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INVESTORS ATTITUDE TOWARDS PRIMARY MARKET
SUBMITTED TO: KURUKSHETRA UNIVERSITY, KURUKSHETRA in the fulfillment of the Degree of Master in Business Administration (Session 2008-10)
PROJECT GUIDE: DR. SURESH TURKA MBA FACULTY
SUBMITTED BY: BRIJENDER UNIV. ROLL NO…….. CLASS ROLL NO.1311
SHRI ATMANAND JAIN INSTITUTE OF MANAGEMENT & TECHNOLOGY
Education becomes more meaningful when its theoretical aspects are combined with practical experience. These provide an opportunity to the students to improve their understanding of the studies. Project report is an integrated part of MBA course. The emphasis in the course is providing the student an insight into Indian share market Scenario. The project is designed to enhance the knowledge. The education of future manager would be incomplete without exposure to working in an organization. Therefore a Project assignment is essential academic requirement for all the students.
This project comes out to be a great source of learning and experience. Lot of efforts has been put by various people to make this project a success. This has greatly enhanced my knowledge about the vast field of Investments in small cap and large cap companies. I gratefully acknowledge my indebtedness to Dr. Suresh Turka (Project Guide, Faculty MBA) for allowing me to undergo a project. Then I express my sincere gratitude and thanks to Miss. Ekta Aggarwal (HODMBA Deptt., AIMT) for her inspiration and helpful attitude.
I, the undersigned, hereby declare that this report entitled “INVESTORS ATTITUDE TOWARDS PRIMARY MARKET” is a genuine and bonafied work prepared by me under the guidance of Dr. Suresh Turka, and is my original work. The empirical findings in the report are based on the data collected by me. The matter presented in this report is not copied from any source. This report has not been submitted for the award of any degree or diploma either in Kurukshetra University or any other university. This work is humbly submitted to AIMT, Ambala City, for the award of the degree of Master of Business Administration.
This is to certify that the research work entitled “INVESTORS ATTITUDE TOWARDS PRIMARY MARKET” undertaken by Mr. Brijender, a student of Masters of Business Administration, Shri Atmanand Jain Institute of Management and Technology, Ambala City (Affiliated to Kurukshetra University, Kurukshetra), was carried out under my guidance and supervision. The research work is candidate’s original work & this project report has not been submitted to any other university for any course.
Dr. Suresh Turka
INDEX OF CONTENTS PAGE NO Chapter –I Chapter – II Introduction Research Methodology Objectives of the Study Research Design Sample Design Methods of Data Collection Analysis and Interpretation Limitations of the project Chapter – III Analysis and Interpretation of Data Chapter – IV Findings. Suggestions and Conclusion Findings Suggestions Conclusion Bibliography Annexure .
enter the primary market to raise money from the public to expand their businesses. securities are issued on an exchange basis. The role of Indian capital market which is to provide long term resources required by industries for investment has observed buoyancy in share market with the liberalization of industries and fiscal policies of the government. The underwriters. Many companies. Driven by an interacting process of liberalization and innovation. where numerous trades happen every day. Finance. The securities can be directly bought from the shareholders. They sell their securities to the public through an initial public offering. the firm must fulfill all the requirements regarding the exchange. which is basically a private . New product have emerged and old boundaries between financial intermediaries have been blurred. especially small and medium scale. which is then used to finance its operations or expand business. Many companies have entered the primary market to earn profit by converting its capital. The primary market. The issuing firm collects money. regulations have been removed. by selling its shares. which is not the case for the secondary market. also called the new issue market. the lie blood of industry is mobilized especially through New Issue Market or Primary Market.INTRODUCTION The past twenty five years have witnessed a process of accelerating change in the world’s financial markets. The primary market categorically excludes several other new long-term finance sources. At the same time. Before selling a security on the primary market. is the market for issuing new securities. growth of capital markets has posed new challenges to economic and financial stability. such as loans from financial institutions. The primary market accelerates the process of capital formation in a country's economy. the investment banks. In the primary market. The primary market is a market for new capitals that will be traded over a longer period. that is. Investors can obtain news of upcoming shares only on the primary market. After trading in the primary market the security will then enter the secondary market. play an important role in this market: they set the initial price range for a particular share and then supervise the selling of that share.
This phenomena is known as "public issue" or "going public. releasing securities to the public. The process of selling new issues to investors is called underwriting. governments or public sector institutions can obtain funding through the sale of a new stock or bond issue. This is typically done through a syndicate of securities dealers. Any investor would like to invest in a reputed Mutual Fund organization. this sale is an initial public offering (IPO). In UTI they believe that the investors attitude would result in profits. the movement towards made by existing companies are known as further issues. The primary market is that part of the capital markets that deals with the issuance of new securities. Initial Public Offer (IPO). Quiet a large amount of money has been invested in mutual funds during the past few years. Understanding the attitude of investors on their investment would help the company to increase their profits. into a public one. . Companies. In the case of a new stock issue. and preferential issue. A company's new offering is placed on the primary market through an initial public offer.capital." There are three methods though which securities can be issued on the primary market: rights issue. Meaning of Primary Market New Issues Market is that part of capital market where dealing exchanges takes the boundaries de-marketing the financial services are fast eroding. Thanks to the innovations in the financial services. UTI is one such organization that provides a better overview of the Mutual Fund industry. though it can be found in the prospectus. Dealers earn a commission that is built into the price of the security offering. Mutual funds are seemingly the easiest and the least stressful way to invest in the stock market.
• external finance. Borrowers in the new issue market may be raising capital for converting private capital into public capital. Financial market in which newly issued securities are offered to the public. Market Actual or conceptual place in commercial world where forces of demand and supply operate. and where buyers and sellers interact (directly or through intermediaries) to trade goods." • The financial assets sold can only be redeemed by the original holder. Market for a particular item is made up of existing and potential customers who need it . (3) facilitating deals and transactions. • • In a primary issue. for money or barter. services. Market in which buyers and sellers negotiate and transact business directly. The company receives the money and issues new security certificates to the Primary issues are used by companies for the purpose of setting up new business The primary market performs the crucial function of facilitating capital formation The new issue market does not include certain other sources of new long term investors. or contracts or instruments. (2) communicating the price information. Markets include mechanisms or means for (1) determining price of the traded item. Therefore it is also called the new issue market (NIM). this is known as "going public. • in the economy. • or for expanding or modernizing the existing business. the securities are issued by the company directly to investors. without any intermediary such as resellers. 2.Features of primary markets are: • This is the market for new long term equity capital. and (4) effecting distribution. The primary market is the market where the securities are sold for the first time. such as loans from financial institutions. Primary market 1.
on the basis of their perceived worth. . for value. Business Economic system in which goods and services are exchanged for one another or money. purchase negotiations.and have the ability and willingness to pay for it. 3. Professional purchaser specializing in a specific group of materials. The transferee takes the instrument in good faith. Buyer 1. Party which acquires. consist of people also called marketplace. 4. or offers or contracts to make. or agrees to acquire. needs. or services. All markets. Contracting: Use of any method to award a contract other than sealed bidding. 2. and obtains an indefeasible title. ownership (in case of goods). Trading: Process by which a negotiable instrument is transferred from one party (transferor) to another (transferee) by endorsement or delivery. 2. Negotiation 1. particularly the one selling a real property. and without notice of any defect in the title of the transferor. and experienced in market analysis. Also called vendor. and viewpoints) seeking to discover a common ground and reach an agreement to settle a matter of mutual concern or resolve a conflict. goods. and delivery coordination. bulk buying. in exchange for money or other consideration under a contract of sale also called purchaser. Every business requires some form of investment and a sufficient number of customers to whom its output can be sold at profit on a consistent basis. General: Bargaining (give and take) process between two or more parties (each with its own aims. or benefit or usage (in case of services). a sale to an actual or potential buyer. Seller Entity that makes. Banking: Accepting or trading a negotiable instrument. ultimately.
