RESEARCH PROJECT REPORT

ON

INVESTORS ATTITUDE TOWARDS PRIMARY MARKET

SUBMITTED TO: KURUKSHETRA UNIVERSITY, KURUKSHETRA in the fulfillment of the Degree of Master in Business Administration (Session 2008-10)

PROJECT GUIDE: DR. SURESH TURKA MBA FACULTY

SUBMITTED BY: BRIJENDER UNIV. ROLL NO.. CLASS ROLL NO.1311

SHRI ATMANAND JAIN INSTITUTE OF MANAGEMENT & TECHNOLOGY

AMBALA CITY

PREFACE

Education becomes more meaningful when its theoretical aspects are combined with practical experience. These provide an opportunity to the students to improve their understanding of the studies. Project report is an integrated part of MBA course. The emphasis in the course is providing the student an insight into Indian share market Scenario. The project is designed to enhance the knowledge. The education of future manager would be incomplete without exposure to working in an organization. Therefore a Project assignment is essential academic requirement for all the students.

ACKNOWLEDGEMENT
This project comes out to be a great source of learning and experience. Lot of efforts has been put by various people to make this project a success. This has greatly enhanced my knowledge about the vast field of Investments in small cap and large cap companies. I gratefully acknowledge my indebtedness to Dr. Suresh Turka (Project Guide, Faculty MBA) for allowing me to undergo a project. Then I express my sincere gratitude and thanks to Miss. Ekta Aggarwal (HODMBA Deptt., AIMT) for her inspiration and helpful attitude.

Brijender

DECLARATION

I, the undersigned, hereby declare that this report entitled INVESTORS ATTITUDE TOWARDS PRIMARY MARKET is a genuine and bonafied work prepared by me under the guidance of Dr. Suresh Turka, and is my original work. The empirical findings in the report are based on the data collected by me. The matter presented in this report is not copied from any source. This report has not been submitted for the award of any degree or diploma either in Kurukshetra University or any other university. This work is humbly submitted to AIMT, Ambala City, for the award of the degree of Master of Business Administration.

BRIJENDER GARG

CERTIFICATE
This is to certify that the research work entitled INVESTORS ATTITUDE TOWARDS PRIMARY MARKET undertaken by Mr. Brijender, a student of Masters of Business Administration, Shri Atmanand Jain Institute of Management and Technology, Ambala City (Affiliated to Kurukshetra University, Kurukshetra), was carried out under my guidance and supervision. The research work is candidates original work & this project report has not been submitted to any other university for any course.

Dr. Suresh Turka

INDEX OF CONTENTS
PAGE NO Chapter I Chapter II Introduction Research Methodology Objectives of the Study Research Design Sample Design Methods of Data Collection Analysis and Interpretation Limitations of the project Chapter III Analysis and Interpretation of Data Chapter IV Findings, Suggestions and Conclusion Findings Suggestions Conclusion Bibliography Annexure

INTRODUCTION The past twenty five years have witnessed a process of accelerating change in the worlds financial markets. Driven by an interacting process of liberalization and innovation, regulations have been removed, New product have emerged and old boundaries between financial intermediaries have been blurred. At the same time, growth of capital markets has posed new challenges to economic and financial stability. The role of Indian capital market which is to provide long term resources required by industries for investment has observed buoyancy in share market with the liberalization of industries and fiscal policies of the government. Finance, the lie blood of industry is mobilized especially through New Issue Market or Primary Market. The primary market, also called the new issue market, is the market for issuing new securities. Many companies, especially small and medium scale, enter the primary market to raise money from the public to expand their businesses. They sell their securities to the public through an initial public offering. The securities can be directly bought from the shareholders, which is not the case for the secondary market. The primary market is a market for new capitals that will be traded over a longer period. In the primary market, securities are issued on an exchange basis. The underwriters, that is, the investment banks, play an important role in this market: they set the initial price range for a particular share and then supervise the selling of that share. Investors can obtain news of upcoming shares only on the primary market. The issuing firm collects money, which is then used to finance its operations or expand business, by selling its shares. Before selling a security on the primary market, the firm must fulfill all the requirements regarding the exchange. After trading in the primary market the security will then enter the secondary market, where numerous trades happen every day. The primary market accelerates the process of capital formation in a country's economy. The primary market categorically excludes several other new long-term finance sources, such as loans from financial institutions. Many companies have entered the primary market to earn profit by converting its capital, which is basically a private

capital, into a public one, releasing securities to the public. This phenomena is known as "public issue" or "going public." There are three methods though which securities can be issued on the primary market: rights issue, Initial Public Offer (IPO), and preferential issue. A company's new offering is placed on the primary market through an initial public offer. Meaning of Primary Market New Issues Market is that part of capital market where dealing exchanges takes the boundaries de-marketing the financial services are fast eroding. Thanks to the innovations in the financial services, the movement towards made by existing companies are known as further issues. The primary market is that part of the capital markets that deals with the issuance of new securities. Companies, governments or public sector institutions can obtain funding through the sale of a new stock or bond issue. This is typically done through a syndicate of securities dealers. The process of selling new issues to investors is called underwriting. In the case of a new stock issue, this sale is an initial public offering (IPO). Dealers earn a commission that is built into the price of the security offering, though it can be found in the prospectus. Mutual funds are seemingly the easiest and the least stressful way to invest in the stock market. Quiet a large amount of money has been invested in mutual funds during the past few years. Any investor would like to invest in a reputed Mutual Fund organization. UTI is one such organization that provides a better overview of the Mutual Fund industry. Understanding the attitude of investors on their investment would help the company to increase their profits. In UTI they believe that the investors attitude would result in profits.

Features of primary markets are:

This is the market for new long term equity capital. The primary market is the

market where the securities are sold for the first time. Therefore it is also called the new issue market (NIM).

In a primary issue, the securities are issued by the company directly to investors. The company receives the money and issues new security certificates to the Primary issues are used by companies for the purpose of setting up new business The primary market performs the crucial function of facilitating capital formation The new issue market does not include certain other sources of new long term

investors.

or for expanding or modernizing the existing business.

in the economy.

external finance, such as loans from financial institutions. Borrowers in the new issue market may be raising capital for converting private capital into public capital; this is known as "going public."

The financial assets sold can only be redeemed by the original holder.

Primary market 1. 2. Market in which buyers and sellers negotiate and transact business directly, without any intermediary such as resellers. Financial market in which newly issued securities are offered to the public.

