A PROJECT

ON

A STUDY ON INVESTOR'S PERCEPTION TOWARDS

STOCK MARKET

NIKHIL NAVANDAR

1051-17-684-095

degree of
fulfilment for the award of the
Project submitted in partial
ADMINISTRATION
BACHELOR OF BUSINESS

By
Osmania University, Hyderabad-500007.
 This is to CERTIFICATE
A certify that project work
STUDY ON entitled
INVESTOR'S PERCEPTION
STOCK MARKET TOWARDS

Is done by
NAME: NIKHIL NAVANDAR
ROLL NO0: 1051-17-684-095
As a
part of their curriculum in the
Department of Management
Aurora's Degree and P.G.
College
Chikkadpally, Hyderabad-500020
This work has been carried
out under my
guidance.

Pripcrpal HOD
Dr.Viswanadham Bulusu Mrs. Veena Kapoor

Mentor.
venallad Extermal Examiner
Mr.T. Prasad
 DECLARATION

Iherebydeclare that the project entitled "A STUDY ON INVESTOR'S PERCEPTION

TOWARDS STOCK MARKET" submitted to the Department of Management, Osmania
University, Hyderabad, is a bonafide work undertaken by me and is not submitted to any
other university or institution for the award of any degree/diploma /certificate or published
any time before.

Name and Address of the Student

NIKHIL NAVANDAR

Aurora's Degree andP.G. College Signature of the Student

3
 CERTIFICATION

This is to certity that project report entitiled "A STUDY ON INVESTOR'S PERCEPTION
of
TOWARDS STOCK MARKET submitted in parial fulfilment for the award of degree
Bacheclor of Business Administration, Osmamia Uziversity, Hyderabad was caried out by
NIKHIL NAVANDAR bearing Roll No: 1051-17-484-095 under my guidance. This hi

ben sabmitted to any other university or institution for the award of any degree or diplona

ar cartificate.

Name of the Mentor Signature of the Mentor

MRT.PRASAD
 ACKNOWLEDGEMENT
I would like to express my gratitude to all those who have helped me to accomplish this

project.
Firstly, I extend my gratitude to Dr.VISWANADHAM BULUSU Principal, Aurora's
Degree & PG College, for his encouragement.
I am indebted to Mr. Prasad, Associate Professor, for his valuable guidance, suggestions and
cooperation in doing the project.
My special thanks to Mrs. VEENA KAPOOR, Head of the Department of Management and
faculty members for their valuable suggestions and cooperation in doing the project.
I would especially like to thank my parents and friends for extending their warm support in

completing my project successfully.

5
 Table of contents

S No. Chapter Particulars Pages

Abstract 1-3

Chapter 1 Introduction of Research study 9-11

Chapter 2 Review of Literature 12-25

Chapter 3 Research Methodology 26-23

Chapter 4 Theoretical Framework 29-31

5.

Chapter 5 Overview Of Stock Market 32-37

Data Analysis & Interpretation 38-54

Chapter 6

Findings & Conclusions 55-57

Chapter 7

Suggestions and Recommendations 58-59

Chapter8

Bibliography and Webliography 60-61

 ABSTRACT

The purpose of this project is to understand the perception of the general

public in relation to the stock market being termed as "Satta Bazaar", or hub of

gambling. A quantitative approach has been used by ascertaíníng varíables and

using statistical techniques to understand the perception of the general public
The basis has been provided for future research based on the key tenets of the
study. The fact has been well recognised that the stock market plays a key role
in influencing the economic activity in India through the creation of liquidity.

The stock exchanges, like National Stock Exchange (NSE), has more or less
become the primary source of funds for the companies. With a meagre 135

companies listed in 1994-95, NSE has currently had about 1,833 listed
companies. The total market capitalization is about Rs. 1.04 lakh crores as on

Nov 2016. With a desire for higher gains, the general public, with little or no
knowledge, has also started investing and predominantly have lost their

personal funds in the stock market. Such losses have prompted these individuals
to compare investing in the stock market with gambling. This study has been
undertaken to understand the perception of the population vis-à-vis stock market
being termed as "Satta Bazaar", or hub of gambling. Only a limited study could
be undertaken due to the paucity of time and diverse subject knowledge by

general public.

lt was inspired by the persistent lack of local investors participating on the

National Stock Exchange (NSE). the wide spread ignorance about tinanelat

a5sets and the continuous purchase o f stocks with no information known aoout

the ich Wno

people in the country plus the wide gap between
uOSt

nvest in stocks and the poor who continuously make losses n the

ndustry. The study was guided by objectives With pa

tracking investor's attitudes and perceptions towards stock market investments
A sample of 106 respondents was used and the findings analyzed using SPSS.