See also intermediation. also called the new issue market. negotiation. which is not the case for the secondary market. In the primary market. the investment banks. is the market for issuing new securities. The underwriters. Investors can obtain news of upcoming shares only on the primary market. banks act as intermediaries between depositors seeking interest income and borrowers seeking debt capital. The primary market is a market for new capitals that will be traded over a longer period. Intermediaries usually specialize in specific areas. that is. play an important role in this market: they set the initial price range for a particular share and then supervise the selling of that share. where numerous trades happen every day. In money markets. Many companies. The securities can be directly bought from the shareholders. and serve as a conduit for market and other types of information. the firm must fulfill all the requirements regarding the exchange. Before selling a security on the primary market. for example. .Intermediary Firm or person (such as a broker or consultant) who acts as a mediator on a link between parties to a business deal. The primary market accelerates the process of capital formation in a country's economy. The issuing firm collects money. enter the primary market to raise money from the public to expand their businesses. investment decision. After trading in the primary market the security will then enter the secondary market. especially small and medium scale. They sell their securities to the public through an initial public offering. which is then used to finance its operations or expand business. Reseller One who buys goods from a manufacturer and resells them to customers unchanged Primary Market The primary market. securities are issued on an exchange basis. by selling its shares. Also called a middleman. etc.
Many companies have entered the primary market to earn profit by converting its capital. and Thailand).that is. Malaysia. Effects of the Asian Crisis To a large degree these price declines are associated with the Asian crisis. China's contribution to the growth in the .prices of primary commodities as a group have fallen by more than 10 percent. Recent Developments in Primary Commodity Markets Since mid-1997 . rubber. oil meals. and fats and oils. just before the beginning of the crisis in Thailand s financial and foreign exchange markets . A company's new offering is placed on the primary market through an initial public offer. and their share in world consumption increased from 12 percent to 15 percent. During the early and mid-1990s. such as loans from financial institutions.The primary market categorically excludes several other new long-term finance sources. the share of Asian countries in world consumption in 1996 was much greater than their share in the world consumption of petroleum products. into a public one. and preferential issue." There are three methods though which securities can be issued on the primary market: rights issue. This phenomena is known as "public issue" or "going public. and the share of these five countries in world consumption rose from 5 percent to 6 1/2 percent.(1) These price declines are sufficiently great in magnitude to have far reaching implications for producers and consumers around the world. which is basically a private capital. the Philippines. consumption of primary commodities in most Asian developing countries increased at rates much higher than in the rest of the world. Initial Public Offer (IPO). releasing securities to the public. Korea and the ASEAN-4 countries (Indonesia. Asian developing countries accounted for about two-thirds of the increase in world consumption of petroleum products over the period 1992-96. coarse grains. accounted for about one-half of the increase in consumption of petroleum products in Asian developing countries. in turn. For most of these non-fuel commodities. A similar pattern of growth in consumption is observed for base metals.
the adverse consequences of El Nino for commodity production that are sufficiently great to have discernible effects on world prices for individual commodities have been limited to the fish catches off the west coast of South America and to palm oil production in southeast Asia. has tended to be much greater than that of Korea plus the ASEAN-4. for some non-fuel commodities such as timber. . in many other countries in Asia and elsewhere.markets for these commodities. and vegetable oils. much higher import costs in terms of national currencies. at a minimum. but the consequence for world prices is not of great importance. Effects of Weather This year weather conditions generally favorable to crop production have also been an important factor that has tended to weaken the prices of several agricultural commodities. less available credit to finance imports. These conditions have led to reductions in the rate of growth of demand. Elsewhere . not only in the ASEAN-4 countries and Korea but also.El Nino may have reduced production locally. however. This seems true notwithstanding the unusual weather patterns in many parts of the world that have been attributed to El Nino and have received much press coverage. In addition. and. in the case of cereal production in southern Africa . sharp reductions in demand. through the spillover and contagion effects of the crisis. In the countries most directly affected. Thus certain commodity markets that as recently as mid-1997 were expected to show a high rate of growth of demand are now facing a period of considerable uncertainty with regard to demand prospects. warmer than usual weather this winter in the Northern Hemisphere has reduced the demand for heating oil and hence contributed to the downward trend in the price of petroleum and other energy commodities. rice. the large depreciations of currencies of the southeast Asian countries may also have had supply effects insofar as they create incentives to increase exports from current inventories and to increase current and prospective production. At least so far.for example. Furthermore. the Asian crisis has brought in its wake much reduced construction activity. natural rubber.
Problems of Indian Primary Market There are several problems of the Indian primary market. . meat. and soybean meal. An expert has rightly said that there is no point expressing disappointment in . natural rubber. The function of the primary market with respect to the market for IPO or initial public offering is to see that various companies are provided with opportunities for the acquisition of growth capital.Developments in Specific Markets The interplay of the Asian crisis and other factors affecting commodity markets in recent months comes more into focus in a review of developments in specific primary commodity markets. timber.. Economists attribute these problems to various factors some of which are highlighted below. But these problems can be overcome too by mere application of simple rules( end of the article).copper. These remedies have been suggested by experts. Withdrawal of IPOs: Another problem lies in the fact that these days. The price declines for five commodities . Inappropriate allotment of shares: There are many existing problems of the Indian primary market. Price decreases in excess of 10 percent (with prices measured in terms of SDRs) over the period June 1997 through January 1998 that were in some way associated with the effects of weaker demand from Asian countries were recorded for nearly one-third of the commodities included in the IMF's commodity price index. For certain other commodities. in the price declines of four other commodities . Some of the instances include the inappropriate assignment of shares to the public as was the case of the ONGC public issues. maize. nickel.. The primary market has withstood the tests of time. zinc. but probably not the predominant role. The Asian crisis also played an important role. Due to this there was a lot of confusion among the investors. iron ore. and hides appear to be associated mainly with the Asian crisis. such as aluminum.crude petroleum. IPOs are increasingly being withdrawn. and lead. wool.