Market Actual or conceptual place in commercial world where forces of demand and supply operate, and where buyers and sellers interact (directly or through intermediaries) to trade goods, services, or contracts or instruments, for money or barter. Markets include mechanisms or means for (1) determining price of the traded item, (2) communicating the price information, (3) facilitating deals and transactions, and (4) effecting distribution. Market for a particular item is made up of existing and potential customers who need it

and have the ability and willingness to pay for it. All markets, ultimately, consist of people also called marketplace. Buyer 1. Party which acquires, or agrees to acquire, ownership (in case of goods), or benefit or usage (in case of services), in exchange for money or other consideration under a contract of sale also called purchaser. 2. Professional purchaser specializing in a specific group of materials, goods, or services, and experienced in market analysis, purchase negotiations, bulk buying, and delivery coordination. Seller Entity that makes, or offers or contracts to make, a sale to an actual or potential buyer. Also called vendor, particularly the one selling a real property. Negotiation 1. General: Bargaining (give and take) process between two or more parties (each with its own aims, needs, and viewpoints) seeking to discover a common ground and reach an agreement to settle a matter of mutual concern or resolve a conflict. 2. 3. 4. Banking: Accepting or trading a negotiable instrument. Contracting: Use of any method to award a contract other than sealed bidding. Trading: Process by which a negotiable instrument is transferred from one party (transferor) to another (transferee) by endorsement or delivery. The transferee takes the instrument in good faith, for value, and without notice of any defect in the title of the transferor, and obtains an indefeasible title. Business Economic system in which goods and services are exchanged for one another or money, on the basis of their perceived worth. Every business requires some form of investment and a sufficient number of customers to whom its output can be sold at profit on a consistent basis.

Intermediary Firm or person (such as a broker or consultant) who acts as a mediator on a link between parties to a business deal, investment decision, negotiation, etc. In money markets, for example, banks act as intermediaries between depositors seeking interest income and borrowers seeking debt capital. Intermediaries usually specialize in specific areas, and serve as a conduit for market and other types of information. Also called a middleman. See also intermediation. Reseller One who buys goods from a manufacturer and resells them to customers unchanged Primary Market The primary market, also called the new issue market, is the market for issuing new securities. Many companies, especially small and medium scale, enter the primary market to raise money from the public to expand their businesses. They sell their securities to the public through an initial public offering. The securities can be directly bought from the shareholders, which is not the case for the secondary market. The primary market is a market for new capitals that will be traded over a longer period. In the primary market, securities are issued on an exchange basis. The underwriters, that is, the investment banks, play an important role in this market: they set the initial price range for a particular share and then supervise the selling of that share. Investors can obtain news of upcoming shares only on the primary market. The issuing firm collects money, which is then used to finance its operations or expand business, by selling its shares. Before selling a security on the primary market, the firm must fulfill all the requirements regarding the exchange. After trading in the primary market the security will then enter the secondary market, where numerous trades happen every day. The primary market accelerates the process of capital formation in a country's economy.

The primary market categorically excludes several other new long-term finance sources, such as loans from financial institutions. Many companies have entered the primary market to earn profit by converting its capital, which is basically a private capital, into a public one, releasing securities to the public. This phenomena is known as "public issue" or "going public." There are three methods though which securities can be issued on the primary market: rights issue, Initial Public Offer (IPO), and preferential issue. A company's new offering is placed on the primary market through an initial public offer. Recent Developments in Primary Commodity Markets Since mid-1997 - that is, just before the beginning of the crisis in Thailand s financial and foreign exchange markets - prices of primary commodities as a group have fallen by more than 10 percent.(1) These price declines are sufficiently great in magnitude to have far reaching implications for producers and consumers around the world. Effects of the Asian Crisis To a large degree these price declines are associated with the Asian crisis. During the early and mid-1990s, consumption of primary commodities in most Asian developing countries increased at rates much higher than in the rest of the world. Asian developing countries accounted for about two-thirds of the increase in world consumption of petroleum products over the period 1992-96, and their share in world consumption increased from 12 percent to 15 percent. Korea and the ASEAN-4 countries (Indonesia, Malaysia, the Philippines, and Thailand), in turn, accounted for about one-half of the increase in consumption of petroleum products in Asian developing countries, and the share of these five countries in world consumption rose from 5 percent to 6 1/2 percent. A similar pattern of growth in consumption is observed for base metals, rubber, coarse grains, oil meals, and fats and oils. For most of these non-fuel commodities, the share of Asian countries in world consumption in 1996 was much greater than their share in the world consumption of petroleum products. China's contribution to the growth in the

markets for these commodities, however, has tended to be much greater than that of Korea plus the ASEAN-4. In the countries most directly affected, the Asian crisis has brought in its wake much reduced construction activity, much higher import costs in terms of national currencies, less available credit to finance imports, and, at a minimum, sharp reductions in demand. These conditions have led to reductions in the rate of growth of demand, not only in the ASEAN-4 countries and Korea but also, through the spillover and contagion effects of the crisis, in many other countries in Asia and elsewhere. Thus certain commodity markets that as recently as mid-1997 were expected to show a high rate of growth of demand are now facing a period of considerable uncertainty with regard to demand prospects. Furthermore, for some non-fuel commodities such as timber, rice, natural rubber, and vegetable oils, the large depreciations of currencies of the southeast Asian countries may also have had supply effects insofar as they create incentives to increase exports from current inventories and to increase current and prospective production. Effects of Weather This year weather conditions generally favorable to crop production have also been an important factor that has tended to weaken the prices of several agricultural commodities. This seems true notwithstanding the unusual weather patterns in many parts of the world that have been attributed to El Nino and have received much press coverage. At least so far, the adverse consequences of El Nino for commodity production that are sufficiently great to have discernible effects on world prices for individual commodities have been limited to the fish catches off the west coast of South America and to palm oil production in southeast Asia. Elsewhere - for example, in the case of cereal production in southern Africa - El Nino may have reduced production locally, but the consequence for world prices is not of great importance. In addition, warmer than usual weather this winter in the Northern Hemisphere has reduced the demand for heating oil and hence contributed to the downward trend in the price of petroleum and other energy commodities.

Developments in Specific Markets The interplay of the Asian crisis and other factors affecting commodity markets in recent months comes more into focus in a review of developments in specific primary commodity markets. Price decreases in excess of 10 percent (with prices measured in terms of SDRs) over the period June 1997 through January 1998 that were in some way associated with the effects of weaker demand from Asian countries were recorded for nearly one-third of the commodities included in the IMF's commodity price index. The price declines for five commodities - copper, nickel, natural rubber, wool, and hides appear to be associated mainly with the Asian crisis. The Asian crisis also played an important role, but probably not the predominant role, in the price declines of four other commodities - crude petroleum, timber, zinc, and lead. For certain other commodities, such as aluminum, iron ore, meat, maize, and soybean meal, ... Problems of Indian Primary Market There are several problems of the Indian primary market. But these problems can be overcome too by mere application of simple rules( end of the article). These remedies have been suggested by experts. Economists attribute these problems to various factors some of which are highlighted below. The function of the primary market with respect to the market for IPO or initial public offering is to see that various companies are provided with opportunities for the acquisition of growth capital. The primary market has withstood the tests of time. Inappropriate allotment of shares: There are many existing problems of the Indian primary market. Some of the instances include the inappropriate assignment of shares to the public as was the case of the ONGC public issues. Due to this there was a lot of confusion among the investors. Withdrawal of IPOs: Another problem lies in the fact that these days, IPOs are increasingly being withdrawn. An expert has rightly said that there is no point expressing disappointment in

