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“A Study on Investors Perception Towards Metaverse Investing "
A Project Submitted to
University of Mumbai for partial completion of the Degree of
Bachelor of Management Studies
Under the Faculty of Commerce
By
Ms. Bhakti Sanjay Suryarao
(Roll No. 72)
Under the Guidance of

Mrs. Vridhi Rupani
Smt. Chandibai Himathmal Mansukhani College,

Ulhasnagar
April, 2024
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Smt. Chandibai Himathmal Mansukhani College
P.B. No 17, Opp. Railway Station, Smt Chandibai Himathmal Mansukhani Road, Ulhasnagar- 421003 Dist. Thane,
(MAHARASHTRA)
Tel. : +91 251 273 4940 • Telefax + 91 251 273 1869 • E-mail: principal.chmc@gmail.com • Website: www.chm.edu
Certificate
This is to certify that Ms. Bhakti Sanjay Suryarao has worked and duly completed
his Project Work for the degree of Bachelor of Management Studies under the Faculty
of Commerce in the subject of Finance and his project is entitled, “A Study on
Investors Perception Towards Metaverse Investing "+under my supervision.
I further certify that the entire work has been done by the learner under my guidance
and that no part of it has been submitted previously for any Degree or Diploma of any
University. It is his own work and facts reported by her/his personal findings and
investigations.
Mrs. Vridhi Rupani
Guiding Teacher
Date of submission: 6th April, 2024
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Declaration by Learner
I the undersigned Ms. Bhakti Sanjay Suryarao here by, declare that the work
embodied in this project work titled “A Study on Investors Perception Towards
Metaverse Investing " forms my own contribution to the research work carried out
under the guidance of Mrs. Vridhi Rupani, is a result of my own research work and
has not been previously submitted to any other University for any other Degree/
Diploma to this or any other University.
Wherever reference has been made to previous works of others, it has been clearly
indicated as such and included in the bibliography.
I, here by further declare that all information of this document has been obtained and
presented in accordance with academic rules and ethical conduct.
Ms. Bhakti Sanjay Suryarao

(Roll No. 72)
Certified by,
Mrs. Vridhi Rupani

Guiding Teacher
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Evaluation
This Research Project on “A Study on Investors Perception Towards Metaverse

Investing" submitted by Ms. Bhakti Sanjay Suryarao of TYBMS (Semester – VI) is
evaluated as per guidelines of University of Mumbai, via Circular No. UG/89 of 2018-
19 on Revised Syllabus - CBCS for the TYBMS (Semester – V and VI) w.e.f. academic
year 2023-24.
External Examiner:
Name: _____________________________________
Signature: _____________________________________
Place: Ulhasnagar Date: ___ April, 2024
Internal Examiner:
Name: _____________________________________
Signature: _____________________________________
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Acknowledgement
I would like to acknowledge the following as being idealistic channels and fresh
dimensions in the completion of this project.
I take this opportunity to thank the University of Mumbai for giving me chance to do
this project.
I would like to thank my Principal, Dr. Manju Pathak for providing the necessary
facilities required for completion of this project.
I would also like to express my sincere gratitude towards my project guide Mrs. Vridhi
Rupani whose guidance and care made the project successful.
I would also like to thank my HOD, Dr. Sunil Lalchandani for providing the necessary
guidelines and facilities to make the project successful.
I would also like to thank librarian Mr. Subhash Athavale for providing the necessary
resources for the completion of the project.
Lastly, I would like to thank each and every person who directly or indirectly helped
me in the completion of the project especially my Parents and Peers who supported
me throughout my project and helped me to complete the project within the time frame.
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Executive Summary
This research project explores the investment opportunities and challenges presented
by the emerging metaverse a collective virtual shared space, created by the convergence
of virtual reality (VR), augmented reality (AR), and the internet. The study investigates
the potential market size, key players, technological advancements, regulatory
landscape, and investment strategies within the metaverse ecosystem. By analyzing
current trends and future projections, this research aims to provide valuable insights for
investors looking to capitalize on the growth of the metaverse and navigate its complex
landscape effectively.
 Chapter 1 covers the Meaning of Meaning of Metaverse, History and Evolution

of Virtual Reality, Key Technologies, Importance, Characteristics, the Seven
Layers of Metaverse, Potential, Challenges, Solutions to Challenges
Investment, Metaverse Investing, Components, Characteristics, Advantages
and Disadvantage of Metaverse Investing, and Best Ways to Invest in
Metaverse
 Chapter 2 covers the Objectives, Methods of Data Collection, Sample Design

and Area of Study.
 Chapter 3 covers the Review of Literature and Gap Analysis of the study.
 Chapter 4 covers the Findings, Analysis and Interpretation of the study.
 Lastly, Chapter 5 includes the Conclusions drawn from the study and
Recommendations derived from the study.
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INDEX
Sr. Content Page

no. No.
1. Preliminary
Title sheet i
Certificate ii
Declaration iii
Evaluation iv
Acknowledgement v
Executive Summary vi
Index vii
List of Tables ix
List of Graphs x
2. Chapter 1: Introduction
1.1 Meaning of Metaverse 2
1.2 History and Evolution of Virtual Reality: From Second Life
to the Metaverse 3
1.3 Key Technologies in Metaverse 5
1.4 Importance of Metaverse 6
1.5 Characteristics of Metaverse 8
1.6 The Seven Layers of Metaverse 9
1.7 The Potential of the Metaverse 12
1.8 Challenges of Metaverse 13
1.9 Solutions to Challenges 15
1.10 Investment 18
1.11 Metaverse Investing 19
1.12 Components of Metaverse Investing 20
1.13 Characteristics of Metaverse Investing 21
1.14 Advantages of Metaverse Investing 23
1.15 Disadvantage of Metaverse Investing 24
1.16 Best Ways to Invest in Metaverse 25
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3. Chapter 2: Research Design
2.1 Introduction 32
2.2 Objectives 32
2.3 Sources/Methods of Data Collection 33
2.4 Sampling Techniques 34
2.5 Area of Study – Badlapur 37
2.6 Tools for Analysis 38
2.7 Scope and Limitations of the Study 40
4. Chapter 3: Review of Literature

3.1 Introduction 42
3.2 Review of Literature at International and National Level 42
3.3 Gap Analysis 46
5. Chapter 4: Data Analysis, Interpretation And Presentation

Data Analysis 48
Interpretation and Presentation 48
Findings Summary 60
6. Chapter 5: Conclusion and Recommendations

5.1 Conclusions 62
5.2 Recommendations 63
7. Bibliography 65
8. Annexure
 Questionnaire 67
viii
List of Tables
Sr. Particulars Pg. no.
no.
4.1 Age of the Respondents 48
4.2 Gender of the Respondents 49
4.3 Occupation of the Respondents 50
4.4 Annual Income of the Respondents 51
4.5 What type of Metaverse Investments are you most interested 52

in?
4.6 What Potential benefits do you see in Metaverse Investment? 53
4.7 What Concerns do you have regarding Investing in the 54

Metaverse?
4.8 How do you perceive investments in the Metaverse 55

compared to traditional investments?
4.9 How do plan to approach Metaverse investments? 56
4.10 Where do you seek information about Metaverse 57

Investments?
4.11 How do you see the future of Metaverse Investments? 58
4.12 On the scale of 1 to 5 how would you rate your experience of 59

using Metaverse Investing
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List of Graphs
Sr. Particulars Pg. no.

no.
1.1 Key Technologies 5
1.2 Metaverse Characteristics 9
1.3 Layers of Metaverse 10
2.1 Badlapur 38
4.3 Occupation of the Respondents 50
4.5 What type of Metaverse Investments are you most interested 52

in?
4.6 What Potential benefits do you see in Metaverse Investment? 53
4.7 What Concerns do you have regarding Investing in the 54

Metaverse?
4.8 How do you perceive investments in the Metaverse 55

compared to traditional investments?
4.9 How do plan to approach Metaverse investments? 56
4.10 Where do you seek information about Metaverse 57

Investments?
4.11 How do you see the future of Metaverse Investments? 58
4.12 On the scale of 1 to 5 how would you rate your experience of 59

using Metaverse Investing
x
A study on investors perception towards Metaverse Investing
CHAPTER 1: INTRODUCTION
Synopsis:
1.1 Meaning of Metaverse
1.2 History and Evolution of Virtual Reality: From Second Life to the Metaverse
1.3 Key Technologies in Metaverse
1.4 Importance of Metaverse
1.5 Characteristics of Metaverse
1.6 The Seven Layers of Metaverse
1.7 The Potential of the Metaverse
1.8 Challenges of Metaverse
1.9 Solutions to Challenges
1.10 Investment
1.11 Metaverse Investing
1.12 Components of Metaverse Investing
1.13 Characteristics of Metaverse Investing
1.14 Advantages of Metaverse Investing
1.15 Disadvantage of Metaverse Investing
1.16 Best Ways to Invest in Metaverse
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1.1 Meaning of Metaverse
As technology advances, we are witnessing some signs of the metaverse in our reality.
Mobile devices connect us to the virtual universe, allowing us to check reviews for a
restaurant across the street, get directions to a beach, or access a private club via NFTs.
Mixed and augmented reality experiences allow us to talk to someone who appears to
be sitting next to us. And fully immersive virtual reality experiences like AltspaceVR
and Beatsaber enable us to interact with others in a virtual space.
At its core, the metaverse is about freedom and real interaction. It is not just about the
technology but also how we interact with it. This concept has been around for a while,
and it’s not new. However, the recent name change of Facebook to Meta in October
2021 has brought the metaverse back to the forefront of discussions, and many believe
that the social media giant will revolutionize the metaverse market.
But the truth is, Meta did not invent the concept of the metaverse. It has been a topic of
discussion among researchers and companies for some time, and many have contributed
to the debate.
In essence, the metaverse is a vision of a future where virtual worlds and the physical
world merge seamlessly. It is a universe where people can interact with each other in
real-time, regardless of their physical location, and engage in various activities, such as
attending virtual events, playing games, or even building virtual real estate.
While the idea of the metaverse may seem far-fetched, the rise of blockchain
technology and the increasing popularity of crypto currencies have brought us closer to
this reality. Decentralized currencies like Bitcoin, and the development of the
blockchain technology, have paved the way for the creation of virtual economies, where
people can buy, sell, and trade virtual assets.
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1.2 History and Evolution of Virtual Reality: From Second Life to the Metaverse
Early attempts at virtual reality used large headsets and crude visuals in the 1960s and
1970s, and the technology has been developing ever since. However, consumer-grade
virtual reality headsets like the Virtual Boy and the VFX1 didn't become widely
available until the 1990s, when virtual reality began to receive widespread interest.
In the early 2000s, online virtual worlds such as Second Life became popular, allowing
users to create avatars and interact with each other in a shared digital space. Second
Life was not strictly a virtual reality platform, but it was an early example of a
Metaverse-like environment, where users could create and share their own content and
build virtual businesses. In the years that followed, virtual reality technology continued
to improve, with the development of more sophisticated headsets and better graphics.
The gaming industry was an early adopter of virtual reality technology, with games like
World of Warcraft and Minecraft offering immersive virtual worlds for players to
explore.
Technology advancements and the rising demand for immersive digital experiences
have propelled the progress of virtual reality and the creation of the Metaverse. The
Metaverse has enormous potential, but there are still a lot of obstacles to overcome,
including the construction of completely seamless virtual experiences and the
development of more realistic graphics.
Neal Stephenson's 1992 book Snow Crash introduced the idea of the Metaverse by
describing a shared virtual environment where users can interact with each other and
virtual items. The book helped popularize the term "Metaverse" and served as an
inspiration for many of the online games and virtual worlds that came after.
Second Life, an online virtual world where users may create avatars and communicate
with one another in a shared digital space, was introduced by Linden Lab in 2003.
Although Second Life was not a platform for the Metaverse per se, it was a pioneering
example of a virtual world where people could produce and distribute their own content,
including virtual companies.
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High Fidelity was a new virtual reality platform that was launched in 2014 by a group
of programmers under the direction of Philip Rosedale, the creator of Second Life, to
build a completely decentralized Metaverse. Virtual money that could be used to buy
and sell virtual products and services was developed by High Fidelity using Blockchain
technology. Users could also construct and share their own virtual environments.
Mark Zuckerberg, the CEO of Facebook (now Meta), described the Metaverse as "a
virtual environment where you can be present with people in a different way" when the
company first announced its plans to create one in 2021. The goal of Meta's significant
investment in Virtual & Augmented Reality (VR/AR) technology is to build a
Metaverse that is usable on a variety of platforms.
From early virtual worlds like Second Life to the more sophisticated Metaverse-like
platforms currently being created, the history of the Metaverse demonstrates how the
idea has changed over time. The Metaverse represents a new frontier in virtual reality
and has the potential to drastically alter how we interact with each other and with digital
content, even though there are still many obstacles to be overcome, such as the
requirement for seamless platform integration and the development of more realistic
graphics and user interfaces.
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1.3 Key Technologies in Metaverse
Figure 1.1: Key Technologies
Source: rubygarage.org
Metaverse is all about virtual worlds. It provides an immersive way to visualize,

collaborate and socialize things in extended reality. Extended reality comprises of
Augmented reality, Virtual reality and Mixed reality.
1.3.1 Augmented Reality (AR)
An interactive experience of the real-world environment where virtual objects are

augmented over real-world objects. This can be achieved by computer-generated
perceptual information, across multiple sensory modalities such as visual, auditory,
haptic, somatosensory and olfactory.
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1.3.2 Virtual Reality (VR)
Teleports users into a virtual world that simulates a physical presence in places in the
real world or in the imaginary world. It can create sensory experiences which include
sight, touch, hearing and smell.
1.3.3 Mixed Reality (MR)
Virtual content is not only overlaid on the real environment but also users can interact
with that environment.
1.4 Importance of Metaverse
The Metaverse is not only an emerging new technology that’s part of today’s hype
cycle. It builds on years of research on artificial intelligence and immersive interactivity
and will transform businesses in several ways.
1.4.1 It is a new technique for interacting with users:
You may leverage the Metaverse to your advantage as a company to provide customers
with a whole new level of immersive experiences and entertainment options.
Competitive advantage and attention will come to your business if it is one of the first
to provide clients with a Metaverse experience. There are several ways to promote your
company in the Metaverse, including branded gaming experiences, virtual items, and
AR/VR showrooms. Businesses may use the Metaverse to build 3D marketing
experiences that are immersive, engaging, and capture the attention of potential
customers in new, embracing ways.
1.4.2 Businesses can find opportunities for virtual events:
It’s not uncommon to plan a conference or live event that can be viewed online and in
person. Many people cannot travel to attend a professional conference or lecture, but
that is still no excuse for not learning more. In contrast to a straightforward Zoom or
Google Meet stream, a conference in the Metaverse can be a fully-fledged VR
experience, with appropriate networking and participation opportunities, rather than
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just another video in a small window with comments underneath it. The spectators will
feel more present and immersed in the experience thanks to VR and the Metaverse.
1.4.3 Companies can advertise and sell their goods:
Several firms are already actively utilizing augmented reality to allow consumers to
virtually try clothing or eyewear, see how new furniture might fit in their space, or
receive a makeover with new hair or cosmetics. In the Metaverse, there is the potential
to have the same experiences but in a better way. If you have the option to lease or
purchase commercial property, you can put up shops and showrooms where users can
view your goods in the Metaverse. Users still avidly purchase virtual clothing and
accessories today, proving that digital fashion is having a moment.
1.4.4 The Metaverse introduces a new media of advertising:
Brands can engage with a massive global audience through Metaverse platforms in an
e-commerce business. Businesses should anticipate introducing novel techniques for
brand storytelling and general advertising in the Metaverse. Storytelling is one of the
most effective methods for increasing brand awareness and identification. People enjoy
hearing tales that reveal much more about the business and its beliefs than simple
slogans. Storytelling will eventually change into “story living,” when the audience
members become active players or even characters with a say in the events rather than
just being passive listeners.
1.4.5 It is possible to improve teamwork and the creation of processes:
Online meetings and distant teamwork are the new realities we have all come to terms
with. These methods were imposed upon us, but they proved equally effective in a face-
to-face office setting. One may further improve workflows by using the Metaverse.
Meetings will appear as a group of individuals sitting in a room rather than as Zoom
calls. Meta has already started offering VR workrooms. The Metaverse offers workers
a digital environment for communication and the ability to read one another’s body
language and emotions and maintain an emotional bond.
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1.4.6 E-wallets and crypto currencies make transactions for businesses simpler:
Crypto currencies and the Metaverse go hand in hand. It will be challenging to enjoy
the benefits of the digital world without a crypto wallet, even at this early adoption
stage. Digital wallets are also supported by Metaverse, allowing businesses to control
transactions across their virtual ecosystem. Although this concept may overwhelm
some business users, blockchain technology and crypto currencies have more benefits
than drawbacks. With crypto currency, users and businesses may conduct any online
transaction more easily. There’s no need to link your bank account to virtual worlds,
payments only require a few clicks, and all transactions are transparent.
1.5 Characteristics of Metaverse
Following are the characteristics of Metaverse:
1.5.1 Boundless:
As an infinite virtual space, the Metaverse removes all forms of barriers. There are no
restrictions on the number of individuals who can use it at the same time, the industries
that can use it, the types of activities that can take place, and so on.
1.5.2 Persistent:
Metaverse can be a fully online platform that allows users to have a consistent
experience. It can be accessed from anywhere in the world at any time.
1.5.3 Decentralized:
Metaverse is decentralized, as it is not held by a single company or platform. It will be

a decentralized network that employs blockchain technology to ensure that all virtual
world transactions are transparent, traceable, and secure at all times.
1.5.4 Immersive:
A VR headset, AR glasses, and a smartphone are all need to explore the incredibly
realistic, immersive metaverse universe. It can adjust to the surroundings based on user
preferences for colors, lighting, and other factors.
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1.5.5 Virtual Economics:
Crypto currency allows users to participate in decentralized virtual economies. It

comprises digital asset marketplaces where users can buy, sell, and trade items like
avatars, virtual apparel, NFTs, and event tickets.
1.5.6 Social Experiences:
Metaverse is all about social experience. In a virtual world, every member can interact
with one another in a shared virtual space.
Figure 1.2: Metaverse Characteristics
Source: https://codemaker2016.medium.com/introduction-to-metaverse-
e48a29fc906f
1.6 The seven layers of Metaverse
The seven layers of metaverse are as follows:
1.6.1 Layer 1: Experience
Experience is where the user engages with games, shopping, sports, immersive virtual
worlds, digital assets, and more. Gaming demonstrates many of these features such as
immersion in virtual environments, avatar identities, storytelling, and real-time social
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interactions. Also, it includes many other everyday experiences where the physical and
digital worlds collide such as Zoom meetings, gym workouts and so on.
Figure 1.3: Layers of Metaverse
Source: https://codemaker2016.medium.com/introduction-to-metaverse-
e48a29fc906f
1.6.2 Layer 2: Discovery
Discovery is the advertising network whose parts are stores, rating systems and social
recommendations. Discovery can be enabled by inbound / outbound information
sharing systems. Inbound includes community content platforms where people can find
out the likes and recommendations given by other users whereas outbound discovery
includes notifications and display ads. Real-time presence is one of the key features of
metaverse discovery where users can get a glimpse of what other users are engaging
currently in the metaverse and will be able to join in the shared experience.
1.6.3 Layer 3: Creator Economy
Creator Economy opens a way to create digital content without any programming
knowledge like creating videos on YouTube. The experiences provided by the creator
economy will be immersive, social, real-time and highly personalized.
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1.6.4 Layer 4: Spatial Computing
Spatial computing is an important feature that allows users to access and manipulate
3D spaces as a blending of physical and virtual spaces. It refers to 3D engines,
programs, AR, VR, XR, and mapping which help us to break down the barriers that
exist between physical and virtual spaces. It also includes the Internet of things (IoT),
voice recognition and gesture recognition technology.3D engines such as Unity and
Unreal enables the users to create the experience of the physical reality. Omniverse by
Nvidia is a platform where creators can collaborate in an interoperable 3D space
whereas Microsoft’s HoloLens is a great example of what we can do on the spatial
computing layer.
1.6.5 Layer 5: Decentralization
One of the key features of the metaverse is decentralization which will enable the
metaverse to be decentralized, open, and distributed. It includes blockchain technology,
smart contracts, open-source platforms and self-sovereign digital identity. To utilize the
full potential of the metaverse, it should have a transparent and traceable way to perform
transactions and interactions. It can be achieved through blockchain, crypto assets and
NFTs. Decentraland is a well-known example of the decentralized metaverse which is
a decentralized virtual world running on the Ethereum blockchain and controlled by a
Decentralized Autonomous Organization (DAO).
1.6.6 Layer 6: Human Interface
Human interface refers to all the technology that extends the human interactions with
the digital assets. It includes mobiles, VR headsets, smart glasses, gestures, voice,
haptics, wearables and neural networks. Oculus Quest is a great example of the same.
3D printed wearables, biosensors and interfaces between brains and computers expand
our interactions more digital and simpler.
1.6.7 Layer 7: Infrastructure
Infrastructure refers to all the technologies that enables, connects and powers the digital
devices. It includes data centers, cloud computing, wireless, materials and processing,
and covers the development of 5G computing built with microchips that are just getting
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denser and faster. With the evolution of infrastructure from cloud computing to edge
computing, the storage and computation of data have been brought to a closer location
as and where data is produced and used.
1.7 The Potential of the Metaverse
Following are the potentials of Metaverse:
1.7.1 Gaming Industry
One of the sectors that stands to benefit the most from the Metaverse is the gaming
industry. With its immersive and interactive nature, the Metaverse can elevate gaming
experiences to unprecedented levels. Players can seamlessly traverse different virtual
worlds, interacting with other gamers in real time.
The potential for virtual reality games within the Metaverse is immense, providing
gamers with truly immersive and lifelike experiences. Virtual reality headsets, motion
controllers, and haptic feedback devices will transport players into a world where they
can fully engage with the game environment. The Metaverse has the power to redefine
what it means to be a gamer.
1.7.2 Entertainment Industry
The entertainment industry, including movies, music, and live performances, will
undergo a significant transformation with the advent of the Metaverse. Virtual concerts
and events will allow artists to reach a global audience without physical limitations.
Imagine attending a virtual concert where you can interact with other fans and even
meet the artist in a virtual backstage area.
With the ability to create immersive storytelling experiences, movies, and TV shows
can transport viewers into the world of their favorite characters. The possibilities for
creating unique and memorable entertainment experiences are endless within the
Metaverse.
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1.7.3 Education Industry
The Metaverse opens up new possibilities for education by creating immersive learning
environments and interactive lessons. Students can explore historical landmarks, dive
into simulations, and collaborate with peers from around the world.
Traditional barriers, such as geography and access to resources, can be overcome within
the Metaverse, providing equal education opportunities. By combining virtual reality
and augmented reality technologies, the Metaverse has the potential to revolutionize
education and make learning engaging, interactive, and accessible to all.
1.7.4 Commerce Industry
The Metaverse presents a new frontier for commerce, with virtual shopping experiences
offering personalized recommendations and enhanced customer engagement. Brands
can create virtual stores within the Metaverse, allowing customers to browse and shop
in a seamless and immersive environment. Real-time interactions with virtual assistants
and personalized experiences tailored to individual preferences can elevate the retail
experience. The Metaverse has the potential to reshape the way we shop and engage
with brands. The Metaverse holds expansive opportunities in gaming, entertainment,
education, and commerce. Its potential goes beyond our current understanding and
opens doors to new and innovative experiences.
As we explore the potential of the Metaverse, it becomes clear that its impact will be
profound across various sectors. The gaming industry will see a transformation in
gameplay and interaction, while entertainment experiences will become more
immersive and globally accessible. With each passing day, the possibilities of the
Metaverse continue to expand, promising a future where virtual and physical worlds
intersect seamlessly.
1.8 Challenges of Metaverse
There is great promise in the metaverse, and big plans for it. But several problems must
be overcome for the vision to be realized. Let’s look at issues arising as digital worlds
develop and then dive into solutions in the next section.
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1.8.1 Security
The metaverse must be fundamentally reliable to evolve and expand. Without reliability
and security, users won’t feel safe spending time or money in a virtual environment.
For now, security breaches continue to happen and must be urgently addressed for
confidence to build.
Problems can come from blockchain technology that is weakly designed or at risk of
exploitation. Other risks come from smart contracts that aren’t coded consistently and
allow for breaches. Lastly, old-fashioned phishing scams and other means of tricking
users to give up their passwords work in Web3.
1.8.2 Privacy
The metaverse has the potential to greatly expand how much biometric data and
personal information tech companies collect on individuals. These biometrics are used
to increase the immersive experience of technology, offering things like voice
recognition and recordings. But they come with serious privacy concerns.
Voice activation, eye recognition and facial recognition also could tighten up metaverse
security. However, that level of data collection opens a world of vulnerability to identity
theft. Criminals could use voice recordings from metaverse platforms against someone.
Bots could be created in a person’s image. Behavioral data could be mismanaged and
sold to interested parties, similar to the way Web-2’s ad-based economy functions.
There’s also the entirely separate issue of copyright infringement in the metaverse
market. NFTs were heralded as a way for creators to retain rights to their creations and
get royalties for subsequent sales. Each NFT minted has a unique cryptographic
signature and address linked with it.
1.8.3 Equal access
Inaccessibility is one of the metaverse’s largest roadblocks. The hardware is expensive

and cumbersome, with physical ramifications like eye fatigue and nausea. It depends
on internet access, but access is limited in different regions of the world. And even in
the 5g-access corners of the planet, virtual experiences are limited largely to the tech-
savvy.
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For the metaverse to become a globally-used landscape, it needs to be financially and

physically accessible to everyone. The costs at present are prohibitive. To build a
decentralized world in the metaverse requires a large amount of capital. Any business
or exchange established in the metaverse should be crypto-accessible, which brings the
stability of digital currencies into play.
1.8.4 Governance
Another key question is how different areas of the metaverse are run. There are
centralized “gardens” in the metaverse, like Facebook’s Meta, where it’s intentionally
walled off. When tech giants build a world, its one thing. But how do small developers
pool resources to build in the metaverse?
Likely, they’ll operate as decentralized autonomous organizations. But DAOs are also
uniquely vulnerable. They need to amass a large enough treasury, which can sometimes
be contributed largely by one or few users. This imbalance of power is far from
decentralized. It sets up the organization for a “rug pull” or other scams well known in
crypto.
Also, litigious issues are complicated with DAOs. Governments are uncertain how to
enforce regulations when decisions are made as a collective. As of now, liability can
and is falling on individuals within DAOs. If there’s an infringement, regulatory
frameworks depend on established policy to deal with it.
1.9 Solutions to Challenges
Following are the solutions to the Metaverse:
1.9.1 Security
Developing robust security protocols: Standards need to be set for metaverse-specific

security to protect digital assets. Similar guidelines have been set already in other
blockchain contexts, like the Cryptocurrency Security Standards (CCSS).
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Ensuring data integrity: Distributed ledger technology is the best means to promise safe
data storage. By saving multiple copies of data immutably on blocks throughout a chain,
data security is ensured.
Encryption: Some standards for blockchain security will need to be strengthened and
adapted for the metaverse. This includes asymmetric-key encryption and hash functions
to disguise data.
1.9.2 Privacy
Enforcing privacy regulations: The current web-2, ad-based economy has privacy
standards that will have to be adapted for the metaverse. Europe’s GDPR and
California’s CCPA “Right to be forgotten” regulations arose out of criticism of
commercial data exploitation. This is complicated by the immutable nature of the
blockchain, because data can’t be tampered with.
Developing strong user authentication: Eye and facial recognition, voice activation,
fingerprints, and other biometric data are the personalized security methods needed to
authenticate users. However, as we've mentioned before, that data must have strong
protections, too.
Ensuring privacy of user data: Assurance must come in the form of regulations and
policies that give users confidence that their data isn’t being exploited. Trust is
foundational to building a user base in virtual worlds.
1.9.3 Inequality
Allowing for easier access: Internet access limits virtual world development and
engagement. 5G networks have the potential to connect millions with wireless data
streaming. This would provide internet access sufficient to host real-time interactions
between users, world-wide.
Physical barriers: Broad usability is the key to a growing metaverse. VR headsets are
continually being streamlined and refined. The current issues of eye strain and nausea
will hopefully be remedied by new haptic technologies.
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Reducing costs for entry: At present, significant metaverse growth is coming from
developers with established wealth. Over time, decentralized solutions like DAOs can
allow small-scale developers to collaborate and build their envisioned virtual reality.
Producers and developers will be pivotal in making the metaverse software and
hardware cost-effective.
Encouraging inclusion: The vision of the metaverse is a parallel micro/macrocosm of

the physical world. As such we want practically everyone to access their digital second
life. This will take time and technological advancement, as well as increased user trust
in the security of the programs.
1.9.4 Governance
Establishing clear rules and regulations: Human issues that exist in the real world are
going to translate into the digital space. Theft and bullying are two examples of issues
that cross from physical to Web2 and Web3 spaces. Metaverse development must
ensure their spaces are safe from these activities by installing effective rules and
regulations.
Resolving disputes fairly: When disputes occur in a decentralized Web3 space, how are
they resolved? Within DAOs there is space for democratic resolution of issues using
proposals, voting, and governance tokens. A dispute against an entire DAO would be a
legal pursuit. Outcomes may depend on whether DAOs observe federal commodities
laws or not. The legality of DAOs and governance of Web3 spaces will become a more
common question for court systems. Familiarity will come as the metaverse develops
and precedents are set.
Implementing monitoring systems: The metaverse continues to blur the boundaries of

identity, nationality, and locality. With such fluidity, the future may require an
international body to oversee societal issues in Web3. Similar oversight is already
established as the Coordinating Committee for the Governance of Artificial Intelligence
(CCGAI).
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1.10 Investment
An investment is an asset or item acquired with the goal of generating income or

appreciation. Appreciation refers to an increase in the value of an asset over time. When
an individual purchases a good as an investment, the intent is not to consume the good
but rather to use it in the future to create wealth. Investor may purchase a monetary
asset now with the idea that the asset will provide income in the future or will later be
sold at a higher price for a profit.
1.10.1 Primary Objectives for Investing:

 Protect your money by investing:
Keeping your money in an interest-bearing asset will shield it from unnecessary
spending and inflation. Investing helps you stay ahead of inflation and ensures that
your money continues to be worth the same value over time.
 Build your wealth:

Investing is the only way to make your money work for you. It allows your money
to accrue interest, and if you reinvest that interest, it will start to generate even more
interest.
 Create funds for emergencies:

Creating funds for unexpected expenses can help you weather the storms of life.
When you are in a good financial position, it's important to set aside money for
difficult times. Having these resources at your disposal can help you manage any
challenges that come your way.
 Ensure a stress-free retirement:

After your working life is over, you will no longer have a regular income to rely on.
Retirement planning will give you the financial security to enjoy your retirement
years without stress.
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 Maximize savings:
Investing in tax-saving instruments, including life insurance plans, ULIPs, PPF,
NPS, etc. can help you to deduct from your taxable income. Such investments also
provide you with a tax-free return at maturity. Thus, by investing in the right assets,
you can significantly reduce your overall tax liability.
 Invest in life's bigger dreams:

Your salary alone is unlikely to be sufficient for you to buy a car or a house for your
family. Nevertheless, by investing a small amount of money, you could make these
objectives achievable in a few years.
1.11 Metaverse Investing
Metaverse investing refers to the practice of investing in companies, assets, or projects

related to the development, growth, and utilization of the metaverse, a virtual shared
space created by the convergence of virtual and physical realities. This includes
investments in virtual reality technologies, online gaming, digital assets like NFTs,
blockchain technology, social media platforms, and other elements that contribute to
the metaverse ecosystem.
Metaverse investing involves allocating financial resources into various aspects of the
virtual universe, encompassing digital environments, virtual economies, and interactive
experiences. This type of investing targets companies, technologies, and assets that
contribute to or benefit from the expansion and evolution of the metaverse. It spans a
wide spectrum, including virtual reality hardware and software, online gaming
platforms, digital currencies, blockchain infrastructure, augmented reality applications,
social networking platforms, and digital content creation tools. Investors engage in
metaverse investing to capitalize on the transformative potential of virtual
environments and the emerging opportunities within this burgeoning space.
Metaverse investing requires in-depth research, analysis, and understanding of

technological trends, market dynamics, regulatory frameworks, and user behavior
within the evolving metaverse landscape. Investors need to assess opportunities and
risks associated with investments in various sectors and industries contributing to the
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growth and development of the metaverse. Diversification, due diligence, and long-
term strategic planning are key considerations for successful metaverse investing
strategies.
1.12 Components of Metaverse Investing
1.12.1 Virtual Reality (VR) and Augmented Reality (AR) Technologies:
Investing in companies that develop VR and AR hardware, software, and content

creation tools. This includes investments in VR headsets, AR glasses, immersive
experiences, and development platforms that enable the creation of virtual
environments and interactive content.
1.12.2 Gaming and Entertainment:
Investing in online gaming platforms, virtual worlds, and entertainment companies that
create and monetize digital content within the metaverse. This includes investments in
game developers, esports organizations, virtual events platforms, and streaming
services focused on gaming and virtual entertainment.
1.12.3 Digital Assets and Cryptocurrencies:
Allocating capital into digital assets and cryptocurrencies that underpin virtual
economies and transactions within the metaverse. This includes investments in non-
fungible tokens (NFTs), virtual real estate, in-game currencies, and blockchain-based
platforms facilitating the creation, trading, and ownership of digital assets.
1.12.4 Blockchain Technology and Decentralized Finance (DeFi):
Investing in blockchain infrastructure, protocols, and decentralized applications

(dApps) that support the metaverse ecosystem. This includes investments in blockchain
platforms enabling secure and transparent transactions, decentralized marketplaces,
governance mechanisms, and interoperability solutions for virtual environments.
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1.12.5 Social Media and Communication Platforms:
Investing in social networking platforms, communication tools, and virtual

communities that facilitate interactions and connections within the metaverse. This
includes investments in virtual social spaces, virtual events platforms, digital identity
solutions, and communication technologies tailored for virtual environments.
1.12.6 E-commerce and Virtual Marketplaces:
Investing in e-commerce platforms and virtual marketplaces that enable commerce and
trade within the metaverse. This includes investments in virtual storefronts, digital
goods marketplaces, virtual asset exchanges, and platforms facilitating peer-to-peer
transactions within virtual environments.
1.12.7 Artificial Intelligence (AI) and Virtual Assistants:
Investing in AI technologies and virtual assistants that enhance user experiences,

interactions, and personalization within the metaverse. This includes investments in AI-
driven chatbots, virtual concierges, virtual avatars, and intelligent assistants tailored for
virtual environments.
1.13 Characteristics of Metaverse Investing
The Characteristics of Metaverse Investing are as follows:
1.13.1 Virtual Assets:
Metaverse investments often involve virtual assets like digital currencies, virtual real
estate, non-fungible tokens (NFTs), and digital collectibles.
1.13.2 Diverse Opportunities:
The metaverse offers diverse investment opportunities, ranging from virtual real estate
development and gaming platforms to virtual events and social experiences.
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1.13.3 Technological Innovation:
Metaverse investments are driven by cutting-edge technologies such as virtual reality

