresses the distribution of the sample according to the percentage of savings invested

in the securities markets.

Table-4.16 Frequency Distribution of Percentage of Savings Invested In Securities

Markets

Percentage of savings Frequency Valid

Percent

Cumulative

Percent

Valid

Below 25% 528 64.0 64.0

26% - 50% 188 22.8 86.8

51% – 75% 104 12.6 99.4

76% - 100% 5 0.6 100.0

Total 507 100.0


118

From the above table it is ascertained that a maximum of 64% of sample size are

investing their fund out of their savings below 25%, followed by 22.8% of sample size

are participating in the securities market out of their savings between 26 – 50%, on

sample size of 12.6% of the investors are investing their fund out of their saving between

51 – 75% and only 0.6% of the sample size are investing their saving between 76 –

100%. So the percentage analysis revealed that most of the investor are invest their

money out of their saving below 25% of the surplus money that they had.

4.18 Sources of Information

A successful investor in securities market must keep himself abreast of the latest

information, all the required information especially the one relating to specific companies

/ industries is not available at one place, so investors are able to get transparent

information about their dealings in securities market through various avenues like News

Paper, Journals and Magazines, Television Channels, Stock Brokers, Investment

Consultancy, Web sites and friends and Relatives. The following table 4.17 presents the

combined frequency distribution of various avenues of information.

Table 4.17 : Sources of Information

Sources Of Information No. Of Responded Percentage

News Papers

Television Channels

Stock Brokers

Journals & Magazines

Friends & Relatives

Investment Consultant

Web Sites

400

336

286

256

203

200

179

77.6

66.4

56.5

50.8

40

39.4

35.3


119

From the above combined frequency distribution table it is ascertained that a

maximum of 77.6% of investors get the information about the securities market through

news papers followed by 66.4% of investors get the information through television

media, 56.5% of investors receive the information through the stock brokers, 50.8% ,

40%, 39.4% and 35.3% of the investors obtain the information about the securities

through journals and magazines, friends and relatives, investment consultant and web

sites respectively. So the combined frequency distribution analysis revealed that a major

percentage of the investors are getting the information through news papers television

and stock brokers.

4.19 Criteria for Investments

Table 4.18: Criteria for Investments

Criteria Frequency Valid Percent Cumulative

Percent

Sector based 253 49.9 50.2

Financial performance 252 49.6 99.5

other 2 0.5 100

Total 507 100.0


From the above table 4.18 it is found that a maximum of 49.9 percent of investors

investing their investment after a careful analysis of company based on their sector in

which it belongs. Some 49.6 percent of investors are investing their money after

analyzing the financial performance of the companies and only 0.5 percent of investors

are considering some other factors like present market condition and new production

strategies. So it is highlighted from the above table that most of the investors are

channalised their investment after a careful analysis of the sector considered in which the

company belonging.

120

4.20 Member of investors’ forum

Investors’ awareness about criteria, forum, malpractices of intermediaries, and

mode of trading financial sector reforms are highlighted in the following discussion.

Table 4.19: Member of investors’ forum

Frequency Valid Percent Cumulative Percent

Yes 435 85.8 85.8

No 72 14.2 100.0

Total 507 100.0


From the above table 4.19 it is ascertained that a maximum of 85.8 percent of

investor are possessing experience in dealing their investment forums followed by 14.2

percent of investor doesn’t have any experience with the forum of investors So the

percentage analysis table reveals that most of the investors in securities market are having

much experience with forum of investors in dealing their investment affairs.

4.21 Awareness of Malpractice of Intermediaries

Table 4.20: Awareness of Malpractice of Intermediaries


Yes 416 82.1 82.1

No 91 17.9 100.0

Total 507 100.0


121

From the above frequency table 4.20 it is ascertained that a maximum of 82.1

percent of investors in securities market are aware of the malpractice of intermediaries

followed by 17.9 percent of investors are not known the malpractices done by the

intermediaries. So the percentage analysis reveals that most of the investors in Indian

securities market are having the knowledge about the malpractices done by the

intermediaries like share brokers etc.

4.22 Mode of Trading

Table 4.21: Mode of trading


Online 416 82.1 82.1

Off line 91 17.9 100.0

Total 507 100.0


From the above frequency table 4.21 it is ascertained that a maximum of 82.1

percent of investors in securities market are aware of the online trading and they buy and

sell their equities followed by 17.9 percent of investors deal with offline trading. So the

percentage analysis reveals that most of the investors in Indian securities market are

having the knowledge about the on line trading conveniently.

4.23 Awareness of Financial Sector Reforms in India

Table 4.22: Awareness of Financial Sector Reforms in India

122


Yes 504 99.5 99.5

No 3 0.5 100.0

Total 507 100.0


From the above table 4.22 it is ascertained that a maximum of 99.5 percent of

investors in the Indian securities market are aware of the reforms made in the Indian

financial system, followed by only 0.5 percent of investors are don’t have the awareness

of financial sector reforms in India. So it is inferred by the percentage analysis that

majority of the investors in Indian securities market are aware of the financial sector

reforms made by the Government of India.

4.24 The Impact of Indices on investors

People have several means to get to know about the available investment schemes

and these sources are motivating the potential investors to make investments in a

particular investment avenue. Investment decision making is the process of identifying

various alternatives, evaluating each alternative and choosing the best alternative based

on the priorities, expectations and risk tolerance of the investor. Investors could make

decision on their own or can rely on the advice of another person. It is very important that

the investors do their home work whether they take independent decisions or rely on

others. In this study five classifications of indices have been considered namely sensex,

CNX nifty, CNX Nifty Junior, CNX midcap and CNX Midcap 200. The following

frequency distribution Table 4.23 expresses the distribution of the samples according to

the source of index about investment avenues.

123

Table 4.23: Frequency Distribution Of index

Influencers Frequency Valid

Percent

Cumulative

Percent

Valid

Sensex 217 42.9 42.9

CNX Nifty 47 9.2 52.1

CNX Nifty Junior 161 31.9 84.0

CNX Mid cap 62 12.1 96.1

CNX Midcap 200 20 3.9 100.0

Total 507 100.0


In can be seen that out of the sample size 42.9% of the investment decisions are

taken based on sensex index followed by 31.9% of the investors’ decisions are influenced

by the index of Nifty, 12.1% of the investors’ decisions are influenced by the index of

Nifty junior, 9.2% of the sample size of investors’ decisions are influenced by the index

of CNX Midcap and only 3.9% of the investors’ decisions are influenced by the CNX

madcap 200. So the percentage analysis revealed that most of the investor’s decisions are

influenced and taken by the observations of sensex index.

4.25 Association between Sources of Information and Preference of Industry

The non-parametric chi-square test is applied to find the association between

source of the information useful for the investors and their ranking preference of their

investment industry. Different sources of information stated in the questionnaire are

considered for the analysis.

a) News papers and Investment in Different Industries

The association between information through newspapers and different industry is

displayed in table – 4.24.

124

Table – 4.24: Chi-square Value for Sources of Information with

regard to Newspapers

Industry Chi-square value Sig Result

Banking 27.538 0.001 Association

Steel 27.654 0.001 Association

Cement 27.087 0.000 Association

IT 10.517 0.161 No association

Pharma 18.236 0.011 Association

Manufacturing 28.220 0.000 Association

Textile 16.320 0.022 Association

Automobile 29.118 0.000 Association


From the above table, it is found that the information through Newspaper plays a

crucial role in identifying all the industries except IT industry.

b) Journals, Magazines and Investment in Different Industries

The association between information through Journals, magazines and different

industries is presented in table – 4.25.

125

Table – 4.25: Chi-square Value for Sources of Information with regard to Journals

and Magazines



Steel 10.748 0.150 No Association

Cement 12.742 0.079 No Association


Pharma 8.385 0.300 No Association





From the above table it is found that the information through Journals and

magazines is useful for investors to invest in banking, manufacturing, textile and

automobile industries.

c) TV channels and Investment in Different Industries

The association between information through TV channels and different industry

is presented in table – 4.26.

Table – 4.26: Chi-square Value for Sources of Information with

regard to TV





126



Manufacturing 7.386 0.390 No Association

Textile 6.760 0.454 No Association

Automobile 12.086 0.098 No Association


From the above table it is inferred that banking, steel and cement industry are

concentrated by the investors with the help of information through TV channels.

d) Stock Brokers and Investment in Different Industries

The association between information through stockbrokers and different industry

is presented in the table – 4.27.

Table – 4.27: Chi-square Value for Sources of Information with regard to Stock

Brokers





IT 36.211 0.000 Association






127

As far as the capital market investment and selection of industry is concerned, the

stockbrokers give more information to the investors in selecting the industry.

e) Investment Consultants and Investment in Different Industries

The association between information through investment consultants and different

industries is presented in the table – 4.28.

Table – 4.28: Chi-square Value for Sources of Information with regard to

Investment Consultant




Cement 12.014 0.100 No Association







From the above table, it is ascertained that the investment consultants

significantly guide the investors to invest in banking, steel, IT, manufacturing, textile and

automobile industries respectively.

f) On line Websites and Investment in Different Industries

The association between information through on line websites and different

industry is presented in table – 4.29.

128

Table – 4.29: Chi-square Value for Sources of Information with regard to On Line

Website











From the above table it is found that web sites give profuse source of information

for investors about the performance of banking, cement, IT, pharma, manufacturing, and


g) Friends, Relatives and Investment in Different Industries

The association between information through friends, relatives and different

industries is presented in the table – 4.30.

Table – 4.30: Chi-square Value for Sources of Information with regard to Friends

and Relatives





129







From the above table it is found that friends and relatives are give more useful

information about the performance of banking, cement, IT, pharma, manufacturing, and


It is concluded that the different sources of information play the vital role in the

investor’s behaviour they promote the knowledge of every investor to think prudently

about the consequences of their investment.

4.26 Preference of Investments and their Ranks with regard to equity investment

The ranking method helps the researcher to identify which investment avenues are

most preferred. Table - 4.31 presents the mean, standard deviation and their respective

rankings based on the mean.

Table - 4.31: Mean and Standard Deviation for Preference of

Investments and their Ranks

Variable Mean S.D. Rank

Shares 1.86 1.42 1

Fixed Deposit 3.72 1.81 2

Real Estates 3.93 1.88 3

Mutual Funds 4.33 1.73 4

Government Bonds 4.40 1.79 5

130

Gold 4.81 2.02 6

Debentures 4.99 1.62 7


It is inferred from the above table that the mean is found according to the ranks

assigned to the variables by the investors. The most preferred investments are well

established and the investors strongly agree that the investment in capital market alone

gives more returns with minimum market risk. So they prefer share market as rank 1

followed by fixed deposit, real estate, mutual funds, government bonds, gold and

debentures in order. The first preference is due to appreciable returns besides the

maximum risk.

4.27 Ranking Analysis for Preference of Investments in Industry

The ranking analysis is executed for the different preference of investment in

industry such as banking industry, steel industry, cement industry, IT industry, Pharma

industry, manufacturing industries, textile industry and automobile industry and the

following preferences are arranged in order in table - 4.32.

Table - 4.32: Mean and Standard Deviation for Ranking of Industries


Banking Industry 3.17 2.20 1

IT Industry 3.45 2.43 2

Cement Industry 4.51 1.20 3

Pharma Industry 4.81 1.76 4

Automobile Industry 4.87 2.37 5

Manufacturing Industry 4.88 2.17 6

Textile Industry 6.02 2.07 7


From the above table, it is found that according to the rank of preference, the

investors invest their money in the above mentioned industries. They invest their money

safely in banks in the form of deposits and give second preference to IT industry

131

followed by cement and pharma industry. This also shows that the investors concentrate

more on the safety of their investments in banks.

4.28 Reasons for Investments and their Ranks in equity Market.

Investments return, tax benefits and liquidity are preferred by investors for

different reasons. The result of the sample means, standard deviations and their ranks are

established below in table - 4.33.

Table - 4.33: Mean and Standard Deviation of Reasons for

Investments and their Ranks


Return 1.27 .550 1

Liquidity 2.18 .678 2

Tax benefits 2.54 .616 3


From the above table, it is concluded that the investors give first preference to

better returns followed by liquidity and tax benefits. So, it can be concluded that all type

of investors demand more returns with no risk. So they prefer share market fabricated

with minimal risk.

4.29 Ranking Analysis for Investment Style in equity Market

Different style of investments like conservative, calculative, intuitive, impulsive,

risk taking are verified to identify the most popular investment style of the investors.

Table - 4.34 presents the mean and standard deviation and rank of preference of

investment style.

132

Table - 4.34: Mean and Standard Deviation of Preference of

Investment Style


Calculative 1.94 1.19 1

Conservative 2.78 1.35 2

Risk taking 2.97 1.43 3

Impulsive 3.45 1.07 4

Intuitive 3.88 1.24 5


From the above table, it is found that the investors adopt the modes of calculative,

conservative, risk taking, impulsive and intuitive in the respective order. The investors’

first notion of investment is the strategic calculation regarding safety, return and liquidity.

They also give less importance to conservative and risk taking separately. It also reveals

that the investors are very calculative in earning more profit from their investments.

4.30 Ranking Analysis for the Preference of Stock Exchange for Investing in

equity market

The different stock exchanges like NSE, BSE and MSE are useful for the

investors to deal with the capital market. Generally the investors in Tamil Nadu prefer

these three stock exchanges for their investment in secondary market. Table - 4.35

presents the rank of preference of investors of secondary market.

Table - 4.35: Mean and Standard Deviations for Preference in Choosing Stock

Exchanges


NSE 1.44 0.684 1

BSE 2.04 0.689 2

MSE 2.49 0.741 3


133

It is inferred from the above table that the investors investing in secondary

market, give their first preference to NSE followed by BSE and MSE respectively. The

NSE is the most popular among the investors of capital market.

Paired sample t-test is to identify the significant difference in the means among

the five factors of the risk and return in equity market. This tool is also useful to identify

the most popular factors of risk and return. The mean scores of each factor is presented in

the table - 4.36, which is useful to identify the popular factor among the investors

Table – 4.36: Paired Samples Statistics for the Factors of the

risk and return

Pair Factors Mean N Std.

Deviation

Std. Error

Mean

Pair 1

Shares 4.1576 507 .58216 .02028

Debentures 4.0445 507 .56689 .01975

Pair 2

Shares 4.1576 507 .58216 .02028

Mutual funds 4.1675 507 .58990 .02055

Pair 3

Shares 4.1576 507 .58216 .02028

Stock futures 4.2031 507 .58191 .02027

Pair 4

Shares 4.1576 507 .58216 .02028

Real estates 3.8706 507 .55730 .01941

Pair 5

Debentures 4.0445 507 .56689 .01975

Mutual funds 4.1675 507 .58990 .02055

Pair 6

Debentures 4.0445 507 .56689 .01975

Stock futures 4.2031 507 .58191 .02027

Pair 7

Debentures 4.0445 507 .56689 .01975

Real estates 3.8706 507 .55730 .01941

Pair 8

Mutual funds 4.1675 507 .58990 .02055

Stock futures 4.2031 507 .58191 .02027

Pair 9 Mutual funds 4.1675 507 .58990 .02055

134

Real estates 3.8706 507 .55730 .01941

Pair 10

Stock futures 4.2031 507 .58191 .02027

Real estates 3.8706 507 .55730 .01941


The above table indicates the mean values of the factors of capital market

reforms. It ranges from the minimum mean value of 3.87 for real estates to the maximum

of 4.0 for stock futures.

The correlation table - 4.37 presents the relationship among all the factors which

are inter linked.

Table – 4.37: Paired Samples Correlations for the Factors of

the investment in equity Market

Pair Factors N Correlation Sig.

Pair 1 Shares & Debentures 507 .645 .000**

Pair 2 Shares & Mutual funds 507 .673 .000**

Pair 3 Shares & Stock futures 507 .550 .000**

Pair 4 Shares & Real estates 507 .467 .000**

Pair 5 Debentures & Mutual funds 507 .556 .000**

Pair 6 Debentures & Stock futures 507 .429 .000**

Pair 7 Debentures & Real estates 507 .533 .000**

Pair 8 Mutual funds & Stock

futures 507 .514 .000**

Pair 9 Mutual funds & Real estates 507 .449 .000**

Pair 10 Stock futures & Real estates 507 .323 .000**

Source: Primary Data; ** - Significant at 0.01 level

As observed from the above table, the five factors constitute the efficient capital

market reforms and the correlation co-efficient are highly significant. So, all reforms are

135

inter linked to accrue benefits to the investors. Paired sample t-test and their

consequences are established in table - 4.37.

Table – 4.38: Paired Samples Test Values for the Factors of the Latest

Reforms in Capital Market

Pair Factors t df Sig. (2-

tailed)

Pair 1 Shares - Debentures 6.707 506 .000**

Pair 2 Shares - Mutual funds -.598 506 .550

Pair 3 Shares - Stock futures -2.364 506 .018*

Pair 4 Shares - Real estates 14.000 506 .000**

Pair 5 Debentures - Mutual funds -6.471 506 .000**

Pair 6 Debentures - Stock futures -7.415 506 .000**

Pair 7 Debentures - Real estates 9.189 506 .000**

Pair 8 Mutual funds - Stock futures -1.769 506 .077

Pair 9 Mutual funds - Real estates 14.140 506 .000**

Pair 10 Stock futures - Real estates 14.390 506 .000**

Source: Primary Data; ** - Significant at 0.01 level; * Significant at 0.05 level

The paired sample statistical table – 4.38 clearly reveals that the investors are very

much attracted towards capital market with mean (4.20), followed by mutual funds (mean

= 4.17), shares (mean = 4.16), Debentures (mean = 4.04) and finally real estates (mean =

3.87). Though the means are different, paired sample t-test would check the statistically

significant differences among them. It is also found that shares and mutual funds are

equally treated (t = 0.598) by the investors for their risk and return. The mutual funds

and stock futures are also equally popular among the investors (t = 1.769) for both risk

and return. So it is inferred that the investors are very much attracted by capital market

after understanding the attractive financial sector reforms. The transparency about the

performance of the companies issuing the shares and continuous monitoring of central

government and the RBI raises the confidence among the investors besides the market

136

risk. It is also found that the investors are willing to invest their hard earned money to

have lucrative returns in the short span of time.

4.31 Rate of return

The investors expect different percentage of investment as their returns with

safety and security. Both the new companies and the existing ones can raise capital on the

new issue market. The prime function of the new issue market is to facilitate the transfer

of funds from the willing investors to the entrepreneurs setting up new corporate

enterprises or going in for expansion, diversification, growth or modernization. Besides,

helping corporate enterprises in securing their funds, the new issue market channelises

the savings of individuals and others into investment. In this study four classification

have been considered namely below 12%, 12-24%, 24-36%, and 36% and above as the

returns.

Table 4.39: Frequency Distribution of Percentage of expected return

Percentage of investment Frequency Valid

Percent

Cumulative

Percent

Valid

Below 12% 300 59.2 59.2

12% - 24% 82 16.2 75.4

24% – 36% 28 5.6 81.0

36% above 97 19.0 100.0

Total 507 100.0


From the above table 4.39 it is ascertained that a maximum of 59.2% of the

investors expect to get return below 12% of their investments followed by 19% of the

137

investors prefer to invest 36% and above of their investments, 16.2% of the investors

prefer only 24 – 36% of their investments to be returned only 5.6% of the investors prefer

to invest between 12 to 24% of their investments as returns. So the percentage analysis

revealed that most of the investors expect below 25% of their total investment from

equities market.

4.32 SUMMARY

In this chapter investment pattern, preferences, risk-return perceptions and

investment objectives of the retail equity investors have been identified.

138

CHAPTER – V

INVESTMENT SATISFACTION AND PORTFOLIO CHOICE

INTRODUCTION

This chapter examines the various factors that significantly influence equity

investors in the evaluation of equity share investments and makes an assessment of the

post – investment satisfaction of various classes of investors and investors’ confidence as

a whole. The study is based on various socio–economic and investment profile factors.

Investment evaluation and decision has become very crucial for any investor

today amidst an array of investment avenues with relative advantages and disadvantages.

Investment in equities is considered to be highly risky as compared to others, so investors

need to study several factors and information while making equity investment. Success of

equity issues is totally dependent on two parameters namely, post - investment

satisfaction and investors’ confidence. Post - investment satisfaction creates a lasting

impact on the investing habits of the investors and investors’ confidence decides the

quantum of investment in equities. The basic factor that generates investment satisfaction

and confidence is the high profitability prospects (rate of return) associated with equity

investments. If investors perceive high profitability prospects, they tend to invest; if not,

they look for other alternatives. The matching of the expected and derived rate of return

creates satisfaction and confidence in the minds of the investors. Hence the growth of

equity culture may be directly associated with the rate of return that builds investment

satisfaction and restores investors’ confidence.

139

5.2 Cluster Analysis of investment evaluation.

In this study investments in the equity shares are classified into 5 elements, viz,

general information, primary reform, details of present value. Project details and their

changes and financial parameters. Based on these elements the investors are requested to

express their opinion about capital investments and the scores are taken to perform

cluster analysis by k-means method. By trial and error method it has been identified that

2 clusters are suitable for the study. The cluster classifications based on the investments

are presented in table – 5.1.

Table – 5.1: Clusters of Investors Based on Elements of

Retail investment

Factors

Cluster of Mean Scores

1 2

General information 3.76 4.47

Company management 3.88 4.50

Details of present value 3.74 4.42

Project details and their changes 3.71 4.44

Financial parameters 3.66 4.47


The above table indicates the mean scores of opinion of retail investment. The

mean scores are high in the second cluster and low in the first cluster. The frequency of

each cluster is presented in table – 5.1.

