Professional Documents
Culture Documents
A Winter Project Report ON: Academic Year March 2010
A Winter Project Report ON: Academic Year March 2010
Submitted By:
ASHISH L. SORATHIYA
T.Y.B.B.A (Sem-VI) FINANCE
Roll No. 79
Under the guidance of
MISS KHUSHBU VORA
Submitted To:
THE CO-ORDINATOR
VIVEKANAND COLLEGE FOR B.B.A., NEAR JAHANGIRPURA,
VEER NARMAD SOUTH GUJARAT UNIVERSITY, SURAT
ACADEMIC YEAR
March 2010
I ASHISH L. SORATHIYA, here by declare that the project report entitled
“Investors Behaviour for Investing in Equity Market in
Various Sectors” Conducted on behalf of SHAREKHAN LIMITED, Surat under
the guidance of Ms. Khushbu Vora submitted in partial fulfillment of the
requirements for the award of the degree of Bachelor of Business
Administration to Veer Narmad South Gujarat University, Surat is my original
Work-Research Study-carried out during 4th January, 2010 to 4th
March, 2010 and not submitted for the award of any other
degree/diploma/fellowship or other similar titles or Prizes to any other
Institutions/Organization or University by any other person.
ASHISH L. SORATHIYA
T.Y.B.B.A (Sem-VI)
Roll No. 79
This is to certify that the Project Report entitled A STUDY ON
“INVESTORS BEHAVIOUR FOR INVESTING IN EQUITY MARKET IN
VARIOUS SECTORS” IN SURAT CITY (Conducted on behalf of Sharekhan
Limited, Surat) submitted in partial Fulfillment of the requirements for the award
of the degree of BACHELOR OF BUSINESS ADMINISTRATION to VEER
NARMAD SOUTH GUJARAT UNIVERSITY, SURAT is a record of bonafide
research work carried out by ASHISH L. SORATHIYA under my supervision and
Guidance.
………………………..
Ms. Khushbu Vora
Project Guide
Myself Ashish L. Sorathiya, student of Vivekanand College for
B.B.A. who is presently undertaking education in the spare of “Bachelor of
Business Administration” which covers total business activities.
Sample size is of 175 respondents who are the actual and potential
investors from whole of the equity market of Surat city and also from Sharekhan
Securities Pvt. Ltd. Here, each sample has the chance to be selected on an equal
basis because I have used simple random sampling method for surveying
purpose.
Equity share holder is real owner of the company in spite of their priority
in getting dividend is comes last.
CEO of the
Mr. Tarun Shah
company:
Lower Parel,
Surat - 395001
0261- 6560310-314
Online division as
“Sharekhan” 8th February 2000
Email: surat@branch.sharekhan.com
Sharekhan is one of the leading share broking and retail brokerage firms in
the country. It is the retail broking arm of the Mumbai-basedSSKI Group (Shripal
Sevantilal Kantilal Ishwarlal Pvt. Ltd), which has more than 88 years of
experience in the stock broking business. SSKI is a veteran equities solutions
company with more than 8 decades of trust and credibility in the Indian stock
markets. It helps the customers/people to make informed decisions and simplifies
investing in stocks.
Sharekhan’s ground network includes over 640 Share shops across 280
cities in India. With branches and outlets across the country, Sharekhan’s
ground network is one of the biggest in India!
The institutional broking arm of SSKI was also awarded ‘India’s best
broking house for 2004 by Asia Money brokers poll recently & It has also won
the prestigious Awaaz Consumer Vote Awards 2005 for the Most Preferred
Stock Broking Brand in India, in the Investment Advisors category.
They have 640 share shops across 280 cities in India to get a host of trading
related services – our friendly customer service staff will also help you with any
account related queries you may have.
Sharekhan won the award by the vote of consumers around the country,
as part of India’s largest consumer study cover 7000 respondents – 21 products
and services across 21 major cities. The study, initiated by Awaaz – India’s first
dedicated Consumer Channel and member of the worldwide CNBC Network, &
AC Nielsen–ORG Marg, was aimed at understanding the brand preferences of
the consumers & to decipher what are the most important loyalty criteria for the
consumer in each vertical.
SSKI named its online division as SHAREKHAN and it is into retail broking.
The business of the company overhauled 10 years ago on February 8,
2000.
It acts as a discount brokerage house to a full service investment solutions
provider.
It has specialized research product for the small investors and day traders.
Largest chain of 640 shares shops in 280 cities across India.
The site was also launched on February 8, 2000 and named it as
www.sharekhan.com.
The Speed Trade account of Sharekhan is the next generation technology
product launched on April 17, 2002.
It offers its customers with the trade execution facilities on the NSE and BSE,
for cash as well as derivatives, depository services.
Ensures convenience in Trading Experience: Sharekhan’s trading services are
designed to offer an easy, hassle free trading experience, whether trading is
done daily or occasionally. Sharekhan providing the customers with a multi-
channel access to the stock markets.
It gives advice based on extensive research to its customers and provides
them with relevant and updated information to help him make informed about
his investment decisions.
Sharekhan offers its customers the convenience of a broker-DP.
It helps the customers meet his pay in obligations on time thereby reducing the
possibility of auctions. And execute the instruction immediately on receiving it
and thereafter the customer can view his updated account statement on
Internet.
Sharekhan depository services offer Demat services to individual and
corporate investors. A customer can avail of Demat, repurchase and
transmission facilities at any of the Sharekhan branches and business partners
outlets.
BRAND NAME:
The company as a whole in its offline business has named itself as SSKI
Securities Private Limited – Shripal Sevantilal Kantilal Ishwarlal Securities
Private Limited. The company has preferred to name themselves under a
blanket family name.
But, in its online division started since 1997, the company preferred to
name itself as “SHAREKHAN”. The Brand name “SHAREKHAN” itself suggests
the business in which the company is dealing so that the customer could easily
identify the product or service category.
MISSION
VISION
“To be the best retail broking brand in the Indian equities market.”
ROLE OF SHAREKHAN:
As a Sharekhan customer you can decide the channel through which you
want to receive different Services.