. The primary markets are undulating the world over. Few are of the opinion that lack of judgment may have led to the withdrawal. The stock market is booming with Sensex hovering around 16000-17000. "Investors fatigue" is being accounted for in the withdrawals. All this is happening because of large amounts of investment in the country. "Cornering" of shares: Recently. A second factor is the fastest growth in private capital flows. The investor was actually a big investor who camouflaged as a small investor cornered many shares. It was fathomed that the IPOs. The incidents occurring in the primary markets are reflections of what is actually happening in the secondary markets. portfolio flows by mutual funds and pension funds and foreign direct investment into India. there was an instance when investors "cornered" shares. and Goldman Sachs. The most important factor shaping in today's global economy is the process of globalization. Templeton. A third factor is the increasing share of India and other emerging market economies in world trade. The lead managers responsible for the IPOs may also be blamed for the catastrophe. mainly short-term flows by banks and financial institutions. which were lately taken back had very "aggressive" price bands. SEBI has put in place appropriate guidelines and controls to regulate the markets in tune with the changing environment and attendant risks. The outburst in communication technology has led to greater integration of Indian financial markets across the world.the withdrawal of the IPOs because it may be taken not as an indication of failure of the company and hence the primary market but it may be considered as a disagreement of price between the seller and the buyer. The impact of these changes could be felt from the extremely buoyant activity in Indian stock markets. A number of foreign financial service providers have entered into the Indian financial market like Morgan Stanley. Currently FII investment is at $ 6. The price bands could have been aligned as per existing conditions of the market. technology is driving growth in production and competition is becoming more intense. Indian companies are moving in search of low-cast markets.5 Billion compared to $ 2 Billion in 2001. which were to be alloted to the public.
Similarly.People often invest in various asset classes to: * To beat Inflation * To fund future needs * To meet contingencies * To maintain same standard of living after retirement All these factors matters a lot to the investors and the mutual fund route is one way through which people can meet these needs. thus. ensure regular valuation of and stability in prices of such securities. primarily concerned with providing marketability to the existing securities but these also activate the new issue markets which serve as primary source of funds to the industrial enterprises for their new projects or for expansion. while the latter deals with the existing securities. Such financial markets may be classified as (1) Capital market. Public responses are generally encouraging in the new issue market when there is boom in the stock market and vice versa. bonds. The capital market which concerns with demand and supply of long term funds is again dichotomized as primary or new issue market and secondary or stock market where the former deals with new securities offered to the investing pubic. preference shares. debentures. the secondary market is very . etc. and (2) Money market where the former refers to the market mechanism which envisages institutional arrangements for marketing of long term and equity claims such as equity shares. channelise funds in the desired direction and ensure wider ownership of the securities. assure safety in dealings of the securities. The joint stock companies raise funds from new issue markets but such new issue are also listed with stock markets which provide them a regular market. Free economies are generally characterized to have financial markets to serve as channels through which the savings of the society are made available to business enterprises. while the latter refers to the market mechanism which concerns with floating of liquid funds and their short term uses in trade and industry through the banking system. The stock exchanges are. Both the primary and the secondary markets are integral parts of the capital market and are susceptible to common influences. diversification or modernization of existing ones..
That is when if you have managed to purchase the shares during the IPO offering. you . New issues include ‘initial issues’ as well as ‘further issue’ where the former refers to the securities issued buy the companies for the first time either on incorporation or on conversion from private to public company while the latter refers to the new issues floated by existing companies which needed funds for expansion/ diversification/ modernization. The initial and further issues may be combined under new money issue which refer to the issues for mobilization of new money for the corporate enterprises and there can be no new money issue which include bonus/capitalization issues and exchange issues where the former results from the capitalization to retained earnings enabling existing shareholders get new shares without paying and the latter results from conversion of private company into public.sensitive to the impact of development in the country and the same is transmitted to the new issue market. amalgamation. rights issue or private placement. An Initial Public Offer (IPO) is the selling of securities to the public in the primary market. if it is a very attractive company. INITIAL PUBLIC OFFERINGS (IPO) A corporate may raise capital in the primary market by way of an initial public offer. This is when you see people filling in application forms and buying bank drafts to purchase the company's shares (some countries do it electronically). Then. there will be more people who will participate in the IPO exercise and the draw-lots method will be used to determine who will be allocated the shares. they will invite the public to participate in an exercise called the IPO (Initial Public Offering). Prices when applying for new shares are always much cheaper than what it should be listed in the market later. However. after the first stage. merger and equity dilution by FERA companies. It is the largest source of funds with long or indefinite maturity for the company. IPO Stocks: When the company wants to release their shares into the market for the first time. the company's shares will be listed in the stock market. Some call it "applying for new shares".
Buying stocks through applying for IPO shares in general is always a safer method of investing in the stock market as most companies price them attractively. .will be able to sell them into the market to buyers who want a part of these shares.
These functionaries are: Promoters Modern industrial enterprises require large amounts of capital which can only be raised by resorting to the joint stock company is done by company promoters and syndicates. as a principal representative of the company which is making the public issue. In case the company is successfully established and investors come forth to take up its shares. which he usually does with the help of an issue house and finally he has to put his proposition into active operation. if he is well endowed financially. should be clear in his mind about the number of agencies involved and their respective roles in the entire exercise so as to be able to coordinate effectively the efforts of these agencies. He has to work up details. The work of the promoter entails difficulties and risks and sometimes he has to stake his whole fortune and reputation in order to make the venture a success. formulate the financial plan. Prior to founding the company a lot of expenditure has to be incurred by the promoter on employment of engineers. It is the promoter who is responsible for conception or discovery of the idea to exploit the possibility of some industrial proposition.FUNCTIONARIES OF INITIAL PUBLIC OFFER The functionaries in IPO are those concerned with the formation of joint stock companies and the issue of their securities to the public. The promoter. technical and other experts. but in the case of projects of large dimensions he usually form a syndicate. will work alone. The promoter. otherwise he stands to lose not only his money he had sunk in the venture but his reputation as well. Public issue is essentially an exercise involving active participation of a number of agencies. it has now become necessary to enlist active participation and support of a number of agencies in making any public issue a success. the promoter is duly rewarded. However with the growth of the number of public issues and the complexities in the efforts involved. At earlier stages it was sole effort on the part of the company and its personnel. All members of the syndicate work up the possibilities of the proposition and undertake the investigation and .