Table – 5.2: Number of Cases in Each Cluster of Retail investment

Clusters Frequency

1 215.000

2 292.000

140

Valid 507.000

Missing .000


The 507 samples of investors are classified into two clusters. The first cluster has

215 frequencies, in which all investors express the opinion that they moderately agree on

all the elements of capital investments. The second cluster has 292 frequencies, in which

the investors strongly agree with the investments in equity shares. No one expressed the

disagreements on retail investment. So, it is concluded that investors’ awareness ranges

from moderate to high.

5.3. Paired sample t-Test Carried out for the Elements of Retail investment

Paired t-test is exploited here to find the significant difference in the means of the

different elements of retail investment. The mean scores of the elements’ retail

investment for comparison are presented in table - 5.3.

Table - 5.3: Paired Samples Statistics for the Elements of

Retail investment

Pair Variables Mean N Std.

Deviation

Std. Error

Mean

Pair 1

General informations 4.1552 507 .48908 .01704

Company management 4.2266 507 .50512 .01760

Pair 2


Details of present values 4.1210 507 .58644 .02043

Pair 3


Project details 4.1141 507 .55972 .01950

Pair 4


Financial parameters 4.1138 507 .54601 .01902

Pair 5



Pair 6


project details 4.1141 507 .55972 .01950

Pair 7



Pair 8 Details of present values 4.1210 507 .58644 .02043

141

Change and their project

details 4.1141 507 .55972 .01950

Pair 9



Pair

10

Change and their project

details 4.1141 507 .55972 .01950



The above table reveals that the mean scores of elements of retail investment

range from 4.11 to 4.23 with their respective standard errors. The relationships among the

elements of retail investment are presented in table - 5.3.

Table - 5.4: Paired Samples Correlations for the Elements of

Retail investment

Pair Variable N Correlat

ion Sig.

Pair 1 General informations & Company

management 507 .587 .000**

Pair 2 General informations & present value 507 .537 .000**

Pair 3 General informations & change and

their project details 507 .573 .000**

Pair 4 General informations & Financial

parameters 507 .657 .000**

Pair 5 & Details of present values 507 .431 .000**

Pair 6 Company management and their

project details 507 .479 .000**

Pair 7 Company management & financial

parameters 507 .528 .000**

Pair 8 Present values & changes and their

project details 507 .448 .000**

Pair 9 Secondary & financial parameters 507 .496 .000**

Pair 10 Project details and their changes

financial parameters 507 .519 .000**


142

The above table indicates that all the correlation co-efficient are significant and

elements of retail investment are deeply related among themselves in the opinion of the

investors. The parametric paired sample significant t-test values are presented in table -

5.4.

Table - 5.5: Paired Samples Test Values for the Elements of

Retail investment

Pair Variables t df Sig. (2-

tailed)

Pair 1 General informations & Company

management -4.540 506 .000**

Pair 2 General informations & Details of

present values 1.874 506 .061

Pair 3 General informations & project

details and their changes 2.414 506 .016*

Pair 4 General informations & Financial

parameters 2.749 506 .006**

Pair 5 Company management & Details of

present values 5.176 506 .000**

Pair 6 Present values& project details and

their changes 5.922 506 .000**

Pair 7 Primary & financial parameters 6.325 506 .000**

Pair 8 present values & project details and

their changes .328 506 .743

Pair 9 Present values & financial parameters .359 506 .720

Pair

10

Project details and their changes &

Financial parameters .013 506 .990


The paired sample t-test values clearly indicate that there is a significant

difference between general informations and Company management (t=4.54), and the

investors are confused with the company management (mean=4.23) and then the general

informations (mean=4.16). It is also found that there is no significant difference between

general informations and Details of present values (t = 1.874). This implies that the

143

investors have found equal awareness about general capital investments and Details of

present values.

It is revealed in the analysis that there is a significant difference between general

capital investments and change and their project details

(t=2.414) and the investors possess their ideas about general informations (mean=4.15)

and more changes and their project details. Similarly, it has been identified that the (mean

= 4.11) significant difference between general informations and financial parameters (t =

2.749). In this pair the investors are more aware of general informations (mean = 4.15)

than financial parameters (mean = 4.11).

The Company management are significantly different from Details of present

values (t = 5.176), because of change in project details (t = 5.922), and financial

parameters (t = 6.325). Among these urban investors are very much aware of company

management (mean = 4.22), than Details of present values (mean = 4.12), change of

project details (mean = 4.114) and financial parameters (mean = 4.113). It is also found

that the investors accept equally about the investments in secondary market, project

details and their changes, and financial parameters. It is concluded that all the

investments are important and they reflect the investments of equity shares.

5.4 Correlation Analysis Carried out for Number of Years Dealing with Equity

shares and Elements of Retail investment

Karl Pearson’s co-efficient of correlation is used to find out the relationship

between the variables i.e. the number of years dealing with equity shares and different

elements of retail investment.

The correlation co-efficient for number of years dealing with equity shares and

elements of capital investments is depicted in table - 5.6.

144

Table – 5.6: Correlation Matrix for Number of Year Dealing

Variables Co-efficient Sig.

General informations 0.048 0.165

Company management 0.006 0.854

Details of present values 0.018 0.608

Changes and their project details 0.005 0.888



The correlation table clearly shows that there is no significant relationship

between the number of years dealing with equity shares and investor’s opinion about

capital investments. This shows that the investors’ opinion on investments can not be

distinguished on their experiences with equity shares dealings. So the retail investments

are totally spread over all the investors equally independent of their number of years of

dealings.

5.5 Correlation Analysis carried out for Percentage of Savings in Share

Markets and Elements of Retail investment

The relationship between percentage of investment in share markets and different

elements of retail investment can be established by applying the statistical tool for Karl

Pearson’s co-efficient of correlation. The co-efficient values are presented in table - 5.7.

145

Table – 5.7: Correlation Co-efficient Table for Percentage of

Savings in Share Market

Variables Co-efficient Sig.

General informations -0.002 0.955

Company management -0.036 0.304

Details of present values 0.002 0.947

Changes and their project details 0.002 0.960



The correlation table clearly illustrates that the percentage of investment in share

market does not have any relationship with the investors’ opinion about the capital

investments. This also shows that the investors invest their money in share market to

accrue maximum benefits before and after investments. So the retail investment just

induces the investors to invest in share market, but the investors welcome any type of

investments of equity shares if it is really worthy of better returns with absolutely no risk.

5.6 Analysis of Variance Carried out for the Elements of Equity shares

Investments with respect to Preference of Investment

The different elements of retail investment are subject to the statistical treatment

using analysis of variance with regard to the grouping of variables preference of investors

for investment.

(a) Analysis of Variance for the Elements of Equity shares with Respect to

Investment in Shares

In this case the analysis of variance is carried out with respect to the investment in

shares and the following result is obtained from table - 5.8.

Table - 5.8: ANOVA for the Elements of Capital Investments with respect to

Investment in Shares

146

Variable Source Sum of

Squares df

Mean

Square F Sig.

General informations Between Groups 2.020 6 .337 1.411 .207

Within Groups 194.839 817 .238 -- --

Total 196.858 506 -- -- --

Company

management

Between Groups 2.514 6 .419 1.650 .131

Within Groups 207.474 817 .254 -- --

Total 209.988 506 -- -- --

Details of present

values

Between Groups 4.221 6 .704 2.061 .055

Within Groups 278.506 817 .341 -- --

Total 283.044 506 -- -- --

Changes and their

project details

Between Groups 3.108 6 .518 1.661 .128

Within Groups 254.729 817 .312 -- --

Total 257.837 506 -- -- --

Financial parameters Between Groups 3.375 6 .562 1.899 .078

Within Groups 241.988 817 .296 -- --

Total 245.362 506 -- -- --


From the above table, it has been ascertained that the elements of retail

investment do not differ significantly with respect to investment in shares. So it is

inferred that all the investors are aware of retail investment immaterial by whether they

invest in shares or not. This also implies updated information to the investors could be a

more effective source of information.

147

(b) Analysis of Variance for Different Elements of Retail investment and

Investment in Government Bonds

The variation in group means of elements of retail investment with respect to

investments in government bonds are presented in ANOVA table - 5.9.

Table – 5.9: ANOVA for the Elements of Retail investment with respect to

Investment in Government Bonds


Squares df

Mean

Square F Sig.

General

informations

Between Groups 6.185 7 .884 3.781 .000**

Within Groups 190.674 816 .234 -- --

Total 196.858 506 -- -- --

Company

management

Between Groups 5.376 7 .768 3.063 .003**

Within Groups 204.612 816 .251 -- --

Total 209.988 506 -- -- --

Details of

present values

Between Groups 5.761 7 .506 2.422 .019*

Within Groups 277.283 816 .340 -- --

Total 283.044 506 -- -- --

Change and their

project details

Between Groups 11.255 7 1.608 5.321 .000**

Within Groups 246.582 816 .302 -- --

Total 257.837 506 -- -- --

Financial

parameters

Between Groups 9.231 7 1.319 4.557 .000**

Within Groups 236.131 816 .289 -- --

Total 245.362 506 -- -- --

Source: Primary Data; ** Significant at 0.01 level; * Significant at 0.05 level

From the above table, it is clear that the general informations (F = 3.281),

Company management (F = 3.781), Details of present values (F = 2.422) change of

project details (F = 5.321), financial parameters (F =

4 .557) exhibit significant variance with respect to investors’ investment in Government

Bonds. This also indicates that the investors who differ in their opinion of investing in

148

Government Bonds also differ in identifying the investments in equity shares. The

investors are very much attracted by the primary and Details of present values, change of

project details investments and investments in financial parameters. So, the investors who

have turned their concentration towards government bonds investments are now rapidly

returning towards share market investments due to investments in their elements.

(c) Analysis of Variance for Different Elements of Retail investment

and Investment in Fixed Deposit

The variations in group means of elements of retail investment with respect to

investments in fixed deposits are presented in ANOVA table - 5.10.

Table - 5.10: ANOVA for the Elements of Retail investment with respect to

Investment in Fixed Deposits


Squares df

Mean

Square F Sig.

General

informations

Between Groups 1.587 7 .227 .947 .469

Within Groups 195.271 816 .239 -- --

Total 196.858 506 -- -- --

Company

management

Between Groups 1.514 7 .216 .846 .549

Within Groups 208.474 816 .255 -- --

Total 209.988 506 -- -- --

Details of

present values

Between Groups 1.436 7 .205 .595 .761

Within Groups 281.607 816 .345 -- --

Total 283.044 506 -- -- --

Changes and

their project

details

Between Groups 4.821 7 .689 2.221 .031*

Within Groups 253.015 816 .310 -- --

Total 257.837 506 -- --

Financial

parameters

Between Groups 2.507 7 .403 1.357 .220

Within Groups 242.538 816 .297 -- --

Total 245.362 506 -- --

Source: Primary Data; * Significant at 0.05 level

149

From the above table, it is vividly exhibited that the investors who are investing in

fixed deposits differ in their opinion about change of project details (F = 2.221). So it is

inferred that a part of the investors who deposit their money in banks in the form fixed

deposits do not have much knowledge about changes of project details in equity shares.

This also shows that the investors are very much attracted towards change of project

details investments in equity shares and that in turn induces them to invest more in

primary and secondary markets.

(d) Analysis of Variance for Elements of Retail investment with

respect to Investment in Gold


investments in gold are presented in ANOVA table - 5.11.


Investment in Gold


Squares df

Mean

Square F Sig.

General

informations

Between Groups 23.032 8 2.879 13.499 .000**

Within Groups 173.826 815 .213 -- --

Total 196.858 506 -- -- --

Company

management

Between Groups 11.109 8 1.389 5.691 .000**

Within Groups 198.879 815 .244 -- --

Total 209.988 506 -- -- --

Details of

present values

Between Groups 28.119 8 3.515 11.237 .000**

Within Groups 254.925 815 .313 -- --

Total 283.044 506 -- -- --

Changes and

their project

Between Groups 13.231 8 1.654 5.511 .000**

Within Groups 244.605 815 .300 -- --

150

details Total 257.837 506 -- -- --

Financial

parameters

Between Groups 14.472 8 1.809 6.386 .000**

Within Groups 230.890 815 .283 -- --

Total 245.362 506 -- -- --

Source: Primary Data; ** Significant at 0.01 level

From the above table, it is found that the investors can be distinguished on general

informations (F=13.499), Company management (F=5.691), Details of present values

(F=11.237), change of project details (F=5.511) and financial parameters (F=6.386) with

respect to investment in gold. This shows that when the investors invest their money in

gold they do not have more knowledge about retail investment. The investors who are

investing in gold are also turning their concentration towards equity shares due to the

tremendous developments in primary, details of present values, change of project details

and financial parameters.

(e) Analysis of Variance for Elements of Retail investment with respect to

Debentures


investments in debentures are presented in ANOVA table - 5.12.


Investment in Debentures

Variable Sources Sum of

Squares df

Mean

Square F Sig.

General

informations

Between Groups 6.238 7 .891 3.815 .000**

Within Groups 190.621 816 .234 -- --

Total 196.858 506 -- -- --

Company

management

Between Groups 3.464 7 .495 1.955 .058

Within Groups 206.524 816 .253 -- --

Total 209.988 506 -- -- --

Details of

present

Between Groups 7.373 7 1.053 3.118 .003**

Within Groups 275.670 816 .338 -- --

151

values Total 283.044 506 -- -- --

Changes and

their project

details

Between Groups 3.548 7 .507 1.626 .124

Within Groups 254.289 816 .312 -- --

Total 257.837 506 -- -- --

Financial

parameters

Between Groups 5.491 7 .784 2.668 .010**

Within Groups 239.872 816 .294 -- --

Total 245.362 506 -- -- --


From the above table it is inferred that the general informations (F=3.815), Details

of present values (F=3.118), and financial parameters (F=2.668) differ significantly with

respect to the investment in debentures. This shows that the investors’ option of investing

in debentures discriminate their ideas about general informations, Details of present

values and financial parameters. But they possess the same opinion of company

management and change of project details. The investors who concentrate on debentures

are very much attracted towards general informations, Details of present values and

financial parameters. They profoundly believe that retail investments of above elements

are really worthy of better returns.

(f) Analysis of Variance for the Elements of Retail investment and

Investment in Mutual Funds


investments in mutual funds are presented in ANOVA table - 5.13.


Investment in Mutual Funds


Squares df

Mean

Square F Sig.

General

informations

Between

Groups 12.446 7 1.778 7.867 .000**

Within Groups 184.413 816 .226 -- --

Total 196.858 506 -- -- --

Company

management

Between

Groups 3.032 7 .433 1.708 .104

Within Groups 206.956 816 .254 -- --

Total 209.988 506 -- -- --

152

Details of

present

values

Between

Groups 5.325 7 .761 2.235 .030*

Within Groups 277.718 816 .340 -- --

Total 283.044 506 -- -- --

Project

details and

their Changes

Between

Groups 8.385 7 1.198 3.918 .000**

Within Groups 249.452 816 .306 -- --

Total 257.837 506 -- -- --

Financial

parameters

Between

Groups 11.364 7 1.623 5.661 .000**

Within Groups 233.998 816 .287 -- --

Total 245.362 506 -- -- --


From the above table, it is ascertained that the general informations (F=7.867),

Details of present values (F=2.235), change of project details (F=3.918), financial

parameters (F=5.661) significantly vary with respect to investors option of investing in

mutual funds, but in the case of Company management they express the same opinion. So

it is inferred that when the investors want to invest their money in mutual funds they

should possess thorough knowledge about capital investments. The investors of mutual

funds also possess a tendency to shift their investment pattern towards equity shares.

They feel that the same amount of risk is involved in mutual funds and equity shares but

in the case of returns the equity shares exceeds more than the mutual fund.

(g) Analysis of Variance for the Elements of Retail investment and

Investment in Real Estate


investments in real estate are presented in ANOVA table - 5.14.

Table - 5.14 ANOVA for the Elements of Retail investment with respect to

Investment in Real Estate


Squares df

Mean

Square F Sig.

General

informations

Between Groups 5.330 6 .888 3.790 .001**

Within Groups 191.528 817 .234 -- --

153

Total 196.858 506 -- -- --

Company

management

Between Groups 7.997 6 1.333 5.391 .000**

Within Groups 201.991 817 .247 -- --

Total 209.988 506 -- -- --

Details of

present values

Between Groups 15.669 6 2.611 7.980 .000**

Within Groups 267.375 817 .327 -- --

Total 283.044 506 -- -- --

Project details

and their

Changes

Between Groups 10.221 6 1.704 5.621 .000**

Within Groups 247.615 817 .303 -- --

Total 257.837 506 -- -- --

Financial

parameters

Between Groups 13.146 6 2.191 7.708 .000**

Within Groups 232.216 817 .284 -- --

Total 245.362 506 -- -- --


From the above table, it is found that the general informations (F=3.790),

Company management (F=5.391), Details of present values (F=7.980) change of project

details (F=5.621), financial parameters (F=7.708) differ significantly. This shows that

some of the investors who invest in real estate possess the ideas about capital investments

but others do not. Even though it is found that investing in real estate would give better

returns, the investors are shifting their concentration towards equity shares due to the

latest investments. They feel that they are able to get the same type of returns as that of

real estate within a short span of time.

5.7 Analysis of Variance for the Elements of Retail investment with

Respect to the Grouping of Variable Reasons for Investments

The elements of capital investments are subject to the analysis of variance

treatment to identify the significant variance among them with regard to various reasons

for investments return, tax benefits and liquidity.

154

(a) Analysis of Variance for the Elements of Retail investment with

respect to the Reason for Investment – return


reason for investment namely, returns are presented in ANOVA table - 5.15.


the Reason for Investment – Return

Variables Sources Sum of

Squares df

Mean

Square F Sig.

General

informations

Between Groups 1.482 2 .741 3.113 .045*

Within Groups 195.377 821 .238 -- --

Total 196.858 506 -- -- --

Company

management

Between Groups .330 2 .165 .646 .524

Within Groups 209.658 821 .255 -- --

Total 209.988 506 -- -- --

Details of

present values

Between Groups 2.554 2 1.277 3.737 .024*

Within Groups 280.490 821 .342 -- --

Total 283.044 506 -- -- --

Project details

and their

Changes

Between Groups 2.655 2 1.328 4.272 .014*

Within Groups 255.181 821 .311 -- --

Total 257.837 506 -- -- --

Financial

parameters

Between Groups .071 2 .036 .119 .888

Within Groups 245.291 821 .299 -- --

Total 245.362 506 -- -- --


It is found from the above table that general informations (F=3.113), Details of

present values (F=3.737), and change of project details (F=4.272) differ significantly.

155

This shows that when the investors expect more returns, they differ in their views about

general informations, Details of present values and change of project details whereas they

have the same view on Company management and financial parameters.

(b) Analysis of Variance for the Elements of Retail investment with

Respect to the Reason for Investment - Liquidity


reason for investment – liquidity are presented in ANOVA table - 5.16.

Table - 5.16: ANOVA for the Elements of Retail investment with respect to the

Reasons for Investment – Liquidity


Squares df

Mean

Square F Sig.

General

informations

Between Groups 4.145 2 2.072 8.829 .000**

Within Groups 192.714 821 .235 -- --

Total 196.858 506 -- -- --

Company

management

Between Groups 1.812 2 .906 3.574 .028*

Within Groups 208.175 821 .254 -- --

Total 209.988 506 -- -- --

Details of

present

values

Between Groups 5.427 2 2.714 8.025 .000**

Within Groups 277.616 821 .338 -- --

Total 283.044 506 -- -- --

Project

details and

their

changes

Between Groups .506 2 .253 .807 .447

Within Groups 257.331 821 .313 -- --

Total 257.837 506 -- -- --

Financial

parameters

Between Groups 2.540 2 1.270 4.294 .014*

Within Groups 242.822 821 .296 -- --

Total 245.362 506 -- -- --


From the above table it is found that general informations (F=8.829), Company

management (F=3.574), Details of present values (F=8.025), and financial parameters

(F=4.294) differ significantly. So it is inferred that when the investors expect liquidity

156

from their investment some of them are highly aware of capital investments while some

others do not. But they possess the same view about changes of project details. The

investors identify liquidity due to investments in primary and secondary market and

financial parameters.

(c) Analysis of Variance for the Elements of Retail investment and

with respect to Reason for Investment – Tax Benefits


reason for investment, namely tax benefits are presented in ANOVA table – 5.17.

Table - 5.17: ANOVA for the Elements of Retail investment with respect to the

Reason for Investment – Tax Benefits


Squares df

Mean

Square F Sig.

General

informations

Between Groups .699 2 .349 1.463 .232

Within Groups 196.159 821 .239 -- --

Total 196.858 506 -- -- --

Company

management

Between Groups 1.957 2 .979 3.862 .021*

Within Groups 208.031 821 .253 -- --

Total 209.988 506 -- -- --

Details of

present values

Between Groups 1.708 2 .854 2.492 .083

Within Groups 281.336 821 .343 -- --

Total 283.044 506 -- -- --

Project details

and their

changes

Between Groups .503 2 .251 .802 .449

Within Groups 257.334 821 .313 -- --

Total 257.837 506 -- -- --

Financial

parameters

Between Groups 1.750 2 .875 2.949 .053

Within Groups 243.612 821 .297 -- --

Total 245.362 506 -- -- --


The analysis of variance table clearly reveals that Company management

(F=3.862) differ significantly with respect to tax benefits. So it is concluded that the

157

investors who invest their money for tax benefits are well aware of general informations,

Details of present values, change of project details and financial parameters.