OTHER SERVICES PROVIDED BY SHAREKHAN
1. Online Services
2. Offline Services
3. Depository Services: Demat & Remat Transactions
4. Derivatives Trading (Futures and Options)
5. Commodities Trading
6. IPOs & Mutual Funds Distribution
7. Fundamental Research
8. Technical Research
9. Portfolio Management
10. Free access to investment advice from Sharekhan's Research team
11. Sharekhan Value Line (a monthly publication with reviews of
recommendations, stocks to watch out for etc)
12. Daily research reports and market review (High Noon & Eagle Eye)
13. Pre-market Report (Morning Cuppa)
14. Daily trading calls based on Technical Analysis
15. Cool trading products (Daring Derivatives and Market Strategy)
16. Personalised Advice
17. Live Market Information
18. Internet-based Online Trading: SpeedTrade
1. Online Services:
Online BSE and NSE executions (through BOLT & NEAT terminals
Mutual Funds
Commodity Futures
PMS (Portfolio Management Services)
Technical PMS
Demat Services
Share shops
2. Offline Services:
TYPES OF DEMAT
ACCOUNT
The company provided mainly two types of services to their customers for
the Demate Accounts.
In the Online account, the company simply provides the terminal to the
customers or clients and the clients can do trading himself/herself when he/she
wants. The charges of online account is Rs. 750 /-, which is varies from company
to company. Online accounts are most popular than the Offline accounts.
In the Online A/C, the company provides 3 types of facilities to their clients
as per the requirements.
A. Classic Accounts
C. Dial – n –Trade
A. Classic Accounts:
Classic account enables you to buy and sell shares through our website. You
get features like
Earlier it was known as Speed Trade and now it is known as Tiger Trade.
This account is same as fast trade account. But, difference between these
two accounts is that in the Tiger Trade Account the client can access more than
25 scripts at a time and buy and sell the share from wherever they wants. This
account also provides the charts and graphs, so that the clients can easily
understand about the stock of the company. This is only for big clients and dealer
kind of customers. This account is mainly for active traders who trade frequently
during the trading session.
Features of Trade Tiger Account: -
A single platform for multiple exchange BSE & NSE (Cash & F&O),
MCX, NCDEX, Mutual Funds, IPOs
Multiple Market Watch available on Single Screen
Multiple Charts with Tick by Tick Intraday and End of Day Charting
powered with various Studies
Graph Studies include Average, Band- Bollinger, Know Sure Thing, MACD,
RSI, etc
Apply studies such as Vertical, Horizontal, Trend, Retracement & Free lines
User can save his own defined screen as well as graph template, that is,
saving the layout for future use
User-defined alert settings on an input Stock Price trigger
Tools available to gauge market such as Tick Query, Ticker, Market
Summary, Action Watch, Option Premium Calculator, Span Calculator
Shortcut key for FAST access to order placements & reports
Online fund transfer activated with 12 Banks
C. Dial-n-trade:
Features of Dial-n-trade:
TWO dedicated numbers for placing your orders with your cell phone or
landline. Toll free number: 1-800-22-7050. For people with difficulty in
accessing the toll-free number, we also have a Reliance number (Your
Local STD Code) 30307600 which is charged at as a local call.
Simple and Secure Interactive Voice Response based system for
authentication
No waiting time. Enter your TPIN to be transferred to our telebrokers
You also get the trusted, professional advice of our telebrokers
After hours order placement facility between 9.00 am and 9.30 am (timings
to be extended soon)
2. Offline Account: -
Employees Strength 35
1. EXPERIENCE:
SSKI has more than eight decades of trust and Credibility in the Indian
stock market. In the Asia Money broker’s poll held recently, Sharekhan won the
‘India best broking house for 2004’ award. Ever since it launched Sharekhan
as its retail broking division in February 2000, it has been providing institutional-
level research & broking services to investors.
2. TECHNOLOGY:
With Sharekhan online trading account you can buy and sell shares in an
instant from any PC with an internet connection. You will get access to our
powerful online trading tools that will help you take complete control over your
investment in shares.
3. KNOWLEDGE:
In a business where the right information at the right time can translate
into direct profits, you get access to a wide range of information on Sharekhan’s
website www.sharekhan.com. You will also get a useful set of Knowledge-based
tools that will empower you to take informed decisions.
4. ACCESSIBILITY:
5. CONVENIENCE:
6. CUSTOMER SERVICE:
Sharekhan’s customer service team will assist you for any help that you
need relating to transactions, billing, demat and other queries. Sharekhan’s
customer service can be contacted via a toll-free number-mail or live chat on
Sharekhan.com.
7. INVESTMENT ADVICE:
WEAKNESSES:
OPPORTUNITY:
THREATS:
An agent that charges a fee or commission for executing buys and sell
orders submitted by an investor. The firm that acts as an agent for a customer,
charge the customer the commission for its service. Roles similar to that of a
stockbroker include investment advisor, financial advisor and probably many
others. A stockbroker may or may not be also an investment advisor.
There are several national as well as local players in stock trading services
which are providing various services to their customers like online trading,
portfolio management system, stock broking etc.
They are helping the investors to take decision about where to invest because
there is lots of Investment Avenue available with investors. Some of them are as
follows working at the national level.
5Paisa.com - Online trading, live stock quotes and market research
Sivan Securities - offers services related investment banking & stock broking
with a focus on South India.
Etc…..etc..…
Stock markets refer to a market place where investors can buy and sell
stocks. The price at which each buying and selling transaction takes is
determined by the market forces (i.e. demand and supply for a particular stock).
A stock market is a public market for the trading of company stock and
derivatives at an agreed price; these are securities listed on a stock exchange as
well as those only traded privately.
The size of the world stock market was estimated at about $36.6 trillion
USD at the beginning of October 2008.
The stock market is one of the most important sources for companies
to raise money. This allows businesses to be publicly traded, or raise additional
capital for expansion by selling shares of ownership of the company in a public
market.
In this way, investing in stock market, the stock exchanges also play
importance role. Exchanges also act as the clearinghouse for each transaction,
meaning that they collect and deliver the shares, and guarantee payment to the
seller of a security. This eliminates the risk to an individual buyer or seller that the
counterparty could default on the transaction. So, here we also understand about
Stock Exchanges as follows.