The study used a cross-sectional survey design and with application of

quantitative and qualitative data. The study may also use descriptive and

correlation approaches to establish the relationships amongst the study

variables. The study made several recommendations among which to increase

investor awareness as a means of encouraging local investors to list on the stock

The regulatory authorities should improve on their performance in
exchange.
order to increase the confidence of the local investor. Furthermore they should

introduce investor incentives to boost the volumes traded on the exchange with

a review of The stock market regulations witha view to make them stronger and
more attractive to local investors.
 CHAPTER 1
INTRODUCTION OF
RESEARCH STUDY
INTRODUCTION

A stock market is a market in which stocks are bought and sold. It is also called industrial

securities market, because it is the market for the trading of company stocks i.e. corporate

securities; both those securities listed on stock exchange as well as those only traded
privately. The term 'Stock Market' is often used as synonymous to "Stock Exchange'. But
there is a difference in the two terms. Stock exchange is a corporation in the business of

bringing buyers and sellers of stocks together. It is a major part of stock market, but not

whole of it. Because a stock market besides stock exchanges also includes the market
for new issue of securities. Thus the stock market can be divided into two_constituents:
1. Primary Market or New Issue Market

2. Secondary Market or Stock Exchange

Primary stock markets are also called new issue markets. A primary market is the market in

which assets are sold for the first time. In other words, it is that market in which new shares,
debentures etc are bought and sold. The essential function of the primary market is to arrange

for the raising of new capital by corporate enterprises, whethr new or old. The firms raising
funds may be new companies or old companies, planning expansion. The issues of the new
firms are called "initial issues" and those of old firms already existing are called "further
issues". Initial capital is raised by issuing ordinary and preference shares only, whereas
further capital can be raised by selling all three types of industrial securities. The new

companies need not always be entirely new enterprises. They may be private firms already in
businegs, but going public to explain their capital base. Going public means becoming public
limited companies to be entitled to raise funds from general public in the open market.

A stock exchange is an organized market for sale and purchase of listed existing shares and

other corporate securities. It is a platform for bringing together the buyers and sellers of

Securities. The securities which may be bought and sold in stock exchange generally includes
shares and debentures of public companies. These may include Government securities and

bonds issued by municipalities, public corporations, utility undertakings etc. Securities held

by the investors are also traded on the stock exchange. Only listed securities are dealt in stock

exchanges. The listed securities are those securities that appear on the approved list of stock
exchange
10
OBJECTIVES OF THE STUDY
To know about the Indian securities market.
To know about the investors
perception towards the stock market.
To know about the investorS
perception towards the SENSEX in future.

SCOPE OF THE STUDY

Keeping in view the various constraints the scope of the study ois limited only to the
investors residing in Telangana.

RESEARCH METHODOLOGY

A structured questionnaire was used to collect the primary data.

For the representation of the data various statistical tools like Charts, Diagrams have been
used. These statistical tools have really provided great help to understand the results of the
analysis.Secondary Data is collected from Newspapers, Television, Websites, Journals &
Magazines
LIMITATIONS OF THE STUDY
Some respondents may have distorted the figures/ facts or may not have

disclosed the true information because of the hesitation to tell the right data.
N o tool
for the cross-checking ofthe facts/ figures was
employed
As most of the times respondents were busy and were unable to spend a

considerable amount of time. So they may not have been able to give the exact figures
facts.
Taken into consideration, only a limited sample size of 100 investors

11
 CHAPTER 2
REVIEW OF LITERATURE

12
Kahneman and Amos Tversky (1979)
originally described Prospect Theory" and found that
individuals were much more distressed
by prospective losses than they were happy by
equivalent gains. Some economists have concluded that investors
of $1 twice as painful as the
typically consider the loss
pleasure received from a $ gain. Many investors do not have data
analysis and interpretation skills. This is because, data from the market supports the merits of
index investing, passive investors are more
likely to base their investment choices on
information received from objective or scientific
sources. Investor fund selection
behaviour
influences marketing decisions of fund
management and has captured the attention of
researchers.