(VR), augmented reality (AR), blockchain, and artificial intelligence (AI).
1.13.4 Decentralization:
Many aspects of the metaverse are decentralized, offering opportunities for investment
in decentralized autonomous organizations (DAOs), decentralized finance (DeFi), and
blockchain-based projects.
1.13.5 Interconnected Ecosystems:
Investments in the metaverse often involve interconnected ecosystems where virtual

assets, experiences, and interactions are seamlessly integrated across platforms and
applications.
1.13.6 User Engagement and Adoption:
Successful metaverse investments often hinge on user engagement and adoption rates
within virtual communities, gaming platforms, and social networks.
1.13.7 Regulatory Considerations:
Regulatory frameworks surrounding virtual currencies, digital assets, and online

gaming may impact metaverse investments, requiring careful consideration of legal and
compliance risks.
1.13.8 Market Volatility:
The metaverse market can be volatile, with prices of virtual assets and cryptocurrencies
subject to rapid fluctuations influenced by factors such as technological advancements,
market sentiment, and regulatory developments.
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1.14 Advantages of Metaverse Investing
Advantages of Metaverse Investing are as follows:
1.14.1 Early Entry into Emerging Market:
Investing in the metaverse allows investors to potentially capitalize on a rapidly

growing sector that is still in its early stages. Early entry can lead to significant returns
if the metaverse continues to expand.
1.14.2 Diversification:
The metaverse presents an opportunity for investors to diversify their portfolios beyond
traditional asset classes like stocks and bonds. Investing in virtual real estate, digital
currencies, and metaverse-related technologies can provide diversification benefits.
1.14.3 Innovation and Technological Advancement:
The metaverse represents the convergence of various cutting-edge technologies such as

virtual reality, augmented reality, blockchain, and artificial intelligence. Investing in
the metaverse allows investors to participate in and support innovation and
technological advancement.
1.14.4 Potential for High Returns:
As the metaverse continues to evolve and attract more users, there is the potential for
investments in metaverse-related assets to generate high returns. Successful projects
and platforms within the metaverse can experience exponential growth.
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1.15 Disadvantages of Metaverse Investing
Disadvantages of Metaverse Investing are as follows:
1.15.1 Volatility and Speculation:
The metaverse market is highly speculative and volatile, similar to other emerging
markets. Prices of virtual assets such as digital currencies and virtual real estate can
experience significant fluctuations, leading to potential losses for investors.
1.15.2 Regulatory Uncertainty:
Regulatory frameworks surrounding the metaverse are still evolving, which introduces
uncertainty and potential regulatory risks for investors. Changes in regulations could
impact the legality and profitability of certain metaverse-related investments.
1.15.3 Technological Risks:
Investing in the metaverse involves inherent technological risks, including security

vulnerabilities, technical glitches, and platform failures. Issues such as hacking, data
breaches, and software bugs can undermine the value and usability of metaverse assets.
1.15.4 Market Saturation and Competition:
As more investors and companies enter the metaverse space, competition is likely to
intensify. Market saturation could lead to challenges in differentiating between viable
projects and speculative bubbles, making it difficult for investors to identify profitable
opportunities.
1.15.5 Lack of Tangible Assets:
Unlike traditional investments such as real estate or commodities, metaverse

investments often involve virtual assets that lack tangible value. The perceived value
of virtual assets within the metaverse is subjective and can be influenced by market
sentiment and trends.
Overall, while metaverse investing offers potential opportunities for diversification and
high returns, investors should carefully consider the associated risks and conduct
thorough research before allocating capital to this emerging market.
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1.16 Best Ways To Invest In The Metaverse
1.16.1 Metaverse Games
Our pick for the best way to invest in metaverse is through metaverse games or via the
best metaverse NFT projects. The growth in this area of gaming over the past year has
been exponential, driven by high-profile projects like Decentraland and The Sandbox.
However, smaller projects are regularly launching that look to capitalize on the success
of those that came before.
In a nutshell, metaverse games are precisely what the name implies – gaming platforms
based within the metaverse. Many of the best metaverse coins are native to these
gaming projects, enabling them to run smoothly. One of the most appealing
characteristics of these games is the level of immersion they can offer to gamers.
Those who have seen Steven Spielberg’s ‘Ready Player One’ will have a firm grasp of
what metaverse games look like. They feature rich 3D worlds where players create their
own avatars and can interact with other players’ avatars. This offers a new way to
socialize – one that looks set to become even more prevalent in today’s post-pandemic
world. Some of the most undervalued cryptos are involved in the metaverse gaming
niche, with ‘play-to-earn’ (P2E) mechanisms being one of the most appealing factors
for gamers. These mechanisms allow gamers to earn rewards (denominated in
cryptocurrency) for their in-game actions. Essentially, this means gamers can monetize
their gameplay skills in a fun way.
Battle Infinity is one metaverse gaming project that has recently caught the media’s
attention. This exciting project incorporates a fantasy sports league into its metaverse,
offering a way for sports fans to strategize and earn rewards for skilled gameplay. These
rewards are distributed in IBAT, which is Battle Infinity’s native token.
Many investors are looking to buy Battle Infinity to gain exposure to the project’s
growth since it offers several other enticing features. One of these is the ‘Battle Store’,
which provides an array of multiplayer P2E games for users to play – expanding
rewards potential. Those interested in learning more about this exciting project can do
so through the Battle Infinity Telegram group.
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 Top 5 Metaverse Games :

1. Battle Infinity
2. Decentraland
3. The Sandbox
4. Axie Infinity
5. Gods Unchained
1.16.2 Metaverse NFTs
Another popular way to invest in metaverse is through NFTs. Some of the best NFTs
over the past year have been part of metaverse-based projects due to their valuable
characteristics. One main factor that makes NFTs attractive from a metaverse
standpoint is that they can provide ‘true’ ownership of in-game assets.
For example, in the Gods Unchained metaverse game, the in-game playing cards are
structured as NFTs. This means that all of a player’s cards are genuinely theirs,
preventing them from being stolen or altered. In turn, this reduces (or removes) the
concept of cheating or hacking from the game.
Another benefit is that in-game items can be easily traded if they are structured as NFTs.
One of the coolest NFT projects right now that offers this feature is Battle Infinity,
which we also mentioned in the section above. Battle Infinity has a dedicated NFT
marketplace within its ecosystem (called Battle Market) that allows players to buy, sell,
and trade in-game items.
For example, users can head to the Battle Market and purchase a new outfit for their in-
world avatar using IBAT – Battle Infinity’s native token. This is another option for the
best way to invest in metaverse since supply and demand factors tend to dictate each
NFT’s price. Thus, as the platform’s user base grows, NFTs will naturally become
scarcer and more valuable.
Many of the best NFT games (including Battle Infinity) also allow players to purchase
plots of virtual land within their world, which are structured as NFTs. We’ll explore
this concept later in the guide, but it’s worth being aware of as it highlights the
continued importance of NFTs within the metaverse.
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 Top 5 Metaverse NFTs:

1. Battle Infinity
2. Lucky Block
3. Gods Unchained
4. Decentraland
5. Axie Infinity
1.16.3 Metaverse Crypto
Another approach for how to invest in the metaverse is through metaverse crypto. In a
nutshell, metaverse crypto describes the native tokens of metaverse-based projects.
These tokens tend to be used for various tasks, such as transactions, staking, and even
governance. Let’s look at these in more detail:
In-world transactions: Each metaverse’s native token can usually be used to purchase
items from the in-world marketplace. For example, users can buy Axie Infinity and use
tokens to purchase additional ‘Axies’ for use in-game. This also means sellers are
compensated in metaverse crypto – which they can then exchange into another digital
currency.
Staking: Crypto staking involves ‘locking up’ tokens for a specific period, usually to
help boost the platform’s security level. Many metaverse platforms offer their staking
mechanism whereby token holders can generate a yield on their holdings – all whilst
benefitting the broader ecosystem.
Governance: Finally, many metaverse projects are structured as a decentralized

autonomous organization (DAO), meaning that the token holders are the ones who
govern the platform. Most of the best crypto DAO projects allow token holders to vote
on governance proposals, with those receiving the highest number of votes being the
ones that move forward.
The list above is not exhaustive, as metaverse crypto coins can be used in many ways.
They also provide an easy way to invest in the metaverse since they’re often listed on
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the best crypto exchanges. As such, investors who aren’t active in a specific metaverse
can still gain exposure to its growth by investing in tokens.
Axie Infinity is a prime example of this, as AXS tokens were valued at over $164 in
November 2021. Investors who opted to buy Decentraland were also handsomely
rewarded when MANA tokens surged over 110% earlier in the year. Finally, those
looking to invest in the metaverse can even buy IBAT tokens through Battle Infinity’s
presale phase to gain exposure to the project’s growth in the weeks and months ahead.
 Top 5 Metaverse Cryptocurrencies:

1. Axie Infinity
2. Ethereum
3. Decentraland
4. Battle Infinity
5. Enjin
1.16.4 Metaverse Real Estate
Metaverse real estate has become one of the most exciting elements within this growing
sector, offering a unique take on ownership and renting. Those wondering how to invest
in metaverse real estate can do so by participating in metaverse projects that enable
users to purchase plots of virtual land.
Decentraland is one of the most prominent projects that offer this functionality since its
3D world comprises roughly 90,000 plots of 16m x 16m land parcels (called LAND).
LAND can be purchased using MANA (Decentraland’s native token) or Ethereum and
is structured as an NFT.
Metaverse real estate
Much like in real life, specific plots of land are deemed more valuable than others due
to their location. Some of the LAND parcels located near Decentraland’s Genesis Plaza’
were even valued at over $13,000 in 2021. Considering these plots are only 16m x 16m,
metaverse real estate can be pricey in some circumstances.
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Virtual land sales in the metaverse topped $500 million in 2021. Much of this was down
to the benefits that owning virtual real estate can offer investors. Not only can investors
benefit from value appreciation, driven by increases in the project’s popularity, but they
can also generate returns through renting.
Decentraland LAND parcels
Renting works precisely as one might expect, allowing virtual landowners to lease their
land to others for a fee. This mechanism is incorporated into Battle Infinity’s ‘Battle
Arena’, as users can rent land from others and then use it for advertising. This is
achieved through virtual billboards, which can be paid for in IBAT.
Ultimately, those wondering how to invest in metaverse real estate must ensure that the
land they buy has inherent value – since this ‘land’ is still just a collection of pixels
within a 3D world. However, as many NFT land projects have shown, making smart
investments in this area can prove lucrative.
 Top 5 Metaverse Real Estate Projects:

1. Decentraland
2. Battle Infinity
3. The Sandbox
4. Somnium Space
5. Meta Mansions
1.16.5 Metaverse Stocks
Rounding off our discussion of the best ways to invest in the metaverse is metaverse
stocks. There is an abundance of metaverse stocks to invest in, which will appeal to
investors who prefer to operate in the equity market rather than the crypto market.
The best metaverse stocks may not offer ‘direct’ exposure to the growth of a specific
platform but rather exposure to the industry’s growth overall. A great example is Meta
Platforms (formerly Facebook) which is now deeply involved in virtual reality (VR)
and the expansion of metaverse concepts.
Meta Platforms
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By finding metaverse companies to invest in, it’s easy to diversify a portfolio and not
be ‘overexposed’ to one particular project. Nvidia is a popular option, as the company’s
chips are now used to power various metaverse projects. Naturally, as the metaverse
expands and more projects require Nvidia’s chips, it will help the company’s bottom
line and its share price.
Some of the most undervalued stocks are involved in the metaverse – with many
established firms also looking to experiment with ideas related to virtual worlds. Nike
has become a frontrunner in terms of metaverse stocks to invest in, as the company has
partnered with the likes of Decentraland and Roblox to boost its presence in this area.
Nvidia metaverse Ultimately, investing in metaverse stocks can be a great way to gain
indirect exposure to a specific project but direct exposure to the industry’s growth.
Furthermore, the process of buying stocks is often much more beginner-friendly than
purchasing crypto, meaning this approach may be more suited to newcomers to the
market.
 Top 5 Metaverse Stocks:

1. Meta Platforms
2. Nvidia
3. Nike
4. Coinbase
5. Roblox
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CHAPTER 2: RESEARCH DESIGN
Synopsis:
2.1 Introduction to Research Design
2.2 Objective
2.3 Sources/Methods of Data Collection
2.4 Sampling Techniques
2.5 Area of Study – Badlapur
2.6 Tools for Analysis
2.7 Scope and Limitations of the Study
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2.1 Introduction to Research Design
Research design refers to the overall strategy utilized to answer research questions. A
research design typically outlines the theories and models underlying a project; the
research questions of a project; a strategy for gathering data and information; and a
strategy for producing answers from the data. A strong research design yields valid
answers to research questions while weak designs yield unreliable, imprecise, or
irrelevant answers.
Research design refers to the overall plan, structure, or strategy that guides a research
project, from its conception to the final data analysis. A good research design serves as
the blueprint for how you, as the researcher, will collect and analyze data while ensuring
consistency, reliability, and validity throughout your study.
Incorporated in the design of a research study will depend on the standpoint of the
researcher over their beliefs like knowledge (see epistemology) and reality (see
ontology), often shaped by the disciplinary areas the researcher belongs to.
The design of a study defines the study type (descriptive, correlational, semi-
experimental, experimental, review, meta-analytic) and sub-type (e.g., descriptive-
longitudinal case study), research problem, hypotheses, independent and dependent
variables, experimental design, and, if applicable, data collection methods and a
statistical analysis plan. A research design is a framework that has been created to find
answers to research questions.
2.2 Objectives
The process of research involves a systematic and organized effort to acquire new
knowledge. It is essentially a quest for knowledge, aimed at exploring and discovering
new information and insights. A research objective is a vital component of this process,
as it defines the specific goals and objectives that the researcher aims to achieve through
their study. The primary purpose of research is to identify solutions to unresolved issues
using scientific methods and to gain a deeper understanding of various phenomena
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through a scientific lens. This information can be instrumental in developing new

technologies, creating new products, or improving existing processes.
Research objectives are critical for guiding the research process, ensuring that the study
remains focused and on track. They help to clarify the research question, identify the
research design, and determine the data collection and analysis methods. Additionally,
research objectives help to establish the significance of the research, which can be used
to justify the funding and resources required for the study. Ultimately, the main
objective of research is to uncover hidden truths and gain a deeper understanding of the
world around us. By pursuing new knowledge and insights, researchers can contribute
to a broader body of knowledge and help to advance our understanding of the universe.
.Objectives of the Present Study:
The present study serves the following purpose:
1. To study the perception of investors towards investing in metaverse

2. To study the various investment avenues in metaverse
3. To suggest recommendations
2.3 Sources / Methods of Data Collection
Data is the quantification of tangible and intangible facts. Data are separate pieces of
information, usually arranged in a special way. Austerely speaking data is the plural or
datum, a single piece of information. In practice, however, people use data as both the
singular as well as plural form of the word. Data are bare facts. When data are
processed, Organized, structured or presented in a given milieu so as to make them
useful, they are called information. It is not adequate to have data (such as statistics on
the economy). Data in themselves are not so useful. But when these data are interpreted
and processed to determine their true meaning, they are converted to useful elements in
research and can be called information.
Primary data are generally expended in those cases where the secondary data do not
deliver an adequate basis for analysis. In some sure cases both primary as well as
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secondary data may be used. The reason why secondary data are being increasingly
used is that published statistics are now accessible covering various fields so that an
investigator seeks required data readily available to him in number of cases. Primary
data is the data collected by the researchers themselves, i.e. Interview, Observation,
Action research, Case studies, Life histories, Questionnaires, Ethnographic research or
Longitudinal studies.
Secondary data is usually used for problem identification and at formulation stage. It is
needed for formulation of hypothesis. It can also be helpful in designing questionnaire.
It may be needed to validate results of current investigation. Various Sources of
secondary data are: Published surveys of markets. (general library research sources),
Government publication and reports, All advertising media, particularly newspaper,
magazines, trade journals etc., Trade association and other technical and professional
groups, Specialized research and foundation organizations, Universities, Specialized
markets intelligence services such as advertising agencies, market research firms, stock
exchanges, commodity exchange, banks., Specialized libraries, Internal sources such as
sales and purchases records, salesman’s report, sales order, customer Complaints and
other records and registers and Internet.
Data Collection for the Present Study
 Primary Data was collected to understand the perception of investors towards

Metaverse Investing. For achieving the objective, a structured questionnaire was
prepared respondents were asked to fill the same. Respondents here comprise of the
investors, market participants, and industry experts of Badlapur.
 Secondary date was collected to study the perception of investors towards

metaverse investing in general. This data was collected through journals, articles,
newspapers, and websites.
Sampling is a technique of selecting individual members or a subset of the population

to make statistical inferences from them and estimate the characteristics of the whole
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population. Different sampling methods are widely used by researchers in market

research so that they do not need to research the entire population to collect actionable
insights it is also a time-convenient and cost-effective method and hence forms the basis
of any research design. Sampling techniques can be used in research survey software
for optimum derivation.
2.4.1 Probability sampling methods: In probability sampling method, each element

in the sample determined gets equal chance of being selected as a sampling element.
Different probability sampling methods are Simple Random, Systematic Random,
Stratified, Cluster and Multi Staged Sampling.
 Simple random sampling
With simple random sampling, every element in the population has an equal chance of
being selected as part of the sample. It’s something like picking a name out of a hat.
Simple random sampling can be done by anonymising the population – e.g. by
assigning each item or person in the population a number and then picking numbers at
random. Simple random sampling is easy to do and cheap, and it removes all risk of
bias from the sampling process. However, it also offers no control for the researcher
and may lead to unrepresentative groupings being picked by chance.
 Systematic sampling
With systematic sampling, also known as systematic clustering, the random selection
only applies to the first item chosen. A rule then applies so that every nth item or person
after that is picked. Although there’s randomness involved, the researcher can choose
the interval at which items are picked, which allows them to make sure the selections
won’t be accidentally clustered together.
 Stratified sampling
Stratified sampling involves random selection within predefined groups. It’s useful
when researchers know something about the target population and can decide how to
subdivide it (stratify it) in a way that makes sense for the research. Stratified sampling
has benefits but it also introduces the question of how to stratify a population, which
adds in more risk of bias.
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 Cluster sampling
With cluster sampling, groups rather than individual units of the target population are
selected at random. These might be pre-existing groups, such as people in certain zip
codes or students belonging to an academic year.
2.4.2 Non-probability sampling methods: Non-probability sampling methods don’t

offer the same bias-removal benefits as probability sampling, but there are times when
these types of sampling are chosen for expediency or simplicity. Here are some forms
of non-probability sampling and how they work.
 Convenience sampling
People or elements in a sample are selected on the basis of their availability. If you are
doing a research survey and you work at a university, for example, a convenience
sample might consist of students or co-workers who happen to be on campus with free
time who are willing to take your questionnaire. This kind of sample can have value,
especially if it’s done as an early or preliminary step, but significant bias will be
introduced.
 Quota sampling
Like the probability-based stratified sampling method, this approach aims to achieve a
spread across the target population by specifying who should be recruited for a survey
according to certain groups or criteria. For example, your quota might include a certain
number of males and a certain number of females, or people in certain age brackets or
ethnic groups. Bias may be introduced during the selection itself – for example,
volunteer bias might skew the sample towards people with free time who are interested
in taking part. Or bias may be part and parcel of the way categories for the quotas are
selected by researchers.
 Purposive sampling
Participants for the sample are chosen consciously by researchers based on their
knowledge and understanding of the research question at hand or their goals. Also
known as judgment sampling, this technique is unlikely to result in a representative
sample, but it is a quick and fairly easy way to get a range of results or responses.
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 Snowball or referral sampling
With this approach, people recruited to be part of a sample are asked to invite those
they know to take part, who are then asked to invite their friends and family and so on.
The participation radiates through a community of connected individuals like a
snowball rolling downhill.
Sampling Plan for the Present Study
Since, it’s not possible to conduct a survey with the total population of Badlapur. So,
keeping this constraint at place, the population of Badlapur. Respondents were selected
on random basis through the different strata. Thus, random sampling was used to collect
the primary data.
2.5 Area of Study
Badlapur City, situated within the Thane district of Maharashtra, India, presents a
compelling proposition for those seeking a vibrant urban center with a touch of nature's
charm. Integrated into the Mumbai Metropolitan Region, Badlapur flourishes along the
banks of the Ulhas River, offering a strategic location and a well-established
administrative framework overseen by the Kulgaon-Badlapur Municipal Council.
While the exact origins of Badlapur remain undetermined, historical references suggest
it may have comprised four distinct villages – Katrap, Kulgaon, the original Badlapur
settlement, and Manjarli – that gradually coalesced into a unified urban entity.
Presently, the "historical" Badlapur village is situated approximately 10 kilometers
from the bustling city center.
37
Figure 2.1: Badlapur
Source: https://www.addressofchoice.com/mumbai/badlapur/guide
In terms of geographical footprint, Badlapur City occupies roughly 36.68 square

kilometers within the Thane district of Maharashtra, India. Its elevation sits around 66
meters above sea level, and the Ulhas River forms a natural border along its eastern
limits. While population estimates suggest approximately 238,000 residents in 2023,
it's advisable to consult official census data for the most precise figures. Strategically
located within the Konkan division, Badlapur boasts close proximity to major urban
centers like Mumbai (around 70 kilometers away) and Thane (approximately 40
kilometers distant).
The purpose of analysis of data is to acquire usable and useful information. Data
analysis is the process of recognizing of certain parameters along with identification of
relationship patterns that may exist among data groups. In the procedure of analysis,
relationships may be discovered that may support or conflict the original hypothesis.
This analysis clues to valid conclusion only if the relationship pattern stands the
statistical test of significance. The analysis irrespective of whether the data is qualitative
or quantitative may:
38
• Describe and summarize the data
• Identify relationships between variables
• Compare variables
• Identify the difference between variables
• Forecast outcomes
Data analysis help to summarize large mass of data into better comprehensible and
simple meaningful form. Such kind of lessening of data with statistical help can be
further are used to lessening complexity. It makes description probable with the help of
numbers averages, percentages, means, standard deviation, etc. Exact relation between
two variables can be sharply stated. Analysis aids the research to pull reliable inference
of the situation that have not measured in full. Such inferences give answers to many
possible questions in research. Due to inference drawn with the help to statistical tolls
further evaluation and estimation is likely. Inferential data can be utilized to evaluate,
understand and draw relationship between some variables. Such identification of
factors helps in analyzing and demonstrating hypothesis.
Tools used in present research study:
In present study, first and foremost, Descriptive Statistical Techniques are used. These
techniques include Finding out Valid Percentage and presentation of the same through
various Graphs and Diagrams. Graphs and Diagrams include Bar Graph and Pie
Diagram.
39
2.7 Scope and Limitations of the Study:
2.7.1 Scope of the Study - This study throws light on Algorithmic trading strategies
and the investor’s preference towards the same. The scope of this study suggest certain
basic concepts related to Metaverse Investment. How investment in Metaverse works.
Conveniences while using Metaverse as Investment. Level of accuracy and reliability
provided by Metaverse while Investing.
2.7.2 Limitations of the Study
The present research study has certain limitations which are listed below-
 This study is restricted only to the Badlapur area. So, the results are not
applicable to other areas.
 This study is based on the prevailing investors but the investor’s preference may
change according to Time, Technology Development, etc.
 As the number of investors are huge, a simple size of 100 respondents is only
covered.
40
CHAPTER 3: REVIEW OF LITERATURE
Synopsis:
3.1 Introduction
3.2 Review of Literature At International and National Level
3.3 Gap Analysis
41
3.1 Introduction
A literature review is an overview of the previously published works on a topic. The

term can refer to a full scholarly paper or a section of a scholarly work such as a book,
or an article. Either way, a literature review is supposed to provide the researcher/author
and the audiences with a general image of the existing knowledge on the topic under
question. A good literature review can ensure that a proper research question has been
asked and a proper theoretical framework and/or research methodology have been
chosen. To be precise, a literature review serves to situate the current study within the
body of the relevant literature and to provide context for the reader. In such case, the
review usually precedes the methodology and results sections of the work.
Producing a literature review is often a part of graduate and post-graduate student work,
including in the preparation of a thesis, dissertation, or a journal article. Literature
reviews are also common in a research proposal or prospectus (the document that is
approved before a student formally begins a dissertation or thesis.
A literature review can be a type of review article. In this sense, a literature review is
a scholarly paper that presents the current knowledge including substantive findings as
well as theoretical and methodological contributions to a particular topic. Literature
reviews are secondary sources and do not report new or original experimental work.
Most often associated with academic-oriented literature, such reviews are found
in academic journals and are not to be confused with book reviews, which may also
appear in the same publication. Literature reviews are a basis for research in nearly
every academic field.
3.2 Review of Literature at International and National Level
Yemenici (2022) his study examines entrepreneurship in the metaverse world through
an in-depth literature review method. It evaluates business opportunities, conveniences,
and difficulties in the metaverse. The metaverse world is predicted to attract large
investments in technology and economy. Entrepreneurs in the metaverse can seize
economic opportunities, but the costs may be unsuitable for the time being. To avoid
increasing costs, entrepreneurs should develop a viable idea and conduct feasibility
42
studies. This original study addresses the benefits, conveniences, and challenges of
being an entrepreneur in the metaverse world, highlighting the potential impact on the
business world and social life standards.
Seifoddini (2022) his study mentioned that gaming industry has significantly expanded
with the introduction of Non-Fungible Tokens (NFTs), making them an attractive
investment opportunity. Their paper presents a framework for rating NFT metaverse
games using the PROMETHEE II method, including a flip ratio that considers both flip
opportunities and risk. Additionally, the study analyzes the crash risk of NFT game
tokens using a non-parametric value at risk analysis.
Yeoh, Chung and Wang (2023), their study investigates using sentiment analysis and
machine learning (ML) techniques to predict crypto trends using time series data for
crypto price and text. The study uses FinBERT, a sentiment model, and an AI investing
framework to analyze the pattern of news influencing top five metaverse crypto prices.
The study found that news from finance, stock market, and crypto news have a strong
impact on crypto pricing. Future improvements include more data for better tuning
performance and technical analysis, such as relative strength index (RSI). A method to
collect minute’s interval data would be ideal for high-frequency trading experiments
using sentiment analysis to discover trends.
Nakavachara and Saengchote (2022) this study contributes to discussions on

blockchain-based virtual economy management and the digitalization of money.
Transactions settled in different denominations can influence willingness to pay, with
wETH-settled LAND priced 30% lower and SAND-settled LAND 3-4% higher.
Sahay, Mahajan, Malik and Kaur (2022) in their study mentioned the impact of
Metaverse on business models and economic growth using ARIMA and SARIMAX
prediction models on four Metaverse cryptocurrencies, AXS, MANA, SAND, and ILV.
The analysis compares predicted prices with actual closing prices and provides accurate
predictions. The results indicate potential growth in cryptocurrency tokens, indicating
increased investments in Metaverse-adapting business models could be profitable in the
future.
43
Aharon, Demir and Siev (2022) this study examines market reaction to firms' SEC
disclosures related to Metaverse activity. It differentiates between Vague and Clear
disclosures, finding clear disclosures lead to higher abnormal returns. Early adopters
and large-cap firms earn higher returns immediately after Metaverse disclosures. This
study represents the first effort to examine market response to Metaverse disclosures.
However, a short-term positive overreaction in share price behavior reverses within 30
days. The study's small sample size limits its scope, but future research could extend
the period and investigate factors driving abnormal returns.
Chen (2022) this paper explores the use of the Markowitz Model and Full Index Model
to determine the return and risk levels of optimal metaverse portfolios. It reveals that
the Full Index Model consistently yields lower returns at the same risk level, while
constraints negatively impact portfolio returns. The paper suggests using the Full Index
Model for optimal portfolios and investing without constraints, as it provides a safer
option. However, it acknowledges limitations to the Markowitz Model and suggests
investing with free constraints for better returns at the same risk level.
Yoo (2022) this study examines the implications of metaverse-based virtual real estate
transactions, focusing on the evolving environment and market perceptions. It
highlights the potential for profit generation through intangible asset investments. The
service provider provides a platform for transactions, allowing for revenue models like
advertisements. As participants increase, the service provider can provide jobs and
information through new services. Governments can leverage new technologies to
create jobs and secure economic benefits. Institutional support is needed to ensure new
services can settle in the market while mitigating risk factors.
Belk, Humayun and Brouard (2022) The Metaverse is a future space where money,
possessions, and ownership are delinked, with cryptocurrencies, algorithmic
collectibles, and NFTs playing a role. This shift in understanding money, possessions,
and ownership is influenced by online auctions and speculation. Theoretical new forms
of ownership with fractional ownership and fractionalized property rights are being
explored, with some consumers paying astronomical prices for digital art with limited
property rights.
44
Radwan and Binkhamis (2023) this research explores the risk and return of NFT, IP,
Metaverse, and cryptocurrency, focusing on factors affecting their risk and return. It
examines the connection between NFT and other digital assets, IP, and the Middle
East's potential for NFTs. The study uses a qualitative method, including interviews
with investors, creators, and blockchain technology specialists. The results show that
NFTs are digital proof of ownership used in digital or real assets if legally approved.
The risk and return factors affecting NFT, Metaverse, and cryptocurrency are similar,
with cryptocurrencies having a wide market and the Middle East offering new
investment opportunities. Investors should choose projects carefully, considering the
nature of each and the factors affecting risk and return.
Kais (2022) this research explores the future of accounting and auditing using virtual
reality technology, the Metaverse. It is the first scientific study to identify a link
between these fields, highlighting the Metaverse's vertical development and its
potential impact on accounting and auditing. The research suggests that the Metaverse
can serve as auxiliary tools, create digital assets for accurate accounting measurements,
and aid in planning audit processes and evidence collection. The research also suggests
that the Metaverse could be used in education and accounting training.
Vidal and Tomas (2022) the emergence of metaverse and play-to-earn games has led to
the development of metaverse and play-to-earn tokens. This new crypto niche, driven
by the gaming industry's interest, has shown positive long-term performance and is not
dependent on the cryptocurrency market. However, the volatility of the market makes
it difficult for traders to outperform the CCi30 index. Metaverse and play-to-earn tokens
are not connected to the cryptocurrency market, allowing traders to diversify their
portfolio and blockchain companies to consider new gaming projects. This study
contributes to the cryptocurrency literature by providing insights into this crypto niche.
However, the increase of IGOs and extreme positive performance of some tokens may
indicate the beginning of a new crypto bubble.
Ante, Wazinski and Saggu (2023) their paper explores retail investor motivations for
digital real-estate ownership in the crypto-metaverse. It uses principal component
analysis to identify four motivational groups: Aesthetics and Identity, Social and
Community, Speculation and Investment, and Innovation and Technology. The study
45
finds that age, education, investment knowledge, risk-taking, and impulsivity

significantly influence investor group membership. The research provides valuable
insights for investors and developers, highlighting the potential of platforms to attract
investors with speculative intentions, engagement longevity, and passive/active trading
characteristics. The findings can inform policymakers and regulators in devising
effective policies for managing the burgeoning digital economy. Future research should
explore the dynamic interdependencies between investor motivations and the metaverse
milieu.
Sonmezer and Celik (2022) Metaverse tokens, a virtual world with potential for infinite
growth, are influenced by various factors. A multi-regression model analyzed the
returns of metaverse tokens, finding that ENJIN returns were the sole factor in MANA
returns (99%). The study found that returns of metaverse tokens are interrelated, with
trading volumes impacting these returns. Despite concerns about the virtual world,
investors are investing in non-fungible tokens, particularly in metaverse ecosystems.
The study found that ENJIN returns have a positive 99% statistical significance, while
other token returns and trading volumes have explanatory power.
Aharon, Alon, and Vakhromov (2024) their article examines the relationship between
metaverse stocks and metaverse crypto price fluctuations and spillovers using a TVP-
VAR approach. It finds that metaverse stocks are strongly influenced by fluctuations
and return shocks from metaverse tokens and cryptocurrencies, while tokens are mainly
affected by their own innovations and crypto relatives like Bitcoin and Ethereum. The
research focuses on the metaverse's potential to transform interactions and business,
creating a non-speculative demand for metaverse-based and other cryptocurrencies.
3.3 Gap Analysis
Various researches have been conducted at National and International level on the
subject matter. Most of these studies either focus on general segment of people or on
youth. No studies have been conducted on investor perception towards metaverse
investing among the people of Badlapur. Considering this gap, present study is
undertaken.
46
CHAPTER 4: DATA ANALYSIS, INTERPRETATION AND

PRESENTATION
Synopsis:
Data Analysis
Interpretation and Presentation
Findings Summary
47
Table 4.1: Age of the Respondents

Age Respondents Percentage
18-25 54 54
25-45 29 29
45-60 16 16
Above 1 1
Total 100 100
Graph 4.1: Age of the Respondents
Interpretation:
According to this chart among the total of 100 respondents, 54% respondents are from
the age group of 18 – 25, 29% respondents are from the age group of 25 – 45, 16%
respondents are from the age group of 45 – 60 and 1% respondent are from the age
group of above 60.
48
Table 4.2: Gender of the Respondents

Gender Respondents Percentage
Male 55 55
Female 45 45
Total 100 100
Graph 4.2: : Gender of the Respondents
Interpretation:
According to the above chart among the total of 100 respondents, 45% respondents are
Male and 55% respondents are Female.
49
Table 4.3: Occupation of the Respondents
Occupation Respondents Percentage
Student 42 42
Employed 39 39
Self-employed 16 16
Retired 3 3
Total 100 100
Graph 4.3: Occupation of the Respondents
Interpretation:
According to the above chart among the 100 respondents, 42% respondents are
students, 39% respondents are employed, 16% respondents are self-employed and rest
3% respondents are retired.
50
Table 4.4: Annual Income of the Respondents
Annual Income Respondents Percentage
Under 2 lakhs 41 41
2 lakhs-7 lakhs 36 36
7 lakhs-15 lakhs 17 17
Above 15 lakhs 6 6
Total 100 100
Graph 4.4: Annual Income of the Respondents
Interpretation:
According to the above chart among the total 100 respondents, 41% respondents belong
to the under 2 lakhs income group, 36% respondents belong to the 2 lakhs – 7 lakhs
income group, 17% respondents belong to the 7 lakhs – 15 lakhs income group and rest
6% respondent belong to the above 15 lakhs income group.
51
Table 4.5: What type of Metaverse Investments are you most interested in?
What type of Metaverse Respondents Percentage