Stock exchange
Stock exchanges also provide facilities for the issue and redemption of
securities as well as other financial instruments and capital events including the
payment of income and dividends.
The Bombay Stock Exchange Limited is the oldest stock exchange not
only in the country, but also in Asia with a rich heritage of over 133 years of
existence. In the early days, BSE was established as "The Native Share &
Stock Brokers Association."
It was established in the year 1875 and became the first stock exchange
in the country to be recognised by the government. In 1956, BSE obtained a
permanent recognition from the Government of India under the Securities
Contracts (Regulation) Act, 1956.
BSE provides an efficient and transparent market for trading in equity, debt
instruments and derivatives.
BSE is the first exchange in India and the second in the world to obtain an
ISO 9001:2000 certifications. It is also the first exchange in the country and
second in the world to receive Information Security Management System
Standard BS 7799-2-2002 certification for its BSE On-line Trading System
(BOLT).
BSE continues to innovate. In 2006, it became the first national level stock
exchange to launch its website in Gujarati and Hindi and now Marathi to reach
out to a larger number of investors.
BSE Vision
The vision of the Bombay Stock Exchange is -
Mumbai-400001, India
Telephone :-91-22-227212334
Website :-www.bseindia.com
Trading hours :-Monday-Friday, 9:00am to 3:30pm
Securities :-Stocks, derivatives, debt
Trading System :-Electronic
MD & CEO :-Mr.Madhu Kannan
History of BSE
The Bombay Stock Exchange is known as the oldest exchange in Asia. It
traces its history to the 1850s, when stockbrokers would gather under banyan
trees in front of Mumbai's Town Hall. The location of these meetings changed
many times, as the number of brokers constantly increased. The group eventually
moved to Dalal Street in 1874 and in 1875 became an official organization known
as 'The Native Share & Stock Brokers Association'. In 1956, the BSE became the
first stock exchange to be recognized by the Indian Government under the
Securities Contracts Regulation Act.
The Bombay Stock Exchange developed the BSE Sensex in 1986, giving
the BSE a means to measure overall performance of the exchange. In 2000 the
BSE used this index to open its derivatives market, trading Sensex futures
contracts. The development of Sensex options along with equity derivatives
followed in 2001 and 2002, expanding the BSE's trading platform.
Sensex
BSE 100(This covers Banking Sector)
BSE 200(This covers Capital goods)
BSE 500(This covers Consumer goods)
BSE mid-cap index
BSE small-cap index
BSE mid-cap index covers the FMCG sector and BSE small-cap index
covers the IT, Metal, Oil & gas, Power industry, PSUs, etc. BSE
disseminates information on the Price-Earnings Ratio, the Price to Book Value
Ratio and the Dividend Yield Percentage on day-to-day basis of all its major
indices.
The values of all BSE indices are updated every 15 seconds during market
hours and displayed through the BOLT system, BSE website and news wire
agencies.
All BSE Indices are reviewed periodically by the BSE Index Committee.
This Committee which comprises eminent independent finance professionals
frames the broad policy guidelines for the development and maintenance of all
BSE indices. The BSE Index Cell carries out the day-to-day maintenance of all
indices and conducts research on development of new indices.
ICAI award for excellence in financial reporting for the year 2006-07
BSE has won the Asia - Pacific HRM awards for its efforts in employer
branding through talent management at work, health management at work
and excellence in HR through technology.
National Stock Exchange (NSE)
Origins:
Markets:
Currently, NSE has the following major segments of the capital market:
Equity
Futures and Options
Retail Debt Market
Wholesale Debt Market
Currency futures
NSE became the first stock exchange to get approval for Interest rate
futures as recommended by SEBI-RBI committee, on 31 August,2009, a futures
contract based on 7% 10 Year GOI bond (NOTIONAL) was launched with
quarterly maturities.
Hours:
NSE's normal trading sessions are conducted from 9:00 am India Time to
3:30 pm India Time on all days of the week except Saturdays, Sundays and
Official Holidays declared by the Exchange (or by the Government of India) in
advance.
However, on Dec 17, 2009, after strong protests from brokers, the
Exchange decided to postpone the change in trading hours till Jan 04, 2010.
NSE new market timing from Jan 04, 2010 is 9:00 am till 3:30 pm India
Time.
NSE Group:
History of N.S.E
Capital market reforms in India and the launch of the Securities and
Exchange Board of India (SEBI) accelerated the incorporation of the second
Indian stock exchange called the National Stock Exchange (NSE) in 1992. After a
few years of operations, the NSE has become the largest stock exchange in
India.
Three segments of the NSE trading platform were established one after
another. The Wholesale Debt Market (WDM) commenced operations in June
1994 and the Capital Market (CM) segment was opened at the end of 1994.
Finally, the Futures and Options segment began operating in 2000. Today the
NSE takes the 14th position in the top 40 futures exchanges in the world.
In 1996, the National Stock Exchange of India launched S&P CNX Nifty
and CNX Junior Indices that make up 100 most liquid stocks in India. CNX Nifty
is a diversified index of 50 stocks from 25 different economy sectors. The Indices
are owned and managed by India Index Services and Products Ltd (IISL) that has
a consulting and licensing agreement with Standard & Poor's.
In 1998, the National Stock Exchange of India launched its web-site and
was the first exchange in India that started trading stock on the Internet in 2000.
The NSE has also proved its leadership in the Indian financial market by gaining
many awards such as 'Best IT Usage Award' by Computer Society in India (in
1996 and 1997) and CHIP Web Award by CHIP magazine (1999).
Indices of N.S.E
NSE also set up as index services firm known as India Index Services &
Products Limited (IISL) and has launched several stock indices, including:
Mission of N.S.E.
NSE's mission is setting the agenda for change in the securities markets in
India. The NSE was set-up with the main objectives of:
What is Investment?
“The money you earn is partly spent and the rest saved for meeting future
expenses. Instead of keeping the savings idle you may like to use savings in
order to get return on it in the future.” This is called Investment.
One of the important reasons why one needs to invest wisely is to meet the
cost of Inflation. Inflation is the rate at which the cost of living increases. The
cost of living is simply what it costs to buy the goods and services you need to
live.