the withdrawal of the IPOs because it may be taken not as an indication of failure of the company and hence the primary market but it may be considered as a disagreement of price between the seller and the buyer. The primary markets are undulating the world over. The incidents occurring in the primary markets are reflections of what is actually happening in the secondary markets. It was fathomed that the IPOs, which were lately taken back had very "aggressive" price bands. The price bands could have been aligned as per existing conditions of the market. The lead managers responsible for the IPOs may also be blamed for the catastrophe. Few are of the opinion that lack of judgment may have led to the withdrawal. "Investors fatigue" is being accounted for in the withdrawals. "Cornering" of shares: Recently, there was an instance when investors "cornered" shares, which were to be alloted to the public. The investor was actually a big investor who camouflaged as a small investor cornered many shares. The most important factor shaping in today's global economy is the process of globalization. Indian companies are moving in search of low-cast markets, technology is driving growth in production and competition is becoming more intense. A second factor is the fastest growth in private capital flows, mainly short-term flows by banks and financial institutions, portfolio flows by mutual funds and pension funds and foreign direct investment into India. A third factor is the increasing share of India and other emerging market economies in world trade. The outburst in communication technology has led to greater integration of Indian financial markets across the world. The impact of these changes could be felt from the extremely buoyant activity in Indian stock markets. A number of foreign financial service providers have entered into the Indian financial market like Morgan Stanley, Templeton, and Goldman Sachs. Currently FII investment is at $ 6.5 Billion compared to $ 2 Billion in 2001. The stock market is booming with Sensex hovering around 16000-17000. SEBI has put in place appropriate guidelines and controls to regulate the markets in tune with the changing environment and attendant risks. All this is happening because of large amounts of investment in the country.

People often invest in various asset classes to: * To beat Inflation * To fund future needs * To meet contingencies * To maintain same standard of living after retirement All these factors matters a lot to the investors and the mutual fund route is one way through which people can meet these needs. Free economies are generally characterized to have financial markets to serve as channels through which the savings of the society are made available to business enterprises. Such financial markets may be classified as (1) Capital market, and (2) Money market where the former refers to the market mechanism which envisages institutional arrangements for marketing of long term and equity claims such as equity shares, preference shares, debentures, bonds, etc., while the latter refers to the market mechanism which concerns with floating of liquid funds and their short term uses in trade and industry through the banking system. The capital market which concerns with demand and supply of long term funds is again dichotomized as primary or new issue market and secondary or stock market where the former deals with new securities offered to the investing pubic, while the latter deals with the existing securities. The joint stock companies raise funds from new issue markets but such new issue are also listed with stock markets which provide them a regular market, ensure regular valuation of and stability in prices of such securities, assure safety in dealings of the securities, channelise funds in the desired direction and ensure wider ownership of the securities. The stock exchanges are, thus, primarily concerned with providing marketability to the existing securities but these also activate the new issue markets which serve as primary source of funds to the industrial enterprises for their new projects or for expansion, diversification or modernization of existing ones. Both the primary and the secondary markets are integral parts of the capital market and are susceptible to common influences. Public responses are generally encouraging in the new issue market when there is boom in the stock market and vice versa. Similarly, the secondary market is very

sensitive to the impact of development in the country and the same is transmitted to the new issue market. New issues include initial issues as well as further issue where the former refers to the securities issued buy the companies for the first time either on incorporation or on conversion from private to public company while the latter refers to the new issues floated by existing companies which needed funds for expansion/ diversification/ modernization. The initial and further issues may be combined under new money issue which refer to the issues for mobilization of new money for the corporate enterprises and there can be no new money issue which include bonus/capitalization issues and exchange issues where the former results from the capitalization to retained earnings enabling existing shareholders get new shares without paying and the latter results from conversion of private company into public, amalgamation, merger and equity dilution by FERA companies. INITIAL PUBLIC OFFERINGS (IPO) A corporate may raise capital in the primary market by way of an initial public offer, rights issue or private placement. An Initial Public Offer (IPO) is the selling of securities to the public in the primary market. It is the largest source of funds with long or indefinite maturity for the company. IPO Stocks: When the company wants to release their shares into the market for the first time, they will invite the public to participate in an exercise called the IPO (Initial Public Offering). This is when you see people filling in application forms and buying bank drafts to purchase the company's shares (some countries do it electronically). Some call it "applying for new shares". Prices when applying for new shares are always much cheaper than what it should be listed in the market later. However, if it is a very attractive company, there will be more people who will participate in the IPO exercise and the draw-lots method will be used to determine who will be allocated the shares. Then, after the first stage, the company's shares will be listed in the stock market. That is when if you have managed to purchase the shares during the IPO offering, you

will be able to sell them into the market to buyers who want a part of these shares. Buying stocks through applying for IPO shares in general is always a safer method of investing in the stock market as most companies price them attractively.

FUNCTIONARIES OF INITIAL PUBLIC OFFER The functionaries in IPO are those concerned with the formation of joint stock companies and the issue of their securities to the public. Public issue is essentially an exercise involving active participation of a number of agencies. At earlier stages it was sole effort on the part of the company and its personnel. However with the growth of the number of public issues and the complexities in the efforts involved, it has now become necessary to enlist active participation and support of a number of agencies in making any public issue a success. The promoter, as a principal representative of the company which is making the public issue, should be clear in his mind about the number of agencies involved and their respective roles in the entire exercise so as to be able to coordinate effectively the efforts of these agencies. These functionaries are: Promoters Modern industrial enterprises require large amounts of capital which can only be raised by resorting to the joint stock company is done by company promoters and syndicates. It is the promoter who is responsible for conception or discovery of the idea to exploit the possibility of some industrial proposition. He has to work up details, formulate the financial plan, which he usually does with the help of an issue house and finally he has to put his proposition into active operation. The work of the promoter entails difficulties and risks and sometimes he has to stake his whole fortune and reputation in order to make the venture a success. Prior to founding the company a lot of expenditure has to be incurred by the promoter on employment of engineers, technical and other experts. In case the company is successfully established and investors come forth to take up its shares, the promoter is duly rewarded, otherwise he stands to lose not only his money he had sunk in the venture but his reputation as well. The promoter, if he is well endowed financially, will work alone, but in the case of projects of large dimensions he usually form a syndicate. All members of the syndicate work up the possibilities of the proposition and undertake the investigation and

