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CHAPTER-1
INTRODUCTION
A Study on investors’ perception towards online stock trading with reference to investors in Bangalore, Karnataka
CHAPTER-1
INTRODUCTION
INTRODUTION
The Indian stock market is one of the oldest and the largest stock markets in the
world. The rapid industrialization in the country since independence has given vitality to
the stock market. Stock market helps to channelize household savings to the corporate
sector which in turn facilitates the development of industrial and service sectors.
Investment is to meet their future needs and also to protect them from the impact of
inflation, Investment in shares will fetch better returns compared to any other forms of
investment. Whenever the inflation rate is high, the stock market has given higher rates
of return to the investors. Share trading helps the corporate to raise additional funds for
expansion by creating demand for the securities. The liquidity that an exchange provides
gives the investors the ability to quick and easy selling of securities. This is an attractive
feature of the stock market investment,
Investors can select the suitable avenue according to their desired level of risk, return
and liquidity. Investment in securities of capital market can be made through primary or
secondary market. In the primary market corporate entities offer new securities directly
to the investors and mobilize the funds needed for their development. The secondary
market provides continuous liquidity to the securities by trading them in the stock
exchanges.
The investors’ can buy or sell the existing securities at the prevailing market price in
the stock exchange through stockbrokers. Investment is the deployment of fund with the
aim of achieving additional income or growth in capital value. Investment was an
investing activity that attracts all people irrespective of their occupation, education and
social status, . An understating of the core concepts and a thorough analysis of the
options can help investors to create a portfolio that maximizes returns while minimizing
risk exposure. The focus of the financial advisors and government was to see that every
individual needs to invest and earn returns on their idle resources and generate a specified
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sum of money for a specific goal in life and make a provision for an uncertain future.
The financial investment is the obligation of money that is expected to yield some
gain over a period of time. If a person has more funds then they can deposit the surplus
money in the bank to earn a fixed rate of interest or buy gold or purchase shares or invest
in any other form of financial instruments. In other words, investment is allocating of
monetary resources to assets that are expected to yield some gain or positive return over a
period of time. The assets may range from safe investment to risky investment. The
nature of investment in the financial sense differs from its use in the economic sense.
According to investment means net addition to the economy's capital stock which
consists of goods and services that were used in the production of other goods and
services.
Traditionally investment is distinguished from speculation in three ways. Speculation

brings in its wake risk, capital gain and period of time. The word risk refers to the
possibility of incurring a loss in a financial transaction. Investing in shares, purchases of
securities were preceded by proper investigation, analysis and review them will receive a
stable return over a period of time, such an act is called investment. In India, the
investors have the dual advantages of free enterprises and government control. Freedom
and growth were ensured from the competitive forces of private enterprise. On the other
hand, being a fixed economy, government control exerts discipline and curtails some
elements of freedom. A public sector that is left free to operate, to hopes to achieve the
benefits derived from both socialistic and capitalistic forms of government. In India, the
political climate was conducive to investment as government control lends stability to the
capital markets. The successes of every investment decisions have become increasingly
important in recent times. Making sound investment decisions require both knowledge
and skill. Skill was needed to evaluate the risk and return associated with an investment
decision. Knowledge was required to analyze the complex investment alternatives
available in the economic environment. The main aim of investors was to get capital
appreciation and regular returns. The capital appreciation occurs when an investment is
sold out at a higher price as compared to the original purchase price of an investment,.
Behavioral finance demonstrates how actual behavior of individuals in financial settings
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differs from rational behavior. Behavioral finance draws inputs from the field of
psychology and finance in an attempt to understand and explain irrational stock market
and investor behavior.
The present study highlights the investors' attitude towards stock market in
Bangalore city and also investment decision and satisfaction of the investors' in respect of
stock market and factors to be considered before investing in the market. Besides it has
also been analyzed about the investors' satisfaction regarding investment in stock
market.4
Investors’ perception
The investors’ perception is psychological variance. Perceived risk of individual
investors is considered as one attitude towards behavior and. Investment decisions are
made by investors and investment managers. Investors commonly perform investment
analysis by making use of fundamental analysis, technical analysis and judgment.
Investment decisions are often supported by decision tools. It is assumed that information
structure and the factors in the market systematically influence individuals' investment
decisions as well as market outcomes. Investor market behavior derives from
psychological principles of decision making to explain why people buy or sell stocks.
Conventional financial theory affirms that the investors are assumed to be rational
wealth-maximizes basing their investment strategies purely on the risk-return
consideration, following basic financial rules (Jain 2012). However, the level of risk,
investors willing to undertake is not the same, and depends it mainly on their personal
attitudes towards risk. It is believed that investment decisions are a function of several
factors such as market characteristics and individual risk profiles, in addition to
accounting information. The disposition error shows that regardless of accounting
information, investors are influenced by sunk cost considerations and asymmetrical risk
preferences for gain/loss situations.
Examined factors influencing investors behavior, it is suggested that classical wealth

- maximization criteria are important to investors, even though investors employ diverse
criteria when choosing stocks. said that contemporary concerns such as local or
international operations, environmental track record and the firm's ethical posture appear
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to be given only cursory consideration. Recommends that the brokerage, houses,

individual stock brokers, family members and co-workers go largely unheeded. Many
individual investors discount the benefits of valuation models while evaluating stocks.
found that stock marketability, past performance of the firm's stock, government
holdings, and the creation of the organized financial markets are the investors
considerations.
Evidence that risk aversion decreases as the investor's wealth increases. The risk
aversion decreases not only as wealth increases, but also as age, income and education
increase. that individuals' risk aversion is largely a function of visceral rather than
rational considerations. Contended that dividends, expected returns and the firm's
financial stability are critical investment considerations for individual investors and
Baker, proposed that investors behave rationally, and taking into account the investment's
risk/return trade-off. Wealth Maximization, Technology, Reliability and Trust are the
greatest influence on the individual stock investor attitude. This study is to empirically
examine the investors’ attitude is based on investment decision and satisfaction towards
the stock market in India.
Investor
An investor is a person who allocates capital with the expectation of a future
financial return. Investors utilize investments in order to grow their money and or provide
an income during retirement, such as with an annuity. A wide variety of investment
vehicles exist including (but not limited to) stocks, bonds, commodities, mutual funds,
exchange-traded funds (ETFs), options, futures, foreign exchange, gold, silver, retirement
plans and real estate. Investors typically perform technical and/or fundamental analysis
to determine favorable investment opportunities, and generally prefer to minimize risk
while minimizing returns.
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Behavioral Finance
This study deals with Behavior Finance. The aim of behavioral finance is to analyses
the phenomena of market keeping in view the psychological factors involved in the
behavior of investors. Behavioral Finance mainly focuses on how investors interpret and
act on micro and macro information to make investment decisions. According to Kent et
al. (2001), the most common behavior that most investors do when making investment
decision. Investors often do not participate in all asset and security categories, Individual
investors exhibit loss-averse behavior , Investors use past performance as an indicator of
future performance in stock purchase decisions, Investors trade too aggressively,
Investors behave on status quo, Investors do not always form efficient portfolios,
Investors behave parallel to each other, and Investors are influenced by historical high or
low trading stocks.
The proposition that has dominated finance is Efficient Market Hypothesis (EMH).
There are three basic theoretical arguments that form the basis of the EMH. The first and
most significant is that investors are rational. Secondly it is based on the idea that
everyone takes careful account of all available information before making investment
decisions. It is related to internal consistency. The third principle is that the decision
maker always pursues self- interest. The globalization of financial markets has increased
the participation and number of retail investors' over the past two decades by providing a
wide variety of market and investment options. However, it makes their investment
decisions process more complex.
There are many investment products which are available for investment to investors
in the stock market ranging from bonds to options. These products vary with regard to
risk factor involved and the return. Investors choose the investment products which are
matching to their risk tolerance. Moreover, investors make up their mind regarding risk
factors involved in any investment based on the financial information they receive from
different channels or sources. Moreover, knowledge of investors regarding financial
market and their past experience contribute a lot towards the risk assessment in various
products. Investors who have experienced loss in the past formulate a new investment
decision having kept in mind their past experience. These factors along with some other
factors constitute the risk aversion and risk perception of the investors. After formulating
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risk attitudes the investors formulate their potential returns from that investment.
Psychological research demonstrates that in areas such as finance, men are overconfident
than women. Human beings are overconfident about their abilities, their knowledge and
their future prospects.
Investors’ Perception and Stock Market Investment