Investor:
While, some people are also believes in “High Risk, High Return” Many
investors purchase a particular stock with the intention of making a big
profit over a short period of time. However, this action is not investing, but a pure
gambling.
Some people are also believes in that there is no safe investment that
will provide you with high returns over a short period of time. Therefore, you
should direct your resources toward long-term investments that are more likely to
reward you for the patience with high returns.
The market in which shares are issued and traded, either through
exchanges or over-the-counter markets. Also known as the stock market,
it is one of the most vital areas of a market economy because it gives companies
access to capital and investors a slice of ownership in a company with the
potential to realize gains based on its future performance.
The Indian Equity Market is more popularly known as the Indian Stock
Market. The Indian equity market has become the third biggest
after China and Hong Kong in the Asian region.
According to the latest report by ADB, it has a market capitalization of
nearly $600 billion. As of March 2009, the market capitalization was around
$598.3 billion (Rs 30.13 lakh crore) which is one-tenth of the combined
valuation of the Asia region. The market was slow since early 2007 and
continued till the first quarter of 2009.
The Indian market has 22 stock exchanges. The larger companies are
enlisted with BSE and NSE. The smaller and medium companies are listed
with OTCEI (Over The counter Exchange of India). The functions of the Equity
Market in India are supervised by SEBI (Securities Exchange Board of India).
The Indian Equity Market was not well organized or developed before
independence. After independence, new issues were supervised. The timing,
floatation costs, pricing, interest rates were strictly controlled by the Controller of
Capital Issue (CII).
In the 1950s, there was uncontrollable speculation and the market was
known as ‘Satta Bazaar'. Speculators aimed at companies like-Tata Steel,
Kohinoor Mills, Century Textiles, Bombay Dyeing and National Rayon. The
Securities Contracts (Regulation) Act, 1956 was enacted by the Government of
India. Financial institutions and state financial corporation were developed
through an established network.
A. Meaning of Sector:
SECTORS
Agro Inputs Sector IT Sector
The oil and gas industry has been instrumental in fuelling the rapid growth
of the Indian economy. The petroleum and natural gas sector which includes
transportation, refining and marketing of petroleum products and gas industry
constitutes over 15 per cent of the GDP.
India's domestic demand for oil and gas is on the rise. As per the Ministry
of Petroleum, demand for oil and gas is likely to increase which is 186.54 million
tonnes in 2008-09.
India is emerging as the global hub for oil refining with capital costs
lower by 25 to 50 per cent over other Asian countries.
Banking in India originated in the last decades of the 18th century. The
oldest bank in existence in India is the State Bank of India, a
government-owned bank that traces its origins back to June 1806 and that is the
largest commercial bank in the country. Central banking is the responsibility of
the Reserve Bank of India, which in 1935 formally took over these
responsibilities from the then Imperial Bank of India.
The banking sector will navigate through all the aspects of the Banking
System in India. It will discuss upon the matters with the birth of the banking
concept in the country to new players adding their names in the industry in
coming few years. The banker of all banks, Reserve Bank of India (RBI), the
Indian Banks Association (IBA) & top 20 banks like IDBI, HSBC, ICICI, ABN
AMRO, etc.
In the Third Quarter Review of Monetary Policy for 2009-10, the RBI
observed that the Indian economy showed a degree of resilience as it recorded a
better-than-expected growth of 7.9 percent during the second quarter of 2009-
10.
The industry has been growing faster than the real economy, resulting in
the ratio of assets of commercial banks to GDP increasing to 92.5 per cent at
end-March 2007. The Indian banks have also been doing exceptionally well in
the financial sector with the price-to-book value being second only to china,
according to a report by (BCG) Boston Consultancy Group.
3. IT Sector:
Over the past decade, the Information Technology (IT) industry has
become one of the fastest growing industries in India. The key segments that
have contributed significantly (96 percent of total) to the industry’s exports
include – Software & services (IT services) & IT-enabled services (ITeS) i.e.
business services. Over a period of time, India has established itself as a
preferred global sourcing base in these segments & they are expected to
continue to fuel growth in the future.
The Indian information technology (IT) industry has played a key role
in putting India on the global map. Thanks to the success of the IT industry,
India is now a power to reckon with. According to the National Association of
Software and Service Companies (NASSCOM), the apex body for software
services in India, the revenue of the information technology sector has risen from
1.2 per cent of the gross domestic product (GDP) in FY 1997-98 to an estimated
5.8 per cent in FY 2008-09. Further, the industry body expects the sector to
grow between 4 per cent and 7 per cent during 2009-10 and return to over 10 per
cent growth next year.
India's domestic market has also become a force to reckon with, as the
existing IT infrastructure evolves both in terms of technology and depth of
penetration.
Investments:
The growth has continued apace during the current fiscal, with the six
core-infrastructure industries growing at the rate of 6.9 percent during April-
September 2007. Significantly, electricity recorded a growth rate of 7.6 per cent
compared to 6.7 per cent in the same period last year. Other sectors recording
major growth include: petroleum refinery products (9.8 per cent), cement (8.3 per
cent) & finished (carbon) steel (6.6 per cent).
Automobile industry made its silent entry in India in the nineteenth century.
Since the launch of the first car in 1897, India automobile industry has come a
long way. Today India is the largest three wheeler market in the world and is
expected to take over China as the second largest automobile market, in the
coming years.
The growth of the Indian middle class along with the growth of the
economy over the past few years has attracted global auto majors to the Indian
market. Moreover, India provides trained manpower at competitive costs
making India a favoured global manufacturing hub. The attractiveness of the
Indian markets on one hand and the stagnation of the auto sector in markets
such as Europe, US and Japan on the other have resulted in shifting of new
capacities and flow of capital to the Indian automobile industry.
Global auto majors such as Japanese auto majors Suzuki, Honda and
Korean car giant Hyundai are increasingly banking on their Indian operations to
add weight to their businesses, even as numbers stay uncertain in developed
markets due to economic recession and slowdown.
According to figures released by the Society of Indian Automobile
Manufacturers (SIAM), domestic passenger car sales have increased 32.28
percent to reach 145,905 units in January 2010 from 110,300 units in the
same month last year.
Across all categories, total sale of vehicles increased 44.94 per cent to
1,114,157 units in January 2010, against 768,698 units in the January 2009.
