Professional Documents
Culture Documents
A
DISSERTATION PROJECT REPORT
SUBMITTED IN THE PARTIAL FULFILMENT OF
THE REQUIREMENTS OF ARKA JAIN UNIVERISTY
for the award of the degree of
BACHELOR OF BUSINESS ADMINISTRATION
for the session 2019-22.
1
CERTIFICATE OF APPROVAL
2
CERTIFICATE BY THE FACULTY MENTOR
This is to certify that Goutam Soni, Enrollment no. AJU/190625, a student of BBA (H).
(2019-22), has undertaken the Dissertation Project titled “BEHAVIOUR OF INVESTORS
IN INDIAN EQUITY MARKET – A CASE STUDY OF JAMSHEDPUR”. The Project
report is hereby submitted by the student for the partial fulfillment of requirement for the
award of Bachelor of Business Administration (H), under my supervision. To the best of
my knowledge, this project is the record of authentic work carried out during the academic
year (2019-22) and has not been submitted anywhere else for the award of any
Certificate/Degree/Diploma, etc.
3
DECLARATION BY THE STUDENT
I, GOUTAM SONI, hereby declare that the project titled “BEHAVIOUR OF INVESTORS
IN INDIAN EQUITY MARKET – A CASE STUDY OF JAMSHEDPUR”, has been
carried out by me and is hereby submitted in the partial fulfilment of the requirements of
ARKA JAIN UNIVERSITY for the award of the degree of Bachelor of Business
Administration.
To the best of my knowledge, the project undertaken, has been carried out by me and is my
own work. The contents of this report are original, and this report has been submitted to
ARKA JAIN UNIVERSITY, Jamshedpur and it has not been submitted elsewhere for the
award of any Certificate/ Diploma/ Degree etc.
4
ACKNOWLEDGEMENT
I take this opportunity to thank my faculty mentor Mrs. Sudeshna Sarkar, Assistant
Professor, ARKA JAIN UNIVERSITY, for her valuable guidance, closely supervising this
work over helpful suggestion, which helped me to complete the report and present.
More importantly her advice and support helped me to put some creative effort in my project.
Her guidance has really been an inspiration and driving force for me and has constantly
enriched my raw ideas with her vast experience and knowledge.
I would also like to give my special thanks to my parents whose blessings and love enabled
me to complete this work properly as well.
GOUTAM SONI
AJU/190625
B.B.A. – 2019-22
5
CONTENTS
2. INTRODUCTION 9
3. REVIEW OF LITERATURE 10 - 11
5. RESEARCH METHODOLOGY 13
6. EQUITY MARKET 14 – 16
9. RECOMMENDATIONS 43
10. CONCLUSION 44
11. BIBLIOGRAPHY 45
12. ANNEXURE 46 - 50
6
EXECUTIVE SUMMARY
The financial market in India has become organized. Now a day’s investor uses to trade in
various equity markets in all over India. At that time, it becomes necessary to know
behaviour of investors in equity market. The objective of this study was to develop a broader
understanding towards behaviours of investors to identify patterns of their investing and
considering investments. Most of the investors consider time period before investing and they
mostly invest for short - term. Behaviour in bearish market is dependent on investment
experience and equity market. Prediction is dependent on education qualification. When there
is bullish trend in the market maximum people invest in alternative that gives them stable but
lower expected result, Even the business or professional investors prefer to invest in same
alternative.
The globalization of financial markets has been increasing the size of the community of retail
investors over the past two decades by providing a wide variety of market and investment
options. Hence, it makes their investment decisions process more complex. The factors
influencing investor’s behaviour are return on investment, market trend or risk, short term
profitability, price of the share, dividend policy, past financial performance, company
reputation, reputation of the board, current earnings of the company and expert opinion. This
study focuses the main factors influencing investor’s behaviour.