An investor means a person who invests his savings. Savings are generated when a
person abstains from present consumption for a future use. Savings keep the cash idle.
Hence, the saver has to find a temporary repository for his savings until they are required
for his future. Increase in investments is because of hike in working population, enhanced
family incomes and consequent savings, availability of large and attractive investment
alternatives.
The investor who is having extra cash could invest it in securities or in any other
assets like gold or real estate or could simply deposit it in his bank account. At present, a
wide variety of investment avenues are open to the investors to suit their needs and
nature. Knowledge about the different investment enables the investors to choose
investment intelligently. The required level of return and the risk tolerance decide the
choice of the investor. The investment alternatives range from National savings
certificates, Indira Vikas Patra, Kisan Vikas Patra, Provident fund, Mutual fund schemes,
Insurance schemes, Chits, Bank fixed deposits, Company fixed deposits, company
shares, Bonds / Debentures, Government securities, Postal savings schemes and Real
estate etc., An equity share is a part of the ownership capital of the company eligible to
share many benefits from the company.
Stock market is one of the most vibrant sectors in the financial system, marking an
important contribution to economic development. Stock market is a place where buyers
and sellers of securities can enter into transactions to purchase and sell shares, bonds,
debentures etc. Stock Market is a platform for trading various securities and derivatives.
Further, it performs an important role in enabling corporate, entrepreneurs to raise
resources through public issues. Today long term investors are interested to invest in the
Stock market rather than invest anywhere.
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The stock market is one of the most interested and inquisitive area for investors who
always want to create massive wealth in the shortest time phase since stocks are the most
wonderful category of financial instruments and one of the greatest tools ever invented
for building financial wealth. Investors are the key stakeholders in the stock market
operations and their attitude towards anything related to the Indian stock market is of
utmost importance. The attitude has been basis of individual factors with respect to
different variables seems to be bothering the stock market behavior. Indian Stock market
is considered as very much volatile in nature. Therefore, despite having good savings
most of the investors do not invest directly in share market. Not only its volatility but
also lack of knowledge, complex decisions to make investment in shares and higher risks
are the other factors which restrict the potential investors from making investment in
Indian stock market.
It is very much important and necessary to understand the expectation, attitude and
experience level of investors. Investors can easily and quickly participate, or withdraw,
the market depending on their confidence level and attitude towards the prevailing
market conditions. Despite increased trainings and involvement of the community in
investment activities, investors are investing in financial assets in stock market. The
factors that influence investor attitudes towards Indian stock market investments and how
their trust, confidence and level of risk in the stock market can be regained or rather
improved.
The process of economic reforms and liberalization was set in 1991 when the
economy suffered severely from a precariously low foreign exchange reserve,
burgeoning imbalance on the external account, declining industrial production, galloping
inflation and a rising fiscal deficit. The economic reforms, being an integrated process,
included deregulation of industry, liberalization in foreign investment, regime,
restructuring and liberalization of trade, exchange rate, and tax policies, partial
disinvestments of government holding in public sector companies and financial sector
reforms. The reforms in the sectors such as trade, industry and fiscal policy were initiated
first in order to create the necessary macroeconomic stability for launching financial
sector reforms, which sought to improve the functioning of banking and financial
institutions and strengthen money and capital markets including securities market. Hence,
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the study is to create the investors awareness about the stock market and to increase
investors’ attitude towards investment decision of stock market in India.
Stock Market Investment
Stock market is one of the most important sources for companies to raise money.
This allows business to publicly trade or raise additional capital for expansion by selling
shares of ownership of the company in a public market. The liquidity that an exchange
provides affords investors the ability to quickly and easily sell securities. An economy
where the stock market is on the rise is considered to be an upcoming economy. Rising
share prices for instance tend to be associated with increased business investment and
vice versa. The shares of profit making companies are quoted at higher prices and are
actively traded so such companies can easily raise fresh capital from stock market. The
general public hesitates to invest in securities of loss making companies. So stock
exchange facilitates allocation of investor's fund to profitable channels.
Evolution of Stock market

The corporate securities market in India dates back to the 18th century when the
securities of the East India Company traded in Mumbai and Kolkotta. The brokers used
to gather under a Banyan tree in Mumbai and under a Neem tree in Kolkata for the
purpose of trading with those securities. However the real beginning came in the 1850's
with the introduction of joint stock companies with limited liability. The 1860's
witnessed feverish dealings in securities and reckless speculation. This brought brokers in
Mumbai together in July 1875 to form the first formally organized stock exchange in the
country viz. The Stock Exchange, Mumbai. Ahmedabad stock exchange in 1894 and 22
others followed in this 20th century. The process of reforms has led to a pace of growth
almost unparalleled in the history of any country. Securities market in India has grown
exponentially as measured in terms of amount raised from the market, number of stock
exchanges and other intermediaries, the number of listed stocks, market capitalization,
trading volumes and turnover on stock exchanges, investor population and price indices.
Along with this, the profiles of the investors, issuers and intermediaries have changed
significantly. The market has witnessed fundamental institutional changes resulting in
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drastic reduction in transaction costs and significant improvements in efficiency,

transparency and safety, thanks to the National Stock Exchange. Indian market is now
comparable to many developed markets in terms of a number of parameters.
Types of Stock Exchanges

A stock exchange is a market where shares and Debentures of Joint securities and
securities of central, state and semi-government bodies are bought and sold under a code
of rules and regulations. The securities contracts( Regulations) Act 1956 defines stock
exchange as an association or body of individuals whether incorporated or not
established for the purpose of assisting, regulating and controlling of business in buying,
selling and dealing in securities.
1. BOMBAY STOCK ECHANGE.

Established in 1875, BSE is Asia's first & the Fastest Stock Exchange in world with
the speed of 6 micro seconds and one of India's leading exchange groups. Over the past
141 years, BSE, as the first stock exchange in Asia and the pioneer of securities
transaction business, has facilitated the growth of the Indian corporate sector by
providing it an efficient capital-raising platform.
2. NATIONAL STOCK ECHANGE.