BANKING SECTOR:
INFRASTRUCTURE SECTOR:
DLF
Reliance Infrastructure
HCC Infrastructure
Maytas Infra Limited
GMR Infrastructure
IBR Infrastructure
etc…
AUTOMOBILE SECTOR:
Hero Honda
Ford Motor
Honda Motors
Bajaj Auto
Tata Motors
Maruti Suzuki
TVS Motors
Mihindra Motors
Yamaha Motors
etc…
INTRODUCTION OF CAPITAL MARKET
Concept:
Capital market is the markets for funds which have a long or undefined
maturity i.e. it deal with long term funds. Generally capital market supplies long
term and medium term securities and funds, which have a maturity period of
above one year. Capital market generates the funds from the saver and transfer
to user. Generally it done with ordinary share, stocks, debentures and bonds of
corporations and securities of the government. They do so by converting financial
assets into productive physical assets.
Capital market provides a market mechanism for those who have savings
and to those who need funds for productive investments. It diverts resources from
wasteful and unproductive channels to productive investment.
BSE reaches to over 400 cities and town nation-wide and has around
4,937 listed companies, with over 7745 scripts being traded as on
31st July 09. The companies listed on BSE command a total market capitalization
of USD Trillion 1.06 as of July, 2009.
There are some 9600 companies listed on the respective exchanges. Any
market that has experienced this sort of growth has an equally substantial
demand for highly efficient settlement procedures.
Two major reasons why Indian securities are now increasingly regarded as
attractive to international investors are:
1. The relatively high returns compared with more developed global markets
as well as the low correlation with world markets.
2. However until the early 90s, the foreign investors’ only way of accessing
the Indian capital markets was through listed country funds
A Brief History
“The capital market is one of the most exciting sectors in the financial
system, marking an important contribution to economic development.”
Asia Focus was launched by the Unit Trust of India (UTI) in London in
1986. The success of this initiative ensured that this fund was followed by
numerous others. Indian companies are now also allowed to raise equity capital
in the international market through the issue of GDRs. In 2004, there are 498
Foreign Institutional Investors who hold 1325 sub-accounts with a net investment
of approximately $15 billion. India’s regulator, the Securities Exchange Board of
India (SEBI) is playing more of a development role rather than being merely a
watchdog. Transparency, competitiveness and equal opportunity to all market
participants has been the driving philosophy behind all the development and
regulatory initiatives of SEBI. The availability of derivative products including
index futures, index options, individual stock futures and individual stock options
re-enforces the overall attractiveness of this market to foreign and domestic
investors. The derivatives market in only two years has shown spectacular
growth. Compared to last financial year the annual turnover grew by over 300%.
As if further evidence was needed of India’s willingness to embrace change, the
availability of Internet trading and dual fungibles of American Depository Receipts
(ADRs) and Global Depository Receipts (GDRs) provides a clear indication of the
vibrancy and dynamism of the Indian securities market.
Meaning of Capital Market
OR
The capital market includes the stock market (equity securities) and the
bond market (debt).
Capital markets may be classified as:
1) Primary markets
2) Secondary markets
In primary markets, new stock or bond issues are sold to investors via a
mechanism known as underwriting.
In the secondary markets, existing securities are sold and bought among
investors or traders, usually on a securities exchange, over-the-counter, or
elsewhere.
CAPITAL MARKET
Primary Market
Secondary Market
The corporate sector raises their capital through these above three types
of securities. This is the physical or tangible asset through which the market
functions.
1. Equity Shares:
The Indian Equity Market is more popularly known as the Indian Stock
Market. The Indian equity market has become the third biggest
after China and Hong Kong in the Asian region.
According to the latest report by ADB, it has a market capitalization of
nearly $600 billion. As of March 2009, the market capitalization was around
$598.3 billion (Rs 30.13 lakh crore) which is one-tenth of the combined
valuation of the Asia region. The market was slow since early 2007 and
continued till the first quarter of 2009.
2. Preference Shares:
Preference shares have different features and are accordingly available as:
3. BONDS:
While the size of Indian dept market is 239.2 (US$ billion) which is
34.5% of GDP as on 2004 -05.
Many financial institutions like IDBI, ICICI, and IFCI, have been raising
capital for their operations by issuing of bonds. These too are available in a large
variety.
Primary market is the market for those securities which are issued first
time in the market for the public. The New Issue Market deals with new securities
i.e. securities which were not previously availably and are offered to the investing
public for the first time.
2) Secondary Market:
Secondary market is the market for those securities which have already
been available in the market and listed on a stock exchange. The main benefit of
Secondary market is securities sold and purchased continuously among investors
without involvement of company. This market consists of all stock exchange
recognized by the Government of India. The stock exchange in India are
regulated under the securities contracts (Regulation) Act, 1956.
B. Government Security Market:
Banks are the largest holders of G-secs. About one–third of the net
demand and time liabilities of the banks are partly in government securities
market mainly to meet statutory liquidity requirements and partly for investment
purpose. Other investor in G-secs includes mutual funds, primary and satellite
dealers, and trusts.
The secondary market for these securities is very narrow since most of the
institutional investors tend to retain these securities until maturity.
The Government securities are in many forms. These are generally:
Government securities are sold through the Public Debt Office of the RBI
while Treasury Bills are sold through auctions.
Term loans: A loan from a bank for a specific amount that has a
specified repayment schedule and a floating interest rate. Term loans
almost always mature between 1 and 10 years.
Mortgages Market:
The mortgage market refers to these centers which supply mortgage loan
mainly to individual customers. A mortgage loan is a loan against the security
of immovable properly like real estate. The transfer of interest in a specific
immovable properly to secure a loan is called mortgage. These mortgages may
be equitable mortgage or legal one. Again it may be a first charge of title deeds to
properties as security whereas in the case of a legal mortgage the title in the
property is legally transferred to the lender by the borrower. Legal mortgage is
less risky.
Similarly, in the first charge, the mortgages transfer his interest in the
specific property to the mortgagee as security. When the properly in question is
already mortgaged once to another creditor, it becomes a second charge when it
is subsequently mortgaged to somebody else. The mortgagee can also further
transfer his interest in the mortgaged property to another, in such a case; it is
called a sub mortgage.