Equity market has become an attractive investment avenue for most of the investors, and
equity market has enormously grown over the years. But lot of investors fear to invest in
equity market due to the volatility often seen in share market. The risk often undertaken by
the investors in share market huge and there exist fear among the investors of losing their
hard-earned income. Even though the return, the investors receive in equity market is high,
the investors need to bear an equal amount of risk as well as moreover the investors must sure
of which investment avenue, they are selecting in order to ensure high returns. This study was
undertaken to understand the different personal factors affecting their investment decision
and the different factors influencing various categories of investment. The test was also
conducted to know the source of investors awareness regarding equity market. It was that
there are many factors influencing the investor’s decision such as risk return, tax benefits,
maturity period, capital appreciation and safety of principal. But majority of the investors
believed returns is the most important factor influencing their decision. The highest number
of investors preferred to invest in stocks, when compared to mutual funds and derivatives.
7
The study also revealed that majority of the investors took their own decision to invest,
whereas some of the investors were influenced by Workshops, Seminars, Advertisements and
newspapers. Thus, study attempted to learn the behaviour of the investors towards equity
mark.
8
INTRODUCTION
Indian equity market - Equities are mostly traded on the stock exchanges in India. In the
Indian stock market, equities are available for trading at the National Stock Exchange (NSE),
the Bombay Stock Exchange (BSE) and the latest entrant, Metropolitan Stock Exchange of
India (MSE). Shares of stock market listed companies are bought/sold.
Equity share trading is roughly in two forms - spot/cash market and futures market. These are
the different types of equity market in India. The spot market or cash market is a public
financial market in which stocks are traded for immediate delivery. The futures market is a
place where the shares' delivery is due at a later date. With the help of an equity trading
account, a trustworthy broker like Nirmal Bang and online equity trading systems, investors
can utilize the Indian equity market.
Investment behaviour - Investment behaviour is based on uncertainty about the future and is
thus risky. News and rumours and speed and availability of information play important roles
in investment markets. Risk propensity, risk preference, and attitude are the major concepts
and explanations of investment behaviour. Investors employ biases and heuristics in their
decisions to invest or not, and how much to invest. Herding is another factor: people tend to
imitate and follow other investors, probably due to lack of relevant and reliable information
and lack of courage to behave differently.
9
REVIEW OF LITERATURE
A study was carried by Syed Tabassum Sultana on titled “An Empirical Study of Indian
Investors’ Behaviour and found that this paper while discussing the characteristics of the
Indian investors along makes an attempt to discover the relationship between dependent
variable i.e., Risk Tolerance level and independent variables such as Age, Gender of an
investor on the basis of the survey. Indian investors are high income, well educated, salaried
and independent in making investment decisions and conservative investors. From the
empirical study it was found that irrespective of gender, most of the investors (41%) are
found have low risk tolerance level and many others (34%) have high risk tolerance level
rather than moderate risk tolerance level. It is also found that there is strong negative
correlation between Age and Risk tolerance level of the investor. Television is the media that
is largely influencing the investor’s decisions. Hence, this study can facilitate the investment
product designers to design products which can cater to the investors who are low risk
tolerant.
Petter (1970) - “Motivating Factors Guiding the Common Stock Investor” identified those
factors which motivated and guided the investment decisions of the investors. The factors
include Income from dividends, Rapid growth, Purposeful investment as a protective outlet of
savings and Professional investment management.
Kannadhasan (2006) – “Risk Appetite and Attitudes of Retail Investors with Special
Reference to Capital Market”. The author examines about the factors that influence the retail
investors‟ decision in investing. The decision of the retail investors is based on various
dependent variables viz., gender, age, marital status, educational level, income level,
awareness, preference and risk bearing capacity.
10
investor behaviour. Six factors were found the most influential factors on the UAE investor
behaviour. The most influencing factors were expected corporate earnings, get rich quick
attitude and past performance of the stocks.
Research gap – Several studies were conducted in India upon behaviour of investment of
people, but were not conducted in the city of Jamshedpur. This study of mine was conducted
in the Jamshedpur region.