Investments
are you most interested
in?
Virtual Games 22 22
Virtual Currencies 20 20
NFTs 10 10
Virtual Real Assets 26 26
Metaverse Stocks 22 22
Total 100 100
Graphs 4.5: What type of Metaverse Investments are you most interested in
Interpretation:
According to the above chart among 100 respondents 22% are interested to invest in
Metaverse games, 10% are interested to invest in NFTs, 20% are interested to invest in
virtual currencies, 26% are interested Investing in virtual real estate, 22% are interested
to invest in metaverse stocks.
52
Table 4.6: What potential benefits do you see in Metaverse Investment?
What potential benefits do Respondents Percentage

you see in Metaverse
Investment?
Potential for High Returns 43 43
Exposure of Digital Assets 21 21
Early Adoption of Emerging 10 10

Technology
Long-term Growth Potential 20 20
Diversification of Investment 6 6
Portfolio
Total 100 100
Graph 4.6: What potential benefits do you see in Metaverse Investment?
Interpretation:
According to the above chart among 100 respondents 43 % see the potential for high
returns, 21% people influenced by Exposure of digital assets, 10% see the benefit that
early adoption of emerging technology, 20% see long-term growth potential, 6% people
influenced by Diversification of Investment Portfolio
53
Table 4.7: What Concerns do you have regarding Investing in the Metaverse?
What Concerns do you Respondents Percentage

have regarding Investing in
the Metaverse?
Security and Privacy Issue 34 34
Volatility of Virtual Assets 12 12
Price
Market Volatility 22 22
Unclear long-term Viability 12 12
Lack of Regulations 14 14
Lack of Control 6 6
Total 100 100
Graph 4.7: What Concerns do you have regarding Investing in the Metaverse?
Interpretation:
concerned about the security and privacy issues, 12% respondents are concerned about
the volatility of virtual asset prices, 14% respondents are concerned about the lack of
regulations, 22% respondents are concerned about market volatility, 12% respondents
are concerned about unclear long-term viability, 6% respondents are concerned about
the lack of control.
54
Table 4.8: How do you perceive investments in the metaverse compared to

traditional investments?
How do you perceive Respondents Percentage

investments in the
metaverse compared to
More Risky 57 57
Equally Risky 29 29
Less Risky 14 14
Total 100 100
Graph 4.8: How do you perceive investments in the metaverse compared to

Interpretation:
According to the above chart among the total of 100 respondents, 29% respondents
perceive Metaverse Investment riskier as compared to traditional investments, 57%
respondents perceive Metaverse Investment equally risky as compared to traditional
investments, 1% respondents perceive Metaverse Investing less risky as compared to
traditional investments.
55
Table 4.9: How do plan to approach metaverse investments?
How do plan to approach Respondents Percentage

metaverse investments?
Long-term Investment 32 32
Short-term Investment 35 35
Diversified Portfolio 26 26
Approach
Other 7 7
Total 100 100
Graph 4.9: How do plan to approach metaverse investments?
Interpretation:
approach Long-term Metaverse Investment, 35% respondents approach Short-term
Metaverse Investment, 26% respondents approach Diversified portfolio for investing
in metaverse.
56
Table 4.10: Where do you seek information about Metaverse Investments?
Where do you seek Respondents Percentage

information about
Metaverse Investments?
News Websites 25 25
Social Media Platforms 47 47
Financial Advisors 23 23
Online Forums and 5 5

Communities
Total 100 100
Table 4.10: Where do you seek information about Metaverse Investments?
Interpretation:
According to the above chart among the total of 100 respondents, 5% respondents seek
information about Metaverse Investment from Online forums and communities, 25%
respondents seek information about Metaverse Investment From news websites, 47%
respondents seek information about Metaverse Investment from social media platforms,
23% respondents seek information about Metaverse Investment from Financial
Advisors.
57
Table 4.11: How do you see the future of Metaverse Investments?
How do you see the future Respondents Percentage

of Metaverse Investments?
High Growth 52 52
Limited Growth 30 30
Uncertain 18 18
Other 100 100
Graph 4.11: How do you see the future of Metaverse Investments?
Interpretation:
According to the above chart among the total of 100 respondents, 52% respondents see
the future of Metaverse Investment as high growth potential, 30% respondents see the
future of Metaverse Investment as limited growth potential, and 18% respondents see
the future of Metaverse Investment Uncertain.
58
Table 4.12: On the scale of 1 to 5 how would you rate your experience of using
Metaverse Investing
On the scale of 1 to 5 how Respondents Percentage

would you rate your
experience of using
Metaverse Investing
1 4 4
2 3 3
3 40 40
4 39 39
5 14 14
Total 100 100
Graph 4.12: On the scale of 1 to 5 how would you rate your experience of using
Metaverse Investing
Interpretation:
According to the above graph, among the total of 100 respondents, 4% respondents rate
the performance of Metaverse Investing in their portfolio as poor (1), 3% respondents
rate it as Fair (2), 40% respondents rate it as neutral (3), 39% respondents rate it as
Good (4) and the rest 14% rate it to be excellent (5).
59
FINDINGS SUMMARY
1) According to the study majority of respondents i.e., 54% fall in the age bracket of
18 – 25 with majority of them i.e., 55% being males and 47% are students
2) It is found that majority of this respondents i.e., 41% fall in the income group of
under 2 lakhs.
3) Out of all the respondents, respondents interested to invest in virtual real assets are
more i.e., 26% and 43% respondents see the potential for high returns.
4) Security and privacy issues are the primary concern for 34% of respondents.
5) A majority 57% perceive metaverse investment to be equally risky as traditional

investments. 29% perceive it to be less risky, while 29% perceive it to be more
risky.
6) Out of all the respondents 32% prefer a long-term approach and Social media
platforms are the primary source of information for 47% of respondents.
7) 52% believe in high growth potential for metaverse investments.
8) 39% rate the performance of metaverse investments as good, and 14% rate it as
excellent. Only 4% rate it as poor, with a majority 40% rating it as neutral.
60
CHAPTER 5: CONCLUSION AND RECOMMENDATION
Synopsis:
5.1 Conclusion
5.2 Recommendation
61
5.1 Conclusion
The data reveals a strong interest in Metaverse investment among respondents, driven
by factors such as the potential for high returns, exposure to digital assets, and the belief
in the long-term growth prospects of the Metaverse. However, this interest is
accompanied by concerns regarding security, regulation, and market volatility,
underscoring the need for a robust regulatory framework and enhanced security
measures to instill investor confidence.
The demographic profile of respondents indicates a broad interest in Metaverse

investment across different age groups, genders, occupations, and income levels,
suggesting that the appeal of the Metaverse extends beyond specific demographic
segments.
The diversity in investment preferences and approaches highlights the need for tailored
investment strategies catering to individual risk profiles and investment goals. While
some investors may favor long-term holdings for potential appreciation, others may
prefer short-term trading or a diversified portfolio approach to manage risk effectively.
Furthermore, the reliance on social media platforms and online forums for information
underscores the importance of accessible and credible information sources in guiding
investor decisions. Financial advisors also play a crucial role in providing personalized
guidance and addressing investor concerns in navigating the complexities of Metaverse
investment.
Overall, while the Metaverse presents exciting opportunities for investors, addressing
concerns related to security, regulation, and volatility will be critical in fostering a
sustainable and inclusive investment environment. By leveraging diverse investment
strategies, accessing reliable information sources, and engaging with regulatory
authorities, investors can navigate the evolving landscape of the Metaverse and
capitalize on its growth potential while managing associated risks effectively.
62
5.2 Recommendations
1) Regulatory Engagement: Encourage investors to actively engage with regulatory

authorities to ensure that their concerns regarding security, regulation, and market
volatility are addressed effectively. This could involve participating in discussions,
providing feedback on proposed regulations, and staying informed about regulatory
developments.
2) Diversified Investment Strategies: Emphasize the importance of diversification in

investment portfolios to manage risks effectively. Investors should consider a mix
of long-term holdings for potential appreciation, short-term trading for
opportunistic gains, and diversified approaches to mitigate volatility.
3) Education and Awareness: Promote education and awareness initiatives to help

investors understand the nuances of Metaverse investment, including its potential
benefits and risks. This could involve organizing seminars, webinars, and
educational resources focused on Metaverse investment strategies and best
practices.
4) Financial Advisor Consultation: Encourage investors to seek guidance from

qualified financial advisors who can provide personalized advice tailored to their
individual risk profiles and investment goals. Financial advisors can also address
investor concerns and provide reassurance amid market uncertainties.
5) Access to Reliable Information: Advocate for the use of reliable information

sources when making investment decisions in the Metaverse. Investors should be
cautious of misinformation and seek information from credible sources such as
reputable financial news outlets, industry reports, and regulatory announcements.
6) Long-Term Perspective: Remind investors to maintain a long-term perspective

when investing in the Metaverse, recognizing that the space is still evolving and
may experience fluctuations in the short term. By focusing on long-term growth
prospects and fundamental value, investors can better navigate market volatility.
63
7) Continued Monitoring: Highlight the importance of ongoing monitoring and

adaptation of investment strategies in response to changing market conditions and
regulatory developments. Investors should stay informed, remain flexible, and
adjust their approaches accordingly to capitalize on emerging opportunities and
mitigate risks.
64
BIBLIOGRAPHY
1. Aysun Devrim Yemenici (2022) "Entrepreneurship in the world of Metaverse:

Virtual or real?" Journal of Metaverse
2. Jalal Seifoddini (2022) A multi-criteria approach to rating Metaverse games"

Journal of Metaverse, Volume 2 Issue 2
3. Eik Den Yeoh, Tinfah Chung, Yuyang Wang (2023) “Metaverse in Investment
Using Sentiment Analysis and Machine Learning”
4. Voraprapa Nakavachara and Kanis Saengchote (2022) "Is Metaverse LAND a good
investment? It depends on your unit of account!" Cornell University
5. Shivangi Sahay, Nishtha Mahajan, Shivangi Malik, Jasdeep Kaur (2022)

"Metaverse: Research based analysis and impact on economy and business" Asian
Conference on Innovation in Technology
6. David Y Aharon, Ender Demir, Smadar Siev (2022) "Real returns from unreal
world? Market reaction to Metaverse disclosures" Research in International
Business and Finance Volume 63
7. Yurou Chen (2022) "Optimal Metaverse Stock Portfolio through Markowitz Model
and Full Index Model"Advances in Economics, Business and Management
Research, volume 215
8. Jongyoung Yoo (2022) "A Study on Transaction Service of Virtual Real Estate
based on Metaverse" The Journal of The Institute of Internet, Broadcasting and
Communication (IIBC) Volume 22
9. Russell Belk, Mariam Humayun, Myriam Brouard (2022) "Money, possessions,

and ownership in the Metaverse: NFTs, cryptocurrencies, Web3 and Wild Markets"
Journal of Business Research. Volume 153
65
10. Bodour Idris Radwan Dr. Mohammed Binkhamis (2023) "Risk and Return of NFT,
Metaverse, Cryptocurrency, and NFT’s Relation" Academic Journal of Research
and Scientific Publishing Volume 5, Issue 54
11. Mohamed Kais (2022) "Accounting and auditing in the metaverse world from a
virtual reality perspective: A future research" Journal of Metaverse Volume 2, issue
1
12. David Vidal-Tomas (2022) "The new crypto niche: NFTs, play-to-earn, and
metaverse tokens" Finance research letters
13. Lennart Ante, Friedrich-Philipp Wazinski, Aman Saggu (2023) “Digital real estate
in the metaverse: An empirical analysis of retail investor motivations” Finance
Research Letter
14. Sitki Sonmezer, Gulsah Gencer Celik (2022) “How returns of metaverse tokens are
interrelated” International Journal of Social Sciences Volume 8, issue 1
15. David Y Aharon, Ilan Alon, Oleg Vakhromov (2024) “Metaverse Tokens or
Metaverse Stocks–Who’s the Boss?” Research in International Business and
Finance Volume 69
https://codemaker2016.medium.com/introduction-to-metaverse-e48a29fc906f
https://techgeek360.com/exploring-the-metaverse/
https://www.spiceworks.com/tech/artificial-intelligence/articles/what-is-
metaverse/amp/
https://hedera.com/learning/metaverse/metaverse-challenges
66
ANNEXURE
1) Name of the Respondent
2) Age of the Respondents

 18 – 25
 25 – 45
 45 – 60
 Above 60
3) Gender of the Respondents

 Male
 Female
4) Occupation of the Respondent

 Student
 Employed
 Self employed
 Retired
5) Annual Income of the Respondent

 Under 2 lakhs
 lakhs – 7 lakhs
 7 lakhs – 15 lakhs
 Above 15 lakhs
6) What type of metaverse investments are you most interested in?

 Virtual games
 Non-fungible tokens (NFTs)
 Virtual currencies
 Virtual real estate
 Metaverse stocks
67
7) What potential benefits do you see in metaverse investments?

 Potential for high returns
 Exposure of Digital Assets
 Early adoption of emerging technology
 Long-term Growth Potential
 Diversification of investment portfolio
8) What concerns do you have regarding investing in the metaverse?

 Security and privacy issues
 Volatility of virtual asset prices
 Market Volatility
 Unclear long-term viability
 Lack of regulation
 Lack of Control
9) How do you perceive investments in the metaverse compared to traditional

investments?
 More risky
 Equally risky
 Less risky
10) How do you plan to approach metaverse investments?

 Long-term investment
 Short-term speculation
 Diversified portfolio approach
 Others
11) Where do you seek information about metaverse investments?

 Online forums and communities
 News websites
 Social media platforms
 Financial advisors
68
12) How do you see the future of metaverse investments?

 High growth potential
 Limited growth potential
 Uncertain
13) On the scale of 1 to 5 how would you rate your experience of using Metaverse
Investing
 1 (Poor)
 2 (Fair)
 3 (Neutral)
 4 (Good)
 5 (Excellent)
69
“A Study on Investors’ Perception Towards Algorithmic Trading"
By
Ms. Chinmayee Upendra Parab
(Roll No. 47)

Mrs. Vridhi Rupani

Ulhasnagar
April, 2024
i
(MAHARASHTRA)
Certificate
This is to certify that Ms. Chinmayee Upendra Parab has worked and duly completed
his Project Work for the degree of Bachelor of Management Studies under the Faculty of
Commerce in the subject of Finance and his project is entitled, “A Study on Investors’
Perception Towards Algorithmic Trading" under my supervision.
I further certify that the entire work has been done by the learner under my guidance and
that no part of it has been submitted previously for any Degree or Diploma of any
investigations.
Mrs. Vridhi Rupani

Guiding Teacher
ii
I the undersigned Ms. Chinmayee Upendra Parab here by, declare that the work
embodied in this project work titled “A Study on Investors’ Perception Towards
Algorithmic Trading" forms my own contribution to the research work carried out under
the guidance of Mrs. Vridhi Rupani, is a result of my own research work and has not been
previously submitted to any other University for any other Degree/ Diploma to this or any
other University.
Ms. Chinmayee Upendra Parab

(Roll No. 47)
Certified by,
Mrs. Vridhi Rupani

Guiding Teacher
iii
Evaluation
This Research Project on “A Study on Investors’ Perception towards Algorithmic

Trading" submitted by Ms. Chinmayee Upendra Parab of TYBMS (Semester – VI) is
evaluated as per guidelines of University of Mumbai, via Circular No. UG/89 of 2018-19
on Revised Syllabus - CBCS for the TYBMS (Semester – V and VI) w.e.f. academic year
2023-24.
External Examiner:
Name: _____________________________________
Signature: _____________________________________
Internal Examiner:
Name: _____________________________________
Signature: _____________________________________
iv
Acknowledgement
I take this opportunity to thank the University of Mumbai for giving me chance to do this
project.
I would also like to thank my HOD, Dr. Sunil Lalchandani for providing the necessary
Lastly, I would like to thank each and every person who directly or indirectly helped me in
the completion of the project especially my Parents and Peers who supported me
throughout my project and helped me to complete the project within the time frame.
v
Executive Summary
The research project on algorithmic trading investigates the application of advanced

algorithms in financial markets to execute trades with speed, accuracy, and efficiency.
Algorithmic trading, also known as algo trading or automated trading, utilizes
mathematical models and automated systems to analyze market data, identify trading
opportunities, and execute orders without human intervention.
The primary objective of this research is to explore the effectiveness and impact of
algorithmic trading strategies on various financial markets, including stocks, currencies,
commodities, and derivatives. The main objective of this research is to study the investors
perception towards Algorithmic trading.
• Chapter 1 covers the Meaning, features, importance, evolution, process of

algorithmic trading, algorithmic trading strategies and its types, pros and cons of
algorithmic trading, regulations by SEBI, algorithmic trading firms in India,
meaning of traditional trading, comparison between traditional and algorithmic
trading, future trends in algorithmic trading.
• Chapter 2 covers the Objectives, Methods of Data Collection, Sample Design and
Area of Study.
• Chapter 3 covers the Review of Literature and Gap Analysis of the study.
• Chapter 4 covers the Findings, Analysis and Interpretation of the study.
• Lastly, Chapter 5 includes the Conclusions drawn from the study and
vi
INDEX
Sr. Content Pg. no.
no.
1. Preliminary
Title sheet i
Certificate ii
Declaration iii
Evaluation iv
Acknowledgement v
Executive summary vi
Index vii
List of tables x
List of graphs xi
2. Chapter 1: Introduction
1.1 Meaning 2
1.2 Features 4
1.3 Importance of Algorithmic Trading 5
1.4 Evolution of Algorithmic Trading 6
1.5 Algorithmic Trading Process 10
1.6 Algorithmic Trading Strategies 12
1.7 Types of Algorithmic Trading Strategies 13
1.8 Pros of Algorithmic Trading 14
1.9 Cons of Algorithmic Trading 15
vii
1.10 Regulations by SEBI 17
1.11 Algorithmic Trading Firms in India 18
1.12 Meaning of Traditional Trading 19
1.13 Comparison Between Traditional Trading and 20

Algorithmic Trading
1.14 Future Trends

22
3. Chapter 2: Research Design
2.1 Introduction 25
2.2 Objectives 25
2.3 Sources/Methods of data collection 27
2.4 Sampling techniques 29
2.5 Area of study – Ulhasnagar 31
2.6 Tools for analysis 32
2.7 Scope and Limitations of the study 33
4. Chapter 3: Review of Literature
3.1 Introduction 35
3.2 Review of Literature at International and National level 36
3.3 Gap analysis 40
5. Chapter 4: Findings, Analysis and Interpretation

41
Data Analysis
Interpretation and presentation 41
Findings summary 55
viii
6. Chapter 5: Conclusion and Recommendations
5.1 Conclusions 57
7. Bibliography 60
8. Annexure
62
• Questionnaire
ix
List of Tables
Sr. no. Particulars Pg. no.

4.3 Occupation of the respondents 44
4.5 How long have you been actively investing in financial 46
markets?
4.6 For which investment strategies do you primarily use 47
Algorithmic Trading?
4.7 What percentage of your portfolio is allocated to Algorithmic 48
Trading?
4.8 What influenced you to use Algorithmic Trading Strategies? 49
4.9 Which platform do you prefer for Algorithmic Trading? 50

4.10 What concerns do you have about Algorithmic Trading? 51
4.11 On a scale of 1 to 5 how do you perceive the level of risk 52
associated with Algorithmic Trading?
4.12 On a scale of 1 to 5 how would you rate the performance of 53
Algorithmic Trading strategies in your portfolio?
4.13 Overall, how satisfied are you with your experience of using 54
Algorithmic Trading strategies?
x
List of graphs
Sr. no. Particulars Pg. no.
1.1 Evolution of Algorithmic trading 6

1.2 Algorithmic Trading Process 10
2.1 Ulhasnagar 32
4.3 Occupation of the respondents 44
4.5 How long have you been actively investing in financial 46
markets?
4.6 For which investment strategies do you primarily use 47
Algorithmic Trading?
4.7 What percentage of your portfolio is allocated to Algorithmic 48
Trading?
4.8 What influenced you to use Algorithmic Trading Strategies? 49
4.9 Which platform do you prefer for Algorithmic Trading? 50

4.10 What concerns do you have about Algorithmic Trading? 51
4.11 On a scale of 1 to 5 how do you perceive the level of risk 52
associated with Algorithmic Trading?
4.12 On a scale of 1 to 5 how would you rate the performance of 53
Algorithmic Trading strategies in your portfolio?
4.13 Overall, how satisfied are you with your experience of using 54
Algorithmic Trading strategies?
xi
A study on Investors Perception Towards Algorithmic Trading
CHAPTER 1: INTODUCTION
SYNOPSIS:
1.1 Meaning
1.2 Features
1.3 Importance of Algorithmic Trading
1.4 Evolution of Algorithmic Trading
1.5 Algorithmic Trading Process
1.6 Algorithmic Trading Strategies
1.7 Types of Algorithmic Trading Strategies
1.8 Pros of Algorithmic Trading
1.9 Cons of Algorithmic Trading
1.10 Regulations by SEBI
1.11 Algorithmic Trading Firms in India
1.12 Meaning of Traditional trading
1.13 Comparison Between Traditional Trading and Algorithmic Trading
1.14 Future Trends
1
1.1 Meaning:
Algorithmic trading, a practice that involves the use of computer algorithms to execute
trading strategies in financial markets. Instead of human traders making buy or sell
decisions, algorithmic trading relies on predefined rules or instructions coded into
software to automate the trading process. These algorithms can analyze market data,
such as price movements, volume, and other relevant indicators, to identify trading
opportunities and execute trades at optimal times and prices. Algorithmic trading can
be used across various financial instruments, including stocks, bonds, commodities,
currencies, and derivatives.
The goals of algorithmic trading include maximizing returns, minimizing risk, and
exploiting market inefficiencies more efficiently than traditional manual trading
methods. High-frequency trading (HFT) is a subset of algorithmic trading that involves
executing many trades in extremely short timeframes, often measured in microseconds.
One of the primary goals of AI in algorithmic trading is to analyze vast amounts of data
quickly and accurately to identify patterns, trends, and anomalies in financial markets.
AI-powered algorithms can process various data sources, including market prices, news
articles, social media sentiment, economic indicators, and more, to gain insights into
market dynamics and make informed trading decisions.
The financial landscape is witnessing a captivating dance between two

transformative forces: artificial intelligence (AI) and algorithmic trading. Each
individually wields immense power, but when combined, they unlock a new era of
automated decision-making and market analysis. Imagine a conductor directing an
orchestra, with each instrument representing a market variable, and the music, a
symphony of profitable trades. That's essentially the essence of algorithmic trading.
Here, complex algorithms, based on mathematical models and technical analysis,
make trading decisions autonomously. This high-speed automation allows for
lightning-fast reactions to market fluctuations, exploring opportunities humans
might miss.
AI in trading leverages machine learning and deep learning to analyze vast amounts
of historical data, identify patterns, and predict future market trends. This
"intelligence" makes AI-powered algorithms more adaptive and potentially more
lucrative. When these two forces unite, the results can be electrifying. AI empowers
2
algorithms to learn and evolve, constantly refining their strategies and anticipating
market shifts. This fusion unlocks sophisticated trading strategies, potentially
outperforming traditional methods. Imagine AI identifying subtle market sentiment
changes through social media analysis, feeding that information to algorithms that
adjust trading positions accordingly. It is a glimpse into the future of finance, where
machines might become invaluable teammates .
AI: The Mind Behind the Machine:
While algorithms offer precise calculations, they lack the ability to learn and adapt.
This is where AI enters the scene. Imagine a conductor constantly refining their
technique based on past performances, anticipating audience reactions, and even
composing new sections on the fly. AI in trading leverages machine learning and
deep learning to analyze vast amounts of historical data, identify patterns, and predict
future market trends. This "intelligence" makes AI-powered algorithms more
adaptive and potentially more lucrative .
The financial landscape is undergoing a fundamental transformation, driven by the

twin forces of artificial intelligence (AI) and algorithmic trading. While both terms
often invoke images of automated robots making lightning-fast trades, there is more
to it than meets the eye. Let us embark on a journey to understand these evolving
concepts and delve into their potential impact on the future of trading .
3
1.2 Features:
• High frequency trading (HFT):

A subset of algo trading, HFT involves executing a large number of trades in extremely
short timeframes, often measured in microseconds. HFT strategies capitalize on small
price discrepancies and market inefficiencies that exist for only brief periods, requiring
sophisticated algorithms and high-speed connections to exchanges.
• Quantitative analysis:
Algo trading heavily relies on quantitative analysis, where traders use mathematical
models and statistical techniques to analyze market data, develop trading strategies, and
optimize algorithm performance. This involves back testing algorithms on historical
data to assess their effectiveness before deploying them in live trading.
• Market making:
Some algo trading strategies involve market making, where traders provide liquidity to
the market by continuously offering to buy and sell securities. Market making
algorithms adjust prices dynamically based on market conditions to manage risk and
capture spreads.
• Arbitrage:
Algorithmic trading can also be used for arbitrage strategies, where traders exploit price
discrepancies between different markets or financial instruments. These discrepancies
could arise due to various factors, such as differences in trading venues, currencies, or
derivative contracts.
• Regulatory considerations:
The rise of algo trading has prompted regulators to implement measures to ensure
market integrity and stability. Regulatory frameworks such as circuit breakers, market
surveillance systems, and requirements for algorithmic risk controls aim to mitigate
potential risks associated with algo trading, such as market manipulation and systemic
failures.
4
• Technological infrastructure:
Algorithmic trading relies on advanced technological infrastructure, including high-
speed data connections, low-latency trading platforms, and powerful computing
resources. Traders often invest significant resources in infrastructure to ensure optimal
performance and competitive advantage in algo trading
1.3 Importance of Algorithmic Trading:
Algorithmic trading plays a significant role in modern financial markets due to several
key reasons:
• Faster execution:
Algorithms can analyse market data and execute trades at lightning speeds, surpassing
human reaction times. This is crucial for capitalizing on fleeting opportunities or exiting
positions swiftly to minimize losses.
• Reduced costs:
Algorithmic trading can potentially lower trading costs by automating order placement
and execution, eliminating the need for human intervention and associated broker fees.
• Predefined rules:
Algorithms operate based on predetermined rules and strategies, removing emotional
biases that can cloud human judgment and lead to irrational trading decisions.
• Back testing and optimization:

Algorithmic strategies can be rigorously back tested with historical data to assess their
effectiveness and optimize them for better performance.
• Market making:
Algorithmic trading plays a vital role in market making, where algorithms continuously
place buy and sell orders to maintain market liquidity and facilitate smooth trading.
5
• Price discovery:
Algorithmic trading can contribute to efficient price discovery by constantly analysing
market data and responding to changes in supply and demand.
• Advancements in technology:
The continuous development of artificial intelligence (AI) and machine learning (ML)
is expected to further revolutionize algorithmic trading, enabling even more
sophisticated strategies and faster execution capabilities.
• Increased accessibility:
As technology becomes more accessible, retail investors may gain greater access to
algorithmic trading tools and platforms, potentially democratizing participation in this
space.
• Portfolio management:
Algorithmic trading can be used to automate portfolio rebalancing and risk management
strategies, ensuring adherence to investment goals and risk tolerance.
1.4 Evolution of Algorithmic Trading:
Figure 1.1: Evolution of Algorithmic Trading
Source: https://www.fisdom.com/algo-trading/
6
• Early 17th century: Stock exchange was set up:

The 17th century saw the emergence of the Dutch East India Company (VOC), which
revolutionized trading by introducing transferable shares and creating a secondary
market in Amsterdam. This laid the foundation for the city's transformation into a major
financial hub. The introduction of tradable shares led to increased trading activity and
the development of sophisticated techniques like forwards, futures, options, and bear
raids. By 1680, the trading practices in Amsterdam closely resembled those seen in
modern financial markets, showcasing the city's early role as an innovator and setting
the stage for advanced techniques worldwide. The 17th century marked a turning point
in trading history with the VOC's introduction of transferable shares. Amsterdam's
market flourished, incorporating complex transactions and becoming a prominent
financial Centre. This period's innovations played a crucial role in shaping global
trading, paving the way for advanced techniques and the growth of financial Centre’s
worldwide.
• Late 17th and 18th century: Beginning of High Frequency Trading:

High-Frequency Trading (HFT) revolves around the speed of information transmission.
HFT traders employ cutting-edge technology to obtain information faster than their
counterparts and execute trades swiftly. Interestingly, the concept of rapid information
delivery has roots that trace back to the 17th century. The establishment of the London
Stock Exchange in the late 18th century created a centralized marketplace for securities
trading, setting the stage for the development of High-Frequency Trading (HFT). The
exchange's technological advancements and infrastructure made it conducive for HFT
firms to operate, taking advantage of its speed and efficiency in executing trades.
• 1900 to 1970: Considerable changes in financial markets:

From 1900 to 1929, railways faced challenges, such as changing transportation
technologies, competition from automobiles and planes, and economic recessions,
leading to their decline. Meanwhile, the financial sector rose in importance. These shifts
reflected broader economic and societal changes that affected the market and investor
sentiment. In the early 1970s, computerization of order flow in financial markets began.
The New York Stock Exchange introduced systems like (Designated Order Turnaround)
DOT and later Super DOT, which electronically routed orders for manual execution.
7
On the other hand, Julius Reuter, the founder of Thomson Reuters, revolutionized
information dissemination in the 19th century. His innovative news delivery system
utilized telegraph cables and carrier pigeons for swift communication, laying the
foundation for high-frequency trading.
• 1980 to 2000: Growth of stock markets and start of algorithmic trading:

A significant structural change occurred from around 1982 to 2007 when the financial
sector experienced remarkable growth and influence in the U.S. stock market. During
this period, factors such as financial regulation, technological advancements, and
innovation in financial products contributed to the rise of the financial sector.
Institutions such as investment banks, commercial banks, and other financial
intermediaries became increasingly prominent, driving the market's performance and
shaping its dynamics. You must be wondering as to when did algorithmic trading start?
Algorithmic trading emerged with the advent of the internet in the late 1980s and early
1990s. In the late 1980s and 1990s, financial markets transitioned to electronic
execution and the development of electronic communication networks (ECNs).
Decimalization in the US reduced bid-ask spreads, encouraging algorithmic trading and
increasing market liquidity. The authorization of electronic exchanges by the SEC in
1998 paved the way for high-frequency trading (HFT). HFT utilizes advanced
technology to execute trades at speeds thousands of times faster than humans, leading
to its widespread adoption and significant impact on financial markets.
• 2000 to 2010: Boom of HFT or High Frequency Trading and co-location facility:
In the early 2000s, high-frequency trading accounted for less than 10% of equity orders.
However, it quickly gained traction and grew rapidly over the years. According to the
NYSE, between 2005 and 2009, high-frequency trading volume experienced a
remarkable 164% increase. 2011, marked the year of launching Nano trading
technology. A firm called Fixnetix developed a microchip that could execute trades in
nanoseconds, which is equal to one billionth of a second.
8
• 2010 to 2023: Emergence of News based trading for HFT and algorithmic trading:
The advent of the internet in the late 20th century had a profound impact on news-based
trading. It enabled the instantaneous dissemination of news globally, levelling the
playing field for traders. Online news platforms, financial websites, and social media
channels became primary sources of news for investors, offering real-time information
and analysis. In September 2012, Dataminr launched a service that turned social media
streams into actionable trading signals, backed by a $30 million investment. It provided
clients with business news up to 54 minutes faster than traditional sources. The platform
identified micro-trends by analyzing on-the-ground chatter, consumer product
reactions, online community discussions, and public attention patterns. Datamine’s
innovation leveraged social media data for real-time insights, reflecting the increasing
role of AI and machine learning in finance. In 2012, real-time analytics engines
analyzed the vast number of daily tweets to identify linguistic and propagation patterns.
During that time, High-Frequency Trading (HFT) dominated the stock markets,
accounting for 70% of US equity trades.
Over the past few years, trading precision has increased, with stock prices moving from
fractions to pennies. High-frequency trading (HFT) has added liquidity to the market
and reduced bid-ask spreads. IT companies have invested heavily in HFT technology,
including ultra-fast computer chips that execute trades in microseconds. Additionally,
a proposed $300 million transatlantic cable aimed to reduce transaction times between
New York City and London by a fraction of a second. The monitoring of social media
by the FBI began and this has led to the instant impact of the social media on the
securities. On April 2nd 2013 the SEC and CFTC levied restrictions on public company
announcements through social media.
9
1.5 Algorithmic Trading Process:
Figure 1.2: Algorithmic Trading Process
Strategy Development
Coding the Algorithm
Market Data Feed
Execution Platform
Risk Management
Order Placement
Trade Monitoring
Trade Execution
Post-Trade Analysis
10
• Strategy Development:
Traders or quantitative analysts (quants) develop trading strategies based on specific
criteria, market indicators, technical analysis, or statistical models. These strategies aim
to identify potential profitable trading opportunities.
• Coding the Algorithm:

Once a trading strategy is defined, it needs to be translated into a computer program.
Traders or quants write the algorithmic code using programming languages like Python,
C++, or Java. The code specifies the conditions for entering or exiting trades, risk
management rules, and other parameters.
• Market Data Feed:

Algorithmic trading systems require real-time market data to make trading decisions.
Data feeds provide information on prices, order books, trade volumes, and other
relevant market variables. Traders typically subscribe to market data providers or
exchange feeds to receive the necessary information.
• Execution Platform:
Algorithmic trading systems connect to trading platforms or directly to exchanges to
execute trades. These platforms provide access to the market and allow algorithms to
place buy and sell orders automatically. They may also offer additional features like
back testing, simulation, and monitoring tools.
• Risk Management:
Risk management is an essential aspect of algo trading. Traders need to define risk
limits and implement safeguards to protect against unexpected market movements or
technical glitches. This may include setting stop-loss orders, position sizing rules, or
circuit breakers to prevent excessive losses.
• Order Placement:
Based on the defined strategy and real-time market data, the algorithmic trading system
generates buy or sell orders. These orders are automatically submitted to the market via
the trading platform or exchange's API (Application Programming Interface).
11
• Trade Monitoring:
Algo trading systems continuously monitor the market for changes in price, volume, or
other relevant factors. They assess whether the conditions specified in the trading
strategy are met. If the criteria are satisfied, the system will automatically execute the
trade.
• Trade Execution:
When the algo trading system identifies a trade opportunity, it submits the
corresponding order to the market. The order is matched with available buy or sell
orders from other market participants, and the trade is executed. The speed of execution
is often a critical factor in algo trading.
• Post-Trade Analysis:
After a trade is executed, algo trading systems can perform post-trade analysis. They
analyze the trade's outcome, calculate performance metrics, and provide insights for
further strategy improvement or adjustment.
1.6 Algorithmic Trading Strategies:
The meaning of algorithmic trading strategies boils down to this: it's a set of pre-defined
rules, programmed into a computer, that tells it when to buy and sell financial
instruments based on market data. These rules aim to remove human emotions and
biases from the decision-making process, potentially leading to more consistent and
efficient trading.
Here's a simplified explanation:

