AN EVALUATIVE STUDY OF SECONDARY

SECURITIES MARKET IN INDIA

THESIS SUBMITTED TO

FOR THE AWARD OF THE DEGREE OF

SESSION 2018-2021

Under the Supervision of: Submitted By:

Vikash kumar; Assistant professor SUNIL KUMAR
Department of Commerce B.COM(6th
SEMESTER)
MARWARI COLLEGE ; RANCHI CLASS ROLL NO. - 525
Exam ROLL NO.-
18MCRBC810467

1
 DECLARATION

I sunil kumar hereby declare that the project report title “ AN

EVALUTIVE
STUDY OF SECONDARY SECURITIES MARKET IN INDIA” has been done
by
Me under B.Com curriculum and authentic to the best of my knowledge.

I also declare that this project report has neither been submitted to any
other
Board nor published at any time by me in past.

Full Signature of the

Candidate

Name : Sunil kumar

Class Roll No. : 525
Regd. No. : MCR18810467
Exam Roll No. :
18MCRBC810467
Session: 2018-2021
2
 ACKNOWLEDGEMENT
Initially I might want to express and pay my & respects to omnipotent
god, who offered his favours on me and gave me mental fortitude and right
sort of condition for fulfilment of my REPORT. This B.com - RESEARCH
REPORT is an indispensable piece of my course. At the start I recognize
my profound feeling of appreciation to my branch of the board for his
important direction. I accept this opportunity to offer my massive thanks
towards my venture guide Vikash kr.(Asst. Prof.) B.Com At
Marwari College , Ranchi . Who gave me the opportunity to do
Research on”AN EVALUTIVE STUDY OF SECONDARY SECURITIES
MARKET IN INDIA”.I would also like to express my gratitude to Prof. R.R.
Sharma DEAN & CHAIRPERSON of the department for his kind
encouragement. Last but not least, this Research report would be
incomplete without extending my special thanks to all those who directly
or indirectly helped me.

Sunil kumar SIGNATURE

3
 CERTIFICATE

This is to certify that this project has been submitted by Sunil kumar of
B.com (Hons.) semester VI session (2018-21) bearing Examination Roll
No. – 18MCRBC810467 of Marwari College Ranchi on the given topic “
AN EVALUATIVE STUDY OF SECONDARY SECURITIES MARKET IN INDIA’’.
Under my guidance . This is for partial fulfilment of award of B.com
(Hons.) degree under Marwari College , Ranchi.

This work is done by him is appreciable of an outstanding level.

Internal guide Head & Dean

External
guide

4
Department of Commerce Department of Commerce
and Management studies and Management studies

Preface

In the Project Research Report I described my experience during the B.

Com-
Research project title as An Evaluative study of secondary securities
market in India .The Project Research Report contains an overview of
Research Project & University Campus activities, tasks and project I
have completed during my B. Com.
In this Research Report I also describe and explain my objective, learning
objectives
& goals, which I have set during the period of B. Com - (3 Yr.) at
Marwari College ,Ranchi. B. Com -Research Project helps me a lot in
inculcating good work culture. It provides the linkage between the student
and industry in order to develop the awareness& skills of industrial
approach to problem solving based on broad understanding of the plant,
hardware procedure and method of activity or modern association. My
Research project has enabled me to have broader knowledge about this
system and what are the methods and techniques policy adopted for An
Evaluative Study of Secondary Securities Market in India. My
Research Project also provided an opportunity to gain practical knowledge
through this Research report; I have tried to summarize all my observation
experience and knowledge acquired in this B. Com - Research Report.

5
Sunil Kumar SIGNATURE

CONTENT

 Abstract

 CHAPTER 1 : INTRODUCTION
 Growth and Origin of SEBI
 Secondary Market Institutions
 Operating Mechanism
 Trading Mechanism
 Settlement Cycle and Trading Hours
 Regulation of Stock Market
 SEBI and its Governing Body
 Causes and Impacts of Volatility
 Effects of FIIs’ on Indian Investors
 Conceptual frame work
 Justification of the study


 CHAPTER 2 : REVIEW OF LITERATURE 23-39
 Review of literature
 Research gap
 Statement of the problem
 Objectives of the study
 Limitations of the study


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
 CHAPTER 3 : RESEARCH METHODOLOGY 40-45
 Introduction
 Research Design
 Sample design
 Universe
 Population
 Sampling unit
 Sample size


 Study area
 Sampling Techniques
 Questionnaire development
 Data collection
 Statistical Techniques
 Demographic profile of the respondents
 Reliability Statistics

 CHAPTER 4 : ANALYSES AND INTERPRETATIONS


 CHAPTER 5: FINDINGS OF THE STUDY
 FURTHER SCOPE OF STUDY


 REFERENCES AND BIBLIOGRAPHY

 APPENDICES

 QUESTIONNAIRE

 Summary

7
 INTRODUCTION
CHAPTER-1

Economic development to great extent depends on the rate of

investment or capital formation which, in turn, depends on whether
finance is made available in time, and the quantity of it, and the terms
on which it is made available. In any economy, in a given period of time,
there are some persons (corporate, households, government) whose
current expenditure are less than their current incomes, while there are
others whose current expenditures exceed their current incomes. In
current terminology, the former are called the ultimate savers or surplus
spending units, and the later are called the ultimate investors or the
deficit spending units. In corporate sector joint stock companies or
corporations required the funds to carry on their activities. In order to
raise funds, these organizations issue various types of securities such as
equity shares, preference shares, debentures, bonds, treasury bills, etc.
Such types of investments are illiquid and investors are bound to have
these securities till their redemption by companies. In case of equity
8
shares the investors cannot get back their invested amount during the
life time of the company. If after investment the investor feels that their
investment decisions are not viable or they want money to fulfill their
present needs, they are not in a position to be sold their investment and
get the money. Because of this investment in corporate sector was not
encouraging for the among surplus spending units. In such a scenario the
financial growth or efficiency of production would linger behind. In
earlier times the task of using these surplus fund and utilized for capital
formation were used by much less specialized agency than the
secondary market. But as the time passes business and industry
expanded and the economy assumed more complex nature, it required a
more permanent source of finance. Businessman needed money for long
term but investors demanded liquidity. To overcome this problem
secondary market came into form. Since the securities are listed and
traded in the stock exchange, the secondary market is also called the
stock market. The main objective of the secondary market is to provide
liquidity, negotiability, marketability, control of dealings and protection
of the interest of investors. According to securities contracts 2
(regulations) Act, 1956, stock exchange means anybody of individuals,
whether incorporated or not, constituted for the purpose of assisting,
regulating or controlling the business of buying and selling or dealing in
securities.” These securities include: (i) Shares, scrips, stocks, bonds,
debentures stock or other marketable securities in or of any
incorporated company or other body corporate; (ii) Government
securities; and (iii) Rights or interest in securities. Nature and Functions
of Secondary Market Economic barometer secondary market acts as an
economic barometer of a countries economic health. It reflects market
direction and indicates day to day fluctuations in prices. Cyclical
fluctuations are also reflected by the index of prices of various securities
maintained by the stock exchange. Pricing of securities The forces of
demand and supply work freely in the secondary market so prices of
securities traded on the stock exchange are fairly determined and they
are recorded and public in the form of market quotations which help the
investors to know current market prices of securities. Safety of
transactions secondary market is an organized market it fully protects
the interest of investors. Each member of secondary market have to
follow the rules and byelaws of it, if any member is found violating them,

9
his membership is cancelled. Contributes to economic growth secondary
market plays a vital role in the economic growth of a country as they
provide capital to the companies easily which helps in the production.
Spreading of equity cult feeling of ownership as securities are freely
traded in the secondary market so anybody can purchase the securities
and become the owner of the company up to its stake in the company.
Providing scope for speculation when securities are traded with a view
to getting profit as a result of change in their market price, it is called
speculation. It is allowed or permitted under the provisions of the act. It
is accepted that in order to provide 3 liquidity to securities some scope
for speculation must be allowed. The secondary market provides this
facility. Liquidity it is a market where already issued securities are traded
on routine basis whenever required investor can invest in the market
and can reconvert this investment into cash. Availability of ready market
for sale and purchase of securities increase their marketability and
enhance liquidity. Better allocation of capital the shares of profit making
companies are quoted at higher prices in the stock exchange and are
actively traded. The new issues of such companies are sought after by
the investors. Thus companies with better performance can easily raise
fresh capital from the market. General public is reluctant in investing in
loss making companies so; secondary market facilitates allocation of
investors‟ funds to profitable channels. Inculcates the habits of saving
and investment secondary market inculcates the habit of saving and
investment in Indians. As people want higher returns and secondary
market promises to give them good return in comparison if they keep
their savings at home as ideal. There is an important relationship
between financial system and economic development which can be
expressed as: Trading mechanism of stock exchanges Trading on stock
exchanges takes place on all week days except Saturdays, Sundays and
notified holidays with working hours from 9.30 a.m. to 3.30 p.m. they
have an extra trading sessions on special occasions such as Diwali or
budget days etc. Reforms in the Secondary Market Reforms were
undertaken to widen and deepen the secondary market. A dynamic
secondary market is a prerequisite for the growth and development of
an investment environment in the economy. Secondary market reforms
were undertaken to have a positive impact on volatility, liquidity, size
and transaction cost. An efficient and effective capital market acts as the

10
technique of measuring the conditions and wellness of an economy.
Though the Indian stock market is very volatile during past 4 due to
various reasons but every time it regained its good position due to
strong fundamentals and dealing mechanism which are free from
drawbacks. Figure /Exhibit-1 Economic Development Savings &
Investment or capital formation Surplus spending economic units Deficit
spending Economic Units Income minus Income Minus (Consumption+
Own Investment) (Consumption+ Investment) Surplus or Saving Deficit
or Negative Saving Financial System Source: Bhole L.M. (2010). Financial
Institutions and Markets. After the initiation of reforms in 1991, The
Indian Secondary Market has four tier forms Regional stock exchanges
The National Stock Exchange (BSE and NSE) The Over the Counter
Exchange of India (OTCEI) The Inter connected Stock Exchange of India
(ISE) 5 Clearing or settlement of transactions Due to the increased
number of actively traded shares, the stock exchange has established a
clearing house which functions on the same principles on which the
clearing houses of banks functions. The clearing house acts as the
common agent of the members for clearing contracts between members
and fro delivering securities to and receiving securities from members
and for receiving and paying any amounts payable by such members in
connection with any of the contracts and to do all the things necessary
or proper for carrying out these purposes. Figure /Exhibit-2 Cycle of
Clearing Corporations Online or Electronic Trading System Before
liberalization trading on the stock market in India was based on the open
outcry into the era of electronic trading or online trading which refers to
trading through internet it is superior than the open outcry system, The
number of stock exchanges in India has grown from 7 exchanges in 1946
to total 24 stock exchanges till 2015. There is no denying the fact that
internet trading offered investors convenience of trading along with
reduced cost. It increases operational efficiency like elimination of time,
cost, which results in low transaction costs, risk of error, fraud and
elimination of chain of brokers and jobbers it increases the large number
of 6 participants in every part of the country to trade with one another
with full confidence therefore improves the depth and liquidity of the
market. it also helps in integration of different trading centers spread all
over the country to a single trading platform. But Indian investors‟ have
not yet fully realized the importance of using technology for stock

11
trading. But even till day online trading is not much popular among
investors for which a list of factors can be blamed. Over the past two
years, the value of all trades executed through internet on NSE has
grown from less than Rs.100 Cr. to over Rs.350 Cr. in June 2015.
Corporatization and Demutualization of Stock Exchanges On 16th
October, 2008 a major reform in stock exchange took place, that is,
corporatization and demutualization of stock exchanges. Before it, all
stock exchanges came under the purview of body of individuals (BOI)
and Association of persons (AOF) but now they become a corporate
entity means come (under the Companies‟ Act 1956,) according to
which they have to publish their financial statements, get audited their
accounts along with issue their shares to the public. It brings out greater
transparency in the functioning of secondary market. Now stock
exchanges can become a profit making and taxpaying entity.
Dematerialization means separation of ownership and control of stock
exchanges, from trading rights of its members. This reduces the conflict
of interest between the exchange and the brokers and the chances of
using stock exchanges by brokers for their own self interest.
Dematerialization of securities Dematerialization or Demat means
conversion of physical share certificates into electronic format which
eliminates various types of problems such as theft, fake and forged
documents, transfer, delay and paper work associated with physical
certificates. Currently almost 99 per cent of shares traded in Indian stock
exchanges are in demat mode. The investors are required to open a
demat account to buy or sell stocks, just like a bank account where
actual money is replaced by shares, the account allows them to buy, sell
and transact shares without the endless paperwork and delays. 7
Similarly, a trading account works as an intermediary between the
savings account and demat account. When the investors want to buy
shares, first the money is transferred from their savings account to
trading account through which shares are purchased and finally they are
stored in electronic form in the demat account. It works just in opposite
way during the time of selling shares. Rolling settlement Rolling
settlement was introduced by SEBI in January 2000 by T+5 settlement
system where T is the trade date and 5 is number of business days after
the trade date on which delivery of securities and cash payment is due
for settlement. Rolling settlement system replaced the carry forward

12
badla system. The rolling settlement system of share transactions
prevents speculation in between the settlement periods. Now SEBI is
moving towards T+1 system, of securities. Rolling settlement is simple as
the investor has only to keep record of the sale/purchase of securities. It
eliminates arbitrage opportunities. Rolling settlement improves the price
discovery process as the settlement is standardized and participants can
focus more on the market outcomes. It also helps in settlement of risks
as difference between the bid and offer prices narrows due to its
transparent nature. Wider participation is possible because investors
enjoy the speedy settlement of transactions. It eliminates fluctuations of
prices which takes place around settlement dates. With the setting up of
Clearing Corporation rolling settlement educes the working capital
requirement of brokerage firms. Finally retail investors benefit as it
shortens the delay of converting securities into cash and viceversa. 8
Comparison of secondary market in between 1992 and 2015 Features
1992 2014 Regulator No specific regulator but central government looks
after the matters A specialized regulator for securities market (SEBI)
vested with powers to protect investors‟ interest and to develop and
regulate securities market. SROs strengthened. Intermediaries Some of
the intermediaries (stock brokers, authorized clerks and remisiers)
regulated by the SROs. A variety of specialized intermediaries emerged.
They are registered and regulated by SEBI (also by SROs). They as well as
their employees are required to follow a code of conduct and are subject
to a number of compliances. Access to Market Granted by Central
Government Eligible issuers access the market after complying with the
issue requirements. Pricing of Securities Determined by Central
Government Determined by market, either by the issuer through fixed
price or by the investors through book building Access to International
market No access to the international market Corporate allowed issuing
ADRs / GDRs and raising ECBs. ADRs/GDRs have two way fungibilty. FIIs
allowed trade in Indian market. MFs also allowed to invest overseas.
Corporate Compliance Very little emphasis on disclosures, accounting
standards and corporate governance Mutual Funds Restricted to public
sector Open to private sector and emergence of a variety of funds and
schemes Trading mechanism Open outcry system, Available at the
trading rings of the exchanges, Opaque, Auction/negotiated deals Screen
based trading system, Orders are matched on price-time priority,

13
Transparent, Trading platform accessible from all over country 9
Aggregation order flow Fragmented market through geographical
distance. Order flow Unobserved. Order flow observed. The exchanges
have open electronic consolidated limit order book (OECLOB).
Anonymity in trading Absent Complete Settlement Cycle 14 day account
period settlement, but not adhered to always Rolling settlement on T+3
basis Counterparty risk Counterparty risk in settlement of transactions
exist Counterparty risk in settlement of transactions Absent Basis of
settlement Bilateral Netting Multilateral Netting Transfer of securities
Cumbersome. Transfer by endorsement on security and registration by
issuer Securities are freely transferable. Transfers are recorded
electronically in book entry form by depositories. Risk Management No
focus on risk management Comprehensive risk management system
encompassing capital adequacy, limits on exposure and turnover, VaR
based margining, client level gross margining, on-line position
monitoring etc. Derivatives Trading Derivatives trading is absent in 1992
Exchange traded futures and Options available on two indices and select
securities Regulations for Secondary Market The Government has
framed rules under the Securities Control and Regulation Act (SCRA)
(1956), the SEBI Act (1992), and the Depositories Act (1996), Disclosure
of Investors Protection Act (DIP) 2000. SEBI has framed regulations
under the SEBI Act and the Depositories Act for the registration and
regulation of all market intermediaries, and for the prevention of unfair
trade practices, insider trading, etc. 10 Under these Acts, the
Government and SEBI issue notifications, guidelines, and circulars that
the market participants need to comply with. The SROs, like the stock
exchanges, have also laid down their own rules and regulations. Causes
and Impacts of Volatility Volatility of a stock measures the frequency
with which changes in its market price takes place over a period of time
if a stock is higher volatile means there are large fluctuations in its
market price then there is risk and investors avoid these shares hence
volatility is a factor which is taken into consideration when assessing the
riskreturn tradeoffs. Moreover, volatility has macro economic
implications in the volatility of the stock market. Volatility in the stock
market is a function of information, misinformation (rumors) and
sometimes lack of information. It is caused by number of factors such as
speculation, trading and settlement system, the government budget,