examination of the scheme. It may be turned over to the technical staff employed and on its favorable report the formulation of the financial plan will be taken up by the financial experts who are supposed to be well conversant with the conditions in the capital market. After completing the financial plan, the work of drawing up the prospectus, the memorandum of association and articles of association for the formal incorporation as a company is proceeded with. After all the formalities are completed, the new company is ready to be launched and its issue is to be placed before the public. Managers to the issue These persons are actively associated in the selection of various agencies involved with new issue planning the timing of the issue, strategies to be adopted by way of publicity and marketing of the issue, etc. they advise the company on selection of the registrars to the issue, underwriters, brokers and bankers to the issue, advertising agents, printer etc. and also give a sense of direction to the various agencies involved in the entire issue. Besides, the other activities mainly performed buy them are drafting of prospectus, preparing project profiles for underwriters, preparing budget of expenses, suggesting the appropriate timings for the public issue, assisting in marketing the public issue successfully, etc. there are a number of agencies specializing in the role of managers to the issue. These merchant banking divisions of some all India financial institutions, subsidiaries of commercial banks and also some private agencies where traditional stock brokers have graduated into providing specialized merchant banking services. SEBI has made the registration of merchant bankers compulsory to ensure that only professionals with requisite qualification and financial background enter into the job. These MBs are classified into four categories where the first category MBs must have a minimum net worth of Rs. 100 lacs and can undertake all activities of issue management (preparation of prospectus, determining financial structure, final allotment and refund of subscription) portfolio management, underwriting, consultant or advisers in the issue. The second categories of MBs must have a minimum net worth of Rs. 50 lacs and can undertake all activities except issue management. The third categories of MBs must have a minimum net worth of Rs.20 lacs and can undertake works of underwriter,

adviser and consultant while there is no minimum net worth requirement for fourth category of MBs but they can function as adviser or consultant only. Registrars The registrars sometimes, also called the issue house are responsible normally for receiving the share applications from the various collection centers through controlling branches of bankers to the issue, analyzing them, recommending the basis of allotment in consultation with the managers to the regional stock exchange for approval arranging for dispatch of allotment letters and preparing the register of members, etc. their job normally starts with the opening of the subscription list, and continues till the share certificates are dispatched, and register of members along with other related registers/details are handed over to the company. Sometimes, the registrars to issue continue their association with the company in the role of share transfer agents, even after the issue is completed. Underwriters The underwriters are the people who actually ensure that the company is able to raise the capital issued by it for a commission charged by them. They make a commitment to get the issue subscribed either by others or themselves. Usually the underwriters can be divided into two categories, namely, financial institutions and banks, on the one hand, and broker underwriters and approved investment companies/trust, on the other. Brokers These are the people who actually bring the prospective investors and the company together. It may not be an exaggeration to state that the success or failure of a public issue depends to large extent on the reaction of the brokers. Generally, they are the members of recognized stock exchanges, with a view to providing better and professional services to investing public and to promote development of capital market on healthy lines, the government has since allowed multiple membership to members of stock exchanges and accorded recognition to corporate entities and the financial institutions including subsidiaries of the banks.

Bankers These are the commercial banks, which will receive the application money along with the share application forms from the prospective investors. Depending upon the size of the issue, at least 4 or 5 banks are designated as bankers to the issue. Different branches of these banks are named at various locations where such application money is accepted. These collecting branches send the application forms and the money received by them to specified branch, where the details of the application are consolidated. Such specified branch of the banker to the issue is called controlling branch/ the controlling branch is usually selected in the city where the managers to the issue/registrars to the issue/registered office of the company is situated. However, it is not necessary that controlling branch should be at a place where the managers to the issue/ registrars to the issue/registered office of the company is situated. Publicity and advertising agents Public issue is an effort to motivate and persuade members of the public to invest in the shares of the company. It is, therefore, essential that the general public is made aware of the company, its activities, its plans for future, etc. it is of vital importance that publicity is given before the public issue by giving newspaper and TV advertisements. Press releases, press conference, leaflets and brochures, hoardings and posters and even audio visual shows are the usual media of publicity used for public issue. There are some advertising agencies, which specialize in financial advertising and publicity campaign for public issues. Financial institutions Term lending financial institutions at the time of sanctioning underwriting support loans to the company, usually stipulate that the draft of the prospectus and also the proposed program for public issue is approved by them. The three principal all India financial institutions are the IDBI, IFCI and ICICI. Even when all the three institutions jointly finance a project under their participating finance scheme, one of them is generally chosen as the lead financials institution which acts on behalf of the other two. Hence, it is generally adequate if the company obtains the necessary approval from the regional office of the lead institution only. In some cases where other institutions like the LIC, GIC, UTI, etc. have also given financial assistance,

it might be necessary to seek separate approvals from them, if insisted for. But generally an advance copy of the draft prospectus is sent to them with a request forward their comments, if any, direct to lead institution. Other Agencies In addition, the company will also have a interaction with other agencies like auditors, legal advisors, taxation or technical experts whose names or statements are mentioned or quoted in the prospectus. Government/Statutory Agencies Besides the various agencies which are directly connected with a public issue whose efforts will have to be coordinated by the company, there are some statutory/government agencies that are connected with public issue. These are: (1) SEBI which provides guidelines for public issue, (2) registrar of the companies with whom the prospectus has to the filed and registered before the public issue under section 60 of the companies act, 1956, (3) reserve bank of India from whom necessary permission has to be obtained for non resident investment, of any in the company, (4) the stock exchanges where the companys share are to be listed (5 industrial licensing authorities for necessary industrial license to be obtained for the project or other statutory bodies like DGTD etc. with whom the capacity of the project has to be registered, and (6) pollution control authorities and other local authorities from whom the clearance may have to be obtained and such clearance is referred to in the prospectus.

A NEW CONCEPT OF IPO MARKETBOOK BUILDING SEBI guidelines defines Book Building as "a process undertaken by which a demand for the securities proposed to be issued by a body corporate is elicited and builtup and the price for such securities is assessed for the determination of the quantum of such securities to be issued by means of a notice, circular, advertisement, document or information memoranda or offer document". Book Building is basically a process used in Initial Public Offer (IPO) for efficient price discovery. It is a mechanism where, during the period for which the IPO is open, bids are collected from investors at various prices, which are above or equal to the floor price. The offer price is determined after the bid closing date. As per SEBI guidelines, an issuer company can issue securities to the public though prospectus in the following manner: 1. 100% of the net offer to the public through book building process 2. 75% of the net offer to the public through book building process and 25% at the price determined through book building. The Fixed Price portion is conducted like a normal public issue after the Book Built portion, during which the issue price is determined. The concept of Book Building is relatively new in India. However it is a common practice in most developed countries. Difference between Book Building and Public Issue In Book Building securities are offered at prices above or equal to the floor prices, whereas securities are offered at a fixed price in case of a public issue. In case of Book Building, the demand can be known everyday as the book is built. But in case of the public issue the demand is known at the close of the issue. The book building process:

The company approaches lead manager for IPO

The company and lead manager suggest a price band at which shares are to be offered

Application are invited

Based on demand for the shares a certain price is established by promoters and the lead manger

The allotment is made on the basis of the market clearance price

Post issue the price stabilization is undertaken by the lead manager.