• Imagine you have a specific trading idea, like buying stocks when they dip below a
certain price and selling them when they reach a specific profit target.
• Instead of manually monitoring the market and making these trades yourself, you
can translate your idea into a set of instructions for a computer program.
• This program constantly analyses market data (prices, volumes, etc.) and
automatically executes trades when the conditions you specified are met.
12
Therefore, an algorithmic trading strategy is essentially a recipe for automated trading

that guides your computer program in making decisions based on your defined criteria.
Here are some key things to remember about algorithmic trading strategies:
• There are many different types of strategies, each with its own strengths and
weaknesses. Some common examples include trend following, mean reversion, and
arbitrage.
• Developing and using effective strategies often requires knowledge of coding,
financial markets, and risk management.
• Results are not guaranteed. Back testing and ongoing monitoring are crucial to
ensure the effectiveness of your strategy.
1.7 Types of Algorithmic Trading Strategies:
• Trend Following:
This is the most extensively employed approach on the planet. Almost half of hedge
funds' assets are invested in this age-old strategy. Has weathered the test of time. In
theory, it's a simple notion, but putting it into practice is a challenge. Nevertheless, if
done scientifically and with discipline, there is an ample alpha creation opportunity.
• Smart Beta:
Smart beta aims to mix the benefits of passive investment with the help of active
investing. Smart beta indexes differ from typical market capitalization-based indices
because they use different index construction rules. It focuses on collecting investing
characteristics of market inefficiencies in a transparent, rules-based manner.
Alternative weighing systems, such as volatility, liquidity, quality, value, size, and
momentum, may be used in innovative beta strategies.
• Means Reversion:
This is the following most widely used technique. In range-bound markets, this strategy
works effectively. Most of the time, needs are range-bound between 60% and 70%. The
risk is more significant because it can be disastrous (i.e., When trend is strong). Stop
13
losses must be rigorously followed. To get the best of both worlds, it can be used with
a trend method.
• Arbitrage:
Arbitrage is a trade in which security, money, or commodity is bought and sold in
different marketplaces almost simultaneously. The goal of arbitrage is to take advantage
of the price differentials between other exchanges for the same financial product.
Arbitrage is legal, but it is also beneficial to markets because it promotes market
efficiency and provides trade liquidity.
• Market Making:
A market maker is only interested in earning a small profit margin (spread) between the
prices at which they purchase and sell shares, and they want to do so as frequently as
possible. On both sides of the book, market makers put buy and sell orders. Market
makers use a variety of ways to make money that are dependent on price distribution.
1.8 Pros of Algorithmic Trading:
As trades are executed by a computer program, algo-trading has a number of advantages

over traditional online trading strategies. So, let us read through some of its major
benefits.
• Instant Speeds:
Algorithms can execute trades at instantaneous speeds—within milliseconds and
microseconds. A human trading with their motor organs will never be able to trade at
the speed of the algo software. Therefore, algorithmic traders can capitalize on even the
tiniest fluctuations in the price of securities. At the same time, algorithms can even
analyze a chart within a split second.
• High Accuracy:
Since algo-trading does not require human intervention to make buying or selling
decisions, algo-trades have a much higher accuracy. They are free of all human-made
errors. For example, the algorithm will not misenter the quantity of units meant to be
14
traded. It will always enter the correct number of zeros and not carelessly trade 100
units instead of 1000.
• Free of Emotional Interventions:

As a trader using traditional online trading strategies, no matter which strategy you use,
everything can fall apart if your emotions get involved. Our emotions can derail the
strategy and disrupt discipline, resulting in unfavorable outcomes. However,
algorithmic trading solves this major problem, as a computer program is devoid of
emotions. If the predefined conditions are met, the computer program will execute the
trade automatically. In this case, second thoughts cannot prevent the trader from
performing or refraining from performing actions that they will later regret. So, it also
helps keep overtrading and under trading in control.
• Decreased Cost in the Long Run:

The initial cost to set up the algo-trading infrastructure may seem expensive. However,
once the system is up and running, it proves to be a cost-saver in the long run. Multiple
trades are processed, and transaction costs are reduced because algo trading allows for
the execution of large volumes of trades in a short period of time.
• Diversification:
Since the algorithm and computer program are able to scan multiple charts in a few
minutes, they can also be programmed to execute multiple trades at the same time. And
this is not limited to a single exchange or geography, as the computer can scan charts
and execute trades in stock markets around the world.
• High Volumes:
Algo-trading allows traders to trade large volumes of securities within seconds. This
helps with maintaining high liquidity in the markets.
1.9 Cons of Algorithmic Trading:
Now that we have read through the advantages of algo trading, it is time to look at the
disadvantages. Despite having high accuracy and speeds and being devoid of emotions,
algorithmic trading does have some noteworthy disadvantages.
15
• Reliance on Technology:
Technology has helped evolve algo-trading to what it is today, but a lack thereof is its
biggest disadvantage. If you do not have the technological infrastructure or lose access
to technology, you will be unable to take advantage of algo-trading. In some cases, a
disruption in your Internet connection will result in your order not being executed if the
date is stored locally.
• High Initial Expenses:

It is true that, in the long run, algorithmic trading proves to be cost-effective if you
intend to place multiple trade orders daily. However, the initial cost of setting up the
algo-trading infrastructure is costly. Algo-traders desire to have the fastest computers
that are capable of placing trades at instantaneous speeds.
• Need for Programming Skills:

Besides the high initial cost, you will also require programming knowledge to write
the algorithm. For that, you must know a computer language like C++ or Python. If
not, then you will have to hire a professional to write the algorithm for you.
• Need for Constant Advancements:

The competition among institutions in the algo-trading space is intense. So, to have an
edge over other algo traders, you have to constantly keep upgrading your algo-trading
strategy. At the same time, algorithms are only effective until market conditions are
suitable. But with ever-dynamic markets, there is a need to improve upon the algorithm
continuously. Hence, an algo-trader may not be pushing buttons to place trades, but
they still have to monitor markets constantly.
• Stringent Regulations:
Lastly, algo-trading is subject to a number of regulations. The regulation bodies of a
few countries still have not been able to reach a consensus on whether algo-trading
should be legal or not. So, there is always a chance the regulatory body may impose
new algo-trading rules or ban them completely.
16
1.10 Regulations by SEBI:
The Securities and Exchange Board of India (SEBI) has established various regulations
to govern algorithmic trading in India. Here's a summary of the key points:
• Direct Market Access (DMA):

SEBI introduced DMA in 2008, allowing institutions to use algorithms for trading.
However, retail investors were initially excluded.
• System Audits:
Algo trading firms must undergo half-yearly audits by SEBI-approved auditors to
ensure adherence to regulations.
• Order Execution:
Trading algorithms must comply with specific order execution regulations set by SEBI
and stock exchanges.
• Co-location and Co-hosting:

SEBI prohibits co-location (placing trading servers within the exchange) and co-hosting
(sharing infrastructure with the exchange) to prevent unfair advantages.
• Retail Algorithmic Trading:

SEBI is currently proposing rules to allow retail investors to participate in algorithmic
trading with specific risk management measures and capital limitations.
• Market maker regulation:

Regulators are scrutinizing the role of market makers, who use algorithms to provide
liquidity to markets, to ensure they are fulfilling their obligations and not manipulating
prices.
• Focus on best execution:

Regulations are being implemented to ensure that algo trading platforms execute orders
in a fair and efficient manner, achieving the best possible results for investors.
17
• Evolving landscape:
As algorithmic trading continues to develop and become more sophisticated, regulators
are constantly adapting their frameworks to address new challenges and risks. This
includes issues such as high-frequency trading (HFT) and the potential for algorithmic
errors to disrupt markets.
It is important to note that these are just the key points, and SEBI's regulations are
subject to change. keep pace with technological advancements and evolving market
dynamics.
1.11 Algorithmic Trading Firms in India:
Following is the list of some Algorithmic trading firms in India:
• iRageCapital:
Website: http://iragecapital.com/
iRageCapital specialize in High Frequency trading and Market making. Interestingly
they are hiring FPGA developers on LinkedIn. You use FPGAs when you want your
algorithms to run extremely fast and in HFT that matters a lot. From their website it is
not clear though whether they provide algo trading as a service or trade with their own
money.
• AlphaGrep:
Website: http://www.alpha-grep.com/
AlphaGrep is a proprietary trading firm focused on algorithmic trading in asset classes
across the globe. They are one of the largest firms by trading volume on Indian
exchanges.
• Mansukh securities:
Website: http://www.moneysukh.com/
Mansukh securities is primarily a brokerage and advisory firm. But they do have algo
trading operation and they are actively hiring python based algo traders on LinkedIn.
18
• Algoji:
Website: https://algoji.com/
Algoji is a algo-trading platform which enables you to run your custom strategies and
execute them with broker of your choice (They support a number of brokers). They can
also provide you coding experts who can develop strategies for you.
• TVISI Algo systems:

Website: https://www.tvisi.in/about.asp
TVISI algo systems focus on providing technology consultancy on algorithm or
algorithmic trading, automated trading for Forex, Stocks or Equities, Stocks Futures,
Index Futures, Options, ETF, Commodities and more.
• AlgoBulls:
Website: https://algobulls.com/
AlgoBulls is a trading platform that provides automated trading algorithms and has the
ability deploy multiple trading strategies for various asset classes like Equity,
Commodities, Futures & Options, Currency across multiple exchanges like NSE, BSE,
MCX, etc. Clients can select which algorithm strategies they want to follow and auto
trade OR they can get their customized trading strategies developed as algorithms and
get it deployed in live markets with the help of the AlgoBulls platform. AlgoBulls
platform supports multiple brokers.
1.12 Meaning of Traditional Trading:
Traditional trading refers to the conventional method of buying and selling financial
assets such as stocks, bonds, commodities, and currencies through established
exchanges or markets. This form of trading involves human interaction, where traders
place orders through brokers who execute them on their behalf. Various asset classes,
including stocks, bonds, commodities like gold and oil, currencies, and derivatives such
as options and futures, are traded in traditional markets.
Participants in traditional trading include individual retail traders, institutional investors

such as mutual funds and hedge funds, market makers, and proprietary trading firms.
These participants employ different trading strategies, including fundamental analysis,
19
which evaluates the intrinsic value of assets based on economic factors, and technical
analysis, which studies past market data to predict future price movements.
Orders in traditional trading can take different forms, such as market orders, limit
orders, and stop orders. Market orders are executed at the current market price, while
limit orders are executed at a specified price or better, and stop orders are triggered
when the price reaches a certain level.
Traditional trading is subject to regulatory oversight by government authorities to

ensure fair and orderly markets, protect investors, and maintain market integrity.
Regulatory bodies like the Securities and Exchange Commission (SEC) in the United
States and the Financial Conduct Authority (FCA) in the United Kingdom enforce rules
and regulations governing trading activities.
Traders in traditional markets also employ risk management techniques to mitigate

potential losses. These techniques may include diversification, stop-loss orders, and
position sizing.
The trading hours of traditional markets typically follow the business hours of the
exchanges where the assets are traded. For example, stock exchanges usually operate
from Monday to Friday during specific hours, while Forex markets are open 24 hours
a day, five days a week. Overall, traditional trading relies on established practices,
human intervention, and regulatory oversight to facilitate the exchange of financial
assets in various markets worldwide.
1.13 Comparison Between Traditional Trading and Algorithmic Trading:
Algorithmic trading (algo trading) and traditional trading represent two distinct
approaches to executing financial transactions in the markets. Here's a comparison
between the two:
BASIS TRADITIONAL TRADING ALGORITHMIC
TRADING
Decision- Involves human decision- Utilizes pre-programmed
making process making based on analysis of algorithms to execute trades
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market trends, economic automatically based on

indicators, news, and other predefined criteria. These
factors. Traders use their algorithms may incorporate

technical indicators, statistical
judgment to buy or sell assets.
models, or machine learning
algorithms.
Speed Utilizes pre-programmed Executes trades with high speed

algorithms to execute trades and precision, as algorithms can
automatically based on predefined react to market changes within
criteria. These algorithms may milliseconds. This speed
incorporate technical indicators, advantage is crucial in high-
statistical models, or machine frequency trading (HFT)
learning algorithms. strategies.
Emotion and Susceptible to emotional biases Free from emotional biases, as
Bias such as fear, greed, and decisions are based solely on
overconfidence, which can lead programmed rules. This can result
to suboptimal decision-making. in more disciplined and consistent
trading strategies.
Scalability Limited by the trader's capacity Highly scalable, as algorithms can

to monitor multiple assets and monitor and execute trades across
execute trades simultaneously. multiple markets and assets
simultaneously, allowing for
efficient portfolio management.
Back testing and Relies on historical data analysis to Facilitates rigorous back
optimization inform trading decisions, but back testing and optimization of
testing can be time-consuming and trading strategies using
subject to human error.
historical data. Algorithms can
quickly analyse vast amounts
of data to refine and improve
strategies.
Costs May involve higher transaction Can potentially reduce transaction
costs due to broker fees, spreads, costs by minimizing human
and slippage, especially for intervention and optimizing trade
frequent traders.
21
execution strategies to minimize

slippage.
Complexity Relatively straightforward for Requires programming skills and
individual traders, but mastering knowledge of quantitative finance
analysis techniques and market concepts. Developing and
dynamics can take time. maintaining algorithms can be
complex and requires continuous
monitoring and updates.
1.14 Future Trends:
Algorithmic trading, also known as algo trading, is poised for continued growth and
evolution in the coming years, driven by several key trends:
• Advancements in technology and computing power:

The ever-increasing speed and efficiency of computer hardware and software will
continue to fuel innovation in algorithmic trading strategies. This will allow for the
development of more complex and sophisticated algorithms that can analyze vast
amounts of data and execute trades at lightning-fast speeds.
• The rise of machine learning (ML):

Machine learning algorithms are becoming increasingly adept at identifying patterns
and making predictions in financial markets. This has led to the development of new
algorithmic trading strategies that are able to learn and adapt to changing market
conditions in real time.
• The growth of alternative data:

Algorithmic traders are increasingly incorporating alternative data sources, such as
social media sentiment and satellite imagery, into their models. This data can provide
valuable insights into market sentiment and help to identify potential trading
opportunities.
22
• Regulatory changes:
Regulators are constantly looking for ways to ensure the fairness and stability of
financial markets. As algorithmic trading continues to grow, we can expect to see new
regulations that aim to address concerns about transparency, risk management, and
market manipulation.
• Personalization and customization:

Algorithmic trading platforms are becoming more user-friendly and customizable,
allowing individual investors to develop and deploy their own trading strategies.
• Cloud-based algorithmic trading:

Cloud computing offers a cost-effective and scalable way to deploy and manage
algorithmic trading infrastructure. This trend is expected to continue as more and more
firms move their algorithmic trading operations to the cloud.
• Focus on risk management and cybersecurity:

As algorithmic trading becomes more complex, there is a growing need for robust risk
management and cybersecurity practices. Firms are investing heavily in technologies
and processes to mitigate the risks associated with algorithmic trading.
23
SYNOPSIS:
2.1 Introduction
2.2 Objective
2.3 Sources/methods of data collection
2.4 Sampling techniques
2.5 Area of study – Ulhasnagar
2.6 Tools for analysis
2.7 Scope and limitations of the study
24
2.1 Introduction:
Methodology is the study of research methods. However, the term can also refer to the
methods themselves or to the philosophical discussion of associated background
assumptions. A research design is a comprehensive plan guiding researcher to achieve
its objectives. It is a detailed blueprint of the research. It details the procedures
necessary for obtaining the information needed to structure or solve research problem.
A method is a structured procedure for bringing about a certain goal. In the context of
research, this goal is usually to discover new knowledge or to verify pre-existing
knowledge claims. This normally involves various steps, like choosing a sample,
collecting data from this sample, and interpreting this data. The study of methods
involves a detailed description and analysis of these processes. It includes evaluative
aspects by comparing different methods to assess their advantages and disadvantages
relative to different research goals and situations. This way, a methodology can help
make the research process efficient and reliable by guiding researchers on which
method to employ at each step. These descriptions and evaluations of methods often
depend on philosophical background assumptions. The assumptions are about issues
like how the studied phenomena are to be conceptualized, what constitutes evidence for
or against them, and what the general goal of research is.
2.2 Objective:
Objectives are very significant elements in any research. It describes what the research
project intends to accomplish. It also describes what the research is trying to achieve
and explain why you are pursuing it. They should guide every step of the research
process, including how you collect data, build your argument, and develop your
conclusions. They summarize the approach and purpose of your project and help to
focus your research. The objectives may evolve slightly as the research progresses, but
they should always line up with the research carried out.
25
The primary objectives of research methodology include:
• Problem Identification:
Research methodology helps in clearly defining and identifying research problems or
questions that need investigation. It assists researchers in formulating clear objectives
and hypotheses to guide the study.
• Research Design Development:

It aims to develop an appropriate research design that aligns with the objectives of the
study. This involves selecting the most suitable approach (qualitative, quantitative, or
mixed methods), data collection methods, and sampling techniques.
• Data Collection:
Research methodology facilitates the collection of relevant and reliable data through
various methods such as surveys, interviews, observations, experiments, or archival
research. It ensures that data collection procedures are systematic and rigorous.
• Data Analysis:
One of the key objectives of research methodology is to analyze the collected data
effectively. It involves organizing, interpreting, and making sense of the data using
appropriate statistical or qualitative analysis techniques. This step helps in drawing
meaningful conclusions and identifying patterns or trends in the data.
• Validity and Reliability:

Research methodology focuses on ensuring the validity and reliability of research
findings. Validity refers to the accuracy and correctness of the research outcomes, while
reliability pertains to the consistency and repeatability of the results. Methodological
rigor helps in enhancing the credibility of research findings.
• Ethical Considerations:
Another important objective is to adhere to ethical principles and guidelines throughout
the research process. Research methodology ensures that participants' rights are
protected, informed consent is obtained, and data confidentiality is maintained.
26
• Generalization and Transferability:

Research methodology aims to generalize findings beyond the specific context of the
study or assess the transferability of results to other settings or populations. This
requires careful consideration of the sampling method and the representativeness of the
sample.
Objectives of Present Research study:
The present research study serves the following purposes:
• To study investors perception towards Algorithmic Trading.

• To Study the factors that influenced the investors in using algorithmic trading
strategies.
• To study the concerns that the investors may have regarding algorithmic trading.
• To study the risk associated with algorithmic trading.
2.3 Sources/Methods of Data Collection:
In a research study, data encompasses the information gathered or produced throughout

the investigation, serving as the empirical backbone for addressing research questions,
testing hypotheses, or fulfilling study objectives. This data manifests in various forms,
including quantitative and qualitative data. Quantitative data comprises numerical
values, measurable and statistically analyzable, obtained from surveys, experiments, or
observational studies. On the other hand, qualitative data is descriptive, offering insight
into attitudes, beliefs, or behaviors, often collected through interviews, focus groups, or
participant observation.
information, usually arranged in a special way. Austerely speaking data is the plural or
datum, a single piece of information. In practice, however, people use data as both the
singular as well as plural form of the word. Data are bare facts. When data are
processed, organized, structured or presented in a given milieu so as to make them
useful, they are called information. It is not adequate to have data (such as statistics on
the economy). Data in themselves are not so useful. But when these data are interpreted
27
and processed to determine their true meaning, they are converted to useful elements in
research and can be called information.
Primary data:
data is the data collected by the researchers. Researchers may gather primary data
firsthand for their study through surveys, interviews, or experiments, or they may utilize
existing secondary data from sources such as published research or organizational
records.
Secondary data:
Secondary data is usually used for problem identification and at formulation stage. It is
needed for formulation of hypothesis. It can also be helpful in designing questionnaire.
It may be needed to validate results of current investigation. Various sources of
secondary data are: Published surveys of markets. (General library research sources),
Government publication and reports, All advertising media, particularly newspaper,
magazines, trade journals etc., Trade Association and other technical and professional
groups, specialized research and foundation Organizations, Universities, Specialized
markets intelligence services such as advertising agencies, market research firms, stock
exchanges, commodity exchange, banks, Specialized Libraries, Internal sources such
as sales and purchases records, salesman’s report, sales order, Customer complaints and
other records and registers and Internet.
Data collection for present research study:
• Primary data was collected to understand the preference of investors towards

Algorithmic trading. To collect this data a questionnaire was prepared for the
purpose of survey and the respondents were asked to fill the same. The respondents
here comprise of the investors, market participants, industry experts of Ulhasnagar.
28
• Secondary data was collected to understand the preference of investors towards

Algorithmic trading in general. This data was collected through journals, articles,
newspapers, websites.
2.4 Sampling Technique:
Sampling may be defined as the selection of some part of a collective or totality based
on which a judgement or implication about aggregate or totality is made. In other words,
it is the procedure of gaining information about an entire population by examining only
a part of it. In most of the research studies and surveys, the usual approach occurs to be
to make generalization or to draw corollaries based on samples about the parameters of
population from which the samples are taken.
• Non-Probability Sampling Methods: Nonprobability sampling methods are called

so because each element in the population does not have an equivalent chance of
being comprised in the sample. The major forms of non-probability samples are
convenient sampling, judgement and purpose sampling, quota sampling and
snowball sampling.
1) Convenience sampling- In convenience sampling, the researcher simply reaches out

and picks up the cases that fall to hand, continuing the process till such time as the
sample obtains a wanted size. It is used to find the data rapidly and easily. It may
include casual pool of friends and neighbors, employees at work place etc.
2) Judgement and purpose sampling- In judgement and purpose sampling, specialists

and experts in the field are consulted or researcher will exercise judgement and
appropriate strategy to handpick the right cases to be in included in the sample and
thus develop sample that are satisfactory in relation to one’s research needs.
3) Quota sampling- Another type of non-probability sampling method is Quota

Sampling. The basic objective of quota sampling is the selection of the sample that
is an imitation of the ‘population’ with the respect to which one would desire to
generalize? In snowball sampling, each and every respondent will also act as
29
reference to other respondents. That is every respondent will identify one or more
respondent having same characteristics as him or her. It is commonly employed
when subjects are hard to locate.
• Probability Sampling Methods: In probability sampling method, each element in

the sample determined gets equal chance of being selected as a sampling element.
1) Simple random sampling- Simple random sampling is in a sense, the basic refrain
of all scientific sampling. It is a primary probability sampling method. A process
that not only gives to each element in the population an equivalent chance of being
included in the sample but also makes the selection of each possible combination
of cases in the preferred size, equally likely, selects a simple random sample.
2) Systematic random sampling- The Systematic Random sampling is for all practical
purposes, an estimate of simple random sampling. In stratified random sampling
the population is first divided into a number of strata. Such strata may be based on
a single criterion. (e.g., educational level, yielding a number of strata corresponding
to the different levels of educational attainment) or on a combination or more
criteria (e.g., Age and sex).
3) Stratified random sampling- In stratified random sampling, a simple random sample

is taken from every stratum and sub samples are bought together to form the total
sample. In cluster sampling, the researcher firstly samples out from the population,
certain large groupings, i.e., “cluster”.
4) Cluster sampling method- A cluster is a collection of heterogeneous subjects

representing population. These cluster may be city-wise, households, or even
several geographical or social units. The sampling of clusters from the population
is done by simple or stratified random sampling techniques.
30
Sampling Plan for the Present Research Study:
Since, the population of Ulhasnagar is huge. So, keeping this constraint at place, the
respondents were selected on random basis through the different strata. Thus, random
sampling was used to collect the primary data.
2.5 Area of Study - Ulhasnagar:
Ulhasnagar is a city located, just 26 km from Thane City in Thane district, Maharashtra,
India. This city is a part of Mumbai Metropolitan Region managed by MMRDA. It had
an estimated population of 506,098 at the 2011 Census. Ulhasnagar is a municipal city
and the headquarters of the Tehsil bearing the same name. It has a suburban station on
the Central line of the Mumbai Suburban Railway.
The town covers an area of 13 square kilometers and is divided into 285 blocks. It is a
Centre to produce rayon silk, dyes, ready-made garments, electrical / electronic
appliances and confectionaries. The total length of roads and streets in the town is 352
kilometers. The town is served by underground and open-surface drainage, night soil
being disposed of by septic tank latrines. The town has a protected water supply through
MIDC. Sanctioned Water Quota at various tapping points is 112 MLD. Fire-fighting
service is also available in the town. There are sixty private hospitals with a total bed-
strength of 840 beds, three government hospitals with total bed-strength of 356 beds,
255 dispensaries / clinics, 100 RMP and a family planning Centre.
Ulhasnagar has some small businesses manufacturing denims. Some of the

manufacturers export jeans worldwide from Ulhasnagar. The city is also known for its
furniture market, cloth market and electronic market.
According to the 2011 Census of India, Ulhasnagar had a population of 506,098.

Ulhasnagar is the 22nd biggest city in Maharashtra and 88th in the country. Males
constituted 53% population and female 47%.
31
Figure 2.1: Ulhasnagar
Source: www.touristlink.com
2.6 Tools for analysis:
analysis is the process of recognizing of certain parameters along with identification of
or quantitative may:

further are used to lessening complexity. It makes description probable with the help of
32
numbers averages, percentages, means, standard deviation, etc. Exact relation between
two variables can be sharply stated. Analysis aids the research to pull reliable inference
of the situation that have not measured in full. Such inferences give answers to many
possible questions in research. Due to inference drawn with the help to statistical tolls
further evaluation and estimation is likely. Inferential data can be utilized to evaluate,
understand, and draw relationship between some variables. Such identification of
factors helps in analyzing and demonstrating hypothesis.
Tools used in present research study:
techniques include Finding out Valid Percentage and presentation of the same through
various Graphs and Diagrams. Graphs and Diagrams include Bar Graph and Pie
Diagram.
2.7 Scope and limitations of the study:
• Scope of the study:

This study throws light on Algorithmic trading strategies and the investors preference
towards the same. The scope of this study suggest certain basic concepts related to
Algorithmic trading along with its process, it also talks about the firms providing
Algorithmic trading, Investors preference towards Algorithmic trading over traditional
trading approach, conveniences while using it, and the level of accuracy as well as
reliability provided by Algorithmic trading.
• Limitations of the study:

1) This study is restricted only to the Ulhasnagar area. So, the results are constrained
to other areas.
2) This study is based on the prevailing investors, but the investors preference may
3) As the number of investors are huge, a simple size of 100 respondents is only
covered.
33
CHAPTER 3: LITERATURE REVIEW
SYNOPSIS:
3.1 Introduction
3.2 Review of Literature at International and National level
3.4 Gap Analysis
34
3.1 Introduction:
Review of literature is a critical summary of research on a topic of interest, often

prepared to put a research problem in a context. A review included a research report,
which include a brief literature review with their introduction. To provide readers with
a quick overview of the being addressed document the need for the new study &
demonstrate how it will contribute to existing evidence. Review of literature is
conducted to generate a theoretical and scientific knowledge about particulars
phenomenon and results in a synthesis of what is known and unknown about that
phenomenon. The primary purpose of literature is to gain a broad background that is
available related to problems in conducting research, the literature review facilitates
selecting a problem and purpose, developing a framework, and formulating a lesson
plan. Literature review is a key step in research process. Review of relevant literature
is an analysis and synthesis of research sources to generate a picture of what is known
about a particular situation and knowledge gaps that exist in the situation. To attempt
the goal in the present study, an attempt has been made to review and discuss the
literature.
It is a comprehensive summary of previous research on a topic. The literature review

surveys scholarly articles, books, and other sources relevant to a particular area of
research. The review should enumerate, describe, summarize, objectively evaluate and
clarify this previous research. It should give a theoretical base for the research and help
you (the author) determine the nature of your research. The literature review
acknowledges the work of previous researchers, and in so doing, assures the reader that
your work has been well conceived. It is assumed that by mentioning a previous work
in the field of study, that the author has read, evaluated, and assimilated that work into
the work at hand.
35
3.2 Review of Literature at International and National Level:
Boehmer, Fong and Wu (2015) in this study on algorithmic trading (AT)

intensity across 42 global markets from 2001 to 2011 reveals that while AT improves
liquidity and efficiency on average, it also increases short-term volatility. However, this
volatility rise isn't due to faster price adjustments or a preference for volatile markets
among algorithmic traders. Instead, these traders are linked to lower market quality.
Additionally, smaller stocks experience reduced liquidity and heightened volatility with
greater AT intensity, especially when market making is challenging. Co-location events
support the causal impact of AT on market quality. Overall, these findings highlight the
need for nuanced regulation that considers dynamic market conditions.
Hendershott and Riordan (2013) in this article the researchers investigate how
algorithmic traders (ATs) impact supply and demand for liquidity in the 30 equities that
make up the Deutscher Aktien Index on the Deutsche Boerse in January 2008. 52% of
market order volume and 64% of nonmarketable limit order volume are made up of
ATs. Compared to human traders, ATs actively monitor market liquidity. When liquidity
is cheap—that is, when bid-ask quotes are narrow—ATs take it in and provide it when
it is costly. ATs are more likely to start trading and are less inclined to cancel or submit
new orders when spreads are narrow. When spreads are large, ATs respond to events
even faster.
Bao, Nekrasova, Neugebauer and E. Riyanto (2022) in this chapter reviews

experimental research on the interaction between algorithmic and human trading in
experimental markets. It examines studies using algorithmic traders, specifically
computer agents, and experiments where human subjects have complete control over
trading algorithms. The chapter presents various types and behaviors of algorithmic
traders, including zero-intelligent traders, arbitragers, fundamentalists, adaptive
algorithms, and manipulators. It reveals that asset value and market state significantly
influence whether algorithm traders make more money than human traders. The chapter
also explores the psychological effects of dealing with algorithmic traders on investors.
36
Chaboud, Chiquoine, Hjalmarsson and Vegathe (2014) in this study examines

the impact of algorithmic trading (AT) on the foreign exchange market, revealing that
AT improves price efficiency by increasing the frequency of triangular arbitrage
opportunities and autocorrelation of high-frequency returns. However, it may also
increase adverse selection costs for slower traders. The correlation between algorithmic
traders' strategies is also found.
Robert Kissell (2013) in this study provides insights into developing and
implementing trading algorithms across asset classes. It covers market structure, pricing
formation, participant interactions, and advanced modeling techniques. The book
emphasizes risk management, consistency with investment goals, and offers a
framework for decision-making alignment.
Hendershott, M Jones and J Menkveld (2011) in their study say that algorithmic
trading and equity market liquidity have significantly increased over the past decade. A
study of New York Stock Exchange (NYSE) stocks found a positive relationship
between algorithmic trading and liquidity. The introduction of auto quoting on the
NYSE, which replaced manual quotes, provided quicker feedback to traders and
algorithms, leading to increased message traffic. Large-cap stocks saw narrow quoted
and effective spreads under auto quote and adverse selection declines.
Adegboye, Kampouridis, and Otero (2023) in this study suggest using a genetic
algorithm (GA) to combine regression and classification methods to predict trend
reversal to optimize several DC-based trading strategies. In terms of risk and return, the
GA algorithm beats all DC and non-DC benchmarks, proving that multi-threshold DCs
are a useful algorithmic trading strategy. The study demonstrates that trading with a
strategy that incorporates data from various DC thresholds significantly improves both
profit and risk using 200 monthly physical time datasets from 20 foreign currency
markets. According to the findings, DCs can compete with the physical time paradigm.
Chan and Ernest P. (2013) in this study provide insights into various winning
strategies in algorithmic trading and discuss their underlying rationale. The book covers
a wide array of strategies, from momentum-based to mean-reversion, and explores how
they can be applied effectively in different market conditions. It serves as a
37
comprehensive guide for both novice and experienced traders interested in algorithmic
trading.
Gomber and Peter (2011) in their publication delve into the phenomenon of
high-frequency trading (HFT), exploring its mechanics, strategies, and implications for
financial markets. It discusses the technological infrastructure required for HFT, its
impact on market dynamics, and regulatory considerations. The paper offers valuable
insights into the rapidly evolving landscape of modern trading practices.
Menkveld and Albert J. (2013) examine the role of high-frequency traders as

new market makers and their impact on market liquidity and efficiency. The paper
analyzes the strategies employed by HFT firms, their interactions with traditional
market makers, and the implications for market quality. It contributes to the ongoing
debate surrounding the effects of HFT on financial markets.
Chordia and Subrahmanyam (2015) here examines the impact of high-

frequency trading (HFT) on financial markets, focusing on its effects on market quality.
It synthesizes empirical studies and theoretical models to examine its effects on market
liquidity, price efficiency, and volatility. The review highlights HFT's potential benefits,
such as enhancing market liquidity, reducing transaction costs, and improving price
discovery. However, it also raises concerns about potential negative effects like market
manipulation, increased systemic risk, and unequal access to market information.
Nair and Vishnani (2017) in this paper investigate the growth of algorithmic
trading in the Indian financial markets, discussing its opportunities and challenges. It
examines the regulatory framework, technological advancements, and market dynamics
shaping algorithmic trading in India, highlighting its potential to enhance market
efficiency while also posing risks related to systemic stability and market integrity.
Goyal and Abhinav (2019) have Focused on the Indian stock market, this review
examines the adoption and implications of algorithmic trading. It explores the benefits
of algorithmic trading in terms of liquidity provision, transaction costs, and market
efficiency, while also addressing concerns related to market manipulation, regulatory
compliance, and technological infrastructure.
38
Agarwal and Devi (2018) here provide a comprehensive overview of

algorithmic trading in the Indian equity market. It discusses the evolution of algorithmic
trading, its impact on market liquidity, price discovery, and efficiency, as well as the
regulatory framework governing algorithmic trading activities in India.
Chan (2008) in this book offers a step-by-step guide to building an algorithmic

trading business, covering topics such as strategy development, back testing, and
implementation. The book provides practical advice for aspiring algorithmic traders,
emphasizing the importance of rigorous testing and risk management.
Aldridge (2013) here offers a practical guide to high-frequency trading (HFT),

exploring the technological infrastructure and algorithmic strategies employed by HFT
firms. The book examines the impact of HFT on market dynamics and regulatory
considerations, providing valuable insights for both practitioners and policymakers.
Johnson (2010) in his book explores the concepts of algorithmic trading and
direct market access (DMA), elucidating various algorithmic strategies such as trend-
following, mean reversion, and market-making. The book delves into the technical
aspects of algorithmic trading systems and their implementation, offering practical
guidance for traders and investors.
Aronson (2010) in his book emphasizes the importance of rigorous testing and
validation in algorithmic trading. It discusses various statistical techniques for
evaluating trading strategies and avoiding common pitfalls such as overfitting. The
book is a valuable resource for traders looking to develop robust and reliable trading
algorithms.
Jansen (2020) in his book focuses on the application of machine learning

techniques for developing systematic trading strategies. It covers topics such as feature
engineering, model validation, and portfolio construction using machine learning
algorithms. Additionally, the book discusses the integration of alternative data sources
and the challenges associated with data preprocessing and model deployment in
algorithmic trading systems.
39
3.3 Gap analysis:
Various research have been conducted at National and International level on the subject
matter. Most of these studies either are focused on the general segment of people or on
youth. No studies have been conducted on Algorithmic trading among the investors of
Ulhasnagar. Considering this gap, present study is undertaken.
40
CHAPTER 4: FINDINGS, ANALYSIS, AND INTERPRETATION
SYNOPSIS:
Data Analysis
Interpretation and presentation
Findings summary
41
Table 4.1: Age of the Respondents

Age Respondents Percentage
18 – 25 54 54
25 – 45 19 19
45 – 60 26 26
Above 60 1 1
Total 100 100
Graph 4.1: Age of the Respondents
Interpretation:
According to this chart among the total of 100 respondents, 54% respondents are from
the age group of 18 – 25, 19% respondents are from the age group of 25 – 45, 26%
respondents are from the age group of 45 – 60 and 1% respondent are from the age
group of above 60.
42
Table 4.2: Gender of the Respondents

Gender Respondents Percentage
Male 32 32
Female 68 68
Total 100 100
Graph 4.2: Gender of the Respondents
Interpretation:
According to the above chart among the 100 respondents, 32% respondents are Male,
and 68% respondents are Female.
43
Table 4.3: Occupation of the Respondents
Occupation Respondents Percentage

Student 47 47
Employed 44 44
Self employed 7 7
Retired 2 2
Total 100 100
Graph 4.3: Occupation of the Respondents
Interpretation:
students, 44% respondents are employed, 7% respondents are self employed and rest
2% respondents are retired.
44
Table 4.4: Annual Income of the Respondents
Annual Income Respondents Percentage

Under 2 lakhs 47 47
2 lakhs – 7 lakhs 41 41
Above 15 lakhs 1 1
Total 100 100
Graph 4.4: Annual Income of the Respondents
Interpretation:
According to the above chart among the total 100 respondents, 47% respondents belong
to the under 2 lakhs income group, 41% respondents belong to the 2 lakhs – 7 lakhs
income group, 11% respondents belong to the 7 lakhs – 15 lakhs income group and rest
1% respondent belong to the above 15 lakhs income group.
45
Table 4.5: How long have you been investing in financial markets?
How long have you been
Respondents Percentage
actively investing in
financial markets?
Less than 1 year 46 46
1 – 3 years 27 27
3 – 5 years 20 20
More than 5 years 7 7
Total 100 100
Graph 4.5: How long have you been investing in financial markets?
Interpretation:
According to the above chart among the 100 respondents, 46% respondents have been
investing for less than 1 year, 27% respondents have been investing for 1 – 3 years,
20% respondents have been investing for 3 – 5 years and 7% respondents have been
investing for more than 5 years.
46
Table 4.6: For which investment strategies do you primarily use algorithmic
trading strategies?
For which investment
strategies do you
primarily use algorithmic
trading strategies?
Short term 39 39
Long term 30 30
Both 31 31
Total 100 100
Graph 4.6: For which investment strategies do you primarily use algorithmic
trading strategies?
Interpretation:
prefer using algorithmic trading strategies for short term investments, 30% respondents
prefer for long term investments and the rest 31% respondents prefer for both type of
investments.
47
Table 4.7: What percentage of your portfolio is allocated to algorithmic trading

strategies?
what percentage of your
portfolio is allocated to
algorithmic trading
strategies?
Less than 10% 31 31
10 – 25% 27 27
26 – 50% 18 18
More than 50% 13 13
Nil 11 11
Total 100 100
Graph 4.7: What percentage of your portfolio is allocated to algorithmic trading

strategies?
Interpretation:
have allocated less than 10% of their portfolio to Algorithmic Trading strategies, 27%
respondents have allocated 10 – 25%, 18% respondents have allocated 26 – 50%, 13%
respondents have allocated more than 50% and 11% respondents do not prefer
allocating their portfolio to Algorithmic trading strategies.
48
Table 4.8: What influenced you to use algorithmic trading strategies?