14
Inflation, interest rates, announcement of corporate results the extent
of integration with international market, the regulatory frame work
governing the stock market, rumors, the day trading and derivatives
trading, crude oil prices, depreciation of dollar and global financial
turmoil all these factors directly or indirectly influence movements in the
share prices. Secondary market is found to be highly volatile. The
volatility of Indian secondary market can be measured in terms of the
coefficient of variation (CV). There is need for exchanges and regulators
to take swift actions to contain volatility. Foreign Institutional Investor
and Indian Retail Investors The institutions which are registered or
incorporated in countries other than India and want to invest their
money in Indian stock market are known as Foreign Institutional
Investors (FIIs) means an institution established or incorporated outside
India which proposes to make investment in securities in India. They are
eligible to purchase shares or convertible debentures issued by Indian
companies under the portfolio investment scheme (PIS). In order to
remove the confusion that prevails on what is Foreign Direct Investment
(FDI) and what is Foreign Institutional Investment (FII), government has
proposed to follow the international practice and lay down a broad 11
principle that, where an investor has a stake of 10 per cent or less in a
company, it will be treated as FII and, where an investor has a stake of
more than 10 per cent, it will be treated as FDI. Since economic
liberalization FII flows to India have steadily grown its importance.
Foreign capital inflows have been acknowledged as one of the important
sources of funds for developing economies that would grow at a rate
higher than what domestic savings can support. This resulted in the
integration of global financial markets. As a result, capital started flowing
freely across national borders seeking out the highest rate of return.
India is considered as one of the best investment destinations for foreign
institutional investors in spite of political differences and lack of
infrastructure facility etc. Since Indian market have vast potential, so it
alluring and encouraging foreign investors continuously foreign portfolio
inflows through FIIs, in India, are important from the policy perspective,
especially when the country has emerged as one of the most attractive
investment destinations in Asia. They changed the face of Indian
secondary market screen based trading and depository is possible in
India only because of FIIs‟. Pressure on domestic currency also can also

15
be eased only through FIIs‟, corporate governance can also be adopted
by Indian companies which is benefitted to domestic investors. FIIs‟ are
driving force behind the movements of stock indices in the Indian stock
market. Rolling settlement was introduced at the insistence of FIIs‟ as
they were not comfortable with badla system. Foreign Institutional
Investors‟ are regarded as the trend setters in Indian market. As, they
were the first one to identify the potential of Indian technology stocks.
Routes for investments in Indian secondary market by Foreign
Institutional Investors: There are three routes which are followed by
FIIS‟ for investment in India Direct route Through Participatory notes
FIIs‟ sub accounts. Indian investors (investors in equity, large
institutional investors, foreign institutional investors, qualified
institutional buyers, small investors/deposit holders, etc.) are rational
savers but unfortunately not wise investors. In India, people do not plan
for 12 long-term future and keep away from investing in long-term
instruments, though they save for long-term goals such as emergencies,
education and old age. The book, 'How India Earns, Spends and Saves'
launched by Montek Singh Ahluwalia, Deputy Chairman, Planning
Commission, Government of India, contains the findings of the survey,
reveals that this phenomena is not just confined to just poor or
middleclass households, but is prevalent in rich households too and
further, that most Indians prefer keeping 65 per cent of their savings in
liquid assets like bank or post office deposits and cash at home, while 23
per cent investing in physical investments like real estate and gold and
only 12 per cent in financial instruments; for getting secure return on
their earnings, the investment in post offices and other guaranteed
return schemes and plans gets minor part of total savings; and only 5 per
cent of total families put their money in post offices, while 2 per cent
buy insurance policies and 0.5 per cent invests in equities. Though, life
insurance is among the most popular financial instruments (about 78 per
cent of the households are aware of life insurance), yet only 24 per cent
of households have a life insurance policy and the ownership is 38 per
cent among urban households but a very low 19 per cent among rural
households. The survey found that Indian households have a strong
saving habit and the income level is an important factor in influencing
the saving patterns of households, variations in savings behavior are
equally decided by education level and occupation. Investors are the

16
backbone of the securities market who not only determines the level of
activity in the securities market but also the level of activity in the
economy. There is a continuous growth in the number of investors in
India and trends reveal that in addition to FIIs and Institutional Investors,
small investors also gradually beginning to regain the confidence in the
capital markets that had been shaken consequent to the stock market
scams during the past decade. It is imperative for the healthy growth of
the corporate sector that this confidence is maintained. However, many
investors may not possess adequate expertise/knowledge to take
informed investment decisions and some of them may not be aware of
the complete risk-return profile of the different investment options,
hence, may not be fully aware and familiar with the market mechanism
and the practices, as well as, their rights and 13 obligations regarding the
precautions they should take while dealing with market intermediaries
and dealing in different securities. The corporate systems and processes
need to be reliable and transparent, so that the interests of the investors
may be safeguarded in a manner that enables them to exercise their
choice in an informed manner while making investment decisions, and
also providing them with a fair exit option. The Securities and Exchange
Board of India (SEBI) has been mandated to protect the interests of
investors in securities and to promote the development and regulate the
securities market so as to establish a dynamic and efficient securities
market contributing to Indian Economy. The securities market promotes
economic growth. More efficient is the securities market, the greater is
the promotion effect on economic growth. It is, therefore, necessary to
ensure that our securities market is efficient, transparent and safe. In
this direction, SEBI has been working since its inception and would
continue to work to continuously improve market design to bring in
further efficiency and transparency to market and make available newer
and newer products to meet the varying needs of market participants,
while protecting investors in securities. The aim is to make Indian
securities market a model for other jurisdictions to follow and make SEBI
the most dynamic and respected regulator globally. Brief profile of
Securities Exchange Board of India (SEBI) The Indian securities markets
have a very long history in comparison to various developing nations of
the world. The market grew substantially during 1980s because of the
interest of corporate in equity however the volume of transactions used

17
to be very low during the previous decade therefore the need for setting
up of an independent Government agency to regulate and develop the
secondary and capital market in India was recognized. After the Sixth
Five Year Plan was initiated in (1985) when some major industrial policy
changes like opening up of the economy to outside world and greater
role to the Private Sector were introduced. Various bad and wrong
practices were observed in the Secondary and Capital Market which
were used by companies, brokers and merchant bankers who dealt in
stock market and hence there was a dire need to abolish these practices
from the country to improve the investment 14 environment. Due to the
same problem the foreign investments remained at low volumes and the
total transactions also remained limited. Earlier there was a provision for
the companies that they had to seek the permission of the government
for price fixation of the securities before raising the capital. It was aimed
at providing fair value to the investors on their investments. Generally
the IPOs‟ were under priced due to their prevailing laws and
consequently the rate of securities used to be very high at the time of
opening up of securities. Keeping in view the various problems the
government of India established the Securities Exchange Board of India
in April, 1988. Initially the following were its functions: To collect
information and advice the Government on matters relating to
secondary and Capital Markets. Licensing and regulation of merchant
banks, mutual funds etc. To prepare the legal drafts for regulatory and
development role of SEBI and To perform any other functions as may be
entrusted to it by the Government. Later on in 1992 Securities and
Exchange Board of India (SEBI) Act was passed by Government of India
to regulate the functions of different stock markets operating in the
country. The activities of SEBI are performed by a chairman who is
appointed by the central government and eight members. The head
office of SEBI is situated in Bandra East, Mumbai with its main
objectives; to protect investors‟ interest which facilitates to a steady
flow of savings into the Capital Market; ensuring the fair practices by the
issuers of securities i.e. (companies) so that they can raise resources at
least cost; and to promote efficient services by brokers, merchant
bankers and other intermediaries so that they become competitive and
professional. Now it can be concluded that secondary market is efficient
means the enterprises that do well in the real sense are rewarded with

18
funds for growth and expansion and all these unavoidably lead to higher
economic growth.15 BRIEF PROFILE OF BOMBAY STOCK EXCHANGE (BSE)
The Bombay Stock Exchange (BSE) was established in 1875 which was
called "The Native Share & Stock Brokers' Association" at that time. It is
thought to be the first and the Fastest Stock market throughout the
globe having a speed of 6 micro seconds and hence a leading stock
market of the country. BSE is a corporate entity with a very large
number of shareholders and having Deutsche Bourse and Singapore
Exchange as its strategic partners. BSE provides opportunities in dealing
in shares, debt instruments, derivatives, mutual funds and handles the
transactions very efficiently and in a transparent manner. It also gives
chance to small and medium organizations to sell and purchase their
equities. it is number one stock market in the world with more than
5500 companies are listed members having a total market capitalization
of USD 1.64 Trillion on Sept, 2015. BSE provides a host of other services
to capital market participants including risk management, clearing,
settlement, market data services and education. It has a global reach
with customers around the world and a nation-wide presence. the stock
exchange is designed in such a manner that provides overall safety of
the shareholders and hence acts as in growth engine of the secondary
market. It is India‟s first and globes seconds to obtain an ISO 9001:2000
certificate, Information Security Management System Standard BS 7799-
2-2002 certification for the On-Line trading System (BOLT). It commands
a respect in the minds of the people because of its effective service
delivering system. It has won several awards till date due to its vibrant
effective services and foolproof mechanism providing base for the
growth and development in the economy by providing a wide base for
the investors. BRIEF PROFILE OF NATIONAL STOCK EXCHANGE (NSE) The
National Stock Exchange of India (NSE) came into being in April 1994,
with the objectives of establishing a nationwide trading facility for all
types of securities; providing equal access to all investors throughout the
country with the help of an appropriate communication network; giving
a fair, efficient, and transparent securities market using an electronic
trading system, helping shorter settlement cycles and book 16 entry
settlements; and meeting the international benchmarks and standards.
It has helped in shaping the Indian stock market into a modern one by
introducing innovative ideas and mechanism. The exchange has set up

19
an infrastructure that serves as a role model for the securities industry in
terms of trading systems, and clearing and settlement practices and
procedures. The standards set by NSE in terms of market practices,
products, technology, and service standards have become industry
benchmarks, and are being replicated by other market participants. The
national stock exchange of India links with the investors online through
automatic trading system which is quite transparent and easily
accessible in all geographical areas. It also provides variety of
information in different forms to the investors and other shareholders
which are helpful in making decisions and act as guide. The plans and
policies of the exchange are designed in such a manner that helps in
creating and maintaining cordial relations among various parts. These
are transparent and unbiased. Anyone can make transactions through
the exchange from ones home / office with the help of internet
connection. Settlement risks have been eliminated with NSE‟s
innovative endeavors in the area of clearing and settlement, namely, the
reduction of the settlement cycle, professionalization of the trading
members, a fine-tuned risk management system, the dematerialization
and electronic transfer of securities, and the establishment of a clearing
corporation. Consequently, the market today uses state-of-the-art
technology to provide an efficient and transparent trading, clearing, and
settlement mechanism. NSE provides a trading platform for of all types
of securities—equity capital, borrowed capital, and derivatives.
Following its recognition as a stock exchange under the Securities
Contracts (Regulation) Act, 1956 in April 1993, it commenced operations
in the Wholesale Debt Market (WDM) segment in June 1994, in the
Capital Market (CM) segment in November 1994, and in the Equity
Derivatives segment in June 2000. Now the Exchange also started
providing its services in retail debt of government securities in January
2003, trading in currency futures in August 2008, trading in currency
option in October 2010 and launched futures & options contracts based
on global indices S&P 500 and DJIA in August 2011. The WDM segment
provides the trading platform for the trading of a wide range of debt
securities. 17 NSE‟s Capital Market segment offers a fully automated
screen-based trading system, known as the National Exchange for
Automated Trading (NEAT) system, which operates on a strict price/time
priority. It enables members from across the country to trade

20
simultaneously with enormous ease and efficiency. NSE‟s Equity
Derivatives segment provides the trading of a wide range of derivatives
such as Index Futures, Index Options, Stock Options, Stock Futures, and
futures on global indices such as S&P 500 and DJIA. Important initiatives
of SEBI Introducing exchange traded interest rate derivatives Promoting
an index to comprehensively reflect the level of corporate governance
Setting up a central listing authority to dynamise listing requirements
Building a cadre of securities market professionals through training and
certification Constructing a central registry of securities market
participants and professionals Rationalising margin trading, securities
lending and short selling Promoting secondary market for corporate
debt securities Implementing market wide straight through processing
from trade initiation to settlement Operationalising T+1 rolling
settlement Reviewing all regulations of SEBI and code of conduct for
intermediaries Providing a legal framework for central counter party
Consolidation of exchanges and other market participants 18
Benchmarking Indian securities market with best in the World
CONCEPTUAL FRAMEWORK Secondary Market: is a market where
owned securities are traded, the market where investors buy securities
from other investors rather than from an issuing company is called a
secondary market. All stock exchanges are part of secondary market.
The secondary market consists of all sellers and buyers except for the
issuer and the first group of investors who bought the issue. The
secondary market is often less volatile than the primary market because
it is easier to determine the underlying value of a security after it has
already begun trading. Nearly all trading of a security occur on the
secondary market. (Financial- dictionary) Securities: a security or
financial instrument is a tradable asset of any kind. Historically they are
in a physical form but now they are available in electronically form
showing that one owns a portion of a public traded company or is owed
a portion of debt issue are called securities. At their most basic,
securities refer to stocks and bonds, but the term sometimes also refer
to derivatives such as future and options. (investopedia) Securities
Market/Exchange: It is a workplace where securities trading is conducted
by professional stock brokers and is open to its members only.
(Financial-dictionary) Investment environment/climate: is a situation in
which an investment is made. Factors affecting the investment climate

21
include macro economic considerations, the political situation and
consumer confidence. The investment climate is a significant
contributing factor in the performance of an investment. A stock
investment climate can help spur investments towards growth while a
weak climate can do the opposite. It should be noted that an investment
climate may be beneficial for some investments and detrimental to
others.(Investopedia) Institutional Investors: are organizations which
pool large sum of money and invest this sum in securities and other
investment assets. Typical institutional investors are banks, insurance
companies, retirement or pension funds, hedge funds, investment
advisors and mutual funds. Their role in the economy is to act as highly
specialized 19 investors on behalf of others. These type of organizations
are called institutional investors. (financial-dictionary) Broker: act as an
agent or intermediary for a buyer and seller. The buyer, seller and
broker may all be individuals, or one or more may be a business or other
institution. For example a stock broker works for a brokerage firm and
handles client orders to buy or sell stocks, bonds, commodities, and
option in return for commission or asset based fee. A stock broker must
pass a uniform examination administered by NASD and must register
with the securities exchange commission. (Financial-dictionary) Stock
Exchange: it is a place where physical or electronic stocks, bonds and/ or
derivatives in listed companies are bought and sold. A stock exchange
may be a private company a nonprofit, or a public traded company
(some exchanges have shares that traded on their own floors.) A stock
exchange provides a regulated place where brokers and companies may
meet in order to make investment on neutral ground. The concept
traces its roots back top medieval France and Low Countries, where
agriculture goods were traded for cash or debt. A stock exchange is also
called bourse or simply an exchange. (Financial-dictionary) Speculator: is
a person who trade derivatives, commodities, bonds, equities or
currencies with a higher than average profit potential is called a
speculator. Speculators take large risks, especially with respect to
anticipating future price movements, in the hope of making quick, large
gains. (Financial- dictionary) Foreign Institutional Investor: The investors
or investment funds that are from or registered in a country outside of
the one in which they are currently investing are called Foreign
Institutional Investors. (InvestoPedia) Retail Investors: Individual

22
investors who buy and sell securities for their personal account and not
for any other company or organization are called Retail Investors. Retail
investors are the polar opposites of institutional investors which are
large firms investing on behalf of clients. (Financial-dictionary) Market
Capitalization is the total market value of the shares outstanding of a
publicly traded company; it is equal to the share price times the number
of shares 20 outstanding. As outstanding stock is bought and sold in
public markets, capitalization could be used as a proxy for the public
opinion of a company's net worth and is a determining factor in some
forms of stock valuation. The investment community uses this figure to
determine a company's size, as opposed to sales or total asset figures.