5.8 Analysis of Variance carried out for Different Elements of retail investments

and it’s Influence on Factors of Investment Decision

Analysis of variance is performed on the elements of capital investments, viz.,

general informations, company management, details of present values, change of project

details and financial parameters with respect to different influential factors of investment

decision – abridged prospectus, TV channels, consultant, and websites. This analysis

helps to identify which influential factor affects the investors in their investment decision

process in the light of retail investment.

(a) ANOVA for Elements of Retail investment with regard to

abridged prospectus


decision of the abridged prospectus are presented in ANOVA table – 5.18.

Table - 5.18 ANOVA for the Elements of Retail investment with regard to the

Investment Decisions Influenced by abridged prospectus


Squares df

Mean

Square F Sig.

General

informations

Between

Groups 2.533 5 .507 2.133 .060

Within Groups 194.325 818 .238 -- --

Total 196.858 506 -- -- --

Company

management

Between

Groups 6.621 5 1.324 5.326 .000**

Within Groups 203.367 818 .249 -- --

Total 209.988 506 -- -- --

158

Details of

present values

Between

Groups 1.275 5 .255 .740 .594

Within Groups 281.769 818 .344 -- --

Total 283.044 506 -- -- --

Project details

and their

changes

Between

Groups 3.686 5 .737 2.373 .038*

Within Groups 254.150 818 .311 -- --

Total 257.837 506 -- -- --

Financial

parameters

Between

Groups 2.519 5 .504 1.697 .133

Within Groups 242.843 818 .297 -- --

Total 245.362 506 -- -- --


From the table, it is ascertained that Company management (F=5.326), and

change of project details (F=2.373) differ significantly and other elements do not exhibit

any significance by variance. This forces to infer that when the abridged prospectus

influences the investment decision, the investors possess good awareness on general

informations, Details of present values and financial parameters. In the case of Company

management and change of project details the investors significantly vary in their

perception of capital investments.

(b) ANOVA for Different Elements of Retail investment with regard to

TV channels

The variations in group means of elements of retail investment with respect to TV

channels are presented in ANOVA table - 5.19.

Table - 5.19: ANOVA for the Elements of Retail investment with regard to the

Investment Decisions Influenced by TV channels


Squares df

Mean

Square F Sig.

General

informations

Between Groups 3.546 5 .709 3.001 .011*

Within Groups 193.312 818 .236 -- --

Total 196.858 506 -- -- --

159

Company

management

Between Groups 5.487 5 1.097 4.390 .001**

Within Groups 204.501 818 .250 -- --

Total 209.988 506 -- -- --

Details of

present values

Between Groups 1.319 5 .264 .766 .574

Within Groups 281.725 818 .344 -- --

Total 283.044 506 -- -- --

Project details

and their

changes

Between Groups 7.516 5 1.503 4.913 .000**

Within Groups 250.320 818 .306 -- --

Total 257.837 506 -- -- --

Financial

parameters

Between Groups .953 5 .191 .638 .671

Within Groups 244.410 818 .299 -- --

Total 245.362 506 -- -- --


From the above table, it is seen that general informations (F=3.001), Company

management (F=4.390) and change of project details (F=4.913) differ significantly when

the investment decision is influenced by the project details. The investors who are

influenced by the TV channels have high awareness on Details of present values and

financial parameters.

(c) ANOVA for Different Elements of Retail investment with regard to

Consultants


consultants are presented in ANOVA table - 5.20.

Table – 5.20: ANOVA for the Elements of Retail investment with regard to the

Investment Decisions Influenced by Consultant


Squares df

Mean

Square F Sig.

General

informations

Between Groups 3.037 3 1.012 4.283 .005**

Within Groups 193.822 820 .236 -- --

Total 196.858 506 -- -- --

Company Between Groups 7.856 3 2.619 10.623 .000**

160

management

Within Groups 202.132 820 .247 -- --

Total 209.988 506 -- -- --

Details of

present

values

Between Groups 2.225 3 .742 2.166 .091

Within Groups 280.818 820 .342 -- --

Total 283.044 506 -- -- --

Project

details and

their changes

Between Groups 9.043 3 3.014 9.934 .000**

Within Groups 248.794 820 .303 -- --

Total 257.837 506 -- -- --

Financial

parameters

Between Groups 4.535 3 1.512 5.147 .002**

Within Groups 240.827 820 .294 -- --

Total 245.362 506 -- -- --


From the analysis of variance table, it is inferred that the investors who approach

consultants for investment in equity shares differ significantly in their knowledge about

general informations (F=4.283), Company management (F=10.623) change of project

details (F=9.934) and financial parameters (F=5.147). It is also found that in the case of

Details of present values all the investors are equally well aware and differ significantly

in other investments. So consultants are forcing them to have knowledge about details of

present values.

(d) ANOVA for Elements of Retail investment with regard to

web sites


investment decision by web sites are presented in ANOVA table - 5.21.

Table - 5.21: ANOVA for the Elements of Retail investment with regard to the

Investment Decisions Influenced by websites


Squares df

Mean

Square F Sig.

General

informations

Between Groups 3.264 2 1.632 6.921 .001**

Within Groups 193.594 821 .236 -- --

161

Total 196.858 506 -- -- --

Company

management

Between Groups 4.036 2 2.018 8.044 .000**

Within Groups 205.952 821 .251 -- --

Total 209.988 506 -- -- --

Details of

present

values

Between Groups .872 2 .436 1.268 .282

Within Groups 282.172 821 .344 -- --

Total 283.044 506 -- -- --

Project

details and

their changes

Between Groups 7.130 2 3.565 11.674 .000**

Within Groups 250.707 821 .305 -- --

Total 257.837 506 -- -- --

Financial

parameters

Between Groups 4.929 2 2.464 8.415 .000**

Within Groups 240.433 821 .293 -- --

Total 245.362 506 -- -- --


From the above table of analysis of variance, it is ascertained that the investors

consult their friends and relatives to invest in equity shares when they do not have much

knowledge about general informations (F=6.921), Company management (F=8.044),

change of project details (F=11.674), and financial parameters (F=8.415). In the case of

Details of present values, the investors cannot be distinguished in terms of their

awareness when their investment decision is influenced by web sites.

5.9 Association between Preference of Investment in Equity shares and

Clusters of Awareness on Retail investment

The preference of investment in equity shares viz. primary market and secondary

market and both are taken for the analysis. Some times the investors want to invest in

both the markets, so that option is also considered for the study. To find the association

between the above mentioned variables, the non-parametric chi-square test is applied.

Table - 5.22 presents the opinion of investment preference of investors in primary and

secondary markets.

162

Table - 5.22: Association between Preference of Investment in Equity shares and

Clusters of Investors

Preference of Investments

in Equity shares

Clusters of Investors Total

1 2

Primary market 24 18 42

Secondary market 48 33 81

Both 155 229 384

Total 227 280 507


The above table indicates that the investors want to invest in both the markets and

the secondary market is more popular among the investors than the primary market. The

chi-square test value is presented in the table - 5.23.

Table - 5.23: Chi-Square for Preference of Investments in Equity shares

Statistical Tool Value Df Significant

(2-sided)

Pearson Chi-Square 21.256 2 .000**

Likelihood Ratio 21.174 2 .000**

Linear-by-Linear Association 17.377 1 .000**

No. of Valid Cases 507 -- --


Null Hypothesis

There is no association between preference of investment in equity shares

and clusters of awareness on retail investment.

163

From the table of chi-square test it is found that the chi-square value as 21.256, p-

value = 0.000 for 2 degrees of freedom. So the null hypothesis is rejected at 5% level of

significance and it is concluded that there is a association between preference of

investment in equity shares and cluster of awareness on retail investment (i.e.) after

knowing the capital investments only the investors decide to invest in primary market and

secondary market.

5.10 General Linear Multivariate Model Analysis Carried out for Different

Elements of Retail investment and Percentage of Investment in Equity shares

In this analysis, the elements of capital investments are considered as independent

co-variants and the percentage of investment options in equity shares are considered as

dependent variables. This analysis of multivariate general linear model aims at finding

whether the percentage of investment in primary and secondary markets is affected by the

investments in equity shares. The individual impact of retail investment on percentage of

investment in primary and secondary markets is presented in table - 5.24.

Table - 5.24: Multivariate General Linear Model for

Percentage of Investments

Sources Dependent

Variables

Type III

Sum of

Squares

df Mean

Square F Sig.

Corrected

Model

Percent of

investment in

primary market

45473.254(a) 5 9094.651 12.403 .000**

Percent of

investment in

secondary market

21633.333(b) 5 4326.667 5.794 .000**

Intercept

Percent of

investment in

primary market

4028.996 1 4028.996 5.494 .019*

Percent of

investment in

secondary market

73508.593 1 73508.593 98.444 .000**

164

Sources Dependent

Variables

Type III

Sum of

Squares

df Mean

Square F Sig.

General

informations

Percent of

investment in

primary market

13.266 1 13.266 .018 .893

Percent of

investment in

secondary market

970.030 1 970.030 1.299 .255

Company

management

Percent of

investment in

primary market

4349.727 1 4349.727 5.932 .015*

Percent of

investment in

secondary market

761.127 1 761.127 1.019 .313

Details of

present values

Percent of

investment in

primary market

4543.825 1 4543.825 6.197 .013*

Percent of

investment in

secondary market

3665.884 1 3665.884 4.909 .027*

Changes and

their Project

details

Percent of

investment in

primary market

1594.629 1 1594.629 2.175 .141

Percent of

investment in

secondary market

650.103 1 650.103 .871 .351

Financial

parameters

Percent of

investment in

primary market

1079.206 1 1079.206 1.472 .225

Percent of

investment in

secondary market

44.579 1 44.579 .060 .807

Error

Percent of

investment in

primary market

599825.725 818 733.283 -- --

165

Sources Dependent

Variables

Type III

Sum of

Squares

df Mean

Square F Sig.

Percent of

investment in

secondary market

610801.714 818 746.701 -- --

Total

Percent of

investment in

primary market

2723037.000 507 -- -- --

Percent of

investment in

secondary market

2348437.000 507 -- -- --

Corrected

Total

Percent of

investment in

primary market

645298.979 506 -- -- --

Percent of

investment in

secondary market

632435.047 506 -- -- --

a. R Squared = .070 (Adjusted R Squared = .065); b. R Squared = .034 (Adjusted R

Squared = .028)

Source: Primary Data ** Significant at 0.01 level; * Significant at 0.05 level

It is inferred from the above table that the general informations in equity shares do

not have any impact on investors to invest certain percentage in primary and secondary

markets. Company management induce the investors to invest a considerable percentage

of their money in primary market (F=5.932). Details of present values make the investors

to invest a good percentage of money in both primary and secondary markets (F=4.909).

The change of project details and financial parameters do not have any impact on

investors to invest money in primary and secondary markets. So it is concluded that the

investments in primary and secondary markets make the investors to allot the required

percentage of investment.

5.11 Association between Criteria for Investment and Clusters of Awareness on

Retail investment

166

Non-parametric chi-square test is used to find the association between criteria for

investments in equity shares and clusters of awareness on equity shares. This helps to

know whether the retail investment highlight these criteria and pave the way to investors

to decide the prudential consequence of their investments. The opinion of the two groups

of equity shares investors about the criteria of investment is presented in table - 5.25.

Table - 5.25: Association Criteria for Investment and Clusters of wareness

Criteria for investments


1 2

Sector to which the company belongs

to 89 169 258

Financial performance of the

company in recent past 138 111 249

Total 227 280 507


The above table reveals that the criteria of investment are equally popular among

the investors. The chi-square test value is presented in table - 5.26.

Table - 5.26: Chi-Square Test and Criteria for Investments

Statistical Tools Value Df Asymp. Sig.

(2-sided)

Exact Sig.

(2-sided)

Exact Sig.

(1-sided)

Pearson Chi-

Square 36.381 1 .000** -- --

Continuity

Correction 35.538 1 .000** -- --

Likelihood Ratio 36.665 1 .000** -- --

Fisher's Exact -- -- -- .000** .000**

167

Test

Linear-by-Linear

Association 36.337 1 .000** -- --

No. of Valid

Cases 507 -- -- -- --

Source: Primary Data** Significant at 0.01 level

Null Hypothesis

There is no association between criteria for investments and clusters of

awareness of retail investment.

From the chi-square test it is found that the chi-square value is 36.381, when the

p-value=0.000. So the null hypothesis is rejected at 5% level of significance and it is

inferred that there is an association between criterion for investment and cluster of

awareness of capital investments. This also shows that the investors are all well aware

that the capital investments giving certain specific criteria for the investment procedure.

5.12 Cluster Analysis carried out for Identifying the Extent of Awareness of

Investors on equity investment

Cluster analysis is a statistical tool brought upon the problems of identifying the

heterogeneous groups prevailing in the sample. These heterogeneous groups are

homogeneous within them. Cluster analysis is carried out with the newly obtained 5

factors of capital market reforms in factor analysis. The formations of new three clusters

are shown in table - 5.27.

Table – 5.27: Final Cluster Centres for Awareness of the equity investment

Factor Clusters and Mean Scores

1 2 3

Investment objectives 2.92 3.73 4.48

Investment satisfaction 3.23 3.57 4.35

Facility satisfaction 2.80 3.84 4.45

168

Innovative measures 2.97 3.96 4.44

Problems 3.18 3.51 4.11


The above table revealed the emergence of three groups of investors based on

their awareness of capital market reforms. The frequency distribution of each cluster is

presented in table - 5.28.

Table – 5.28: Frequency of Clusters for Awareness of the Latest


Cluster Frequency

1 31.000

2 156.000

3 320.000

Valid 507.000

Missing .000


The cluster analysis transparently reveals that the samples are classified into 3

heterogeneous groups with respect to investment objectives, investment satisfaction,

facility satisfaction, innovative measures and problems. The first cluster investors do not

possess more awareness with the equity market and the frequency of this cluster is 31.

The second cluster has the frequency of 156 and they are moderately aware of the equity

investment in capital market. The third clusters with the frequency of 320 are highly

aware of the equity investment. So the respondents in the study are classified into 3

groups based on their awareness on the equity investment pattern. This group

classification will be further used in the analysis. So it is concluded that the investors of

capital market are distributed into three types on the basis of investment pattern

prevailing in India

169

5.13 Analysis of Variance carried out for Different Elements of Equity shares

Investments and Preference of Investment in Industries

This analysis is aimed at ascertaining whether the capital investments awareness

varies with respect to different industries in equity shares. It also helps to find out the

relationship between retail investment and the most popular industries attracting the

investors.

(a) ANOVA for Different Elements of Retail investment with regard to

Preference of Investment in Banking Sector


investment in banking sector are presented in ANOVA table - 5.29.

Table - 5.29: ANOVA for the Elements of Retail investment with regard to

Preference of Investment in Banking Sector


Squares df

Mean

Square F Sig.

General

informations

Between

Groups 6.391 8 .799 3.418 .001**

Within

Groups 190.467 815 .234 -- --

Total 196.858 506 -- -- --

Company

management

Between

Groups 5.492 8 .687 2.736 .006**

Within

Groups 204.495 815 .251 -- --

Total 209.988 506 -- -- --

Details of

present values

Between

Groups 11.778 8 1.472 4.423 .000**

Within

Groups 271.265 815 .333 -- --

170

Total 283.044 506 -- -- --

Project details

and their

changes

Between

Groups 10.415 8 1.302 4.288 .000**

Within

Groups 247.422 815 .304 -- --

Total 257.837 506 -- -- --

Financial

parameters

Between

Groups 10.390 8 1.299 4.505 .000**

Within

Groups 234.972 815 .288 -- --

Total 245.362 506 -- -- --


From the above table, it is found that general informations (F=3.418), Company

management (F=2.736), Details of present values (F=4.423) change of project details

(F=4.288) and financial parameters (F=4.505) vary significantly with respect to

investment in banking sector. This shows that the capital investments have affected the

investment in the banking sector. More number of investors are enthusiastic in venturing

into equity shares.

(b) Analysis of Variance for Different Elements of Retail investment

with regard to Preference of Investment in FMCG Sector


investment in FMCG sector are presented in ANOVA table - 5.30.


Preference of Investment in FMCG Sector


Squares df

Mean

Square F Sig.

General

informations

Between

Groups 2.969 7 .424 1.785 .087

Within Groups 193.889 816 .238 -- --

Total 196.858 506 -- -- --

171

Company

management

Between

Groups 4.861 7 .694 2.763 .008**

Within Groups 205.127 816 .251 -- --

Total 209.988 506 -- -- --

Details of

present

values

Between

Groups 3.528 7 .504 1.471 .174

Within Groups 279.516 816 .343 -- --

Total 283.044 506 -- -- --

Project

details and

their

changes

Between

Groups 1.021 7 .146 .463 .861

Within Groups 256.816 816 .315 -- --

Total 257.837 506 -- -- --

Financial

parameters

Between

Groups 2.818 7 .403 1.354 .222

Within Groups 242.544 816 .297 -- --

Total 245.362 506 -- -- --


From the above table, it becomes vividly clear that company management

(F=2.763) have affected the investments in FMCG sector. Other capital investments do

not make any impact on FMCG sector. So it shows that the investors have the knowledge

about company management before they invest in FMCG industries.

(c) Analysis of Variance for Different Elements of Retail investment

with regard to Preference of Investment in Pharma Sector


investment in pharma sector are presented in ANOVA table - 5.31


Preference of Investment in Pharma Sector

Variable Sources

Sum of

Square

s

df Mean

Square F Sig.

General

informations

Between

Groups 9.231 7 1.319 5.735 .000**

172

Within Groups 187.628 816 .230 -- --

Total 196.858 506 -- -- --

Company

management

Between

Groups 6.755 7 .965 3.874 .000**

Within Groups 203.233 816 .249 -- --

Total 209.988 506 -- -- --

Details of

present

values

Between

Groups 8.561 7 1.223 3.636 .001**

Within Groups 274.483 816 .336 -- --

Total 283.044 506 -- -- --

Project

details and

their changes

Between

Groups 10.396 7 1.485 4.898 .000**

Within Groups 247.441 816 .303 -- --

Total 257.837 506 -- -- --

Financial

parameters

Between

Groups 7.563 7 1.080 3.708 .001**

Within Groups 237.799 816 .291 -- --

Total 245.362 506 -- -- --


A cursory glance at the above table reveals that the general informations

(F=5.735), company management (F=3.874), details of present values (F=3.636), change

of project details (F=4.898), and financial parameters (F=3.708) very much affect the

investment in pharma sector. So it is inferred that the investors investing more in pharma

sector due to retail investment.

(d) Analysis of Variance for Elements of Retail investment with

regard to Preference of Investment in PSE Industries


investment in PSE sector are presented in ANOVA table – 5.32.

173


Preference of Investment in PSE Sector


Squares df

Mean

Square F Sig.

General

informations

Between Groups 12.048 7 1.721 7.599 .000**

Within Groups 184.367 814 .226 -- --

Total 196.416 821 -- -- --

Company

management

Between Groups 10.982 7 1.569 6.456 .000**

Within Groups 197.806 814 .243 -- --

Total 208.789 821 -- -- --

Details of

present values

Between Groups 12.781 7 1.826 5.507 .000**

Within Groups 269.884 814 .332 -- --

Total 282.665 821 -- -- --

Project details

and their

changes

Between Groups 9.750 7 1.393 4.611 .000**

Within Groups 245.889 814 .302 -- --

Total 255.639 821 -- -- --

Financial

parameters

Between Groups 13.657 7 1.951 6.859 .000**

Within Groups 231.541 814 .284 -- --

Total 245.198 821 -- -- --


It is inferred from the above table that general informations (F=7.599), company

management (F=6.456), details of present values (F=5.507), change of project details

(F=4.611), and financial parameters (F=6.859) affecting the investment in PSE sector.

Hence it is clear that the capital investments direct the investors to invest more in PSE

sector.

(e) Analysis of Variance for Elements of Retail investment with regard

to Preference of Investment in MNC Sector


investment in MNC sector are presented in ANOVA table - 5.33.

174


Preference of Investment in MNC Sector


Squares df

Mean

Square F Sig.

General

informations

Between Groups 6.557 7 .937 4.016 .000**

Within Groups 190.302 816 .233 -- --

Total 196.858 506 -- -- --

Company

management

Between Groups 9.248 7 1.321 5.371 .000**

Within Groups 200.739 816 .246 -- --

Total 209.988 506 -- -- --

Details of

present values

Between Groups 7.999 7 1.143 3.390 .001**

Within Groups 275.045 816 .337 -- --

Total 283.044 506 -- -- --

Project details

and their

changes

Between Groups 13.871 7 1.982 6.628 .000**

Within Groups 243.965 816 .299 -- --

Total 257.837 506 -- -- --

Financial

parameters

Between Groups 12.474 7 1.782 6.244 .000**

Within Groups 232.889 816 .285 -- --

Total 245.362 506 -- -- --


It is deduced from the above table that the general informations (F=4.016),

Company management (F=5.371), Details of present values (F=3.390), change of project

details (F=6.628), and financial parameters (F=6.244) affect the investment in MNC

sector. The degrees of awareness and knowledge about retail investment have enabled the

investors for making meaningful investment decisions in MNC sector.

(f) Analysis of Variance for Different Elements of Retail investment with regard

to Preference of Investment in IT Sector


investment in IT sector are presented in ANOVA table - 5.34.