The mortgage market may have primary market as well secondary market.
The primary market consists of original extension of credit and secondary market
has sales and re-sales of existing mortgages at prevailing prices.
In India residential mortgages ate the most common ones. The Housing
and Urban Development Corporation and the LIC play a dominant role in
financing residential projects. Besides, the Land Development Banks provides
cheap mortgages loans for the development of lands, purchase of equipment etc.
These development banks raise finance through the sale of debentures which are
treated as trustee securities.
Financial Guarantees Market:
Though there are many types of guarantees, the common forms ate:
There are a number of capital market instruments used for market trade,
including stocks, bonds, debentures, T-bills, foreign exchange, fixed deposits,
and others. These are used by the investors to make a profit out of their
respective markets. All of these are called capital market instruments because
these are responsible for generating funds for companies, corporations, and
sometimes national governments.
This market is also known as securities market because long term funds
are raised through trade on debt and equity securities. These activities may be
conducted by both companies and governments.
Stocks and bonds are the two basic capital market instruments used in
both the primary and secondary markets.
DEBENTURES
BONDS
PREFERENCE SHARES
EQUITY SHARES
GOVERNMENT SECURITIES
DEBENTURES:
“A type of fixed-interest security, issued by companies
(as borrowers) in return for medium and long-term investment of funds. A
debenture is evidence of the borrower's debt to the lender.”
These are issued by companies and regulated under the SEBI guidelines
of June 11, 1992.
Convertible debentures
Non-Convertible debentures
BONDS:
“A bond is a debt security, in which the authorized issuer owes the
holders a debt and, depending on the terms of the bond, is obliged to pay
interest (the coupon) and/or to repay the principal at a later date, termed
maturity.”
International Bond Market is very big and has an estimated size of nearly
$47 trillion. The size of the US bond market is the largest in the world. The US
bond market's outstanding debt is more than $25 trillion.
While the size of Indian dept market is 239.2 (US$ billion) which is
34.5% of GDP as on 2004 -05.
Indian development financial institutions like IDBI, ICICI, and IFCI, have
been raising capital for their operations by issuing of bonds. These too are
available in a large variety. These include:
Income bonds
Tax-free bonds
Capital gains bonds
Deep discount bonds
Infrastructure bonds
Retirement bonds etc…
PREFERENCE SHARES:
“Stock whose holders are guaranteed priority in the payment of
dividends but whose holders have no voting rights”
Preference shares have different features and are accordingly available as:
For example, if you buy 1000 shares of stock in a company that has
issued a total of 100,000 shares, you own one per cent of the company.
I. Dated Securities
II. Treasury Bills
The Public Debt Office (PDO) of the Reserve Bank of India performs all
functions with regard to the issue management, settlement of trade, distribution of
interest and redemption. Although only corporate and institutional investors
subscribe to government securities, individual investors are also permitted to
subscribe to these securities.
It acts as a link between those who want to save funds and those who
need funds and are in a position to invest them with safety and
reasonable return.
It provided the capital to those enterprises which can apply it profitably,
productively and increase the aggregate national income.
It provides proper flow of funds and brings about the rational allocation of
resources through the conversion of financial assets into physical assets.
Thus, the capital market facilitates capital formation.
It provides incentives to saving and facilitates capital formation by offering
suitable rate of interest as the price of capital.
It facilitated buying and selling of securities at listed price by providing
continuously marketability to the investors.
The securities offered in the capital market are transferable in character.
The changing business conditions in the economy are immediately
reflected on capital market. Booms and depression can be identified by
capital market. So suitable monitory and fiscal policies can be taken by
government.
Capital market supplies securities of different kinds with different maturity
and yields in unable the investors to diversify their risk by wider portfolio of
investment.
RESEARCH METHODOLOGY
Introduction:
Research is one of the best instruments to identify the investing pattern of
investors to invest in various sectors & to study different sectors of Capital
market.
Definition:
“Research is careful inquiry or examination to discover new
information and relationship and to expand and to vary existing
knowledge.”
Research always starts with question or any problem and finds answer of
problem by using scientific method. It gives complete knowledge about any
problem or question.
Primary Objective:
The primary objective of carrying out this research is:--
To know the peoples time horizon for investing in Equity Market and to
BENEFITS OF STUDY:
The study carried out under the title of “Investors Behaviour for
Investing in Equity Market in Various Sectors” will give benefits as under:
The research will be help to know in which sector investors are investing
more.
The study will be helpful in knowing that what factors consider most
important while selecting the Sectors and company under the sectors.
The study will be helpful in knowing that how the investors are trade in
Equity market.
The study will be helpful in knowing that what are the motivational factors
A research design is the master plan or model for the conduct of formal
investigation and survey. It is a specification of methods and procedures for
acquiring the information needs for solving the problem. It decides the source of
information and methods for gathering the data. A questionnaire and other forms
are tested to use the collection of data.
In the research study there is no perfect study to solve the problem. The
research design has broadly three categories as follow.
RESEARCH
DESIGN
1. Exploratory Research
2. Descriptive Research
3. Casual Research
2. Descriptive Research:
Descriptive research answers the questions who, what, where, when and
how. This study is complex and determines high degree scientific skill to study
the problem.
In short descriptive research deals with everything that can be counted and
studied.
Primary Data
Secondary Data
Primary Data:
Questionnaire method
Interviews method
Focus group interviews
Observation method
Case-studies method
Diaries method
I have used Questionnaire method for the Primary data collection for
the study.
Secondary Data:
Secondary data means data which are collected by any one for a
particular research purpose and which are used by others for different purpose.
I have also used the secondary data for the study like some company
resources like broachers, websites etc.
Sampling Plan:
The effectiveness of the report depends on the sample size selected from the
population.
Sampling Unit:
Here, target population is decided who are the actual and potential
investors, each sample has the chance to be selected on an equal basis & this
research has been conducted through surveying the whole of the equity market
of Surat city
Sample Size:
For getting better result of the given problem I have to determine the
perfect sample size as on 90% confidence level which is calculated statically by
the given formula.
n = p*q (z /c) 2
Where,
n = sample size
q = (1 - p)
p = 0.80 q = 0.20
z = 1.645 c = 0.05
n = p*q (z /c) 2
= 0.80*0.20 (1.645/0.05) 2
= 173.1856
= 175
Confidence interval:
In statistics, a confidence interval (CI) is a particular kind of interval
estimate of a population parameter. Instead of estimating the parameter by a
single value, an interval likely to include the parameter is given.