The National Stock Exchange (NSE), located in Mumbai, is the leading stock
exchange in India and was the fourth largest in the world according to World Federation
of Exchanges (WFE) in terms of equity trading volume in 2015. NSE began operations in
1994 and is ranked as the largest stock exchange in India in terms of total and average
daily turnover for equity shares every year since 1995.
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3. MULTI COMMODITY OF INDIA ECHANGE.
The Multi Commodity Exchange of India Limited (MCX), India’s first listed commodity
exchange, is a state-of-the-art, commodity derivatives exchange that facilitates online
trading, and clearing and settlement of commodity derivatives transactions, thereby
providing a platform for risk management.
4. NATIONAL COMMODITY AND DERIVATIVES

EXCHANGE.
National Commodity & Derivatives Exchange Limited (NCDEX) is a professionally

managed on-line multi commodity exchange. The shareholders of NCDEX comprises of
national level institutions, large public sector bank and companies. NCDEX is a public
limited company incorporated on 23rd April, 2003 under the Companies Act, 1956.
NCDEX is headquartered in Mumbai and offers facilities to its members from its various
centers located throughout India.
Functions of stock Market
 Economic Barometer
A stock exchange is a reliable barometer to measure the economic condition of a

country. Every major change in the country and the economy is reflected in the prices of
shares. The rise/fall in the share prices indicates the boom/ recession cycle of the
economy. Stock exchange is known as a pulse of economy or economic mirror which
reflects the economic conditions of a country.
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 Liquidity
The stock market is to provide ready market for sale and purchase of securities.
The presence of stock market gives assurance to investors that their investment can be
converted into cash whenever they want. The investors can invest in long term
investment projects without any uncertainty, as because of stock market they can convert
into short term, medium term as well as long term investment.
 Better Allocation of Capital
The shares of profit making companies are quoted at higher prices and are actively
traded so such companies can easily raise fresh capital from stock market. The general
public hesitates to invest in securities of loss making companies. So stock exchange
facilitates allocation of investor's fund to profitable channels.
 Effective Mobilization of savings
Stock exchanges provide organized market for individual as well as institutional

investors. They regulate the trading transactions with proper rules and regulations in
order to ensure investors’ protection. This helps to consolidate the confidence of
investors and small savers. Thus, stock exchanges attract small savings especially of
large number of investors in the capital market.
 Promoting Capital formation
The funds mobilized through capital market are provided to the industries engaged
in the production of various goods and services useful for the society. This leads to
capital formation and development of national assets. The savings mobilized are
channelized into appropriate avenues of investment.
 Investment priorities
Stock exchanges facilitate the investors to decide his investment priorities by

providing him the basket of different kinds of securities of different industries and
companies. He can sell stock of one company and buy a stock of another company
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through stock exchange whenever he wants. He can manage his investment portfolio to
maximize his wealth.
Products of stock Market
National Stock Exchange of India or in short NSE happens to be India's largest

Stock Exchange and World's third largest stock exchange in terms of transactions. S
Products of NSE
Equities
The Equities section provides you with an insight into the equities segment of
NSE with Current Market Reports, Historical Data and Product Information. In-depth
information regarding listing of securities, trading systems & processes, clearing and
settlement, risk management, trading statistics etc.
Derivatives
The Derivatives section provides you with an insight into the derivatives segment
of NSE with Current Market Reports, Historical Data and Product Information. Real-time
quotes and information regarding derivative products, trading systems & processes,
clearing and settlement, risk management, statistics etc.
Debt
Debt section provides you with an insight into the debt segment of NSE with
Current Market Reports, Historical Data and Product Information. Large investors and a
high average trade value characterize this segment. Till recently, the market was purely
an informal market with most of the trades directly negotiated and struck between
various participants. The commencement of this segment by NSE has brought about
transparency and efficiency to the debt market.
BSE
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The BSE Stands for Bombay Stock Exchange. BSE functions as the first-level
regulator in the securities market, providing monitoring and surveillance mechanisms
that are able to detect fraud and manipulations in stock prices.BSE currently has Index
and Equity Futures contracts, Index and Equity Monthly Options contracts and Index and
Equity Weekly Options contracts. A Futures contract is a standardized contract to buy or
sell a security at a future data at an agreed date.
Role of SEBI in stock market
 To protect the interests of investors through proper education and guidance as

regards their investment in share. For this, security exchange board of India has
made rules and regulations to be followed by the financial mediators such as
brokers, speculators, etc. The security exchange board of India look after the
complaints received from investors for fair settlement of contract. It issues
booklets for the guidance and protection of small savers.
 To regulate and control the business on stock exchanges. For this, security
exchange board of India keeps supervision on brokers. Registration of brokers
and sub-brokers is made compulsory to follow certain rules and regulations.
Effective control is too maintained by SEBI on the working of stock market.
 To make registration and to regulate the performance of mediators such as stock

brokers, sub-brokers, speculators, share transfer agents, merchant bankers and
other intermediaries operating on the securities market. In addition, to provide
training to intermediaries. This function is useful for healthy atmosphere on the
stock market and for the protection of small savers.
 To regulate merger, takeover and acquisition of companies in order to save from

harm the interest of investors. For this, Stock exchange board of India has issued
suitable guidelines so that such mergers and takeovers will not be at the cost of
small investors.
 To prohibit unfair practices and fraudulent of intermediaries operating on
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securities markets. Security exchange board of India is not for interfering in the
normal working of these intermediaries. Its function is to regulate and control
their objectionable practices, which may harm the investors and healthy growth
of capital market.
 To conduct inspection, inquiries and audits of stock exchanges, intermediaries

and self-regulating organizations and to take suitable remedial measures
wherever necessary. This function is undertaken for orderly working of stock
market and intermediaries.
Operational definitions
Investors' Perception
Investors' perception refers to the investors feeling for their investment in stock
market. The attitude is the psychological variable and they are making decision based on
observation and circumstance. A person possesses positive or negative feelings toward the
behavior of performance. Investing is clearly risky and people routinely have to make
decisions under uncertainty due to incomplete information. Depending on the amount of
information an investor has regarding various stocks on the stock market determines one's
risk perception. The perceived degree of uncertainty by investors affects their decisions
regarding consumption, saving and investing (Cary, et. al, 2008). Perceptions encompass
psychological and emotional aspects, which subsequently guide judgment and decision
making. And this makes perceived risk attitudes of investors to be more subjective rather
than objective to risky situations. Therefore, the attitudes we form and express are likely to
be influenced both by emotions and a more `logical' cognitive assessment.
An analysis of how people make investment decisions confirms that objective

assessments of probability have only a weak impact on the decision making process . Risk
perception is an indispensable component of financial decision making and other risk-taking
behaviors. The risk attitude is an important but under-researched topic that is essential for
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understanding investment decision making in stock markets. Risk attitude encompasses an

assessment of the degree of situational uncertainty, controllability of that uncertainty, and
the confidence in these estimates.
Risk
Risk is defined as ªan uncertainty that could have a positive or negative effect on
one or more objectives. An investor seeking a large return is likely to see more risk as
necessary, while one who only wants a small return would find such an investment strategy
reckless. However, most rational economic actors are sufficiently risk averse such that,
given two investments with the same return and different levels of risk, they would choose
the less risky investment.
Wealth Maximization
The wealth maximization strategy generally involves making sound investment
decisions which takes into consideration any risk factors that would compromise or
outweigh the anticipated benefits.
Technology
Technology has had a massive impact on our lives and is generally regarded to
have improved our social lives, businesses, governments and education. Unless you are a
broker or an investor much thought is given as to the impact technology has had on the
productivity of the Stock Market.
Trust & Reliability