175


Preference of Investment in IT Sector


Squares df

Mean

Square F Sig.

General

informations

Between Groups 4.792 7 .685 2.908 .005**

Within Groups 192.067 816 .235 -- --

Total 196.858 506 -- -- --

Company

management

Between Groups 3.949 7 .564 2.234 .030*

Within Groups 206.039 816 .252 -- --

Total 209.988 506 -- -- --

Details of

present values

Between Groups 13.207 7 1.887 5.705 .000**

Within Groups 269.837 816 .331 -- --

Total 283.044 506 -- -- --

Project details

and their

changes

Between Groups 3.452 7 .493 1.582 .137

Within Groups 254.384 816 .312 -- --

Total 257.837 506 -- -- --

Financial

parameters

Between Groups 5.187 7 .741 2.518 .014*

Within Groups 240.175 816 .294 -- --

Total 245.362 506 -- -- --


From the above table, it is inferred that general informations (F=2.908), Company

management (F=2.234), Details of present values (F=5.705), and financial parameters

have affected the investment in IT sector. The above mentioned investments induce the

investors to invest in IT sector. It is also found that change of project details does not

have any impact on investment in IT sector.

176

(g) Analysis of Variance for Different Elements of Retail investment

with regard to Preference of Investment in Manufacturing Sector


investment in manufacturing sector are presented in ANOVA table - 5.35.


Preference of Investment in Manufacturing Sector


Squares df

Mean

Square F Sig.

General

informations

Between Groups 4.620 7 .660 2.801 .007**

Within Groups 192.239 816 .236 -- --

Total 196.858 506 -- -- --

Company

management

Between Groups 1.680 7 .240 .940 .474

Within Groups 208.307 816 .255 -- --

Total 209.988 506 -- -- --

Details of

present values

Between Groups 3.116 7 .445 1.297 .248

Within Groups 279.928 816 .343 -- --

Total 283.044 506 -- -- --

Project details

and their

changes

Between Groups 3.869 7 .553 1.776 .089

Within Groups 253.968 816 .311 -- --

Total 257.837 506 -- -- --

Financial

parameters

Between Groups 3.894 7 .556 1.880 .070

Within Groups 241.468 816 .296 -- --

Total 245.362 506 -- -- --


The above table is useful in deciding that the general informations (F=2.801)

affect the investment in manufacturing sector. This also shows that the investors find a

scope for their investment in manufacturing sector after general capital investments.

Other investments do not have any role to play with manufacturing sector.

(h) Analysis of Variance for Different Elements of Retail investment

with regard to Preference of Investment in Service Sector

177


investment in service sector are presented in ANOVA table - 5.36.


Preference of Investment in Service Sector


Squares df

Mean

Square F Sig.

General

informations

Between Groups 6.951 7 .993 4.267 .000**

Within Groups 189.907 816 .233 -- --

Total 196.858 506 -- -- --

Company

management

Between Groups 8.400 7 1.200 4.857 .000**

Within Groups 201.588 816 .247 -- --

Total 209.988 506 -- -- --

Details of

present values

Between Groups 13.342 7 1.906 5.767 .000**

Within Groups 269.702 816 .331 -- --

Total 283.044 506 -- -- --

Project details

and their

changes

Between Groups 6.085 7 .869 2.818 .007**

Within Groups 251.752 816 .309 -- --

Total 257.837 506 -- -- --

Financial

parameters

Between Groups 8.541 7 1.220 4.204 .000**

Within Groups 236.821 816 .290 -- --

Total 245.362 506 -- -- --


The above table clearly reveals that the general informations (F=4.267), Company

management (F=4.857), Details of present values (F=5.767), change of project details

(F=2.818) and financial parameters (F=4.204) affect the investment in service sector.

This also shows that the investors are drifting towards service sector after capital

investments.

5.14 Association between Investment in Equity shares with Higher Risk and

Clusters of Awareness on Retail investment

This analysis is aimed at verifying the retail investment made every procedure of

investment transparent and free from risks. The non- parametric chi-square test is applied

178

to achieve this objective. The opinion of the group of investors about the risk involved in

retail investment is presented in the table - 5.37.

Table - 5.37: Investment in Equity shares is Higher Risk and Clusters of Awareness

on Retail investment

Investment in

Equity shares is

Higher Risk

Clusters of

Investors Total

1 2

Yes 318 415 733

No 48 43 91

Total 366 458 824


The above table indicates that a maximum number of both the clusters confessed

that the risk in equity shares investments is higher. The chi-square test value is presented

in the table - 5.38.

Table – 5.38: Chi-square Test Statistics for Investment in

Equity shares is Higher Risk

Statistical Tool Value df Asymp. Sig.

(2-sided)

Exact Sig.

(2-sided)

Exact Sig.

(1-sided)

Pearson Chi-

Square 2.875 1 .090 -- --

Continuity

Correction 2.508 1 .113 -- --

Likelihood Ratio 2.856 1 .091 -- --

Fisher's Exact

Test -- -- -- .094 .057

Linear-by-Linear

Association 2.872 1 .090 -- --

N of Valid Cases 507 -- -- --


179

Null Hypothesis

There is no association between extension of risk in equity shares and

awareness on retail investment.

From the chi-square table, it is inferred that the null hypothesis is accepted at 5%

level of significance and that there is no association between extensive of risk and

awareness of retail investment. It clearly shows that the investors are very much aware of

risks involved in investing in equity shares, because it depends upon the performance of

firms upon which their money is invested.

5.15 Analysis of Variance Carried out for Different Elements of Capital

Market Investments with regard to Preference of Stock Exchange

The analysis of variance is applied on the elements of capital investments with

respect to different stock exchanges like NSE, BSE and MSE. This would help the

researcher to analyse the impact of retail investment in different stock exchanges.

(a) Analysis of Variance for Elements of Retail investment with regard to

Preference of sensex


preference to sensex are presented in ANOVA table - 5.39.


Preference of stock exchanges - sensex


Squares df

Mean

Square F Sig.

General

informations

Between Groups 14.540 3 4.847 21.798 .000**

Within Groups 182.319 820 .222 -- --

Total 196.858 506 -- -- --

Company

management

Between Groups 8.217 3 2.739 11.131 .000**

Within Groups 201.771 820 .246 -- --

180

Total 209.988 506 -- -- --

Details of

present values

Between Groups 7.227 3 2.409 7.162 .000**

Within Groups 275.817 820 .336 -- --

Total 283.044 506 -- -- --

Project details

and their

changes

Between Groups 12.219 3 4.073 13.598 .000**

Within Groups 245.618 820 .300 -- --

Total 257.837 506 -- -- --

Financial

parameters

Between Groups 16.471 3 5.490 19.669 .000**

Within Groups 228.892 820 .279 -- --

Total 245.362 506 -- -- --


It is deduced from the above table that the general informations (F=21.798),

Company management (F=11.131), Details of present values (F=7.162), change of

project details (F=13.598) and financial parameters (F=19.669) significantly differ with

respect to rules assigned to sensex. So it is inferred that preference of sensex depends

upon the retail investment.

(b) Analysis of Variance for Elements of Retail investment with

regard to Preference of Stock Exchanges - Nifty


preference to Nifty are presented in ANOVA table - 5.40.

Table - 5.40 ANOVA for the Elements of Retail investment with regard to

Preference of nifty


Squares df

Mean

Square F Sig.

General

informations

Between Groups 14.336 3 4.779 21.468 .000**

Within Groups 182.523 820 .223 -- --

Total 196.858 506 -- -- --

Company

management

Between Groups 9.595 3 3.198 13.087 .000**

Within Groups 200.393 820 .244 -- --

Total 209.988 506 -- -- --

181

Details of

present values

Between Groups 11.305 3 3.768 11.371 .000**

Within Groups 271.739 820 .331 -- --

Total 283.044 506 -- -- --

Project details

and their

changes

Between Groups 7.793 3 2.598 8.519 .000**

Within Groups 250.043 820 .305 -- --

Total 257.837 506 -- -- --

Financial

parameters

Between Groups 15.892 3 5.297 18.930 .000**

Within Groups 229.470 820 .280 -- --

Total 245.362 506 -- -- --


From the above table it is noted that the general informations (F=21.468),

Company management (F=13.087), Details of present values (F=11.371), change of

project details (F=8.519) and financial parameters (F=18.930) differ significantly with

respect to Nifty. This shows that the investors are able to set information about Nifty

through the investments of elements of equity shares.

(c) Analysis of Variance for Elements of Retail investment with regard

to Preference of Stock Exchanges - MSE


preference to CNX 100 are presented in ANOVA table - 5.41

Table - 5.41: ANOVA for the Elements of Capital Investments with regard to

Preference of CNX 100


Squares df

Mean

Square F Sig.

General

informations

Between Groups 2.279 3 .760 3.201 .023*

Within Groups 194.580 820 .237 -- --

Total 196.858 506 -- -- --

Company

management

Between Groups .560 3 .187 .731 .534

Within Groups 209.428 820 .255 -- --

Total 209.988 506 -- -- --

Details of

present values

Between Groups 2.344 3 .781 2.282 .078

Within Groups 280.700 820 .342 -- --

Total 283.044 506 -- -- --

182

Project details

and their

changes

Between Groups 2.659 3 .886 2.848 .037*

Within Groups 255.178 820 .311 -- --

Total 257.837 506 -- -- --

Financial

parameters

Between Groups 1.586 3 .529 1.779 .150

Within Groups 243.776 820 .297 -- --

Total 245.362 506 -- -- --


It is ascertained from the above table that general informations (F=3.201), and

change of project details (F=2.848) induce the investors to give preference to CNX 100.

Other elements of equity shares do not have any impact on investors to choose CNX 100.

So the investors in CNX 100possess the same opinion about primary and secondary

markets as well as financial parameters.

5.16 Association between Reason for Preference Given to Stock

Exchange Dealings and Clusters of Awareness of retail investment

The non-parametric chi-square test is applied between the two variables-reason

for stock exchange dealings and clusters of awareness of capital investments. This also

helps to ascertain the retail investment and its relationship with different stock exchanges

in India. The different groups of investors possess different opinion about reasons for

stock exchange dealings and they are presented in table - 5.42

Table - 5.42: Reason for Preference Given to Stock Exchange Dealing and Clusters

of Awareness on Retail investment

Reasons for Preference given to Stock

Exchange Dealing


1 2

Reputation 120 213 333

No. of stocks listed 130 93 223

Transparency and updated information 116 152 268

Total 366 458 824


183

The above table clearly expresses that the reputation of stock exchanges plays a

very important role for the groups of investors followed by number of stocks and

transparency in the proceedings. Table - 5.43 presents the chi-square test value.

Table - 5.43: Chi-Square Tests for Reason of

Preference Given to Stock Exchanges

Statistical Tool Value df Asymp. Sig. (2-

sided)

Pearson Chi-Square 27.146 2 .000**

Likelihood Ratio 27.163 2 .000**

Linear-by-Linear Association 3.821 1 .051

No. of Valid Cases 507 -- --


Null Hypothesis

There is no association between reasons for preference of stock exchange and

clusters of awareness of equity shares.

From the table of chi-square it is found that the null hypothesis is rejected,

because the chi-square value = 27.146 and p = 0.000. It is further inferred that different

reasons for preference of stock exchange arise due to retail investment.

5.17 Association between Experience in Dealing with Shares in Electronic Mode

(demat) and Elements of Retail investment

A non-parametric test is brought upon the problem of finding the association

between retail investment and investors dealing with electronic shares. The different

groups of investors possess different opinions about dealing with electronic shares are


184

Table - 5.44: Experience in Dealing Shares through Electronic Mode (demat) and

Cluster of Awareness on Elements of Retail investment

Experience in Dealing Shares through

Electronic Mode (demat)


1 2

Yes 313 394 707

No 53 64 117

Total 366 458 824


The above table indicates the maximum number investors are dealing shares

through electronic mode and only a few investors do not deal shares through this mode.

Table - 5.45 indicates the chi-square test value.

Table - 5.45: Chi-Square Tests Statistic Showing Experience in Dealing Shares with

Electronic Mode (demat) and Cluster of Awareness on Elements of Retail

investment

Statistical Tool Value df Asymp. Sig.

(2-sided)

Exact Sig.

(2-sided)

Exact Sig.

(1-sided)

Pearson Chi-

Square .043 1 .836 -- --

Continuity of

Correction .011 1 .915 -- --

Likelihood Ratio .043 1 .836 -- --

Fisher's Exact

Test -- -- -- .841 .456

Linear-by-Linear

Association .043 1 .836 -- --

No. of Valid

Cases 507 -- -- -- --


185

Null Hypothesis

There is no association between dealing with electronic shares and elements

of retail investment.

From the table of chi-square test it is found that the chi-square value = 0.043 and

p-value = -0.836. So the null hypothesis is accepted and it is concluded that there is no

association between dealing with electronic shares and elements of retail investment. This

shows that the investors feel that the electronic share is a convenient mode because it is

introduced in equity shares by electronic advertisement in the scientific world and the

economic use of the investments in equity shares which do not have any role to play with

technological electronic advancement.

5.18 Sources of Information Available to Know about Retail investment

The different sources of information are useful to the investors to obtain updated

information about retail investment and stock exchanges. They are able to set the

information through newspapers, journals, TV channels, stock brokers, consultants,

websites and friends and relatives. This analysis is aimed at finding which the most

useful source of information is. The percentage of different sources information useful

for the investors to deal with equity shares is presented in table - 5.46.

Table – 5.46 Percentage of Different Sources of Information to Know About

Retail investment

Source

Preferred by

investors

(in %)

Not preferred by

investors

(in %)

1. News papers 77.5 22.5

186

2. Journals 56.6 43.4

3. TV channels 66.5 33.5

4. Stock brokers 50.8 49.2

5. Consultants 39.4 60.6

6. Websites 35.3 64.7

7.company announcements 40.0 60.0


The above table clearly ascertains that the investors are able to get proper

information through newspapers (77.5%). So it is the most preferred source of

information to know about retail investment. The next source of information is TV

through which 66.5% investors are able to get more information about equity shares,

followed by journals 56.6% and stock brokers 50.8%. Other sources are not that much

significant. So it is concluded that the investors are able to get perfect information about

equity shares through newspapers and TV.

5.19 Paired sample t-Test Carried out for the Factors of the equity investment.

Paired sample t-test is to identify the significant difference in the means among

the five factors of the equity investment. This tool is also useful to identify the most

popular factors of capital market reforms. The mean scores of each factor is presented in

the table - 5.47, which is useful to identify the popular factor among the investors

Table – 5.47: Paired Samples Statistics for the Factors of the equity investment

Pair Factors Mean N Std.

Deviation

Std. Error

Mean

Pair 1

Investment

objectives 4.1576 824 .58216 .02028

Investment

satisfaction 4.0445 824 .56689 .01975

Pair 2

Investment

objectives 4.1576 824 .58216 .02028

Facility satisfaction 4.1675 824 .58990 .02055

187

Pair 3

Investment

objectives 4.1576 824 .58216 .02028

Innovative

measures 4.2031 824 .58191 .02027

Pair 4

Investment

objectives 4.1576 824 .58216 .02028

Problems 3.8706 824 .55730 .01941

Pair 5

Investment

satisfaction 4.0445 824 .56689 .01975


Pair 6

Investment

satisfaction 4.0445 824 .56689 .01975

Innovative

measures 4.2031 824 .58191 .02027

Pair 7

Investment

satisfaction 4.0445 824 .56689 .01975

Problems 3.8706 824 .55730 .01941

Pair 8


Innovative

measures 4.2031 824 .58191 .02027

Pair 9


Problems 3.8706 824 .55730 .01941

Pair 10

Innovative

measures 4.2031 824 .58191 .02027

Problems 3.8706 824 .55730 .01941


The above table indicates the mean values of the factors of capital market

reforms. It ranges from the minimum mean value of 3.87 for problems to the maximum

of 4.0 for innovative measures. The correlation table - 5.48 presents the relationship

among all the factors which are inter linked.

Table – 5.48: Paired Samples Correlations for the Factors of

the equity investment

Pair Factors N Correlation Sig.

Pair 1 Investment objectives & 824 .645 .000**

188

Investment satisfaction

Pair 2 Investment objectives &

Facility satisfaction 824 .673 .000**


Innovative measures 824 .550 .000**


Problems 824 .467 .000**

Pair 5 Investment satisfaction &

Facility satisfaction 824 .556 .000**




Problems 824 .533 .000**

Pair 8 Facility satisfaction &


Pair 9 Facility satisfaction &

Problems 824 .449 .000**

Pair 10 Innovative measures &

Problems 824 .323 .000**


As observed from the above table, the five factors constitute the efficient capital

market reforms and the correlation co-efficient are highly significant. So, all reforms are

inter linked to accrue benefits to the investors. Paired sample t-test and their

consequences are established in table - 5.49.

Table – 5.49: Paired Samples Test Values for the Factors of the equity investment

Pair Factors t df Sig. (2-tailed)

Pair 1 Investment objectives -

Investment satisfaction 6.707 823 .000**


Facility satisfaction -.598 823 .550

189


Innovative measures -2.364 823 .018*


Problems 14.000 823 .000**

Pair 5 Investment satisfaction -

Facility satisfaction -6.471 823 .000**


Innovative measures -7.415 823 .000**


Problems 9.189 823 .000**

Pair 8 Facility satisfaction -

Innovative measures -1.769 823 .077

Pair 9 Facility satisfaction - Problems 14.140 823 .000**

Pair 10 Innovative measures -

Problems 14.390 823 .000**


The paired sample statistical table – 4.99 clearly reveals that the investors are very

much attracted towards capital market with mean (4.20), followed by facility satisfaction

(mean = 4.17), investment objectives (mean = 4.16), investment satisfaction (mean =

4.04) and finally problems (mean = 3.87). Though the means are different, paired sample

t-test would check the statistically significant differences among them. It is also found

that investment objectives and facility satisfaction are equally treated (t = 0.598) by the

investors for their awareness. The educative and innovative measures are also equally

popular among the investors (t = 1.769). So it is inferred that the investors are very much

attracted by capital market after understanding the attractive financial sector reforms. The

transparency about the performance of the companies issuing the shares and continuous

monitoring of central government and the RBI raises the confidence among the investors

besides the market risk. It is also found that the investors are willing to invest their hard

earned money to have lucrative returns in the short span of time.

190

5.20 General Linear Multivariate Model Utilized to find out the Impact of the

Equity investment and Various Elements of Capital Market Reforms

The general linear multivariate model provides a regression analysis and analysis

of variance for multiple dependent variables. The independent variables are considerable

as co-variants. In this study, the various elements of capital market reforms, general

information in capital market, primary market reforms, secondary market reforms,

reforms in instruments and their changes and finally reforms in financial parameters are

considered as multiple dependent variables and the equity investments are considered as

independent variables. The effect of independent variables on the dependent variables is

depicted in table - 5.50.

Table – 5.50: Multivariate Tests (b) for the Impact of the Latest


Factor Source Value F Hypothesis

df Error df Sig.

Intercept Pillai's Trace .224 46.864(a) 5.000 814.000 .000**

Wilks' Lambda .776 46.864(a) 5.000 814.000 .000**

Hotelling's Trace .288 46.864(a) 5.000 814.000 .000**

Roy's Largest

Root .288 46.864(a) 5.000 814.000 .000**

Investment

objectives

Pillai's Trace .151 28.889(a) 5.000 814.000 .000**

Wilks' Lambda .849 28.889(a) 5.000 814.000 .000**


Roy's Largest

Root .177 28.889(a) 5.000 814.000 .000**

Investment

satisfaction

Pillai's Trace .179 35.537(a) 5.000 814.000 .000**

Wilks' Lambda .821 35.537(a) 5.000 814.000 .000**


Roy's Largest

Root .218 35.537(a) 5.000 814.000 .000**

Facility

satisfaction

Pillai's Trace .051 8.823(a) 5.000 814.000 .000**

Wilks' Lambda .949 8.823(a) 5.000 814.000 .000**

191


Roy's Largest

Root .054 8.823(a) 5.000 814.000 .000**

Innovative

measures

Pillai's Trace .063 10.938(a) 5.000 814.000 .000**

Wilks' Lambda .937 10.938(a) 5.000 814.000 .000**


Roy's Largest

Root .067 10.938(a) 5.000 814.000 .000**

Problems Pillai's Trace .042 7.210(a) 5.000 814.000 .000**

Wilks' Lambda .958 7.210(a) 5.000 814.000 .000**


Roy's Largest

Root .044 7.210(a) 5.000 814.000 .000**

a Exact statistics

b Design: Intercept+ Investment objectives+ Investment satisfaction+ Facility

satisfaction+ Innovative measures + Problems


The above table reveals the existence of significant multivariate test for the

dependent variables and the factors of capital market reforms. It is clear from the table

that the F-values are significant in identifying the impact of independent variables.

The individual impact of five factors of capital market reforms on the dependent

variables and probable significance are presented in the table - 5.51.

Table – 5.51: Impact of the equity investment objectives on the Element of

investment decision Tests of Between-Subjects Effects

Independent

Variable

Dependent

Variable

Type III

Sum of

Squares

df Mean

Square F Sig.

Corrected

Model

General

information 107.477(a) 5 21.495 196.723 .000**

Company

management 82.097(b) 5 16.419 105.020 .000**

Details of the

present value 111.103(c) 5 22.221 105.713 .000**

Project details 111.547(d) 5 22.309 124.745 .000**

192

Independent

Variable

Dependent

Variable

Type III

Sum of

Squares

df Mean

Square F Sig.