Woerheide (1982) conducted a

study
"investor response to suggested criteria for mutual
on

funds" in which he tested the effect of different

factors. It was proved that factors like size of
fund, effectiveness of marketing programme and
past return of funds have great impact.
Among these the effectiveness of marketing programme has strong
impact.

De Bondt and Thaler (1985) while investigating the possible psychological basis for investor
behaviour, argue that mean reversion in stock prices is an evidence of investor over reaction
where investors overemphasise recent firm performance in forming future expectations.

Suguna G (1986) studied an investors attitude towards saving pattern in coimbatore. There
exists poor positive savings are increasing when the income increase but in the same
perception. There exists high positive correlation between income and tax indicating that the
tax are increasing when the income increases most of the bank executives expressed the view
that due to insufficiency of income they were not able to contribute to savings scheme like
public provident fund, post office time deposit

Shanmugam (1990) studied a group of 90 investors to examine the factors affecting

investment decisions. The study focused its analysis on investment objectives and the extent
of awareness of factors affecting investment decisions. The study concluded that the investors

were high risk takers, then interested in capital gains and current dividend income. Investors

possessed adequate knowledge of govt. regulations, monetary and fiscal policy.

Gupta L.C. (1991) argues that designing portfolio for a client is much more than merely
pIcking up securities for investment. The portfolio manager needs to understand the psyche of

13
his client while designing his portfolio. According to Gupta, investors in India regard equity,
debentures and company deposits as being in more or less the same risk category and

consider including all mutual funds, including all equity funds, almost as safe as bank

deposits.

Sitkin and Pablo (1992), defined risk perception as risk assessment in uncertainty and it
depends on the familiarity with organizational and management system. The authors also
developed a model of determinants of risk behavior and identified personal risk preferences
and past experiences are the important risk factors and social influence also affects the

individuals perception.

Ippolito (1992) reported that fund selection by investors is based on past performance of the
funds and money flows into winning funds more rapidly than they flow out of losing funds.

Goetzman (1993) studied the ability of investors to select funds and found evidence to
support selection ability among active fund investors.

Pandurangan G (1993) concluded that the investors rate this mode of investment as excellent
and they want only capital appreciation and dividend and for this they are ready to take
calculated risk also. This mode of investment is urban oriented till today

Noel Capon (1994)in a study "Affluent investors and mutual fund purchases" stated that there
are many evidences that supports that in spite of risk and return other factors also effect on

mutual fund selection, for example a consumer survey 1990 on mutual fund it was founded
that past performance and level of risk are two aggregate important factors but other factors
also effect like management fee, amount of sales charges, reputation of fund family, funds
already owned in family, recommendation from magazine and newsletter and clarity of
accounting statements. Investor showed different behavioral trait and they prefer different
factors while selecting fund because of different demographic background.

Sikidar and Singh (1996) carried out a survey with an objective to understand the behavioral
aspects of the investors of the North Eastern Region towards equity and MFs investment
portfolio. The survey revealed that the salaried and self employed formed the major investors
in MF
primarily due to tax concessions.
14
 Lambodekar (1996) conducted a study to assess the awareness of MFs among investors, to

identify the information sources influencing the buying decision and the factors influencing

the choice of a particular fund. The study reveals among other things that Income Schemes

and Open Ended Schemes are more preferred than Growth Schemes and Close Ended
Schemes during the then prevalent market conditions. Investors look for safety of Principal,

Liquidity and Capital appreciation in the order of importance; Newspapers and Magazines
are

the first source of information through which investors get to know about MFs/Schemes and
investor service is a major differentiating factor in the selection of MF Schemes.