JUSTIFICATION OF THE STUDY : Investors are the backbone of

the securities market who not only determines the level of activity in the
securities market but also the level of activity in the economy. There is a
continuous growth in the number of retail and domestic institutional
investors‟ in India. They also gradually are beginning to regain the
confidence in the capital markets that had been shaken consequent to
the stock market scams during the past decade. It is imperative for the
healthy growth of the corporate sector that this confidence is
maintained. However, many investors may not possess adequate
expertise or knowledge to take informed investment decisions and some
of them may not be aware of the complete risk-return profile of the
different investment options, hence, may not be fully aware and familiar
with the market mechanism and the practices, as well as, their rights and
obligations regarding the precautions they should take while dealing
with market intermediaries and dealing in different securities. The
corporate systems and processes need to be reliable and transparent, so
that the interests of the investors may be safeguarded in a manner that
enables them to exercise their choice in an informed manner while
making investment decisions, and also providing them with a fair exit
option. The Securities and Exchange Board of India (SEBI) has been

23
 mandated to protect the interests of investors in securities and to
promote the development and regulate the securities market so as to
establish a dynamic and efficient securities market contributing to Indian
Economy. The securities market promotes economic growth. More
efficient is the securities market, the greater is the promotion effect on
economic growth. It is, therefore, necessary to ensure that our securities
market is efficient, transparent and safe. In this direction, SEBI has been
working since its inception and would continue to work to continuously
improve market design to bring in further efficiency and transparency to
market and make available newer and newer products to meet the
varying needs of market participants, while protecting investors in
securities. The aim is to make Indian 22 securities market a model for
other jurisdictions to follow and make SEBI the most dynamic and
respected regulator globally.

CHAPTER - 2
REVIEW OF LITERATURE

Review of literature is mainly framed to gain insight on theoretical

background knowledge of the research problem. It helps the researcher
to increase strong theoretical basis of the problem under study and also
help to see the sights any one has done research on the related issue. So

24
 it can be said that review of literature helps one to find the path of
problem solving. Eysell (1995) investigated the impact of suitable and
timely disclosures of information on protecting the interests of investors.
The study was found that Information should be disclosed when it is
valuable to the market. The companies should, therefore, be made to
disclose routine information on a periodic basis and price sensitive
information on a permanent basis. It was found that the secondary
market regulator and stock exchanges have played a significant role to
play in ensuring that such information is accessible by all market
participants rather than a few selected market players. The study further
found that the use of modern technology, internet, and computers,
should be enabled to enhance the efficiency of the disclosure process. It
should be possible to submit and propagate financial and non-financial
information by electronic means. The law should ensure a revelation
regime that compels companies to disclose substantial information on a
continuous and timely basis. Sarkar and Bhole (1996) examined that the
working of stock markets in India is characterized by unethical practices
of diverse forms on the part of existing companies, new companies and
entrepreneurs, brokers and other operators on the markets. The
mergers and acquisitions through malpractices entering into unofficial
transactions even before issues open up for subscription rigging up of
premium on new issues, presenting excessively rosy picture about new
ventures, insider trading, are some of the examples of unethical
practices on stock markets. As a result of it, 24 almost complete lack of
protection to the interest of the genuine and small investors is the worst
part of the function of the secondary markets. Gokarn (1996) assessed
the contribution of SEBI to the growth and development of secondary
market institutions in the securities markets in India during the 1992-96
periods. It develops a theory of regulation which may be summarized as
follows regulation is required to ensure that securities markets achieve
the four main dimensions of efficiency. The working of the securities
markets in predicated on the activity of three broad sets of stakeholders,
namely, investors, issuers and intermediaries. The study was found that
the regulation is essential to concentrate on three potential sources of
market failure namely information asymmetry, transaction costs and
imperfect competition. Shah (1999) focuses on how four key
developments relating to trading have changed the Indian secondary

25
 securities markets into being one of the largest and the most
competitive in the world in terms of expenditure and have enhanced the
informational efficiency of the market. The institutional developments it
focuses on are the electronic limit order book, matching system, rolling
settlement, dematerialized trading and innovation through a clearing
corporation. The study further takes the view that with these
developments the Indian secondary securities market mainly the equity
market, has achieved nearly all the institutional development that is
required for the scope of further development in the areas of
investigation and enforcement. Chakraborty (2001) studied in his
research paper that since the beginning of liberalization FIIs flow to India
has steadily grown its importance. The study analyzed foreign
institutional investors flow and their relationship with other variables.
The study further revealed that FIIs are the major players in the Indian
stock market and their impact on the domestic market are increasing.
Trading activities of FIIs and the domestic stock market turnover
indicates that FIIs‟ are becoming more important source of finance.
Machiraju (2002) studied the role of retail investors in the Indian
secondary securities market and found that retail investors are not only
the backbone of 25 securities market but also determine the level of
economic activity in the economy. Increase in the number of retail
investors in the economy enhances the scope of secondary market. The
study suggested that the growth in the number of retail investors in
secondary market should be encouraged for the growth and
development of investment environment in the country. Mukherjee
(2002) examined the various feasible determinants of FIIs and the study
found that Foreign investment flows to the Indian markets tend to be
caused by return in the domestic market; returns in the Indian
secondary market is an important factor that has an impact on FIIs flows;
whereas FIIs sale and FIIs net inflow are considerably affected by the
performance of the Indian secondary market, FIIs purchase show no
such affect to this market performance; FIIs investors do not probably
use Indian secondary market for the purpose of prove to be strong
enough diversification of their investment; returns from the exchange
rate variation and the fundamentals of the economy may have an impact
on FIIs decisions. Gordon and Gupta, (2003) investigated through their
study the causes behind the FII inflows and return in BSE and NSE. The

26
 study observed that FIIs act as market makers and book profits by
investing when prices are low and selling when they are high meaning
thereby that they are market manipulators and hence, there are
contradictory findings by various researchers regarding the causal
relationship between FII net inflows, market capitalization and returns of
BSE and NSE. Consequently, there is a need to investigate whether FIIs
are the cause or effect of secondary market fluctuations in the country
or they effect the volatility of the market. Kumar (2005) examined the
role of institutional investors, foreign institutional investors and mutual
funds in Indian secondary market. The main findings of the study shows
that the Indian stock market had improved from last 25 years as so many
developments takes place which make Indian secondary market at par
with developed economies of world. Indian secondary market consist
investments of institutional investors, foreign institutional investors and
mutual funds. Though foreign institutional investors and mutual funds
affect the market but now institutional investors also start playing an
active role in the market movements. 26 Bose (2005) examined the
scope of Indian secondary securities market laws, which have gradually
evolved over time, they are now quite pervasive and the problem lies
mostly in enforcing compliance particularly for crimes such as price
manipulation and illegal insider trading. The study also suggests that
there remains a need to ensure that laws or regulations should be
streamlined completely to empower SEBI to carry out its functions as the
principal regulator, while SEBI in turn needs to drastically upgrade its
surveillance process enabling it to produce evidence that is trustworthy
enough to secure confidence. Rui and Gian (2006) asserted through their
study that better investor protection implies better risk sharing and
because of entrepreneurs‟ risk aversion, it results into a larger demand
for capital which is known as the demand and supply effect follows from
general equilibrium restrictions i.e. better protection and higher demand
which increases the interest rate and lowers the income of
entrepreneurs, decreasing current savings and next period‟s supply of
capital. The supply effect is stronger the tighter are the restrictions on
capital flows. The study concluded that the (positive) effect of investor
protection on growth is stronger for countries with lower restrictions.
Uchida (2006) analyzed the role of futures and options in stock market.
The study found that the majority of Indian retail investors are like to

27
 trade in equities than in future or options. People mainly invest their
money in share market followed by mutual funds and fixed deposits.
This shows there is a need to create education and awareness among
investors regarding profitability of investment in futures and options of
stock market. Barua and Raghunathan (2006) examined that Indians
prefer to save money in 'inhouse savings' rather than 'in banks or
investment.' They save money for emergency and any miss happening.
The reason behind this is because unlike in the western and developed
countries, which have the system of social security that prevents the
poor households from starvation and ill-social society by giving social
protection and economic support, there is no social security in the
country (India) for the citizens of the nation. The study suggested that to
improve the investment environment in the 27 country government
should provide social security benefits to the citizens of the country so
that they can invest freely in the secondary market. Douma, Kabir and
Rejie (2006) investigated the impact of foreign institutional investment
on the performance of emerging market firms and found that there is
positive effect of foreign ownership on firm's performance. The study
also found the impact of foreign investment on the business group
affiliation of firms. The study also found that foreign investors preferred
the companies with better corporate governance. Foreign Institutional
investors are regarded as the trend setters. Rolling settlement in India is
possible only because of them as they are not comfortable with Badla
system. Poshakwale and Thapa (2007) compared the influence of foreign
institutional investments in the long and short run on Indian equity
market with the main developed equity markets of the US and the UK by
using daily return series and portfolio investments made by foreign
institutional investors. The study found that Indian stock returns are
significantly influenced by the short and long term innovations in the US
and UK stock market. The study further suggests that before initiating
with any policies in Indian secondary market its implications in
developed economies of the world should be considered and then only
they should be implemented in Indian economy. Dhamija (2007)
described that the increase in the volume of foreign institutional
investment (FII) inflows in recent years has led to concerns regarding the
volatility of these flows, threat of capital flight, its impact on the stock
markets and influence of changes in regulatory regimes. The study

28
 suggested that as the pace of foreign investment began to accelerate,
regulatory policies have changed to keep up with changed domestic
scenarios. Singh (2007) attempted to explain the use of participatory
notes (PNs) by foreign investors, as a medium of portfolio flows into
Indian capital markets for more than a decade. The expansion of India's
foreign investor base, in recent years, has a prejudice towards hedge
funds/unregistered foreign investors who invest primarily through 28
participatory notes (PNs). Foreign institutional investors (FIIs) are keenly
interested in the Indian equity market and have been overweight the
MSCI index since 2003, while market capitalization of the large Indian
stock exchanges is presently about 100 percent of GDP (around $1.3
trillion) and tax arbitrage through capital gains tax has almost
disappeared since July 2004. Walia and Kumar (2007) examined the
investor‟s preference for traditional trading and online trading. The
major findings of the study showed that Indian investors are more
conservative, they do not change easily and Indian traditional traders
still choose brokers for trading. But Internet traders are more
comfortable with online trading because of its transparency and
complete control over the terminal. Srivastav and Yadav (2008) asserted
that high net worth individuals and proprietary traders contribute to the
major proportion of trading volumes in the derivative segment. The
survey also revealed investors are using these securities for risk
management, profit enhancement, speculation and arbitrage. The study
also emphasized to popularize option instruments because they may
prove to be a useful medium for enhancing retail participation. Prasanna
(2008) found that countries and firms are interested in attracting foreign
capital because it helps to create liquidity for both the firm‟s stock and
the stock market in general. This leads to lower cost of capital for the
firm and allows firm to compete more effectively in the global market
place. This directly benefits the economy and the country and availability
of foreign capital depends on many firm specific factors like
management, profitability, technology and competition other than
economic development of the country. Bhole (2008) discussed the role
of FIIs in Indian Capital market and examined the contribution of foreign
institutional investment particularly among companies included in
sensitivity index (Sensex) of Bombay Stock Exchange. The study found
that higher Sensex indices and high price earnings ratio are the country

29
 level factors attracting more foreign investment in India and the foreign
investment is more in the 29 companies with higher volume of publically
held shares. The promoter‟s holdings and the foreign investments are
inversely related. Reddy (2008) analyzed the performance of the sensex
and FIIs in the Indian stock market. The study revealed that the liquidity
as well as the volatility was highly influenced by FII inflows in BSE sensex
so the foreign institutional investment is the significant factor for
determining the liquidity and volatility in the stock market prices. The
study concluded that the FIIs who have been so bullish in India for the
last so many years might start looking at other cheaper emerging
markets for better returns. So, it is very tough to predict that whether
the sensex will sustain the momentum in future or not. Sethi (2008)
evaluated the impact of international capital flow on economic growth,
trends and composition and suggested the policy implication thereof.
The study further observed that the foreign institutional investors (FIIs)
have negative impact on growth, but it is very negligible. The study
concluded that India should move to influence both the size and
composition of capital flows, strengthened their banking system rather
than promoting financial market, banks can provide the surest vehicle
for promoting long term growth and industrialization. Saha (2009)
investigated the participation of foreign institutional investors and the
other financial institutions in India and the performance of the Indian
stock markets and she concluded that Indian stock market is regarded at
par with the developed markets Moreover, it had a very unique
economic model and is based on strong economic growth with huge
liquidity and it is not depended on the US economy for its GDP growth.
Singh (2009) revealed that the size of net capital inflows to India
increased from US $ 7.1 billion in 1990-91 to US $ 108.0 billion in 2007-
08. India has one of the highest net capital inflows among the EMEs of
Asia. Capital inflows, however, not an unmitigated blessing, the main
danger posed by large and volatile capital inflows is that they may
destabilize macroeconomic management. The study concluded that the
30 intensified pressures due to large and volatile capital flow in India in
the recent period in an atmosphere of global uncertainties Sethi and
Sucharita (2009) attempted a study to explain the effects of private
foreign capital inflows (FINV) on some macroeconomic variables in India
by using the time series data between April 1995 to Dec 2007. The

30
 findings revealed that Foreign Direct Investment (FDI) is positively
affecting the economic growth, while Foreign Institutional Investment
(FII) is negatively affecting the economic growth. Aggarwal and
Chaturvedi (2010) found that with growth in the dealing of stock
markets lot of malpractices also started in the stock markets such as
price rigging, unofficial premium on new issue, delay in delivery of
shares, violation of rules and regulations of stock exchange and listing
requirements. Due to these malpractices the customer are losing
confidence and faith in stock markets. The study suggests that SEBI
should implement tight measures so that such type of unethical
practices should be stopped and investors‟ faith and confidence can be
regained in the secondary market. Kumar (2010) examined that an
investor while operating in corporate securities has to face various types
of risks associated with secondary market. An investor has to identify
and manage these risks properly to maximize his returns. A clear
perception of risk is necessary to have a control over them. Risk is the
potential loss a portfolio is likely to suffer. As most losses proceed from
ignorance, they could be avoided by understanding them properly. Risk
management aims at identifying and understanding the various risks an
investor has to face. Future return is an expected return and may or may
not be actually realized. Risk management measures the various
probabilities that may arise in a particular investment. It can show the
strengths and weaknesses of an investment. The study found that to
reduce the risk in the market an investor should strictly follow the Stop-
Loss method. Kaur and Dhillon (2010) focused on the determinants of
Foreign Institutional investment in India. Market capitalization and stock
market turnover of India have significant positive influence only in short-
run but Stock market risk has negative 31 influence on FIIs inflows to
India. Among macroeconomic determinants, economic growth of India
has positive impact on FIIs investment in both long run and short run but
all other macroeconomic factors have significant influence only in long
run like inflation. The study concluded that host country stock market
returns (returns on Sensex) have positive and significant impact whereas
home country returns (returns on S&P 500 Index) have negative but
insignificant influence on FIIs investment inflows in long-run as well as in
short-run. Khan (2010) investigated in his study that SEBI's activities are
to provide a regulator structure which would simplification an effective

31
 mobilization and allotment of wealth through the securities market a
structure which would encourage effective market so that it could
manage the essential services of business and commerce and personal
investors in the most effective economic route which encourage
competition and promote innovation, that is responsible for
international growth a system which is flexible and cost effective so that
it has clarity to guide and not cramp the changes, and finally in breath
trust on the part of the investors and other users of the market by
ensuring the market place clean, fair and transparent in an efficient
manner. The SEBI is a regulatory body which is twenty five years old and
the capital market system is more than 100 years old. There should be
cross border cooperation among all regulators and between regulators
and profession. Bohra, Singh and Dutt (2011) studied the behavioral
pattern of FII in India and figure out the reasons for indifferent
responses of BSE and NSE index due to FII inflows. The study found the
correlation between FII investment and turnover of different individual
groups at BSE and NSE index. The study concluded that there is a
positive correlation between FII investment and stock market but in year
2005 and 2008, it was also observed that positive or negative movement
of FII‟s investment leads to a major shift in the sentiments of domestic
or retail investors in market. Shukla et al. (2011) investigated the impact
of foreign institutional investors on Indian stock indices. The study
revealed that India, after United States hosts the largest number of
listed companies and Global investors now enthusiastically seek India as
their preferred destination for investment. Many Indians working in
foreign 32 countries now divert their savings to stocks. The study further
concluded that FIIs have significant impact on the share prices of the
Midcap & Small-cap companies but small and a periodic shift in their
behavior leads to market volatility. Pandey (2011) emphasized that it is
very difficult and herculean task for the entire regulator to prevent the
scams in the markets due to the difficulty in regulating and monitoring
each and every segment of the financial markets. The responsibilities of
the regulator to set the system right. Once the scam has taken place it is
the responsibility of SEBI to redress the grievances of the investors so
that their confidence is restored. The redressal of investors‟ grievances
after the scam is the most challenging task before the regulator that is
SEBI. Dharmishta (2011) found that the SEBI has been operating now as