11
OBJECTIVES OF THE STUDY
12
RESEARCH METHODOLOGY
Primary Data - Primary research involves the collection of original primary data by
researchers. It is often undertaken after researchers have gained some insight into an issue by
reviewing secondary research or by analyzing previously collected primary data. It can be
accomplished through various methods, including questionnaires and telephone interview in
market research.
COLLECTION OF DATA
The data for purpose of the study are collected only from the primary sources of information.
This study is in descriptive nature since it is based on primary data’s facts and findings of
investigation in a structured manner. The sampling method used in this study is convenience
sampling. The data was collected through a questionnaire. The sample size was 207.
SAMPLING FRAME
13
EQUITY MARKET
An equity market is a market in which shares of companies are issued and traded, either
through exchanges or over-the-counter markets. Also known as stock market, it is one of the
most vital areas of market economy. It gives companies access to capital to grow their
business, and investors a piece of ownership in a company with the potential to realize gains
in their investment based on the company’s future performance.
Equity markets are the meeting point for buyers and sellers of stocks. The securities traded in
the equity market can either be public stocks, which are those listed on the stock exchange, or
privately traded stocks. Often, private stocks are traded through dealers, which is the
definition of an over-the counter-market. When companies are born, they are private
companies, and after a certain time, they go through an initial public offering (IPO), which is
a process that turns them into public companies traded on a stock exchange. Private stocks
operate slightly differently as they are only offered to employees and certain investors.
Some of the largest equity markets, or stock markets, in the world are the New York Stock
Exchange, Nasdaq, Tokyo Stock Exchange, Shanghai Stock Exchange and Euronext Europe.
Companies list their stocks on an exchange as a way to obtain capital to grow their business.
An equity market is a form of equity financing, in which a company gives up a certain
percentage of ownership in exchange for capital. That capital is then used for a variety of
business needs. Equity financing is the opposite of debt financing, which utilizes loans and
other forms of borrowing to obtain capital.
TYPES OF INVESTORS
Because the market’s behavior is impacted and determined by how individuals perceive that
behavior, investor psychology and sentiment are fundamental to whether the market will rise
or fall.
Bull Investor: An investor who expects prices to rise and so buys now for resale later. It is a
prolonged period where the investment prices rise faster than their historical average.
14
Bear Investor: An investor who expects prices to fall and so sells now in order to buy later at
a lower price. The chances of losses are greater here as prices are continuously falling and the
end is not in sight.
Savers: Savers are those people who spend the majority of their life slowly growing their
“nest egg” in order to ensure a comfortable retirement. Their primary investing strategy is to
hedge each of their investments with other “non-correlated” investments, and ultimately
generate a consistent annual return in the range of 3-8%.
Speculators: Unlike, Savers Speculators choose to take control of their investment, and not
rely solely on “time”. Speculators are happy to forgo the relatively low returns of a
diversified portfolio in order to try to achieve the much higher returns of targeted
investments.
Specialists: Specialists believes that the key to successful investing isn’t luck but it’s
education and experience. The specialist generally picks a single investing area, and becomes
an expert in that area. Some Specialists deal in paper assets, some deal in real estate, and
some start business.
When it comes to money and investing, we are not always as rational as we think we are
which is why there’s a whole field of study that explains our sometimes-strange behavior.
When do you, as an investor, fit in? Psychological factors can actually explain why different
investors behave in different ways which affect their investment decisions. Investors might
actually overreact towards some information that they gained and under react towards others.
One of the most common investor behaviors is overconfidence towards the market. This
actually works when they actually underestimate the risk of the investment. The major
mistake of all is when they are overconfidence towards the market, they tend to trade too
much which will lead them to high transaction costs. The transaction costs might even exceed
the returns that they gained.
The second behavior is the investor tends to have biased self-attribution which means that
they will take all the credit for the returns that they received and they will blame others for
their losses that they encountered. This kind of investors usually support the information that
are against them. They see the failure to get return as the result of the factors that are beyond
their control.