WHAT SEBI DID TO ENCOURAGE RETAIL INVESTOR

SEBI has announced a series of measures to encourage retail participation in the primary market. This is perhaps the first instance where the market regulator has got the timing of reform measures spot on. Coming close on the heels of the hugely successful Maruti IPO, these measures should arouse retail interest in some of the big public offers expected in the near future BPCL, Idea Cellular, TCS and Nalco. The principle of these changes seems to be that greater participation of retail investors in the primary market is possible only when they have a reasonable chance of making gains, certainly not the case earlier. To enable such participation, Sebi has adopted a two-fold approach. First, the market watchdog has made sure that retail investors actually get an allotment in book-built IPOs. Hence, the 10% increase in the allocation for retail investors. But more significant is the change in the

definition of what constitutes retail from those applying for up to 1,000 shares to applications for shares worth Rs 50,000 or less. This would ensure that retail is truly retail. Take the i-flex IPO, priced at Rs 530 a share. An application for 1,000 shares entailing investment of Rs 5.3 lakh would have qualified for the retail category. Second, to ensure some quality, the regulator has introduced the concept of net tangible asset, making certain that issuing company has some pre-IPO history. Additionally, to discourage fancy ideas being sold to public and subsequently abandoned (plantation schemes), issuers have been asked to tie-up funds for a project before the issue. Of course, willful defaulters have been barred. Lastly, to fix accountability, the CEOs or the CFOs of the issuing company would have to certify disclosures in the offer document. These measures should translate into higher allotment for retail investors and keep a check on the quality of issuers as well. The decision to disallow withdrawal of bids by institutional investors and the shift to price band instead of a floor price will prevent manipulation in pricing and subscription, both inimical to retail interest while the availability of a green shoe option should deliver price stability post listing in the case of over subscription. Beyond this, there is precious little a regulator can do. The rest is upto the market and investors. HOW TO BE WATCH FUL OF IPO BOOM The Indian capital market is on the verge of an unprecedented IPO boom. Reports emanating from the office of the Securities and Exchange board of India clearly indicate that the year 2004 is all set to emerge as a record breaking year for initial public offer as over 600 companies big, medium as well as small are planning to raise a whopping sum of Rs. 60,000 crore! Interestingly, it had taken 15 years for over 5,600 companies to raise this amount! The 2004 performance will, thus, be a historical feat in the realm of the Indian capital market. Of course, the IPO market was literally comatose for the last six years after the previous five-year (1992-96) boom period when about 5,000 companies had raise around Rs 45,000 crore! At least one third of this amount has vanished into thin air as several cheaters, unscrupulous businessmen belonging to select industrial groups and fly by night operators had palmed off worthless scrap papers in the name of share certificates to

millions of hapless investors. The watchdog could not see in which direction the promoters fled after downing the shutters of their companies and stock exchange authorities took easiest route to forget about the fraud by de-listing the shares of these companies. And the poor investors are still burdened with these worthless papers, originally valued at millions of rupees. This body blow was enough to disenchant the investing public from the new issue market which wore a deserted look for the last six years. But now that business activity has picked up, economy is on the path of rapid growth and wheels of industries have started running at a fast pace, the new issue market is showing some activity once again. On the one side, the government is in dire need of funds to meet its budgetary plans and, for this, disinvestments of PSU offers the easiest route. And on the other hand, with business activity picking up, there is need for larger production of industrial and consumer goods, which, in turn, needs funds for expansion and setting up new plants. At he same time, as interest rates on various instruments of saving have come down drastically and equities have emerged as more remunerative avenue for investment, the public is willing to go for equities. The buoyancy in the stock market has further aided this trend. Taking advantage of this favorable climate, over 600 companies have planned to come out with issues to raise over Rs 60,000 crore. It is almost certain that cheaters and looters among businessmen will once again be at their game mopping up funds through bad or bogus issues. Lured by hefty fees and heftier out of pocket expanses, merchant bankers will also try to hard sell these shares. The capital market watchdog, SEBI has already washed its hands of any say in it by declaring that SEBI does not take any responsibility either for the financial soundness of any scheme or the project for which the issues are proposed to be made or for the correctness of the statements made or opinion expressed in the offer document. The SEBI clarification raises a pertinent question: have we moved forward or backward from the controller of capital issues days in investor protection? By and large, merchant bankers are more interested in their fees rather than in the quality of the issues. Can you rely on analysts? Just recall the paeans they had sung on issues which shook the very foundation of a giant institution like UTI

The best thing for investors to do to ensure that thy are not cheated in this IPO boom, is to follow the following evaluation process THE EVALUATION PROCESS Backed by aggressive merchant bankers, the pink papers, and gung ho TV channels. Rs. 40,000 crore is hard to resist. But dont forget that your personal rs 4000 are as valuable to you as it will be with a couple of zeroes more. Before you jump on to the bandwagon. Do your homework. Its not easy to analyze the performance even of al listed company that has been around for a while and has a record of market performance; for a company making an initial public offer, this analysis is rather more difficult. But some point to be considered are as follows THE BUSINESS Make sure you understand the companys business. The attempt should be to understand the long-term sustainable advantage of the business and the companys position in it. The prospectus has a section dedicated for such information and this is a must read. A voluminous offer document can seem daunting but if you focus on the key aspects, it gets less tedious. Study the document to understand product portfolio, competitive strengths, new business initiatives and strategy, regulations and so on. THE COMPANY Next, choose companies with leadership positions. Three successful recent issues have been Maruti, TV today and Patni computers. Maruti is an industry leader and the largest passenger car manufacturer in India with a diverse product portfolio, which includes 10 basic models with over 50 variants. In 2003, Marutis share stood at 54.6 percent; the balance was divided among nine other manufacturers. Similarly, TV Today is Indias leading news broadcaster and Patni computer is Indias largest IT services company. THE PROMOTER An old business adage says, its better to have an a team with a c team with an a product, and even better to have an a team with a a product. After all its

people who run the business. Hence, its important to focus on the credentials of the promoter and key management figures. Invest in companies with a proven management track record, since its the management philosophy and ability that determines attitude towards minority shareholders and the likely success of a venture. For instance, the promoters of Indraprastha gas and Maruti have proven management credentials. On the other hand, theres a Tips industry, where there were allegations against one to the promoters in the Gulshan Kumar murder case such issues are best avoided. THE LOCK IN During an IPO, the underwriter makes the companys key shareholders sign a lock-in agreement. The agreement is legally binding on the promoters and other key shareholders, prohibiting them from selling their shares for a specified period of time. The inevitable supply overhang when these previously restricted investors are permitted to sell shares can put downward pressure on the stock price. For example, in Patni computers, the lock in period for key promoters is three years, but for general Atlantic, a foreign venture capital investor holding 28.3 percent of outstanding shares, the lock in period is 180 days from listing. THE FINANCES A good management and a sound business model count, but what matters most is performance. Check for consistency in revenue and profit growth and margins for at least three years before the IPO. Also, check if the company has an overly high debt equity ratio, or carries contingent liabilities, or has disputed tax claims, or faces litigation in short, factors bearing on the companys operations and results. THE RISK This is the most relevant part of the offer document. Although the offer document is tailor made to sell the issue, the risk factors help you get a fair idea of the impact of such risks on the companys operations. For example, in the case of Bharti Televenture the biggest risk came from regulations governing Indian telecom. Increased competition in cellular services, unrestricted competition in fixed line services and the decision to

allow fixed line operators to provide limited mobility using WLL were some of the risks at the time of the IPO.