32
 the securities markets regulator for a decade and a half, and has
appeared to have done a commendable task in upholding the mandate it
was charged with, in a period of high growth and reasonably heightened
levels of economic volatility. The credibility of SEBI as a regulator also
appears to have been facilitated hugely by the creation of specialised
courts with specialised domain knowledge that can rapidly review
regulatory actions. In the process of ensuring that the markets develop
in such a way that the objective of securities markets continue to be
met, the legal processes at SEBI have also continued to evolve along the
lines of higher levels of transparency of processes, clarity of actions and
credibility of legal action. Ramchandaran and Chinnathambi (2011)
assessed the emphasis on risk management is increasing with
globalization and the economic liberalization process altering the way
risks are perceived. The competitive market scenario and the
progressive opening up of the economy leading to global linkages point
to multiplicity of risks and risk management processes. The spread of the
equity cult and the dawning of the information age have also
contributed to the increasing dimensions of risk management. The study
further founds that the investors now have to explicitly identify and deal
with all the risk components, as investors have to be accountable to
themselves in terms of the risk-return implications of their behavior. 33
Gomathi et al. (2011) investigated that nearly 70 per cent of investors
has lost their money in secondary market by trying guessing stock price
movements. In order to make money from secondary market one should
carefully understand the movements of stocks and strategically follow it.
The study suggested that the investors should not blindly follow the
advice of brokers, newspapers, television channels, magazines,
fundamental analysis. Investors should carefully devote their time in
understanding the stock price movements and then invest in the market
that is too up to safety level. Abraham (2012) concluded that the
regulatory institution is under duress and under severe attack from
powerful corporate interests operating concertedly to undermine SEBI.
He specially said that Finance Minister‟s office, and especially his advisor
Omita Paul, were trying to influence many cases before SEBI, including
those relating to Sahara Group, Reliance, Bank of Rajasthan and MCX.
Babu and Naidu (2012) through their study revealed that SEBI
surmounted with several obstacles on the way to development of capital

33
 market with due care for investors‟ interests and greater transparency
in the affairs of organizations and live stock exchanges, though not to
the extent of hundred per cent. As the study found that via different
guidelines, it had made it sure that no stone remains unturned in the
path of the mission of development of Indian stock market. Investor
education campaigns have been yielding positive results to some extent,
still lot more needs to be done. Indian investors have been steadily
fleeing the market, despite the apparent spread of „equity cult‟, which
calls for immediate attention of the apex body to frame and effectively
implement the measures to protect the interests of investors, and
restore their confidence in the stock market. Sahoo (2012) investigated
the reasons behind the investors‟ behavior. The study revealed that
India‟s GDP has raised from 414 billion dollar in 2001 to 1.3 trillion dollar
in 2012. This growth in size of economy has been complemented by 8
fold increase in market capitalization of the Indian companies it means
people are investing in secondary market to increase their value of
money. The study further founds that the motive behind secondary
market investments is high returns so brokers should suggest those
profitable stocks to the customers which give them more 34 than 30 per
cent return. Research revealed that investors generally prefer their own
research work or brokers advice to decide whether to buy or sell shares
which means that brokers should be more reliable and authentic while
giving their advice on selection of shares and broking firms should also
concentrated more on customer service. Gupta (2012) investigated that
Security Exchange Board of India (SEBI) has enjoyed success as a
regulator by pushing systematic reforms aggressively and respectively.
Security Exchange Board of India did out with corporate example that
were prone to postal delays, robbery and product, separate from making
the solution action slow and carking by passing Depositories Act, 1996.
Security Exchange Board of India has also been instrumental in taking
fast and useful steps in light of the universal meltdown and the Satyam
fiasco. In October 2011, it increased the region and stock of disclosures
to be made by Indian corporate promoters. In light of the universal
meltdown, it liberalized the takeover code to straighten investments by
removing regulatory structures. In one such move, Security Exchange
Board of India has increased the application limit for retail investors to
Rs 2 lakh, from Rs 1 lakh at present. Jain (2012) focused on the reasons

34
 of volatility of secondary market and why investors behave so
irrationally, their study found the reasons responsible for unusual
movements in the secondary market which was not fully explained by
the theories of traditional finances so a new area of financial research
has been developed that is behavioral finance which draws inputs from
the field of psychology and finance in which an attempt is made in the
direction of understand and explain the unscientific and irrational
behavior of secondary market and investors behavior. Shrikanth and
Kishore (2012) investigated a cause and effect relationship between FII
and Indian capital market. The study observed that FIIs carried the
institutional flavor in terms of market expertise and fund management
by way of pooling small savings from retail investors. The main objective
of FIIs is maximizing returns and minimizing risk while keeping liquidity
of the investments intact. The study 35 concluded that net FII inflows
had a positive impact on the Indian stock market and foreign exchange
reserves. Loomba (2012) studied the behavior of FII trading and its effect
on Indian stock market. Through the study it was observed that in the
course of capital market liberalization, foreign capital has become
increasingly significant source of finance and institutional investors are
raising their influence in developing markets. The study also found that
the Indian stock markets have come in age where there were significant
developments in the last 22 years make the markets at similar with the
developed markets. Pathak (2013) asserted that Indian stock market has
a history of more than 125 years. It has undergone a sea change in the
last decade. Technology has changed the face of secondary market, new
trading system, new stock exchanges; new players, new market
instruments and new markets have come into existence. Today the
Indian secondary market is one of the most technologically developed in
the world and it is on par with other developed markets abroad. The
introduction of online trading system, dematerialization, ban of the
badla system and introduction of rolling settlement have facilitated
quick trading and settlements which need to larger volume. The setting
up of the National Stock Exchange of India limited has revolutionalized
face of the secondary market. With globalization secondary market is
facing tough competition globally. They will have to gear up themselves
to face the competition. Following steps should be taken to be there in
the international market increase transparency, strictly in force

35
 corporate governance norms provide more value added services to
investors and take steps to increase investors‟ confidence. They will
have to plan strategic tie ups with their foreign counter parts to get an
international platform. A developed and vibrant secondary market can
be an engine for the revival and growth and development of an
investment environment in the economy. Kulshrestha (2014) the study
focuses on FII investment pattern in the Indian capital market. It
examines the factors expected to affect the investment decisions of FIIs.
The study further found that due to economic liberalization FII flows to
India have steadily grown its importance and it acknowledged as one of
the important sources of 36 funds for developing economies that would
grow at a rate higher than what domestic savings can support. The study
further resulted in the integration of global financial markets. As a result
of it capital started flowing freely across national borders seeking out
the highest rate of return. India is considered as one of the best
investment destinations for foreign institutional investors in spite of
political differences and lack of infrastructure facility etc. Since Indian
market have vast potential, so it attracts and encouraging foreign
investors continuously but on January 21 2008, BSE Sensex saw the
largest ever fall in record, BSE shed down by 2000 points intra-day due
to global economic meltdown (Subprime lending crises in US). This made
everyone very cautious whether the FII positions have kept Indian
capital market in such a miserable condition. Foreign portfolio inflows
through FIIs, in India, are important from the policy perspective,
especially when the country has emerged as one of the most attractive
investment destinations in Asia. The Foreign Institutional Investors (FIIs)
have emerged as important players in the Indian equity market in the
recent past. Business line (Sept 1, 2014) an article published in business
line dated on Sept.1, 2015 concluded that the financial need of Indian
economy are not confined to cheap agricultural loans and bank
overdraft. Savers in small towns are just like city folks who desperately
seek savings products that deliver inflation-beating return. Harshesh
(2014) analyzed the role of self regulatory organizations in the growth
and development of investment environment in the country. The study
further examined that SEBI‟s efforts are to create effective surveillance
mechanism for the securities market, and encourage responsible and
accountable autonomy on the part of all players of the market, who

36
 should discipline themselves and observes the rules of the game. This
would be possible, if the intermediaries set themselves up as effective
self-regulatory bodies. Self-regulation is therefore the cornerstone of the
regulatory framework advocated by SEBI, which like management by
exception would result in regulation by exception. However, self
regulation can work only if there is an effective regulatory body
overseeing activities of self-regulatory organizations. Shallu (2014)
revealed that with a population of over one billion, India has a huge
edge over smaller emerging markets because it has the critical mass to
withstand 37 minor shocks to the system. India is not reliant on a huge
export market for the bulk of its growth. It has a huge, educated middle
class. In fact, India's middle class population is larger than that of the
entire United States. Of course, this middle class earns less on average
than poverty line families in America, but it has the capacity to spend
enough money to buy products that were once considered luxuries
(washers/dryers, TVs, cars, etc). This generates tremendous economic
activity without the issues of trade balance. Because of India's
protectionist business nature, companies tend to thrive without the
threat of multinational competition. Gopalswamy (2014) concluded in
his paper that Indian Secondary Market helps in promoting the savings
of the economy - helping to adopt an effective channel to transmit
various financial policies. The Indian Secondary market is well-
developed, competitive, efficient and integrated to face all shocks. In
Secondary market there are various types of financial products whose
prices are determined by the numerous buyers and sellers in the market.
The other determinant factor of the prices of the financial products is
the market forces of demand and supply. The various other types of
Indian markets help in the functioning of the wide India financial sector.
Having fallen along with other world markets during last year's crash, it
actually bucked the global trend and was nowhere near testing its multi-
year lows. This year Indian market hit a 25-month high. India's stock
market returns over the past couple of years have actually beaten most
other global markets. Economic Times (Jan. 5, 2015) small savers seem
to be lack in the basic financial knowledge to assess the risk and rewards
of the financial products that are peddled to them so sophisticated
seminars that create investors awareness in the cities about mutual
funds insurance and derivatives, can probably wait. Basic financial

37
 literacy, ideally integrated into the school or college curriculum is
imperative for the investor protection. Business line (March 8, 2015)
Investors generally does not follow the basic rules of investment like
thorough study of securities, their future growth prospects, their
fundamental and technical knowledge of charts but their investments
are based on perceptions and are generally motivated by „ hear and
say‟.38 Business today (October, 2015) found that sales were largely as
a result of the overweight positions in India by foreign investors, who
have been heavy buyers since 2012. Foreign institutional investors sold a
record amount of shares in August 2015, offloading even more than in
the midst of the global financial crisis, as turbulent markets in China led
many funds to reduce their holdings in riskier emerging markets. The
sales helped push the Nifty down 6.6 per cent in August its worst
monthly performance since November 2011. Research Gap As is clear
from the review of the related literature a lot of studies have been
attempted to examine the various aspects of secondary market
institutions in the growth and development of investment environment
in the country and role of SEBI in measuring risk, return and protection,
impact of FIIs‟ on Indian retail investors. Out of them a few descriptive
and exploratory studies measured the impact of SEBI on Indian
economy. But no systematic study has yet been endeavored to measure
the perception of retail investors and brokers on role of secondary
market on Indian economy. Statement of the Problem The investment
patterns and capital formation are the barometers for measuring the
economic growth and development of a country. There are various
possible avenues of making investments and getting returns thereof. The
secondary market is one of the possible avenues where a large number
of investors invest their funds in hope of getting good returns. Since, the
Indian secondary market has been volatile signaling threats to the
investors in the form of losses. The volatility of secondary market is
caused by a number of factors including foreign market moments. The
government of India constituted SEBI in 1992 to regulate and control the
investment environment of the country by the safeguarding the interest
of investors. The present study, after assuming the gap through the
review of literature is going to find out the level of risk, return and safety
of the funds invested by the retail investors in the secondary market.
Besides that the strong and weak points of the secondary securities

38
market will be 39 exposed and role of market institution (share brokers)
will be accessed. The study will also be focusing on observing the impact
of FIIs on retail investors. Objectives of the study are 1. To analyze the
role of secondary market institutions in the growth and development of
the investment environment in India. 2. To study the secondary market
with regard to risk return and protection. 3. To study the impact of
foreign institutional investors on Indian retail investors. 4. To study the
causes and impacts of volatility in the secondary market. 5. To study the
role of genuine investors and pure speculator in the secondary securities
market. Limitation of the study The study was completed under certain
limitation. Since, the scope of the research is limited due to shortage of
time, efforts and funds available to the researcher and hence, the
number of questions and statement were restricted to the main issues
only and several related areas were left out which may be studied

further.

CHAPTER 3
39
 RESEARCH METHODOLOGY

Research methodology is a way to systematically solve the research

problem. It may be understood as a science of studying how research is
done scientifically. Research methodology also defined as the study of
methods by which knowledge is gained. To attain the objectives of the
study the following research methodology were applied: Research
Design The research design of the present study is exploratory cum
descriptive in nature as the researcher has to study Risk, Return and
Protection, Growth and Development in Investment environment, effect
of FIIs, on retail investors, Causes and impacts of volatility and relation
between genuine investors and pure speculators . The purpose of
exploratory study is to achieve new insights in to the phenomenon and
generate new ideas. Descriptive study is fact finding investigation with
adequate interpretation or describes the state of affairs as it is present.
In descriptive researcher has no control over the variables he can only
report what has happened or what is happening. Methods used in
descriptive research are all kinds of surveys. Sample design Sample
design means the way of deciding a sample. It is a definite plan
determined before data is actually collected for obtaining a sample from
a given population. Because the study is for the academic research so, it
is not possible to examine the entire universe when its size is very big. So
the only alternative is to take resource of sampling. Non probability
convenience sampling method is used which means researcher should
collect the data as per the convenience of the study. While designing the
sample design the following step taken: 41 Population All the retail
investors, the certified financial analysts, the total number of registered
brokers, sub-brokers, and mutual fund managers in Indian stock
exchanges across the country are considered as the population of the
study. Sampling unit As it is not possible to collect information from all
the sections of society so only Retail investors, brokers, sub-brokers, and
mutual fund managers are considered as sampling unit of the proposed
study. Sample size The study was carried out on a representative sample
of 500 respondents (329 retail investors, 171 brokers and sub-brokers,)
from Delhi NCR. Sampling techniques Non probability sampling
40
technique „convenience sampling‟ was followed to attain the objectives
of the present study. Convenience sampling is used in exploratory
research where the researcher is interested in getting an expensive
approximation of truth. As the name implies, the sample is selected
because they are convenient. This non-probability method is often used
during preliminary research efforts to get a gross estimation of the
results, without incurring the cost or time required to select a random
sample. This technique refers to that fraction of the population being
investigated, which is neither by probability nor by judgment but by the
convenience to the researcher. Data collection Primary data: primary
data are those statistical data which are collected for the first time and
are original in nature and the sources from which these are collected are
called primary sources. For example, while collecting the information
regarding secondary market questionnaire are filled by those who invest
or deal in secondary market. Primary data collected by filling the
structured questionnaire from above respondents in NCR, Delhi. 42
Secondary data: Any data which have been gathered earlier for some
other purpose are secondary data in the hands of the investigator.
Secondary data collected through the articles, journals, books of
financial market, news papers, various editions of handbook of statistics,
NSE fact book, ISMR (Indian securities market review), websites of
nseindia and bseindia, etc. Data analysis The data collected from primary
and secondary data were analyzed, evaluated and interpreted with the
help of various statistical tools and techniques such as Cross tabulation
statistical technique, Graphical presentation, Correlation, Regression, Chi
Square test and other appropriate statistical techniques which will be
suitable for analysis of data. Cross Tabulation Analysis Cross-tabulation is
one of the most useful analytical tools, used to analyze categorical data.
Cross tabulation is a two dimensional or more tables that have recorded
the frequency of the respondent with specific characteristics described
in the cells of the table. Cross-tabulation tables provide a wealth of
information about the relationship between the variables. The Chi-
square statistic is the chief indicator used for testing the statistical
significance of the cross-tabulation table that tests whether the two
variables are independent or dependent. If the variables are
independent (have no relationship), then the results of the statistical
test will be „non-significant‟ and we „are not able to reject the null