Thus, confidence intervals are used to indicate the reliability of an estimate.
For example,
The confidence level tells you how sure you can be. It is expressed as a
percentage and represents how often the true percentage of the population who
would pick an answer lies within the confidence interval.
The 90% confidence level means you can be 90% sure; When I put the
confidence level and the confidence interval together, I can say that I am 90%
sure that the true percentage of the population is between 20% and 80%.
Sampling frame:
Sampling frame is the actual set of units from which a sample has been
drawn. In sampling frame, I have used simple random sampling method for
conducting survey. In a simple random sample ('SRS') all units from the sampling
frame have an equal chance to be drawn and to occur in the sample.
I have used SPSS software (Statistical Package for the Social Sciences)
for analysis purpose.
In that I have used Mean, Median, Mode, Frequency Table, and Cross
Tabulation, Graphical representation & interpretation with each graphs
and charts.
Microsoft Office is used for data typing formatting and analyzing the data.
ANALYSIS OF QUESTIONNAIRE
[ ] Yes
[ ] No
36% Yes
No
68%
Interpretation:
7% IPO
Mutual Funds
8% Bonds
53%
Fixed Deposits
Other
18%
Interpretation:
According to the previous chart:
18% of investors believe that IPO (Primary Market) will provide the best
returns.
8% of investors think that Mutual Funds will provide the best returns.
7% of investors believe that Bonds Market will provide the best returns.
4% of investors trust that Fixed Deposits will provide the best returns.
Commodity Market
Insurance
Government Securities etc.
Investors in
Motivation Factors
Percentage
Return 49%
Liquidity 26%
Safety 7%
Capital Appreciation 17%
Other 1%
Safety
Capital Appreciation
25%
Other
Interpretation:
According to the Previous Figure:
[ ] Less than 5%
[ ] 5%-10%
[ ] 10%-15%
[ ] 15%-20%
[ ] 20%- 25%
[ ] More than 25%
45%
Interpretation:
According to the Previous Figure:
23% of the investors are investing Less than 5% of their income in Equity
Market.
45% of the investors are investing 5%-10% of their income in Equity Market.
17% of the investors are investing 10%-15% of their income in Equity Market.
7% of the investors are investing 15%- 20% of their income in Equity Market.
While 3% of the investors are investing More than 25% of their income in
Equity Market.
[ ] Intraday
[ ] Delivery
[ ] Speculation
[ ] Arbitragers
[ ] Hedging
[ ] If any other please specify _____________
Intraday 13%
Delivery 31%
Speculation 26%
Arbitragers 17%
Hedging 11%
Other 2%
2%
11% 13% Intraday
Delivery
Speculation
17%
Arbitragers
31% Hedging
Other
26%
Interpretation:
According to the Previous Figure:
13% of the investors are doing Intraday trading in Equity Market.
“Intraday Trading is trading for that one day only. Means any securities
are purchase & sell “within the day.”
While 2% of the investors are trade in Equity Market for Other Purpose.
20% 18%
14% 15%
15%
10%
5%
0%
Less than 1 1 to 3 Months 3 to 6 Months 6 to 12 Months More than 12
Months Months
Interpretation:
According to the Previous Figure:
14% of investors invest in Equity market for Less than 1 Months.
Que.7. What is the rate of return expected by you from Equity Market
in a year?
[ ] 5% – 10 %
[ ] 10% – 15 %
[ ] 15% – 20%
[ ] 20% – 25%
[ ] 25% –30%
[ ] 30% and above
18% 10% – 15 %
20% – 25%
25% –30%
32%
Interpretation:
Here, above two cases investors are more expects from Equity
market.
While 4% of investors are expects more than 30% return from Equity
market.
Que.8. Are you satisfied with the current performance of the Equity Market
in terms of expected return?
[ ] Fully Satisfied
[ ] Satisfied
[ ] Neutral
[ ] Unsatisfied
[ ] Fully Unsatisfied
Interpretation:
According to the Previous Figure:
Equity market.
5% 3% Friends
10% 28% Relatives
Advisers
Media
17%
Research Report
Magazines
12%
Other
25%
Interpretation:
Particulars Percentage
Economic Condition
Industry Condition
16%
Existence of well established
Companies under Sectors
Government Policy
Banking Sector
IT Sector
Infrastructure Sector
Automobile Sector
IT Sector 20 40 47 35 33 175
IT Sector 40 2nd
IT Sector:
20 Investors gave 1st rank, 40 Investors gave 2nd rank, 47 investors gave
3rd Rank, 35 Investors gave 4th Rank, & 33 Investors gave 5th Rank to this
sector.
Here, over all 40 investors have selected IT sector as a 2nd Rank in
comparison with 2nd Rank of all sectors.
Banking Sector:
26 Investors gave 1st rank, 24 Investors gave 2nd rank, 53 investors gave
3rd Rank, 42 Investors gave 4th Rank, & 30 Investors gave 5 th
Rank to this sector.
Here, over all 53 investors have selected Banking sector as a 3nd Rank in
comparison with 3nd Rank of all sectors.
Automobile Sector:
35 Investors gave 1st rank, 30 Investors gave 2nd rank, 28 investors gave
3rd Rank, 52 Investors gave 4th Rank, & 30 Investors gave 5th Rank to this
sector.
Here, over all 52 investors have selected Automobile sector as a 4th
Rank in comparison with 4th Rank of all sectors.
Infrastructure Sector:
37 Investors gave 1st rank, 32 Investors gave 2nd rank, 33 investors gave
3rd Rank, 28 Investors gave 4th Rank, & 45 Investors gave 5th
Rank to this sector.
Here, over all 45 investors have selected Infrastructure sector as a
5nd Rank in comparison with 5nd Rank of all sectors.
Que. 12. Mention the most important factors for selecting a company
of your choice.