of MF investors with using

Malhotra and Robert (1997) reported that the preoccupation
evaluation as selection criteria is misguided because of volatility of returns,
performance
luck is difficult to determine.
which may be due to superior management or just good

the extent to which

Marcel Fafchamps and John Pender (1997)15 in their paper investigated
divisible but profitable investment.
poor households are discouraged from making a non-

estimate the parameters of a structural model of

data on irrigation wells in India, we
Using
farmers fail to undertake a profitable
irreversible investment. Results shows that poor
of the
self-finance because the non- divisibility
investment that they could, in principle,
constitutes an additional disincentive to
investment puts it out of their reach. Irreversibility
dramatically increase investment
invest. Simulations show that the availability of credit can

subsidization has little impact.

in irngation and that interest rate

has brought out various results arising from

Sivanesan S (1997) revealed that his analysis
considered to bring out the
been
relevant factors have
different tools of analysis. All
increases with the duration
of investment,
awareness
awareness. The investors
relationship awareness.
tend to acquire more
when investors invest for a considerable long period they

the various
and Peter J. Nigro (1997) analyzed
Jordon J. Alexander, Jonathan D. Jones
that the investors are
investors and found
Characteristics and investment
knowledge of
funds.
returns associated with mutual
and
AOWledgeable about costs, risk

investors on the basis of their

highlighted segmentation of
d a Rajan (1997, 1998) of the
between stage in life cycle
and the relationship
racteristics, investment size,
vestors and their investment pattern.
15
Syama Sunder (1998) conducted a survey to get an insight into the MF operations of private
institutions with special reference to Kothari Pioneer. The survey revealed that the awareness
about MF concept was poor duríng that time in small cíties. Agents play a vital role in

spreading the MF culture; open-end schemes were much preferred then; age and income are

the two important determinants in the selection of fund/ scheme; brand image and return are
their prime considerations.

Ang, Chen, and Lin (1998) explored equity mutual fund management reactíon to poor
performance using data beginning in 1994. They observed that management had good reason
to be concerned about poor performance, as management compensation is based upon the
amount of money under management and performance of the fund. Their analysis explores
possible management reactions to poor performance. Management could trade more often,
reduce costs, take more risks, or adopt a more aggressive marketing strategy. They found that
the management of lower performing funds did more trading and had greater expense ratios
than the management of funds that had good performance. We examine these issues and
contribute to the understanding of mutual fund performance by studying a later time
Period with a larger sample and by including fixed-income as well as equity funds.
We also contribute by considering the role of economies of scale both at the level of the
individual fund and the level of the fund family.

Sirri and Tufano (1998) attributed the asymmetry between the investor reaction to past
winners and losers to marketing as fund families tend to advertise top past performers. Their
Cxplanation would suggest that convexity will be more pronounced among investors that are
swayed by advertising. Since being susceptible to behavioral biases and to the influence of
advertising are features commonly associated with naive investors, these arguments suggest

that flow-performance convexity is inversely related to investor sophistication.

Chalapati Rao K.S., Murthy M.R. and Ranganathan K.V.K (1999) in their research article
Some aspects of the Indian Stock Market in the post liberalization period" evaluates that as a
part of the process of economic liberalization, the stock market has been assign an important

place in financing the Indian corporate sector. Besides enabling mobilizing resources for
investment, directly from the investors, providing liquidity for the investors and monitoring
and disciplining company management are the principal functions of the stock market. This
paper examines the development in the Indian stock markets during the nineties in terms of

these three roles.

16
 Kevin James (2000) in his research article "The
Price of Retail Investíng in the UK
evaluates the financial wealth services provided by investment funds in UK, the
study
identifies that the retail investors largely delegate the management of their
wealth to
investment funds. These funds in turn charge retail
investors for the portfolio and risk
management services they provide, sparing retail investors the
burdensome task of
performing these various services themselves. So in order to choose a
sensible fund (a fund
that meets his or her requirements), a retail investor
must be able to ascertain
the servíces
provided and the price charged by each of the funds he or she
may consider.

Ramasamy T and Vinayakamoorthy S (2000) had concluded the

study on "Investment a
development factor on savings". The study reveals that, both
savings and investment had
equality. It means that an individual wants to have more
investment, first he has to save that
extent, savings and investment decisions are taken
separated by an investor with different
motives. The savings and income level raises. As a result savings has been raised by raise in
the income level. It is concluded that
the investment is
dependent on savings investments are
brought about by the changes in income. Whenever investment
excecds savings, the income
levelraises. As a result savings has been raised raise
that the
by in the income level. It is
concluded
investment is dependent on
savings.