41
 hypothesis.‟ The null hypotheses formulated shall be accepted or no
evidence to reject i.e., there is no relation between the two variables. If
the variables are related, the chisquare value would be significant and
hence the null hypotheses is rejected i.e., there is a relationship
between the two variables. If the variables are independent (have no
relationship), then the results of the statistical test will be „non-
significant‟ and we „are not able to reject the null hypothesis‟, meaning
that we believe there is no relationship between the variables. If the
variables are related, then the results of the 43 statistical test will be
'statistically significant‟ and we “are able to reject the null hypothesis”,
meaning that we can state that there is some relationship between the
variables. The chi-square statistic, along with the associated probability
of chance observation, may be computed for any table. If the variables
are related (i.e. the observed table relationships would occur with very
low probability, say only 5%) then we say that the results are
“statistically significant” at the “.05 or 5% level”. This means that the
variables have a low chance of being independent. The chi-square value
for the cell is compounded as, (Observed value – Expected value) 2 ∕
(Expected Value) The null hypotheses formulated by the researcher and
tested with cross tabulation and chi-square. Limitation of the study An
academic research always bounded with some limitations therefore the
scope of the research is limited due to shortage of time and funds
available to the researcher and other required resources. So, the study
was limited to 500 respondents in Delhi and NCR only as convenience to
the researcher in the proposed study. The questionnaires were filled
from retail investors, brokers, sub-brokers, and mutual fund managers,
etc. will be limitation of the present study and the aspects of Risk,
Return and Protection, Growth and Development in Investment
environment, effect of FIIs, on retail investors, Causes and impacts of
volatility and relation between genuine investors and pure speculators.
STATISTICAL TECHNIQUES To reach to the findings of the research the
Descriptive Statistics, Frequencies, Cross Tab, Percentages, and Pearson
Chi Square (test of significance) were applied. These tools were used to
seek the issues of Indian secondary securities market context to look
into prospectus and problems. 44 Data Analysis with Descriptive
Statistics Descriptive statistics provides simple summary about the
sample and observations that have been made. Such summaries may be

42
 quantitative for ex. summary statistics or visual for ex. graphs. These
summaries may be form the basis of the initial description of the data as
part of a more extensive statistical analysis, or they may be sufficient in
and of themselves for a particular investigation. The study is conducted
with a structured questionnaire with 6 demographic factors. Five-point
Likert Scale is used to measure the responses,
1. Strongly Disagree,
2. Disagree,
3.Indifferent,
4. Agree and
5.Strongly Agree

Table 3.1

Reliability Statistics
Variables

Cronbach's Alpha value No. of Items

Respondents .974 30

Reliability Statistics

To check the internal consistency and reliability of the data, Cronbach‟s

alpha is used. The overall alpha for 30 items is calculated as 0.97 all
respondents‟ value. The value of Cronbach‟s alpha generally varies
between 0.0 and 0.1 that indicates nil consistency to highest
consistency. The calculated alpha value 0.974 indicates a high and
strong internal consistency among the given items.
43
 Table 3.2

Demographic Characteristics of Respondents

Valid Cumulative
Demographic Variables Frequency Percent Percent Percent
Up to 30 years 151 30 30 30
31-50 years 272 54 54 84
51 & Above 77 16 16 100
Total 500 100 100
Male 399 80 80 80
Female 101 20 20 20
Total 500 100 100

Rural 66 13 13 13
Urban 434 87 87 100

Total 500 100 100

Short 283 57 57 57
Long 217 43 43 100
Total 500 100 100
Government 138 28 28 28
Private 261 52 52 80
Self employed 101 20 20 100
Total 500 100 100
Retailers 329 66 66 66
Brokers 171 34 34 100
Total 500 100 100

ANALYSIS AND INTERPRETATION

44
To attain the objectives of the study, the required data were collected
both from primary and secondary sources, sequences were decided, the
data were transformed into requisite formats and analyzed with the help
of suitable techniques and results were obtained which have been
explained and presented thus:

Role of Secondary Market Institutions in the growth and development of

Investment Environment in the Country

The primary data were collected with the help of a questionnaire from
500 respondents to assess the role of the secondary market institutions
in the growth and development of the investment environment in the
country; the statements were prepared to get the responses of the
respondents thereto and to draw the conclusions; and the facts were
also verified with the help of secondary data later on in the chapter. The
following are the tables exposing the responses of the selected
respondents on various types of statements:
Table 4.1
Secondary Market Institutions Play an Effective Role in the Growth and Development
of Investment Environment in the Country.

Category of
Respondents

up to 30 yrs. 13(8.6) 11(7.3) 11(7.3) 35(23.2) 81(53.6) 151(100) 4.05

38(14) 37(13.6) 14(5.1) 104(38.2) 79(29) 272(100) 3.54
31-50 yrs

51 & above 10(13) 16(20.8) 18(23.4) 11(14.3) 22(28.6) 77(100) 3.24

Total 61(12.2) 64(12.8) 43(8.6) 150(30) 182(36.4) 500(100) 3.65

52(13) 52(13) 36(9) 136(34.1) 123(30.8) 399(100) 3.56

Male
9(8.9) 12(11.9) 7(6.9) 14(13.9) 59(58.4) 101(100) 3.71
Female
Total 61(12.2) 64(12.8) 43(8.6) 150(30) 182(36.4) 500(100) 3.65

52(12) 61(14.1) 30(6.9) 131(30.2) 160(36.9) 434(100) 3.65

Urban

9(13.6) 6(7) 10(12) 19(28.8) 22(33.3) 66(100) 3.80

Rural
Total 61(12.2) 64(12.8) 43(8.6) 150(30) 182(36.4) 500(100) 3.65

45
 35(12.4) 44(15.5) 18(6.4) 91(32.2) 96(33.6) 283(100) 3.59
Short- term

26(12) 20(9.2) 25(11.5) 59(27.2) 87(40.1) 217(100) 3.74

Long-term
Total 61(12.2) 64(12.8) 43(8.6) 150(30) 182(36.4) 500(100) 3.65

7(5.1) 7(5.1) 19(13.8) 50(36.2) 55(39.9) 138(100) 4.00

Government
Private 11(4.2) 14(5.4) 19(7.3) 98(37.5) 119(45.6) 261(100) 4.14

43(42.6) 43(42.6) 5(5.0) 2(2.0) 8(7.9) 101(100) 1.90

Self
Total 61(12.2) 64(12.8) 43(8.6) 150(30) 182(36.4) 500(100) 3.65

Retailers 38(11.55) 42(12.76) 27(8.2) 110(33.4) 112(54.8) 329(100) 3.65

Brokers 23(13.45) 22(12.86) 16(9.3) 40(23.39) 70(40.9) 171(100) 3.65

Total 61(12.2) 64(12.8) 43(8.6) 150(30) 182(36.4) 500(100) 3.65

Source: Compiled from primary data Note: Figures in brackets show the
percentages.

The analytical table 4.1 which has been compiled from the collected
primary data expresses the role played by the secondary market
institutions in the growth and development of Investment environment
in the country as per the responses opined by the various categories of
respondents. As per the age, the respondents were classified into three
categories- „up to 30 years‟, „31-50 years‟, and „51 and above‟
dependent on their age. Among 151 respondents „up to 30 years‟ of age
53.6 per cent strongly agreed and only 8.6 per cent strongly disagreed
with a mere 7.3 per cent respondents who chose to remain indifferent to
the statement made initially. Taking into consideration respondents
between „31-50 years‟ of age, out of 272 respondents, 38.2 per cent
agreed whereas only 13.6 per cent disagreed. The percentage of
indifferent respondents was only 5.1 per cent in this category. Among 77
respondents of age group „51 and above‟ 14.3 percent agreed and 20.8
percent disagreed, with a percentage of 23.4 indifferent respondents.
The highest mean score (4.05) was observed followed by 3.54 of „31-50
years‟ and 3.24 of „51 and above‟ respectively which confirms the fact
that the younger the investor more feeling of effective role played by
secondary market institutions in the growth and development of
46
investment environment as they are more technology savvy and are well
equipped with the latest information and developments in the area.
After that the responses were analysis on the basis of gender that is male
and female. Respondents belonging to the two gender categories gave
distinct responses to the statement about growth and development of
investment environment in the country. Out of the total 399 male
respondents, 123 strongly agreed, 52 strongly disagreed and 36 did not
show any response. Among the 101 female respondents, 59 strongly
agreed, 9 strongly disagreed and only 7 remained indifferent. They
favored the statement with a high mean score of 3.65 where by the
female respondents endorsed the statement with a higher mean score of
3.71 in comparison to 3.56 of their male counterparts.
Under the category of residential status of respondents - rural and urban,
the responses indicated that out of the total 434 urban respondents 131
agreed, 61 disagreed while 30 turned out to be indifferent. Talking of
mere 66 rural respondents 19 agreed, 3 disagreed and 13 exhibited no
response. The rural respondents found a better role played by the
institutions with a high mean score of 3.80 in comparison to 3.65 of their
urban counterparts in the growth and development of the investment
environment in the country.
When the responses of the respondents were categorized into short-
term and longterm investors-investors who invested for short period of
time were found 283 and long period investors were 217. Out of the
long-term investors 40.1 per cent strongly agreed, 12 per cent strongly
disagreed and 11.5 per cent remained indifferent while, from short term
investors, 33.6 per cent strongly agreed, 12.4 per cent strongly disagreed
while 6.4 per cent did not respond to the aforesaid statement. Long-term
investors showed a slightly higher mean score of 3.74 with short-term
investors scoring a mean score of 3.59. Long-term investors found the
statement more appropriate with a high mean score of 3.74 in
comparison to the 3.59 of short-term investor respondents.

Degrees Minimum
Pearson’s of Significant Expected
Category Result
Value Freedom Value Count

Age 66.016 8 0 6.62 Rejected

47
Gender 29.458 4 0 8.69 Rejected

Residential
Status 15.298 4 0.004 5.68 Rejected
Investment
Period 18.266 4 0.039 10.11 Rejected
Occupation 252.003 8 0 8.69 Rejected

Type of Investors 13.445 4 0.009 8.89 Rejected

Pearson‟s Chi-square test was applied to check the association between

different categories of respondents and their perception towards the
role of secondary market institutions in the growth and development of
investment environment in the country. It was found through exhibit 4.1
that significant P- value was less than .05 in case of all the categories of
respondents i.e. Age, Gender, Investment period, Residential Status
Occupation and types of investors and hence the null hypothesis is
rejected in all these cases which proves that a significant difference was
observed in the perception of respondents of above categories on the
statement. Higher Pearson‟s Chisquare value verified the rejection of
null hypotheses.

Degrees Minimum
Pearson’s Significant
Category of Expected Result
Value Value
Freedom Count

Age 29.83 8 0 6.31 Rejected

Gender 91.994 4 0 8.28 Rejected
Residential
Status 3.226 4 0.521 5.41 Accepted
Investment
Period 51.926 4 0 17.79 Rejected
Occupation 12.468 8 0.132 8.28 Accepted
Type of Investors 12.888 4 0.012 7.87 Rejected

48
It is evident from the exhibit 4.2 that the P-value at 95 percent level of
significance was found to be .521; .132 in case of residential status and
occupation of the respondents respectively, which is greater than .05
and hence, the null hypotheses was accepted which confirms that no
significant difference was observed among the perception of
respondents on the basis of residential status and occupation. But since
the P-value was less than .05 in the remaining four categories (Age-.000;
gender-.000; investment peripod-.000; and category of investors-.012)
which proves that there is a significant difference in the perception of
respondents on the basis of these categories on the statement and
hence consequently the hypotheses is rejected.
Table-4.3
Secondary Market Institutions Affect the Market Capitalization.

Category of
respondents

13(8.6) 15(9.9) 6(5.3) 69(48.3) 48(31.8) 151(100) 3.84

Up to 30 yrs.
31-50 yrs 12(4.4) 29(10.7) 49(18) 143(52.6) 39(14.3) 272(100) 3.61

51 &above 13(16.9) 5(6.5) 12(15.6) 33(42.9) 14(18.2) 77(100) 3.38

Total 38(7.6) 49(9.8) 63(12.6) 249(49.8) 101(20.2) 500(100) 3.65

Male 27(6.8) 37(9.3) 56(14) 219(54.9) 60(15) 399(100) 3.62

Female 11(10.9) 12(11.9) 7(6.9) 30(29.7) 41(40.6) 101(100) 3.77

Total 38(7.6) 49(9.8) 63(12.6) 249(49.8) 101(20.2) 500(100) 3.65

34(7.8) 36(8.3) 58(13.4) 210(48.4) 96(22.1) 434(100) 3.68

Urban

6(6.1) 11(19.7) 5(7.6) 39(59.1) 5(7.6) 66(100) 3.42

Rural
Total 40(8) 47(9.8) 63(12.6) 249(49.8) 101(20.2) 500(100) 3.65

24(8.5) 31(11) 42(14.8) 124(43.8) 62(21.9) 283(100) 3.59

Short-term

14(6.5) 18(8.3) 21(9.7) 125(57.6) 39(18) 217(100) 3.74

Long-term
Total 38(7.6) 49(9.8) 63(12.6) 249(49.8) 101(20.2) 500(100) 3.65

49
 28(20.3) 11(8) 18(13) 58(42) 23(16.7) 138(100) 3.26
Government

6(2.3) 22(8.4) 36(13.8) 140(53.6) 57(21.8) 261(100) 3.84

Private

5(5) 15(15.8) 9(8.9) 51(50.5) 21(20.8) 101(100) 3.68

Self
Total 38(7.6) 49(9.8) 63(12.6) 249(49.8) 101(20.2) 500(100) 3.65

30(9.1) 40(12.1) 55(16.7) 110(33.4) 94(28.57) 329(100) 3.57

Retailers

Brokers 8(4.6) 9(5.2) 8(4.67) 139(81.2) 7(4.09) 171(100) 3.74

Total 38(7.6) 49(9.8) 63(12.6) 249(49.8) 101(20.2) 500(100) 3.65

FINDINGS OF THE STUDY

After analyzing the primary and secondary data collected for the
attainment of the objectives of the study with appropriate
statistical tools and techniques the following were found to be
main inferences of the study:

Findings pertaining to first objective of ‘To analyze the role of

secondary market institutions in the growth and development of the
investment environment in India.

It is evident from the analysis of the responses of the

respondents pertaining to the various demographic
categories that the respondents agreed towards the
statement „secondary market institutions play an effective
role in the growth and development of investment
environment in the country‟ with a high aggregate mean
score of 3.7. It was also established through the analysis made
that the respondents belonging to the private sector and up
to 30 years age category endorsed the statement with the
same highest mean score of (4.1) and highest acceptance
percentage (total 83.1 per cent) followed by government
50
sector employees with a high mean score of (4) but the self-
employed respondents perceived adversely with the lowest
mean score of (1.9).

The null hypotheses on the basis of age, gender, residential

status, investment period, occupational status and type of
investors were rejected, which indicated that all the
respondents agreed that the secondary market institutions
play an effective role in the growth and development of
investment environment in the country.

The age-wise responses on the statement secondary market

institutions affect the number of traded companies indicated
that the respondents up - to 30 years age category perceived
highly towards the statement with mean score of 3.9 in
comparison to the respondents to the other age sub -
categories similarly the male respondents endorsed the same
statement in a more significant manner in comparison to their
female counterparts. The respondents who are making
investments for short and long term also opined the
statement with the high mean scores of 3.6 and 3.5
respectively.

The null hypotheses on the basis of age, gender, and

investment period were rejected and proving the dissimilarity
in the opinions of the respondents from the various
demographic sub categories. The responses on the basis of
residential status: urban (3.6) and rural (3.7); Occupation of
investors: government (3.6), private (3.7), and self employed

51
(3.6); and type of investors: retailers (3.6) and brokers (3.7)
agreed to the statement and the acceptance of all the related
null hypotheses proved that there is no significant difference
among the perceptions of the respondents on the basis of
their residential status, occupational status and type of
investors sub categories. The respondents approved the
statement with no difference in the opinion as far as their
respective sub category was concerned.

The age-wise findings confirmed that respondents belonging

to up - to 30 years age category favored the statement that
„secondary market institutions affect significantly the market
capitalization‟ with majority (80.1 per cent) in comparison to
other respondents. The responses on the basis of gender,
residential status, investment period and occupational status
recognized that all the respondents agreed to the statement
with the similar high mean scores and acceptance
percentages of 69.9, 70.3, 70.5, 66.7, 65.7, 75.6, 58.7, 75.4
and 71.3 respectively as far as their respective sub categories
were taken in to consideration.