Financial

parameters 109.080(e) 5 21.816 130.945 .000**

Intercept General

information 11.698 1 11.698 107.056 .000**

Company

management 21.894 1 21.894 140.037 .000**

Details of the

present value 7.009 1 7.009 33.344 .000**

Project details 9.421 1 9.421 52.681 .000**

Financial

parameters 11.025 1 11.025 66.176 .000**

Investment

objectives

General

information 5.641 1 5.641 51.629 .000**

Company

management 8.786 1 8.786 56.194 .000**

Details of the

present value 2.395 1 2.395 11.393 .001**

Project details 14.654 1 14.654 81.942 .000**

Financial

parameters 5.840 1 5.840 35.053 .000**

Investment

satisfaction

General

information 9.418 1 9.418 86.192 .000**

Company

management .617 1 .617 3.944 .047*

Details of the

present value 11.218 1 11.218 53.371 .000**

Project details 5.703 1 5.703 31.888 .000**

Financial

parameters 16.841 1 16.841 101.083 .000**

Facility

satisfaction

General

information 2.812 1 2.812 25.733 .000**

Company

management 3.612 1 3.612 23.104 .000**

Details of the

present value 2.368 1 2.368 11.266 .001**

Project details .216 1 .216 1.206 .272

193

Independent

Variable

Dependent

Variable

Type III

Sum of

Squares

df Mean

Square F Sig.

Financial

parameters 1.016 1 1.016 6.101 .014*

Innovative

measures

General

information 4.709 1 4.709 43.097 .000**

Company

management .913 1 .913 5.837 .016*

Details of the

present value 3.618 1 3.618 17.212 .000**

Project details .598 1 .598 3.344 .068

Financial

parameters .372 1 .372 2.236 .135

Problems General

information .574 1 .574 5.257 .022*

Company

management 1.123 1 1.123 7.185 .008**

Details of the

present value 1.403 1 1.403 6.675 .010**

Project details 1.683 1 1.683 9.411 .002**

Financial

parameters .135 1 .135 .809 .369

Error General

information 89.381 818 .109 -- --

Company

management 127.891 818 .156 -- --

Details of the

present value 171.941 818 .210 -- --

Project details 146.290 818 .179 -- --

Financial

parameters 136.282 818 .167 -- --

Total General

information 14423.703 824 -- -- --

Company

management 14930.313 824 -- -- --

Details of the

present value 14276.432 824 -- -- --

Project details 14204.560 824 -- -- --

194

Independent

Variable

Dependent

Variable

Type III

Sum of

Squares

df Mean

Square F Sig.

Financial

parameters 14190.440 824 -- -- --

Corrected

Total

General

information 196.858 823 -- -- --

Company

management 209.988 823 -- -- --

Details of the

present value 283.044 823 -- -- --

Project details 257.837 823 -- -- --

Financial

parameters 245.362 823 -- -- --

a R Squared = .546 (Adjusted R Squared = .543)

b R Squared = .391 (Adjusted R Squared = .387)

c R Squared = .393 (Adjusted R Squared = .389)

d R Squared = .433 (Adjusted R Squared = .429)

e R Squared = .445 (Adjusted R Squared = .441)


The following observations have been made from the above table. The

independent variables of the equity investment explain the total variance of 54.6%,

39.1%, 39.3%, 43.3% and 44.5% respectively. These variances are statistically

significant to state that the equity investment increases the number of investors in

primary market and secondary market.

The table of tests of between – subtest effects clearly reveals that the investment

objectives and the latest developments have impact on general information (F = 51.629),

company management (F = 56.194), details of the present value (F = 11.393), project

details (F = 81.942) and financial parameters (F = 35.053). Similarly the investment

satisfaction has an impact on all the elements of reforms in capital market.

Facility satisfaction does not create an impact on instruments and their changes.

Innovative measures have good impact on all elements of capital reforms, except

financial parameters. Problems create deep impact on capital market reforms, primary

195

market reforms secondary market reforms, instruments and their changes, but it does not

predict financial parameters. So, it is summarised that the equity investment have

predicted good impact on reforms in capital market. Collectively the equity investments

aim at reforming primary and secondary market. Positive changes in the instrument and

better returns to the investors prevail in the equity market.

5.21 Analysis of Variance carried out for Investors Preference of Investment

when better return is received

Analysis of variance is a useful tool to identify the variance among the variables.

In this study, the preference to investments, shares, real estate, gold, deposit in bank,

government bonds and purchasing of agricultural lands are considered for their

significant difference in variance and the grouping variables for the analysis in the cluster

of investors. Table - 5.52 presents the variance in group means of factors of capital

market reforms with respect to clusters of investors and exhibits the significant variance

in group means of various investment options.

Table – 5.52: ANOVA for Group Means of Investment Options

Dependent

Variable Group

Sum of

Squares df

Mean

Square F Sig.

Investment in

Share and

Debentures

Between

Groups 374.254 2 187.127 .699 .497

Within

Groups 219775.397 821 267.692 -- --

Total 220149.650 823 -- -- --

Investment in

Real Estate

Between

Groups 2441.163 2 1220.582 5.845 .003**

Within

Groups 171434.196 821 208.811 -- --

Total 173875.359 823 -- -- --

Investment in

Gold

Between

Groups 2461.048 2 1230.524 8.558 .000**

196

Within

Groups 118043.568 821 143.780 -- --

Total 120504.617 823 -- -- --

Investment in

Bank

Between

Groups 111.702 2 55.851 .325 .723

Within

Groups 141021.793 821 171.768 -- --

Total 141133.495 823 -- -- --

Investment in

Government

Bonds

Between

Groups 5596.028 2 2798.014 20.266 .000**

Within

Groups 113350.058 821 138.063 -- --

Total 118946.086 823 -- -- --

Investment in

Purchasing of

Agricultural

Lands

Between

Groups 989.789 2 494.894 8.894 .000**

Within

Groups 45682.366 821 55.642 -- --

Total 46672.154 823 -- -- --


It is found from the above table that there is a significant variance in investment

in real estate (F = 5.845), investment in gold (F = 8.558), investment in Government

bonds (F = 20.27), and finally investment in of agricultural lands (F = 8.894).

On the whole it is concluded that the investors’ behaviour changes with regard to

clusters of equity investment. As the clusters of investors are based on their interest and

awareness of capital market, it can be profoundly stated that the investors are also explore

the avenues like real estate, gold investment and government bonds to get more returns

with less risk.

5.22 Correlation Analysis Carried out for the Number of Years in Dealing with

equity market investment

197

Karl Pearson’s co-efficient of correlation is a statistical tool used to establish the

relationship between the two variables. There are two types of correlations, one is

positive correlation and the other one is negative correlation.

Table – 5.53 establishes the co-efficient of correlation between the factors of the

equity investment and the number of years in dealing with capital market.

Table - 5.53: Coefficient of Correlations for Number of Years

Dealing in Capital Market

Variables Co-efficient Significance

1. Investment objectives .008 0.816

2. Investment satisfaction -.004 0.911

3. Facility satisfaction -.064 0.068

4. Innovative measures -.027 0.439

5. Problems -.050 0.153


After a close scrutiny of the above table, it is concluded that there is no significant

relationship between the number of years in dealing with capital market and variably of

the equity investment, i.e., some investors are continuously investing in capital markets

with their perception about the developments in capital market. They feel it is an

advantage for their investment.

5.23 Percentage of Savings in Capital Market with regard to equity investment

The group means and their significant difference between them with respect to

percentage of savings is presented in table - 5.54.

Table – 5.54: ANOVA for the Latest Reforms Based on Percentage of Savings

Independent

Variable Group

Sum of

Squares Df

Mean

Square F Sig.

Investment

objectives

Between Groups 11.380 3 3.793 11.627 .000**

Within Groups 267.540 820 .326 -- --

Total 278.920 823 -- -- --

Investment Between Groups .464 3 .155 .481 .696

198

satisfaction Within Groups 264.015 820 .322 -- --

Total 264.480 823 -- -- --

Facility

satisfaction

Between Groups 7.836 3 2.612 7.689 .000**

Within Groups 278.552 820 .340 -- --

Total 286.388 823 -- -- --

Innovative

measures

Between Groups 1.545 3 .515 1.523 .207

Within Groups 277.141 820 .338 -- --

Total 278.686 823 -- -- --

Problems

Between Groups 1.860 3 .620 2.003 .112

Within Groups 253.749 820 .309 -- --

Total 255.609 823 -- -- --

Source: Primary Data; ** - Significant at 0.01 level; *Significant at 0.05level

The above table clearly reveals that the latest investment objectives (F=11.627)

and facility satisfaction (F=7.689) differ in their means significantly. So, it can be

inferred that investment objectives and facility satisfaction severely affect the investor’s

decision to decide the percentage of investment in share market.

5.24 Linear Multiple Regression Analysis carried out on Elements of

Retail investment

Linear multiple regression analysis is a multivariate statistical tool used to

identify the impact of independent variables on dependent variables. It also explores the

percentage of variance of independent variables on dependent variable. The ANOVA

table exhibited in this analysis explains fitness of regression using independent variables

and the co-efficient table elaborates about the individual impact on every independent

variable in the study. The demographic variables of investors’ viz. Age, Gender, Marital

Status, Education, Occupation, Income, Nature of Family, Number of Dependents, House

Ownership and percentage of investment are considered as independent variables. Each

element of capital investments is taken as a dependent variable. This analysis is going to

be performed cluster wise, using the clusters of awareness on retail investment.

199

(a) Cluster wise Linear Multiple Regression Analysis for General informations

In cluster, 1 the explanation of independent demographic variables about

dependent variable general informations is presented in table - 5.55.

Table - 5.55: Variance of Independent Variable on General informations and

Cluster 1 (b)

Model R R Square Adjusted R

Square

Std. Error of

the Estimate

1 .341(a) .116 .091 .38026

a. Predictors: (Constant), Vehicle Ownership, Occupation, House Ownership Gender,

Marital Status, Dependents, Qualification, Nature of the Family Annual Income, Age.

b. Clusters of investments 1


As seen in the above table in the case of moderate cluster the independent

variables explain 11.6% variance of dependent variables.

The significance of the regression model is presented in the

table - 5.56.

Table – 5.56: ANOVA (b, c) for General informations and Cluster 1

Model Source Sum of

Squares df

Mean

Square F Sig.

1

Regression 6.588 10 .659 4.556 .000(a)**

Residual 50.176 347 .145 -- --

Total 56.763 357 -- -- --



b. Dependent Variable: General informations

c. Clusters of investments 1

200


From the above table it is found that the regression significantly fits

(F=4.556).The individual explanations of each demographic variable and its respective t-

values are presented in table - 5.57.

Table - 5.57: Coefficients (a, b) of General informations and Cluster 1

Model

Independent

Variables

Un-

standardized

Coefficients

Standardized

Coefficients t

Sig.

B Std.

Error Beta

1

(Constant) 3.240 .190 -- 17.037 .000**

Age .124 .032 .234 3.927 .000**

Gender .307 .082 .193 3.720 .000**

Martial Status .036 .047 .042 .765 .445

Educational

Qualification .022 .020 .063 1.098 .273

Occupation -.025 .020 -.074 -1.249 .213

Annual

Income .069 .026 .155 2.654 .008**

Family -.030 .045 -.037 -.669 .504

Dependents -.008 .011 -.038 -.704 .482

House

Ownership -.065 .054 -.064 -1.192 .234

Percentage of

investment -.109 .045 -.135 -2.440 .015*

a. Dependent Variable: General informations; b . Clusters of investments 1


In this moderate awareness cluster age (t=3.927), gender (t=3.720), annual

income (t=2.654), and vehicle ownership (t=2.440) of investors pave the way to know

about general capital investments. So on the whole it is concluded that the demographic

variables of investors are useful for them to identify the general retail investment.

201

Table - 5.58: Variance of Independent Variable on General informations and

Cluster 2 (b)

Model R R. Square Adjusted

R. Square

Std. Error of

the Estimate

1 .298(a) .089 .068 .26307





In the case of high awareness cluster the independent variables explain 8.9%

variation of dependent variable. It is found in the above table. The significant fit of the

regression model is presented in the table - 5.58.

Table - 5.59: ANOVA (b, c) for General informations and Cluster 2

Model Sources Sum of

Squares df

Mean

Square F Sig.

1

Regression 3.000 10 .300 4.335 .000(a)**

Residual 30.796 445 .069 -- --

Total 33.796 455 -- -- --

a. Predictors: (Constant), Vehicle Ownership, Occupation, House Ownership

Gender, Marital Status, Dependents, Qualification, Nature of the Family

Annual Income, Age.

b. Dependent Variable: General informations



From the table – 5.59 it is identified that the regression fits significantly

(F=4.335). The individual explanations of each demographic variable and their respective

t- values are presented in table - 4.67.

In cluster 2 the explanation of independent demographic variables about

dependent variable general informations is presented in the table - 5.60.

202

Table – 5.60: Coefficients (a, b) of General informations and Cluster 2

Model Independent

Variable

Un-standardized

Coefficients

Standardized

Coefficients t Sig.

B Std.

Error Beta

1

(Constant) 4.606 .142 -- 32.518 .000**

Age .079 .024 .183 3.360 .001**

Gender -.054 .047 -.054 -1.166 .244

Martial Status .084 .034 .125 2.463 .014*

Educational

Qualification -.022 .014 -.076 -1.577 .116

Occupation -.038 .013 -.137 -2.830 .005**

Annual

Income -.001 .016 -.004 -.082 .935

Family .016 .027 .028 .574 .566

Dependents -.028 .007 -.181 -3.507 .000**

House

Ownership -.073 .041 -.083 -1.763 .079

Percentage of

investment -.052 .025 -.106 -2.071 .039*

a. Dependent Variable: General informations



From the co-efficient table it is found that the high awareness of investors is

achieved through their age (t=3.360) marital status (t=2.463) occupation (t=2.83) no. of

dependents and percentage of investment. In cluster 2 the demographic variables

distinguish the investors from high awareness on retail investment.

203

(b) Cluster-wise Linear Multiple Regression Analysis for Company management

In cluster 1, the explanation of independent demographic variables about

dependent variable Company management is presented in table - 5.61.

Table - 5.61: Variance of Independent Variable for Company management and

Cluster 1 (b)


Square

Std. Error of the

Estimate

1 .252(a) .064 .037 .41747


Marital Status, Dependents, Qualification, Nature of the Family, Annual Income, Age.

b Clusters of investments 1


As seen from the above table the demographic variables of investors with

moderate awareness on equity shares explains 6.4% variance of the dependent variable.

The significant fit of the regression model is presented in table - 5.62.

Table - 5.62: ANOVA (b, c) for Company management and Cluster 1

Model Source Sum of

Squares df

Mean

Square F Sig.

1

Regression 4.118 10 .412 2.363 .010(a)*

Residual 60.475 347 .174 -- --

Total 64.594 357 -- -- --



Annual Income, Age.

b. Dependent Variable: Company management



204

From the above table, the significant regression fit is evident (F=2.363). The

individual impact of each variable is presented in table - 5.63.

Table - 5.63: Coefficients (a, b) of Company management and Cluster 1

Model Independent

Variable

Unstandardized

Coefficients

Standardized

Coefficients t Sig.

B Std.

Error Beta

1

(Constant) 3.356 .209 -- 16.075 .000**

Age -.013 .035 -.022 -.366 .715

Gender .086 .091 .051 .950 .343

Martial Status .025 .052 .028 .488 .626

Educational

Qualification -.005 .022 -.012 -.211 .833

Occupation -.016 .022 -.043 -.707 .480

Annual Income .052 .029 .109 1.809 .071

Family .097 .049 .113 1.979 .049*

Dependents .009 .012 .042 .757 .450

House

Ownership .038 .059 .035 .633 .527

Percentage of

investment .127 .049 .149 2.602 .010**

a. Dependent Variable: Company management; b. Clusters of investments 1


As observed from the above table the demographic variables of investors with

moderate awareness on equity shares explain 6.4% variance of the dependent variable

with good regression fit (F=2.363). In this moderate awareness group of investors, nature

of family (t=1.979) and vehicle ownership help them to acquire knowledge about

company management. It is concluded that the nature of family decides the investor’s

awareness on the company management in cluster 1.


dependent variable company management is presented in table - 5.64.

205

Table - 5.64: Variance of Independent Variable for Company management and

Cluster 2 (b)

Model R R Square Adjusted

R Square

Std. Error of

the Estimate

1 .269(a) .072 .051 .36060





It is clear from the above table that in the high awareness on equity shares reform

clusters, the demographic variables of investors explain 7.2% of total variation on

company management. The significant fit of the regression model is presented in the

table - 5.65.

Table - 5.65: ANOVA (b, c) for Company management and Cluster 2

Model Source Sum of

Squares df

Mean

Square F Sig.

1

Regression 4.498 10 .450 3.460 .000(a)**

Residual 57.863 445 .130 -- --

Total 62.361 455 -- -- --



Annual Income, Age.

b. Dependent Variable: Company management; c Clusters of investments 2


From the above table, it is found that the regression fits significantly with

F=3.460. The individual explanations of each demographic variable and its respective t-

value are indicated in table - 5.66.

206

Table - 5.66: Coefficients (a, b) for Company management and Cluster 2

Model Independent

Variable

Un-standardized Coefficients

Standardized Coefficients t

Sig.

B

Std. Error

Beta

1

(Constant) 4.757 .194 -- 24.500 .000**

Age .021 .032 .036 .663 .508

Gender -.032 .064 -.024 -.502 .616

Martial Status .034 .047 .037 .724 .469

Educational Qualification

-.001 .019 -.004 -.073 .942

Occupation -.035 .018 -.094 -1.912 .057

Annual Income .055 .021 .138 2.556 .011*

Family -.045 .038 -.058 -1.191 .234

Dependents -.033 .010 -.157 -3.290 .001**

House Ownership

.017 .057 .014 .301 .764

Percentage of investment

-.143 .034 -.215 -4.159 .000**

a. Dependent Variable: Company management; b. Clusters of investments2;

Source: Primary Data; ** Significant at 0.01 level; * Significant at 0.05level

It is understood from the above table that annual income (t=2.556), no of

dependents (t=3.290), and vehicle ownership (t=4.159) are useful for the investors to

know the company management. In cluster 2, it is concluded that income, vehicle

ownership and number of dependents explain the awareness of investors on company

management.

c) Cluster-wise Linear Multiple Regression Analysis for Details of present

values

In cluster 1, the explanation of independent demographic variables about dependent

variable Details of present values is presented in table - 5.67.

207

Table - 5.67: Variance of Independent Variable on Details of present values Cluster

1 (b)


R Square

Std. Error of

the Estimate

1 .297(a) .088 .062 .53165





It is deduced from the above table that in the case of moderate awareness on

capital reform clusters, the independent variables explain 8.8% variance of details of

present values. The significant fit of the regression model is presented in table - 5.68.

Table - 5.68: ANOVA (b, c) for Details of present values and Cluster 1

Model Source Sum of

Squares df

Mean

Square F Sig.

1

Regression 9.505 10 .951 3.363 .000(a)**

Residual 98.081 347 .283 -- --

Total 107.587 357 -- -- --



Annual Income, Age.

b. Dependent Variable: Details of present values; c. Clusters of investments 1


From the above table, it is found that the regression fits significantly with

F=3.363. The individual explanations of each demographic variable and its respective t-

value are presented in table - 5.69.

208

Table - 5.69: Coefficients (a, b) of Details of present values and Cluster 1

Model Independent

Variable

Un-standardized

Coefficients

Standardized

Coefficients t Sig.

B Std.

Error Beta

1

(Constant) 3.476 .266 -- 13.070 .000**

Age -.088 .044 -.121 -1.994 .047*

Gender .177 .115 .081 1.539 .125

Martial Status .090 .066 .077 1.375 .170

Educational

Qualification .033 .028 .067 1.155 .249

Occupation -.033 .029 -.069 -1.141 .255

Annual

Income .041 .036 .067 1.124 .262

Family .192 .063 .173 3.071 .002**

Dependents .010 .016 .034 .627 .531

House

Ownership -.195 .076 -.139 -2.576 .010**

Percentage of

investment -.029 .062 -.026 -.463 .644

a. Dependent Variable: Details of present values; b. Clusters of investments 1;


It is inferred from the above table that in this cluster, age (t=1.994), nature of

family (t=3.071), and house ownership (t=2.576) create a good impact on details of

present values. So it is concluded that in moderate awareness, clusters, the secondary

market awareness can be observed by the investors using their age, nature of family and

house ownership.


dependent variable Details of present values is given in the table - 5.70.

209

Table - 5.70: Variance of Independent Variable on Details of present values and

Cluster 2 (b)


Square

Std. Error of the

Estimate

1 .157(a) .025 .003 .41696





As per the above table the demographic variables explain 2.5% of the total

variance. The significant fit of the regression model is presented in table - 5.71.

Table - 5.71: ANOVA (b, c) for Details of present values and Cluster 2

Model Source Sum of

Squares df

Mean

Square F Sig.

1

Regression 1.956 10 .196 1.125 .341(a)

Residual 77.365 445 .174 -- --

Total 79.321 455 -- -- --


Gender, Marital Status, Dependents, Qualification, Nature of the Family Annual

Income, Age.

b. Dependent Variable: Details of present values; c. Clusters of investments 2 Source:

Primary Data

The above table clearly reveals that the regression is not significant. The

individual explanations of each demographic variable and its respective t-value are


Table - 5.72: Coefficients (a, b) for Details of present values and Cluster 2

Model

Independent

Variable

Un-standardized

Coefficients

Standardized

Coefficients t

Sig.