THE OBJECTS In bull markets, price increases defy fundamentals, and companies are prone to capitalize on this sentiment to raise money. If you study the objects of the issue, you will be able to weed out the chaff. For example, if the money is being raised to repay loans or to provide and exit option to existing investors investigate. If the business is doing well, the company should not need to raise fresh capital to repay its debt. However, a proceeds of the issue going towards research, marketing, or capacity expansion paints a better picture. Companies like Bharti and Divis have used the funds raised to create infrastructure, which will drive growth for these companies in future. On the other hand, BAG films had earmarked 60 percent of he issue proceeds towards production to feature films, which exposes it to significant risks considering that film production is not a safe business, especially when the company does not have prior experience in it. THE FINE PRINT Often, the most critical bits of information on a companys financial health are buried in the prospectus. Expect the red flags, in particular, to be lost in acres of fine print. For example, BAG films converted its 14 percent fully convertible debentures and accumulated interest into equity shares and issued them to UTI and IDBI at a 10 percent discount to the issue price at Rs. 9 per share. Rarely, some good news also gets buried and goes unnoticed. The discounts and royalty waivers by Suzuki to Maruti, for instance, will result in savings of over Rs.80 crore, which will directly flow to the bottom line. This means Marutis Rs.146 crore net profit in 2003 will get a boost of 40 percent by just this little clause. THE PRICE The pricing of the issue determines the demand for the stock. Although issues are usually attractively priced to attract investors, benchmarking it with valuations of

comparable listed companies is a good idea. This will give you a sense o f the relative attractiveness of the issue and scope for appreciation. For valuation purposes, compare the companys profit margins, capital efficiency, price earning ratio and other financial parameters with that of similar payers. For example, Patni scores high on the valuation front but low on performances parameters like operating margins. THE HYPE Given that there is only one IPO for a company, they are often presented as not to be missed opportunity and much hype is created by lead managers and brokers to get as much attention as possible. Remember that it is their business to make clients buy and sell stocks. Our advice: dont buy stocks just because they are making a debut in the market. THE BROKER The lead managers track record is as important as that of the companys. History suggests that the best merchant bankers usually undertake some due diligence before associating themselves with an issue. Since business fortunes of merchant bankers depend on their track record, there is more reason for them to handle only quality issues. Look for known lead managers like Kotak investment, SBI capital markets, DSP Merill lynch, Enam, JM Morgan. Be wary of smaller investment banks that may be willing to make any company public.

RESEARCH METHODOLOGY
Research in common parlance refers to the search for knowledge. One can define research as a scientific and systematic search for pertinent information on a specific topic. It is the voyage of discovering new facts. This inquisitiveness is the mother of all knowledge and the method employed in this quest is known as research. Research is thus an original contribution to the existing stock of knowledge making for its advancement. Research methodology is an attempt to solve the research problem systematically. Research methodology plays an important part in any investigation. Unless the methodology is correct, the analysis and conclusion may not be scientific. Research methodology is a way to solve the problems sceintifically and systematically. RESEARCH PROBLEM The research problems, in general refers to some difficulty with a researcher experience in the contest of either a particular a theoretical situation and want to obtain a salutation for same, The problem statement are to Investors attitude towards primary market.

RESEARCH DESIGN Research design is the blue print of conditions for collection and analysis of data in manner that aims to, combine relevance to the research purpose with economy in procedure. The research design used in my study is basically analytical in nature. OBJECTIVES OF THE STUDY The main objective of investment portfolio management is to maximize the returns from the investment and to minimize the risk involved in investment. Moreover, risk in price or inflation erodes the value of money and hence investment must provide a protection against inflation.

Secondary objectives: The following are the other ancillary objectives: To know about the perception of primary market. To know about the risk of primary market. To study about the regular return. To study how to earn more liquidity. To study the safety of investment.

Portfolio management services helps investors to make a wise choice between alternative investments with pit any post trading hassles this service renders optimum returns to the investors by proper selection of continuous change of one plan to another plane with in the same scheme, any portfolio management must specify the objectives like maximum returns, and risk capital appreciation, safety etc in their offer. PRIMARY DATA COLLECTION: - Primary data collection, which is collected through observation or direct communication with the respondent in one form or another. These are two methods for primary data collection. Observation Method Through Questionnaire

But as the time was limited I used the Questionnaire method for data collection SECONDARY DATA: - Secondary data is also collected by me from various documents of the company from the Internet. But two main methods to collect it i.e. Books and Journals and Official sources. DATA COLLECTION INSTRUMENTS: The data collection instruments used in the study are following: -

QUESTIONNAIRE: - This method of data collection is quiet popular, particularly in care of inquiries. As we know Questionnaire should be comparatively short and simple in the size of the questionnaire should be kept to minimum questions should proceed in logical sequence moving from easy to more difficult. Hence questionnaire made by me is structured. Structured questionnaire is that in which these are define concrete and predetermine questions. The questions were presented with exactly with same wording and in the same order to all respondents. Structured questionnaire are simple to administer and relatively inexpensive to analyze. The provision of alternatives replies at times helps to understand the meaning of question clearly but such questionnaire have limitations too for instance, wide range of data and that too in respondents own words cant be obtained with structured questionnaire. Questions that put too much strain on the memory or intellectual of the respondent.

SAMPLING: Sampling may be defined as the selection of some part of an aggregate or totality on the basic of which a judgment or inference about the aggregate and totality is made. Sampling is used in practice for various reasons. All items in any field of inquiry constitute a universe or population complete enumeration of all items in the population is known as census inquiry. It can be presumed that in such an inquiry, when all items are covered, element of chance is left and highest accuracy is obtain. But in practice this may be not true. Even the slightest element of bias in such an inquiry will get larger and as the numbers of observations increased more over there is no way checking the element of bias or it extend except through a survey or used sample checks besides this type of inquiry involves a great deal of time, money and energy. Therefore when the field of inquiry is large this method becomes difficult to adopt because of the resources involve. SAMPLING UNIT: - Every researcher has to take a decision regarding a sample unit before selecting sample. Sampling unit may be a geographical one such as district, state and village etc or a social unit such as family, club, school, etc or it may be an individual.