Mittal & RK, 2008

explored the relationship
between various demographic factors
and the
nvestment personality exhibited by the investors.
Such as Empirical evidence suggested that factors
income, education and marital status affect individual
investment decisions.

Kukreja, 2012 explains Educational

qualification has significant related with
transaction in cash market, tax advantage in cash market, transparency of
Cash market. past pertormance of the company in
Occupation has signilicant intluence on investment
and
uncertainty in future & option, size of investment in future pattern in cash market, risk
& option.
ntuential role on cash Age has significant
market, future & option, life insurance. These variables
Signiticant influence on are
having
investor behaviour.

17
 Adam, 2008 analysed how
investors psychology changes the vision of
discussed the
consequences of the new view of financial markets and
finance by capital market
investors, corporate poliey makers and practitionerTS
concluded with some
development of the capital market theory. thoughts on the future

Nagtilak & Kulkarni, 2015 concluded that IPO is

no more risky investment as SEBI 1s
playing very important role in regulating the risk and
financial aspects of the investors. As
per our finding IPOs
gives returms up to 10% to 20% to 88 of total
investors hence IPO can
be considered good option for
investment. Also, this project has report that
proven large no of
investors have shown confidence in IPO and
prefer to invest in IPO and according to them
IPO is one of the good option for Investment.
Therefore, despite of too much price volatility,
price manipulation and corporate fraud investors still have
confidence in this investment
tools.

KUMAR, 2009 stated that his study that the propensity to gamble and investment decisions
are correlated. At the aggregate level, individual investors prefer stocks with lottery features,
and like lottery demand, the demand for lottery-type stocks increases during economic
downturns. Because lottery-type stocks underperform, gambling-related underperformance is
greater among low-income investors who excessively overweight lottery-type stocks. These
results indicate that state lotteries and lottery-type stocks attract very similar socioeconomic

clienteles.

Dhaka, 2015 states that stock market, though not a place for gambling, involves gambling

gambling mean in relation to the stock market.

but the investor needs to know what risk and
It will help one to maintain a balanced portfolio and therefore, minimise risk. In simpler

coin the tem a gambling den for the whole stock market
Words, people have started to risk and have lost.
into the market without calculating the
because they have put their money
has to calculate his/her risks and then
invest.
one
even to gamble,
Tne paper suggests that

on the findings oftheir study that indicate

Rafael emphasise
FEREZ, 2011 Perez and Daniel
relative to both the market and socially
underperforms
even the online gambling portfolio

responsible portfolios.

18
 Rajarajan V (2000) had conducted a study on the title of "nvestors lite styhes and invesanan

character" The study reveals that active investors are dominated by the age group belkow

years, individuals group by above 50 years and passive investors by the nge qroup of%o
years. Active investors group and passive investors group have shont tem perspecsive i l e
making their investment decIsion. Most of the investors read two or more uKOOS

information to make investment decisions and most of them tend to make inveIANA
decisions on their own.

Chakarabarti and Harsh Rungta (2000) stressed the importance of brand effe in
Anjan
AMCs. Their study reveals that brand image
determining the competitive position of the
performance measures, infuences the
factor, though cannot be easily captured by computable
fund/scheme selection.
investor"s perception and hence his
investor will contínue to be misled byy
Thomas A Feuerborn (2001) argued that the individual
market funds. There no one is taking the completely honest
mutual fund companies that
new

can trust.
approach that c o n s u m e r s

mutual funds over a 20-year period found no ong-

Droms and Walker (2001) studying 151
time period
expenses, or
turnover rates, They xamine a longer
term persistence in returns,
investment companies.
smaller sample of
than this study, but a
Theirfindingscouldsupportvariousexplanations.Changesinreturns,expensesand
or management
in fund management
turnover rate could be due to changes
thatthe quality of
consistentthe possibility
also
philosophy. The findingsare
varies over time.
trustees
Oversight from the independent
to understand the
have conducted a study
Ramamoorthy
V.E (2001)
Rajeswari T.R and MF investors in order
to provide some
behaviour of 350
factors influencing the fund selection to innovatively design the
Companies (AMC)
for Asset Management
meaningful inferences
qualities, fund sponsor qualities and
done on the basis of product
analysís was
products. The scale.
framed on a five point Likert
nvestor services using questions