B

Std.

Error Beta

210

1

(Constant) 4.219 .224 -- 18.793 .000**

Age .076 .037 .114 2.017 .044*

Gender -.029 .074 -.019 -.390 .697

Martial Status .017 .054 .017 .320 .749

Educational

Qualification .007 .022 .017 .340 .734

Occupation -.003 .021 -.007 -.130 .897

Annual Income -.013 .025 -.028 -.506 .613

Family .056 .043 .064 1.282 .201

Dependents -.008 .012 -.034 -.691 .490

House

Ownership -.069 .066 -.051 -1.045 .296

Percentage of

investment .030 .040 .040 .757 .449

a Dependent Variable: Details of present values



The investors with high awareness on retail investment are able to initiate more

ideas of details of present values through age (t=2.017), alone. The regression does not fit

significantly and the variance percentage is 2.5 only. It is found that in order to have high

awareness age alone helps the investors. All these have been observed from table - 5.72.

(d) Cluster-wise Linear Multiple Regression Analysis for Project details and

their Changes


dependent variable change of project details is presented in table - 5.73.

211

Table - 5.73 Variance of Independent Variable on Project details and their Changes

and Cluster 1 (b)


R Square

Std. Error of

the Estimate

1 .268(a) .072 .045 .47031





According to the above table in moderate awareness cluster, the demographic

variables of investors explain 7.2% variance on dependent variables. The significant fit of

the regression model is presented in table - 5.74.

Table - 5.74: ANOVA (b, c) for Project details and their Changes and Cluster 1

Model Source Sum of

Squares Df

Mean

Square F Sig.

1

Regression 5.933 10 .593 2.682

.004(a)*

*

Residual 76.753 347 .221 -- --

Total 82.686 357 -- -- --



b. Dependent Variable: Change of project details



From the above table it is found that the regression fits significantly with

F=2.682.The individual explanations of each demographic variable and its respective t-


212

Table – 5.75: Coefficients (a, b) for Project details and their Changes and Cluster 1

Model

Independent

Variable

Un-standardized

Coefficients

Standardize

d

Coefficients t

Sig.

B Std.

Error Beta

1

(Constant) 3.658 .235 -- 15.549 .000**

Age -.072 .039 -.113 -1.849 .065

Gender .269 .102 .140 2.641 .009**

Martial Status -.022 .058 -.021 -.375 .708

Educational

Qualification -.027 .025 -.064 -1.083 .279

Occupation -.004 .025 -.009 -.151 .880

Annual Income .097 .032 .179 2.998 .003**

Family .062 .055 .064 1.127 .260

Dependents -.007 .014 -.028 -.504 .615

House

Ownership -.133 .067 -.108 -1.981 .048*

Percentage of

investment -.036 .055 -.037 -.658 .511

a Dependent Variable: Change of project details



It is understood from the table that in this cluster, gender (t=2.641), income

(t=2.998) ownership of the house (t=1.981) explain the awareness of investors on

213

changes of project details. So it is concluded that gender, income and ownership of the

house decide their high awareness on details of present values.


dependent variable change of project details is presented in the table - 5.76.

Table - 5.76: Variance of Independent Variable on Project details and their

Changes and Cluster 2 (b)


Square

Std. Error of the

Estimate

1 .191(a) .037 .015 .37355





As exhibited in the above table for high awareness cluster, the regression does not

fit significantly (f=1.690) and very poor 3.7% variance is explained by independent

variables on dependent variables The significant fit of the regression model is presented

in table - 5.77.

Table - 5.77: ANOVA (b, c) for Project details and their Changes and Cluster 2

Model Source Sum of

Squares df

Mean

Square F Sig.

1

Regression 2.358 10 .236 1.690 .080(a)

Residual 62.095 445 .140 -- --

Total 64.453 455 -- -- --



b Dependent Variable: Change of project details

c Clusters of investments 2


214

The above table clearly reveals that the regression is not significant. The

individual explanations of each demographic variable and its respective t-value are


Table - 5.78 Coefficients (a, b) for Project details and their Changes Cluster 2

Model Independent

Variable

Un-standardized Coefficients

Standardized Coefficients

t Sig.

B Std.

Error Beta

1

(Constant) 4.100 .201 -- 20.388 .000**

Age .054 .034 .090 1.599 .111

Gender .028 .066 .020 .421 .674

Martial Status .099 .048 .106 2.037 .042*

Educational

Qualification -.020 .020 -.052 -1.044 .297

Occupation -.024 .019 -.063 -1.257 .209

Annual Income .047 .022 .116 2.110 .035*

Family .071 .039 .091 1.836 .067

Dependents -.013 .010 -.061 -1.248 .213

House Ownership .052 .059 .043 .893 .372

Percentage of

investment -.052 .036 -.077 -1.450 .148

a Dependent Variable: Change of project details


215


It is inferred from the above table that in this cluster, the marital status (t=2.037)

and income (t=2.110) create an impact of dependent variables. The marital status and

income of the investors decide them to possess moderate awareness on change of project

details

(e) Cluster-wise Linear Multiple Regression Analysis for Financial parameters


dependent variable financial parameters is presented in the table – 5.79.

Table - 5.79: Variance of Independent Variable on Financial parameters and

Cluster 1 (b)


Square

Std. Error of the

Estimate

1 .412(a) .170 .146 .39757





It is clear from the above table that in the case of moderate awareness on capital

reform with 17% variance in financial parameters. The significant fit of the regression

model is presented in table - 5.80.

Table - 5.80: ANOVA (b, c) for Financial parameters for Cluster 1

Model Source Sum of

Squares Df

Mean

Square F Sig.

1

Regression 11.241 10 1.124 7.112 .000(a)**

Residual 54.847 347 .158 -- --

Total 66.088 357 -- -- --



b. Dependent Variable: financial parameters



216

From the above table it is found that the regression fits significantly with

F=7.112. The individual explanation of each demographic variable and its respective t-


Table - 5.81: Coefficients (a, b) for Financial parameters and Cluster 1

Model

Independent

Variable

Unstandardized

Coefficients

Standardized

Coefficients t

Sig.

B

Std.

Error Beta

1

(Constant) 3.995 .199 -- 20.091 .000**

Age .039 .033 .068 1.177 .240

Gender -.025 .086 -.015 -.295 .768

Martial Status .202 .049 .219 4.106 .000**

Educational

Qualification .032 .021 .085 1.532 .126

Occupation -.063 .021 -.171 -2.965 .003**

Annual

Income -.078 .027 -.161 -2.846 .005**

Family -.085 .047 -.097 -1.810 .071

Dependents -.015 .012 -.069 -1.311 .191

House

Ownership -.262 .057 -.239 -4.624 .000**

Percentage of

investment .038 .047 .044 .822 .412

a Dependent Variable: financial parameters



It is found from the above table that in this cluster the marital status (t=4.106),

occupation (t=2.965), income (t=2.846) and house ownership (t=4.624) of investors pave

the way for them to understand the financial parameters. The moderate awareness on

financial parameters can be obtained through the marital status, occupation, income and

house ownership of the investors.

In cluster 2, the explanation of independent demographic variables about

dependent variable financial parameters is presented in table - 5.82.

217

Table - 5.82: Variance of Independent Variable on Financial parameters and

Cluster 2 (b)


R Square

Std. Error of

the Estimate

1 .200(a) .040 .018 .30988



Annual Income, Age.



The significant fit of the regression model is presented in table - 5.83.

Table - 5.83: ANOVA (b, c) for Financial parameters for Cluster 2

Model Source Sum of

Squares df

Mean

Square F Sig.

1

Regression 1.783 10 .178 1.856 .049(a)*

Residual 42.732 445 .096 -- --

Total 44.515 455 -- -- --



Annual Income, Age.

b. Dependent Variable: financial parameters



Tables 5.82 and 5.83 clearly reveals that in the highly awareness on capital reform

cluster, 4% of the variance of dependent variables is explained by the independent

variables. The individual explanation of each demographic variable and its respective t-


218

Table - 5.84: Coefficients (a, b) for Financial parameters and Cluster 2

Model Independent

Variables

Un-standardized

Coefficients

Standardized

Coefficients t Sig.

B Std.

Error Beta

1

(Constant) 4.487 .167 -- 26.896 .000**

Age -.002 .028 -.003 -.057 .955

Gender .087 .055 .076 1.586 .113

Martial Status .003 .040 .004 .083 .934

Educational

Qualification -.017 .016 -.052 -1.057 .291

Occupation -.032 .016 -.101 -2.020 .044*

Annual Income .031 .018 .091 1.660 .098

Family .009 .032 .013 .274 .785

Dependents -.023 .009 -.131 -2.693 .007**

House

Ownership .005 .049 .005 .099 .922

Percentage of

investment -.005 .030 -.009 -.176 .860

a. Dependent Variable: return in investment



It is found from the above table that the occupation (t=2.020), and no of

dependents (t=2.693) are the two demographic variables of investors creating a good

impact on return in investment. The high awareness on financial parameters of investors

is decided by their occupation and the number of dependents in the family.

219

5.25 The Multivariate General Linear Analysis for returns Received and

Preference of Investment

In this analysis the retail investment and its impact on different avenues of

investment are explored using multivariate general linear model. The elements of retail

investment are taken as independent variables and the percentage of investment in

different avenues are considered as dependent variables. The individual impact of retail

investment on the investment options is explained in the table - 5.85.

Table - 5.85: Impact of Retail investment Preference of returns Amount Received

and Tests of Between-Subjects Effects

Source Dependent

Variable

Type III

Sum of

Squares

df Mean

Square F Sig.

Corrected

Model

Investment in

shares 5735.221(a) 5 1147.044 4.376 .001**

Investment in

real estate 5598.794(b) 5 1119.759 5.443 .000**

Investment in

Gold 6797.038(c) 5 1359.408 9.779 .000**

Investment in

bank 3116.403(d) 5 623.281 3.694 .003**

Investment in

Govt bonds 2023.126(e) 5 404.625 2.831 .015*

Investment in

lands 2741.143(f) 5 548.229 10.208 .000**

Intercept Investment in

shares 1241.456 1 1241.456 4.736 .030*

Investment in

real estate 2.489 1 2.489 .012 .912

Investment in

Gold 10447.977 1 10447.977 75.162 .000**

220

Source Dependent

Variable

Type III

Sum of

Squares

df Mean

Square F Sig.

Investment in

bank 10893.213 1 10893.213 64.562 .000**

Investment in

Govt bonds 21.241 1 21.241 .149 .700

Investment in

lands 1514.569 1 1514.569 28.201 .000**

General

informations

Investment in

shares 2322.564 1 2322.564 8.861 .003**

Investment in

real estate 2844.654 1 2844.654 13.828 .000**

Investment in

Gold 2342.439 1 2342.439 16.851 .000**

Investment in

bank 1011.898 1 1011.898 5.997 .015*

Investment in

Govt bonds 107.061 1 107.061 .749 .387

Investment in

lands 293.177 1 293.177 5.459 .020*

Company

management

Investment in

shares 13.601 1 13.601 .052 .820

Investment in

real estate 101.959 1 101.959 .496 .482

Investment in

Gold 291.202 1 291.202 2.095 .148

Investment in

bank 337.034 1 337.034 1.998 .158

Investment in

Govt bonds 692.267 1 692.267 4.843 .028*

Investment in

lands 26.321 1 26.321 .490 .484

221

Source Dependent

Variable

Type III

Sum of

Squares

df Mean

Square F Sig.

Details of

present values

Investment in

shares 77.867 1 77.867 .297 .586

Investment in

real estate 158.547 1 158.547 .771 .380

Investment in

Gold 864.583 1 864.583 6.220 .013*

Investment in

bank 8.884 1 8.884 .053 .819

Investment in

Govt bonds 180.865 1 180.865 1.265 .261

Investment in

lands 1047.146 1 1047.146 19.498 .000**

Project details

and their

Changes

Investment in

shares 1.543 1 1.543 .006 .939

Investment in

real estate 492.994 1 492.994 2.396 .122

Investment in

Gold 28.536 1 28.536 .205 .651

Investment in

bank 7.476 1 7.476 .044 .833

Investment in

Govt bonds 261.607 1 261.607 1.830 .176

Investment in

lands 403.619 1 403.619 7.515 .006**

Financial

parameters

Investment in

shares 89.543 1 89.543 .342 .559

Investment in

real estate 16.320 1 16.320 .079 .778

Investment in

Gold 1.353 1 1.353 .010 .921

222

Source Dependent

Variable

Type III

Sum of

Squares

df Mean

Square F Sig.

Investment in

bank 43.005 1 43.005 .255 .614

Investment in

Govt bonds 114.515 1 114.515 .801 .371

Investment in

lands 383.380 1 383.380 7.139 .008**

Error Investment in

shares 214414.429 818 262.120 -- --

Investment in

real estate 168276.565 818 205.717 -- --

Investment in

Gold 113707.579 818 139.007 -- --

Investment in

bank 138017.093 818 168.725 -- --

Investment in

Govt bonds 116922.960 818 142.938 -- --

Investment in

lands 43931.011 818 53.705 -- --

Total Investment in

shares 1169704.000 507 -- -- --

Investment in

real estate 434980.000 507 -- -- --

Investment in

Gold 268580.000 507 -- -- --

Investment in

bank 446400.000 507 -- -- --

Investment in

Govt bonds 206525.000 507 -- -- --

Investment in

lands 57969.000 507 -- -- --

223

Source Dependent

Variable

Type III

Sum of

Squares

df Mean

Square F Sig.

Corrected

Total

Investment in

shares 220149.650 506 -- -- --

Investment in

real estate 173875.359 506 -- -- --

Investment in

Gold 120504.617 506 -- -- --

Investment in

bank 141133.495 506 -- -- --

Investment in

Govt bonds 118946.086 506 -- -- --

Investment in

lands 46672.154 506 -- -- --


Squared = .026)

c. R Squared = .056 (Adjusted R Squared = .051); d. R Squared = .022 (Adjusted R

Squared = .016)

e. R Squared = .017 (Adjusted R Squared = .011); f. R Squared = .059 (Adjusted R

Squared = .053)


From the above table, it is clear that general capital investments include the

investors’ investment in shares (F=8.861), real estate (F=13.828), gold (F=16.851), bank

deposits (F=5.997) and in agricultural lands (F=5.459). It is also ascertained that the retail

investment explain the investment options as 2.6%, 3.2%, 5.6%, 2.2%, 1.7% and 5.9%

respectively which is not statistically significant. So due to general capital investments

investors show good enthusiasm for various investment avenues. Company management

make the investors to go for investing in Government bonds (F=4.843). Details of present

values compel the investors to invest in gold (F=6.220) and in lands (F=19.498). Change

in project details forces the investors to go in for own lands (F=7.515) and similarly

financial parameters directs the investors to invest in lands (F=7.139). On the whole, it is

concluded that the capital investments open fascinating vistas for investment of investors.

224

The demographic variables of investors in some way affect their awareness of retail

investment.

5.26 Impact of Demographic Variables on the investment objectives, decision and

satisfaction.

The general multivariate linear model is used to find the impact of independent

demographic variables such as age, gender, marital status, educational qualification,

occupation, annual income, family members, dependents, house ownership and vehicle

ownership on the dependent variables factors of latest developments in capital market.

The individual impacts of all type of the demographic variables are presented in table -

5.86.

Table – 5.86: Impact of Demographic Variables on the investment objectives,

decision and satisfaction-Tests of Between-Subjects Effects

Independent

Variable

Dependent

Variable

Type III

Sum of

Squares

df Mean

Square F Sig.

Corrected

Model

Investment

objectives 2703.389(a) 10 270.339 14.383 .000**

Investment

satisfaction 688.234(b) 10 68.823 6.372 .000**

Facility

satisfaction 559.123(c) 10 55.912 11.229 .000**

Innovative

measures 208.500(d) 10 20.850 7.377 .000**

Problems 411.062(e) 10 41.106 5.610 .000**

Intercept

Investment

objectives 5784.901 1 5784.901 307.774 .000**

Investment

satisfaction 3855.162 1 3855.162 356.921 .000**

Facility

satisfaction 1572.120 1 1572.120 315.737 .000**

Innovative

measures 900.553 1 900.553 318.632 .000**

225

Independent

Variable

Dependent

Variable

Type III

Sum of

Squares

df Mean

Square F Sig.

Problems 2404.229 1 2404.229 328.118 .000**

Age

Investment

objectives 89.200 1 89.200 4.746 .030*

Investment

satisfaction 11.592 1 11.592 1.073 .301

Facility

satisfaction 34.923 1 34.923 7.014 .008**

Innovative

measures 14.130 1 14.130 5.000 .026*

Problems 7.022 1 7.022 .958 .328

Gender

Investment

objectives 22.322 1 22.322 1.188 .276

Investment

satisfaction 33.234 1 33.234 3.077 .080

Facility

satisfaction .762 1 .762 .153 .696

Innovative

measures 7.843 1 7.843 2.775 .096

Problems 35.445 1 35.445 4.837 .028*

Martial Status

Investment

objectives 28.386 1 28.386 1.510 .219

Investment

satisfaction .045 1 .045 .004 .949

Facility

satisfaction 26.692 1 26.692 5.361 .021*

Innovative

measures .364 1 .364 .129 .720

Problems 18.983 1 18.983 2.591 .108

Educational

Qualifications

Investment

objectives 23.534 1 23.534 1.252 .263

Investment

satisfaction 3.125 1 3.125 .289 .591

Facility

satisfaction 5.357 1 5.357 1.076 .300

226

Independent

Variable

Dependent

Variable

Type III

Sum of

Squares

df Mean

Square F Sig.

Innovative

measures 4.891 1 4.891 1.730 .189

Problems 84.528 1 84.528 11.536 .001**

Occupation

Investment

objectives 116.999 1 116.999 6.225 .013*

Investment

satisfaction 25.933 1 25.933 2.401 .122

Facility

satisfaction 29.747 1 29.747 5.974 .015*

Innovative

measures .362 1 .362 .128 .720

Problems 2.946 1 2.946 .402 .526

Annual

Income

Investment

objectives 1014.005 1 1014.005 53.948 .000**

Investment

satisfaction 82.041 1 82.041 7.596 .006**

Facility

satisfaction 257.483 1 257.483 51.712 .000**

Innovative

measures 25.697 1 25.697 9.092 .003**

Problems 38.907 1 38.907 5.310 .021*

Nature of

Family

Investment

objectives 168.022 1 168.022 8.939 .003**

Investment

satisfaction 160.850 1 160.850 14.892 .000**

Facility

satisfaction 52.974 1 52.974 10.639 .001**

Innovative

measures .301 1 .301 .107 .744

Problems 170.968 1 170.968 23.333 .000**

No. of

dependents

Investment

objectives 191.904 1 191.904 10.210 .001**

Investment

satisfaction 52.536 1 52.536 4.864 .028*

227

Independent

Variable

Dependent

Variable

Type III

Sum of

Squares

df Mean

Square F Sig.

Facility

satisfaction 27.323 1 27.323 5.488 .019*

Innovative

measures 13.845 1 13.845 4.899 .027*

Problems 26.191 1 26.191 3.574 .059

House

Ownership

Investment

objectives 16.594 1 16.594 .883 .348

Investment

satisfaction 139.010 1 139.010 12.870 .000**

Facility

satisfaction 26.083 1 26.083 5.238 .022*

Innovative

measures 1.338 1 1.338 .473 .492

Problems 61.304 1 61.304 8.367 .004**

Vehicle

Ownership

Investment

objectives 173.975 1 173.975 9.256 .002**

Investment

satisfaction 26.966 1 26.966 2.497 .114

Facility

satisfaction .108 1 .108 .022 .883

Innovative

measures 35.237 1 35.237 12.468 .000**

Problems 12.569 1 12.569 1.715 .191

Error

Investment

objectives 15093.152 803 18.796

Investment

satisfaction 8673.343 803 10.801

Facility

satisfaction 3998.298 803 4.979

Innovative

measures 2269.526 803 2.826

Problems 5883.842 803 7.327

228

Independent

Variable

Dependent

Variable

Type III

Sum of

Squares

df Mean

Square F Sig.

Total

Investment

objectives 918822.000 814

Investment

satisfaction 489622.000 814

Facility


Innovative

measures 131623.000 814

Problems 311582.000 814

Corrected

Total

Investment

objectives 17796.541 813

Investment


Facility


Innovative

measures 2478.026 813

Problems 6294.904 813


Squared = .062)

c. R Squared = .123 (Adjusted R Squared = .112); d R Squared = .084 (Adjusted R

Squared = .073)

e R Squared = .065 (Adjusted R Squared = .054); Source: Primary Data

** - Significant at 0.01 level; * Significant at 0.05 level

The demographic variables of investors explain the dependent variables

investment objectives, investment satisfaction, facility satisfaction, innovative measures

and problems with the total variance of 15.2%, 7.4%, 12.3%, 8.4% and 6.5%

respectively.

It is found that the age of the investors predicts investment objectives

(F = 4.746), Facility satisfaction, (F = 7.014) and Innovative measures (F = 5.00). In

229

investment objectives the investors in the age group of 41-60 years (mean = 4.295) are

highly aware of investment objectives. Similarly the age group 41-60 are aware of facility

satisfaction and innovative measures.

Gender has its impact on problems (F = 4.837), especially the female investors are

aware of problems in capital market (mean = 4.03) than male investors (mean = 3.86).