These MBs are classified into four categories where the first category MBs must have a minimum net worth of Rs. After all the formalities are completed. preparing budget of expenses. It may be turned over to the technical staff employed and on its favorable report the formulation of the financial plan will be taken up by the financial experts who are supposed to be well conversant with the conditions in the capital market. strategies to be adopted by way of publicity and marketing of the issue. final allotment and refund of subscription) portfolio management. suggesting the appropriate timings for the public issue. subsidiaries of commercial banks and also some private agencies where traditional stock brokers have graduated into providing specialized merchant banking services. 50 lacs and can undertake all activities except issue management. assisting in marketing the public issue successfully. After completing the financial plan.20 lacs and can undertake works of underwriter.examination of the scheme. brokers and bankers to the issue. These merchant banking divisions of some all India financial institutions. etc. 100 lacs and can undertake all activities of issue management (preparation of prospectus. and also give a sense of direction to the various agencies involved in the entire issue. the memorandum of association and articles of association for the formal incorporation as a company is proceeded with. . determining financial structure. preparing project profiles for underwriters. they advise the company on selection of the registrars to the issue. consultant or advisers in the issue. etc. underwriters. the work of drawing up the prospectus. the new company is ready to be launched and its issue is to be placed before the public. The third categories of MBs must have a minimum net worth of Rs. there are a number of agencies specializing in the role of managers to the issue. the other activities mainly performed buy them are drafting of prospectus. printer etc. SEBI has made the registration of merchant bankers compulsory to ensure that only professionals with requisite qualification and financial background enter into the job. Besides. Managers to the issue These persons are actively associated in the selection of various agencies involved with new issue planning the timing of the issue. The second categories of MBs must have a minimum net worth of Rs. advertising agents. underwriting.
on the other. analyzing them. Usually the underwriters can be divided into two categories. namely. also called the ‘issue house’ are responsible normally for receiving the share applications from the various collection centers through controlling branches of bankers to the issue. Brokers These are the people who actually bring the prospective investors and the company together. and broker underwriters and approved investment companies/trust. on the one hand. they are the members of recognized stock exchanges. and continues till the share certificates are dispatched. Registrars The registrars sometimes. and register of members along with other related registers/details are handed over to the company. recommending the basis of allotment in consultation with the managers to the regional stock exchange for approval arranging for dispatch of allotment letters and preparing the register of members. their job normally starts with the opening of the subscription list. They make a commitment to get the issue subscribed either by others or themselves. .adviser and consultant while there is no minimum net worth requirement for fourth category of MBs but they can function as adviser or consultant only. Underwriters The underwriters are the people who actually ensure that the company is able to raise the capital issued by it for a commission charged by them. Generally. with a view to providing better and professional services to investing public and to promote development of capital market on healthy lines. even after the issue is completed. etc. the government has since allowed multiple membership to members of stock exchanges and accorded recognition to corporate entities and the financial institutions including subsidiaries of the banks. Sometimes. It may not be an exaggeration to state that the success or failure of a public issue depends to large extent on the reaction of the brokers. the registrars to issue continue their association with the company in the role of share transfer agents. financial institutions and banks.
In some cases where other institutions like the LIC. it is not necessary that controlling branch should be at a place where the managers to the issue/ registrars to the issue/registered office of the company is situated. usually stipulate that the draft of the prospectus and also the proposed program for public issue is approved by them. Such specified branch of the banker to the issue is called ‘controlling branch’/ the controlling branch is usually selected in the city where the managers to the issue/registrars to the issue/registered office of the company is situated. Even when all the three institutions jointly finance a project under their participating finance scheme. hoardings and posters and even audio visual shows are the usual media of publicity used for public issue. at least 4 or 5 banks are designated as bankers to the issue. UTI. its plans for future. These collecting branches send the application forms and the money received by them to specified branch. one of them is generally chosen as the lead financials institution which acts on behalf of the other two. its activities. etc. leaflets and brochures. it is of vital importance that publicity is given before the public issue by giving newspaper and TV advertisements. Different branches of these banks are named at various locations where such application money is accepted. etc. .Bankers These are the commercial banks. There are some advertising agencies. which will receive the application money along with the share application forms from the prospective investors. therefore. have also given financial assistance. press conference. It is. IFCI and ICICI. essential that the general public is made aware of the company. Hence. GIC. Press releases. Financial institutions Term lending financial institutions at the time of sanctioning underwriting support loans to the company. it is generally adequate if the company obtains the necessary approval from the regional office of the lead institution only. where the details of the application are consolidated. However. Depending upon the size of the issue. which specialize in financial advertising and publicity campaign for public issues. Publicity and advertising agents Public issue is an effort to motivate and persuade members of the public to invest in the shares of the company. The three principal all India financial institutions are the IDBI.
Other Agencies In addition. Government/Statutory Agencies Besides the various agencies which are directly connected with a public issue whose efforts will have to be coordinated by the company. the company will also have a interaction with other agencies like auditors. (4) the stock exchanges where the company’s share are to be listed (5 industrial licensing authorities for necessary industrial license to be obtained for the project or other statutory bodies like DGTD etc. with whom the capacity of the project has to be registered. direct to lead institution. . (2) registrar of the companies with whom the prospectus has to the filed and registered before the public issue under section 60 of the companies act. (3) reserve bank of India from whom necessary permission has to be obtained for non resident investment. 1956. if any. if insisted for. These are: (1) SEBI which provides guidelines for public issue.it might be necessary to seek separate approvals from them. taxation or technical experts whose names or statements are mentioned or quoted in the prospectus. of any in the company. But generally an advance copy of the draft prospectus is sent to them with a request forward their comments. legal advisors. there are some statutory/government agencies that are connected with public issue. and (6) pollution control authorities and other local authorities from whom the clearance may have to be obtained and such clearance is referred to in the prospectus.
75% of the net offer to the public through book building process and 25% at the price determined through book building. bids are collected from investors at various prices. Difference between Book Building and Public Issue In Book Building securities are offered at prices above or equal to the floor prices. The book building process: . The concept of Book Building is relatively new in India. advertisement. an issuer company can issue securities to the public though prospectus in the following manner: 1. The offer price is determined after the bid closing date. during the period for which the IPO is open. 100% of the net offer to the public through book building process 2. circular. during which the issue price is determined. whereas securities are offered at a fixed price in case of a public issue. which are above or equal to the floor price. Book Building is basically a process used in Initial Public Offer (IPO) for efficient price discovery. document or information memoranda or offer document". the demand can be known everyday as the book is built. The Fixed Price portion is conducted like a normal public issue after the Book Built portion. In case of Book Building. It is a mechanism where. However it is a common practice in most developed countries. As per SEBI guidelines. But in case of the public issue the demand is known at the close of the issue.A NEW CONCEPT OF IPO MARKET—BOOK BUILDING SEBI guidelines defines Book Building as "a process undertaken by which a demand for the securities proposed to be issued by a body corporate is elicited and builtup and the price for such securities is assessed for the determination of the quantum of such securities to be issued by means of a notice.
