“STUDY OF PERCEPTION OF RETAIL INVESTORS IN INDIA OVER BANK NIFTY”

*Gaurav Sharma,

Enrollment No. DET- 2001000356

Roll No. CW/PHD/20/80
Mail id- gs189189@gmail.com
Contact No. +91 9424942469

**Dr. Kumbhan Khandelwal

Faculty of GACC,
Indore, (MP)
Contact No. 9425063154

***Dr. Preeti Singh

Head of Department,
School of Commerce,
Indore, (MP)
Contact No. +919425349044

A
Research Paper
Submitted to
Devi Ahilya Vishwavidyalaya,
Indore (M.P.)
In the School of Commerce
Year 2020

Devi Ahilya Vishwavidyalaya

Khandwa Road, Indore(M.P.)
Pin 452001
 “STUDY OF PERCEPTION OF RETAIL INVESTORS IN INDIA OVER BANK NIFTY”

ABSTRACT

This paper investigates the perception of retail investors on BANKNIFTY. The survey was
conducted in October 2021. The Indian economy and share market declined due to the direct
impact of COVID. The study tries to find out the perception of retail investors by collecting the
primary data via questionnaire survey that consist of close ended questions.

INTRODUCTION

First financial market was established in 1875. www.bseindia.com (2021). At that time, Foreign investment
market was not developed. National investors were the only participants. When globalization came into
existence, the whole diversified investment market got united. In result, the investment sector grew up very
fast and foreign individual investors and institutional investors started investing in domestic financial
market. There are some long-term foreign investors, and they are unpredictable, because of the influence of
macro-economic variables like, Inflation rate, Exchange rate and Interest rate etc. Such conditions have
adverse impact on the stock market. Our country nearly succeeded in attracting foreign capital.

Financial markets are marketplaces, where creation and trading of financial assets, such as shares,
debentures, bonds, derivatives, currencies, etc. take place. It acts as an intermediary between the savers and
investors by mobilising funds between them. The financial market provides a platform to the buyers and
sellers, to meet, for trading assets at a price determined by the demand and supply forces.
www.businessjargons.com.(2021).

Capital markets are growing, therefore small retail investors need to be secured from frauds and market
dominance by FIIs and market manipulators. Through SEBI, Government interferes and put control on
stock markets. www.investopedia.com(2021). Share markets like National Stock Exchange are financial
markets where the sale and purchase of financial securities take place. This market ensures not only the
income source to investors but a better career opportunity for youngsters also. Most of the investors are
having awareness about the products being dealt by stock exchanges. Some of the investors are ready to
take high risk in the stock market. Purohit (2013).

Securities market like NSE provides a wide range of commodities, as the investors wants. Commodities
available in NSE are: Listed shares of companies; Index like NIFTY, BANKNIFTY. Trading options as
per duration are Intraday and Delivery. More choices available for trading and investment are Future and
option (call/put). The market facilitates the investors to trade via brokers assigned through SEBI.
Banks are considered to be the base of financial structure of an economy. In India, banks plays an
important role to control and manage almost all kinds of financial activities of an individual. The banking
companies in India grew up with the support of government and acted as a tool to solve the financial
burdens. The market is controlled by the bulls and bears, FIIs and big domestic investors. They drive
market up to an extent. The number of retail investors are now increasing day by day. And can now hold
their position in market for a time being.
PROPOSED OBJECTIVE
The following are the objectives of this study-
1. To know the impact of awareness on the perception of investors.
2. To know the interest of investors in trading BANKNIFTY.
The hypothesis of the study- 
The following null hypothesis is to be tested for the objectives of the study to test if there is no relation
among variables-
As observed from existing literature it is evident that domestic retail investors are increasing day by day.
The retention ratio of investors in stock market has been ultimately increased post covid. The knowledge
and awareness of market somehow helps in gaining the investors interest. However, a strong correlation
may establish if they are correlated. Therefore, study can be framed to design Hypothesis with selected
variables and questionnaire.