Investors' trust refers to the brokers offering -online trading services to behave
ethically and in a socially acceptable manner. It reduces the demand for equity, implies that
companies will have more difficulty in floating their stock in countries characterized by low
levels of trust. They find that trust has a positive and significant effect on stock market
participation and a negative effect on dispersion of ownership. These effects are present
even when we control for law enforcement, legal protection, and legal origin. Hence,
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cultural differences in trust appear to be a new additional explanation for cross-country

differences in stock market development
Herding effect
Herding effect in financial market is identified as tendency of investors' behaviors

to follow the others' actions. Practitioners usually consider carefully the existence of
herding, due to the fact that investors rely on collective information more than private
information and the result is the price deviation of the securities from fundamental value.
Therefore, many good chances for investment at the present can be impacted. Because, its
impacts on stock price changes can influence the attributes of risk and return models and
this have impacts on the viewpoints of asset pricing theories. In the security market, herding
investors base their investment decisions on the masses' decisions of buying or selling
stocks. In contrast, informed and rational investors usually ignore the flow of masses, and
this makes the market efficient.
In general, herding investors act in the same ways as prehistoric men who had a
little knowledge and information of the surrounding environment and live together in groups
to support each other and get safety. When the investors put a large amount of capital into
their investment, they tend to follow the others' actions to reduce the risks, at least in the
way they feel. Besides, the preference of herding also depends on types of investors, for
example, individual investors have tendency to follow the crowds in making investment
decision more than institutional investors. Stock investment decisions that an investor can
be impacted by the others: buying, selling, choice of stock, length of time to hold stock, and
volume of stock to trade. conclude that buying and selling decisions of an investor are
significantly impacted by others' decisions, and herding behavior helps investors to have a
sense of regret aversion for their decisions.
Herding variables are generally applicable to individual investors as they are not
well informed of the stock market, so they feel a sense of safety while following the masses
and make investment decisions as the other investors do. But some investors are confident
enough and well informed about the investment markets so they do not find any good to
follow the herd behavior up to a limited extent, this type of investors act as corrections to
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the security prices movements in the long term.
Time
A person’s attitude towards time can be equated with his attitude towards authority
figures. Here, it is considered that the investment made today is for a better tomorrow, quick
returns, timely benefits in terms of dividend. Investment is a long term affair.
Saving
The portion of disposable income not spent on consumption of consumer goods but
accumulated or invested. There are a variety of reasons for saving money. Different people
save for different reasons. It is important to have an emergency fund set aside to cover
unexpected expenses.
Investment decision
Investment decisions are made by investors and investment managers. Investors

commonly perform investment analysis by making use of fundamental analysis, technical
analysis and judgment. Investment decisions are often supported by decision tools. It is
assumed that information structure and the factors in the market systematically influence
individuals' investment decisions as well as market outcomes.
Investor’s market behavior derives from psychological principles of decision

making to explain why people buy or sell stocks. These factors will focus upon how
investors interpret and act on information to make investment decisions. Individual
investments behavior is concerned with choices about purchases of small amounts of
securities for his or her own account. No matter how much an investor is well informed, has
done research, studied deeply about the stock before investing, he also behaves irrationally
with the fear of loss in the future. This different behavior in the individual investors is
caused by various factors which compromise the investor rationality. An individual investor
is one who purchases generally small amounts of securities for their own account. Identified
that dividend, rapid growth, saving purposes, quick profits through trading, professional
investment management and long-term growth that affect individual investors' attitudes
towards their investment decisions. 18
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CHAPTER-2
REVIEW OF LITERATURE
CHAPTER-2
REVIEW OF LITERATURE
INTRODUCTION
Review of related literature is an important step in research. It helps the researcher to clarify
and define the problem, stating objectives, formulating hypotheses, selecting appropriate design and
methodology of research as well as interpreting the results in the light of the research work already
undertaken. In this chapter, an endeavor has been made to provide an overview of various aspects of
this study through the review of existing literature. The sources referred to include various journals
books, doctoral theses, working papers, reports, magazines, internet sites, newspapers, etc. In this
research, the researcher has classified review of literature into three groups namely investment
attitude, investment decision and satisfaction which are to be discussed now one after the other
INVESTORS’ PERCEPTION
Chalapati Rao, (2002) in his study entitled An Overview of the Indian Stock Market
with Emphasis on Ownership Pattern of Listed Companies, found that all is not well with the
governance of many big American companies. Over the years all sorts of checks and balances have
been created to ensure that company bosses, who supposedly act as agents for shareholders, their
principals, actually do so. Yet the cult of the allpowerful chief executive, armed with backfills of
stock options, has too often pushed such checks aside. It is time for another effort to realign the
system to function more in shareholders' interests. Companies need stronger non-executive directors,
paid enough to devote proper attention to the job; genuinely independent audit and remuneration
committees; more powerful internal auditors; and a separation of the jobs of chairman and chief
executive. If corporate America cannot deliver better governance, as well as better audit, it will have
only itself to blame when the public backlash proves both fierce and unpleasant.
Debjiban Mukherjee, (2007) in his study entitled Comparative Analysis of Indian

Stock Market with International Markets, found that the covers New York Stock Exchange (NYSE),
Hong Kong Stock exchange (HSE), Tokyo Stock exchange (TSE), Russian Stock exchange (RSE),
Korean Stock exchange (KSE) from various socio- politico-economic backgrounds. Both the
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Bombay Stock exchange (BSE) and the National Stock Exchange of Indian Limited (NSE) have
been used in the study as a part of Indian Stock Market. The time period has been divided into
various eras to test the correlation between the various exchanges to prove that the Indian markets
have become more integrated with its global counterparts and its reaction are in tandem with that are
seen globally.
Tripathi, (2008) in his study entitled Investment Strategies in Indian Stock Market: A
Survey, found that the investors use both fundamental as well as technical analysis while investing in
Indian stock market. They strongly agree that various company fundamentals significantly influence
stock prices in India. The most worthy investment strategies in Indian stock market are buying
stocks for which some good news is expected, buying stocks which are expected to announce bonus
issue, momentum strategy, size strategy and following investment behavior of FIIs. The widely used
investment strategies in Indian equity market are size based strategies, momentum strategies,
following FIIs investment behavior, buying stocks on the basis of 30 days moving average and
buying stocks on the basis of the relative strength index. It was also noticed that there is a substantial
change in investment strategies used by active investors in Indian stock market over the past five
years. In a nutshell, there has been a shift from purely technical analysis based strategies on the one
which involves both fundamental and technical analysis. Moreover the investment horizon of
investors has also reduced due to higher volatility.
Durga Rao, P. V, (2013) in her study entitled A study on role of demographic factors in
small investors' savings in stock market, found that the investor can make the share trading as a
beneficial investment area. It is purely based upon the investor's awareness towards share trading.
When the investor gets more and more accurate information on the right time, then he/she can enjoy
the taste of success from the share trading. The authorities should implement more training and
awareness programs for the investors.
Anshuja Tiwari and Babita Yadav, (2013) in their study entitled A comparative
analysis of Investor's Risk perceptions towards public and private life insurers in Jabalpur District of
Madhya Pradesh, found that private insurance players with their aggressive marketing strategy,
advanced technology, foreign expertise and better customer services makes this industry attractive
for every social segment. In private life insurance service providers even aware and educated people
hesitate to invest because of having less faith due to evidence of many insurance frauds and
misleading information given at the time of policy selling.
Murty, (2013) in his study entitled Evaluation of investment decision of small investors in
Page 21
Indian stock market, found that the success of equity issues is totally dependent on the satisfaction of
the investors during post - investment period and investors' confidence. The post - investment
satisfaction creates a lasting impact on the investing thoughts or ideas of the investors and investors'
confidence decides the quantity of investment. The basic factor that generates investment
satisfaction and confidence is the high profitability prospects (rate of return) associated with equity
investments.
Vijayakumar, (2015) in his study entitled Investor's perception in equity market