and factors
financial behaviour
studied the
V.E (2002)
Kajeshwari T.R and
Ramamoorthy Analysis using
investors by conducting Factor
retail
selection of scheme seletion
ntluencing
fund/scheme
investor's underlying fund/
to identify the
Component Analysis,
Principal

19
eriteria, so as to
gOup u c nto
speCitic market segment for
designing of the appropriate
marketing strategy.

Cingh
ng and Vanita (2002)51 have examined the investors' preferences and perception towards
MF investments by conducted a survey of 150 respondents in the city of Delhi. The findings
of the study were that the nvestors preferred to invest in public sector MFs with an

investment objecive of getting tax exemptions and stayed invested for a period of3-5 years
and the investors evaluated past perfomance. The study further concludes by stating that
majority of the investors were dissatisfied with the performance of their MFs and belonged to
the category who held growth schemes.

King (2002) has highlighted the emergence of products like exchange traded funds, hedge
funds, managed accounts etc. which offer competition to MFs.

mutual funds in
Wilcox (2002) conducted a research on investor"'s preferences for stock
that investors
which they conducted a conjoint study on 50 investors. Analysis showed
The wealthier and the knowledgeable
weighted past perfomance more than fee structure.
the mutual funds. But the authors are
investors are more biased towards load while selecting
the of future return. There are
of the point of view that past performance is not only guarantee
but investors make cognitive errors while
other factors that affects on decision making,
selecting funds.

"investor"s perception towards

on the title of
Ranganayaki N (2003)has concluded study
a
and
women investors."
A sample of 100 respondents in Sulur
investment with special to office savings are
that recurring deposit and post
adjoining areas was taken. It is concluded
sector. It may be due to safety, liquidity
avenues in the banking
most preferable investment and investment the first thing that
of women
Whenever, one thinks
andalso for the benefits. w o m e n are disproving the above said
But now-a-day"'s
comes to mind is gold and Jewellery.
belief.
a mutual fund and found that
investors choose
Ron (2003) examined how
Onald T. Wilcox indicated that the educated
and also
inve to past performance
attention
tors pay a great made poorer, not better, decisions
basic finance
inve knowledge of
estors demonstrated greater
than their less financially savvy.
20
 funds. 1he
mutual
attitudes
toward
investor"s
investor s
empirically investigated
Lenard et. al. (2003)
fund family is affected by
decision to switch
funds within a base
indicate that
the
ínvestment mix, capital
results investment losses,
current asset allocation, diversification
towards risk,
attitude and portfolio
investment mix, fund
initial fund perfornmance, funds
fund age, before switching
of the crucial to be considered
that these factors are and non-
reported
The study
plans or in both employer
invest in non-employer
whether they
regardless of
employer plans.
of risky
attitude towards
risk and holding
examined and compared
the
Coleman (2003) of Consumer
Susan
data from the 1998 survey
households using
white and Hispanic
assets of black, were more
risk averse and they
heads of household
result shows that Hispanic
Finances. The Black and white
households

for investment returns.

are unwilling
to take any risk in exchange also found
different asset mix.
The study has
averse even though there is
more risk hold a
are not
risk aversion and
heads of household express
a higher degree of
and older
that women
educated individuals
that more highly
of risky assets. Similarly, it found
lower percentage higher
aversion and hold a
households express a
lower degree of risk
and wealthier heads of