First. The principle of these changes seems to be that greater participation of retail investors in the primary market is possible only when they have a reasonable chance of making gains. the 10% increase in the allocation for retail investors.The company approaches lead manager for IPO The company and lead manager suggest a price band at which shares are to be offered Application are invited Based on demand for the shares a certain price is established by promoters and the lead manger The allotment is made on the basis of the market clearance price Post issue the price stabilization is undertaken by the lead manager. Idea Cellular. To enable such participation. But more significant is the change in the . the market watchdog has made sure that retail investors actually get an allotment in book-built IPOs. Hence. Coming close on the heels of the hugely successful Maruti IPO. This is perhaps the first instance where the market regulator has got the timing of reform measures spot on. these measures should arouse retail interest in some of the big public offers expected in the near future — BPCL. WHAT SEBI DID TO ENCOURAGE RETAIL INVESTOR SEBI has announced a series of measures to encourage retail participation in the primary market. certainly not the case earlier. TCS and Nalco. Sebi has adopted a two-fold approach.
the regulator has introduced the concept of net tangible asset.000 companies had raise around Rs 45. Reports emanating from the office of the Securities and Exchange board of India clearly indicate that the year 2004 is all set to emerge as a record breaking year for initial public offer as over 600 companies big.3 lakh would have qualified for the retail category. The decision to disallow withdrawal of bids by institutional investors and the shift to price band instead of a floor price will prevent manipulation in pricing and subscription. it had taken 15 years for over 5. Additionally.000 crore! At least one third of this amount has vanished into thin air as several cheaters. be a historical feat in the realm of the Indian capital market.600 companies to raise this amount! The 2004 performance will. making certain that issuing company has some pre-IPO history.definition of what constitutes retail — from those applying for up to 1.000 crore! Interestingly. Of course.000 or less. willful defaulters have been barred. These measures should translate into higher allotment for retail investors and keep a check on the quality of issuers as well. priced at Rs 530 a share. Beyond this. medium as well as small are planning to raise a whopping sum of Rs. An application for 1. Second. both inimical to retail interest while the availability of a ‘green shoe’ option should deliver price stability post listing in the case of over subscription. issuers have been asked to tie-up funds for a project before the issue. there is precious little a regulator can do. HOW TO BE WATCH FUL OF IPO BOOM The Indian capital market is on the verge of an unprecedented IPO boom. unscrupulous businessmen belonging to select industrial groups and fly by night operators had palmed off worthless scrap papers in the name of share certificates to . This would ensure that ‘retail’ is truly retail. Take the i-flex IPO.000 shares entailing investment of Rs 5. 60. Of course.000 shares to applications for shares worth Rs 50. to fix accountability. thus. Lastly. The rest is upto the market and investors. the CEOs or the CFOs of the issuing company would have to certify disclosures in the offer document. to ensure some quality. to discourage fancy ideas being sold to public and subsequently abandoned (plantation schemes). the IPO market was literally comatose for the last six years after the previous five-year (1992-96) boom period when about 5.
which. This body blow was enough to disenchant the investing public from the new issue market which wore a deserted look for the last six years. SEBI has already washed its hands of any say in it by declaring that “SEBI does not take any responsibility either for the financial soundness of any scheme or the project for which the issues are proposed to be made or for the correctness of the statements made or opinion expressed in the offer document”.millions of hapless investors. Can you rely on analysts? Just recall the paeans they had sung on issues which shook the very foundation of a giant institution like UTI . there is need for larger production of industrial and consumer goods. The buoyancy in the stock market has further aided this trend. merchant bankers will also try to hard sell these shares. the new issue market is showing some activity once again. for this. And the poor investors are still burdened with these worthless papers. Lured by hefty fees and heftier out of pocket expanses. disinvestments of PSU offers the easiest route. But now that business activity has picked up. over 600 companies have planned to come out with issues to raise over Rs 60. needs funds for expansion and setting up new plants. It is almost certain that cheaters and looters among businessmen will once again be at their game mopping up funds through bad or bogus issues. At he same time. the public is willing to go for equities. Taking advantage of this favorable climate. And on the other hand. the government is in dire need of funds to meet its budgetary plans and. in turn. The capital market watchdog. originally valued at millions of rupees. merchant bankers are more interested in their fees rather than in the quality of the issues. On the one side. as interest rates on various instruments of saving have come down drastically and equities have emerged as more remunerative avenue for investment. The SEBI ‘clarification’ raises a pertinent question: have we moved forward or backward from the controller of capital issues days in investor protection? By and large. economy is on the path of rapid growth and wheels of industries have started running at a fast pace.000 crore. The watchdog could not see in which direction the promoters fled after downing the shutters of their companies and stock exchange authorities took easiest route to forget about the fraud by de-listing the shares of these companies. with business activity picking up.
Study the document to understand product portfolio. Do your homework. TV Today is India’s leading news broadcaster and Patni computer is India’s largest IT services company. THE COMPANY Next. choose companies with leadership positions. new business initiatives and strategy. and even better to have an ‘a’ team with a ‘a’ product. A voluminous offer document can seem daunting but if you focus on the key aspects. Before you jump on to the bandwagon.The best thing for investors to do to ensure that thy are not cheated in this IPO boom. it gets less tedious.000 crore is hard to resist. the balance was divided among nine other manufacturers. Similarly. competitive strengths. Maruti’s share stood at 54. The prospectus has a section dedicated for such information and this is a must read. 40. this analysis is rather more difficult. Its not easy to analyze the performance even of al listed company that has been around for a while and has a record of market performance. THE PROMOTER An old business adage says. The attempt should be to understand the long-term sustainable advantage of the business and the company’s position in it. is to follow the following evaluation process THE EVALUATION PROCESS Backed by aggressive merchant bankers. But don’t forget that your personal rs 4000 are as valuable to you as it will be with a couple of zeroes more. which includes 10 basic models with over 50 variants.6 percent.” After all it’s . and gung ho TV channels. Maruti is an industry leader and the largest passenger car manufacturer in India with a diverse product portfolio. Rs. the pink papers. In 2003. for a company making an initial public offer. ”it’s better to have an ‘a’ team with a ‘c’ team with an ‘a’ product. regulations and so on. TV today and Patni computers. But some point to be considered are as follows THE BUSINESS Make sure you understand the company’s business. Three successful recent issues have been Maruti.
For example. it’s important to focus on the credentials of the promoter and key management figures. check if the company has an overly high debt equity ratio. in Patni computers. Hence. Although the offer document is tailor made to sell the issue. Also. or carries contingent liabilities. a foreign venture capital investor holding 28. Check for consistency in revenue and profit growth and margins for at least three years before the IPO.3 percent of outstanding shares. unrestricted competition in fixed line services and the decision to . the lock in period for key promoters is three years. in the case of Bharti Televenture the biggest risk came from regulations governing Indian telecom. For instance. The inevitable supply overhang when these previously restricted investors are permitted to sell shares can put downward pressure on the stock price. there’s a Tips industry. the promoters of Indraprastha gas and Maruti have proven management credentials. since it’s the management philosophy and ability that determines attitude towards minority shareholders and the likely success of a venture. the underwriter makes the company’s key shareholders sign a lock-in agreement. Invest in companies with a proven management track record. the risk factors help you get a fair idea of the impact of such risks on the company’s operations. the lock in period is 180 days from listing. For example. THE FINANCES A good management and a sound business model count. prohibiting them from selling their shares for a specified period of time. THE RISK This is the most relevant part of the offer document. THE LOCK IN During an IPO. Increased competition in cellular services. or faces litigation in short.people who run the business. On the other hand. but for general Atlantic. factors bearing on the company’s operations and results. The agreement is legally binding on the promoters and other key shareholders. or has disputed tax claims. but what matters most is performance. where there were allegations against one to the promoters in the Gulshan Kumar murder case such issues are best avoided.