What influenced you to use Respondents
algorithmic trading strategies?
Higher returns 37
Diversification of investment strategies 24
Reduced emotional bias 15
Automation and efficiency 14
Other 10
Total 100
Graph 4.8: What influenced you to use algorithmic trading strategies?
Interpretation:
were influenced by higher returns to use Algorithmic trading strategies, 24%
respondents were influenced by diversification of investment strategies factor, 15%
respondents were influenced by the factor of reduced emotional bias, 14% respondents
were influenced by automation and efficiency factor and rest 10% respondents were
influenced by various other factors.
49
Table 4.9: Which platform do you prefer for Algorithmic Trading?

Which platform do you
prefer for Algorithmic
Trading?
Zerodha Streak 24 24
Upstox Algo Lab 24 24
Tradetron 10 10
AlgoTraders 13 13
TradeSanta 8 8
Other 21 21
Total 100 100
Graph 4.9: Which platform do you prefer for Algorithmic Trading?
Zerodha Streak
21% 24%
Upstx Algo Lab
Tradetron
8%
AlgoTraders
13% TradeSanta
24%
10% Other
Interpretation:
prefer using Zerodha Streak for Algorithmic trading, 24% respondents prefer using
Upstox Algo Lab, 10% respondents prefer using Tradetron, 13% respondents prefer
using AlgoTraders, 8% respondents prefer using TradeSanta and the rest 21% prefer
using other platforms for Algorithmic trading.
50
Table 4.10: What concerns do you have about algorithmic trading?

What concerns do you
have about algorithmic
trading?
Risk of technological 25 25
failures or glitches
Over-reliance on historical 15 15
data
Lack of control 15 15
Ethical concerns 9 9
Regulatory compliance 13 13
Market manipulation 8 8
Other 15 15
Total 100 100
Graph 4.10: What concerns do you have about algorithmic trading?
Interpretation:
concerned about the risk of technological failures or glitches, 15% respondents are
concerned with over reliance on historical data, 15% respondents are concerned about
lack of control, 9% respondents have ethical concerns, 13% respondents are concerned
about regulatory compliance, 8% respondents are concerned about the market
manipulation and rest 15% respondents have other various concerns.
51
Table 4.11: On a scale of 1 to 5 how do you perceive the level of risk associated
with algorithmic trading?
On a scale of 1 to 5 how
do you perceive the level
of risk associated with
algorithmic trading?
1 (Low) 20 20
2 (Moderate) 10 10
3 (Neutral) 39 39
4 (High) 22 22
5 (Severe) 9 9
Total 100 100
Graph 4.11: On a scale of 1 to 5 how do you perceive the level of risk associated
with algorithmic trading?
Interpretation:
According to the above graph, among the total of 100 respondents, 20% respondents
perceive the risk at level 1 (low), 10% respondents perceive the risk at level 2
(moderate), 39% respondents perceive the risk at level 3 (neutral), 22% respondents
perceive the risk at level 4 (high), 9% respondents perceive the risk at level 5 (severe).
52
Table 4.12: On a scale of 1 to 5 how would you rate the performance of

algorithmic trading strategies in your portfolio?
On a scale of 1 to 5 how
would you rate the
performance of
algorithmic trading
strategies in your
portfolio?
1 (poor) 17 17
2 (fair) 17 17
3 (neutral) 34 34
4 (good) 24 24
5 (excellent) 8 8
Total 100 100
Graph 4.12: On a scale of 1 to 5 how would you rate the performance of

algorithmic trading strategies in your portfolio?
Interpretation:
rate the performance of algorithmic trading in their portfolio as 1 (poor), 17%
respondents rate it as 2 (fair), 34% respondents rate it as 3 (neutral), 24% respondents
rate it as 4 (good) and the rest 8% rate it as 5 (excellent).
53
Table 4.13: Overall, how satisfied are you with your experience of using
Overall, how satisfied are
you with your experience
of using algorithmic
trading strategies?
Highly dissatisfied 9 9
Dissatisfied 12 12
Neutral 47 47
Satisfied 19 19
Highly satisfied 13 13
Total 100 100
Graph 4.13: Overall, how satisfied are you with your experience of using
Interpretation:
According to the above chart, among the total of 100 respondents, 9% respondents are
highly dissatisfied with their experience of algorithmic trading strategies, 12%
respondents are dissatisfied, 47% respondents are neutral, 19% respondents are
satisfied, and the rest 13% respondents are highly satisfied.
54
• Findings Summary:
1) According to the study majority of respondents i.e., 54% fall in the age bracket of
18 – 25 with majority of them i.e., 68% being females and are students (47%).
2) It is found that majority of this respondents i.e., 47% fall in the income group of
under 2 lakhs.
3) Out of all the respondents, respondents investing in financial market for less than 1
year are more i.e., 46% and prefer Algorithmic trading for short term investment
strategies with majority being 39%.
4) Majority of the respondents have 10 – 25% of their portfolio dedicated to

Algorithmic trading strategies i.e., 27%.
5) The survey highlights that most of the respondents i.e., 37% were influenced by the
higher returns to use Algorithmic trading.
6) 24% of the respondents prefer using Zerodha Streak and Upstox Algo Lab for
Algorithmic trading.
7) 25% of the respondents think that risk of technological failures and glitches is the
main concern while using Algorithmic trading.
8) 39% respondents perceive the risk level of Algorithmic trading to be Neutral.
9) 34% respondents rate the performance of Algorithmic trading as Neutral.
10) 47% respondents are neutrally satisfied with their experience of using Algorithmic
trading.
55
CHAPTER 5 CONCLUSION AND RECOMMENDATIONS
SYNOPSIS:
5.1 Conclusion
5.2 Recommendations
56
5.1 Conclusion:
Algorithmic trading, also known as algo trading or automated trading, is a rapidly

growing trend in financial markets due to its potential for higher returns, reduced
emotional bias, and automated trading processes. However, its adoption is not uniform
across investors, and understanding these nuances is crucial for investors, financial
institutions, and regulators to make informed decisions and formulate appropriate
policies. This paper analyzes survey data related to algorithmic trading to gain insights
into investor preferences, perceptions, and concerns.
Despite its growing popularity, algorithmic trading faces challenges, including

technological, ethical, and regulatory challenges. Addressing these concerns is essential
to foster trust and confidence in algorithmic trading. Understanding investors'
preferences and experiences is crucial for tailoring algorithmic trading strategies and
platforms.
The analysis emphasizes the need for continuous monitoring, adaptation, and
innovation to navigate evolving market dynamics effectively. It also emphasizes the
importance of investor education and awareness initiatives to empower investors with
the knowledge and skills needed to make informed decisions in algorithmic trading.
To capitalize on opportunities presented by algorithmic trading while mitigating

associated risks, stakeholders must prioritize transparency, education, and innovation.
This includes fostering greater awareness of algorithmic trading practices, promoting
responsible use of technology, and fostering collaboration between investors, industry
participants, and regulatory authorities.
In conclusion, algorithmic trading represents a powerful convergence of technology

and finance, offering opportunities for enhanced decision-making, improved efficiency,
and greater profitability in financial markets. As technology continues to evolve, the
role of AI in algorithmic trading is expected to grow, shaping the future of investment
and trading practices.
57
5.2 Recommendations:
Based on the research conducted on the demographics, preferences, concerns, and

perceptions related to algorithmic trading, we can derive several suggestions to enhance
the understanding and utilization of algorithmic trading strategies.
1) Enhanced Transparency Measures: Implementing stricter regulations and standards

for transparency in algorithmic trading processes to ensure investors have clear
insights into the algorithms used and their impact on market dynamics.
2) Investor Education Initiatives: Developing comprehensive educational programs

and resources to empower investors with the knowledge and skills needed to
understand and navigate algorithmic trading effectively, thereby reducing the risk
of uninformed decision-making.
3) Ethical Frameworks: Establishing ethical guidelines and frameworks for

algorithmic trading practices to promote responsible and fair use of technology,
including considerations for market manipulation, fairness, and social impact.
4) Continuous Monitoring and Adaptation: Instituting mechanisms for continuous

monitoring of algorithmic trading activities and market trends to enable timely
adaptation and mitigation of emerging risks and challenges.
5) Collaborative Efforts: Encouraging collaboration between investors, financial

institutions, industry participants, and regulatory authorities to foster a holistic
approach to addressing the technological, ethical, and regulatory challenges
associated with algorithmic trading.
6) Innovation and Research: Supporting ongoing innovation and research efforts in

algorithmic trading technology, including advancements in AI and machine
learning, to stay ahead of evolving market dynamics and maintain competitiveness.
58
7) Risk Management Practices: Strengthening risk management practices within

financial institutions and investment firms to effectively manage the risks
associated with algorithmic trading, including cybersecurity, operational, and
systemic risks.
59
BIBLIOGRAPHY
REFERENCES:
1) Ekkehart Boehmer, Kingsley Fong, Julie Wu (2015). “International evidence on
algorithmic trading”, San Diego Meetings Paper.
2) Terrence Hendershott and Ryan Riordan (2013). “Algorithmic Trading and the
Market for Liquidity” Journal of Financial and Quantitative Analysis, Volume 48,
Issue 4.
3) Te Bao, Elizaveta Nekrasova, Tibor Neugebauer, and Yohanes E. Riyanto (2022).

“Algorithmic trading in experimental markets with human traders: A literature
survey”
4) Robert Kissell (2013) “The science of algorithmic trading and portfolio

management”
5) Terrence Hendershott, Charles M Jones, Albert J Menkveld (2011). “Does

algorithmic trading improve liquidity?” The Journal of Finance volume 66, issue 1.
6) Adesola Adegboye, Michael Kampouridis, Fernando Otero (2023) “Algorithmic

trading with directional changes” Artificial intelligence review volume 56.
7) Chan, Ernest P. (2013) “Algorithmic trading: Winning strategies and their rationale"
8) Gomber, P., Arndt, B., Lutat, M., & Uhle, T. (2011). “High-frequency trading”.
Deutsche Boerse AG, 5.
9) Menkveld, A. J. (2013). “High-frequency trading and the new market makers”.

Journal of Financial Markets, 16(4), 712-740.
10) Chordia, T., Goyal, A., & Subrahmanyam, A. (2015). “High-frequency trading: A
literature review”. Annual Review of Financial Economics, 7, 201-218.
60
11) Nair, A. K., & Vishnani, K. (2017). “Algorithmic trading in India: Opportunities
and challenges”. Journal of Advances in Management Research, 14(1), 104-117.
12) Goyal, A., & Jain, P. (2019). “Algorithmic trading in Indian stock market: A
review”. International Journal of Management Studies, 6(1), 51-57.
13) Agarwal, S., & Devi, K. A. (2018). “Algorithmic trading in Indian equity market:
A comprehensive literature review”. Journal of Commerce and Accounting
Research, 7(4), 7-12.
14) Chan, Ernest. (2008) “Quantitative Trading: How to Build Your Own Algorithmic
Trading Business”.
15) Aldridge, Irene (2013) “High-Frequency Trading: A Practical Guide to Algorithmic

Strategies and Trading Systems”.
16) Johnson, Barry (2010) “Algorithmic Trading and DMA: An Introduction to Direct
Access Trading Strategies”.
17) David A. Aronson (2010) “Algorithmic trading: The play-at-home version”.
18) Stefan Jansen (2020). “Machine Learning for Algorithmic Trading: Predictive
Models to Extract Signals from Market and Alternative Data for Systematic Trading
Strategies”.
WEBSITES:
https://en.wikipedia.org/wiki/Algorithmic_trading
https://www.fisdom.com/algo-trading/
https://www.investopedia.com/terms/a/algorithmictrading.asp
https://tradetron.tech/blog/algo-trading-vs-traditional-trading/
https://marketsetup.in/posts/algo-trading-companies/
61
ANNEXURE
Questionnaire:
1) Name of the Respondent
2) Age of the Respondents

• 18 – 25
• 25 – 45
• 45 – 60
• Above 60
3) Gender of the Respondents

• Male
• Female

• Student
• Employed
• Self employed
• Retired
5) Annual Income of the Respondent

• Under 2 lakhs
• 2 lakhs – 7 lakhs
• Above 15 lakhs
62
6) How long have you been actively investing in financial markets?

• Less than 1 year
• 1 – 3 years
• 3 – 5 years
• More than 5 years
7) For which investment strategies do you primarily use Algorithmic trading

strategies?
• Short term
• Long term
• Both
8) What percentage of your portfolio is allocated to Algorithmic trading strategies?

• Less than 10%
• 10 – 25%
• 26 – 50%
• More than 50%
• Nil
9) What influenced you to use Algorithmic trading strategies?

• Higher returns
• Diversification of investment strategies
• Reduced emotional bias
• Automation and efficiency
• Other
63
10) Which platform do you prefer for Algorithmic trading?

• Zerodha Streak
• Upstox Algo Lab
• Tradetron
• AlgoTraders
• TradeSanta
• Other
11) What concerns do you have about Algorithmic Trading?

• Risk of technological failures and glitches
• Over reliance on historical data
• Lack of control
• Ethical concerns
• Regulatory compliance
• Market manipulation
• Other
12) On a scale of 1 to 5 how do you perceive the level of risk associated with
Algorithmic trading?
• 1 (low)
• 2 (moderate)
• 3 (neutral)
• 4 (high)
• 5 (severe)
13) On a scale of 1 to 5 how would you rate the performance of Algorithmic trading
strategies in your portfolio?
• 1 (poor)
• 2 (fair)
• 3 (neutral)
• 4 (good)
• 5 (excellent)
64
14) Overall, how satisfied are you with your experience of using Algorithmic trading
strategies?
• Highly dissatisfied
• Dissatisfied
• Neutral
• Satisfied
• Highly satisfied
65
“CUSTOMER PERCEPTION TOWARDS BELLAVITA PRODUCTS”
“A Study on Customer Perception Towards BELLAVITA Products"
By
Mr. Atharva Rajesh Sarolkar
(Roll No. 202)

Mrs. Jiya Chawla

Ulhasnagar
April, 2024
i

(MAHARASHTRA)
Certificate
This is to certify that Mr. Atharva Rajesh Sarolkar has worked and duly completed
of Commerce in the subject of Marketing and his project is entitled, “A Study on the
Customer Perception Towards BELLAVITA Products " under my supervision.
investigations.
Mrs. Jiya Chawla

Guiding Teacher
ii
I the undersigned Mr. Atharva Rajesh Sarolkar here by, declare that the work
embodied in this project work titled “A Study on the Customer Perception
Towards BELLAVITA Products" forms my own contribution to the research work
carried out under the guidance of Mrs. Jiya Chawla, is a result of my own research
work and has not been previously submitted to any other University for any other
Degree/ Diploma to this or any other University.
Mr. Atharva Rajesh Sarolkar

(Roll No. 202)
Certified by,
Mrs. Jiya Chawla

Guiding Teacher
iii
Evaluation
This Research Project on “A Study on the Customer Perception Towards

BELLAVITA Products" submitted by Mr. Atharva Rajesh Sarolkar of TYBMS
(Semester – VI) is evaluated as per guidelines of University of Mumbai, via Circular
No. UG/89 of 2018-19 on Revised Syllabus - CBCS for the TYBMS (Semester – V
and VI) w.e.f. academic year 2023-24.
External Examiner:
Name: _____________________________________
Signature: _____________________________________
Place: Ulhasnagar Date: April, 2024
Internal Examiner:
Name: _____________________________________
Signature: _____________________________________
iv
Acknowledgement
this project.
I would like to thank my Principal, Dr. Manju Lalwani Pathak for providing the
necessary facilities required for completion of this project.
I would also like to express my sincere gratitude towards my project guide Mrs. Jiya
Chawla whose guidance and care made the project successful.
me throughout my project and helped me to complete the project within the time
frame.
v
Executive Summary
 Chapter 1 covers the history of Perfumery around the world as well as in

India, about BELLAVITA, Trends and Evolution of perfume industry globally
and in India, Marketing strategies of BELLAVITA, Natural v/s Synthetic
fragrances, Factors that influence buying behaviour among customers
 Chapter 2 covers the Objectives, Methods of Data Collection, Sample Design

and Area of Study.
vi
Sr. Content Page. no

no
1. Preliminary i-x
Title Sheet i
Certificate ii
Declaration iii
Evaluation iv
Acknowledgement v
Contents
vii-viii
List of tables
ix
List of Figures
x
2. Chapter 1 Introduction 9-53

1.1 PERFUMES AND ITS HISTORY. 10-11
1.2 ABOUT BELLAVITA. 11-13
1.3 COMPETITORS OF BELLAVITA. 13-14
1.4 MEANING OF CUSTOMER PREFERENCES. 15-16
1.5 PERFUME INDUSTRY IN INDIA. 16-18
1.6 TRENDS IN PERFUME INDUSTRY. 18-21
1.7 EVOLUTION OF PERFUME INDUSTRY IN INDIA. 22-25
1.8 PERFUME AND SKINCARE MARKET GLOBALLY. 25-28
1.9 PERFUME AND SKINCARE MARKET IN INDIA. 28-31
1.10 BELLAVITA’S VISION AND MISSION. 31-32
1.11 MARKETING STRATEGY USED BY BELLAVITA. 32-33
1.12 FACTORS INFLUENCING BUYING BEHAVIOUR 34-38
AMONG CUSTOMERS.
1.13 PERCEPTION OF LUXURY v/s MASS-MARKET
38-42
FRAGRANCES.
1.14 PERCEPTION OF NATURAL v/s SYNTHETIC 43-47

FRAGRANCES.
7
1.15 FRAGRANCE PREFERENCES AND TRENDS. 47-53
3. Chapter 2 Research Methodology 53-65

2.1 INTRODUCTION 55-56
2.2 OBJECTIVES 56-57
2.3 SOURCES/METHODS OF DATA COLLECTION 57-58
2.4 SAMPLING TECHNIQUES 59-61
2.5 AREA OF STUDY 62-64
2.6 TOOL FOR ANALYSIS 64-65
4. Chapter 3 Review Of Literature 66-76

3.1 INTRODUCTION 67-68
3.2 LITERATURE REVIEW 69-75
3.3 GAP ANALYSIS 76
5. Chapter 4 Finding, Analysis And Data 77-98

Interpretation
4.1 ANALYSIS AND DATA INTERPRETATION 78-97
4.2 FINDINGS 98
6. Chapter 5 Conclusion And Recommendation 99-107

5.1 CONCLUSION 100-106
5.2 RECOMMENDATION 107
7. Bibliography 108-109
8. Annexures 110-114
QUESTIONNAIRE
8
1.1 PERFUMES AND ITS HISTORY.
1.2 ABOUT BELLAVITA.

1.3 COMPETITORS OF BELLAVITA.
1.4 MEANING OF CUSTOMER PREFERENCES.
1.5 PERFUME INDUSTRY IN INDIA.
1.6 TRENDS IN PERFUME INDUSTRY.
1.7 EVOLUTION OF PERFUME INDUSTRY IN INDIA.
1.8 PERFUME AND SKINCARE MARKET GLOBALLY.
1.9 PERFUME AND SKINCARE MARKET IN INDIA.
1.10 BELLAVITA’S VISION AND MISSION.
1.11 MARKETING STRATEGY USED BY BELLAVITA.
1.12 FACTORS INFLUENCING BUYING BEHAVIOUR AMONG

CUSTOMERS.
1.13 PERCEPTION OF LUXURY v/s MASS-MARKET FRAGRANCES.
1.14 PERCEPTION OF NATURAL v/s SYNTHETIC FRAGRANCES.
1.15 FRAGRANCE PREFERENCES AND TRENDS.
9
CHAPTER 1.1: PERFUMES AND ITS HISTORY
Perfumes have been known to exist in some of the earliest human civilizations, either
through ancient texts or from archaeological digs. The word perfume used today
derives from the Latin perfumum, meaning “through smoke”. Modern perfumery
began in the late 19th Century with the commercial synthesis of aroma compounds
such as vanillin, which allowed for the composition of perfumes with smells
previously unattainable solely from natural aromatics alone. Perfumery, or the art of
making perfumes, began in ancient Mesopotamia and Egypt and was further refined
by the Romans and Persians. The world’s first recorded chemist is considered to be a
woman named Tapputi, a perfume maker who was mentioned in a cuneiform tablet
from the 2nd Millenium BC in Mesopotamia. She distilled flowers, oils and calamus
with other aromatics then filtered and put them back in the still several times. In 2005,
archaeologists uncovered what are believed to be the world’s oldest perfumes in
Pyrgos, Cyprus
The art of perfumery was known in Western Europe ever since 1221. Hungarians
produced in 1370 a perfume made of scented oils blended in alcohol solution at the
command of Queen Elizabeth of Hungary, best known as Hungary Water. France
quickly became one of the European centres of perfume and cosmetic manufacture.
Cultivation of flowers for their perfume essence, which begun in the 14th Century,
grew into a major industry in the south of France. Between the 16 th and 17th Century,
perfumes were used primarily by the wealthy to mask body odours resulting from
infrequent bathing. Partly due to this patronage, the perfumery industry was created.
In Germany, Italian barber Giovanni Paolo Feminis created a perfume water called
Aqua Admirable, today best known as Eau De Cologne, and his nephew Johnan Maria
Faria (Giovanni Maria Farina) in 1732 took over the business. By the 18 th Century,
aromatic plants were being grown in the Grasse region of France, in Sicily and in
Calabaria, Italy to provide the growing perfume industry with raw materials. Even
today, Italy and France remain the centre of the European perfume design and trade.
10
India has a vast history of perfume and aromatic scents; it has been in use for ages. In
India perfumes and scented articles were in use from pre - vedic and vedic periods for
religious practices, social customs, and domestic rituals and later gradually became
essential part of human life. Its evidences have also been found in various Indian
literatures such as Brihat Samhita, various kind of formulas are written by
Varahamihira, which is also considered as one of the oldest texts of India. Many of the
scented materials were also mentioned in ancient Ayurvedic texts. In Charaka
Samhita, Susruta Samhita, Ashtanga Hridaya, Ashtanga Sangraha etc., many scented
materials and perfumes were used for improving the complexion and also as
deodorant. Kautilya’s Arthashastra have the descriptions of many fragrant drugs,
which were used in cosmetics like Sandalwood, Agaru (Aquilaria agallocha Roxb.)
and Taila Parnika (Eucalyptus).
Perfume is a mixture of fragrant oils or aroma compounds fixtures and solvents used
to give the human body, animals, objects and living spaces “a pleasant scent”, they are
like cherry on the cake in personal grooming. They play a very important role
throughout the history. Like many other personal grooming items, the purchasing
decision for perfumes is also complex comprising of budget, price, brand, etc. This
study is considered in CHM College, to understand the factors which interplay during
the purchase of perfume and influential on students.
CHAPTER 1.2: ABOUT BELLAVITA
Perfume is a mixture of fragrant essential oils or aroma compounds fixtures and

solvents used to give the human body, animals, objects, and living spaces “a pleasant
scent”, they are like cherry on the cake in personal grooming .They play
a very important role throughout the history. Like many other personal
grooming and beauty items ,the purchasing decision for perfumes is also
complex comprising of budget, price brand etc.. This study is considered in
CHM College, to understand the factors which interplay during the purchase
of perfume and influential on consumers. The outcomes have confirmed that
11
consumers are willing to spend their share of wallet if fragrance of high quality are
offered with affordable price. If the experience of the consumer with any
perfume is satisfactory then it will result in repeated purchases and loyalty.
BELLAVITA Organic or 'The Good Life’ is a leading natural beauty and skincare
brand committed to building handcrafted, natural solutions invigorated by the natural
elements of the earth and ancient skin and hair care practices. As a brand, they
encourage their new-age consumers to analyse their skin and feed it accordingly. They
aspire to satisfy and preserve your body's necessities using environmentally
responsible ingredients. They adore delivering regime-oriented skincare products and
services with round-the-clock expertise navigating you through every step of your
self-care journey. What makes them unique, BELLAVITA Organic impersonates
authentic Indian traditional herbs, driven by state-of-an-art and legacy-driven
expertise-moulding pure, authentic, natural and eco-friendly products. For our service,
they cherish and curate the sprouts of our mother earth. They believe in guiding and
protecting the customers via our natural products that proudly stand natural and
unadulterated.
IDAM Natural Wellness Private Ltd. is the legal name of the company and its
headquarters are located at Gurugram, Haryana, India. BELLAVITA was founded in
the year 2018 and employs over 200 workers. Aakash Anand and Aashima Anand are
the Co-Founders of the company while Aakash Anand is also the CEO. BELLAVITA
has raised a total of $1.7M from Ananta Capital. Within 18 months of foraying into
the fragrance category, the monthly revenue of the brand saw an exponential growth
from Rs. 25 Lakh per month to Rs. 45 Crore per month.
BELLAVITA is a fragrance-forward brand that creates world-class luxury

perfumes, bath and body products and skincare that feel good and smell even
better. Their perfumes are perfect to make us the centre of attention, be it day
or night. Their best-selling perfumes are infused in our bath and body ranges
so that we smell awesome straight from the shower. Made with imported
12
perfume oils from France, Spain and Italy, BELLAVITA is single-mindedly

and completely obsessed with making us smell fresh as we power through the
day.
CHAPTER 1.3: COMPETITORS OF BELLAVITA.
 Mamaearth- Internet first brand offering multi-category organic beauty care

products. The company offers a range of products including shampoos,
conditioners, body lotions, face wash, body wash, moisturizers, lip balms, and
more. It also offers baby care products and colour cosmetics like lipsticks, lip
balms, foundation, concealers, and more.
 Plum- Internet first brand offering organic skincare products. Users can
browse through product type or skin type and shop for skincare, body care,
makeup, haircare products. The company claims that the products are vegan
and don't contain toxic ingredients.
 Pureplay Skin Sciences- Online discovery platform offering beauty & personal
care products. They offer products under categories such as skincare and
grooming products.
13
 Nat Habit- Nat Habit is an internet-first brand offering beauty & skincare
products. The product catalogue includes face masks, face packs, deep
cleansing lotion, hair products, bath products, etc. The products offered are
suitable for all types of skins. The products are made of natural ingredients &
eco-friendly in nature. The company also offers free samples.
 Juicy Chemistry- Juicy Chemistry is an online private label brand that sells
skin and hair care products. The company claims to manufacture handmade,
natural, and vegan products. The company also sells cleansers, toners,
moisturizers, shampoos, soaps, body masks, gels, essential oils, etc.
 T.A.C- Internet-first brand offering multi-category ayurvedic-based beauty

products. The product catalogue includes face care, body care, hair care, lip
care, colour cosmetics, and more. It also offers beauty products for skin
dullness, ache, hair fall, dandruff, and more. The company claims that all its
products are free of toxin and chemicals.
 WOW Skin Science- Internet-first brand offering organic beauty products. The
product catalogue includes skincare products, hair care, bath & body care
products, hygiene products, and more. The company claims that the products
don't include parabens, sulphates, colour, or silicones.
 Earth Rhythm- Earth Rhythm is an internet-first brand offering multi-category

organic beauty products. It offers products for face, hair care, lips, makeup,
etc. The product catalogue includes face masks, toner, hair oil, shampoo &
conditioner, lipsticks, lip balms, and more. The company claims to offer
vegan, cruelty-free, no artificial fragrance, and biodegradable products.
 Arata- Internet-first brand of multi category beauty care products. Its

catalogue includes body wash, hair creams, shampoo, hair gel, lip balms,
skincare products, etc. The company claims to offer natural, vegan, and
cruelty-free beauty products.
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CHAPTER 1.4: MEANING OF CUSTOMER PREFERENCES
Customer preference refers to the specific choices, tastes and inclinations exhibited by
individual customers or a target market segment when selecting products, services or
brands. These preferences can be influenced by a variety of factors, including
personal values, needs, past experiences, marketing messages, peer influence and
social trends.
Understanding customer preferences is crucial for businesses because it allows them

to tailor their offerings to the better meet the desires and expectations of their target
audience. By identifying and accommodating customer preferences, business can
enhance customer satisfaction, build brand loyalty and ultimately increase sales and
profitability.
By analysing customer preferences through market research, surveys, feedback and

sales data, businesses can gain valuable insights that inform product development,
marketing strategies and customer service efforts. This proactive approach can help
businesses stay competitive and responsive to evolving consumer needs and
preference. Keeping track of customer preferences is essential for the longevity and
success of any business.
Customer preferences can be manifested in various forms such as personalization,

cultural & demographic factors, convenience & accessibility, product features, brand
affinity, buying behaviour and communication channels. By considering these
additional factors, businesses can gain deeper understanding of customer preferences
and develop more effective strategies for meeting customer needs & expectations.
15
CHAPTER 1.5: PERFUME INDUSTRY IN INDIA
The perfume industry in India has been experiencing significant growth and
transformation over the years. Here is an overview of the perfume industry in India,
including key trends, market dynamics, and factors influencing its growth:
1. Market Size and Growth: The perfume market in India has been steadily
growing, driven by factors such as increasing disposable income, changing
lifestyles, and a growing awareness of personal grooming and hygiene.
According to various reports, the Indian perfume market is expected to
continue growing at a healthy rate in the coming years.
2. Consumer Preferences: Indian consumers are becoming more discerning about

fragrances, with a preference for both traditional and modern scents. While
traditional fragrances such as attar and ittar remain popular among certain
segments of the population, there is also a growing demand for Western-style
perfumes and luxury brands.
3. Shift towards Premium and Luxury Fragrances: With rising incomes and
changing consumer perceptions, there has been a noticeable shift towards
premium and luxury fragrances in India. International perfume brands have
16
been expanding their presence in the Indian market to cater to the growing
demand for high-end products.
4. Celebrity Endorsements and Branding: Celebrity endorsements play a

significant role in shaping consumer perceptions and driving sales in the
Indian perfume industry. Many perfume brands collaborate with Bollywood
celebrities, sports personalities, and influencers to promote their products and
reach a wider audience.
5. E-commerce Boom: The proliferation of e-commerce platforms has

contributed to the growth of the perfume industry in India by providing
consumers with greater access to a wide range of products and brands. Online
retail channels offer convenience, competitive pricing, and access to customer
reviews, driving sales in the perfume market.
6. Rise of Niche and Artisanal Fragrances: Alongside mainstream perfume

brands, there is a growing interest in niche and artisanal fragrances in India.
Consumers are increasingly seeking unique and personalized scent
experiences, leading to the emergence of niche perfume brands and boutique
fragrance houses.
7. Innovation and Product Diversification: Perfume manufacturers in India are

focusing on innovation and product diversification to cater to diverse
consumer preferences. This includes the development of new fragrance
compositions, packaging designs, and product formulations to meet evolving
market trends.
8. Regulatory Framework: The perfume industry in India is subject to various

regulations and standards governing the manufacturing, labeling, and
marketing of perfumes. Compliance with safety and quality standards is
essential for perfume manufacturers to ensure consumer safety and maintain
market credibility.
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Overall, the perfume industry in India presents lucrative opportunities for both
domestic and international players, driven by changing consumer lifestyles, increasing
disposable income, and evolving preferences for fragrance products. As the market
continues to mature, companies are likely to focus on innovation, branding, and
distribution strategies to capitalize on growth prospects in the Indian perfume market.
CHAPTER 1.6: TRENDS IN PERFUME INDUSTRY
Several trends were shaping the perfume industry. In the context of industry, "trends"
refer to the general direction or pattern of changes, developments, or shifts in various
aspects of a particular sector over time. These trends can encompass a wide range of
factors, including consumer preferences, technological advancements, market
dynamics, regulatory changes, and societal influences.
18
Understanding industry trends is crucial for businesses as they provide valuable

insights into the evolving landscape and help companies anticipate and adapt to
changes. By identifying and analysing trends, businesses can stay competitive,
capitalize on emerging opportunities, mitigate risks, and make informed decisions
about product development, marketing strategies, resource allocation, and overall
business strategy.
Industry trends can vary significantly depending on the sector, market conditions, and
external factors. Monitoring and interpreting these trends require continuous
observation, data analysis, and contextual understanding to effectively navigate the
complexities of the industry and position businesses for success.
1. Sustainability: Consumers were increasingly concerned about the

environmental impact of the perfume industry. Brands were focusing on
sustainable sourcing of ingredients, eco-friendly packaging, and reducing
carbon footprints in production processes.
2. Customization: Personalization and customization were gaining popularity.