The related null hypotheses on the basis of age, gender,

residential status, investment period and occupation status
were also rejected proving that respondents perceived
similarly towards the statement „secondary market
institutions affect significantly the market capitalization‟ with
no difference in the opinions.

52
The type of investors - wise findings indicated that the broker
investor (85.3 per cent) endorsed the statement „secondary
market institutions affect significantly the market
capitalization‟ in a more significant way in comparison to the
retailer investor (61 per cent). The allied null hypothesis was
accepted and proved that the respondents perceived towards
the statement with a statistically significant difference in the
level of opinion and believed that „secondary market
institutions affect significantly the market capitalization‟

The self employed respondents highly perceived towards the

statement „secondary market institutions affect the turnover
of stock exchanges‟ with a high mean score of (4) in
comparison to the aggregate mean score of (3.6) respondents
to the other categories similarly the male respondents (3.8)
endorsed the same statement in a more significant manner in
comparison to their female counterparts (3.2). The
respondents who are making investments for short and long
term also opined the statement with the high mean scores of
3.6 and 3.5 respectively.

The null hypotheses on the basis of age, gender, and

investment period were rejected and proving the dissimilarity
in the opinions of the respondents from the various
demographic sub-categories. The responses on the basis of
residential status: urban (3.6) and rural (3.7); Occupation of
investors: government (3.6), private (3.7), and self employed
(3.6); and type of investors: retailers (3.6) and brokers (3.7)

53
 agreed to the statement and the acceptance of all the related
null hypotheses proved that there is no significant difference
among the perceptions of the respondents on the basis of
their residential status, occupational status and type of
investors sub categories. The respondents approved the
statement with no difference in the opinion as far as their
respective sub category was concerned.

It is clear from the analysis of the responses of respondents

pertaining to the various demographic categories that the
secondary market institutions affect the number of registered
brokers with a high aggregate mean score of 3.7 of

all the 500 respondents responses taken together though

the respondents from „31-50 years‟ age category, female
respondents and retailers showed the highest mean score of
4 with (75 per cent, 74 per cent, 78 per cent respectively)
agreed percentages, followed by self employed respondents
(3.8) with agreed percentage of 71. While the lowest mean
score was recorded by brokers (3.2), short term investors
(3.2), rural respondents (3) and „51 & above‟ age category
(3).
The related null hypotheses on the basis of age, gender,
residential status, investment period and type of investment
period were also rejected, proving that respondents
perceived towards the statement „secondary market
institutions affect significantly the registered brokers‟ with
difference in the opinions. While the occupation status – wise
null hypothesis was accepted and proved that there is no
significant difference in the level of opinion and believed that

54
„secondary market institutions affect significantly the
registered brokers‟.

It is evident from the age category-wise responses of

respondents that the respondents belonging to „ up to 30
years‟ age category respond favorably towards the statement
that the „secondary market institutions affect the indices‟
with the highest mean score of 3.8 in comparison to other
respondents of the same category: „31-50‟ (3.6) „51 & above‟
(3). Similarly the male respondents also favored the
statement with the highest mean score of 3.8 in comparison
to the female respondents (3.5) as well as the related null
hypothesis was accepted and proved no difference in the
opinion. The findings on the basis of residential status (68.9
and 67.7 per cent respectively) and investment period (68.9
and 67.7 per cent ) established that all the respondents
endorsed the statement and believed that secondary market
institutions have significant impact on indices.

The self employed respondents from the occupational status

and the retailers‟ investors from the demographic category
type of investors highly supported the statement with the
mean scores of 4 and 3.8 respectively. The related hypotheses
on the basis of age, residential status, investment period,
occupation status and type of investors were rejected and
proved that all the respondents perceived favorably towards
the statement but with the difference in the opinion level.

55
 The main findings of the study reveled that during the
fourteen years traded companies registered in NSE and BSE
had been increased to 128.22 in NSE and 185.92 in BSE,
taking year 2000 as base year. The turnover also increased to
209.538 NSE and 52.16 in BSE, registered brokers to 122.53
in NSE and 191 in BSE, market capitalization to 1106.2 in BSE
and 1297.3 in NSE similarly, in case of indices to 501.8 in NSE
and 842.9 in BSE. The findings confirms the fact that the
investment environment in the country was not congenial
during the initial years of study but it improved significantly
during the later years of study.
It is also cleared from the findings that the market
capitalization has a greater impact in comparison to
registered brokers on turnover and indices of NSE and both of
the independent factors (market capitalization and registered
brokers) are highly and positively correlated with the
dependent factor
(turnover and indices).

In case of BSE also the market capitalization has a greater

impact in comparison to registered brokers on turnover and
indices of BSE and both of the independent factors (market
capitalization and registered brokers) are highly and positively
correlated with the dependent factor (turnover and indices).

Findings pertaining to second objective of ‘To study the secondary

market with regard to risk return and protection’.

The respondents categorized on the basis of age favored the

statement that the „Indian secondary securities market
investment is risky‟ with the exactly same mean score of 3.8
out of total 5 and similarly the male and female respondents

56
also endorsed the statement with the high mean scores of 3.8
and 3.7 respectively. The residential status wise findings
revealed that the urban respondents (3.8) endorsed the
statement in a more significant manner in comparison to the
rural respondents (3.5). The null hypotheses on the basis of
age, gender, residential status were accepted meaning there
by that the respondents favored the statement that the
„Indian secondary securities market investment is risky‟ with
no difference in the opinion.

The main findings on the basis of investment period

established that the respondents involving in short term
investments perceived highly towards the statement with the
highest mean score of (4) in comparison to the respondents
involving in long term investments with mean score of ( 3.6).
The respondents categorized on the basis of occupation were
also agreed to the statement with the mean score of (3.6, 3.9
and 3.8 respectively). the main findings on the basis of type of
investors exhibited that the investors belonging to retailers
category endorsed the statement with the highest mean
score of 4.1 in comparison to the broker respondents with the
mean score of 3.5. the related null hypotheses on the basis of
investment period, occupation status and type of investors
were rejected proving thereby that the respondents agreed
that the Indian secondary securities market investment is
risky‟ with the statistically significant difference in the levels
of opinions as far as their respective sub categories were
concerned.
57
The main inferences emerged out that the respondents
categorized on the basis of age agreed that the „education
provided by SEBI helps in risk diversification of investors‟ with
the high mean score of (3.5, 3.9 and 3.7 respectively) a
difference was recorded in the perception levels as shown by
the mean scores but the acceptance of the related null
hypotheses proved that the difference is not statistically
significant meaning there by that the respondents agreed to
the statement with no difference in the opinion. The main
findings on the basis gender, residential status and
investment period showed that all the respondents agreed
towards the statement with the high mean scores: 3.8, 3.4,
3.7, 3.7, 3.5 and 3.4 respectively. The occupation wise main
findings established that all the respondents favored the
statement „education provided by SEBI helps in risk
diversification of investors‟ with high acceptance percentages
and mean scores as far as their occupational status was
concerned.

Similarly the retailers and the broker investors also endorsed

the statement with the high mean scores of 3.8 and 3.7. The
null hypotheses on the basis of gender, residential status,
investment period, occupation and types of Investors were
rejected and found a statistically significant difference in the
level of the perception of the respondents as far as their
respective sub categories was concerned and it was
established that the respondents believed that the
„education provided by SEBI helps in risk diversification of
58
investors‟ with the statistically significant difference in the
opinion.

The age - wise findings on the statement „SEBI provides an

effective investors‟ grievance redressal mechanism‟ revealed
that the respondents belonging to „31-50 years‟ of age
category highly approved the statement with the highest
mean score of 3.7 in comparison to the other respondents
from the same age category. The female respondents favored
the statement with the highest mean score of 4 in
comparison to their male counterparts with the mean scores
of 3.6 similarly the residential status wise findings revealed
that the urban respondents perceived highly with the mean
score of 3.7 but the rural respondents agreed to the
statement with a comparatively low mean score of 3. Both
the respondents doing short and long term investments
categorized on the basis of investment period highly
appreciated the statement with 3.5 and 3.8.

The occupational status wise findings showed that the

respondents belonging to the private and the government
sector agreed the statement „SEBI provides an effective
investors‟ grievance redressal mechanism‟ with the high
mean scores of 3.8 and 3.6 respectively but the self employed
respondents endorsed the statement with a comparatively
low mean score of 3.1. Both type of the respondents
categorized on the basis of type of investors highly endorsed
the statement with the same high mean score of 3.6. All the

59
related null hypotheses belonging to the statement were
rejected and found statistically significant differences among
the responses of the respondents as far as their sub
categories were taken into consideration, established that all
the respondents agreed the statement with the difference in
the levels of their perception.

The age wise main findings on the statement that the

„investing in companies showing consistent growth reduces
the risk on investment‟ showed that the respondents
belonging to first two age categories endorsed the statement
with exactly same mean score of 3.5 but on the other hand
respondents from „51 & above‟ age category recorded
acceptance with a comparatively low mean score of 2.8 and
similarly the female respondents were found highly
appreciating the statement with a high mean score of 4.2 but
their male counterparts found less concerned towards he
statement with a comparative mean score of 3.3. Both the
urban and rural respondents believed that „investing in
companies showing consistent growth reduces the risk on
investment‟ with the high mean scores of 3.4 and 3.2. The
results on the basis of investment period showed that both
the respondents engaged in short term and long term
investments supported the statement with the similar
acceptance percentage and the mean scores. The self
employed respondents found more concerned towards the
statement and believed that „investing in companies showing
consistent growth reduces the risk on investment‟ with the
60
highest mean scores of 3.6 but the respondents belonging to
the government sector agreed to the statement with the
mean scores of 3.1.

On the same statement the main findings on the basis of type

of investors exhibited that the retailers respondents found
more concerned towards the same statement and recorded a
mean score of 3.4 in comparison to the broker respondents
who were agreeing to the statement with comparatively low
mean score of 2.9. the null hypotheses on the basis of age,
gender, residential status, occupation, and type of investors
were rejected and established that all the respondents
believed that „investing in companies showing consistent
growth reduces the risk on investment‟ but with the
difference in the opinion.

The null hypothesis on the basis of investment period was

accepted meaning there by that the respondents agreed to
the statement in the similar way and with the no difference in
the opinion.

The main findings emerged out from age wise analysis

showed that respondents belonging to‟ 31-50 years‟ of age
category favored the statement more empathetically in
comparison to other respondents belonging from „up to 30
years‟ and „51 & above‟ age categories similarly the female
respondents(3.4) found more concerned towards the
statement in comparison to their male counterparts (3.2). The
residential status wise main findings confirmed that both the

61
urban and rural respondents perceived highly towards the
statement with the similar mean scores. In the same way the
respondents categorized on the basis of investment period
also agreed to the statement with the similar high mean
scores of 3.1 and 3.2. The occupation wise and type of
investor wise main findings revealed that all the respondents
belonging to these particular demographic sub categories also
endorsed the statement with all high mean scores of above 3.
The null hypotheses on the basis of age, gender, investment
period, residential status, occupation structure and type of
investors were rejected and found statistically significant
difference among the responses of the respondents meaning
there by that the respondents agreed to the statement that
„Investing in Securities of Regular Dividend Paying Companies
is less Risky‟ with the difference in the opinion.

The main findings on the statement revealed that the

respondents belonging to „up to 30 years‟ age category
agreed to the statement in a more significant manner (3.6) in
comparison to other respondents from the other age sub
categories with the mean scores of 3.3 and 3 respectively
surprisingly, the male, female, urban and rural respondents
were found of the same thinking and endorsed the statement
with exactly same mean score of 3.4 each. Respondents who
involved in long - term dealing are found to be more satisfied
by brokers‟ advice in comparison to short –term investors
while government (3.3) and private employees (3.6) found to
be more satisfied by brokers advice in comparison to self –
62
employed (2.9). Both type of investors favored the statement
with mean score of 3.5 approximately.

The related null hypotheses in case of following sub

categories age-wise, residential status-wise, investment
period-wise were rejected which means that there was
significant association between demographic features and
responses of respondents towards the statement; „broker‟s
advice is helpful in risk diversification‟. Further exhibit
showed gender-wise related hypothesis was said to be correct
and null hypotheses is accepted which proves that there is no
association between category and related responses.

After analyzing the table it was found that aggregate mean

score of the table was 3.77 where retailers recorded the
highest mean score of 4.10, followed by respondents under
age-group of‟ 31-50 years‟ of age (3.94) then by respondents
„up to 30 years‟ of age 3.86. Respondents under „51 and
above‟ age-group showed their least support towards the
statement with a low mean score of 2.98.

Results revealed that there was no association between

opinions of investors on the basis of their Age, Gender,
Residential Status, Occupation and type of Investors as their
value was less than .05 at 95 per cent level of significance and
hence no evidence was found to accept the null hypotheses.
So it proved that there was significant association between
perception of investors towards the statement „plethora of
laws, various authorities and regulators are responsible for

63
corporate offences and affect the investors interest adversely
“and their demographic characteristics. Further it is cleared
that according to investment period calculated significant
value was greater than .05 at 95 per cent level of significance
so null hypotheses was accepted which proved that there was
no association between perception of investors on the basis
of their investment period on the statement.

The overall glimpse of the table shows the highest mean score
was retailers4.00, followed by private sector respondents-
3.98. Respondents of „51 and above‟ age had the lowest
mean score-2.81. The high aggregate mean score of the table
4.17 was 3.72 which showed that all the 500 respondents
together found the statement more appropriate.

It was found that significant P- value was less than .05 at 95

per cent level of significance in case of Age, Gender,
Residential Status, Occupation structure and type of
investors. So, null hypothesis is rejected in all the five
categories of investors except investment period whose value
is which is greater than .05. And hence, it is recognized that
there is an association between perception of investors on the
basis of age, gender, residential status, occupation and type
of investors and the statement.

It was confirmed through the grievances reported and

redressed by secondary market institutions that there was a
continuous decline in both- grievances reported and settled,
which again proves the efficiency and effectiveness of the

64
secondary market institutions for making the environment
more investment friendly. The highest cases of grievances
were reported during financial year 2000-01, while the lowest
were reported during 2006-07; similarly, the highest rate of
grievances settled was observed during year 2008-09 and the
lowest in 2006-07.

There are undoubtedly few significant factors due to which

regulator has been able to address the grievances and reduce
them significantly. Firstly SEBI established a Disclosure of
Investor‟s Protection Act 2000 (DPI 200). Due to this act, it is
mandatory for a company to provide all pertinent information
to the investors so that there is a complete transparency in
the system and more and more investors are encouraged to
invest in the secondary market without any hassle.

Secondly, SEBI has simplified the process for launching

grievances made it mandatory that within 15 days, action
would be taken which has helped in building a positive image
of the market. Investors are assured of their investment and
the return. Thirdly, launch of Investor Awareness Programs
(IAP) across India in different cities with an objective to create
awareness amongst the investors and the prospective
investors about the Capital Market and the safeguards that
they need to follow while dealing in various Investment
Products. To fund IAP, SEBI created a separate entity Investors
Protection and Education Fund (IPEF) so that a successful
campaign could be carried out. SEBI has created a punch line

65
 also “Sooch Samajh Kar Invest Karen” which appeals the
investor to be cautious while investing and aware the public
about fraudulent schemes claiming 'big profits in less time'.
Even a SMS campaign was launched to achieve the purpose.
SEBI is also the watchdog and if it finds any offenders, case of
impeachment is filled and strict action is taken or the offender
is penalized heavily depending up on the offence.

Findings pertaining to third objective of ‘To study the impact of

foreign institutional investors on Indian retail investors’.

It is evident from the age – wise analysis of the responses of

the respondents that „up to 30 years‟ and „31-50 years‟ age
respondents favored the statement‟ Indian secondary market
is affected by Foreign institutional investors investment‟ with
a high aggregate mean score of 3.8 and 3.7 but the
respondents form 51 and above age category favored the
statement with moderate mean score of 2.9. when the gender
and residential status wise analysis taken into consideration it
was found that the male female urban and rural respondents
with the same high mean score of 3.6 and no difference was
found in their opinion which was also cleared from both the
hypotheses acceptance. the respondents doing short
(65.8)and long term investors(67.3) were also esteemed that
Indian secondary market is affected by Foreign institutional
investors investment‟ also esteemed the statement with the
high mean scores. The respondents from the government
sector highly appreciated the statement followed by the
private sector respondents with the mean score of 3.9 and 3.6
66
but the self employed respondents were found less
concerned towards the statement and secured a mean score
of 2.2. and both the retailers and brokers respondents
endorsed the statement with the high mean score.