SAMPLE SIZE: - Size of samples refers to the numbers of items to be selected from the universe to constitute a sample. This is a major problem before every researcher. The size of sample should neither be excessively large, nor too small. It should be optimum. An optimum sample is one, which fulfills the requirements of efficiency representatives, reliability and flexibility. While deciding the size of sample researcher must determine the desired precision as also an expectable confidence liable for the estimate, the size of population variance needs to be consider as in case of large variance usually a bigger sample is needed. The size of population must be kept in view for this also limits the sample size. As such budgetary constraints must invariable to taken into consideration when we decide the sample size looking at the above consideration I have decided the 180 sample size of sample unit i.e. users. SAMPLING PROCEDURE: - This refers to the procedure by which the respondents should be chosen. In order to obtain a representative sample, a sample of the population was drawn non-random sampling can be of following types: Sample Random Sample Stratified Random Sample Cluster (Area) Sample In this case, random sampling was done. DATA ANALYSIS For analysing data, bar diagrams and pie charts have been used. Tables showing data over past years have also been included.

LIMITATIONS OF THE STUDY The result must be viewed in a quantitative terms. Findings must be verified and tested through further conclusive investigations. However, the main drawbacks of the present study are:-

Less Time Period: As the time period that is given to us for doing training was also too less. In a short time period that is very difficult that we can get the knowledge about each and everything related to our project. Lack of knowledge: Conducting the research makes it very difficult for us to perform out task without any problem. The lack of experience made the task difficult.

Less Response from respondents: Getting the informations from the respondents is also a tedious task. As there are many respondents that are not in a position to tell us correct information about the project or study and also sometimes they do not show any interest.

In spite of all the above mentioned limitations and constraints, every sincere efforts has been made to complete the study and to derive the reliable and viable results for analyzing.

ANALYSIS AND INTERPRETATION

Q.1 Which age group do you belong? Age Group 18-30 30-45 45-55 Above 55
89 90 80 No. of Respondents 70 60 50 40 30 20 10 0 18-30 30-45 45-55 Above 55 Age Groups 14 19 58

No. of Respondents 14 89 58 19

Analysis: The above diagram shows that 14 respondents were from 18 to 30 age group, 89 respondents were from 30 to 45 age group, 58 respondents were 45 to 55 age group and 19 respondents were from above 55 age group.

2)

Have you ever invested in stock market? Invested in Stock Market Yes No No. of Respondents 150 30

150 160 140 No. of Respondents 120 100 80 60 40 20 0 Yes No 30

Invested in Stock Market

Analysis: The above diagram shows that 150 respondents said that they are invested in the stock market and 30 respondents said that they did not invest in the stock market.

Q3)

If yes, in which type of market? Type of Market Primary Secondary Both No. of Respondents 100 30 20

100

100 90 No. of Respondents 80 70 60 50 40 30 20 10 0 Primary Secondary Type of Market Both

30 20

Analysis: The above diagram depicts that 100 respondents said that they invest in primary market, 30 respondents said that they invest in secondary market and 20 respondents said that they invest in both markets i.e. primary as well as secondary.

Q4)

What is the source of information regarding primary market? Source of Information News Broker TV Internet Any Other
89 90 80 70 No. of Respondents 60 50 40 30 20 10 0 News Broker TV Internet Any Other Source of Information 6 2 16 7

No. of Respondents 16 89 6 2 7

Analysis: The above diagram shows that 89 respondents i.e. maximum from total 120 respondents said that they got the knowledge from their brokers, 16 respondents said that they got knowledge about primary market from News/newspaper, 6 respondents got information through TV, 2 from Internet and 7 respondents said any other sources for information.

Q5)

In which of the following you would like to invest your money? Like to Invest Private Co. Govt. Co. Semi Govt. Any Other No. of Respondents 43 18 37 22

45 40 No. of Respondents 35 30 25 20 15 10 5 0

43 37

22 18

Private Co.

Govt. Co.

Semi Govt.

Any Other

Like to Invest

Analysis: The above diagram depicts that 43 respondents said that they like to invest in Private companies, 18 respondents said Govt. companies, 37 respondents said they like to invest in Semi-Govt. companies and 22 respondents said they like to invest in any other companies.

Q6)

How much % of your income you invest yearly? %age of Income Invest 0-20% 20-35% 35-50% Above 50% No.of Respondents 49 32 29 10

49

50 45 No.of Respondents 40 35 30 25 20 15 10 5 0 0-20% 20-35% 35-50% Above 50%

10 32 29

%age of Income Investment

Analysis: The above diagram shows that 49 respondents said that they invest upto 20% of their income in primary market, 32 respondents said that they invest upto 20% to 35% of their income, 29% respondents said they like to invest in 35% to 50% of their income, and 10 respondents said that they invest above 50% of their income in primary market.

Q7)

In which sector you like the invest the money? Investment Sector Insurance Infrastructure Telecom IT Sector Any Other No. of Respondents 16 48 33 23 10

50 45 40 No. of Respondents 35 30 25 20 15 10 5 0
Insurance

48

33

23 16 10

Infrastructure

Telecom

IT Sector

Any Other

Investment Sector

Analysis: The above diagram shows that 16 respondents said that they invest in insurance sector, 48 respondents said they invest in Infrastructure sector, 33 respondents said that they invest in Telecom sector, 23 respondents said that they invest in IT sector and 10 respondents said that they invest in any other sectors.

Q8)

How much is your portfolio? Portfolio Rs.10000 to 50000 Rs.50000 to 1 Lac Above Rs.1 Lac No.of Respondents 41 58 21

58 60 50 No.of Respondents 40 30 20 10 0 21 41

Rs.10000 to 50000

Rs.50000 to 1 Lac

Above Rs.1 Lac

Portfolio

Analysis: The above diagram shows that 41 respondents said that their yearly portfolio has been between Rs.10000 to 50000, 58 respondents said that their yearly portfolio has been between Rs.50000 to 1 Lac and 21 respondents said that their yearly portfolio has been above Rs. 1 Lac.

Q9)

For how much period you would prefer to invest? Investment Time Short Term Long Term No. of Respondents 96 24

96 100 90 No. of Respondents 80 70 60 50 40 30 20 10 0 Short Term Long Term 24

Investment Time

Analysis: The above diagram shows that 96 respondents said that they invest for short time and 24 respondents said that they invest for long term.

Q10) Investing in primary market is risky or not? Risky Investment Yes No No. of Respondents 26 94

Risk of Investment in Primary Market

Yes 22%

No 78%

Analysis: The above diagram shows that 78% respondents i.e. 94 said that primary market investment is risky and 22% respondents i.e. 26 said that primary market investment is not risky.

Q11) If yes, then how much risky in this? Risk Highly Moderately Lower No. of Respondents 6 2 18

18

18 16 No. of Respondents 14 12 10 8 6 4 2 0 Highly Moderately Lower

2 6

Risk

Analysis: The above diagram shows that 6 respondents said that primary market is highly risky, 2 respondents said moderately risky and 18 respondents said primary market is risky but not highly or moderately.