15
The third behavior is known as loss aversion. This behavior often happens to the investors
that dislike the losses much more than the gains. For example, when a person loss $200, the
loss that he experience will have a higher impact on him compare with when he is gaining
$200. The investor will usually hang on to the losing stock hoping the price of the stock will
bounce back. They will sell the gaining stock rather than the losing stock.
The fourth behavior will be representativeness. The investor will usually make strong
conclusion from a very small sample. This means that they actually ignore or underestimate
the effects of random chance. One of the examples is when a stock broker helps the investors
to gain from the market for consecutive three months, the investor will assume that the stock
broker will maintain his performance and continue to help him to earn the return. But
actually, the investor overlooks a few matters in this case. Firstly, the investment period is
only three months which is a very short time period. Secondly, the results of the stock broker
might just be driven by random chance. The investor should analyze the investment results
for a longer time period before making the judgment that they choose the right stock broker
and they are investing at the right investment.
Another behavior that most investor might have, is the belief perseverance. This actually
means that the investor will just simply ignore the information that is against their existing
belief. They will even be avoiding themselves from finding any new information because
they afraid that the new information is against initial opinion. Once the investor has decided
that they make the right choice, they will behave it even though there is evidence proving that
their choice is wrong.
Basically, these are the few of the investor behaviors that explain their actions when dealing
with the investment. Some investors might possess one of the behaviors but some of them
might possess few of these behaviors at one time. Understand these behaviors will help the
investors to react in the market efficiently.
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DATA ANALYSIS AND INTERPRETATION
Figure 1 - Gender
INTREPRETATION – It can be seen that there are more number to males investing in
equity market than females. Males are investing more probably because it requires a regular
watch in the market structure.
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Q2. Age of the respondents
Figure 2 - Age
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Q3. Designation of the respondents
Figure 3 – Designation
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Q4. Annual income of the respondents
2 1 - 3 lakhs 41 19.8
3 3 - 5 lakhs 50 24.2
INTERPRETATION – The slab of income ‘less than 1 lakhs’ has the highest votes
because the percentage of students investing is high and students generally have lesser money
than others.
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Q5. Savings of the respondents
1 0 - 10% 76 36.7
2 10 - 20% 65 31.4
3 20 - 30% 49 23.7
Figure 5 – Savings
INTERPRETATION – This shows that people with savings 0 - 10% invest more in the
market followed by people with savings with 10 - 20%.
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Q6. Annual investment of the respondents
3 1 – 5 lakhs 42 20.3
INTERPRETATION – This show that majority of the people invest less than 50000 in
the markets in a year
22
Q7. Duration of investment
2 1 – 2 years 78 37.7
3 2 – 5 years 44 21.3
INTERPRETATION – It can be inferred that many people invest for a time period of 1
-2 years followed by people who invest for less than a year. This means more people are
interested in short term investing.
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Q8. How frequently they invest
1 Weekly 22 10.6
2 Monthly 55 26.6
3 Quarterly 70 33.8
5 Annually 30 14.5
INTERPRETATION – This shows that most of the people invest in the markets on a
quarterly basis and the second most frequency was on a monthly basis.
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Q9. Purpose of investment
4 Others 54 26.1
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Q10. Source of information about market
1 Brokers 28 13.5
2 News 86 41.5
4 Others 71 34.3
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Q11. Source of information for investment
Reference group
69
1 (friends and family) 33.3
2 News 68 32.9
4 Brokers 36 17.4
5 Others 58 28
INTERPRETATION – The above table and graph show that there were 3 most
common sources of information for investment which were friends and family, news and
financial consultants.
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Q12. Invest through
1 Experts 42 20.3
INTERPRETATION – This shows the most of the people invest by their own rather
than preferring an expert or going for mutual funds.
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Q13. Investment options they prefer
2 Mutual funds 87 42
3 Debt 35 16.9
4 Gold 69 33.3
7 Insurance 49 49
8 Others 45 45
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Q14. Investment pattern affected by market movement
30
Q15. Experience in the market
INTERPRETATION – This means that most of the respondents have an experience less
than 1 year followed by people with and experience of 1 - 3 years.