investments in India with special reference to Chennai, made an attempt to find what plays an
important role in the minds of the investors before deciding on investment. After collecting
questionnaires from 200 respondents in the Chennai city it was found that the nine factors namely
security, risk tolerance, lucrative returns, investment duration, periodic returns, share performance,
long-term investment , futuristic returns and investment dynamics influence the investors' perception
at various level and ultimately leads them to satisfaction.
Gnani Dharmaja, (2012) in his study entitled A Study on the Individual Investor
Behavior with Special Reference to Geojit BNP Paribas Financial Service Ltd, Coimbatore. The
study aimed at identifying the most and the least influencing factors of the individual investors.
Convenience sampling method was used in the study and a sample size of 200 investors was taken
for the study. The primary data was collected through structured questionnaire. The questionnaire
included thirty four items that belong to five categories, namely self-image/firm-image coincidence,
accounting information, neutral information, advocate recommendation and personal financial needs.
The research design that is adopted in this study is descriptive design. The data collected through
questionnaire has been analyzed using mean score value and chi-square test. Pie charts and bar
diagrams were used in the study for better understanding.
Puneet Bhushan, (2014) in his study entitled Insights into awareness level and
investment behavior of salaried individuals towards financial products, found that the respondents
are quite aware about traditional and safe financial products whereas awareness level of new age
financial products among the population is low. Majority of the respondents park their money in
traditional and safe investment avenues. Overall results suggest that people must be made more
aware about new investment opportunities available in the market. They must be properly educated
about new financial products available in the market, so that they can get advantage of earning
higher returns. Moreover they will not get cheated by sales personnel as they will have knowledge
regarding the charges levied by a company selling financial products and they will invest in financial
products only after weighing risk return characteristics of the financial products.
Page 22
Tamil Selv, (2015) in her study entitled ªInvestors Attitude towards Investment
Avenuesº, found that the main objective of the investors in Coimbatore District towards making
investments and to assess the investors© attitude towards the investment avenues. The demographic
variables and objectives of the investors have been obtained from the respondents and the
relationship between these variables and objectives has been computed. The attitude of the
respondents towards the select investment avenues has been ranked. This study also offers
suggestions to the investors to make investments.
Parimalakanthi, (2015) in her study entitled A Study Pertaining to Investment

Behavior of Individual Investors in Coimbatore City, found that the safety was also a foremost
preferred aspect in fixed income and investment for safety. Capital appreciation was the foremost
preferred aspect in long term investment. Additional income was the most preferred aspect on
liquidity investments. The factors namely gender and investment ratio in real estate does influence
the investment behavior. The investment before was found to be significant influencing factor of
overall investment behavior of the investors. Based on the table two whatever be the avenues still the
present day investors think ONLY about safety as their priority hence, MOF,RBI,GOI, SEBI and
policy makers should frame policies in such a way that safety is given the highest priority than other
parameters considered for the study. Hence, the study concludes that saving habits to be developed
with Individuals at all levels rural or urban, aged or young, male or female, married or spinster, low
class or high class and so on. The mobilization of financial savings is possible by activating the
Pradhan Mantri Jan Dhan Yojana (PMJDY) accounts by progressive use of Direct Benefit Transfer
(DBT), increasing financial literacy and creating universal social security cover for all citizens,
especially the poor, Under-privileged and workers in the unorganized sector by Shri. Arun Jaitley,
Honorable Finance Minister, Government of India.
Saranya, (2015) in her study entitled A Study on Investor's attitude towards Currency
market in Chennai, Tamil Nadu. Indiaº, found that the investment behavior of investors and
investment preference for the same. Investment is necessary for meeting the cost of inflation and to
maintain the liquidity. The main purpose of this study is to evaluate that which is the most favorable
option in which people like to invest their savings and which factors do generally considered by
people while making investments in available avenues. Descriptive research design was adopted in
this study. Convenient sampling technique used to choose samples. Totally 300 respondents
participated through by questionnaire in this study. Chi square, One way ANOVA, Mann -whitney U
test, Kruskal -Wallis test and Rank correlation test were used to measure hypothesis and to analyze
Page 23
the matrimonial sites. Findings indicate that Majority of the respondents believe to the statement
ªHigh risk, high return. The main objective of investing in currency market is for the return on
investment and the wealth maximization.
Merikas et.al, (2000) in their study entitled Economic Factors And Individual Investor
Behavior: The Case of The Greek Stock Exchange, examined the factors that were thought to
exercise the greatest influence on the individual stock investor, and included not only the factors
investigated by previous studies and derived from prevailing behavioral finance theories, but also
introduced certain other factors generated through personal interviews that have been found to
influence the stockholders' investment decisions in Greece. It was found that the there was a certain
degree of correlation between the factors that behavioral finance theory and previous empirical
evidence identified as the influencing factors for the average equity investor, and the individual
behavior of active investors was influenced by the overall trends prevailing at the time of the survey.
Meenu Verma, (2008) in her study entitled Wealth Management and Behavioral
Finance: The Effect of Demographics and Personality on Investment Choice among Indian
Investors. The author has observed that demographic profile and investor personality can be the two
determinants for making perception about the investor psychology. The study revealed that real
estate, followed by mutual funds are the most preferred choices for investment among the investors.
It was noted males prefer real estate, PPF and equity shares as attractive avenues for investment,
females prefer bank FD, insurance and bullions. Young investors find investing in equity
shares/derivatives more comfortable, while old investors prefer PPF as their first choice. Middle
aged investors prefer investing in mutual funds and NSC. Thus it clearly shown that as age increases,
the ability to take risks decreases and people go towards safer investments. People with low income
prefer investments in low risk investments like NSC. People with high income like to invest in real
estate. Middle income groups prefer investing in bank FD and mutual funds. The study provides the
evidence that the investment choice depends on and is affected by the demographic variables such
as gender, age, income, education, occupation as well as various personality types such as
conservative, medium moderate and aggressive.
Lovric., M. et al, (2008) in their study entitled A Conceptual Model of Investor

Behavior, found that a description model of individual investor behaviour in which investment
decisions are seen as an iterative process of interactions between the investor and the investment
environment. The investment process was influenced by a number of interdependent variables. They
suggested that this conceptual model can be used to build stylized representations of individual
Page 24
investors and further studied using the paradigm of agent-based artificial financial markets.
Abdelkarim, et.al, (2009) in their study entitled Investor Perception of Information