assets.
percentage of risky

common investor
"Measures for improving
Santi Swarup K (2003)
in her research article
the decisions taken by the
concentrates on
confidence in Indian primary market a survey",
sample investors
indicates that the
markets, the study
investors while investing in primary
also consider
to their own analysis as compared to broker 's advice. They
give importance identifies
analyst
recommendations. The study also
market price as a better indicator than
Issue price, information
market situation in India.
factors that are affecting primary
and liquidity emerge as important factors. This study
availability, market price after listing
and current level of risk associated
be assured of some return
Suggests that investors need to
have had bad experience in terms of lower
With investment in the market is very high. They
in terms of
Accordingly number of measures
market price after listing and high issue price.
oriented were suggested to improve the investor
regulatory, policy level and market
the measures
However, this paper does not highlight
Confidence in equity primary markets.
market.
1Or improving investor confidence in secondary
Daula A. Tkac (2004) found that investors are irTational or in some other sense cannot look
t for their own best interests. vuual nund
industry provides a variety of products and price
u r e s to heterogeneous consumer preferences and budgets. Consumer who prefer more
ctvle, features or power willngly pay higher prices and the investor rely on and pay to the

financial advisors or brokers for processing and formulating guidance regarding fund

allocation. They are tacing isk because of misconduct by advisory firms. They are not

demanding any disclosures of their fund. The risks reduced to zero if investors are willing to
nay with their own time and energy to monitor their fund position.

K. D. Mehru (2004) documented that the ignorance of the investors about mutual funds
coupled with aggressive selling by promising higher returns of the investors have resulted in
loss of investors confidence due to inability to provide higher return. The agents or
distributors of mutual funds are more governed by the commissions and incentives they get
for selling the schemes and not by the requirements of the investors and quality of the
products. They do not explain the risk factors to the investors.

Krishnamurthy Suresh, (2004) in an analysis of popular perceptions said that retail investors,
swamed back to the stock markets in the year2003-2004. The investments of households in
shares and debentures rolled by 8.6% to Rs. 5,847 crore in 2003-2004. Households had
deposited Rs. 1, 69,000 crore in bank deposits while investment in small savings nearly 19%.
The data suggests that that in 2003-2004, the household investors had turned extremely
conservative.

Sankaran (2004)proposes the future direction for investors will be to invest in pensionfunds,
as govemment is envisaging a policy to cover all kinds of investors. He further opined that
MF industry will continue to grow in spite of competition and will be propelled in the right
direction because of the investor friendly financial markets.

Singh (2004) has established that middle class salaried investors and professionals perfected

to have disclosure of net asset value on a day today basis and wanted to invest in MFs in
order to get higher tax rebates. Further, it is evidenced that small investors perceived MEFs to
Debetter investment alternative and public sector investments to be less risky.
Kiran D. and Rao U.s. (2004) identified investor group segments using the demographic and

psychographic characteristics of investors using two statistical techniques, namely

Multinomial Logistic Regression (MLR) and Factor Analysis.

Gupta and Gupta (2004) in the paper "Performance Evaluation of Select Indian Mutual Fund

Schemes: An Empirical Study", have studied the performance of 57 growth schemes using
the Net Asset Values for the period April 1999 to March 2003. The paper used performance
evaluation measures of Sharpe, Jensen, Trey nor and Fama to arive at the finding that some

funds performed better than the market because only few managers had the stock selection

skills and as a result the funds were exposed to large diversifiable risk.

Manjesh (2005) in article titled "Money Market Mutual Funds(MMMFs): A Macro

MMMFs as to being a very
Perspective" has elucidated the origin, features and advantages of
offer superior returns in
viable option for investment for the retail investor as Money Markets
lower risk for short term funds.
comparison with bank deposits, are highly liquid at relatively
and discusses
The paper focuses on advantages of MMMF investment for a retail investor
the
retail investor in India as it is obstructed by
the problems in penetration of MMMFs for the
and SEBI) in the matter of control of
perceived conflict of interest by the regulators (RBI
of Mutual
of contact across the country, the reliance
MMMFs, lack of Mutual Funds points
and structural constraints.
Fund industry on corporate investment

such psychological state

found the evidence of prevalence of
a
Panda and Tripathy (2005)
which is synonymous to mutual funds in
MF investors in India. For instance, UTI,
among
investment vehicle with the
had glorious past and perceived as a safe, high yield
India, a
their beliefs by staying invested
account holders have justified
added tax benefit. Many UTI
2001 episode of repurchase freeze
1999 bail out and the July
in UTI schemes even after the
are more likely to believe that something they own is better
on US 64 for 6 months. "People
found evidence of this effect also among
than something they do not
own". Further, they