if the money is being raised to repay loans or to provide and exit option to existing investors investigate. and companies are prone to capitalize on this sentiment to raise money. price increases defy fundamentals. which will directly flow to the bottom line. On the other hand. which exposes it to significant risks considering that film production is not a safe business. Although issues are usually attractively priced to attract investors.allow fixed line operators to provide limited mobility using WLL were some of the risks at the time of the IPO. However. Expect the red flags. benchmarking it with valuations of . Rarely. BAG films had earmarked 60 percent of he issue proceeds towards production to feature films. you will be able to weed out the chaff. which will drive growth for these companies in future. BAG films converted its 14 percent fully convertible debentures and accumulated interest into equity shares and issued them to UTI and IDBI at a 10 percent discount to the issue price at Rs. This means Maruti’s Rs. or capacity expansion paints a better picture. marketing. The discounts and royalty waivers by Suzuki to Maruti. THE FINE PRINT Often.146 crore net profit in 2003 will get a boost of 40 percent by just this little clause. some good news also gets buried and goes unnoticed. THE OBJECTS In bull markets. Companies like Bharti and Divi’s have used the funds raised to create infrastructure. in particular. For example. 9 per share. the company should not need to raise fresh capital to repay its debt. THE PRICE The pricing of the issue determines the demand for the stock. will result in savings of over Rs. the most critical bits of information on a company’s financial health are buried in the prospectus. For example.80 crore. If the business is doing well. If you study the objects of the issue. for instance. a proceeds of the issue going towards research. especially when the company does not have prior experience in it. to be lost in acres of fine print.
. compare the company’s profit margins. Patni scores high on the valuation front but low on performances parameters like operating margins. For example.comparable listed companies is a good idea. THE HYPE Given that there is only one IPO for a company. Our advice: don’t buy stocks just because they are making a debut in the market. Enam. History suggests that the best merchant bankers usually undertake some due diligence before associating themselves with an issue. JM Morgan. This will give you a sense o f the relative attractiveness of the issue and scope for appreciation. SBI capital markets. Since business fortunes of merchant bankers depend on their track record. Look for known lead managers like Kotak investment. DSP Merill lynch. there is more reason for them to handle only quality issues. For valuation purposes. price earning ratio and other financial parameters with that of similar payers. Remember that it is their business to make clients buy and sell stocks. Be wary of smaller investment banks that may be willing to make any company public. capital efficiency. they are often presented as not to be missed opportunity and much hype is created by lead managers and brokers to get as much attention as possible. THE BROKER The lead manager’s track record is as important as that of the company’s.
combine relevance to the research purpose with economy in procedure. RESEARCH DESIGN Research design is the blue print of conditions for collection and analysis of data in manner that aims to. .RESEARCH METHODOLOGY Research in common parlance refers to the search for knowledge. the analysis and conclusion may not be scientific. Research methodology is a way to solve the problems sceintifically and systematically. Research methodology is an attempt to solve the research problem systematically. risk in price or inflation erodes the value of money and hence investment must provide a protection against inflation. Research is thus an original contribution to the existing stock of knowledge making for its advancement. It is the voyage of discovering new facts. Unless the methodology is correct. Moreover. This inquisitiveness is the mother of all knowledge and the method employed in this quest is known as research. One can define research as a scientific and systematic search for pertinent information on a specific topic. Research methodology plays an important part in any investigation. OBJECTIVES OF THE STUDY The main objective of investment portfolio management is to maximize the returns from the investment and to minimize the risk involved in investment. The problem statement are to Investors attitude towards primary market. in general refers to some difficulty with a researcher experience in the contest of either a particular a theoretical situation and want to obtain a salutation for same. RESEARCH PROBLEM The research problems. The research design used in my study is basically analytical in nature.
To study how to earn more liquidity. safety etc in their offer. To study about the regular return. PRIMARY DATA COLLECTION: . • • Observation Method Through Questionnaire But as the time was limited I used the Questionnaire method for data collection SECONDARY DATA: . any portfolio management must specify the objectives like maximum return’s. and risk capital appreciation.Secondary data is also collected by me from various documents of the company from the Internet. But two main methods to collect it i. which is collected through observation or direct communication with the respondent in one form or another. To study the safety of investment.e.Primary data collection. These are two methods for primary data collection. Books and Journals and Official sources.Secondary objectives: The following are the other ancillary objectives: • • • • • To know about the perception of primary market. Portfolio management services helps investors to make a wise choice between alternative investments with pit any post trading hassle’s this service renders optimum returns to the investors by proper selection of continuous change of one plan to another plane with in the same scheme. DATA COLLECTION INSTRUMENTS: The data collection instruments used in the study are following: - . To know about the risk of primary market.
Hence questionnaire made by me is structured. Questions that put too much strain on the memory or intellectual of the respondent.QUESTIONNAIRE: . club.Every researcher has to take a decision regarding a sample unit before selecting sample. SAMPLING: Sampling may be defined as the selection of some part of an aggregate or totality on the basic of which a judgment or inference about the aggregate and totality is made. Sampling is used in practice for various reasons. It can be presumed that in such an inquiry. The questions were presented with exactly with same wording and in the same order to all respondents. money and energy. Structured questionnaire is that in which these are define concrete and predetermine questions. state and village etc or a social unit such as family. school. The provision of alternatives replies at times helps to understand the meaning of question clearly but such questionnaire have limitations too for instance. particularly in care of inquiries. But in practice this may be not true. Even the slightest element of bias in such an inquiry will get larger and as the numbers of observations increased more over there is no way checking the element of bias or it extend except through a survey or used sample checks besides this type of inquiry involves a great deal of time. element of chance is left and highest accuracy is obtain. SAMPLING UNIT: . wide range of data and that too in respondents own words can’t be obtained with structured questionnaire. As we know Questionnaire should be comparatively short and simple in the size of the questionnaire should be kept to minimum questions should proceed in logical sequence moving from easy to more difficult.This method of data collection is quiet popular. All items in any field of inquiry constitute a universe or population complete enumeration of all items in the population is known as census inquiry. when all items are covered. Sampling unit may be a geographical one such as district. etc or it may be an individual. . Structured questionnaire are simple to administer and relatively inexpensive to analyze. Therefore when the field of inquiry is large this method becomes difficult to adopt because of the resources involve.
nor too small. The size of sample should neither be excessively large. which fulfills the requirements of efficiency representatives.SAMPLE SIZE: . random sampling was done. . DATA ANALYSIS For analysing data. The size of population must be kept in view for this also limits the sample size. a sample of the population was drawn non-random sampling can be of following types: • • • Sample Random Sample Stratified Random Sample Cluster (Area) Sample In this case.Size of samples refers to the numbers of items to be selected from the universe to constitute a sample. reliability and flexibility. This is a major problem before every researcher. bar diagrams and pie charts have been used. SAMPLING PROCEDURE: . users. the size of population variance needs to be consider as in case of large variance usually a bigger sample is needed. Tables showing data over past years have also been included.e. It should be optimum. As such budgetary constraints must invariable to taken into consideration when we decide the sample size looking at the above consideration I have decided the 180 sample size of sample unit i. An optimum sample is one.This refers to the procedure by which the respondents should be chosen. In order to obtain a representative sample. While deciding the size of sample researcher must determine the desired precision as also an expectable confidence liable for the estimate.