The marital status of the investors explains facility satisfaction (F = 5.361). It is found

that the separated investors status concentrate more on facility satisfaction (mean = 4.23)

followed by married (mean = 4 .17) and unmarried (mean = 4.15).

Educational qualification predicts problems (F = 6.225). The graduate investors

(mean = 3.90) and diploma investors (mean = 3.92) are aware of innovative

developments in capital market.

Occupation of investors predicts investment objectives (F = 6.225) and facility

satisfaction (F = 5.974). Among these, occupation of the investors who are working as

government employees (mean = 4.28) followed by private employees (mean = 4.17)

concentrate more on these reforms. Income predicts all the latest development investment

objectives (F = 53.948), investment satisfaction (F = 7.596) and innovative measures (F =

9.092). In the case of investment objectives, the income group of 3 lakhs and above

investors alone (mean = 4.40) are aware of it. The investors with the annual income 2-3

lakhs (mean = 4.16) are aware of investment satisfaction; those with annual income of

above 3 lakhs are very much aware of facility satisfaction (mean = 4.39), innovative

measures (mean = 4.43) and finally the income group of 2-3 lakhs are aware of problems

(mean = 3.91).

The nature of family predicts investment objectives (F = 8.939), investment

satisfaction (F = 14.892) facility satisfaction (F = 10.639) and problems (F = 10.639). It is

also found that the investors in the nuclear family are aware of investment objectives

(mean = 4.20) than joint families. Similarly, the nuclear family investors are aware of

investment satisfaction (mean = 4.10), facility satisfaction (mean = 4.21) and problems

(mean = 3.93).

230

It is inferred that the number of dependents is considered as a very important

factor for investors to deal with the capital market the ownership of the house explains

the investors’ interest on investment satisfaction (F = 12.87) facility satisfaction (F =

5.238) and problems (F = 8.367). The investors with own house are showing special

enthusiasm on investment satisfaction (mean = 4.07), facility satisfaction (mean = 4.19),

and problems (mean = 3.89).

The ownership of vehicles predicts investment objectives (F = 9.26), and

innovative measures (F = 12.47). The investors with four wheelers are aware of

investment objectives (mean = 4.38) and those who do not possess the vehicles are drawn

by innovative measures (mean = 4.47). So, it is concluded that that all the demographic

variables of investors are related to investors in understanding the latest developments of

capital market. All the above observations have been explored in table - 5.86.

5.27 A MODEL OF INVESTMENT PATTERN IN STOCK MARKET

The present research ventured in identifying investment pattern of investors in

stock market. It ascertained through analysis of primary data of investors and under

pinned the exact the pattern of investment in stock market with regard to Chennai

geographical base. The primary data is analysed through the various statistical tools

factor analysis, cluster analysis, multiple regression analysis, analysis of variances, Karl

Pearson’s co-efficient of correlation and non-parametric chi-square analysis.

The analysis revealed socio-economic profile of investors is a basis for

ascertaining the investment profile. The multiple regression analysis is followed by

analysis of variance significantly identified that the investor’s socio-economic profile

desires their type, category, and type of market they invest.

The sequential analysis further revealed the investment profile reveals a

characteristics feature of investors through their investment preferences and objectives.

The analysis of variance with suitable ‘F’ value clearly proved the relationship between

investment profile, investment preferences and investment objectives. The inter

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correlation between investment preferences and investment objectives identified their

existence of positive relationship between preferences and objectives.

The factor analysis found that investment decision is a composition of five pre-

dominant factors general information, company management, details of present issue,

project details and financial parameters. The overall relationship between the factors of

investment decision with preferences and objectives are established through significant

correlation co-efficient.

The factors of investment decision act as a basis for the formation of

heterogeneous groups of investors, similarly investment satisfaction and problems of

investors classify them into various heterogeneous groups. The mutual association among

investment decision, investment satisfaction and problems are significantly associated

through non-parametric chi-square analysis. This model profoundly concludes that the

research instrument used in the study is highly reliable is ascertained through this model.

This investment pattern of Chennai investors is identified through this model.

5.28 SUMMARY

In this chapter, factors influencing equity investors, investment satisfaction and

investors’ confidence of the retail equity investors have been assessed.

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CHAPTER – VI

SUMMARY OF FINDINGS SUGGESTION AND CONCLUSION

INTRODUCTION

This chapter is intended to present the findings of the research and suitable

suggestions, profound conclusions and scope for further research.

The microscopic cross examinations of the primary and secondary data reveal the

following results. Primary and secondary data are explored completely to ascertain the

important factors of the study, to identify the reasons of investors for investing in retail

investment, impact of investment decision, relationship between financial sector reforms

and equity retail investment. The changes in the attitude of investors were noticed after

the latest developments in capital market in 1991. Now the investors possess greater

awareness through TV, newspaper and other sources of information. The transparency in

capital market is considered as one of the vital reforms that magnetically attracted the

investors and increased their number in retail investment. The classification of markets

paved way to the investors to select their own lucrative choice and make them to employ

various strategies to overcome the impediments in investment procedures.

6.2 MAJOR FINDINGS OF THE STUDY

6.2.1 OBJECTIVE ONE

To study the investment pattern of retail equity investors in Chennai.

A maximum percentage of 54.9% of investors are in the age group of 26 to 40

followed by the investors in the age group 41 to 60 which is 33.3%. Male investors are

more enthusiastic than females in equity shares investment.

It is identified that most of the investors are working in private concerns or

running their own business, that is 43% and 32.7% of investors are employed in private

or in their business concerns. The Government employees are not enthusiastic more in

equity shares.

It is found that 39.1% investors belong to the income groups of Rs. 1 - 2 lakhs and

26.6% investors have the income less then Rs. 1 lakh, 22.9% are in the income of groups

of Rs. 2 - 3 lakhs. The number of dependents and investment are inversely proportional to

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each other. When the number of dependents is more in the family, they do not have

ample money for investment in this present economic situation.

It is found that 72% of the respondents establish themselves as both long term

investors and daily traders and 12.6%of them operate equity investment daily. Most of

the investors are having the experience in the securities market just below 5 years. The

young investors and educated persons now enter into the securities markets.

It is found that 74.1% of the respondents in Chennai invested in less than 10

companies and remaining 25.9% of them are attracted towards more than 10 companies

share market investment. 10.7 % of the respondents have an investment of less than Rs.

1, 00,000. The investment level of 35.4 % of the respondents is between Rs. 1, 00,000

and Rs. 2, 00,000. 23.5 % of them have an investment size which ranges from Rs.2,

00,000 to Rs. 3, 00,000.

The maximum number of investors invest own funds to obtain better returns. A

maximum of 64% of sample size are investing their fund out of their savings below 25%,

most of the investor are invest their money out of their saving below 25% of the surplus

money that they had.

6.2.2 OBJECTIVE TWO

To analyse the information search and investment option of retail investors.

A maximum of 77.6% of investors get the information about the securities market

through news papers followed by 66.4% of investors get the information through

television media, 56.5% of investors receive the information through the stock brokers.

A major percentage of the investors are getting the information through news

papers television and stock brokers. 49.6 percent of investors are investing their money

after analyzing the financial performance of the companies and only 0.5 percent of

investors are considering some other factors like present market condition and new

production strategies.

234

A maximum of 85.8 percent of investor are possessing experience in dealing their

investment forums followed by 14.2 percent of investor doesn’t have any experience with

the forum of investors. Most of the investors in Indian securities market are having the

knowledge about the malpractices done by the intermediaries and share brokers.

It is ascertained that a maximum of 82.1 percent of investors in securities market

are aware of the online trading and they buy and sell their equities followed by 17.9

percent of investors deal with offline trading. Majority of the investors in Indian

securities market are aware of the financial sector reforms made by the Government of

India.

42.9% of the investment decisions are taken based on sensex index and 31.9% of

the investors’ decisions are influenced by the index of Nifty. Most of the investor’s

decisions are influenced and taken by the observations of sensex index.

Newspaper plays a crucial role in identifying all the industries except IT industry.

It is found that the information through Journals and magazines is useful for investors to

invest in banking, manufacturing, textile and automobile industries. Banking, steel and

cement industry are concentrated by the investors with the help of information through

TV channels.

The stockbrokers give more information to the investors in selecting the industry.

The investment consultants significantly guide the investors to invest in banking, steel,

IT, manufacturing, textile and automobile industries. Web sites give profuse source of

information for investors about the performance of banking, cement, IT, pharma,

manufacturing, and automobile industries

6.2.3 OBJECTIVE THREE

To identify the various investment preferences and investors perception on

risk and return.

The most preferred investments are well established and the investors strongly

agree that the investment in capital market alone gives more returns with minimum

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market risk. The investors prefer share market as most preferred investment followed by

fixed deposit, real estate, mutual funds, government bonds, gold and debentures in order

The investors invest their money safely in banks in the form of deposits and give

second preference to IT industry followed by cement and pharma industry. The investors

also concentrate more on the safety of their investments in banking sector.

All type of investors demand more returns with no risk. So they prefer share

market fabricated with minimal risk. It is found that the investors adopt the modes of

calculative, conservative, risk taking, impulsive and intuitive in the respective order.

The investors investing in secondary market give their first preference to NSE

followed by BSE and MSE respectively. The transparency about the performance of the

companies issuing the shares and continuous monitoring of central government and the

RBI raises the confidence among the investors besides the market risk. It is also found

that the investors are willing to invest their hard earned money to have lucrative returns

in the short span of time.

It is ascertained that a maximum of 59.2% of the investors expect to get return

below 12% of their investments followed by 19% of the investors prefer to invest 36 %

and above of their investments in equities.

6.2.4 OBJECTIVE FOUR

To examine factors influencing investment evaluation and decision of

investors.

The cluster analysis revealed that 42.16 percent investors express the opinion that

they moderately agree on all the elements of capital investments and remaining 57.54

percent investors strongly agree with the investments in equity shares

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The investors accept equally about the investments in secondary market, project

details and their changes, and financial parameters. It is concluded that all the

investments are important and they reflect the investments of equity shares Investors’

opinion on investments can not be distinguished on their experiences with equity shares

dealings. The retail investments are totally spread over all the investors equally

independent of their number of years of dealings.

The investors invest their money in share market to accrue maximum benefits

before and after investments. The retail investment just induces the investors to invest in

share market, but the investors welcome any type of investments of equity shares with

better returns and absolutely no risk.

All the investors are aware of retail investment immaterial whether they invest in

shares or not. The updated information to the investors could be a more effective source

of information.

The investors who differ in their opinion of investing in Government Bonds also

differ in identifying the investments in equity shares. The investors are very much

attracted towards the primary and Details of present values, change of project details

investments and investments in financial parameters.

The investors are very much attracted towards change of project details

investments in equity shares and that in turn induces them to invest more in primary and

secondary markets. When the investors invest their money in gold they do not have more

knowledge about retail investment. The investors who are investing in gold are also

turning their concentration towards equity shares

Investors who concentrate on debentures are very much attracted towards general

information, Details of present values and financial parameters. They profoundly believe

that retail investments of above elements are really worthy of better returns.

The investors of mutual funds also possess a tendency to shift their investment

pattern towards equity shares. They feel that the same amount of risk is involved in

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mutual funds and equity shares but in the case of returns the equity shares exceeds more

than the mutual fund.

The investors shift their concentration towards equity shares due to the latest

developments in Indian equity shares. They feel that they are able to get the same type of

returns as that of real estate within a short span of time.

The investors expect more returns, they differ in their views about general

informations, Details of present values and change of project details whereas they have

the same view on Company management and financial parameters.

It is inferred that when the investors expect liquidity from their investment, some

of them are highly aware of capital investments while some others do not. The investors

who invest their money for tax benefits are well aware of general information, Details of

present values, change of project details and financial parameters.

Company management and change of project details differ the investors

significantly in their perception of capital investments. The investors who are influenced

by the TV channels have high awareness on Details of present values and financial

parameters.

The investors want to invest in both the markets and the secondary market is more

popular among the investors than the primary market. There is a association between

preference of investment in equity shares and cluster of awareness on retail investment.

The investors decide to invest in primary market and secondary market after knowing the

capital investments only the investors

The general information in equity shares does not have any impact on investors to

invest certain percentage in primary and secondary markets. Company management

induce the investors to invest a considerable percentage of their money in share market.

The change of project details and financial parameters do not have any impact on

investors to invest funds in share market.

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It is inferred that there is an association between criterion for investment and

cluster of awareness of capital investments. The investors are all well aware that the

capital investments giving certain specific criteria for the investment procedure.

6.2.5 OBJECTIVE FIVE

To evaluate investors level of satisfaction and their futuristic perceptions

towards retail equity investment.

It is found that the investors of equity market are distributed into three groups on

the basis of investment pattern prevailing in India. The first group consists of 6.11

percent investors with minimum awareness on equities and 63.12 percent with high

awareness on equity investments.

Equity investments have affected the investment in the banking sector. More

number of investors is enthusiastic in venturing into equity shares pertaining to banking

sector. The investors have the knowledge about company management before they invest

in FMCG sector.

General information, company management, and details of present values, change

of project details and financial parameters significantly affect the investment in pharma

sector and PSE sector retail investment.

The degree of awareness and knowledge about retail investment has enabled the

investors for making meaningful investment decisions in MNC sector. It is also found

that change of project details does not have any impact on investment in IT sector

The general information affects the investment in manufacturing sector. The

investors find a scope for their investment in manufacturing sector after general capital

investments. Other details do not have any role to play with manufacturing sector.

General information, Company management, Details of present values, change of

project details and financial parameters affect the investment in service sector. The

investors are drifting towards service sector after obtaining the details of investment.

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There is no association between extensive of risk and awareness of retail

investment. The investors are very much aware of risks involved in investing in equity

shares, because it depends upon the performance of firms.

It is inferred that different reasons for preference of stock exchange arise due to

retail investment. There is no association between dealing with electronic shares and

elements of retail investment.

The investors are very much attracted by share market after understanding the

attractive financial sector reforms. The transparency about the performance of the

companies issuing the shares.

Facility satisfaction does not create an impact on instruments and their changes.

Innovative measures have good impact on all elements of capital reforms, except

financial parameters. Problems create deep impact on capital market reforms, primary

market reforms secondary market reforms, instruments and their changes, but it does not

predict financial parameters.

The equity investment has predicted good impact on reforms in capital market.

Collectively the equity investments aim at reforming primary and secondary market.

Positive changes in the instrument and better returns to the investors prevail in the equity

market.

The investors are also exploring the avenues like real estate, gold investment and

government bonds to get more returns with less risk. There is no significant relationship

between the number of years in dealing with capital market and equity investment, some

investors are continuously investing in capital markets with their perception about the

developments in capital market. They feel it is an advantage for their investment.

Investment objectives and facility satisfaction severely affect the investor’s decision to

decide the percentage of investment in share market.

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6.2.6 OBJECTIVE SIX

To find the relationship between demographic variables of investors and

their investment objectives, decision and satisfaction.

In this moderate awareness cluster age, gender, annual income and vehicle

ownership of investors pave the way to know about general capital investments. The high

awareness of investors is achieved through their age, marital status occupation, no. of

dependents and percentage of investment.

In this moderate awareness group of investors, nature of family and vehicle

ownership help them to acquire knowledge about company management. It is concluded

that the nature of family decides the investor’s awareness on the company management.

The annual income, no of dependents and vehicle ownership are useful for the

investors to know the company management. It is concluded that income, vehicle

ownership and number of dependents explain the awareness of investors on company

management.

Age, nature of family, and house ownership create a good impact on details of

present values. In moderate awareness, clusters, the equity market awareness can be

observed by the investors using their age, nature of family and house ownership.

The investors with high awareness on retail investment are able to initiate more

ideas of details of present values through age alone. Genders, income, ownership of the

house explain the awareness of investors on changes of project details. The gender,

income and ownership of the house decide their high awareness on details of present

values.

The marital status and income of the investors decide them to possess moderate

awareness on change of project details. The marital status, occupation, income and house

ownership of investors pave the way for them to understand the financial parameters. The

moderate awareness on financial parameters can be obtained through the marital status,

occupation, income and house ownership of the investors.

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The high awareness on financial parameters of investors is decided by their

occupation and the number of dependents in the family. The investors show good

enthusiasm for various investment avenues. Company management makes the investors

to go for investing in Government bonds. Details of present values compel the investors

to invest in gold and in lands. Change in project details forces the investors to go in for

own lands and similarly financial parameters direct the investors to invest in lands.

It is found that the age of the investors predicts investment objectives,

Facility satisfaction, and Innovative measures. In investment objectives the investors in

the age group of 41-60 years are highly aware of investment objectives. Similarly the age

group 41-60 are aware of facility satisfaction and innovative measures.

Gender has its impact on problems, especially the female investors are aware of

problems in capital market than male investors. The marital status of the investors

explains facility satisfaction. It is found that the separated investors status concentrate

more on facility satisfaction followed by married and unmarried.

Educational qualification predicts problems. The graduate investors and diploma

investors are aware of innovative developments in capital market.

Occupation of investors predicts investment objectives and facility satisfaction.

Among these, occupations of the investors who are working as government employees

followed by private employees concentrate more on these reforms. In the case of

investment objectives, the income group of 3 lakhs and above investors alone are aware

of it. The investors with the annual income 2-3 lakhs are aware of investment

satisfaction; those with annual income of above 3 lakhs are very much aware of facility

satisfaction, innovative measures and finally the income group of 2-3 lakhs are aware of

problems.

The investors in the nuclear family are aware of investment objectives than joint

families. Similarly, the nuclear family investors are aware of investment satisfaction,

facility satisfaction and problems.

242

It is inferred that the number of dependents is considered as a very important

factor for investors to deal with the capital market. The investors with own house are

showing special enthusiasm on investment satisfaction, facility satisfaction, and

problems. The investors with four wheelers are aware of investment objectives and those

who do not possess the vehicles are drawn by innovative measures.

6.3 SUGGESTIONS

Based on the study, the following suggestions have been made.

The transparency must be made about the companies and their performance so

that the investors can decide their investment on suitable shares.

Corporate governance has to be implemented in all stock exchanges.

Innovative technologies like integration of stock exchanges, demat, online

trading, creation of development of web pages must be brought in capital markets

for its growth and to attract the educated investors.

Strategies like hedging, index futures must emerge in capital market to reduce the

market risk, provisions must be made to return at least the principal amount of

investors.

Strategies must be employed to encourage women investors. Awareness

programmes has to conduct in all places.

The competitions of capital market have come from instructional investors like

mutual funds and real estate. So the companies must be careful enough in issuing

their shares.

Transparency must be made both in primary market and secondary market equally

to help the investors to get their capital.

243

Shares, Debentures and bonds are familiar to urban investors. But their

counterparts in rural areas do not know anything about them.

Investors are the hub of the capital market. Their satisfaction is the most

important. So it should be done by providing safety, return and liquidity for their

investments.

Capital market should create a higher level critical factors involved for making

investment decisions.

Companies should provide information/education to investors at large with

detailed data including the role of SEBI to make them smart.

Regarding capital market more journals, newspapers and TV media have to reach

the investors.

The investors should be allowed an opportunity to trade in International Stock

Exchanges.

As far as the capital market is concerned research carried out is very less. So,

SEBI and other agencies should provide assistance to carryout advance research

in this area.

Credit rating agencies should rate the equities and mutual funds for the benefit of

the investors.

SEBI and other intermediaries should tap the rural investors by conducting

awareness programme exclusively for them.

6.4 IMPLICATION OF THE STUDY

This study would be of immense help to managers, particularly, financial

managers who take decisions regarding investment and investors’ attitude towards share

market. The study will help investment consultants in identifying the investment avenues.

The credit rating agencies can use the information for their investment rating. Investor’s

244

preference for equity retail investment will help policy makers in formulating strategies.

The study helps for timing and type of instruments for new issues in retail investment.

Stock exchanges can introduce technological advancement in trading. In short, this piece

of research work has become quite friendly to all the three groups of players in the capital

market viz. the investors, issuers and the intermediaries.

6.5 SCOPE FOR FURTHER RESEARCH

Based on the study done by the researcher, the following suggestions are identified

for further research.

Since the present study is at a regional level, it could be extended to state and

national level.

The impact of retail investment in capital market may be studied in view of rural

investors.

The study may further be carried out to analyse the impact of reforms on the

functioning of stock exchanges.

A study on the awareness of women investors about retail investment pattern

could be attempted.

Implications of internet stock trading in India can be taken up for study.

Impact of technological innovation in capital markets can be studied.

6.6 CONCLUSION

Indian retail investment in share market has now grown into a great material

market with a lot of qualitative inputs and emphasis on investors’ protections and

disclosure norms laid down. The market has become automated, transparent and self-

driven. It has integrated with global markets with Indian companies seeking listing on

foreign stock exchange, off shore investments coming to India and foreign mutual funds

floating their schemes and thus bringing expertise in to our markets. India has achieved

the distinction of possessing the largest population of investors next to the U.K. Perhaps

ours is the country to have the largest number of listed companies with around 19

Regional Stock Exchanges and National Stock Exchanges most of them automated. India

245

now has world class regulatory system in place. Thus at the dawn of the new millennium,

stock market increased the wealth of Indian companies and investors. No doubt strong

economic recovery, upturn in demand, improved market structure, etc. have been the

driving forces.

Further, financial services sector is considered to be the nuclear of the growth

model designed for the economic development of our vast country. Financial services and

markets constitute significant components of the financial system. Development and

reforms in this field are inevitable for the growth of our developing economy.

Accordingly, a lot of financial reforms have been made as and when required for the

welfare of the investors and the institutions.