Brands were offering bespoke fragrance experiences where customers could
create their own unique scents tailored to their preferences.
3. Wellness and Naturals: There was a growing demand for natural and organic
fragrances as consumers became more health-conscious. Perfume brands were
incorporating natural ingredients and avoiding synthetic chemicals to cater to
this trend.
4. Digital Innovation: Technology was being integrated into the perfume

industry, with virtual fragrance experiences, augmented reality (AR) for
testing scents online, and AI-driven scent recommendations becoming more
common.
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5. Gender Fluidity: Traditional gender norms were being challenged, leading to a

rise in gender-neutral or unisex fragrances. Perfume brands were increasingly
blurring the lines between traditionally masculine and feminine scents.
6. Niche and Artisanal Fragrances: Consumers were showing interest in unique

and niche fragrances crafted by independent perfumers or artisanal brands.
These perfumes often offered distinctive scents and stories, appealing to
consumers seeking individuality.
7. Social Media Influences: Social media platforms were playing a significant

role in shaping perfume trends, with influencers and online communities
driving consumer preferences and brand visibility.
8. Wellness Integration: Perfumes were being marketed not just as cosmetic

products but also as tools for enhancing mental well-being and mood.
Ingredients with aromatherapeutic properties were being highlighted for their
stress-relieving or mood-boosting benefits.
9. Transparency and Traceability: Consumers were becoming more interested in

knowing the journey of their perfume from ingredients sourcing to production.
Brands were responding by providing transparent information about their
supply chains, ingredient origins, and manufacturing processes.
10. Multi-sensory Experiences: Perfume brands were exploring ways to engage

consumers beyond just the sense of smell. This included incorporating visual
elements such as creative packaging and branding, as well as tactile
experiences through textured bottles or innovative application methods.
11. Cultural Influences: With globalization and increased cultural exchange, there
was a rise in perfumes inspired by diverse cultural traditions and exotic
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locales. Brands were drawing inspiration from different regions, rituals, and
ingredients to create unique fragrance experiences.
12. Health and Safety Concerns: As awareness about the potential health risks of
certain fragrance ingredients grew, consumers were seeking products that were
free from harmful chemicals such as phthalates and parabens. Perfume brands
were responding by formulating safer alternatives and emphasizing ingredient
safety in their marketing.
13. Collaborations and Limited Editions: Perfume brands were collaborating with
celebrities, fashion designers, and artists to create limited edition or signature
fragrances. These collaborations not only attracted attention but also appealed
to collectors and fans of the collabo`rators.
14. E-commerce Growth: The shift towards online shopping was impacting the
perfume industry, with more consumers purchasing fragrances through e-
commerce channels. Brands were optimizing their online presence, offering
virtual try-on experiences, and providing convenient delivery options to cater
to digital-savvy consumers.
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CHAPTER 1.7: EVOLUTION OF PERFUME INDUSTRY IN

INDIA
The perfume industry in India has undergone significant evolution over the years,
influenced by factors such as changing consumer preferences, economic growth,
globalization, and technological advancements. Here's a brief overview of the
evolution of the perfume industry in India:
1. Traditional Fragrance Heritage: India has a rich tradition of using

fragrances dating back centuries, with the use of natural ingredients like
sandalwood, jasmine, rose, and spices in religious rituals, ceremonies, and
personal grooming practices. Traditional Indian perfumery, known as attar
or ittar, involves the distillation of botanical extracts to produce fragrant
oils.
2. Colonial Influence: During the colonial era, India's perfume industry was
influenced by European fragrances introduced by the British and other
colonial powers. Western-style perfumes gained popularity among the
urban elite, leading to the establishment of perfume shops and
manufacturers catering to this segment.
3. Emergence of Modern Perfumery: With India's economic liberalization in

the 1990s and the subsequent growth of the middle class, there was a surge
in demand for branded perfumes and personal care products. Domestic and
international perfume brands began entering the Indian market, offering a
wide range of fragrances to cater to diverse consumer preferences.
4. Shift towards Premiumization: As disposable incomes rose and consumer

lifestyles evolved, there was a noticeable shift towards premium and
luxury fragrances in India. Consumers became more discerning about
fragrance quality, packaging, and brand image, leading to the proliferation
of upscale perfume brands and designer fragrances in the market.
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5. Rise of Indigenous Brands: Alongside international players, indigenous

perfume brands started gaining traction, leveraging India's rich botanical
heritage and traditional fragrance knowledge. These brands focused on
incorporating natural and culturally relevant ingredients into their
perfumes, appealing to both domestic and international consumers seeking
authenticity and uniqueness.
6. Celebrity and Designer Fragrances: Celebrity-endorsed and designer

fragrances became increasingly popular in India, with Bollywood stars and
fashion icons launching their own perfume lines. These collaborations
helped create buzz and appeal among consumers, driving sales and brand
visibility in a competitive market.
7. Expansion of Distribution Channels: The perfume industry witnessed a

diversification of distribution channels, including the growth of specialty
perfume stores, department stores, online retailers, and beauty salons. E-
commerce platforms played a significant role in expanding access to a
wider range of perfumes and reaching consumers in tier 2 and tier 3 cities.
8. Focus on Innovation and Differentiation: Perfume brands in India have

been focusing on innovation and differentiation to stand out in a crowded
market. This includes offering unique fragrance formulations, personalized
scent experiences, and eco-friendly packaging solutions to cater to
changing consumer preferences and sustainability concerns.
9. Rising Demand for Natural and Organic Perfumes: With increasing

awareness about health and environmental sustainability, there has been a
growing demand for natural and organic perfumes in India. Brands are
responding by offering fragrances made from sustainably sourced
botanicals, free from synthetic chemicals and animal-derived ingredients.
10. Globalization and Cross-Cultural Influences: Globalization has led to

cross-cultural influences in the Indian perfume industry, with brands
incorporating elements from diverse fragrance traditions and international
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trends. This fusion of East and West has resulted in innovative fragrance
creations that appeal to a cosmopolitan and culturally diverse consumer
base.
11. Influence of Cultural Festivals: India's vibrant cultural festivals and

celebrations have played a significant role in shaping the perfume industry.
Festivals like Diwali, Eid, and weddings are occasions where the demand
for perfumes surges, leading to seasonal variations in fragrance sales.
Perfume brands often release special edition fragrances tailored to these
festive occasions, incorporating traditional motifs and ingredients to
appeal to consumers.
12. Rise of Ayurvedic and Herbal Fragrances: With a renewed interest in

Ayurveda and holistic wellness, there has been a resurgence of interest in
Ayurvedic and herbal fragrances in India. Perfume brands are infusing
their products with Ayurvedic herbs, botanical extracts, and essential oils
known for their therapeutic properties, catering to health-conscious
consumers seeking natural alternatives to synthetic fragrances.
13. Government Initiatives and Regulations: Government initiatives aimed at

promoting indigenous industries and regulating the use of synthetic
chemicals have had an impact on the perfume industry in India. Policies
promoting Make in India and encouraging entrepreneurship have
supported the growth of domestic perfume brands, while regulations
governing the use of ingredients ensure consumer safety and product
quality standards.
14. Growing Awareness and Education: Increased awareness about fragrance

composition, ingredients, and manufacturing processes has influenced
consumer preferences in India. Consumers are becoming more discerning
and educated about the benefits of natural, cruelty-free, and sustainable
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perfumes, driving demand for transparent labeling and ethical practices

within the industry.
15. Rise of Artisanal and Small-Batch Perfumery: In parallel with the global
trend towards artisanal and craft products, there has been a rise in artisanal
and small-batch perfumery in India. Artisan perfumers and niche fragrance
houses are gaining recognition for their handcrafted fragrances,
personalized service, and attention to detail, appealing to connoisseurs
seeking unique and exclusive olfactory experiences.
CHAPTER 1.8: PERFUME AND SKINCARE MARKET

GLOBALLY
The global perfume and skincare market encompasses a wide range of products
catering to personal grooming, beauty, and wellness needs. Here's an overview of
each market:
Perfume Market:
1. Market Size and Growth: The global perfume market was valued at over $30
billion in 2020 and is projected to grow at a compound annual growth rate
(CAGR) of around 4% from 2021 to 2026. Factors such as increasing
disposable income, changing consumer lifestyles, and the growing popularity
of fragrances across emerging markets contribute to market expansion.
2. Segmentation: The perfume market is segmented based on fragrance type,

concentration level, distribution channel, and gender. Common fragrance types
include eau de parfum, eau de toilette, and eau de cologne, with variations in
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scent profiles and longevity. Distribution channels range from specialty stores
and department stores to online retailers and duty-free shops.
3. Key Players: Major players in the global perfume market include multinational
corporations such as L'Oréal, Estée Lauder Companies, Coty Inc., LVMH
Moët Hennessy Louis Vuitton SE, and Shiseido Company Limited, as well as
niche and indie brands that cater to specific consumer preferences and niche
markets.
4. Trends and Opportunities: Key trends driving the perfume market include the
rise of niche and artisanal fragrances, growing demand for natural and
sustainable perfumes, customization and personalization trends, and the
increasing influence of digital marketing and e-commerce channels.
Opportunities exist in emerging markets with rising disposable incomes and
growing beauty consciousness, particularly in Asia-Pacific, Latin America,
and the Middle East.
Skincare Product Market:
1. Market Size and Growth: The global skincare product market was valued at
over $140 billion in 2020 and is expected to grow at a CAGR of around 5%
from 2021 to 2026. Factors such as increasing awareness of skincare routines,
rising demand for natural and organic skincare products, and advancements in
skincare technology contribute to market expansion.
2. Segmentation: The skincare product market encompasses a wide range of

products, including cleansers, moisturizers, serums, sunscreens, masks, and
treatments targeting various skin concerns such as aging, acne,
hyperpigmentation, and sensitivity. Products are segmented based on skin
type, function, ingredients, and formulation.
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3. Key Players: Major players in the global skincare product market include
multinational companies such as Johnson & Johnson, Procter & Gamble,
Unilever, L'Oréal, and The Estée Lauder Companies Inc., as well as niche and
indie brands that focus on specific skincare concerns or ingredient-based
formulations.
4. Trends and Opportunities: Key trends driving the skincare product market
include the rising demand for clean and natural skincare products, the
convergence of skincare with wellness and self-care trends, the growing
popularity of multi-step skincare routines (such as the Korean skincare
routine), and the increasing adoption of digital technologies for personalized
skincare solutions. Opportunities exist in product innovation, expansion into
emerging markets, and strategic partnerships with influencers and
dermatologists to endorse products and educate consumers.
Overall, both the perfume and skincare product markets offer significant growth
opportunities for companies that can innovate, differentiate, and adapt to evolving
consumer preferences, market dynamics, and regulatory trends globally. As
consumers increasingly prioritize self-care, wellness, and personal grooming, the
demand for high-quality perfumes and skincare products is expected to continue
growing across diverse geographic regions and demographic segments.
Regional Variances, Emerging Markets, Digital Transformation, Wellness and

Sustainability are some of the additional aspects to consider regarding the vast and
diverse global perfume and skincare product market.
The global beauty and personal care market is projected to reach a value of $646.20
Billion. Skincare is the largest segment within this market, is expected to grow from
$190 Billion to $260 Billion by 2027 growing at a CAGR of 4.6% in the forecast
period, driven by innovation and a focus on science-based ingredients. United States
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is the leading perfume and skincare market globally, followed by Japan. While
skincare dominates the beauty market, perfumes aren’t behind that much.
CHAPTER 1.9: PERFUME AND SKINCARE MARKET IN INDIA
The perfume and skincare market in India has witnessed significant growth and
evolution in recent years, driven by factors such as increasing disposable income,
changing consumer lifestyles, rising beauty consciousness, and the influence of social
media and digital marketing. Here's an overview of each market segment:
Perfume Market in India:
1. Market Size and Growth: The perfume market in India has experienced steady
growth, fueled by a growing young population, urbanization, and rising
consumer aspirations. While precise market size estimates vary, the Indian
perfume market is valued at several billion dollars and is expected to continue
growing at a healthy rate in the coming years.
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2. Segmentation: The Indian perfume market is segmented based on factors such

as fragrance type, price range, target demographic, and distribution channel.
Popular fragrance categories include floral, oriental, woody, and citrus,
catering to diverse consumer preferences. Perfume brands in India offer a wide
range of products, from affordable mass-market fragrances to premium and
luxury offerings.
3. Key Players: Both domestic and international perfume brands compete in the
Indian market, offering a variety of products across different price points.
Major players include international brands like L'Oréal, Estée Lauder
Companies, Coty Inc., and local brands such as Titan, Forest Essentials, and
Engage, among others.
4. Trends and Opportunities: Key trends shaping the perfume market in India
include the growing demand for natural and organic fragrances, the rise of
gender-neutral and unisex perfumes, the popularity of celebrity-endorsed and
designer fragrances, and the increasing influence of e-commerce platforms in
driving sales and consumer engagement. With rising disposable incomes and a
burgeoning middle class, there are ample opportunities for perfume brands to
expand their market presence and cater to diverse consumer preferences.
Skincare Product Market in India:
1. Market Size and Growth: The skincare product market in India has
experienced robust growth in recent years, driven by factors such as increasing
awareness of skincare routines, rising beauty standards, and the influence of
social media and celebrity endorsements. The market is valued at several
billion dollars and is expected to continue growing at a rapid pace.
29
2. Segmentation: The Indian skincare product market encompasses a wide range

of products, including cleansers, moisturizers, serums, sunscreens, masks, and
treatments targeting various skin concerns such as acne, aging, pigmentation,
and dryness. Products are segmented based on skin type, function, and price
point to cater to the diverse needs and preferences of Indian consumers.
3. Key Players: Both multinational corporations and domestic companies

compete in the Indian skincare product market, offering products across
different price segments. Major players include companies such as Hindustan
Unilever Limited (HUL), Procter & Gamble, L'Oréal, Johnson & Johnson, and
local brands like Himalaya Herbals, VLCC, and Biotique, among others.
4. Trends and Opportunities: Key trends driving the skincare product market in
India include the rising demand for natural and herbal skincare products, the
adoption of multi-step skincare routines inspired by K-beauty trends, the
increasing popularity of anti-aging and sun protection products, and the
growing influence of male grooming and skincare among Indian men. With a
large and diverse consumer base, there are significant opportunities for
skincare brands to innovate, expand their product offerings, and capitalize on
emerging trends in the Indian market.
Overall, both the perfume and skincare product markets in India offer immense
potential for growth and expansion, driven by evolving consumer preferences,
increasing urbanization, and the growing influence of digital media and e-commerce
platforms. Businesses that can effectively navigate the competitive landscape,
understand local consumer preferences, and offer innovative and differentiated
products are well-positioned to succeed in India's dynamic beauty and personal care
market.
The beauty and personal care market in India is projected to generate a revenue of
$31.51 Billion in 2024. This market is expected to witness an annual growth rate of
30
3.00%. While the perfume market in India is estimated to grow at a CAGR of 15.23&
between 2022 and 2027.
CHAPTER 1.10: BELLAVITA’S VISION AND MISSION
BELLAVITA Organics wants to make luxury perfumes and aromatic bath and body
ranges accessible to all at value driven prices. No one should have to compromise on
their right to smell good with BELLAVITA around. They pivoted into the fragrance
category with a vision to make exquisite fragrances accessible to all as the fragrance
market was still untapped in India & consumers were looking for luxury perfumes at
affordable price points.
Their products are IFRA certified which means the perfumes made are safe to use on
the skin without allergic reactions. They believe their perfumes last for 6-8 hours for
long day freshness. Also, the products are cruelty free that is no animals are harmed
during the process. BELLAVITA eyes to become the biggest perfume brand of India.
They are also planning to launch their products internationally in the countries like
31
Bangladesh, Nepal, Thailand, The USA and Maldives via distribution and online
retail.
BELLAVITA which has a presence across GT, MT, kiosks, shop-in-shop, e-commerce
marketplaces and D2C websites, plans to expand its offline presence from 55 kiosks
to 100 kiosks. They are focusing more upon Tier II and Tier III cities to open their
kiosks. They are also planning to acquire 2 brands in colour cosmetics and skincare
category.
CHAPTER 1.11: MARKETING STRATEGY USED BY

BELLAVITA
Bella Vita Organic’s marketing strategy is a testament to their unwavering

commitment to providing quality products at affordable prices, particularly targeting
the underserved markets of Tier II and Tier III cities. Recognizing the scarcity of
32
quality options in these regions, the brand consciously positioned itself to fill this void
by delivering high-quality products at price points comparable to existing choices.
BELLAVITA, a leading Indian fragrance brand, decided to challenge the status quo
by embarking on a ground-breaking social experiment which explored the influence
of price perception on consumer behaviour. The aim was to prove that quality and
luxury can be made affordable. This captivating experiment took place at the elegant
SITIO Bar in Gurgaon, where elite guests were in for a surprise.
BELLAVITA invited top socialites and lifestyle influencers of Gurugram to an

exclusive launch of a fake luxury perfume brand called FRAGO Italia. Along with
Wine and Cheese, the guests were given a first-hand experience of the fragrances
from the to be launched brand, FRAGO Italia. The elegant packaging, supreme
quality and high-end pricing attracted the guests, leading them to make purchases.
Feedback from the guests was overwhelmingly positive, with praise for the quality
and presentation of the products.
But here is where the experiment took an unexpected turn. BELLAVITA unveiled the
truth. All Frago Italia perfumes were actually BELLAVITA perfumes with masked
labels of FRAGO Italia for which the guests had paid 10 times the actual price of
BELLAVITA perfumes. The guests were astonished to learn that the fragrances they
had purchased were available at a price of Rs. 599/-. As compared to amounts
exceeding Rs. 5,000/- which they had paid for their purchases. It was a revelation that
challenged their preconceived notions about luxury and affordability.
The guests who had made purchases were not only refunded their money but also
received the products as a token of appreciation from BELLAVITA. Their reactions
ranged from disbelief to amazement, realising that they had been part of an
experiment that highlighted the power of branding and perception.
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CHAPTER 1.12: FACTORS INFLUENCING BUYING

BEHAVIOUR AMONG CUSTOMERS
Buying behaviour among customers is influenced by a multitude of factors, both

internal and external. Here's an overview of some key factors:
1. Psychological Factors:
Perception: How individuals perceive products or brands can greatly influence their
buying decisions.
Motivation: Needs, desires, and goals drive purchasing behaviour. Understanding

what motivates customers can help businesses tailor their marketing strategies.
Attitudes and beliefs: Customer attitudes towards products or brands, as well as their
beliefs about them, play a significant role in purchase decisions.
Personality: Individual characteristics and traits can affect consumer preferences and
brand choices.
2. Social Factors:
Reference groups: People are influenced by the groups they identify with or aspire to
join. This includes family, friends, colleagues, and online communities.
Culture: Cultural norms, values, and customs influence consumer behaviour

significantly. Different cultures have different preferences, taboos, and rituals
surrounding consumption.
Social class: Socioeconomic status can impact consumer behaviour, including

preferences for certain products, brands, or shopping venues.
34
3. Personal Factors:
Demographics: Factors such as age, gender, income, education, occupation, and

family size can affect purchasing decisions.
Lifestyle: Individual lifestyles and interests influence product choices. For example,
health-conscious individuals may prefer organic foods or gym memberships.
Life stage: Different life stages (e.g., young adult, parent, retiree) entail different
needs and priorities, affecting buying behaviour.
4. Economic Factors:
Income: Disposable income and purchasing power dictate what products or services
consumers can afford.
Price sensitivity: Consumers may be more or less sensitive to price changes

depending on various factors, including income level and perceived value.
Economic conditions: Economic factors such as inflation, unemployment rates, and

overall economic stability can impact consumer confidence and spending patterns.
5. Technological Factors:
Digitalization: The rise of e-commerce, social media, and mobile technology has
transformed how consumers research, evaluate, and purchase products.
Innovation: Technological advancements often introduce new products or services,

influencing consumer preferences and behaviour.
35
6. Environmental Factors: Sustainability: Increasing environmental awareness has led

to growing consumer demand for eco-friendly products and companies with
sustainable practices.
Ethics: Consumers may consider a company's ethical stance, such as its treatment of
workers, sourcing practices, and contributions to social causes, when making
purchasing decisions.
7. Marketing and Advertising:
Promotion: The way products are promoted through advertising, sales promotions,
endorsements, and other marketing efforts can impact consumer perceptions and
purchasing decisions.
Brand image: Branding plays a crucial role in shaping consumer preferences. Strong
brand identities and positive brand associations can influence purchase decisions.
Product placement: The placement of products within stores or online platforms can
affect visibility and purchase likelihood.
8. Personal Influence:
Personal selling: Direct interactions with sales representatives or influencers can

influence consumer decisions through persuasion, product demonstrations, and
personalized recommendations.
Word of mouth: Recommendations from friends, family, or online reviews can

heavily influence purchasing behaviour, particularly in the case of high-involvement
products.
36
9. Psychological Triggers:
Urgency and scarcity: Limited-time offers or scarcity tactics can create a sense of
urgency, prompting consumers to make impulsive purchase decisions.
Emotional triggers: Emotional appeals in marketing, such as nostalgia, fear, or

happiness, can impact consumer perceptions and decision-making.
10. Perceived Risk:
Financial risk: Concerns about wasting money or making a poor investment can
influence consumer decisions, especially for high-ticket items.
Performance risk: Fears regarding the product's quality, reliability, or effectiveness

can deter consumers from making a purchase.
Social risk: The perceived risk of embarrassment or social consequences associated

with a purchase can influence consumer behaviour, particularly for products with a
social aspect (e.g., fashion, luxury goods).
11. Convenience and Accessibility:
Location: The proximity of retail outlets or the ease of online shopping can impact
consumer convenience and preferences.
Payment options: Flexible payment methods, such as credit cards, installment plans,
or digital wallets, can affect purchase decisions.
12. Government Regulations and Policies:
Consumer protection laws: Regulations related to product safety, labelling, and

advertising can influence consumer trust and confidence in certain products or brands.
37
Taxation: Changes in taxation policies, such as sales tax or import duties, can affect
product prices and consumer purchasing power.
By considering these factors, businesses can gain deeper insights into consumer
behaviour and develop more comprehensive strategies to attract and retain customers.
CHAPTER 1.13: PERCEPTION OF LUXURY v/s MASS-MARKET

FRAGRANCES.
Perception of luxury versus mass-market fragrances can vary significantly among

consumers and is influenced by several factors including brand image, packaging,
price, scent composition, and marketing strategies. Here's a breakdown of some key
differences in perception:
1. Brand Image and Prestige:
Luxury fragrances are often associated with prestigious and well-established brands
known for their heritage, craftsmanship, and exclusivity. Examples include Chanel,
Dior, Tom Ford, and Creed.
Mass-market fragrances, on the other hand, are typically associated with more
accessible and widely available brands found in department stores, drugstores, and
supermarkets. Examples include Calvin Klein, Adidas, and Axe.
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2. Price Point:
Luxury fragrances tend to command higher price points, often reflecting the quality of
ingredients, intricate packaging, and brand prestige. Consumers may perceive higher
prices as indicative of superior craftsmanship and exclusivity.Mass-market fragrances
are generally more affordable and cater to a broader consumer base. Price promotions,
discounts, and value-packaging are commonly used strategies to attract budget-
conscious shoppers.
3. Packaging and Presentation:
Luxury fragrances often feature elaborate and luxurious packaging, with attention to
detail in bottle design, materials used, and presentation. The packaging is often
considered part of the overall luxury experience.
Mass-market fragrances may have simpler packaging designed for efficient mass
production and cost-effectiveness. While still visually appealing, the emphasis may be
more on functionality and accessibility rather than luxury.
4. Scent Composition and Complexity:
Luxury fragrances typically feature complex and sophisticated scent compositions

crafted by master perfumers. They often incorporate rare and high-quality ingredients,
resulting in unique and long-lasting fragrances.
Mass-market fragrances may have simpler scent profiles designed to appeal to a

broader audience. They may rely more on popular fragrance trends and consumer
preferences, with an emphasis on mass appeal and familiarity.
39
5. Marketing and Distribution:
Luxury fragrances often employ exclusive marketing strategies targeting affluent

consumers through high-end advertising campaigns, celebrity endorsements, and
limited distribution channels such as luxury boutiques and department stores.
Mass-market fragrances employ broader marketing tactics targeting a wider

demographic through mass media, online platforms, and retail outlets ranging from
supermarkets to specialty stores.
6. Ingredients and Formulation:
Luxury fragrances often boast of using rare and exotic ingredients sourced from
around the world. These ingredients are carefully selected for their quality and
potency, resulting in fragrances that are rich, nuanced, and long-lasting.
Mass-market fragrances may use synthetic alternatives or lower concentrations of

natural ingredients to keep production costs down. While this can result in more
affordable options, it may also lead to fragrances that are perceived as less complex or
sophisticated compared to their luxury counterparts.
7. Perceived Exclusivity and Rarity:
Luxury fragrances are often limited in production, with some editions released as
exclusive or limited-edition offerings. This exclusivity adds to the allure and
perceived value of luxury fragrances, making them coveted items among fragrance
enthusiasts and collectors.
Mass-market fragrances, due to their wide availability and larger production runs, are
generally perceived as less exclusive. While this accessibility appeals to a broader
audience, it may diminish the sense of uniqueness or specialness associated with
owning a luxury fragrance.
40
8. Artistry and Craftsmanship:
Luxury fragrance houses often pride themselves on their rich heritage, artisanal
craftsmanship, and dedication to the art of perfumery. Master perfumers carefully
blend ingredients to create fragrances that evoke emotions, tell stories, and evoke a
sense of luxury and refinement.
Mass-market fragrances may prioritize efficiency and scalability in production, with

less emphasis on the artisanal aspects of perfumery. While this approach allows for
the mass production of affordable fragrances, it may lack the depth and complexity
found in luxury offerings.
9. Consumer Experience and Service:
Luxury fragrance brands often provide a tailored and immersive shopping experience,
with knowledgeable staff, personalized consultations, and exclusive events. The
ambiance of luxury boutiques and flagship stores adds to the overall sense of luxury
and indulgence.
Mass-market fragrances are typically sold through a variety of retail channels,

including department stores, online retailers, and drugstores. While these outlets may
offer convenience and accessibility, they may not provide the same level of
personalized service or attention to detail found in luxury fragrance shopping
experiences.
10. Cultural and Societal Influences:
Perceptions of luxury versus mass-market fragrances can also be influenced by

cultural and societal norms. In some cultures, owning luxury fragrances may be seen
as a status symbol or a sign of sophistication and refinement, while in others,
practicality and value for money may be prioritized.
41
Trends in the fragrance industry, celebrity endorsements, and social media influencers
can also shape consumer perceptions and preferences, impacting the popularity and
desirability of both luxury and mass-market fragrances.
In conclusion, the perception of luxury versus mass-market fragrances is shaped by a

combination of factors including brand image, price point, packaging, scent
composition, marketing strategies, and cultural influences. While luxury fragrances
are often associated with exclusivity, sophistication, and craftsmanship, mass-market
fragrances cater to a broader audience with more accessible options. Ultimately,
individual preferences and priorities play a significant role in determining which type
of fragrance resonates most with consumers.
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CHAPTER 1.14: PERCEPTION OF NATURAL v/s SYNTHETIC