The related null hypotheses on the basis of age, investment

period, occupational status, and type of investors were
rejected and proved the similarity in the perception of the
respondents meaning there by that all the respondents
favored the statement with the no difference in the opinion
as far as their sub categories was concerned.

The main findings of the statement‟ foreign institutional

investors (FIIs‟) Improve Liquidity in the Secondary Market‟
showed that the respondents form up-to 30 years age (4.1)
category were found more concerned in comparison to other
respondents. the gender wise and residential status wise main
inferences established that the male and female urban and
rural respondents favored the statement with the same high
mean score of 3.8. The respondents involved in long term
investments (4.1) agreed to the statement in a more
significant manner in comparison to the investors doing short
term investments (3.6). The occupational status wise main
findings revealed that all the respondents belonging to this
particular demographic category endorsed the statement
with high mean score of 3.7 and 3.8, 3.9 respectively. the
retailer investor highly believed that foreign institutional
investors (FIIs‟) Improve

67
Liquidity in the Secondary Market with a high acceptance
percentage(72.5) and high mean score (3.9) in comparison
to broker investor with mean score of 3.5.
The null hypothesis on the basis of gender was accepted
proving that both the male and female respondents were
having the same opinion towards the statement and believed
that foreign institutional investors (FIIs‟) Improve
Liquidity in the Secondary Market with no significant
difference in the perception level of responses. the null
hypotheses basis on the age, residential status, investment
period, occupation status and type of investors were
rejected and a statistically significant difference was found in
the perception or in the opinion of respondents when the
particular sub categories were taken into consideration
The main findings on the basis of age cleared that all type
respondents belonged to the various age categories
perceived highly towards the statement that „movement of
foreign institutional investors‟ is a major reason behind
volatility of secondary market‟ with the high mean scores of
3.8, 3.8 and 3.4 respectively and the acceptance of related
hypotheses proved that the respondents favored the
statement with no difference in the opinion. on the basis of
gender and residential status showed that all the respondents
agreed to the statement with the high mean scores of 3.9, 3.7,
3.8, 3.9 respectively. the respondents doing short term
investment found more excited towards the statement and
agreed to the statement with the highest mean score of 4 in
comparison to the respondents doing long term investments
with the mean score of 3.6. the occupation wise main findings

68
 revealed that all the respondents favored the statement with
the high mean score of 3.6, 3.9 and 3.8 respectively. The
respondents categorized on the basis of type of investors also
appreciated the statement with the similar high mean scores.

The null hypotheses on the basis of gender, residential status,

investment period, occupation status and type of investors
were rejected and found a statistical significant difference in
the opinion of respondents meaning there by that all the
respondents agreed „movement of foreign institutional
investors‟ is a major reason behind volatility of secondary
market‟ to the statement but with the significant difference
in the opinion as far as their sub categories were concerned.

Findings pertaining to fourth objective of ‘To study the causes

and impacts of volatility in the secondary market.

The age wise main findings encoded that the respondents

belonged from 51 & above age category endorsed the
statement with a moderate mean score of 2.7 followed by the
respondents of up to 30 years with a moderate mean score of

2.1 but the respondents from 31-50 years age category were
not in favor of the statement and recorded a low mean score
of 1.8. The female respondents endorsed the statement with
a high mean score of 3.1 in comparison to the male
respondents who supported the statement with a low mean
score of 1.9. The main findings on the basis of residential
status and investment period revealed that all the
respondents favored the statement with the low mean
scores of 2, 2.3, 2.1 and 2 respectively. The respondents
belong to private and self employed believed that volatility

69
 in the secondary market is the main hurdle with the Foreign
Institutional Investors‟ in India with the mean score of
2.1 and 2.2. But the respondents from government sector
were not in favor of statement and recorded a very low
mean score of 1.9. The broker investor favored the
statement with a moderate mean score of 2.6 but the
retailer investors agreed to the statement with a very low
percentage and low mean score of 1.7.
The null hypotheses on the basis of age, gender, investment
period, residential status, occupation and types of investors
were rejected proving that all the respondents agreed to the
statement that volatility in the secondary market is the main
hurdle with the Foreign Institutional Investors‟ in India with
difference in their opinion as far as their sub categories were
taken into consideration.

Secondary Data

It was confirmed that foreign institutional investors increased

their participation in Indian secondary market by 13.52 per
cent which showed their faith and positive attitude towards
the system. Sensex and Nifty also showed increasing CAGR
(17.81, 13.21) respectively which verified the improved
investment environment in the country. The Foreign
Institutional Investors (FIIs) have emerged as noteworthy
players in the Indian stock market and their growing
contribution adds as an important feature of the development
of stock markets in India.

It provides the evidence of significant Strong positive

correlation between the variables. A high degree of positive
70
 correlation (.809) was found between the indices of both the
major two stock exchanges that is Bombay Stock exchange
(BSE) and National stock exchange (NSE). Further it observed
that fIIs‟ impact the indices also as there is positive relation
between FIIs‟ and Sensex (.856), fIIs‟and Nifty (.745).

The positive value depicts positive relationship between the

predictors and outcome variable if the effects of the other
predictors are held constant. In table 3(c), the b value of FIIs‟
is .002 which means that if FIIs‟ increased by 1 unit than Nifty
increases by .2 per cent. Similarly the b value of FIIs‟ is .005
which means that if FIIs‟ increased by 1 unit than Sensex
increases by .5 per cent.

The Indian Secondary Market is highly volatile.

The main findings derived from the analysis showed that all
the respondents from the various age categories endorsed
the statement that the Indian secondary market is highly
volatile with the high mean scores of 3.9, 3.7 and 3.8
respectively and the acceptance of related null hypotheses
also found no significant difference among the responses of
the respondents. The male respondents found to be highly
appreciating the statement with the highest mean score of 4.2
in comparison to the female respondents with the mean score
of 3.7: the urban respondents found to be more concerned
towards the statement with the mean score of 3.9 in
comparison to the rural respondents with the mean score of
3.5. Both the respondents doing short term and long term

71
investment highly approved the statement with the high
mean score of 3.7 and 3.6 respectively. The self employed
respondents found to be more concerned towards the
statement with the higher acceptance percentage and mean
score of 4.1 In comparison to the respondents from the
private sector (3.8) and government sector (3.6) . The broker
respondents were also endorsed the statement in amore
significant manner in comparison to the retailer respondents
with the mean score of 4 and 3.8 respectively.

The null hypotheses on the basis of gender, residential status,

investment period, occupation status, type of investor were
rejected and found that the respondents perceived differently
towards the statement the Indian secondary market is highly
volatile.

It is evident from the analysis of the responses of the

respondents pertaining to the various categories that the
trade cycle is one of the factor which disturbs the market
continuously with a high aggregate mean score of 3.91 of all
the 500 respondents taken together though the brokers and
long term investor respondents 4.22 showed the highest
mean score followed by private sector employees 4.07 and
4.04 by respondents in between the age category of „3150
years‟.

Pearson Chi-Square results revealed that there was no

significant association among the perception of investors‟ on
the basis of age, gender, and residential status as their P-value

72
 was greater than .05 at 95 per cent level of significance.
Further the Pearson‟s value was less than .05 in case of
investment period, occupation and type of investors‟
category so, null hypotheses was rejected which means that
there is a significant association among the perception of
investors‟ on the basis of aforesaid characteristics on the
statement trade cycle is one of the factors which disturb the
secondary market continuously.

By and large it is inferred that political instability is a vital

factor influencing the sound working of the secondary
market. As the aggregate mean score of five categories were
3.63. While, female and long term respondents favored with
a high mean score of 3.98 followed by urban respondents
3.92, brokers 3.88 and private employees 3.84.

It is evident that the null hypotheses was accepted which

confirms that no significant difference was observed among
the perception of respondents on the basis of age. But since,
the P-value in case of gender, residential status, investment
period, occupation, and investors‟ category is less than .05
which proves that there was a significant difference in the
perception of respondents

on the basis of aforesaid categories on the statement and

hence, the hypotheses was rejected.
It is evident from the analysis of the responses of the
respondents pertaining to the various categories that the
media is responsible for fluctuations in the secondary market

73
with a high aggregate mean score of 3.63 of all the 500
respondents. Though the statement was highly appreciated
by government employees with a very high mean score of
4.79 followed by long term investors 4.00, private employees
with 3.84 and retailers with 3.73.

It was found that significant P-value was less than .05 in case
of all the categories of respondents i.e. age, gender,
investment period, residential Status, occupation and types of
investors and hence the null hypothesis were rejected in all
these cases which proves that a significant difference is
observed in the perception of respondents of above
categories on the statement.

It is evident from the analysis of the responses of the

respondents pertaining to the various categories that the
company‟s reputation is responsible for volatility in the
secondary market. with a high aggregate mean score of 3.73
of all the 500 respondents taken together though the long-
term investors respondents (4.01) showed the highest mean
score followed by respondents under age category of „31-50
years‟ (3.95) male respondents (3.80).

The results revealed that there was no association among the

opinion of investors on the basis of their gender, residential
status, investment period, occupation and types of investors
as their P-value were less than .05 at 95 per cent level of
significance and hence no evidence was found to accept the
null hypotheses. So, it is proved that there is a significant

74
association between perceptions of various types of
respondents on the statement „SEBI provides education to
investors‟ which helps in risk diversification‟ and their
demographic characteristics. Further it clearly shows that
since the calculated significant value was greater than .05 at
95 per cent level of significance in case of age-wise responses
hence, the null hypothesis was accepted which proves that
there was no association between age- wise perception of
respondents on the statement.

It can be clearly implied that female respondents supported

the statement more emphatically with a highest mean score
of 3.98 followed by private-sector employees‟ respondents
3.84 and 3.77 by long term investors. High aggregate mean
score of 3.63 confirmed that investment or withdrawing
decisions depends on the volatility of the market.

The results shows that the Age-wise, Gender-wise,

Residential status-wise, Investment period-wise, Occupation-
wise and type of investors significant value was less than .05
at 95 per cent level of significance and hence no evidence was
found to accept the null hypotheses. It means that there was
significant association between demographic features and
responses of respondents towards the statement; „Investing
in/withdrawing from secondary market depends on the
volatility of the market.‟

It is evident from the analysis of the responses of respondents

pertaining to the various categories that the secondary

75
market institutions helps in bringing stability in the market
with a high aggregate mean score of 3.81 though, the
respondents „up to 30 years‟ and long term investors favored
the statement with a very high mean score of 4.09 and 4.05
respectively followed by self employed 3.91 and retailers‟
with 3.90.

The results disclosed in case of age, residential status,

investment period, occupation and type of investors „of
respondents the null hypotheses were rejected which
confirms that there was significant difference among the
perception of respondents on the basis of aforesaid
demographic
characteristics on the statement. While, on the other hand in
case of Gender and hence null hypothesis was accepted
indicating that there is no significant difference between the
perception of respondents on the basis of gender on the
statement, secondary market institutions helps in bringing
stability in the market.
It was established through the main findings on the basis of
age that the respondents highly agreed to the statement with
the same mean score of 3.8. The main findings on the basis of
gender and residential status were found that the urban
respondents found highly appreciating the statement with
the highest mean score of 4.4 followed by male (3.9) female
(3.7) and rural respondents 3.5. the respondents doing short
term investments believed that volatility in the market keeps
the possible genuine investor out of secondary market
investment in a more significant manner with a mean score of

76
 4 in comparison to the respondents doing long term
investments (3.6) The respondents categorized on the basis
of occupational status also agreed to the statement with all
high mean score of 3.6, 3.9 and 3.8. The type of investors wise
main findings showed that the retailer investor (79.3 per cent)
agreed to the statement with the high mean score of 4.1 in
comparison to the broker respondents (55.5 per cent) with
the mean score of 3.5.

The null hypotheses on the basis of age, gender, and

residential status were accepted and no significant difference
was found among the responses of the respondents which
further elaborate that respondents believed that volatility in
the market keeps the possible genuine investor out of
secondary market investment with no difference in their
opinion. The related null hypotheses on the basis of
investment period, type of investors and occupation status
were rejected proving thereby that the respondents
perceived differently towards the statement as far as their
sub categories were concerned.

Findings pertaining to fifth objective of ‘To study the role of genuine

investors and pure speculator in the secondary securities market.

The main findings on the basis of age on the statement

Genuine Investor promotes Capital formation revealed that
the respondents „up to 30 years‟ age category highly
perceived the statement with the high mean score of 3.8
followed by respondents „31-50 years‟ with the mean score

77
of 3.6 the male, female, urban and rural respondents
endorsed the statement genuine Investor promotes capital
formation with the high mean scores of 3.6, 3.8, 3.7 and 3.4
respectively: the short and long term investors also endorsed
the statement with the high mean scores of 3.6 and 3.7
respectively. The respondents belonging to the private sector
highly endorsed the statement with the high mean score of
3.8 followed by t he self employed respondents with the
mean score of 3.7. In the same way the retailer and brokers
investors also recorded the high mean scores of 3.6 and 3.7
while endorsing the statement.

the null hypotheses on the basis of age, gender,

residential status, occupation status and investment period
were rejected and proved that all the respondents agreed to
the statement that genuine investor promotes capital
formation in the country with difference in the opinion and
null hypothesis on the basis of type of investor was accepted
and found no significant difference in the opinion or
perception of investors.
It was established that the respondents belonging „51&
above‟ age category perceived that „Pure Speculators
Provide Liquidity to the market.‟ with a high mean score of 4
followed by the respondents „up to 30 years‟ and „31-50
years‟ with the same mean score of 3.8 but the acceptance
of related null hypothesis found no statistical difference in the
opinion of the respondents towards the statements. The main
findings on the basis of gender, residential status, and
investment period showed that respondents doing short term
investments highly endorsed the statement with the high
78
mean score of 4 followed by the respondents from various
categories i.e. male (3.9), urban (3.9). All the respondents
categorized on the basis of occupational status highly favored
the statement with the high mean scores of 3.6, 3.9 and 3.8
respectively and both the retailer and brokers investors also
appreciated the statement with 4 and 3.6 as their mean score.

the null hypotheses on the basis of gender, residential

status, occupation status, investment period and type of
investors‟ were rejected and proved that „Pure Speculators
Provide Liquidity to the market.‟ with difference in the
opinion and null hypothesis on the basis of age was accepted
and found no significant difference in the opinion or
perception of investors.

By and large it is inferred that genuine investors plays a

vital role in influencing the volatility of the secondary
market. As the aggregate mean score of five categories were
3.73 though the statement liked by female respondents with
a high means score of 3.98 followed by long term investors
3.95 and urban respondents with 3.92.

It is evident that the in case of age of the respondents the

null hypotheses was accepted which confirms that no
significant difference was observed among the perception of
respondents on the basis of age. But in case of gender,
residential status, investment period, occupation, and
investors‟ category significant difference in the perception
of respondents on the basis of aforesaid categories on the
statement and hence, the hypotheses was rejected.

It is evident from the analysis of the responses of the

respondents pertaining to the various categories that the
genuine investor helps in generating a positive investment
environment with a high aggregate mean score of 3.63 of all
79
the 500 respondents though the statement appreciated
most by long term investors with 4.79 government
employees with 4.00, private employees with 3.84 and
retailers with 3.73.

It was found in case of all the categories of respondents

i.e. age, gender, investment period, residential Status,
occupation and types of investors and hence the null
hypothesis were rejected in all these cases which proves
that a significant difference is observed in the perception of
respondents of above categories on the statement.

Suggestions and Conclusions

The study highlighted many important findings on the basis of
analysis of collected data by primary and secondary sources, for
the purpose of study. On the basis of the findings the following are
some viable suggestion which may be adopted or applied by the
concerned authorities or stakeholders for the sake of bringing
about improvement in the investment environment of secondary
market institutions in the country.

 Since all type of investors irrespective of their age, gender,

occupation status, investment period, type of investors,

residential status endorsed through their opinions with a high
mean score that secondary market institutions helps in the
growth and development of investment environment in the
country. It is suggested that the secondary market institutions
should further be improved by providing them more capital
base latest technology and the required authorities clubbed
with a strong controlling mechanism so that the secondary
market may become more effective and efficient with regards
to their delivery mechanism in the interest of all the investors
in general and the small investors in particular.

80
 It was indicated through the findings of the study that the

young retail investors „up to 30 years‟ endorsed the

statement the most that the financial institutions help to grow
the investment environment in secondary market of the
country. Therefore, it is suggested that the government of
India should prepare such plans and policies which may help
to educate more and more young educated people of the
country regarding the investment to be made in the
secondary market and to have a good returns thereof. It will
further help in eliminating the problem of unemployment and
poverty from the country.