The investors of to-day are more rapidly informed than their predecessors of

yesterday. So they are better informed and better treated. They want to be secure when

they aspire to become rich, wanted to save while they are tempted to spend, want to feel

the joy of pride and avoid the pain of regret. However every agency in the capital market

should plan their strategies for profit to investors on a long term basis. The potential

investor must be properly educated and guided in a manner that more idle resources or

invested in other avenues will be diverted to capital market. Increase in GDP (9%) raising

of sensex around 20,000 more participation of MNCS with their FDI results in the

progress of Indian economy and awareness of the prudent Indian investors. If and when

all financial reforms are inflated, the Indian capital market will not only be on par with

developed capital markets of the world, but also will become the paradise for investors.

Conclusively the quantum of retail investment increased rapidly as well as enormously,

liberalization continues to blow retail market investment by adapting itself to new

procedures practices and patterns with the entry of various players in the market; it is

poised to achieve unprecedented levels of growth in the near future.

246

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44. Loeb G.R., “Checklist for Buying Stock” New York : Simon & Schuster Inc.,

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250

46. Payne, Stanley, “The Art of Asking Questions,” Princeton: Princeton University

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47. Pickett R.R., and Ketchum M.D., “Investment Priciples & Policy” New York :

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49. Rajkapila and Mahesh Duliani., “Manual of SEBI ( ed),” New Delhi: Bharat Law

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50. Ralph E. Badger, Harold Torgerson and Harry G. Guthmann “Investment

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55. Shanbhag A.N., “In the Wonder Land of Investment”, ‘Bombay’ Popular

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II. JOURNALS AND PERIODICALS



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Vercelli,


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254

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23. Dechow, Patricia, Hutton, Amy and Sloan, Richard part 5, “Mastering Finance”,

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24. Diptendu simlai,” An Inquiry into the origion and Growth of the modern capital

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25. Eva Hofmann, Erik Hoelzl and Erich Kirchler, “A comparison of models

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26. Fama E, “Efficient Capital Markets: II”, Journal of Finance, Vol. XLVI(5),

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27. Feldstein, Martin S., Yitzhaki, Shlomo, “Are high income individuals better stock

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28. Gangadhar V. and G. Naresh Reddy, “The Impact of Foreign Institutional

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255

29. Gerben de zwart, Brian Frieser and Dick van Dijk, “A recommitment strategy for

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30. Global standards and ethical stock indexes: The case of the Dow Jones

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31. Gnana Desigan C, Kalai Selvi S, Anusya L, “Women Investors Perception

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32. Gupta L.C, Naveen Jain and Team, “Indian Household Investors Survey-2004”,

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33. Hall, John.H., “Do brokers buy, hold and sell recommendations of value to

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35. Hong Kong Exchanges and clearing Ltd (HKEx), (2001-02), “Derivatives Retail

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36. HorstRaff and Michael J.Ryan, “Firm-Specific Characteristics and the Timing of

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37. Ibid.,


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256


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40. Iran Peacock and Stuart Cooper, “Private equity: implications for financial

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41. Jaspal singh and subhash chander, “Investors’ preference for Investment in mutual

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March 2006 PP: 7-17.

42. John R. Graham, Alokkumar, “Do Dividend Clienteles Exist? Evidence on

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Issues 3, June 2006, pp: 1305-1336.

43. Jones Nilsson, “Investment with a Conscience: Examining the Impact of Pro-

Social Attitudes and Perceived Financial Performance on Socially Responsible

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44. Julan Du, “heterogeneity in investor confidence and asset market under-and

overreaction”, The ICFAI Journal of Behavioral Finance, June 2004, PP: 55-85.

45. Kameswari, “Foreign Direct Investment and its role in Developing Indian

Economy,” The Management Accountant ICWAI Journal Vol. 43 No.7 July 2008

PP: 510-517.

46. Kavitha Ranganathan, “A study of fund selection behavior of individual investors

towards mutual funds: With reference to Mumbai city”, The ICFAI University

Journal of Behavioral Finance,Vol. III, No. 2, 2008, PP: 63-88.

47. Kenneth A.Froot and Tarun Ramadorai, “Institutional portfolio Flows and

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PP: 1-36.

257

48. Kuntluru S. and Md. Akbar Ali khan, “Financing pattern of foreign and Domestic

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49. Larry D. Wall, “On investing in the Equity of small firms”, Journal of small

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50. Levine, Ross and S. Zervos, “Stock Market Development and Economic Growth”,

The World Bank Economic Review, Vol.1012, PP.323-339, 2008.

51. Lieven Baele,” Olivier De Jonghe and Rudi vander Vennet, “Does the Stock

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52. M.Raja and J.Clement sudhahar,” An Empirical test of Indian Stock Market

Efficiency in Respect of Bonus Announcement”, Asia pacific Journal of Finance

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53. Mahabaleswara Bhatta H.S. “Behavioral Finance- A discussion his individual

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February2009, PP: 138-141.

54. Malcolm Baker and Jeffrey Wurgler, “A Catering Theory of Dividends,” The

ICFAI Journal of Behavioral Finance, Vol.59, Issue 3, 2008 PP: 32-60.

55. Mamunur Rashid1 and Md. Ainun Nishat, “satisfaction of retail investors on the

structural efficiency of the market: Evidence from a developing country context,”

Asian Academy of management Journal, Vol. 14, No. 2 , July 2009, PP: 41-64.

56. Manish Mittal and R K Vyas, “personality type and investment choice: An

empirical study”, The ICFAI University Journal of Behavioral Finance, Vol. V,

No. 3, 2008, PP: 6-22.

258

57. Marcela Meirelles Aurelio, “Going Global: The changing pattern of U.S.

Investment Abroad,” Economic – Federal Reserve Bank of Kansas city Vol.93

No.3, Third quarter 2006 PP: 5-33.

58. Maria May seitanidi, “Intangible economy: how can investors deliver change in

business? Lessons from non profit business partnerships”, Management Decision

Journal, Emerald Group publishing limited Vol.45 No.5 2007 PP: 853-865.

59. Mark Grinblatt, Matti Keloharju, “The Investment Behaviour and Performance of

Various Investor Types: Study of Finland’s unique Data set”, Journal of Financial

Economics, Vol. 55, 2010, pp: 43-67.

60. Maruthu Pandian P, Benjamin Christopher S, “A study on Equity Investor

Awareness”, Doctoral Dissertation at Bharathiar University, 2011.

61. Masashi Toshino and Megumi suto,” Cognitive biases of Japanese institutional

investor’s consistency with behavioral finance,’ The ICFAI Journal of Behavioral

Finance, March 2008 PP: 7-18.

62. Meenu Verma, “Wealth management and behavioral finance: The effect of

demographics and personality on investment choice among Indian investors”, The

ICFAI University Journal of Behavioral Finance, Vol. V, No. 4, 2008, PP: 31-57.

63. Meir Statman, Steven Thorley and Keith Vorkink, “Investor overconfidence and

Trading volume,” The Review of Financial studies Vol.19, No. 4 , 2006, PP:

1531- 1565.

64. Michael J. Robinson and Thomas J. Cottrell, “Investment patterns of informal

investors in the Alberta private Equity Market,” Journal of small Business

Management Vol. 45, No. 1 PP: 47-67.

65. Michael Kaestner, “investors’ Misreaction to unexpected earnings: evidence of

simultaneous overreaction and under reaction,” The ICFAI Journal of Behavioral

Finance, March 2008, PP: 32-42.

259

66. Ming Dong, Chris Robinson and Chris veld, “Why individual investors want

dividends,” The ICFAI Journal of Behavioral Finance, Vol. III, No. 2, 2007, PP:

27-62.

67. Minh Quang Dao, “The impact of investment climate indicators on Gross capital

formation in developing countries,” Eastern Illinois university, USA, working

paper, 2007, PP: 1-10.

68. Mohammad Salahuddin and Md. Rabiul Islam,” Factors affecting investment in

developing countries: A panel data study,” South east university Bangladesh,


69. Mohanty B.K. “Market capitalization: A suitable growth approach for share

holders’ value creation”, The Management Accountant ICWAI Journal Vol.43,

No. 8, August 2008, PP: 398-401.

70. Nagarajan R.“Green shoe option in IPO”, The Management Accountant ICWAI

Journal Vol.40, No. 5, May 2008, PP: 398-401.

71. Narendra Jadhav, “Development of Securities Market – The Indian Experience”,

Association for Financial Professionals (AFP), Annual conference, session: 30

2009, PP: 1-34.

72. Nissim Ben David, “An indicator for internalization of analyst’s

recommendations by investors, “The ICFAI University Journal of Behavioral

Finance Vol. V, No. 3, 2008, PP: 23-35.

73. NSE-Fact book: 2006, www.nseindia.com,p.1, PP.85.

74. Panda K, Tapan N.P and Tripathi, “Recent Trends in Marketing of Public Issues:

An Empirical Study of Investors Perception”, Journal of Applied Finance, Vol. 7,

No.1, 2010, pp: 1-6.

75. Qiang Cheng and Terry D. Warfield,” Equity incentives and earnings

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260

76. Rajarajan V, “Investors Life Styles and Investment Characteristics”, Finance

India, Vol. XIV, No. 2, 2010, pp: 465-478.

77. Ramesh Gupta, “Retail Investor – A lost Species”, IIM Working paper series, E

15378, p:1.

78. Retail Investments into Equity”, IIM Working paper series, E27119, p:4.

79. Roopam Kothari and Narendra Sharma,” Testing the Beta Stability of Banking

Sector over various Phases in Indian Stock market,” The Management Accountant

ICWAI Journal Vol.45 No.7 July 2010 PP: 591-595.

80. Sachdeva, “Emerging Securities Market – Challenges and Prospects”, Chartered

Financial Analyst, Feb 2005, PP.53-56.

81. Sadhan Kumar Chattopadhyay and Samir Ranjan Behera, “Financial Integration

for Indian Stock Market”, Department of Economic Analysis and policy of the

RBI, Working paper, 2006, PP: 1-29.

82. Sakthivel N. “EVA – MVA: Shareholders’ value measure”, The Management

Accountant ICWAI Journal Vol.45, No. 1, January 2010, PP: 10-14 &18.

83. Santi Swarup K, “Measures for Improving Common Investor Confidence in

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84. Santi Swarup K, “Role of Mutual Funds in Developing Investor confidence in

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www.sebi.gov.in, PP. 247-250..

86. Securities and Exchange Board of India-National council of Applied Economic

Research (SEBI – NCAER), “Survey of Indian investors”, Chartered Secretary,

Vol. XXX, No.9, 2009, pp: 1201-1207.

261

87. Security Regulations, Guidelines, Schemes in Force, SEBI bulletin, Vol.3, No.11,

Nov 2005, PP.13

88. Selvam M, Rajagopalan V, Vanitha S, Babu M, “Equity culture in Indian Capital

Market”, Sajosps, Vol. 4, No. 1, July-Dec 2003, pp: 66-78.




90. Sen S.S. B.K. Ghosh and Santanu Kumar Ghosh, “ Stock market liquidity and

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91. Shah. A and Thomas., S, “Developing the Indian Capital Markets” in J.A.

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India,”: Oxford University Press, Chapter 71, PP.2025 -265



93. Shivkumar Deene, Madari D.M and Gangashetty, “Capital market Reforms: some

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94. Shobana V.K. and Jayalakshmi J, “Investor Awareness and Preferences”,

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95. Shollapur M.R. and A B Kuchanur, “Identifying perceptions and perceptual

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96. Statman, Meir. “A century of investors”, Santa Clara university–Department of

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262

97. Stephanie Desrosiers, Jean-Francois L Her and Jean-Francois Plante,”Style

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02-18, 2009.

99. Subha M.V, “Indian Capital Markets-A Road Ahead”, Indian Journal of

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100. Tarapore wala, Russi Jai, “The Union Budget 1994 -95 and the Capital Market”,

BMA Review, Vol. III, No.26, March 14-278, 2008.

101. Vibha Mahajan and Dr. Poonam Aggarwal, “Foreign investment – need for a

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102. Viswambharan A.M, “Indian Primary Market–Opportunities and Challenges”,

Facts for You, March 2008, p: 31.

103. William A. Birdthistle and M.Todd Henderson, “One Hat Too many? Investment

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PP: 45- 82.

104. Xuewu wang, “Sentiment strategies,” The ICFAI Journal of Behavioral Finance

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105. Yadagiri M. and P.Rajender, “Analysis of investment portfolio of scheduled

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263

III. REPORTS

Annual Reports of RBI (2000 – 2010)

Annual Reports of SEBI (2000 – 2011)

Gupta L.C, “Indian share owner–A survey”, Society for Capital Market Research and

Development, (2011), New Delhi.

Gupta L.C, Naveen Jain and Team, “Indian Household Investors Survey-2004”, Society

for Capital Market Research and Development”, (2006), Delhi.

Hong Kong Exchanges and clearing Ltd (HKEx), (2001-02), Derivatives Retail Investor

Survey (DRIS).

Santi Swarup K, “Measures for Improving Common Investor Confidence in Indian

Primary Market: A Survey”, Research Publication, 2008, nseindia.com.

Securities and Exchange Board of India-National council of Applied Economic Research

(SEBI – NCAER), “Survey of Indian investors”, Chartered Secretary, Vol. XXX, No.9,

2010, pp: 1201-1207.

IV. WEBSITES

www.nse-india.com

www.bseindia.com

www.sebi.gov.in

www.moneycontrol.com

www.watchoutinvestors.com

264

www.rbi.org.in

www.nyse.com

www.nsadag.com

www.epwrf.res.in

INTERVIEW SCHEDULE

PART 1: SOCIO ECONOMIC PROFILE

1. Age : Below 25 years 25 - 35 years

: 35 - 45 years 45 - 55 years

: 55 & above

2. Gender : Male Female

3. Marital Status : Married Unmarried

4. Educational Level : School Education

: College Education

: Professional

: Others, Specify___________________

5. Occupation : Salaried

: Professional

265

: Business

: Retired

: Others, specify ___________________

6. No. of Members in the Family :

7. No of Earning Members

in the Family :

8. Monthly Family Income : Below Rs. 10,000

: Rs. 10,000 – Rs. 20,000

: Rs. 20,000 – Rs. 30,000

: Rs. 30,000 – Rs. 40,000

: Rs. 40,000 & above

266

PART 2: INVESTMENT PROFILE AND PATTERN

2.1 Type of investor

Hereditary investor New generation investor

2.2 Category of investor

Long term investor Day trader both

2.3 Type of market Operated

Primary market Secondary market both

2.4 Experience in the market

Less than 1 year 1-3 years 3 years & above

2.5 Number of companies in which investment is made

Less than 10 10-20 20 & above

2.6 State the approximate size of investment in shares as on date

Below Rs. 1 Lakh

Rs. 1 lakh – Rs. 2 lakhs

Rs. 2 lakhs & above

2.7 State the source of investment

Own savings Borrowings Both

267

2.8 State the Percentage of your savings invested in shares

Less than 15 % 15% - 30 % 30% and above

2.9 Rank the following sources of investment information based on usage and

reliability

(1 to 10)

S. No Sources of Investment Information Rank

a Abridged Prospectus

b Newspaper Journals & Magazines

c TV Channels

d Investments Related Websites

e Brokers / Analysts Forecast

f Investor Forum

g Technical Analysis

h Company Announcements

i Stock Exchange Announcements

j Others (Friends , Relatives etc)

2.10 Mode of trading

Online Offline Both

2.11 State the trading volume per month

a. Long-term investor

Less than Rs. 1 lakh

Rs. 1 Lakh – Rs. 2 lakhs

Rs. 2 lakhs & above

268

b. Day trader

Less than Rs. 50 Lakhs

Rs. 50 Lakhs – Rs 1 Crore

Rs. 1 Crore & above

2.12 State the indices you frequently refer

S. No Indices Tick ( )

a Sensex

b S&P CNX Nifty

c CNX Nifty Junior

d CNX 100

e S& CNX 500

f CNX Mid-cap

g CNX Mid-cap 200

2.13 Are you a member of any investor forum?

Yes No

If yes, specify the period

Less than 1 year 1- 3 years 3 years & above

269

PART 3: INVESTMENT PREFERENCES & RISK RETURN PERCEPTIONS

3.1 Rank your Investment preferences (1 to 10)

S. No Investments Ranks

a Shares

b Debentures / Bonds

c Stock Futures and Options

d Mutual Funds

e *NSC/PPF/PF

f Fixed Deposits

g Insurance Policies

h Real Estate

i Gold / Silver

j Others

*NSC – National Saving Certificate, PPF – Public Provident Fund, PF – Provident Fund

3.2 Rank your Sectoral preferences for stocks (1 to 10)

S. No Sectoral Stocks Ranks

a IT Sector

b Bank Sector

c *FMCG sector

d *PSE Sector

270

e *MNC Sector

f Service Sector

g Energy Sector

h Pharma Sector

i Infrastructure & Capital Goods

Sector

*FMCG – Fast Moving Consumer Goods, PSE – Public Sector Enterprises MNC –

Multinational Company.

3.3 State the level of risk and return associated with the following investments.

Level of risk Level of Return

Very High

High Moderate Low

Very

Low Investments

Very High

High Moderate Low

Very

Low

Shares

Debentures / Bonds

Stock Futures and Options

Mutual Funds

NSC/PPF/PF

Fixed Deposits

Insurance Policies

Real Estate

Gold / Silver

Others

*NSC – National Saving Certificate, PPF – Public Provident Fund, PF – Provident Fund

271

Kindly answer the following questions with regard to Equity Shares (Part 4, 5 &6)

PART 4: INVESTMENT OBJECTIVES

4.1 State the level of importance of the following investment objectives

S.

No Investment Objectives

Very

High

High Moderate Low Very

low

a Dividends

b Capital Appreciation

c Quick Gain

d Safety

e Liquidity

f Tax Benefits

g Diversification of Asset

Holding

h Rights / Bonus issues & Stock

splits

i Hedge against Inflation

4.2 State the expected rate of return (ROR) per annum.

Less than 12%

12% - 24%

24% - 36%

36% & above

272

PART 5: FACTORS INVOLVED IN INVESTMENT EVALUATION AND

DECISION

5.1 State the level of influence of the following factors in investment evaluation and

decision

S. No

Investment Factors

Level of importance

Very high

High Moderate

Low Very Low

5.1.1 General Information

a. Stock Exchange information

b Risk factors

c Lead managers image

d Credit rating

e Brokers advice/ Analysts forecast/Advertisement impact

5.1.2 Company Management

a Company history

b Promoters background & contribution

c Board of directors

d Company’s present policies

e Companies under the same management & their performance

5.1.3 Details of Present issue

a Authorized and Paid up capital

b Size of present issue

c Objectives of present issue

d Terms of issue

e Minimum & Maximum subscription

f Institutional investments

5.1.4 Project Details

a Cost of the project & Means of financing

b Location /Process/ Infrastructure

c Product strength

d Existing & Future demand

e Future prospects & Profitability

5.1.5 Financial parameters

a EPS/PE Ratio

b Dividend payment trend

273

c Book value, Market value per share & Price trends

d Market volume traded

e Bonus/ Rights issues & Stock splits

f Performance of related companies

PART 6: INVESTMENT SATISFACTION

6.1 State the level of satisfaction achieved, in the following investment objectives

S.

No

Investment

objectives

Level of importance

Highly

Satisfied Satisfied

Neutral /

undecided

Dissatisfied Highly

Dissatisfied

a Dividends

b Capital

Appreciation

c Quick Gain

d Safety

e Liquidity

f Tax Benefits

g Diversification

of Asset

holding

h Rights / Bonus

issues & Stock

splits

i Hedge Against

Inflation

6.2 State the derived rate of return

Less than 12% 12% - 24%

24% - 36% 36% & above

274

6.3 State the level of satisfaction with respect to the following other aspects of share investment

S.

No

Others

Aspects

Level of importance

Highly

Satisfied Satisfied

Neutral /

undecided Dissatisfied

Highly

Dissatisfied

a

Nation wide

trading

facility

b

Equal access

to all

investors

c

Fairness,

efficiency and

transparency

of security

trading

d Settlement

cycle

e

Prompt

service from

company

Such as

transfers,

subdivision

etc

f

Functioning

of Stock

Exchange

g Functioning

of SEBI

h

Quality of

advice and

services of

brokers

i

Information

availability &

reliability

j Market

regulation

275

k

Transparency

& disclosure

norms

l

Share holders

rights &

equitable

treatment

m

Investor

awareness &

education

measures

n

Investor

protection

measures

o

Speedy

redressal of

grievances

p

Functioning

of investor

forum

6.4 State your level of agreeability regarding enhancing or introduction of the

following measures, to increase investor confidence and to attract more

investments in shares.

S.

No Measures

Level of Agreeability

Strongly

agree

Agree Neutral /

undecided

Disagree Strongly

Disagree

a Information related measures

b Scandal control measures

c

Investor awareness and education

Measures

276

d Grievance handling and Investor protection measures

e Regulating intermediary and rating measures

f Market regulation measures

g Return related measures

h Government measures

i Transparency in Promoter’s activities

j Rating of equity scripts

k Insurance coverage for stock losses

If any other, Please specify____________________________________________

___________________________________________________________________

277

6.5 How much you are affected by the following problems

S.

No Problems Faced

Very

High

High Moderate Low Very

low

a No proper advise by Brokers

b Too many channel giving too

many opinion about the

market

c Difficulty in operating online

trading

d Change of transaction

password frequently

e Unauthorized transaction by

brokers

the retail investors behaviour on equity shares …

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