In spite of all the above mentioned limitations and constraints.LIMITATIONS OF THE STUDY The result must be viewed in a quantitative terms. the main drawbacks of the present study are:- Less Time Period: As the time period that is given to us for doing training was also too less. The lack of experience made the task difficult. every sincere efforts has been made to complete the study and to derive the reliable and viable results for analyzing. Less Response from respondents: Getting the information’s from the respondents is also a tedious task. However. Lack of knowledge: Conducting the research makes it very difficult for us to perform out task without any problem. In a short time period that is very difficult that we can get the knowledge about each and everything related to our project. . Findings must be verified and tested through further conclusive investigations. As there are many respondents that are not in a position to tell us correct information about the project or study and also sometimes they do not show any interest.
1 Which age group do you belong? Age Group 18-30 30-45 45-55 Above 55 89 90 80 No. . of Respondents 14 89 58 19 Analysis: The above diagram shows that 14 respondents were from 18 to 30 age group. of Respondents 70 60 50 40 30 20 10 0 18-30 30-45 45-55 Above 55 Age Groups 14 19 58 No. 58 respondents were 45 to 55 age group and 19 respondents were from above 55 age group.ANALYSIS AND INTERPRETATION Q. 89 respondents were from 30 to 45 age group.
of Respondents 150 30 150 160 140 No. . of Respondents 120 100 80 60 40 20 0 Yes No 30 Invested in Stock Market Analysis: The above diagram shows that 150 respondents said that they are invested in the stock market and 30 respondents said that they did not invest in the stock market.2) Have you ever invested in stock market? Invested in Stock Market Yes No No.
Q3) If yes. in which type of market? Type of Market Primary Secondary Both No. of Respondents 100 30 20 100 100 90 No. of Respondents 80 70 60 50 40 30 20 10 0 Primary Secondary Type of Market Both 30 20 Analysis: The above diagram depicts that 100 respondents said that they invest in primary market.e. 30 respondents said that they invest in secondary market and 20 respondents said that they invest in both markets i. . primary as well as secondary.
. of Respondents 16 89 6 2 7 Analysis: The above diagram shows that 89 respondents i.e. of Respondents 60 50 40 30 20 10 0 News Broker TV Internet Any Other Source of Information 6 2 16 7 No. 16 respondents said that they got knowledge about primary market from News/newspaper. 6 respondents got information through TV.Q4) What is the source of information regarding primary market? Source of Information News Broker TV Internet Any Other 89 90 80 70 No. 2 from Internet and 7 respondents said any other sources for information. maximum from total 120 respondents said that they got the knowledge from their brokers.
of Respondents 43 18 37 22 45 40 No. companies and 22 respondents said they like to invest in any other companies. Co. Any Other Like to Invest Analysis: The above diagram depicts that 43 respondents said that they like to invest in Private companies. 18 respondents said Govt. Any Other No. Govt. of Respondents 35 30 25 20 15 10 5 0 43 37 22 18 Private Co. companies. Semi Govt. Govt. 37 respondents said they like to invest in Semi-Govt. Semi Govt.Q5) In which of the following you would like to invest your money? Like to Invest Private Co. Co. .
and 10 respondents said that they invest above 50% of their income in primary market. 32 respondents said that they invest upto 20% to 35% of their income.of Respondents 40 35 30 25 20 15 10 5 0 0-20% 20-35% 35-50% Above 50% 10 32 29 %age of Income Investment Analysis: The above diagram shows that 49 respondents said that they invest upto 20% of their income in primary market.Q6) How much % of your income you invest yearly? %age of Income Invest 0-20% 20-35% 35-50% Above 50% No.of Respondents 49 32 29 10 49 50 45 No. . 29% respondents said they like to invest in 35% to 50% of their income.
. 48 respondents said they invest in Infrastructure sector.Q7) In which sector you like the invest the money? Investment Sector Insurance Infrastructure Telecom IT Sector Any Other No. of Respondents 16 48 33 23 10 50 45 40 No. of Respondents 35 30 25 20 15 10 5 0 Insurance 48 33 23 16 10 Infrastructure Telecom IT Sector Any Other Investment Sector Analysis: The above diagram shows that 16 respondents said that they invest in insurance sector. 33 respondents said that they invest in Telecom sector. 23 respondents said that they invest in IT sector and 10 respondents said that they invest in any other sectors.
of Respondents 41 58 21 58 60 50 No.10000 to 50000 Rs.50000 to 1 Lac Above Rs.50000 to 1 Lac and 21 respondents said that their yearly portfolio has been above Rs.10000 to 50000. .50000 to 1 Lac Above Rs.of Respondents 40 30 20 10 0 21 41 Rs. 58 respondents said that their yearly portfolio has been between Rs. 1 Lac.Q8) How much is your portfolio? Portfolio Rs.1 Lac No.10000 to 50000 Rs.1 Lac Portfolio Analysis: The above diagram shows that 41 respondents said that their yearly portfolio has been between Rs.
Q9) For how much period you would prefer to invest? Investment Time Short Term Long Term No. . of Respondents 80 70 60 50 40 30 20 10 0 Short Term Long Term 24 Investment Time Analysis: The above diagram shows that 96 respondents said that they invest for short time and 24 respondents said that they invest for long term. of Respondents 96 24 96 100 90 No.
94 said that primary market investment is risky and 22% respondents i. 26 said that primary market investment is not risky. .e.Q10) Investing in primary market is risky or not? Risky Investment Yes No No.e. of Respondents 26 94 Risk of Investment in Primary Market Yes 22% No 78% Analysis: The above diagram shows that 78% respondents i.
. then how much risky in this? Risk Highly Moderately Lower No.Q11) If yes. of Respondents 14 12 10 8 6 4 2 0 Highly Moderately Lower 2 6 Risk Analysis: The above diagram shows that 6 respondents said that primary market is highly risky. 2 respondents said moderately risky and 18 respondents said primary market is risky but not highly or moderately. of Respondents 6 2 18 18 18 16 No.