Hypothesis 1
Ho1 There is no correlation between investment pattern and awareness of stock market.
Ha1There is a correlation between investment pattern and awareness of stock market.

Hypothesis 2
Ho2 There is no significant impact of stock market awareness and education on retail investors.
Ha2 There is a significant impact of stock market awareness and education on retail investors.

Hypothesis 3
Ho3 There is no significant impact of Bank Nifty trading volume on the retail investor.
Ha3 There is a significant impact of Bank Nifty trading volume on the retail investor.

REVIEW OF LITERATURE
The Stock market is highly volatile and it is up to the investors to decide how he could make use of the
stock market to gain higher returns. In practice investors use Beta to judge the riskiness of each stock. It is
believed that higher the risk, higher will be the returns, but seeking excessive risk may not be advisable as
it does not ensure excessive returns. At a particular level of return, security has its own degree of risk. It is
advised that investor should analyse the market on a continuous basis, which in turn would help them pick
the right stocks to invest. Mallikarjunappa (2016). The derivatives market is witnessing tremendous growth
in India. The retail and institutional investors occupied a key role in development of derivatives trading in
India. The major participants in equity derivatives are retail investors with 52% higher contribution than
that of institutional investors. Pallavi (2012). The individual risk perception based on gender, age, income,
investment portfolio and other demographic factors. Retail investors’ decision making in equity investment
is influenced highly by the individual level of perception. This is because; retail investors’ are very much
financially conservative which are reflected by emotion and cognition characteristics. The investor should
understand the diversified portfolio and market to reduce their risk level in investment decision making for
prevention. Dhanaiah (2012).
All the stocks of Bank nifty had negative returns during the study except Yes bank and Kotak Mahindra
bank. Yes Bank had given the highest return and the lowest return was given by Punjab National Bank. It
was also found that systematic risk was highest for SBI and lowest for Yes bank. The Bank of India and
Syndicate Bank where less affected by market risk due the negative beta, while Punjab National bank and
Bank of Baroda had the highest market risk. Dinakar (2016).
Self-consciousness is the most dominating personality trait among the survey respondents and it is
influenced by all the proposed variables such as gender, age marital status, discipline, occupation income,
time spent for analysis of trades per month etc. Rajagopalan, Guruswamy (2014).
three likely independent variables, namely, investors’ perception of information asymmetry,
market perceptions and over confidence that may predict investor’s risk attitude. Hilu (2015)

Chennai respondents have exhibited risk element which is the an important personality and influenced by
income, gender, time spent for analysis and rate of return on equity. Diligence is the next important
personality trait shown by the respondents and it is influenced by time spent for analysis, number of trades
performed per month and rate of return on equity. Among the psychological biases, Illusion of control and
socio conformity bias are the most biases which are influenced by the proposed independent variables viz.,
gender, income etc. Rajgopalan (2014). Implied volatility indices include information about future
volatility beyond that contained in past volatility. The study further reveals that there is a statistically
significant negative and asymmetric contemporaneous relationship between implied volatility changes and
the corresponding underlying equity index returns. Dhaniyah (2011).
Awareness about financial market experience in derivatives trading workplace activity and return
expectation are significantly associated with Derivatives Awareness level of respondents. Gakhar (2016).
Derivatives market is dominated by male investor with age group 31-40. Derivations are use as Hedging
tool and trend of spot market affects F&O trading. Manrai (2015).
The attitude of investors is changing towards derivatives market in India for the last few years. There has
been increasing awareness about derivatives trading among investors in India. Rashid, Nishat (2009)
Market structure Dhaka stock exchange Bangladesh 300 retail investors. Random sampling. Factor analysis
descriptive & reliability statistics regression analysis. Investment analysis, ease of conducting transaction,
information and risk all affect the satisfaction level of stock investors in Bangladesh. Kumar, Pani (2016).
Regulatory framework is required to meet the needs of enquiry market integrity, financial integrity and
investor protection. Naresh (2006).