Dividend 17%
Market capitalization 7%
Other 2%
Factors affect to Investors for for
selecting company
(Investors in Percentage)
2%
19% Earning Per Share
24%
Dividend
Broker’s advise
Market capitalization
17%
Performance of company
16%
P.E. Ratio
7% 15% Other
Interpretation:
While 15% of the investors are select a company under the sector of their
choice on the basis of Broker’s advises.
From the research I found out that 68% of investors (119) are investing in
Equity Market. While 36% of investors (56) are not investing in Equity Market
as per my sample size 175.
I also found out that, 53% of investors believe that Equity Market is better
investment option and will provide the best returns in compare to other
investment option.
I found out that the 49% of investors who are dealing in equity market they
are motivated by return factor and 26% of investors are motivated by
Liquidity and some investor also consider capital appreciation and safety factor
while investing in equity market in various sectors.
I also found out that the 45% of the investors are ready or interested to
invest their 5%-10% of income in Equity Market. It means many investors trust
on the growth of equity market as they are ready to spend major proportion of
their income.
Going ahead I found out that very few investors want to deal in intraday
trading which shows that they consider safety factors while investing. 31% of
the investors are investing in Equity Market as a Delivery base Trading and
26% of the investors are trading in Equity Market as a Speculator. Means 26%
of investors who willingly take higher-than-average risk in return for a higher-
than-average profit potential.
28% of investors invest in Equity market for the period of 1 to 3 Months and
the same proportion of investors are invest for long period more than year.
I also found out that 32% of investors are expects 15%-20% return from
Equity market and 26% of investors are expects 20%-25% return from Equity
market. Here, investors are more expects from Equity market.
42% of investors are satisfied with the current performance of the Equity
Market in terms of expected return, while 28% of investors are Neutral about
equity market.
I found that most of investors are motivated by their friends to enter in the
equity market and some investors are motivated by Advisers, Media, Research
Report and other factors like and self study of current scenario of equity market.
Other thing I found out that 29% of the investors have considered market
trend and 23% of the investors have considered Profitability as a most
important factor as a most important factor while selecting the Sector. There are
also other factors like - government policy, industry condition, and economic
condition also important factor while selecting the Sector
Then I found that 44 investors selected Oil & gas sector as a
First Rank (in comparison with First Rank of all sectors)
40 investors have selected IT sector as a 2nd Rank.
53 investors have selected Banking sector as a 3nd Rank
52 investors have selected Automobile sector as a 4th Rank
45 investors selected Infrastructure sector as a 5nd Rank
I also found out that 24% of the investors have considered Price Earning
Ratio, 19% of the investors have considered Earning per Share and 17%
of the investors have considered Dividend as a most important factor while
selecting a company from these selected sectors. Investors also consider other
factors like - Suggestion from reference group, External advisors,
Stakeholders, Growth of Company, Market Trend, Profitability and their own
view etc. are as an important factor while selecting a company from these
selected sectors.
During my training period I have study on “Investors Behaviour for
Investing in Equity Market in Various Sectors” by using Descriptive
Research Design as a Questionnaire method where respondents are from
whole of the equity market of Surat city and also from Sharekhan Securities
Pvt. Ltd.
From the survey I found that major people are investing in equity market
only due to Earn High Return and Hedge the Risk by investing their major
proportion of income in Equity Market. Here, the most of people are trade in
equity market as a speculation and they are invests for one to three months.
Generally, the investors who are invest for long period more than year they are
surely beneficial in equity market. Majority of people are motivated by their
friends & medias advise to enter into equity market. Majority people are expecting
something more from the equity market.So, finally some are satisfied and some
are not satisfy with equity market.
Major investors prefer the Oil & gas sector as a first rank on the basis of
Market trend, Profitability, industry condition and economic condition also
important factor while selecting the Sector and investors have also considered
Price Earning Ratio, Earning per Share and Dividend as a most important
factor while selecting a company under these selected sectors.
Recommendation to Investors:
Prefer investment for long term investment strategy that provides you
moderate return with liquidity.
Investors should not invest in only equity market but, also invest in other
Safe Securities Like- Fixed Deposits, Government Securities, Bonds,
Mutual fund and Insurance etc. which also provides moderate
return.
For Example: One should prefer
o Equity – 50%
o Other Safe Securities – 50%
Investors should invest money at lower level price and sale the stock at
higher price.
The Stock Broking firm should also provide better services to the investor
to increase the satisfaction level of the investors.
Company should focus on students also because equity market has risk
and the younger generation likes to take risk.
Majority investors are investing in Oil & gas sector and IT sector.
So, Company should also suggest to investors for investing other sector
which is also profitable.
@. BOOKS:
Gordon & Natrajan, “Financial Markets And Services” Second
Revised Edition Reprint, Himalaya Publishing House, 2005.
Investment Management – V.A. AVADHANI
@. Websites:
www.sharekhan.com
www.nseinda.com
www.bseindia.com
www.moneycontrol.com
www.investopedia.com
www.wikipedia.com
www.autherstream.com
www.myrisis.com
@. NEWS PAPER:
ECONOMICS TIMES
TIMES OF INDIA
@. OTHER:
Sharekhan’s Broachers
NCFM – Capital Market Dealers Module
Other Magazines for Capitals Markets
Questionnaire
On
“INVESTORS BEHAVIOUR FOR INVESTING IN EQUITY MARKET
IN VARIOUS SECTORS” IN SURAT CITY
[ ] Yes [ ] No
2. If you want to invest, which investment option will provide the best returns?
7. What is the rate of return expected by you from Equity Market in a year?
of expected return?
10. Which Factors do you consider most important while selecting the Sectors?
11. Which Sector do you prefer the most? (Give 1 to 5 Orders in given boxes)
12. Mention the most important factors for selecting a company of your choice.
______________________________________________________________
______________________________________________________________
-: Personal Information:-
Name: _______________________________________________
Address: _______________________________________________
_______________________________________________
Age:
Occupation:
[ ] Business [ ] Service [ ] Employee
[ ] Student [ ] Other please specify _____________
Income (Yearly):
[ ] Less than 100000 Rs. [ ] 100000 to 200000 Rs. [ ] 200000 to 300000 Rs.
Projected By:
Ashish l. Sorathiya