Disclosed in Financial Reports of Palestine Securities Exchange Listed Companies in Accounting
and Taxation, made an attempt to investigate the perception of users regarding the availability,
adequacy, and usefulness of information disclosed in the financial reports of companies listed on the
Palestine Securities Exchange (PSE). The availability, adequacy, and timeliness of relevant
information about marketable securities are important for both pricing efficiency and market
confidence. The investors must be fully informed of relevant facts to make sound judgments about
the value of securities. The Palestinian economy suffers from limited resources and poor quality of
small and medium family enterprises. Therefore, it is important to have an efficient capital market to
attract foreign capitals, to gather the Palestinian savings, and to help local and foreign investors in
making investment decisions. The primary objective was to assess the extent that users perceive
information disclosed in the financial reports by companies listed on the PSE as available, adequate,
and useful to their investment decisions. It was also examined that whether multi-groups of investors
have the same investment decision criteria within the different characteristics (qualification,
experience, industry, and the amount of money invested).
Geetha and Ramesh, (2011) in their study entitled Investors' Perception on Mutual
Funds with reference to Chidambaram Town in Perspectives of Innovations, explored the
perceptions and behaviors of the small investors towards the mutual funds and also suggested some
measures to increase the quantum of investors and investments as well. It was enlightened that many
of the facts present in the country were inevitable for mutual fund companies to change their present
strategies to survive and penetrate potential market. It was also revealed that that the personal
profiles of investors such as age, educational qualification, profession, annual family income and
quantum of monthly savings have direct influence over the investor in making mutual fund
investment decisions.
Shanmuga Sundaram, V, (2011) in his study entitled The impact of behavioural bias
of investors in Capital market, examined the impact of behavioral dimensions of investors in Capital
market and found that investor decisions are influenced by psychological factors as well as
behavioral dimensions and this psychological effect is created by the fear of losing money, sudden
decline in stock indices, greed and lack of confidence about their decision making capability.
Varadharajan .P and Vikkraman .P, (2011) in their study A study on Investor's

perception towards investment decision in equity, found that an investor decides on an investment
Page 25
after getting opinion from family, friends and colleagues, Broker's recommendation and also other
professional advice. The investor also takes into consideration the market situations like financial
results of the companies, bonus issue, Price Earnings Ratio and the reputation of the company.
Geetha, (2011) in her study entitled A Study on People's Preferences in Investment

Behavior, found that the person dealing with the planning must know all the various investment
choices and how these can be chosen for the purpose of attaining the overall objectives. The details
of making the investment along with the various ways in which the investment has to be maintained
and managed. This study examined on people's choice in investment avenues of Kurumbalur. Data
were collected using structured questionnaires. The sample size of area is analyzed by tools selected
for this study was two hundred and ten respondents were randomly selected from the town. Data
were analyzed using descriptive statistics and chi-square technique.
Heena Kothari, (2012) in his study entitled Investors behavior towards investment
avenues: A study with reference to Indore city, found that the behavior of investors towards
investment avenues. The different avenues can be preferred provided it is put forth before young and
different age group investors in the desired form. If the younger generation starts investing at such
an early stage on regular basis, they will be able to save more for their future. Facts revealed in this
study highlight the perception of varied age group investors who desire to invest in different avenues
which give high returns and growth prospect. Survey findings of this study have got significant
managerial implications that can be used by investment companies in restructuring their existing
practices and finally innovating new ways of service deliver.
Sanjay Kanti Das, (2012) in his study entitled Small investor's behavior on stock
selection decision: A case of Guwahati Stock Exchange, found that the role of various socio-
economic, demographic and attitudinal factors affecting the investment decision of investors in the
market. The researcher collected primary data from 100 small investors living in Assam and linked
with Guwahati Stock Exchange during the period between June and July, 2011 through a Structured
Questionnaire. It is found that majority of the sample small investors in Assam took into
consideration all the 38 factors before selecting the stocks to invest. According to the sample small
investors of Guwahati Stock Exchange ,the average value of the top five highly influential factors
were `Financial statements of companies' with a mean value of 4.90, `Referral' with a mean value of
4.86, `public information' with a mean value of 4.72 and `Profitability variables' with mean value of
company's of 3.84 and so on. According to sample small investors, there were four factors with the
lowest priority or which had low influence on the Stock Selection Decision. These are `Government
policies' (1.66), `Calculation of risk' (1.86), `Economic variables' (2.24) and `Discounted cash flow
Page 26
tools' (2.54) and so on.
Gagan Kukreja, (2012) in his study entitled Investors' Perception for Stock Market:
Evidences from National Capital Region of India, made an attempt to measure the investors'
perception towards Indian capital market with reference to National Capital Region (NCR) investors
of India. This research is a descriptive research study, in which, systematic sampling technique is
used. Trail survey is used to select the sample size, validity and reliability of the instrument. 120
samples are selected for this study. Major findings of this study include, age has significant impact
on investment, and educational qualification has significant impact on tax advantages. 119 functional
variables are used in this study to measure investors' perception. These variables have 72% impact
on measuring investor perception. Charges, liquidity and investment attributes are mediating factor
for investors' perception. Investment influences and investment benefits are having high relevance.
Suresh, A.S, (2013) in his study entitled A study on fundamental and technical
analysis, found that unique nature of capital market instruments forces investors to depend strongly
on fundamental factors in their investment decisions. These fundamental factors relate to the overall
economy or a specific industry or a company. The performance of the securities that represent the
company can be said to depend on the performance of the company itself. However, as companies
are a part of industrial and business sector, which in turn are a part of overall economy, so even the
economic and industry factors can affect the investment decision. The selection of an investment
will start with fundamental analysis. Fundamental analysis examines the economic environment,
industry performance and company performance before making an investment decision.
Durga Rao, (2013) in her study entitled ªRole of Independent Variables on Investment
Decision of Equity Retail Investors, found that the positives and negatives of the different types of
investment avenues to maximize the return. With the help of these kinds of studies different sections
of society understand the merits and demerits of the investment. The participants in the Indian
Capital market are unable to understand the investor investment objective due to the dramatic change
in the attitude of the investor. The investor can make the trading in securities as a beneficial area of
investment. It is purely based upon the investor's awareness towards investment objectives. When
the investor gets more and more accurate information on the right time, then they can enjoy the taste
of success from investment in securities. The capital market authorities should implement more
training and awareness programs for the investors. The present study is confined to Guntur district
only and there is a scope for further survey in other districts in Andhra Pradesh and different areas of
the country to formulate the policies and to attract the investors to invest their savings for the
industrial development of the nation.
Page 27
Sivarethinamohan, (2013) in his study entitled A Study on Investors' Preference in

Indian Commodities Market, made an attempt to conduct a research on the customer preference of
commodity market with respect to various investment avenues in around Trichy district, Tamilnadu.
It was observed from the statistical analysis that there was a significant association between the
respondents' age and the various factors such as Terms, conditions& Benefits, Easy transactions.
Also there was a significant association between the respondents' Profession and factors such as
Awareness and knowledge, tax exemptions, Affordable brokerages. As a result of ANOVA test there
was significance among Areas of Investment and tax exemption. Also there was a high significance
between way of investment decision reached and factors such as Awareness and knowledge, Terms,
conditions and Benefits, Tax exemption.
Sukhwinder Kaur, (2013) in his study entitled Investor's Perception towards