Chi-squares test Cronbach’s alpha Education has significant relation with transparency, tax advantage, past
performance of the company. Age has significant role in cash market. Kukreja (2012) Investors are using
different metrics to adequately evaluate company’s risks and refines and not entirely influenced by
emotional factors when deciding to invest in a particular. Ali (2011).
Financial literacy has moderation role. Results indicate that both framing and hereby effects have a positive
significant relationship with per cared invest act performance. KHAN (2014). On the other hand some
studies suggests that, retail investors are prone to self-attribution bias which causes a tendency among them
to make wrong decisions. Most of the retail investor’s trade in futures is mostly for speculative purpose.
Nuruzzaman (2013).

As we know that the Indian economy has majority of male tax payers. Due to evolution in current scenario
women are now stepping out to earn. They also need to start investing in market for their investment
diversification. Strategies must be employed to encourage women investors. Awareness programs have to
be conducted. Srividhya (2012). Investors Decision are affected by Changes of stock price, Past trends of
stocks and market information, which influence the individual’s investment decision. Luong & Ha (2011).
The behaviour of small investors in derivatives markets in Hong Kong consistently indicates the ascending
order of importance of return performance, reference group, and personal background. Based on these
findings, more research should be conducted in the future to examine the behaviour of small investors in
other financial markets. Hon (2011).
RESEARCH METHODOLOGY
This chapter consists of research design and includes the Universe, Sources of data, Types of data, Period
of the study, the process and Statistical tools used. It also consists of a research design, followed by the
principles of research.

I. UNIVERSE- The data was collected from 60+ respondents represented the retail investors
perception and views on stock market especially Bank Nifty.

II. TYPES OF DATA AND SOURCES OF DATA-The data collected for research purpose is
mainly primary data from questionnaire consisting 5 demographic and 19 objective oriented
questions.
III. PERIOD OF THE STUDY- Purposive data sampling was conducted for the study. Data was
collected via questionnaire from 17th Oct 2021 and processed further. The study is done months
after the impact of covid on market.

Some statistical tests have to be done to check their normality-

The literature review suggests that some tests are important to check the normality, correlation, percentage
of the impact of one variable on other.

Methodology,
The process of study will be comprehensive and quantitative. Some statistical tests will be used to find out
the various relation between the variables.

LIMITATIONS OF THE STUDY-

1. This study is based on the data collected from questionnaire, despite taking data from direct sources it
may differ from reality.
2. Limitations of extraneous variables are ignored in the study.
3. Not all the dependent and independent variables were taken in this study. So, the sampling error may
occur.
4. The data is collected from a very small population as compared to the seriousness of findings and
conclusions.

FINDINGS
Null hypothesis 01 is rejected because there is a correlation between investment pattern and awareness of
stock market.

Null hypothesis 02 is rejected because there is a significant impact of stock market awareness and
education on the perception of retail investors.

Null hypothesis 03 is rejected because there is a significant impact of Bank Nifty trading volume on the
retail investor.

Objective 1
The study suggests that graduated and post graduated retail investors are aware of share market and
majority of investors has enough knowledge of Bank nifty in stock market. The National stock exchange
offers variety of investment options. And the young respondents with a basic knowledge of share market
want to invest in the aforesaid Index. They are also not worried about the risk factor involved in stock
market. The retail investors are not investing due to other reasons like unavailability of funds. A portion of
Indian tax payers are government employee and cannot trade in the market.

The aged respondents want their income to be in safe hands. The riskiest place where they can put their
savings is mutual fund. But Indian tax payers prefers Household expenditures and remaining in Fixed
Deposits.

The respondents spent their major portion of income in Household expenditures, marriages and traveling
around the country. Whereas young investors prefer to invest in commodities and mutual funds with
keeping their traveling desires alive.