31
Q16. Risk undertaking capacity
INTERPRETATION – It can be inferred that most of the people take minimal risk
followed by people wo take moderate amount of risk.
32
Q17. No. of companies’ stocks
2 5 – 10 companies 81 39.1
3 10-15 companies 23 11.1
More than 15
4 8 3.9
companies
INTERPRETATION – It means that many people have less than 5 companies’ stocks in
their portfolio.
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Q18. Sectors preferred
1 IT 75 36.2
2 Bank 86 41.5
3 FMCG 75 36.2
4 Automobile 77 37.2
5 Power 72 34.8
6 Pharmaceutical 64 30.9
7 Oil and gas 71 34.3
8 Others 57 27.5
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Q19. Segments they invest in
1 IPOs 53 25.6
2 FPOs 37 17.9
3 Index 54 26.1
4 Intraday 43 20.8
5 Future and options 70 33.8
6 Secondary market 68 32.9
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Q20. Motivating factors in selection of shares
1 Dividend 62 30
2 Capital gains 83 40.1
3 Bonus shares 48 23.2
4 Tax benefits 58 28
5 Safety 72 34.8
6 Liquidity 44 21.3
INTERPRETATION – It can be inferred that the most common motivating factor for
people in selection of their shares are capital gains followed by safety of their investment.
36
Q21. Factors of investment in any company’s shares
37
Q22. Reasons for investment in IPOs
1 Dividend 55 26.6
2 Capital gains 108 52.2
3 Others 69 33.3
INTERPRETATION – This shows that people who invest in IPOs invest majorly for
their capital gains.
38
Q23. Is stock market a good option to invest in
INTERPRETATION – Most of the respondents think that stock market is a good option
to invest in and this is why the number of retail investors have increased in the recent past.
39
Q24. Alternative investment options they prefer
40
FINDINGS
Most of the respondents are male. 55.6% of the respondents are male.
The survey shows that youth is more interested in stock markets as age group of 20 –
30 years form 60.9% of the survey’s respondents.
As the above line says that the youth is more interested in the stocks markets, the next
question acts as a proof as 45.9% of the respondents were students.
Most of the people who are investing in stock market are from bracket of earning
“less than 1 lakh”.
36.7% of the respondents are able to save 0 – 10 % of their annual income which is
greater than others.
The annual investment of the majority of people (49.3%) was less than 50000.
37.7% of the people preferred to invest for 1 – 2 years followed by 34.8% people
who invest for less than a year. This clearly shows that people are more interested in
short - term investment rather than long term.
33.8% of the people invest on a quarterly basis followed by 26.6% who invest on a
monthly basis which shows that people keep a regular eye on the market and invest
whenever they see an opportunity.
The most common voted purpose of investment was future savings (57.5%).
Most of the respondents received information about the market through internet ads
(44.4%), followed by news (41.5%).
The respondents accepted that there were 3 most common sources of information for
their investment which were friends and family (33.3%), news and financial
consultants with 32.9% each. This means that people collect information from
various sources and stock market is a trending topic among the youth.
50.2% of the respondents invest on their own without depending on others to invest
on their behalf. This states that they have the self – belief and have interest too.
It can be seen that 52.7% of the respondents prefer the stock market to invest in
followed by mutual funds with a vote of 42%.
84.1% of the respondents admitted that their investment pattern gets affected by the
market movement.
Since most of the respondents were young, they have an experience of “less than 1
year”, which formed 36.2% of the total.
41
47.3% of the respondents take only a minimal risk while 34.3% will to take moderate
amount of risk.
Almost half (45.9%) of the respondents had less than 5 companies’ stocks in their
portfolio which is expected to increase as they spent more time and gain experience in
the market.
The respondents preferred almost every sector (Bank, Automobile, FMCG, IT, Oil
and gas etc) as it can be seen through the survey. This is a good sign that investors
are aware of “Diversification”.
33.8% of the investors prefer Future and Options followed by simple investment
and trading (32.9%).