FRAGRANCES.
The perception of natural versus synthetic fragrances can vary widely among
consumers and is influenced by several factors, including preferences, beliefs, and
awareness of ingredients. Here's a breakdown of some key differences in perception:
1. Ingredients and Sourcing:
Natural fragrances are derived from plant-based sources such as flowers, fruits,
spices, and resins. These ingredients are typically extracted through methods like
steam distillation, cold pressing, or solvent extraction.
Synthetic fragrances are created in laboratories using various chemical compounds to

replicate the scent of natural ingredients or to produce entirely new fragrances. These
compounds can be derived from petrochemicals or other synthetic sources.
2. Perceived Quality and Authenticity:
Natural fragrances are often perceived as being of higher quality and authenticity, as
they are derived directly from botanical sources without extensive processing. Some
consumers prefer natural fragrances due to their perceived purity and connection to
nature.
Synthetic fragrances, while not inherently inferior, may be perceived as less authentic
or "artificial" by some consumers. However, advancements in fragrance technology
have led to synthetic fragrances that closely mimic natural scents and offer unique
olfactory experiences.
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3. Health and Environmental Concerns:
Natural fragrances are generally perceived as safer and more environmentally

friendly, as they are derived from renewable botanical sources and may contain fewer
synthetic chemicals. Some consumers prefer natural fragrances to avoid potential
allergens or irritants.Synthetic fragrances have raised concerns among some
consumers due to the use of synthetic chemicals that may be associated with allergies,
skin sensitivities, or environmental pollution. However, regulatory agencies such as
the International Fragrance Association (IFRA) set strict guidelines for the safe use of
fragrance ingredients in consumer products.
4. Scent Complexity and Longevity:
Natural fragrances are praised for their complexity and depth, as they often contain a
wide range of volatile compounds that evolve over time on the skin. The scent of
natural fragrances may vary from batch to batch due to variations in plant harvests
and extraction methods.
Synthetic fragrances can offer consistency in scent profile and longevity, as they are
formulated to withstand changes in temperature, humidity, and storage conditions.
Some synthetic fragrances are engineered to have a longer-lasting scent compared to
their natural counterparts.
5. Price Point and Accessibility:
Natural fragrances tend to be more expensive than synthetic fragrances due to the cost
of sourcing and extracting botanical ingredients. They are often perceived as luxury
products and may be found in specialty boutiques or niche fragrance brands.
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Synthetic fragrances are more affordable and widely accessible, as they can be
produced on a larger scale using cost-effective manufacturing processes. They are
commonly found in mainstream perfumes, body care products, and household items.
6. Personal Preferences and Values:
Consumer perception of natural versus synthetic fragrances is ultimately subjective

and influenced by individual preferences, values, and experiences. Some consumers
prioritize natural fragrances for their perceived purity and connection to nature, while
others may prefer the consistency and affordability of synthetic fragrances.
7. Sustainability and Ethical Considerations:
Natural fragrances are often perceived as more sustainable and environmentally

friendly compared to synthetic fragrances. This perception stems from the renewable
nature of botanical sources and the minimal ecological impact associated with their
cultivation and extraction.
Synthetic fragrances, particularly those derived from petrochemicals, may raise

concerns about their environmental footprint and contribution to pollution and
resource depletion. However, advancements in green chemistry and sustainable
sourcing practices are improving the sustainability profile of some synthetic fragrance
ingredients.
8. Cultural and Historical Significance:
Natural fragrances have a long history of use in various cultural and religious
practices, often symbolizing purity, spirituality, or luxury. Certain natural ingredients,
such as oud, frankincense, and jasmine, hold cultural significance in different regions
of the world.
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Synthetic fragrances have gained prominence in the fragrance industry over the past
century, driven by advancements in chemistry and manufacturing technology. While
they lack the historical and cultural pedigree of natural fragrances, synthetic
fragrances have become ubiquitous in modern perfumery.
9. Artistry and Innovation:
Natural perfumery is often associated with artisanal craftsmanship and a reverence for
traditional techniques. Perfumers who specialize in natural fragrances may draw
inspiration from botanicals and natural essences to create unique and evocative scent
compositions.
Synthetic fragrances offer perfumers a palette of endless possibilities, allowing for the
creation of novel scents that may not exist in nature. The synthesis of new aroma
molecules and the use of cutting-edge technologies contribute to the innovation and
creativity within the fragrance industry.
10. Consumer Education and Awareness:
Perceptions of natural versus synthetic fragrances are influenced by consumer

education and awareness campaigns that highlight the benefits and drawbacks of each
type of fragrance. Organizations and advocacy groups may promote the use of natural
fragrances for health and environmental reasons or advocate for the responsible use of
synthetic fragrances.
Increased transparency in labelling and ingredient disclosure can empower consumers

to make informed choices about the fragrances they purchase and use, whether they
prioritize natural, synthetic, or a combination of both.
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11. Crossover and Hybrid Fragrances:
Some fragrance brands are blurring the lines between natural and synthetic fragrances
by incorporating elements of both in their formulations. These hybrid fragrances may
combine natural essences with synthetic aroma chemicals to achieve a desired scent
profile or enhance longevity.
Crossover fragrances appeal to consumers who appreciate the authenticity of natural

ingredients but also seek the performance and versatility offered by synthetic
fragrances. They represent a convergence of traditional perfumery techniques and
modern fragrance innovation.
In conclusion, the perception of natural versus synthetic fragrances is multifaceted

and influenced by factors such as sustainability, cultural significance, artistry,
consumer education, and the evolving landscape of perfumery. While each type of
fragrance has its distinct characteristics and appeal, consumers are increasingly
embracing diversity and seeking fragrances that align with their values, preferences,
and sensory experiences.
CHAPTER 1.15: FRAGRANCE PREFERENCES AND TRENDS.
Fragrance preferences and trends are dynamic, influenced by cultural shifts, changing
consumer lifestyles, technological advancements, and emerging market demands.
Here are some insights into current fragrance preferences and trends:
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1. Clean and Transparent Formulations:
There's a growing demand for fragrances formulated with natural and sustainable
ingredients, free from potentially harmful chemicals such as phthalates, parabens, and
synthetic musks. Consumers are increasingly seeking transparency in fragrance
labelling and production processes.
Brands are responding to this trend by emphasizing clean and transparent

formulations, highlighting natural ingredients, eco-friendly packaging, and ethical
sourcing practices. This trend aligns with broader consumer concerns about health,
wellness, and environmental sustainability.
2. Gender-Neutral Fragrances:Gender-neutral or unisex fragrances are gaining

popularity as consumers move away from traditional gender stereotypes in scent
preferences. These fragrances are characterized by versatile and inclusive scent
profiles that appeal to individuals regardless of gender identity.
Brands are expanding their fragrance offerings to include gender-neutral options,

emphasizing versatility, sophistication, and individual expression. This trend reflects
evolving attitudes toward gender and personal identity in contemporary society.
3. Niche and Artisanal Fragrances:
Niche and artisanal fragrance brands are experiencing a surge in popularity among
fragrance enthusiasts seeking unique, unconventional, and high-quality scents. These
brands often prioritize creativity, craftsmanship, and storytelling over mass appeal.
Consumers are drawn to niche fragrances for their authenticity, exclusivity, and the
opportunity to discover hidden gems and niche perfumers. This trend reflects a desire
for personalized and distinctive olfactory experiences that stand out from mainstream
offerings.
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4. Sustainable Packaging and Practices:
Sustainability is becoming increasingly important in the fragrance industry, with

brands adopting eco-friendly packaging materials, reducing waste, and implementing
sustainable sourcing and production practices.
Consumers are gravitating toward fragrance brands that prioritize sustainability and
environmental responsibility, rewarding brands that demonstrate a commitment to
reducing their carbon footprint and minimizing environmental impact.
5. Wellness-Inspired Fragrances:
Fragrances infused with wellness-promoting ingredients such as essential oils,

botanical extracts, and aromatherapy blends are gaining traction as consumers seek
holistic approaches to health and self-care.
Fragrance brands are incorporating wellness-inspired elements into their products,

offering fragrances designed to evoke feelings of relaxation, mindfulness, and
emotional well-being. This trend reflects a growing interest in fragrance as a form of
self-care and sensory therapy.
6. Digital and Personalized Experiences:
Digital technology is transforming the way consumers discover, experience, and

purchase fragrances, with virtual fragrance consultations, online scent profiling, and
personalized fragrance recommendations becoming increasingly common.
Brands are leveraging digital platforms and artificial intelligence to offer personalized
fragrance experiences tailored to individual preferences, lifestyles, and occasions.
This trend reflects the growing influence of technology in shaping consumer behavior
and brand interactions.
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7. Cultural Influences and Globalization:
Fragrance preferences are influenced by cultural diversity, with consumers seeking

scents that resonate with their cultural heritage, traditions, and experiences.
Globalization has led to the cross-pollination of fragrance trends and the appreciation
of diverse olfactory palettes.
Brands are embracing cultural diversity in their fragrance offerings, drawing

inspiration from different regions, cuisines, and rituals to create fragrances that appeal
to a global audience. This trend reflects the richness and complexity of scent culture
in an interconnected world.
8. Scent Layering and Customization:
Consumers are increasingly experimenting with scent layering techniques, combining

multiple fragrances to create unique scent combinations tailored to their preferences
and mood.
- Fragrance brands are responding to this trend by offering customizable fragrance

options, such as fragrance layering kits, mix-and-match sets, and bespoke scent
creation services. This allows consumers to express their individuality and creativity
through scent customization.
9. Celebrity and Influencer Collaborations:
Collaborations between fragrance brands and celebrities, influencers, and cultural

icons are becoming more prevalent, driving interest and engagement among fans and
followers.
Celebrity and influencer-endorsed fragrances capitalize on the star power and

personal branding of prominent figures, appealing to fans who aspire to emulate their
lifestyle, style, and personality through fragrance.
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10. Nostalgia and Retro Revival:
Nostalgia-driven fragrance trends are on the rise, with consumers drawn to scents that
evoke memories of past experiences, eras, and cultural phenomena.
Fragrance brands are tapping into nostalgia by reviving classic fragrances,

reinterpreting vintage scent profiles, and introducing retro-inspired packaging and
marketing campaigns. This trend appeals to consumers seeking familiarity, comfort,
and nostalgia in uncertain times.
11. Experiential and Multi-Sensory Marketing:
Fragrance brands are investing in experiential and multi-sensory marketing initiatives

that engage consumers through immersive sensory experiences, interactive
installations, and sensory storytelling.
- These initiatives aim to create emotional connections with consumers, deepen

brand engagement, and enhance the overall fragrance shopping experience both
online and offline.
12. Cultural Fusion and Hybrid Fragrances:
Fragrance trends are increasingly influenced by cultural fusion, with brands blending
diverse scent elements, ingredients, and inspirations from different cultures and
traditions.
Hybrid fragrances that combine elements of Eastern and Western perfumery, fusion
cuisine, and cross-cultural influences are gaining popularity, offering consumers a
sensorial journey that transcends geographic and cultural boundaries.
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13. Eco-Conscious Packaging and Refillable Solutions:
Sustainability-minded consumers are driving demand for eco-conscious packaging

solutions and refillable fragrance formats that minimize waste and environmental
impact.
Fragrance brands are innovating with sustainable packaging materials, reusable

containers, and refillable fragrance cartridges, aligning with consumer values and
contributing to the circular economy.
14. Fragrance for Self-Expression and Empowerment:
Fragrance is increasingly seen as a form of self-expression and empowerment, with

consumers using scent to communicate their identity, personality, and values.
Fragrance brands are embracing diversity, inclusivity, and individuality in their

marketing campaigns and product offerings, celebrating the unique beauty and
authenticity of each individual's scent journey.
15. Scent Layering and Customization:
Scent layering, the practice of combining multiple fragrances to create a unique

olfactory blend, is gaining popularity among consumers seeking personalized scent
experiences. This trend allows individuals to express their creativity and tailor
fragrances to suit their mood, personality, or the occasion.
Fragrance brands are introducing customizable fragrance collections, offering

consumers the opportunity to mix and match individual scents or purchase fragrance
layering kits. This trend reflects a desire for individuality and self-expression in
fragrance consumption.
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16. Vintage and Retro Revival:
Vintage and retro fragrances from past decades are experiencing a resurgence in
popularity, driven by nostalgia and a renewed appreciation for classic scent
compositions. Consumers are drawn to fragrances that evoke memories, evoke a sense
of nostalgia, or pay homage to iconic fragrance trends of the past.
Fragrance houses are reintroducing discontinued fragrances or reimagining vintage-

inspired scents with modern twists to appeal to contemporary tastes. This trend
reflects a cyclical nature in fragrance trends and a fascination with the history of
perfumery.
17. Ephemeral and Evanescent Scents:
Ephemeral or evanescent fragrances, characterized by light, airy, and fleeting scent

profiles, are gaining traction among consumers seeking subtle and understated
olfactory experiences. These fragrances are designed to create delicate scent trails that
linger briefly on the skin before dissipating.
Fragrance brands are experimenting with minimalist compositions, sheer accords, and
translucent notes to capture the ephemeral beauty of fleeting moments and ephemeral
sensations. This trend reflects a shift away from heavy
These additional fragrance preferences and trends reflect the evolving landscape of
the fragrance industry, driven by consumer demand for innovation, authenticity,
sustainability, and personalization. Brands that embrace these trends and anticipate
emerging consumer preferences are poised to thrive in a rapidly evolving market.
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CHAPTER 2: RESEARCH METHODOLOGY
2.1 INTRODUCTION.
2.2 OBJECTIVES.
2.3 SOURCES/METHODS OF DATA COLLECTION.
2.4 SAMPLING TECHNIQUES.
2.5 AREA OF STUDYING: CHM COLLEGE
2.6 TOOLS FOR ANALYSIS.
2.6.1 LIMITATIONS OF THE STUDY.
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CHAPTER 2.1: INTRODUCTION
A research design is a comprehensive plan guiding researcher to achieve its

objectives. It is a detailed blueprint of the research. It details the procedures necessary
for obtaining the information needed to structure or solve research problem. Research
design is the ADHOC plan, structure and significant strategy of exploration
apprehended so as to acquire solutions to research problems and to control any
discrepancy or any variance. It is the specification of certain methods and procedures
for getting the information needed.
It is an overall operational framework of the project that stipulates what information is

to be gathered, from which all informants and by using what methods and procedures.
Thus, a research design can be expresses as a blueprint, plot, guide or outline for
gratifying research objectives.
Research design is needed because it eases the glib sailing of the research options
thereby creating research as effectual as possible generating maximal information
with minimal expenditure of effort, time and money. Just for better, economical and
pretty construction of a house, we need a blue print (or what is commonly called the
chart or plot of the house) well thought out and prepared by an expert architect,
similarly we need research design or a plan in advance of data collection and analysis
for our research study.
Overall, the research design serves as a roadmap for researchers, helping them to
structure their study in a way that maximizes the likelihood of obtaining meaningful
and trustworthy results. It also provides a framework for evaluating the quality and
rigor of the research methodology.
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In this chapter following elements of research design are discussed at length.
 Objectives
 Data Collection
 Sampling Techniques
 Tools For Analysis
 Scope And Limitations of The Study
CHAPTER 2.2: OBJECTIVES
Objectives are very significant elements in any research. Objectives aid in

determining the likelihood of conducting the research. Generally, the aim of any
research is to confirm the reliability of existing knowledge and to find the deviation of
existing knowledge i.e. to contribute the new knowledge in the existing one. Before
conducting the research it is necessary to recognize the research objectives as it
evades the waste of time and efforts in future stages. Objectives act as the guiding
principles for conducting the research. By stating the list of objectives, researcher
actually endeavours at fixing the frame of research.
Objectives Of The Present Study:
1. To study the present status of brand BELLAVITA.
2. To spread awareness about luxurious yet affordable perfumes & skincare

products available in the market.
3. To understand the customer reaction about BELLAVITA products.
4. To understand customer choices and perception towards BELLAVITA

products.
5. To create awareness towards BELLAVITA.
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CHAPTER 2.3: SOURCES/METHODS OF DATA COLLECTION
information, usually arranged in a special way. Austerely speaking data is the plural
or datum, a single piece of information. In practice, however, people use data as both
the singular as well as plural form of the word. Data are bare facts. When data are
processed, organized, structured or presented in a given milieu so as to make them
useful, they are called information. It is not adequate to have data (such as statistics
on the economy). Data in themselves are not so useful. But when these data are
interpreted and processed to determine their true meaning, they are converted to
useful elements in research and can be called information.
data is the data collected by the researchers themselves, i.e Interview, Observation,
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Action research, Case studies, Life histories, Questionnaires, Ethnographic research

or Longitudinal studies.
Secondary data is usually used for problem identification and at formulation stage. It
is needed for formulation of hypothesis. It can also be helpful in designing
questionnaire. It may be needed to validate results of current investigation. Various
sources of secondary data are: Published surveys of markets. (general library research
sources), Government publication and reports, All advertising media, particularly
newspaper, magazines, trade journals etc., Trade association and other technical and
professional groups, Specialized research and foundation organizations, Universities,
Specialized markets intelligence services such as advertising agencies, market
research firms, stock exchanges, commodity exchange, banks., Specialized libraries,
Internal sources such as sales and purchases records, salesman’s report, sales order,
customer complaints and other records and registers and Internet.
Data Collection for The Present Study:
 Primary Data was collected to understand the level of product awareness from
the students of CHM College. For achieving the objectives, structured
questionnaire was prepared and respondents were asked to fill the same.
Respondents here comprised of Degree College students of CHM.
 Secondary Data will be collected by referring various books, journals, articles

and magzines.
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CHAPTER 2.4: SAMPLING TECHNIQUES
Sampling may be defined as the selection of some part of a collective or totality based
on which a judgement or implication about aggregate or totality is made. In other
words, it is the procedure of gaining information about an entire population by
examining only a part of it. In most of the research studies and surveys, the usual
approach occurs to be to make generalization or to draw corollaries based on samples
about the parameters of population from which the samples are taken.
2.4.1: NON-PROBABILITY SAMPLING METHOD
Non probability sampling methods are called so because each element in the
population does not have an equivalent chance of being comprised in the sample. The
major forms of nonprobability samples are convenient sampling, judgement and
purposive sampling, quota sampling and snowball sampling. In convenience
sampling, the researcher simply reaches out and picks up the cases that fall to hand,
continuing the process till such time as the sample obtains a wanted size. It is used to
find the data rapidly and easily. It may include casual pool of friends and neighbours,
employees at work place etc. In judgement and purpose sampling, specialists and
experts in the field are consulted or researcher will exercise judgement and
thus develop sample that are satisfactory in relation to one is research needs. Another
type of nonprobability sampling method is Quota Sampling. The basic objective of
quota sampling is the selection of the sample that is an imitation of the ‘population’
with the respect to which one would desire to generalize. In snowball sampling, each
and every respondent will also act as reference to other respondents. That is every
respondent will identify one or more respondent having same characteristics as him or
her. It is commonly employed when subjects are hard to locate.
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2.4.2: PROBABILITY SAMPLING METHOD
In probability sampling method, each element in the sample determined gets equal
chance of being selected as a sampling element. Different probability sampling
methods are Simple Random, Systematic Random, Stratified, Cluster and Multi
Staged Sampling. Simple random sampling is in a sense, the basic refrain of all
scientific sampling. It is a primary probability sampling method. A process that not
only gives to each element in the population an equivalent chance of being included in
the sample but also makes the selection of each possible combination of cases in the
preferred size, equally likely, selects a simple random sample. The Systematic
Random sampling is for all practical purposes, an estimate of simple random
sampling. In stratified random sampling the population is first divided into a number
of strata. Such strata may be based on a single criterion. (Eg. Educational level,
yielding a number of strata corresponding to the different levels of educational
attainment) or on a combination or more criteria (Eg. Age and sex). In stratified
random sampling, a simple random sample is taken from every strata and sub samples
are bought together to form the total sample. In cluster sampling, the researcher firstly
samples out from the population, certain large groupings, that is “cluster”.
A cluster is a collection of heterogeneous subjects representing population. These

cluster may be city-wise, households, or even several geographical or social units.
The
sampling of clusters from the population is done by simple or stratified random
sampling techniques. Last but not the least, multistage sampling denotes to sampling
plans where the sampling is carried out in stages using smaller and smaller sampling
units at every stage.
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Sampling Plan for the Present Study:
 CHM is a very big college comprising of more than 10,000 students of which
about 6,000 enrolments are in Degree College. These 6,000 students belong to
various courses like B.Com., B.Sc., BA, BMS, etc. So it was difficult to
conduct the survey with the total Degre College strength. So keeping
constraint at place, degree college students—respondents were selected on
random basis from various courses through different strata. These strata
include 11 different courses. Thus cluster random sampling was used to collect
the primary data.
 Primary Data will be collected from students of degree college to understand

awareness about BELLAVITA products. Total number of respondents was
100. From each of the 11 courses [viz. B.Com, BBI, BMA, BA, BFM, BMM,
BAF, B.Sc., B.Sc.(IT), B.Sc.(CS), B.Sc.(BT)] 100 respondents were selected.
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2.5: AREA OF STUDY: CHM COLLEGE
Smt. Chandibai Himathmal Mansukhani College also known as Smt. C.H.M. College
of Arts, Science, Commerce and Management, Mass Media and Information
Technology, is one of the largest colleges in the University of Mumbai. Management
belongs to the Hyderabad (Sind) National Collegiate Board.
The foundation stone of the college was installed on 1 st January 1964 by Principal
K.M. Kundnani, Rector and Secretary, H.S.N.C Board, Barrister Hotchand G. Advani,
president of the Board, Late Shri Gangaram Himathmal Mansukhani.
CHM college has more than 400 teaching and non-teaching staff members on its roll
and more than 9500 students in six faculties. The college offers education to students
at Junior, Undergraduate Degree and Post-Graduate levels.
Figure[I] CHM COLLEGE
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Starting as an institution to cater to the aspirations of the minority Sindhi community,

Smt. CHM College is the brainchild of educationists including Principal K. M.
Kundnani and Barrister H.G. Advani and Mr. Gangaram Mansukhani.
After being displaced from his native land Sindh, now in Pakistan because of partition
of India on 15 August 1947, Principal K. M. Kundnani reached Mumbai with a
mission to resurrect National College which he had to close down at Sindh. He
initiated the establishment of fourteen educational institutions with a view to arousing
intellectual and spiritual strength of the people.
He had personally supervised the construction of Smt. CHM College. In this effort he
had the support of Barrister H. G. Advani and Mr. Kishinchand Chellaram, Mr.
Wassiamull Assomull and Mr. J. Watumull. The sixth institution set up was Smt.
CHM College at Ulhasnagar. The college was established in 1965 with about 250
students and four departments has transformed into one of the largest colleges of the
University of Mumbai with enrolment of more than 10,000 students, three faculties,
22 Undergraduate Departments, 8 Postgraduate Departments, 7 Research Centres, 7
Professional Courses, 7 Dual Degree Courses and 3 Prestigious UGC sponsored
community outreach centres.
College provides exposure to sports, National Cadet Corps and National Service
Scheme. The co-curricular and extra-curricular activities of the college are
channelised through the various associations of the college namely Science
Association, Commerce Association, Arts Forum and Sindhi Sahitya Sangat. The
institution provides community enrichment programs enabling holistic development
of students.
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Figure [II] Courses Offered at CHM College
CHAPTER 2.6: TOOLS FOR ANALYSIS
analysis is the process of reckoning of certain parameters along with identification of
relationship patterns that may exist among data groups. This analysis clues to valid
conclusion only if the relationship pattern stands the statistical test of significance.
The analysis irrespective of whether the data is qualitative or quantitative may:
1. Describe and summarise the data
2. Identify relationships between variables
3. Compare variables
4. Identify the difference between variables
5. Forecast outcomes
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further re used to lessening complexity. Data analysis make description probable with
the help of numbers averages, percentages, means, standard deviation, etc. Exact
relation between two variables can be sharply stated. Analysis aids the research to pull
reliable inference of the situation that have not measured in full. Such inferences give
answers to many possible questions in research. Analysis also helps in prediction,
further estimation and generalization from the result of sample survey. Due to
inference drawn with the help to statistical tolls further evaluation and estimation is
likely. Inferential data can be utilised to evaluate, understand and draw relationship
between some variables.
Data Analysis and Statistical Techniques in Present Study:
techniques include Finding out Average – Valid Percentage and presentation of the
same through various Graphs and Diagrams. Graphs and Diagrams include Bar
Graph, Subdivided Bar Graph, Joint Bar Diagram and Pie Diagram. Mean responses
are used to test the hypothesis.
CHAPTER 2.6.1: LIMITATIONS OF STUDY
The present research has certain limitations which are listed as follows:
 For finding the level of awareness about BELLAVITA products among the
students of CHM College, only degree college students have been covered.
 Sample size of the survey is limited.
 The statistical techniques used for the analysis have their own limitations.
65
3.1 INTRODUCTION
3.2 LITERATURE REVIEW
3.3 GAP MODEL
66
CHAPTER 3.1: INTRODUCTION
A literature review is a critical evaluation and analysis of published academic sources

related to a particular research question, topic, or field of study. It aims to identify and
analyse the most relevant and significant research, theories, and ideas in a specific
area of study.
A literature review typically involves the following steps:
• Identify the research question or topic: This involves determining the specific area
of study or research question that will guide the literature review.
• Conduct a comprehensive search for relevant literature: This involves using various
search engines, databases, and academic journals to find published sources that are
relevant to the research question.
• Evaluate and select sources: This involves critically evaluating each source based on
its relevance, credibility, and quality. The selected sources should be those that
provide the most relevant and reliable information to answer the research question.
• Organize and summarize the findings: This involves synthesizing the information
from the selected sources and organizing it into a coherent and logical structure.
• Analyse and interpret the findings: This involves analysing the key themes,
concepts, and arguments that emerge from the literature review and interpreting their
implications for the research question.
The purpose of a literature review can vary depending on the context, but some
common objectives include:
67
• Identifying gaps in knowledge: A literature review can help to identify areas where
there is a lack of research or where more research is needed.
• Evaluating the quality of existing research: By critically analysing the literature, a

literature review can assess the strengths and weaknesses of previous studies and
identify any biases or limitations.
• Synthesizing information: A literature review can help to synthesize the information

from multiple studies to develop a more comprehensive understanding of the topic.
• Providing context: A literature review can provide background information on the

topic and explain how it fits within the broader research literature.
Literature reviews are often conducted as part of a research project or thesis, but they
can also be stand-alone documents that summarize the current state of knowledge on a
particular topic. The process of conducting a literature review typically involves
searching for relevant literature, reading and analysing the literature, and writing a
summary and synthesis of the findings. Overall, a literature review is an important
tool for researchers and scholars to gain a deeper understanding of a topic and to
identify areas for future research.
In view of the importance of the review of related research, an attempt was made to
analyse the related researches on A customer perception toward clothing brands. This
chapter gives a brief overview of researches made by various experts in the field.
These studies have been systematically presented in the following section.
68
CHAPTER 3.2: LITERATURE REVIEW
A literature review is a critical analysis and synthesis of existing research literature on

a specific topic or subject area. It involves identifying, evaluating, and synthesizing
relevant sources such as scholarly articles, books, and other publications to provide an
overview of the current state of knowledge in the field.
Consumer behaviour is a complex field that encompasses a wide range of factors that
influence how individuals make purchasing decisions. Researchers have investigated
numerous aspects of consumer behaviour, including the psychological, social, and
cultural factors that influence purchase decisions.
 Burr (2007)- The science of perfume is chemistry and the aromatic result is
artistry. Indeed, especially in France, perfume creation is treated as high art.
According to one French perfume executive: “…perfumers consider that what
they create is great art and that because they are French the world should come
on bended knee and consider itself lucky to be blessed with their creations…
[they say] ‘I launched this and that perfume, and my perfumes are wonderful,
fabulous, they lost five million dollars, but who cares, they’re objects of art
that will live love forever and conform to my immortal, pure aesthetic’.
Perfume briefs, the perfume company’s instruction to the perfumer of what the
perfume should smell (be) like, are equally artistic and vague. For example,
Parfums Dior posed this brief for Pure Poison (2004): “What is it like to have
something soft and hard at the same time. More typical examples are: “Give us
the scent of a warm cloud floating in a fresh spring sky over Sicily raining
titanium raindrops on a woman with emerald eyes”.
 Moran (2000)- The language of perfumery bears witness to its inherently

aesthetic qualities. Fragrances are designated according to
their concentration level, the scent family they belong to, and the notes in the
scent. The concentration level of the perfume oil in a fine fragrance indicates
69
its intensity and its predicted duration on the skin. The more concentrated the
perfume, the stronger the scent and the longer it will last. Although there is
variability within the definitions, there are four major perfume concentration
classifications. Parfum contains between 15% and 30% aromatic
compounds; eau de parfum contains 8–15% aromatic compounds; eau de
toilette ranges from 4% to 8% aromatic compounds; and eau de
cologne contains between 2% and 5% aromatic compounds. Eau de
cologne was originally invented by Italian perfumers living in KÖln (Cologne)
Germany in the 1700s and was made from rosemary and citrus essences
dissolved in wine. However, the term “cologne” has become a generic for a
weakly concentrated perfume and/or a man’s fine fragrance. The second
category of perfume grouping is by scent family and scent family subtype.
Scent families are designated with traditional classification terms (originating
from around 1900) and modern terms (since 1945). The main scent families
are Floral, Chypre, Fougère, Marine/Ozonic, Oriental, Citrus, Green, and,
most recently, Gourmand. Scent family subtypes include terms such as fresh,
aldehyde, amber, fruity, spicy, woody, and animalic.
 Herz (2005)- In English, aromatic, fragrant, pungent, redolent,

and stinky exhaust the list of adjectives that specifically describe olfactory
stimuli and nothing else. More common terms used to describe odors,
like floral or fruity, are references to the odor-producing objects (flowers and
fruits), not the odors themselves. We also borrow terms from other senses;
chocolate smells sweet, grass smells green, and so on.
 Paul M. Wise, Mats J. Olsson and William S. Cain- The relationship between
odor quality and molecular properties is arguably the most important issue in
olfaction. Despite sophistication in the chemical characterization of molecules,
accompanying perceptual characterization has had little quantitative
usefulness, relying mostly on enumerative description. As a result of weak
interest in the topic outside industry and little agreement regarding how to
measure quality, the field of olfactory psychophysics has failed to develop a
substantial database for odor quality and has offered little help to other
70
researchers, e.g. neurobiologists, in choice of stimuli, interpretation of

outcome or testable hypotheses. This review scrutinizes how psychophysicists
and others have measured quality and offers criteria for useful techniques.
Most measures have had a subjective component that makes them
anachronistic with modern methodology in experimental behavioral science,
indeterminate regarding the extent of individual differences, unusable with
infra-humans and of unproved ability to discern small differences. Techniques
based upon performance, rather than on the more common reporting of mental
content, offer firmer possibilities for growth. These techniques inevitably tap the
discriminative basis of perception. The non-subjective techniques have high
sensitivity, can have counterparts in infrahuman research, are suitable to
examine individual differences and yield non-negotiable answers with potential
archival value. Discriminative techniques have their limitations, too—
principally excess sensitivity that abridges their use to comparisons between
similar-smelling stimuli. Research has begun to extend that range and may
overcome the limitation. Application of discriminative methods may have the
side-effect of shifting focus in structure–activity research from searches for
molecular least common denominators that underlie often vague similarity to
the search for molecular properties of importance in discrimination of small
differences.
 Holland and Rescorla (1975)- The second assessment of the reward value of
perfume is whether it serves as a reinforcer for human behavior. There have
been no empirical investigations regarding the reinforcing value of perfume.
However, observation of human behavior suggests that perfume is an
inherently reinforcing stimulus, to the extent that it is deliberately sought out
and its application is repeatedly performed with the apparent outcome of
pleasure. Thus, within a classical conditioning paradigm one might predict that
a favored perfume could act like an unconditioned stimulus, such that another
neutral stimulus would gain reinforcement value after being paired with the
perfume. This is anecdotally supported by the experience we may have upon
meeting a stranger who is wearing the same perfume as someone we have very
fond feelings towards—such encounters can generate a positive bias in our
attitudes towards the stranger. This supposition however needs to be put to
71
rigorous test. In all likelihood, a favored perfume initially comes to be

preferred as a consequence of appetitive classical conditioning, for example,
the association of a particular (hedonically inert) scent with positive emotions
or with a loved one. After the perfume becomes endowed with conditioned
value, it can then function as a second-order conditioned reinforcer.
 Kandhasamy Sowndharajan and Songmun Kim (2016)- The influence of

fragrances such as perfumes and room fresheners on the psychophysiological
activities of humans has been known for a long time, and its significance is
gradually increasing in the medicinal and cosmetic industries. A fragrance
consists of volatile chemicals with a molecular weight of less than 300 Da that
humans perceive through the olfactory system. In humans, about 300 active
olfactory receptor genes are devoted to detecting thousands of different
fragrance molecules through a large family of olfactory receptors of a diverse
protein sequence. The sense of smell plays an important role in the
physiological effects of mood, stress, and working capacity.
Electrophysiological studies have revealed that various fragrances affected
spontaneous brain activities and cognitive functions, which are measured by
an electroencephalograph (EEG). The EEG is a good temporal measure of
responses in the central nervous system and it provides information about the
physiological state of the brain both in health and disease. The EEG power
spectrum is classified into different frequency bands such as delta (0.5–4 Hz),
theta (4–8 Hz), alpha (8–13 Hz), beta (13–30 Hz) and gamma (30–50 Hz), and
each band is correlated with different features of brain states. A quantitative
EEG uses computer software to provide the topographic mapping of the brain
activity in frontal, temporal, parietal and occipital brain regions. It is well
known that decreases of alpha and beta activities and increases of delta and
theta activities are associated with brain pathology and general cognitive
decline. In the last few decades, many scientific studies were conducted to
investigate the effect of inhalation of aroma on human brain functions. The
studies have suggested a significant role for olfactory stimulation in the
alteration of cognition, mood, and social behavior.
72
 Constance Claseen, David Howes and Anthony Synnott (1994)- Smell is a

social phenomenon, given particular meanings and values by different
cultures. Odors form the building blocks of cosmologies, class hierarchies, and
political odors. They can enforce social structures or transgress them, unite
people or divide them, empower or disempower. The authors argue that the
sociology of smell is repressed in the modern West, and its social history
ignored. This book breaks the "olfactory silence" of modernity. It offers the
first comprehensive exploration of the cultural role of odors in Western history
- from antiquity to the present. It also covers a wide variety of non-Western
societies. Its topics range from the medieval concept of the "odor of sanctity",
to the aromatherapies of South America, and from olfactory stereotypes of
gender and ethnicity in the modern West to the role of smell in postmodernity.
Its subject matter will fascinate anyone who likes to nose around in the inner
workings of culture.
 Fiore A. M., Yah X. and Yoh E. (2000)- Investigated the effects of

atmospherics (i.e., a product display, pleasant and [in]appropriate ambient
fragrances) on approach responses toward a product (global attitude, purchase
intention, estimated price, and price the customer is willing to pay) and
pleasurable experiences (sensory, affective, and cognitive pleasure). In
addition, the mediating effects of sensory, affective, and cognitive pleasure on
approach responses toward a product were examined. Statistical analysis of
responses of 109 female subjects each randomly assigned to one of four
treatments showed that the appropriately fragranced display generated the
most positive effect on approach responses and pleasurable experiences. A
component of cognitive pleasure (seeing oneself in a fantasy) and
multisensory pleasure mediated two approach responses: attitude toward the
product and purchase intention. The authors suggest the importance of
combining a display with environmental fragrancing as a marketing tool, but
careful selection and application of environmental fragrances are required
73
 Milinski M. and Wedekind C. (2001)- Fragrances have been used since at

least 5000 years ago and all traditional scents are found in modern perfumes.
Although perfumes are obviously involved in sexual communication, the
significance of great individual differences in preference for fragrances is an
evolutionary puzzle. The major histocompatibility complex (MHC) is a highly
polymorphic and conserved set of genes that plays an important role in
immune function in vertebrates. Both mice and humans have been shown to
prefer the body odor of potential partners that have a dissimilar MHC
genotype, which would result in heterozygous offspring. We tested whether
individual preferences for perfume ingredients correlate with a person's MHC
genotype. The human MHC is called HLA (human leukocyte antigen). A total
of 137 male and female students who had been typed for their MHC (HLA-A,
-B, -DR) scored 36 scents in a first test for use on self (“Would you like to
smell like that yourself?”) and a subset of 18 scents 2 years later either for use
on self or for a potential partner (“Would you like your partner to smell like
that?”). An overall analysis showed a significant correlation between the MHC
and the scorings of the scents “for self” in both tests. In a detailed analysis we
found a significant interaction of the two most common HLAs with the rating
of the 36 scents in the first study as well as with the 18 scents in the second
study when evaluated for self. This result suggests that persons who share, for
example, HLA-A2, have a similar preference for any of the perfume
ingredients. The significant repeatability of these preferences in the two tests
showed that the volunteers that had either HLA-A1 or HLA-A2 were
significantly consistent in their preferences for the perfume ingredients
offered. Hardly any significant correlation between MHC genotype and ratings
of the scents “for partner” were found. This agrees with the hypothesis that
perfumes are selected “for self” to amplify in some way body odors that reveal
a person's immunogenetics.
 Schleidt M., Hold B., and Attila G. (1981)- Human axillary odor was used in
testing the ability of male and female subjects to distinguish between gender
and individuals. The subjects also gave a qualitative evaluation of the odors.
The tests were carried out in Japan, Italy, and Germany. Of all three cultures,
74
80% of the participants could significantly distinguish among the odor of

individuals; 50% could identify the person correctly to whom the recognized
odor belonged. Discrimination between male and female odor was
significantly shown by 20% of Italian, 30% of German, and 60% of Japanese
subjects. The qualitative evaluation of male and female odor was the same in
the three cultures: male odor was classified more unpleasant and less pleasant
than female odor. Men classified their own odor more unpleasant than women
did with their own. A cultural difference was found concerning partner's odor:
though men classified it alike (predominantly pleasant), women differed.
Japanese and Italian women classified their partner's odor predominantly
unpleasant, German women predominantly pleasant. In general the Japanese
subjects classified the odors less often pleasant than the Italian and German
subjects did.
 Todrank J., Byrnes D., Wrzesniewski A. and Rozin P. (1995)- Evaluative

conditioning is a form of Pavlovian conditioning in which the “CR” is a
change in preference or liking for the “CS.” It is probably a major cause of
development of likes and dislikes in humans. This research introduces a new,
cross-modal evaluative conditioning procedure using odors as USs and
photographs of people's faces as CSs. When liked, neutral, and disliked odors
that were plausibly connected with people were contingently presented with
photographs of neutral people, subjects shifted their preference ratings for the
people in the photographs presented subsequently without odors in the
direction of their preference ratings for the odors. Subjects who developed
personality sketches of someone “who looked and smelled this way” showed
similar shifts as those who simply studied the odor-picture combinations.
Results also suggest that a plausible connection between odors and people
may play a role in the success of this conditioning.
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CHAPTER 3.3: GAP ANALYSIS
Very less research has been conducted on this topic nationally and internationally. No
studies have been conducted on the level of homegrown Indian brands in this
industry. Considering this gap, present study is undertaken.
76
CHAPTER 4: FINDINGS, ANALYSIS AND DATA

INTERPRETATION
4.1 ANALYSIS AND DATA INTERPRETATION

4.2 FINDINGS
77
CHAPTER 4.1: ANALYSIS
Figure 1
Of the total number of respondents,
 78% of the students are familiar with the brand.
 22% of the students aren’t familiar with the brand.
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Figure 2
 42% of the students wear perfume Regularly.
 34% of the students wear perfume Occasionally.
 14% of the students wear perfume Often.
 10% of the students wear perfume Rarely.
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Figure 3
 62% of the students have purchased products from BELLAVITA.
 38% of the students haven’t purchased products from BELLAVITA.
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Figure 4
 78% of the students are familiar with BELLAVITA Organics.
 22% of the students aren’t familiar with BELLAVITA Organics.
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Figure 5
NOTE: The respondents chose multiple options for this chart.