The respondents who are knowledgeable prefers to invest in Fixed deposits and Mutual funds with a quite
interest in market. They believe the guides and relatives for investment suggestions. And are influenced by
them.

Objective 2

52.9% prefers to invest in stock market after a good knowledge and awareness in Exchanges. They are well
aware of the ups and downs of market. The Study found out that the respondent’s belief in the growth of
Stock market in near future. The Covid has impacted their savings but the structured plan they regularly
watch and observe through various platforms attracts them.

CONCLUSION
The Study concludes that the Indian retail investors wants to keep their savings in Fixed deposits and
Mutual funds. And believe in the theories and principles of investments. The advertisement in social sites
also influences them to invest. Nowadays crypto is the future of world. The respondents are also aware of
this option. And thinks that the stock market is better and safe option. The regulatory bodies has succeeded
in building up the trust of domestic retail investors. The young investors are willing to take risk and keep
their position in oppose of FIIs and big investors. That means the Post Covid era has increased the number
of retail investors. They are also encouraged and supported by their guardians for further investments.
Risk factors, unavailability of funds, lack of knowledge and other investments are the only reasons which
affects the ratio of retail investors to that of FIIs.

REFERENCES
 Prabha Rajgopalan, (2014). Perception of Indian retail investors in the aftermath of the global
financial crisis- A study with reference to their portfolio decision making.
 India VIX: Examining the Negative and Asymmetric Volatility Index – Market Return
Relationship. Gangineni Dhanaiah, June 5, 2012
 Abdallah, S., & Hilu, K. (2015). Exploring Determinants to Explain Aspects of Individual
Investors’ Financial Behaviour. Australasian Accounting, Business and Finance Journal, 9(2), 21.
 Awareness of Derivative Trading Among. (n.d.), 109–189
 K, S. J., & Joseph, M. A. (2015). An analysis of retail investor ’ s perception towards mutual
funds, 6(2), 304–317.
  Education of investors is immensely important for present day investors. The majority of the
investors prefer to invest in saving account followed by gold and silver, FD account. Parimala
Kanthi & Kumar. (2015).
 Manrai R. (n.d.). Investor Perception towards Derivative Markets in Indian Context, 10–14
 Rashid, M., & Nishat. M. A. (2009). Satisfaction of Retail Investors on the Structural Efficiency of
the Market: Evidence From a Developing Country Context. Asian Academy of Management
Journal, 14(2), 41–64.
 Kukreja G. (2012). Investors ’ Perception for Stock Market : Evidences from National Capital
Region of India, 712–726
 Naruzzaman A. (2013). REtail I Nvestors ’ Attitude Towards F Utures T Rading : a N E Mpirical,
7(2)
 Raza, B. M. Y., Latif, K., Sultan, T., Bashir, M., khan. M. I., & Ahmed, M. (2015). The Impact of
Individual Investor’s Perceptions on Perceived Self Efficacy while Trading Internationally, 15(4).
 Tai liu & Hon. (2015). Small investors in Hong Kong Stock Market.
 www.bseindia.com. Visited on 15th October 2021.
 www.investopedia.com Visited on 16th October 2021.
 www.nseindia.com. Visited on 16th October 2021.
 www.rbi.org.in. Visited on 16th October 2021.
 www.sebi.org. Visited on 14th October 2021.
 www.googlescholar.com Visited on 11th October 2021

APPENDIX

The demographic results show the following information-

Gender Female- 48.5%
Male- 51.5%
Age Below 21= 11.8% 21-35=77.9%
35-50=8.5% 50 Above=1.5%
Qualification Secondary-4.4% Higher secondary- 7.4%
Graduate-20.6% Post Graduate-50%
Professional-16.2%
Annual Income- Below 150,000-41.2% 150,000-360,000-27.9%
360,000-12,00,000-25% 12,00,000 Above- 5.9%