18 respondents earn 100 to 150% return and 8 respondents said that they earn between 150 to 200% return from primary market. of Respondents 50 40 30 63 31 18 20 8 10 0 10-50% 50-100% 100-150% 150-200% %age of Return Analysis: The above diagram shows that 63 respondents said that they earn 10-50% return from their primary market investments.Q12) How much return has been earned from primary market? %age of Return 10-50% 50-100% 100-150% 150-200% No. of Respondents 63 31 18 8 70 60 No. . 31 respondents earn 50-100% return.
Q. of Respondents 29 59 32 59 60 50 No. of Respondents 40 29 30 20 10 0 32 Past Experience Company Results Criteria for Investment Any Other Analysis: The above diagram shows that 29 respondents said that they use their past experience for new investment into primary market. 59 respondents said they watch current results of companies in which they want to invest and 32 respondents said they watch other things whenever they go for investment in primary market.13 What criteria you used to invest in any IPO? Criteria for Invest Past Experience Company Results Any Other No. .
14 From where you get to know about these criteria? Knowledge about Criteria Share Broker Newspaper Magazine 87 90 80 No. of Respondents 87 25 8 Knowledge about Criteria Analysis: The above diagram shows that 87 respondents said that know about their criteria from their Share brokers. of Respondents 70 60 50 40 30 20 10 0 Share Broker Newspaper Magazine 8 25 No. .Q. 25 respondents said they got knowledge from Newspapers and 8 respondents said they got knowledge from Magazines.
• Most of respondents said that they invest less portion of their income in primary market. & some of them said that they got knowledge about primary market from News/newspaper & very few respondents got information through TV from Internet and any other sources for information. • Retail investor divert their fund from the banking system to the primary market. Very few investors like to invest major portion of their income in primary market. . • Maximum respondents said that they got the knowledge from their brokers. • The study shows that maximum respondents among the sample respondents are getting information related to the different services from the agents. As the interest rate of saving account deposit decreased very much. So there is a fear in the mind of respondents about to invest in primary market. • Respondents view is that primary market investment is risky. • There is a need to bring awareness among the general public about primary market.FINDINGS • Most of respondents said that they are invested in the stock market and few of them said that they did not invest in the stock market. It implies that most powerful source of information about services is an agent.
marketing executives. read various comments and take their own decision. through different media. . people are looking for better service. Investors have to beware as all those who are keen to grab a piece of the cake of the impending IPO boom. The very first suggestion to the investor is that the best thing for the investors to do to ensure that they are not cheated in this IPO boom. companies should give full information of there product line to the investors. Keep in mind three P’s before investing in any IPO & Three P’s are Promoter Performance Price • The next best suggestion to the investor is that they should be steer clear of IPO’s from lesser known industry and focus on offerings by well known industry leader with quality management and strong financials. are doing so at their cost. So by decrease their price/commission rate. • • The investor should not follow the IPO boom blindly as they can get The companies should make regular contact with his customer through his cheated as they during nineties IPO fiasco. providing this it can gain the big reach its break even as soon as possible and can earn profit from there. This would not only help in strengthening the business relation but would also help in taking proper feedback of their products.SUGGESTIONS On the basis of the Market survey conducted has put very interesting findings in the Market. • • • • The majority of customers are price conscious so they should improve or The companies should concentrate more on the sale promotion activities The market is not well aware of the product line of the companies. is to study the prospectus themselves. so In corporate and institutions.
still some improvements are required. It has been concluded that on the one hand the customers are somewhat satisfied but on the other hand. • The most important factor that attracts the people towards investment in primary market is the communication factor.• Customers get dissatisfied very soon. • The main reason behind people not wanting to have investing of a particular company is the lack of proper information. lot many schemes are waiting to hit the ramp in the coming years. the broking companies segment is flooded with the new schemes from new & existing players and moreover. In the end. In the today scenario it’s very important to study the customer’s psychological behaviour regarding the various services provided by them. This is the most important reason and for this. They need care and by providing that a long customerorganization relationship can be built. who its promoter are. how is its management. So. So they must be supported by a good customer care unit. Moreover. people don’t want to come out of cocoon of their seemingly uncomplicated life. I conclude that investor should not invest their hard earned money blindly in the IPO’s but they should invest their money by taking different safeguards like understand the company business. Although there is SEBI to protect the investor but he company which follow the legal binding of the SEBI is not fool proof that the company is a good one. its risk factor and pricing of the issue etc. They seem satisfied with their old ways and are wary of modern. CONCLUSION This project is based on the study of “Investors attitude towards primary market”. . people feel persuaded to buy it. new age products.
2001. volume 5 / Dec. Tata McGraw Hill Publications. Wilkinson & Bhandarkar. page no 261-268.. 2nd edition. (Page 152. Ltd. www. May 2006 P.com www. 2002. 6th edition. Bansal K Lalit. Websites 1.359-412. Dr. New Delhi. 2) Financial review..com www.155) (Page 175-185) JOURNALS and MAGAZINES:1) Applied Finance.R.2007. 4. “Financial Services”. 2005. Delhi.BIBLIOGRAPHY 1) 2) 3) 4) M. Kothari. C.prowessdatabase. 3.Y Khan. 27-42. Himalaya publishing house Pvt. “Business Research Methodology”. PP 237-243. edition January 2007. pages no 34-40. 2005. No.indiainfoline.com www.com Vikas . New age international ltd. “Research methodology methods & techniques”. No. P. 2. “Merchant Banking & Financial Services” Publications. Publishers. p-10-20.thehindubusinessline.indiatimes. 3) Management Accountant.
1 Lac to 3 Lacs 2.3 Lacs 30 .50000 to 1 Lac Above Rs.QUESTIONNAIRE Q1) General Information 1.55 above 55 b) d) b) Serviceman Any other Rs. 20-35% 50% & above Infrastructure Any Other Telecom Businessman Professional Rs.10000 – 50000 Short term Yes Rs. Name ____________________________ 3.50000 – 1 Lac Long term (5 & above) No Above 1 Lac Broker Govt.45 No Secondary Market TV Semi Govt. 0-20% 35-50% Q8) Insurance IT Sector Q9) How much is your portfolio? Rs.30 Yes Primary Market News Private Co. Co. Age ______________ Annual Income Which age group do you belong? Have you ever invested in stock market? If yes. a) c) Q2) Q3) Q4) Q5) Q6) Q7) 18 . Internet Any other 45 . in which type of market? What is the source of information regarding primary market? In which of the following you would like to invest your money? Any other How much % of your income you invest yearly? In which sector you like the invest the money? Q10) For how much period you would prefer to invest? Q11) Investing in primary market is risky or not? . Occupation a) c) 4.
200% Any Other Magazine Q13) How much return has been earned from primary market? What criteria you used to invest in any IPO? Company Result Newspaper From where you get to know about these criteria? .14 Q.15 Past Experience Share Broker Moderately 50%-100% 100%-150% Lower 150% .Q12) If yes. then how much risky in this? Highly 10% – 50% Q.
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