Q12) How much return has been earned from primary market? %age of Return 10-50% 50-100% 100-150% 150-200% No. of Respondents 63 31 18 8

70 60 No. of Respondents 50 40 30

63

31

18 20 8 10 0 10-50% 50-100% 100-150% 150-200%

%age of Return

Analysis: The above diagram shows that 63 respondents said that they earn 10-50% return from their primary market investments, 31 respondents earn 50-100% return, 18 respondents earn 100 to 150% return and 8 respondents said that they earn between 150 to 200% return from primary market.

Q.13

What criteria you used to invest in any IPO? Criteria for Invest Past Experience Company Results Any Other No. of Respondents 29 59 32

59 60 50 No. of Respondents 40 29 30 20 10 0 32

Past Experience

Company Results Criteria for Investment

Any Other

Analysis: The above diagram shows that 29 respondents said that they use their past experience for new investment into primary market, 59 respondents said they watch current results of companies in which they want to invest and 32 respondents said they watch other things whenever they go for investment in primary market.

Q.14

From where you get to know about these criteria? Knowledge about Criteria Share Broker Newspaper Magazine
87 90 80 No. of Respondents 70 60 50 40 30 20 10 0 Share Broker Newspaper Magazine 8 25

No. of Respondents 87 25 8

Knowledge about Criteria

Analysis: The above diagram shows that 87 respondents said that know about their criteria from their Share brokers, 25 respondents said they got knowledge from Newspapers and 8 respondents said they got knowledge from Magazines.

FINDINGS
Most of respondents said that they are invested in the stock market and few of

them said that they did not invest in the stock market. Maximum respondents said that they got the knowledge from their brokers, &

some of them said that they got knowledge about primary market from News/newspaper & very few respondents got information through TV from Internet and any other sources for information. Retail investor divert their fund from the banking system to the primary market.

As the interest rate of saving account deposit decreased very much. Most of respondents said that they invest less portion of their income in primary

market. Very few investors like to invest major portion of their income in primary market. Respondents view is that primary market investment is risky. So there is a fear in

the mind of respondents about to invest in primary market. The study shows that maximum respondents among the sample respondents are

getting information related to the different services from the agents. It implies that most powerful source of information about services is an agent. There is a need to bring awareness among the general public about primary

market.

SUGGESTIONS
On the basis of the Market survey conducted has put very interesting findings in the Market. The very first suggestion to the investor is that the best thing for the investors to do to ensure that they are not cheated in this IPO boom, is to study the prospectus themselves, read various comments and take their own decision. Investors have to beware as all those who are keen to grab a piece of the cake of the impending IPO boom, are doing so at their cost. Keep in mind three Ps before investing in any IPO & Three Ps are Promoter Performance Price The next best suggestion to the investor is that they should be steer clear of IPOs from lesser known industry and focus on offerings by well known industry leader with quality management and strong financials. The investor should not follow the IPO boom blindly as they can get The companies should make regular contact with his customer through his cheated as they during nineties IPO fiasco. marketing executives. This would not only help in strengthening the business relation but would also help in taking proper feedback of their products. The majority of customers are price conscious so they should improve or The companies should concentrate more on the sale promotion activities The market is not well aware of the product line of the companies, so In corporate and institutions, people are looking for better service. So by decrease their price/commission rate. through different media. companies should give full information of there product line to the investors. providing this it can gain the big reach its break even as soon as possible and can earn profit from there.

Customers get dissatisfied very soon. So they must be supported by a good

customer care unit. They need care and by providing that a long customerorganization relationship can be built.

CONCLUSION
This project is based on the study of Investors attitude towards primary market. In the today scenario its very important to study the customers psychological behaviour regarding the various services provided by them. In the end, I conclude that investor should not invest their hard earned money blindly in the IPOs but they should invest their money by taking different safeguards like understand the company business, who its promoter are, how is its management, its risk factor and pricing of the issue etc. Although there is SEBI to protect the investor but he company which follow the legal binding of the SEBI is not fool proof that the company is a good one. It has been concluded that on the one hand the customers are somewhat satisfied but on the other hand, still some improvements are required. So, the broking companies segment is flooded with the new schemes from new & existing players and moreover, lot many schemes are waiting to hit the ramp in the coming years. The main reason behind people not wanting to have investing of a particular company is the lack of proper information. Moreover, people dont want to come out of cocoon of their seemingly uncomplicated life. They seem satisfied with their old ways and are wary of modern, new age products. The most important factor that attracts the people towards investment in primary market is the communication factor. This is the most important reason and for this, people feel persuaded to buy it.

BIBLIOGRAPHY
1) 2) 3) 4) M.Y Khan., Financial Services, Himalaya publishing house Pvt. Ltd. New Delhi, 2001, p-10-20. Kothari, C.R, Research methodology methods & techniques, 2nd edition, New age international ltd. Publishers, 2005, P. No. 27-42. Wilkinson & Bhandarkar, Business Research Methodology, 6th edition, Tata McGraw Hill Publications, Delhi, 2005, PP 237-243. Dr. Bansal K Lalit, Merchant Banking & Financial Services Publications, 2002, (Page 152- 155) (Page 175-185) JOURNALS and MAGAZINES:1) Applied Finance, page no 261-268, volume 5 / Dec.2007. 2) Financial review, edition January 2007, pages no 34-40. 3) Management Accountant, May 2006 P. No.- 359-412. Websites 1. 2. 3. 4. www.thehindubusinessline.com www.indiainfoline.com www.prowessdatabase.com www.indiatimes.com Vikas

QUESTIONNAIRE
Q1) General Information 1. Name ____________________________ 3. Occupation a) c) 4. a) c) Q2) Q3) Q4) Q5) Q6) Q7) 18 - 30 Yes Primary Market News Private Co. 0-20% 35-50% Q8) Insurance IT Sector Q9) How much is your portfolio? Rs.10000 50000 Short term Yes Rs.50000 1 Lac Long term (5 & above) No Above 1 Lac Broker Govt. Co. 20-35% 50% & above Infrastructure Any Other Telecom Businessman Professional Rs.50000 to 1 Lac Above Rs.3 Lacs 30 - 45 No Secondary Market TV Semi Govt. Internet Any other 45 - 55 above 55 b) d) b) Serviceman Any other Rs.1 Lac to 3 Lacs 2. Age ______________

Annual Income

Which age group do you belong? Have you ever invested in stock market? If yes, in which type of market? What is the source of information regarding primary market? In which of the following you would like to invest your money? Any other How much % of your income you invest yearly?

In which sector you like the invest the money?

Q10) For how much period you would prefer to invest? Q11) Investing in primary market is risky or not?

Q12) If yes, then how much risky in this? Highly 10% 50% Q.14 Q.15 Past Experience Share Broker Moderately 50%-100% 100%-150% Lower 150% - 200% Any Other Magazine Q13) How much return has been earned from primary market? What criteria you used to invest in any IPO? Company Result Newspaper From where you get to know about these criteria?