The most common motivating factor behind selection of shares was “Capital gains”
(40.1%) followed by “Safety” which received 34.8% votes.
There were several factors that led investors to invest in any company like – Price,
Market value, Earnings per share and so on.
People who invested in IPOs had the most common goal of “Capital gains”.
63.3% of the respondents believe that stock market is a good option to invest in.
When asked for alternate options they prefer for investment, Gold came up to be the
most common option (52.7%), followed by Real estate (39.1%) and Insurance
(38.2%).
42
RECOMMENDATIONS
Youth are more concerned for their future and benefits, but they should as far as
possible, try to make fundamental, technical and financial analysis before investing in
the shares.
People with the lowest income level are ones who are investing more which is a good
sign, but people with high incomes should also come up and invest as they would gain
knowledge and make more money as well.
People investing for short - term should look forward to invest for long - term as there
is more security and also, they would have to pay less tax on it.
The investors should rely less on others and do their own research before investing in
any company as it would lead to expansion of knowledge and gain experience.
There are some investments which are risky and few are not, so depending upon the
age, the investors they should decide about the degree of risk to be taken.
Investors should adopt a diversified and liquidity-oriented approach while
constructing and managing the portfolio for investment under present economic
scenario.
People should try less of intraday and future and options as it is not safe until and
unless you are experienced and knowledgeable. Try more of trading and long - term
investment.
Strategies must be employed to encourage women investors as the percentage of
female investors were less. Awareness programs need to be organised.
43
CONCLUSION
The study reveals that most of the investors take only a minimal amount of risk as
they are new to the markets. They should go for low – risk shares which are
comparatively stable so as to minimise their risk.
This study contains understanding the investor’s behavior, level of awareness and
their investment decision in the equity market. The views and behavior relating to
investment often differ from person to person.
It can also be concluded that income level does not matters while investing as people
with the lowest incomes are the ones who are investing the most.
Educating the investor is the need of the hour. Financial institutions with the help of
social organizations like Rotary club, Lions club and Banking companies may
individually or jointly take part in educating investors.
It can be concluded that, investors who expect high return will be ready to undertake
high risk, though as of now most of the investors are taking only a minimal and
moderate amount of risk due to fear of losing their hard-earned money.
44
BIBLIOGRAPHY
WEBSITES:
https://www.investopedia.com/terms/e/equitymarket.asp
https://www.businesstoday.in/magazine/expert-view/story/market-fall-and-investor-
behaviour-127406-2008-05-16
https://www.investopedia.com/articles/05/032905.asp
https://m.economictimes.com/markets/stocks/news/do-indian-investors-follow-herd-
behaviour-what-rbi-study-shows/articleshow/90351922.cms
REFERENCES:
45
ANNEXURE
1. Name*
2. Gender*
Male
Female
3. Age*
15-20
20-30
30-40
40+
4. Designation*
Student
Employee
Business
Retired
Others
5. Annual income*
6. Savings*
0 - 10%
10 - 20%
20 - 30%
More than 30%
46
7. Annual investment*
8. Duration of investment*
Weekly
Monthly
Quarterly
Semi - annually
Annually
Wealth creation
Tax benefits
Future savings
Others
Brokers
News
Internet ads
Others
47
12. Source of information for investment*
Experts
Mutual funds
Self
Stock market
Mutual funds
Debt
Gold
Real estate
Government bonds
Insurance
Others
Yes
No
48
17. Risk undertaking capacity*
Too conservative
Minimal risk
Moderate risk
High risk
IT
Bank
FMCG
Automobile
Power
Pharmaceutical
Oil and gas
Others
IPOs
FPOs
Index
Intraday
Futures and options
Secondary market
49
21. Motivating factors in selection of shares*
Dividend
Capital gains
Bonus shares
Tax benefits
Safety
Liquidity
Book value
Market value
High - low price
Earnings per share
Price earnings ratio
Market capitalization
Dividend
Capital gains
Others
Yes
No
Not sure
Gold
Debt
Insurance
Bonds
Real estate
50