 As the brokers play a significant role in helping and educating

the investors the concerned policies makers are advised to

frame new policies regarding the consolidation of the work of
brokers or bringing about the changes in existing policies to
do so, so that they can become more efficient and can
contribute more in terms of improving the investment
environment in the country and helping thus in the growth
and development of economic environment of the country.

 Interesting the female as well as rural respondents assumed

the importance of the investment environment in the country

with a high score and at present their participation in the
secondary market investment arena is insignificant therefore
steps are required to be taken to educate more and more
female and rural masses to participate and make investments
in the secondary market so that the gap between has and

81
 have nots‟ be bridged and the economic development of the
country can be fastened. Ultimately it will help substantially
in combating the problems of rural development, women
empowerment, financial inclusion, unemployment and
poverty.

 It was observed through the findings of the study that the

market capitalization helps more the growth and

development in the secondary market in comparison to
registered brokers and indices therefore. It is suggested that
required measures are to be taken by the concerned
authorities for enhancing the market capitalization which will
result into the faster economic growth and development in
the country with the help of broad based secondary market.

 The study exposed with a high score of responses of the

respondents that the secondary market of the country is risky

irrespective of the type of respondents hence, it is essential
that the factors affecting the returns of the investor should be
categorized into controllable and uncontrollable factors, and
the controllable factors in particular be advertised more and
more so that the same may be learnt and adopted by all sorts
of investors particularly the retail ones to reduce the risk on
investments and to have the maximum gains out of their
investments.

 It was observed through the study that the number genuine

investor is low among all investors hence, education programs

should be augmented with the help of authorities concerned
82
 that the investors should have long term perspective rather
than the short one to make the secondary market
investments more meaningful.

 The role of Securities Exchange Board of India has been

commended by the respondents through their responses

bearing high scores but yet there is a further scope of
improvement in its functioning. The SEBI should be provided
with more autonomy in its functioning wedded with certain
more effective instruments forcing the corporates to adopt
the required rules and principles in toto disclosing the real
facts and avoiding the misappropriations. If it is done it may
help the investors significantly in general and the small
investors in particular.

 Though the SEBI is doing well in resolving the grievances of

investors but yet a lot more is needed to be done particularly

by bridging the gap between the investors and small markets,
corporates and against trading members.

 Since the investments in securities of the companies showing

consistent growth reduces the risk of investment hence, the

investors are advised to have the requisite information first
regarding the companies where the investments is to be
made analyze the information and then invest. it will help in
reducing their risk and enhance the scale of returns on their
investments which are made on the basis of dividends of the
companies.

83
 The respondents assumed through the finding of the study

that the advice from brokers helps in diversification of the risk

the investor are advised to have consultation from their
brokers as and when required they should not depend wholly
on the advices of brokers rather the application of their own
judgments is must which comes through their own
knowledge, wisdom and experiences.

 It was exposed through the responses of various types of

respondents that Foreign Institutional Investors have a

significant impact on the Indian secondary securities market
that is more the investments made by FIIs higher will be the
prices of securities in the secondary market and vice - versa.
It also affects that more FIIs are attracted towards the
economies where the investment environment is positive. In
the light of above finding it is suggested that the internal
economic environment of the country must be improved by
expanding the world class infrastructural facilities which help
and attract the indigenous and foreign companies to
commence their businesses in India and consequently more
and more FIIs‟ will be attracted towards the economy and
they will be pouring huge capital into the country which
ultimately result into the growth and development not only of
secondary market but also of whole economy. If it happens
the liquidity positions will improve up to great extent in the
secondary market and due to strong fundamentals of the
economy the volatility in the secondary market will be
controlled significantly. Due to this the risk of investors can be
84
 reduced as far as the FIIs‟ are concerned and returns of
investors (both retailers and domestic institutional investors‟)
will be improved substantially.

 It was established through the results of the study that the

Indian stock market are highly volatile due to several factors

which can be divided in to controllable and uncontrollable
factors. The uncontrollable factor are numerous such as
speculation, effects of different economies of the world
change in the international trade policies by various world
class organizations or bodies such as IMF, World Bank etc. and
the political conditions throughout the globe. But there can
be certain factors which are internal in nature and hence can
be controlled with the help of good governance , strong and
business friendly laws, the establishment of good social
practices such as honesty, love and affection towards mother
land clubbed with value system of humanities which may help
significantly in creation of state of art investment
environment in the country having high positive sentiments
helping conversion of speculators into genuine investors and
ultimately leading the economy on the path of growth and
development.

Further scope of the study

The present study covered NSE, BSE, SEBI and the respondents in
the form of retail investors‟ and brokers only from Delhi NCR
85
 therefore further studies on the topic are possible by taking into
consideration more financial institutions, The Board of directors
including employees of all levels pertaining to the financial
institutions may be included in the forthcoming researches.
Moreover since, the study covers only the Delhi NCR region hence,
studies are possible by covering other area/ areas of the country.
Lastly the stakeholders involved in the secondary market may be
considered for future studies.

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88
 Statement Demographic Significance Result

Age 0 Rejected
Gender 0 Rejected
Secondary Market Institutions
plays an effective role in the Residential status 0.004 Rejected
growth and development of Investment period 0.039 Rejected
investment environment in India. Occupation status 0 Rejected
Type of investors 0.009 Rejected
Age 0 Rejected
Gender 0 Rejected
Secondary market institutions like
NSE, BSE and SEBI affect Residential status 0.521 Accepted
significantly the Traded Investment period 0 Rejected
Companies. Occupation status 0.132 Accepted
Type of investors 0.012 Rejected
Age 0 Rejected
Gender 0 Rejected
Secondary market institutions like
NSE, BSE and SEBI affect Residential status 0.002 Rejected
significantly the Market Investment period 0.044 Rejected
Capitalization. Occupation status 0 Rejected
Type of investors 0.065 Accepted
Age 0 Rejected

Secondary market institutions like Gender 0.003 Rejected

NSE, BSE and SEBI affect Residential status 0.007 Rejected
significantly the Turnover of Investment period 0.007 Rejected
Stock Exchanges Occupation status 0 Rejected
Type of investors 0 Rejected
Age 0 Rejected

Secondary market institutions like Gender 0 Rejected

NSE, BSE and SEBI affect Residential status 0 Rejected
significantly the Registered Investment period 0.049 Rejected
Brokers Occupation status 0.231 Accepted
Type of investors 0.026 Rejected
Age 0 Rejected
Gender 0.596 Accepted
Secondary market institutions like 0.003 Rejected
Residential status
NSE, BSE and SEBI affect
Investment period 0 Rejected
significantly the Indices.
Occupation status 0 Rejected
Type of investors 0 Rejected
Age 0.331 Accepted
Indian Securities market
Gender 0.125 Accepted
investment is risky.
Residential status 0.213 Accepted
89
 Investment period 0.001 Rejected
Occupation status 0 Rejected
Type of investors 0.018 Rejected
Age 0.264 Accepted
Gender 0 Rejected
Education provided by SEBI helps Residential status 0 Rejected
in risk diversification of Investors. Investment period 0 Rejected
Occupation status 0.002 Rejected
Type of investors 0 Rejected
Age .0 Rejected
Gender .0 Rejected
SEBI provides an effective Residential status .0 Rejected
investors‟ grievance redressal
Investment period .0 Rejected
mechanism.
Occupation status .0 Rejected
Type of investors .0 Rejected
Age 0 Rejected
Gender 0.003 Rejected
Investing in companies showing 0.031 Rejected
Residential status
consistent growth reduces the risk
Investment period .125 Rejected
on investment.
Occupation status 0.003 Rejected
Type of investors 0 Rejected
Age 0 Rejected
Gender 0 Rejected
Investing in securities of regular 0.001 Rejected
Residential status
dividend paying companies is less
Investment period 0 Rejected
risky
Occupation status 0.016 Rejected
Type of investors 0 Rejected
Age .000 Rejected
Gender 0.291 Accepted
Broker‟s advice is helpful in risk Residential status .000 Rejected
diversification. Investment period .000 Rejected
Occupation status .000 Rejected
Type of investors .000 Rejected

Plethora of laws, various Age 0 Rejected

authorities, and regulators are Gender 0.008 Rejected
responsible for corporate offences Residential status 0 Rejected
90
and affect the investors‟ interest Investment period 0.403 Accepted
adversely. Occupation status 0 Rejected
Equity Markets and Recent Regulatory Changes‟ IMF Working paper,
Monetary and Capital Markets Department, WP/07/291. Singh,
Sumanjeet (2009). Foreign capital flows into India: Compositions,
regulations, issues and policy options‟ Journal of Economics and
International Finance, 1(1), 014-029. 23
APPENDICES

238

Type of investors 0.002 Rejected

Age 0 Rejected
Gender 0 Rejected
Investors‟ get regular return on 0 Rejected
Residential status
their investments in the form of
Investment period .125 Accepted
dividends and interests.
Occupation status 0.026 Rejected
Type of investors 0 Rejected
Age 0 Rejected
Gender 0 Rejected
The Indian stock market is Residential status 0.244 Accepted
affected significantly by
Investment period 0 Rejected
FIIs‟ investment.
Occupation status 0 Rejected
Type of investors 0 Rejected
Age 0 Rejected
Gender 0.596 Accepted
FIIs‟ improve liquidity in the Residential status 0.003 Rejected
secondary market. Investment period 0 Rejected
Occupation status 0 Rejected
Type of investors 0 Rejected
Age 0.264 Accepted
Gender 0 Rejected
Movements of FIIs‟ are a major 0 Rejected
Residential status
reason behind volatility of stock
Investment period 0 Rejected
market.
Occupation status 0.002 Rejected
Type of investors 0 Rejected
91
 Age 0 Rejected
Gender 0 Rejected
Volatility in the secondary 0.004 Rejected
Residential status
market is the main hurdle with
Investment period 0.039 Rejected
the FIIs‟ in India.
Occupation status 0 Rejected
Type of investors 0.009 Rejected
Age 0.264 Rejected
Gender 0 Rejected

The Indian secondary market is Residential status 0 Rejected

highly volatile. Investment period 0 Rejected
Occupation status 0.002 Rejected
Type of investors 0 Rejected
Age 0.331 Accepted
Trade cycle is one of the factors 0.125 Accepted
Gender
which disturb the secondary
Residential status 0.213 Accepted
market continuously.
Investment period 0.001 Rejected
Occupation status 0 Rejected
Type of investors 0.018 Rejected
Age .013 Rejected
Gender 0 Rejected
The Political instability also 0 Rejected
Residential status
affects the sound working
Investment period 0 Rejected
of secondary market.
Occupation status 0 Rejected
Type of investors 0 Rejected
Age 0 Rejected
Gender 0 Rejected

Media is responsible for Residential status 0.004 Rejected

fluctuations in secondary market. Investment period 0.039 Rejected
Occupation status 0 Rejected
Type of investors 0.009 Rejected
Age 0.264 Accepted
Gender 0 Rejected
Goodwill of the firm is 0 Rejected
Residential status
responsible for volatility in
Investment period 0 Rejected
secondary market.
Occupation status 0.002 Rejected
Type of investors 0 Rejected
92
 Age .000 Rejected
Gender .000 Rejected
Investing in/withdrawing from .000 Rejected
Residential status
secondary market depends on the
Investment period .000 Rejected
volatility of the market.
Occupation status .000 Rejected
Type of investors .000 Rejected
Age 0 Rejected
Gender 0.596 Accepted
Secondary market institutions 0.003 Rejected
Residential status
help in bringing stability in the
Investment period 0 Rejected
market.
Occupation status 0 Rejected
Type of investors 0 Rejected
Age 0.331 Rejected
Gender 0.125 Rejected
Volatility in the market keeps the 0.213 Accepted
Residential status
possible genuine investor out of
Investment period 0.001 Rejected
secondary market investment.
Occupation status 0 Rejected
Type of investors 0.018 Rejected
Genuine investor promotes capital Age 0 Rejected
formation. Gender 0 Rejected
Residential status 0.002 Rejected
240
Investment period 0.044 Rejected
Occupation status 0 Rejected
Type of investors 0.065 Rejected
Age 0.264 Accepted
Gender 0 Rejected
Pure speculators provide liquidity Residential status 0 Rejected
to the market. Investment period 0 Rejected
Occupation status 0.002 Rejected
Type of investors 0 Rejected
Age .013 Rejected
Gender 0 Rejected
Genuine Investor brings down the
Residential status 0 Rejected
volatility in the secondary market.
Investment period 0 Rejected
Occupation status 0 Rejected

93
 Type of investors 0 Rejected
Age 0 Rejected
Gender 0 Rejected
The genuine investor helps in 0.004 Rejected
Residential status
generating a positive investment
Investment period 0.039 Rejected
environment.
Occupation status 0 Rejected
Type of investors 0.009 Rejected

AN EVALUATIVE STUDY OF SECONDARY

SECURITIES MARKET IN INDIA
QUESTIONNAIRE (CONFIDENTIAL)

INSTRUCTIONS:

The objective of getting information through questionnaire is only to study the behavior of
investors‟ which could be helpful to analyze the secondary securities market trends and role
of regulators. Every statement has some options out of which you have to tick mark (√) the
most appropriate option in your opinion. The collected information through questionnaire
will be used only for research purpose (Ph.D. work), and will be kept strictly confidential. So,
please feel free to express your opinion and I will feel obliged for your kind help and co-
operation.

Thank you
Sapna Goyal
Research scholar (Ph.D)
Dept. of Commerce,
M.D.U., Rohtak
Email-(sapna.ipsrtk @gmail.com)

PART - A

Personal Information:
1. Name______________________ 2 Age: ________________Yrs.

3. Gender: Male ( ) Female ( )

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 4. Educational Qualification: __________________

5. Phone number _____________

6. E- mail: ______________

7. Residential status: Rural ( ) Urban ( )

8. Category: Gen. ( ) OBC ( ) SC/ST ( )

9. Occupation of investor Govt. sector ( ) Pvt. Sector ( )

Semi Govt. Sector ( ) Self employed ( ) any other ( )

10. Are you an income tax assesse Yes ( ) No ( )

11. You are a regular investor in secondary securities market. Yes ( ) No ( )

12. You make investments for: (a) Short term gains (less than one year)

(b) Long term gains (more than one year)

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 PART – B

Please read the following statements and tick (√) the most appropriate answer

SA-Strongly Agreed, A-Agreed, I – Indifferent, D- Disagreed, SA – Strongly Disagreed

S. Statements SA A I D SD
No.
1 Secondary Market Institutions plays an effective role
in the growth and development of investment
environment in India.
2 Secondary market institutions like NSE, BSE and SEBI
affect significantly the Traded Companies.
3 Secondary market institutions like NSE, BSE and SEBI
affect significantly the Market Capitalization.
4 Secondary market institutions like NSE, BSE and
SEBI affect significantly the Turnover of Stock
Exchanges
5 Secondary market institutions like NSE, BSE and
SEBI affect significantly the Registered Brokers
6 Secondary market institutions like NSE, BSE and SEBI
affect significantly the Indices.
7 Indian Securities market investment is risky.
8 Education provided by SEBI helps in risk
diversification of Investors.
9 SEBI provides an effective investors‟ grievance
redressal mechanism.
10 Investing in companies showing consistent growth
reduces the risk on investment.
11 Investing in securities of regular dividend paying
companies is less risky
2

12 Broker‟s advice is helpful in risk diversification.

13 Plethora of laws, various authorities, and regulators
are responsible for corporate offences and affect the
investors‟ interest adversely.
14 Investors‟ get regular return on their investments in
the form of dividends and interests.
15 The Indian stock market is affected significantly by
FIIs‟ investment.

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16 FIIs‟ improve liquidity in the secondary market.
17 Movements of FIIs‟ are a major reason behind
volatility of stock market.
18 Volatility in the secondary market is the main hurdle
with the FIIs‟ in India.
19 The Indian secondary market is highly volatile.
20 Trade cycle is one of the factors which disturb the
secondary market continuously.
21 The Political instability also affects the sound working
of secondary market.
22 Media is responsible for fluctuations in secondary
market.
23 Goodwill of the firm is responsible for volatility in
secondary market.
24 Investing in/withdrawing from secondary market
depends on the volatility of the market.
25 Secondary market institutions help in bringing
stability in the market.
26 Volatility in the market keeps the possible genuine
investor out of secondary market investment.
27 Genuine investor promotes capital formation.
28 Pure speculators provide liquidity to the market.
29 Genuine Investor brings down the volatility in the
secondary market.
30 The genuine investor helps in generating a positive
investment environment.

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