Selection of Mutual Funds Rather than Stock Market. This study is also attempted to give
suggestions to investors for making investment in mutual funds. Both primary and secondary data
has been used in the study. 200 investors have been taken for survey. A five point Likert scale
questionnaire has been constructed. The analysis of data has been done with factor analysis. The
findings of the study revealed that investor consider mutual funds as flexible investment option,
efficient Asset Management companies and they think investment in stock market is risky and
complex. The study has suggested that investors should consider long historical data, size and age of
the fund, fund charges and some measure to analysis the funds for investments.
Purohit and Neel Kamal, (2013) in his study entitled ‘Investors ‘perception and
attitude towards Indian stock market with reference to Tamil Naduº, found that the investors’
perception and attitude towards Indian stock market with reference to the investors in Tamilnadu.
This research is descriptive research study in nature. It is going to measure the variables which
influencing the investors’ perception and attitude towards Indian stock market. So, this descriptive
research is applicable for this. Convenient sampling technique was adopted. Universe of this study
was infinite in nature. So, it is appropriate to apply non-probability sampling. Trail survey was used
to select the sample size (SD of population is .359) of 200, measuring internal and construct validity
and reliability of the instrument be ingested. Based on the pilot study, researcher infers that the
standard deviation of the population is low. Major findings of this study include, Income has
significant impact on frequency of trading in stock market, selection of mode of trading and
selection of market segments. Age and income has significant impact on taking exposure. Forty six
functional variables are used in this study to measure investors’ perception and attitude. These
Page 28
variables have explained 72% influence on measuring investor perception and attitude.
Durga Rao, (2014) in his study entitled Role of capital market in Indian financial
system - past, present and future, made an attempt to all facilities and institutional arrangements for
borrowings and lending of medium term and long term fund. It deals not capital goods but concerned
with rising of money capital for investment. In the capital market the supply of funds largely from
individual savings, corporate savings, banks, insurance companies, specialized financing agencies
and Government. The demand for long term capital comes mainly from private sector industries and
Government. The researchers have presented Introduction and investment, Role of investment in
economic development of the nation, Developments in the Indian capital markets, SEBI and the
regulation of securities markets, Report of the committee under the chairmanship of Justice
D.P.Wadhwa with a aim to know the role of capital market in India.
Ruta Khaparde, (2014) in his study entitled ªInvestors' Perception towards Impact of
Macroeconomic Performance on Stock Market Behaviorº. The study included a lot more number of
other categorical variables and value based variables which have not been included, restricting the
scope of the study to some limited objectives. With some selected macroeconomic factors and
categorical variables, it was observed by the simplest means that the perception of the investors does
differ towards the impact of macroeconomic performance on stock market behavior with respect to
different individual factors like age and years of market investment experience. The study had been a
possibility as more and more investors are doing market study before investing. Moreover, a study of
this kind would be definitely of great help to fund management companies and for financial planners
who will seek this to understand the awareness level of the investors and would able to build
investment strategies accordingly.
Senthilkumar, (2014) in his study entitled Investors' Attitude towards Savings in Post
Officeº, found that the prime objective of the government policy in India is to promote a rapid and
balanced growth. As development is a continuous process, it requires the utilization of resources
more effectively to achieve the accepted means. Sustaining the development mainly depends on the
availability of large volume of capital. Availability of adequate finance ensures systematic and
uninterrupted development generally in the economy of the country and particularly in the field of
postal investments. Necessary postal investments can be made available if the postal investments
intermediaries perform their work efficiently and effectively. Banks, non-banking finance
companies, post office and share markets are the major intermediaries. These organizations help the
retail and rural investors to save and invest their money for a specific purpose. Among the above,
India post offices perform their work efficiently and effectively with reference to rural investments.
Page 29
Hence, the postal investments and rural savings have a dual role to play. Primarily they undertake
the responsibility of savings of India postal investors and secondly they help the nation to generate
the necessary funds resulting in the society's getting overall benefits.
Faisal Alanezi et.al, (2014) in their research work on Kuwait stock market
participant's perception of information useful to the investment decisionsº, found that the most
important sources of information to the Kuwaiti multi-investors concerned general corporate
information was information about major types of product and for financial information was
operating profit. In addition the most important item in non-financial information was new contracts
won by the company. Furthermore the most important item in corporate governance information was
corporate strategies, in corporate social information was improvement in customer services and in
type of valuation methods was fundamental analysis. However with the exception of some corporate
information items no significant differences were found between participant's perceptions.
Ambrose Jagongo, (2014) in his study entitled ªA Survey of the Factors Influencing
Investment Decisions: The Case of Individual Investors at the NSE, found that the information
structure and the factors in the market systematically influence individuals' investment decisions as
well as market outcomes. The objective of the study was to establish the factors influencing
investment decisions at the Nairobi Stock Exchange. The study was conducted on the 42 investors
out of 50 investors that constituted the sample size. To collect data the researcher used a structured
questionnaire that was personally administered to the respondents. The questionnaire constituted 28
items. The respondents were the individual investors. In this study, data was analyzed using
frequencies, mean scores, standard deviations, percentages, Friedman's test and Factor analysis
techniques. The researcher confirmed that there seems to be a certain degree of correlation between
the factors that behavioral finance theory and previous empirical evidence identify as the for the
average equity investor. The researcher found out that the most important factors that influence
individual investment decisions were: reputation of the firm, firm's status in industry, expected
corporate earnings, profit and condition of statement, past performance firms stock, price per share,
feeling on the economy and expected divided by investors. The findings from this research would
provide an understanding of the various decisions to be made by investors based on the prevailing
factors and the eventual outcomes for each decision and would identify the most influencing factors
on the company's investors' behavior on how their future policies and strategies will be affected
since investment decisions by the investors will determine the company's strategy to be applied.
Gurinder Singh, (2015) in his study entitled Investigation of the Determinants to

Augment Investment in the Indian Stock Marketº, made an attempt to access the factors which resist
Page 30
common man in India from investing in stock market and ways to overcome such hesitations with
the sole motive to induce investment in Indian Stock Market. India is one of the fastest developing
countries in the world. As country's growth is mainly dependent upon its financial markets, India is
also concentrating towards its share market sector. Indian stock markets are the engines that drive
the vehicle of our economy by pumping in much needed capital. The study compares investment in
Indian Stock Market with United State, London and Japanese Stock Market. This research is based
upon a survey conducted on both investors and non-investors. This paper tends to find out why in a
population of over one billion; barely 3% invest in equity markets in India, whereas in developed
countries like US, UK and Japan more than 50% invest in equity markets.
Shahin Sarwar and Charles Darwin, (2016) in their study entitled ªInvestors
Attitude towards the Stock Market: A Study in Dhaka City, Bangladeshº, found that there is an
association between educational qualification of investors and their attitudes. But in case of other
selected demographic and socioeconomic variables (age, gender, income level and investment level)
there is no association between these variables and investors' attitude. It indicates the essence of
conducting more awareness program about the stock market among investors. In the second part of
this study, it ranked different sources investors used for their investment decisions, where study
reveals that investors give most importance to FM radio and least importance to television talk show
as source of information.
Radha V, (1995) in her study entitled A Study on Investment Behavior of Investors in