continued existence of many poor performing funds with

Indian MF investors due to the
them.
investors staying invested with

to analyze recent trends in the MF

conducted a study
Ramamurthy and Reddy S (2005) to efficient
that the main
benetits for small investors due
Industry and draw a conclusion
administration, nice return potential
of investment, easy
diversification
management,
23
 titnt transpar
liquidity, transparency, flexibility, affordability, wide range of choices and a proper
governed by SEBI,
regulation

asious G. Noulas, John A. Papanastasiou and John Lazaridis

n005) evaluated the performance of 23 equity funds during the period 1997-2000 in Greece

The performance evaluation was based on measuring risk and return of the selected funds and
the study proves that the investor needs to know the long term behavior of Mutual funds in
investment decision.
order to make the right

investment pattern in debt scheme of

BalaiK(2005) conducted a study entitled,A survey on
mutual fund investments" in Chennai with special reference to Karvy Consultants Limited.
This study was undertaken to know the Investment pattern ofinvestors in the debt schemeof
mutual funds. In the survey, they studied the investment pattern, awareness about mutual

fund and performance of the investor in various ways of investment avenues. In Mutual

Funds, the debt scheme is the one, which provides good returns with reasonable risk. In
recent days, debt schemes are gaining momentum among investors and through this project
this fact has been proved. The choice of Investment Avenue of individual investors mainly

The survey on
depends annual income and the percentage of income allotted for savings.
on

investment pattern in debt scheme of mutual funds gives an idea of the investor"s choice

Dased on returns, rating of Mutual funds etc., particularly relating to city.

human saves one part of his income for some

anmugaraj R K (2005) stated that every
C needs. For this purpose, people are interested to save their income through bank

mutual funds, insurance. The study has

, p o s t office saving, chit funds, share market,
nCluded that,Tax Benefits" are the motto of the salaried and retired people and ,Higher

5-10% of the income is the amount invested.

urns are the motto of the business people.
diversification of risk consistency of returns when
yMa
or
do not perceive mutual funds as a

be given a closer look. The feeling that

dalfunds provide such benefits. This needs to
with it should be eradicated. The
mutual funds have a high degree of risk associated
these factors are taken into
popularity
y of mutua
of mutual funds investments
would be enhanced if all

account.
Securities Private imited for studying
Lim:
aS (2005) under
iertook a study for Way2wealth
the potential of insurance as an investment option and
rception of an
a investor, on the

24
oreference of imvestors investing in private Life insurance companies. It has been found that
the salaried person 1s more interested in having insurance as an investment avenue for various

reaso
sons. LIC and money back are the well known company and scheme. The private

Insu
surance companies are accepted to cotain extent only and it has to be tapped to greater
extent. It has also be tound that insurance advisor is the one, who are the main source of

information on schenes and advantages of private insurance companies, to the investor

which is an indicator of the bright future of Way2wealth Securities Pvt Ltd.

Kanchana R (2005) revealed that each and every individual saves a part of his income to meet
his future needs. The percentage of income saved mainly depends on the income level,
purpose of saving and objective of investments. In the same way, the choice of investment he
adopts also depends on the return expected. percentage of income allotted for savings and the
purpose of savings. 36.1% of salaried class people save 10-20 %of their income whereas only
13.6% of salaried class people save more than 40% of their income. 34.7% of salaried class
people have chosen bank deposits as the most preferable investment option. This is due to the
reason, that the salaried class people's main investment objective is safety and regular
income. This is being the reason, 36.8% of salaried class people have chosen safety as their

investment objective. Thus the most preferable investment option of the salaried class people
at Chennai is the Bank deposit since it is the investment avenue which provides safety to their

investment with a regular return.

Therefore, though gambling has become a part of the stock market, the stock market cannot
be coined as the gambling den because even the gambles that are fairly calculated do not give

as many returns as the one with well-calculated risks and strategies.

n this way, however betting has turned into a part of money markets, the stock exchange

anot be instituted as the betting cave on the grounds that even the bets that are genuinely

much figured dangers and procedures.

COmputed don't give returns as the one with very

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