Corporate Securities, examined the investment plan of corporate security investors in Tamilnadu.
The analysis revealed that the largest segment of sample was constituted by young generation model
investors. They were generally better educated belonging to the salaried class. Capital appreciation
was considered as the most important objective. Investors relied more on magazines and journals for
their investment information. The success of the investment decision made by the investors entirely
depended upon the successful performance of industry.
Tripathi, (2008) in his study entitled Investment Strategies in Indian Stock Market: A
Surveyº, found that the investors use both fundamental as well as technical analysis while investing
in Indian stock market. They strongly agree that various company fundamentals significantly
influence stock prices in India. The most worthy investment strategies in Indian stock market are
buying stocks for which some good news is expected, buying stocks which are expected to announce
bonus issue, momentum strategy, size strategy and following investment behavior of FIIs. The
widely used investment strategies in Indian equity market are size based strategies, momentum
strategies, following FIIs investment behavior, buying stocks on the basis of 30 days moving average
Page 31
and buying stocks on the basis of the relative strength index. It was also noticed that there is a
substantial change in investment strategies used by active investors in Indian stock market over the
past five years. In a nutshell, there has been a shift from purely technical analysis based strategies on
the one which involves both fundamental and technical analysis. Moreover the investment horizon of
investors has also reduced due to higher volatility.
Anju bala, (2013) in his study entitled Indian Stock Market - Review of Literature, made
an attempt to present review of literature related to Indian Stock Market to study the Indian Stock
Market in depth. The study would facilitate the reader to know the past, current and future trend or
prospects of Indian Stock market. This study would provide guidelines to investor to maximize
profit with minimize risks. High degree of volatility in the recent times in the Indian market has led
to more development in the future.
Statement of the Problem
India is one of the fastest developing countries in the world. As country growth is mainly
dependent upon its financial markets, India is concentrating towards its share market sector. Indian
stock markets are the engines that drive the vehicle of our economy by pumping in much needed
capital. The investors are assumed to be rational wealth-maximizes, following basic financial rules
and basing their investment strategies purely on the risk-return consideration as the factors expected
to influence investment decisions (Baker, et. al., 1977). The people are rational agents who make
decisions objectively to take advantage of the opportunities available to them. (Potter, 1971) found
that rapid growth, investment saving, quick profits, professional investment management and long-
term growth will affect investors’ attitudes on investment decisions. Thus, the decisions of investors
on stock market play an important role in defining the market behavior trend, which then influences
the economy, (Tripathy, 2014). Behavioral factors which influence the decisions of individual
investors at the Stock Exchange and how these factors impact their investment performance and
investor satisfaction. It will be useful for investors to understand common behaviors, from which
they can justify their reactions for better returns in the future, Tripathy (2014
The attitude of investors is examined from their risk bearing capacity perspective. These
are all in respect of measuring the investors' attitude in the study area, (Riley and Chow 1992). This
study would help many investors who may want to know a rational method to buy shares that have a
better, risk position, role of SEBI, investors’ rights and portfolio information along with their broad
category of statement, (Diacon, 2004).
Page 32
Significance of the Study
The dimensions of the investors’ attitude factors towards investment decision and investment
satisfaction reveal the stock market investors in India. From the marketing point of view, it would
help to achieve competitive advantages particularly when deciding to make a strategic planning on
investment. Understanding the importance of relationships among the constructs would broaden
perspective of reinvestment intention in order to ensure long term profitability (Shimko, et. al., 2006)
This study may help the individual investor and will be highly beneficial, by giving valuable
information at the time of investment in the stock market. Hence, this study helps in making a
decision regarding investment by investors, Brokerage Company and financial institution. And also
the study was guided by objectives with a purpose of tracking investor's attitudes and decision
towards stock market investments. Even though the Government of India has established many
supervisory bodies to take over the various operations of the stock market, it has not yet attained
stability.
Objectives of the study
1. To develop an Investors' Perception-Inventory for stock market Investment.

2. To identify which of the Investors' Perception dimensions are perceived important in the study
Area of stock market Investment.
3. To offer suggestions to the Investors' and companies towards stock Market Investment.
Source of data:
The study is based on secondary data, which are collected from the official website of the
companies. The information related to Investors’ perception is derived from various sources like
articles,
1. Journals
2. Newspapers
3. Websites
Page 33
Tools for analysis

The data collected will be presented on tables, diagrams and graphs. The analysis will be done by
using financial tools such as percentages, ratios, trend analysis etc.
Page 34

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CHAPTER-1

Traditionally investment is distinguished from speculation in three ways. Speculation

Examined factors influencing investors behavior, it is suggested that classical wealth

to be given only cursory consideration. Recommends that the brokerage, houses,

Investors’ Perception and Stock Market Investment

Stock Market Investment

Evolution of Stock market

drastic reduction in transaction costs and significant improvements in efficiency,

Types of Stock Exchanges

1. BOMBAY STOCK ECHANGE.

2. NATIONAL STOCK ECHANGE.

3. MULTI COMMODITY OF INDIA ECHANGE.

4. NATIONAL COMMODITY AND DERIVATIVES

National Commodity & Derivatives Exchange Limited (NCDEX) is a professionally

Functions of stock Market

A stock exchange is a reliable barometer to measure the economic condition of a

 Better Allocation of Capital

 Effective Mobilization of savings

Stock exchanges provide organized market for individual as well as institutional

 Promoting Capital formation

Stock exchanges facilitate the investors to decide his investment priorities by

Products of stock Market

National Stock Exchange of India or in short NSE happens to be India's largest

Role of SEBI in stock market

 To protect the interests of investors through proper education and guidance as

 To make registration and to regulate the performance of mediators such as stock

 To regulate merger, takeover and acquisition of companies in order to save from

 To prohibit unfair practices and fraudulent of intermediaries operating on

 To conduct inspection, inquiries and audits of stock exchanges, intermediaries

An analysis of how people make investment decisions confirms that objective

understanding investment decision making in stock markets. Risk attitude encompasses an

Trust & Reliability

cultural differences in trust appear to be a new additional explanation for cross-country

Herding effect in financial market is identified as tendency of investors' behaviors

the security prices movements in the long term.

Investment decisions are made by investors and investment managers. Investors

Investor’s market behavior derives from psychological principles of decision

Debjiban Mukherjee, (2007) in his study entitled Comparative Analysis of Indian

Vijayakumar, (2015) in his study entitled Investor's perception in equity market

Parimalakanthi, (2015) in her study entitled A Study Pertaining to Investment

Lovric., M. et al, (2008) in their study entitled A Conceptual Model of Investor

Abdelkarim, et.al, (2009) in their study entitled Investor Perception of Information

Varadharajan .P and Vikkraman .P, (2011) in their study A study on Investor's

Geetha, (2011) in her study entitled A Study on People's Preferences in Investment

tools' (2.54) and so on.

Sivarethinamohan, (2013) in his study entitled A Study on Investors' Preference in

Sukhwinder Kaur, (2013) in his study entitled Investor's Perception towards

Gurinder Singh, (2015) in his study entitled Investigation of the Determinants to

Radha V, (1995) in her study entitled A Study on Investment Behavior of Investors in

Statement of the Problem

Significance of the Study

Objectives of the study

1. To develop an Investors' Perception-Inventory for stock market Investment.

Tools for analysis

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