Of the total number of students,
 42% of the students think Affordability sets BELLAVITA apart from others.
 46% of the students think Essence Of Luxury sets BELLAVITA apart from
others.
 46% of the students think Essence Of Luxury sets BELLAVITA apart from
others.
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Figure 6
 50% of the students usually purchase perfumes from Physical Shops such as
streets, shopping malls, etc.
 50% of the students usually purchase perfumes Online from online stores such
as Amazon, Myntra, Flipkart, Ajio.
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Figure 7
 51% of the students believe Pricing influences their decision to buy perfumes.
 45% of the students believe Packaging influences their decision to buy

perfumes.
 35% of the students believe Brand Reputation influences their decision to buy
perfumes.
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Figure 8
 26% of the students expect their perfumes to last for 3-5 hours.
 46% of the students expect their perfumes to last for 5-7 hours.
 28% of the students expect their perfumes to last for 7-10 hours
85
Figure 9
 45% of the students have purchased Parfum.
 44% of the students have purchased Eau De Parfum.
 34% of the students have purchased Deodrants.
 14% of the students have purchased Eau De Toilette.
 15% of the students have purchased Eau De Cologne.
 17% of the students have purchased Shower Gels.
 13% of the students have purchased Body Lotions.
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Figure 10
 31% of the students came to know about BELLAVITA through Blogs.
 23% of the students came to know about BELLAVITA through Magzines.
 57% of the students came to know about BELLAVITA through Word of

Mouth.
87
Figure 11
 72% of the students like the variety of BELLAVITA products.

 28% of the students don’t like the variety of BELLAVITA products.
88
Figure 12
 74% of the students think the price of the products is reasonable.
 26% of the students think that the products are overpriced.
89
Figure 13
 31 % of the students believe that Axe is the competitor of BELLAVITA.
 25% of the students believe that Beardo is the competitor of BELLAVITA.
 37% of the students believe that Wild Stone is the competitor of

BELLAVITA.
 39% of the students believe that The Man Company is the competitor of
BELLAVITA.
 32% of the students believe that Fog is the competitor of BELLAVITA.
 23% of the students believe that Denver is the competitor of BELLAVITA.
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`Figure 14
 20% of the students have used BELLAVITA products for Over a Month.
 23% of the students have used BELLVITA products for 3 Months.
 27% of the students have used BELLAVITA products for 6 Months.
 30% of the students haven’t Made a Purchase Yet.
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Figure 15
 25% of the students believe BELLAVITA provides Excellent product quality.
 49% of the students believe BELLAVITA provides Good product quality.
 19% of the students believe BELLAVITA provides Fair product quality.
 7% of the students believe BELLAVITA provides Poor product quality.
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Figure 16
 50% of the students apply perfume to their Necks.
 48% of the students apply perfume to their Wrist.
 62% of the students apply perfume to their Clothes.
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Figure 17
 34% of the students are willing to spend Rs. 200-Rs. 500 on a perfume bottle.
 41% of the students are willing to spend Rs. 500-Rs. 1000 on a perfume bottle.
 17% of the students are willing to spend Rs. 1000-Rs. 1500 on a perfume
bottle.
 8% of the students are willing to spend more than Rs. 1500 on a perfume
bottle.
94
Figure 18
 40% of the students prefer Oriental scented perfumes.
 44% of the students prefer Woody scented perfumes.
 46% of the students prefer Floral scented perfumes.
 20% of the students prefer Fruity scented perfumes.
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Figure 19
 41% of the students are Satisfied with BELLAVITA products.
 45% of the students are Delighted with BELLAVITA products.
 14% of the students are Dissatisfied with BELLAVITA products.
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Figure 20
 31% of the students have purchased perfume from BELLAVITA.
 34% of the students have purchased perfume from Wild Stone.
 45% of the students have purchased perfume from The Man Company.
 29% of the students have purchased perfume from Axe.
 36% of the students have purchased perfume from Fog.
 20% of the students have purchased perfume from Denver.
 16% of the students have purchased perfume from Beardo.
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CHAPTER 4.2: FINDINGS
 BELLAVITA enjoys significant brand recognition and awareness among

students, indicating a strong presence in the market.
 The survey provides insights into consumer preferences regarding perfume
usage frequency, types, and purchase decision influencers.
 Consumers have specific expectations regarding perfume attributes, and while
there's generally positive sentiment towards BELLAVITA products, there are
areas for improvement to address dissatisfaction.
 Understanding consumer spending patterns on perfumes can inform pricing
strategies and product positioning.
 Word of mouth is a prominent channel for brand awareness, emphasizing the
importance of effective marketing strategies, including influencer
collaborations and social media engagement.
 BELLAVITA's USP is perceived as a balance between affordability and
luxury, but clear messaging is essential for consumer understanding.
 Segmenting the consumer base based on behaviour and preferences can enable
BELLAVITA to tailor marketing strategies effectively.
 Incorporating sustainable practices can differentiate BELLAVITA and appeal
to environmentally conscious consumers.
 Continuous innovation is crucial to staying competitive and meeting evolving
consumer preferences in the perfume market.
 Providing a seamless and personalized customer experience is essential for
building lasting relationships and fostering brand loyalty.
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CHAPTER 5: CONCLUSION AND RECOMMENDATION
5.1 CONCLUSION
5.2 RECOMMENDATIONS
99
CHAPTER 5.1: CONCLUSION
The perfume industry is one of the most dynamic and competitive sectors in the
global market. With an array of brands offering various fragrances and product
ranges, understanding consumer behaviour and preferences becomes crucial for
companies to thrive in this industry. In this comprehensive analysis, we delve into the
insights obtained from a detailed survey conducted among students regarding their
familiarity, preferences, and perceptions of different perfume brands, with a particular
focus on BELLAVITA. By analysing the data gathered, we aim to draw conclusions
regarding consumer behaviour, preferences, and perceptions within the perfume
industry.
The survey reveals that a significant majority of students (78%) are familiar with the
BELLAVITA brand. This indicates a considerable brand presence and awareness
among the target demographic. Additionally, a comparable percentage of students
(78%) are familiar with BELLAVITA Organics, further emphasizing the brand's
visibility and recognition among consumers.
In terms of product usage, the survey provides insights into the frequency with which
students wear perfume. It is observed that a considerable proportion of students wear
perfume regularly (42%) and occasionally (34%). This suggests that perfume is an
integral part of their grooming routine, with varying degrees of usage frequency.
Furthermore, the preference for different types of perfumes, such as Parfum, Eau De
Parfum, and Deodrants, highlights the diverse choices among consumers.
Consumer purchase decisions are influenced by several factors, as indicated by the

survey findings. Pricing emerges as a significant determinant, with 51% of students
acknowledging its influence on their perfume purchases. Packaging and brand
reputation also play pivotal roles, with 45% and 35% of students respectively
100
considering these factors while making their buying decisions. These findings
underscore the importance of marketing strategies that address these influential
factors to attract and retain customers.
Consumers have distinct expectations regarding the attributes of perfumes,

particularly concerning longevity and fragrance type. The survey indicates that a
substantial percentage of students expect their perfumes to last for 5-7 hours (46%).
Additionally, preferences for fragrance types vary, with woody scents being the most
preferred (44%), followed by floral scents (46%). These insights highlight the
importance of product formulation and development to align with consumer
preferences.
The survey reveals an equal preference among students for purchasing perfumes both
offline (50%) and online (50%). This indicates the growing influence of e-commerce
platforms in the perfume industry and underscores the importance for brands to have a
strong presence across both offline and online channels to cater to diverse consumer
preferences.
Understanding consumers' perceptions of competing brands is crucial for assessing

market positioning and competitive strategies. The survey identifies several brands
perceived as competitors to BELLAVITA, including Axe, Beardo, Wild Stone, The
Man Company, Fog, and Denver. Analysing these perceptions can inform strategic
decisions aimed at differentiating BELLAVITA from its competitors and
strengthening its market position.
The survey indicates positive sentiments regarding BELLAVITA products, with a

significant percentage of students expressing satisfaction (41%) and delight (45%)
with the brand's offerings. However, it is noteworthy that a portion of respondents
(14%) reported dissatisfaction, indicating areas for potential improvement in product
quality or customer experience.
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Consumers exhibit varying levels of price sensitivity when it comes to purchasing

perfumes. The survey highlights that a significant proportion of students are willing to
spend between Rs. 500 to Rs. 1000 on a perfume bottle (41%), followed by those
willing to spend between Rs. 200 to Rs. 500 (34%). Understanding these spending
patterns can inform pricing strategies and product positioning to cater to different
consumer segments effectively.
The survey sheds light on the channels through which students became aware of
BELLAVITA, with word of mouth being the most prominent (57%), followed by
blogs (31%) and magazines (23%). These findings underscore the importance of
effective marketing strategies, including influencer collaborations and social media
engagement, to enhance brand awareness and reach a wider audience.
The survey findings reveal interesting insights into how students perceive
BELLAVITA's unique selling proposition (USP) compared to other perfume brands.
It is noteworthy that 42% of students believe that affordability sets BELLAVITA
apart from others, while an equal percentage (46%) consider the essence of luxury as
the distinguishing factor. This suggests that BELLAVITA has effectively positioned
itself as a brand that offers a balance between affordability and luxury, catering to a
wide range of consumer preferences. However, it is essential for the brand to maintain
clarity in its messaging to ensure that consumers understand and resonate with its
USP.
While a majority of students perceive BELLAVITA products positively in terms of

quality, it is crucial for the brand to address the concerns raised by the 7% of students
who perceive the products as poor in quality. Continuous improvement in product
formulation, quality control measures, and customer feedback mechanisms can help
BELLAVITA maintain and enhance its reputation for offering high-quality perfumes.
Additionally, highlighting positive reviews and testimonials from satisfied customers
can further bolster consumer confidence in the brand's products.
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The survey findings indicate diverse preferences among consumers regarding the
application of perfumes. While 50% of students prefer applying perfume to their
necks, a significant portion (48%) opts for applying it to their wrists, and a majority
(62%) chooses to apply it to their clothes. Understanding these preferences can inform
product development and packaging designs to ensure ease of application and
maximize fragrance longevity. Additionally, educating consumers on optimal
application techniques can enhance their overall perfume experience and satisfaction
with the product.
The varying expectations regarding perfume longevity, with significant percentages of

students expecting perfumes to last between 5-7 hours (46%) and 7-10 hours (28%),
underscore the importance of product development and formulation. BELLAVITA
can leverage these insights to innovate and introduce long-lasting fragrance
formulations that align with consumer expectations. Furthermore, offering a diverse
range of fragrances with different longevity options can cater to the preferences of
different consumer segments, thereby expanding the brand's market reach and appeal.
While preferences for woody (44%) and floral (46%) scents dominate among
students, it is essential for BELLAVITA to also consider catering to niche fragrance
preferences, such as oriental and fruity scents. By diversifying its product portfolio
and offering a wide range of fragrance options, the brand can effectively target
different consumer segments and capitalize on emerging trends in the perfume
market. Market research and trend analysis can provide valuable insights into
evolving consumer preferences, enabling BELLAVITA to stay ahead of the
competition and maintain its relevance in the market.
Fostering brand loyalty and advocacy among consumers is critical for long-term
success in the perfume industry. BELLAVITA can achieve this by prioritizing
customer satisfaction, engaging with consumers through personalized experiences,
and fostering a sense of community among its customer base. Loyalty programs,
103
exclusive offers, and personalized recommendations based on individual preferences

can incentivize repeat purchases and strengthen the emotional connection between
consumers and the brand. Additionally, encouraging satisfied customers to share their
experiences through word of mouth, social media, and online reviews can amplify
brand visibility and attract new customers, further solidifying BELLAVITA's position
as a trusted and preferred perfume brand.
Segmentation of the consumer base can provide valuable insights for crafting targeted
marketing strategies. By analysing the survey data, BELLAVITA can identify distinct
consumer segments based on factors such as purchasing behaviour, fragrance
preferences, and brand perception. For example, consumers who prioritize
affordability may respond well to promotions highlighting value-oriented pricing,
while those seeking luxury may be attracted to campaigns emphasizing premium
ingredients and elegant packaging. By tailoring marketing messages and promotional
offers to specific consumer segments, BELLAVITA can maximize the effectiveness
of its marketing efforts and enhance engagement with its target audience.
In recent years, there has been a growing emphasis on sustainability and ethical
practices in the consumer goods industry, including the perfume sector. BELLAVITA
can differentiate itself by incorporating sustainable sourcing, manufacturing, and
packaging practices into its operations. This can involve using natural and organic
ingredients, minimizing environmental impact throughout the production process, and
adopting eco-friendly packaging materials. By aligning with consumer values related
to sustainability and ethics, BELLAVITA can appeal to environmentally conscious
consumers and enhance its brand reputation as a socially responsible company.
Influencer marketing has emerged as a powerful tool for reaching and engaging with
target audiences, particularly among younger demographics. BELLAVITA can
leverage influencer partnerships and collaborations to amplify brand visibility, drive
product awareness, and foster authentic connections with consumers. By partnering
with influencers who align with the brand's values and target demographics,
104
BELLAVITA can leverage their reach and influence to promote its products
effectively. Additionally, co-creating content with influencers can provide valuable
social proof and endorsement, further enhancing brand credibility and trust among
consumers.
To stay competitive in the fast-paced perfume industry, BELLAVITA must prioritize

continuous innovation and product development. This involves staying abreast of
emerging trends, consumer preferences, and technological advancements in fragrance
formulation and packaging. By investing in research and development, BELLAVITA
can introduce new and innovative products that resonate with evolving consumer
tastes and preferences. Whether it's experimenting with novel fragrance combinations,
introducing sustainable packaging solutions, or incorporating advanced delivery
systems, innovation can drive differentiation and foster consumer loyalty in an
increasingly crowded market.
In today's digital age, providing a seamless and personalized customer experience is

essential for building lasting relationships with consumers. BELLAVITA can enhance
customer experience and engagement by investing in user-friendly e-commerce
platforms, implementing omnichannel marketing strategies, and offering personalized
product recommendations based on individual preferences and purchase history.
Additionally, proactive customer service, hassle-free returns, and loyalty rewards
programs can incentivize repeat purchases and foster brand loyalty. By prioritizing
customer satisfaction at every touchpoint, BELLAVITA can cultivate a loyal
customer base and drive long-term success in the competitive perfume market.
In conclusion, the perfume industry presents both challenges and opportunities for
brands like BELLAVITA seeking to differentiate themselves and succeed in a highly
competitive market landscape. By leveraging the insights obtained from the
comprehensive survey analysis and implementing strategic initiatives focused on
consumer segmentation, sustainability, influencer marketing, innovation, and
customer experience, BELLAVITA can strengthen its brand positioning, drive sales
105
growth, and foster long-term relationships with its target audience. With a
commitment to understanding and meeting consumer needs, BELLAVITA can
navigate market dynamics effectively and emerge as a leader in the global perfume
industry.
CHAPTER 5.2: RECOMMENDATIONS
 Address areas of dissatisfaction by improving specific attributes of

BELLAVITA perfumes based on consumer feedback. This could involve
refining scent profiles, longevity, packaging, or introducing new product lines
to cater to diverse preferences.
 Strengthen word-of-mouth marketing efforts by engaging with influencers and
leveraging social media platforms effectively. Develop clear and compelling
messaging to communicate BELLAVITA's unique selling proposition (USP)
of balancing affordability and luxury, ensuring it resonates with the target
audience.
 Utilize consumer behaviour and preference data to segment the market
effectively. Tailor marketing strategies and product offerings to cater to the
specific needs and desires of different consumer segments, maximizing
relevance and engagement.
 Analyse consumer spending patterns to inform pricing strategies. Balance
affordability with perceived value to maintain competitiveness while
maximizing profitability. Consider offering various price points to appeal to
different consumer segments.
 Continuously innovate to stay ahead of competitors and meet evolving
consumer preferences. Incorporate sustainable practices throughout the value
chain to differentiate BELLAVITA and appeal to environmentally conscious
consumers.
 Prioritize providing a seamless and personalized customer experience across
all touchpoints, from online shopping to post-purchase support. Invest in
106
technologies such as AI-powered chatbots or personalized recommendations to

enhance customer satisfaction and foster brand loyalty.
 Establish a feedback loop to gather ongoing insights from consumers.
Regularly solicit feedback through surveys, social media channels, and other
communication channels to monitor satisfaction levels, identify areas for
improvement, and adapt strategies accordingly.
 Invest in training and development programs for employees to ensure they are
equipped to deliver exceptional customer service and represent the brand
effectively. Empower frontline staff to address customer inquiries and
concerns promptly and professionally.
107
BIBLIOGRAPHY
REFERENCES:
 Burr C. New York: The Perfect Scent. 2007

 Moran J. La Quinta, CA: Crescent House Publishing; Fabulous Fragrances
II. 2000
 Herz R. S. The unique interaction between language and olfactory perception
and cognition. New York: Nova Science; Trends in Experimental Psychology
Research. 2005:91–109.
 Paul M. Wise, Mats J. Olsson and William S. Cain Chemosensory Perception
Laboratory, Department of Surgery (Otolaryngology), University of
California, San Diego, La Jolla, CA 92093-0957, USA and Department of
Psychology, Uppsala University, S-75142 Uppsala, Sweden.
 Holland P. C., Rescorla R. A. Second-order conditioning with food
unconditioned stimulus. Journal of Comparative and Physiological
Psychology. 1975;88:459–67.
 Kandhasamy Sowndharajan and Songmun Kim: Influence of fragrances on
human psychophysiological activity: Publishing 2016 Nov. 29
 Classen C., Howes D., Synnott A. New York: Routledge; Aroma: The Cultural
History of Smell. 1994
 Fiore A. M., Yah X., Yoh E. Effects of product display and environmental
fragrancing on approach responses and pleasurable experiences. Psychology &
Marketing. 2000;17:27–54.
 Milinski M., Wedekind C. Evidence for MHC-correlated perfume preferences
in humans. Behavioural Ecology. 2001;12:140–49
 Schleidt M., Hold B., Attila G. A cross-cultural study on the attitude towards
personal odors. Journal of Chemical Ecology. 1981;7:19–31.
 Todrank J., Byrnes D., Wrzesniewski A., Rozin P. Odors can change
preferences for people in photographs: A cross-modal evaluative conditioning
study with olfactory USs and visual CSs. Learning and
Motivation. 1995;26:116–40.
108
BOOKS:
 ESSENCE AND ALCHEMY

 PERUMERY CODE OF ETHICS
 SENSE OF SMELL
 THE CHEMISTRY OF ESSENTIAL OILS
 THE ART OF PERFUMERY
WEBSITES:
 https://www.researchgate.net
 https://www.academia.edu
 https://www.ncbi.nlm.nih.gov
 https://digitalcommons.odu.edu
 https://www.researchwithnj.com
 https://www.sciencedirectassets.com
109
ANNEXURE
QUESTIONNAIRE
1. Are you familiar with the brand BELLAVITA Organics?

A. Yes
B. No
2. How often do you wear perfume?

A. Regularly
B. Occasionally
C. Often
D. Rarely
3. Have you purchased any product from BELLAVITA?

A. Yes
B. No
4. What do you think sets BELLAVITA apart from others?

A. Affordability
B. Essence of Luxury
C. Long Lasting Scent
5. Where do you usually purchase perfumes from?

A. Physical Stores
B. Online
110
6. What factors influence your decision to buy a perfume?

A. Price
B. Packaging
C. Brand Reputation
7. How long do you expect a perfume to last throughout the day?

A. 3-5 hours
B. 5-7 hours
C. 7-10 hours
8. Which products have you purchased from BELLAVITA?

A. Parfum
B. Eau De Parfum
C. Deodrants
D. Eau De Toilette
E. Eau De Cologne
F. Shower Gels
G. Body Lotions
9. How did you come to know about BELLAVITA?

A. Blogs
B. Magzines
C. Word of Mouth
10. Did you like the variety of BELLAVITA products?

A. Yes
B. No
111
11. Is the price range reasonable?

A. Yes
B. No
12. Who do you think are the competitors of BELLAVITA in this industry?
A. Axe
B. Beardo
C. Wild Stone
D. The Man Company
E. Fog
F. Denver
13. How long have you been using BELLAVITA products?

A. Over a month
B. 3 Months
C. 6 Months
D. Not Made a Purchase Yet
14. What do you think about the quality of BELLAVITA products?

A. Excellent
B. Good
C. Fair
D. Poor
15. How do you typically apply perfume?

A. Neck
B. Wrist
C. Clothing
112
16. Are there any specific scents or types of perfumes you would like to see from
BELLAVITA in the future?
A. Yes
B. No
17. How much are you willing to spend on a bottle of perfume?

A. Rs. 200-Rs. 500
B. Rs. 500-Rs. 1000
C. Rs. 1000-Rs. 1500
D. More that Rs. 1500
18. What scents do you prefer?

A. Oriental
B. Woody
C. Floral
D. Fruity
19. Are you satisfied with BELLAVITA products?

A. Satisfied
B. Delighted
C. Dissatisfied
113
20. Have you purchased any perfume from different brands? If yes, which brand do
you prefer?
A. BELLAVITA
B. Wild Stone
C. The Man Company
D. Axe
E. Fog
F. Denver
G. Beard
114
“A Study on EVA: Its Influence on Investor Choices and Financial Strategy”
Strategy”
By
Mr. Nishant Nilesh Pendharkar
(Roll No. 52
52)

Mr. Varun Jashnani

College,
Ulhasnagar
April, 2024
i
(MAHARASHTRA)
Certificate
This is to certify that Mr. Nishant Nilesh Pendharkar has worked and duly completed his
Project Work for the degree of Bachelor of Management Studies under the Faculty of
Commerce in the subject of Finance and his project is entitled, “A Study on EVA: Its
Influence on Investor Choices and Financial Strategy” under my supervision.
I further certify that the entire work has been done by the learner under my guidance and that
no part of it has been submitted previously for any Degree or Diploma of any University. It is
his own work and facts reported by her/his personal findings and investigations.
Mr. Varun Jashnani

Guiding Teacher
Date of submission: 06 April, 2024
ii
I the undersigned Mr. Nishant Nilesh Pendharkar here by, declare that the work embodied in
this project work titled “A Study on EVA: Its Influence on Investor Choices and Financial
Strategy” forms my own contribution to the research work carried out under the guidance of
Mr. Varun Jashnani, is a result of my own research work and has not been previously
submitted to any other University for any other Degree/ Diploma to this or any other
University.
Wherever reference has been made to previous works of others, it has been clearly indicated as
such and included in the bibliography.
I, here by further declare that all information of this document has been obtained and presented
in accordance with academic rules and ethical conduct.
Mr. Nishant Nilesh Pendharkar

(Roll No. 52)
Certified by,
Mr. Varun Jashnani

Guiding Teacher
iii
Evaluation
This Research Project on “A Study on EVA: It’s Influence on Investor Choices and
Financial Strategy” submitted by Mr .Nishant Nilesh Pendharkar of TYBMS (Semester – VI)
is evaluated as per guidelines of University of Mumbai, via Circular No. UG/89 of 2018-19 on
Revised Syllabus - CBCS for the TYBMS (Semester – V and VI) w.e.f. academic year 2023-
2024
External Examiner:
Name: _____________________________________
Signature: _____________________________________
Internal Examiner:
Name: _____________________________________
Signature: _____________________________________
iv
Acknowledgement
I would like to acknowledge the following as being idealistic channels and freshdimensions in
the completion of this project.
project.
I would like to thank my Principal, Dr. Manju Lalwani Pathak for providing the necessary
I would also like to thank my Head of Department Dr. Sunil lalchandani for providing the
necessary facilities required for completion of this project
I would also like to express my sincere gratitude towards my project guide Mr. Varun
Jashnani whose guidance and care made the project successful.
Lastly, I would like to thank each and every person who directly or indirectly helped me in the
completion of the project especially my Parents and Peers who supported me throughout my
project and helped me to complete the project within the time frame.
v
Executive Summary
Economic Value Added (EVA) is a powerful financial metric that assesses an organization's
profitability by comparing its operating profit with the cost of capital. EVA provides valuable
insights into a company's ability to generate returns that exceed investor expectations and the
cost of capital, thus creating value for shareholders.
By analyzing EVA, stakeholders can gain a comprehensive understanding of a company's

operational efficiency and effectiveness in creating shareholder value. EVA goes beyond
traditional profit measurements by considering the true economic profit generated by a
business, making it a crucial tool for evaluating financial performance.
However, EVA is not without its limitations. It relies on estimations, particularly regarding the
cost of capital, which can introduce subjectivity into the final figure. Additionally, EVA may
not fully capture the value of intangible assets like brand recognition or intellectual property,
leading to an incomplete assessment of a company's true value.
Despite these limitations, EVA remains a significant indicator for financial analysts and
investors. When combined with other financial metrics and industry analysis, EVA offers
valuable insights that can greatly improve the decision-making process. By prioritizing EVA,
companies can make well-informed choices to enhance their performance and increase
shareholder value
In conclusion, Economic Value Added (EVA) serves as a robust financial indicator that
evaluates an organization's capacity to generate profits from its invested capital. It provides a
holistic perspective on a company's financial health and its ability to create long-term
shareholder value. EVA proves to be a valuable tool for assessing a company's financial well-
being and driving sustainable growth.
vi
• Chapter 1 covers the Meaning Economic Value Added, Investment & Investor, Origin
& Evolution of EVA Calculating EVA, Application of EVA, Limitations of EVA,
Advantages and Disadvantages of EVA, Risk and Return relation, Investor Decision
Making Process, How EVA influence Investors Decision, Implementation Challenges
Economic value added
• Chapter 2 covers the Objectives, Methods of Data Collection, Sample Design and Area
of Study.
• Chapter 3 covers the Review of Literature and Gap Analysis of the study.
Overall, the project report has been framed in simple and lucid language, so that, even
Alay man can understand the contents, specially the research findings which are valuable
for every reader.
vii
Contents
No. Content Page
No.
1 PRELIMINARY
i
Title Sheet
ii
Certificate
iii
Declaration
iv
Evaluation
v
Acknowledgement
vi
Executive summary Contents
viii
List of tables
xi
List of Figures
2 Chapter1: INTRODUCTION
1.1 Economic Value Added. 2
1.2 Origin & Evolution of Economic Value Added. 14
1.3 Assumptions of Economic Value Added Methods 16
1.4 Calculating Economic Value Added (EVA) 17
1.5 Application of Economic Value Added. 18
1.6 Limitations of Economic Value Added. 19
1.7 Investment 21
1.8 Risk and Return 28
1.9 Investor 33
1.10 Investor Decision Making Process 36
1.11 How EVA influence Investors Decision 40
1.12 Implementation Challenges Economic value added 42
3 Chapter2: RESEARCH DESIGN

2.1Introduction 45
2.2 Objective 45
2.5 Area of Study 50
viii
4. Chapter3: REVIEW OF LITERATURE
3.1 Introduction 55
3.2 Studies on Economic Value Added 55
3.3 Gap Analysis 59
5. Chapter4: SURVEY FINDINGS
4.1 Findings and Analysis 60
6. Chapter5: CONCLUSION AND RECOMMENDATIONS
5.1 Conclusion 75
7. BIBLIOGRAPHY 79
8. ANNEXURE
Questionnaire 82
ix
List of Tables
No. Table Heading Page No.
1.1 Example of Compounding Interest. 26
1.2 Factors Affecting Investment Decisions 38
4.1 Age of Respondents 61
4.2 Types of Investment 62
4.3 Risk tolerance level of respondents 63
4.4 Primary investment goals 64
4.5 Gathering Information 65
4.6 Portfolio Review Frequency 66
4.7 Familiar with the concept of EVA 67
4.8 Understanding EVA Principles 68
4.9 Importance of EVA Factors 69
4.10 EVA Consideration 70
4.11 Gathering Information about EVA 71
4.12 Companies with strong EVA practices tend to 72
outperform financially in the long term
4.13 Would you be interested in learning more about 73
EVA investing?
x
List of Figures
No. Figure Heading Page No.
1.1 Types Of Investment Risk 29
1.2 Types of Investment Returns 31
1.3 Importance Of Understanding
36
The Investment Decision Making Process
2.1 Badlapur Station Board 50
2.2 Badlapur City Map 50
2.3 Ulhasnagar Station Board 51
2.4 Ulhasnagar Map 51
4.2 Types of Investment 62
4.3 Risk tolerance level of respondents 63
4.4 Primary investment goals 64
4.5 Gathering Information 65
4.6 Portfolio Review Frequency 66
4.7 Familiar with the concept of EVA 67
4.8 Understanding EVA Principles 68
4.9 Importance of EVA Factors 69
4.10 EVA Consideration 70
4.11 Gathering Information about EVA 71
4.12 Companies with strong EVA practices tend to 72
outperform financially in the long term
4.13 Would you be interested in learning more about 73
EVA investing?
xi
A Study on EVA: Its Influence on Investor Choices and Financial Strategy.
1.1 ECONOMIC VALUE ADDED.

1.2 ORIGIN OF ECONOMIC VALUE ADDED & EVOLUTION OF
ECONOMIC VALUE ADDED.
1.3 ASSUMPTIONS OF ECONOMIC VALUE ADDED METHODS
1.4 CALCULATING ECONOMIC VALUE ADDED (EVA)
1.5 APPLICATION OF ECONOMIC VALUE ADDED.
1.6 LIMITATIONS OF ECONOMIC VALUE ADDED.
1.7 INVESTMENT
1.8 RISK AND RETURN
1.9 INVESTOR
1.10. INVESTOR DECISION MAKING PROCESS
1.11 HOW EVA INFLUENCE INVESTORS DECISION
1.12 IMPLEMENTATION CHALLENGES ECONOMIC VALUE ADDED
1
1.1 ECONOMIC VALUE ADDED

Economic Value Added (EVA) serves as a crucial financial indicator that
assesses the profitability of a company by comparing the profits it generates with the
capital it employs. Essentially, EVA determines the value a company brings to its
shareholders by considering the capital's opportunity cost invested in the company.
Economic Value Added (EVA) serves as a crucial financial indicator used to

evaluate the economic profit produced by a corporation. This metric showcases the
value a company generates for its shareholders while taking into consideration the
capital costs involved. Essentially, EVA helps in determining if a company's activities
are yielding profits that exceed the capital investment made in the company.
EVA is a comprehensive measure that goes beyond traditional accounting

methods by focusing on the true economic profit generated by a business. By
deducting the cost of capital from the net operating profit, EVA provides a clearer
picture of how efficiently a company is utilizing its resources to create value for its
shareholders.
The concept of EVA is rooted in the idea that a company should generate
returns that are higher than the cost of the capital it uses. By analyzing EVA, investors
and stakeholders can gain insights into the company's ability to create wealth and
assess its overall financial performance in a more holistic manner.
EVA, or Economic Value Added, is a financial metric that measures the value
created by a company after accounting for its cost of capital. It is calculated by
subtracting the company's net operating profit after taxes (NOPAT) from its cost of
capital, which comprises both the cost of equity and the cost of debt. The purpose of
EVA is to provide a more accurate assessment of the company's economic
performance by considering the expenses associated with financing its operations. By
analyzing EVA, stakeholders can gain insights into the company's ability to generate
value above and beyond its cost of capital. Essentially, a positive Economic Value
Added (EVA) signifies that a company is producing profits that surpass its capital
costs, ultimately creating value for its shareholders. On the other hand, a negative
2
EVA implies that the company's activities are failing to generate ample returns to
offset the expenses of its capital.
In summary, a positive EVA demonstrates the company's ability to generate

wealth for its shareholders by earning more than the cost of capital, while a negative
EVA indicates that the company is not effectively utilizing its resources to generate
returns that exceed the cost of capital.
Limitations of EVA are Estimation Reliance: EVA calculations involve

estimations, particularly regarding the cost of capital. This can introduce a degree of
subjectivity in the final figure. It's crucial to employ well-established methodologies
and acknowledge the inherent limitations of these estimates. Intangible Asset
Challenges: EVA may not fully capture the value of intangible assets like brand
recognition or intellectual property. While these assets can significantly contribute to
a company's long-term value creation potential, they may not be fully reflected in the
EVA calculation.
EVA faces challenges due to its reliance on estimations, especially when it

comes to determining the cost of capital. This reliance on estimates can introduce
subjectivity into the final EVA figure, highlighting the importance of using reliable
methodologies and recognizing the limitations associated with these estimates.
Another limitation of EVA lies in its inability to fully account for intangible
assets such as brand recognition and intellectual property. These assets play a crucial
role in enhancing a company's long-term value creation capabilities, yet they may not
be accurately captured in the EVA calculation. This can lead to an incomplete
assessment of a company's true value and potential for growth.
Although EVA should not be the only factor considered when making
investment decisions, it holds great significance for financial analysts and investors.
When combined with other financial metrics, industry analysis, and a comprehensive
understanding of a company's fundamentals, EVA offers valuable insights that can
greatly improve the decision-making process. By utilizing EVA as a sophisticated tool
for analyzing corporate performance, investors can gain a more profound
3
understanding of a company's actual ability to generate economic profit and its

potential to provide long-term value for shareholders.
Furthermore, EVA can be used in industry analysis to compare the

performance of different companies within the same sector. By comparing the EVA
of companies operating in the same industry, investors can identify which companies
are creating more value for their shareholders and have a competitive advantage.
By utilizing EVA as a sophisticated tool for analyzing corporate performance,

investors can make more informed investment decisions. It helps them identify
companies that have a sustainable competitive advantage and are capable of
generating long-term value for shareholders. EVA also provides insights into a
company's operational efficiency and its ability to allocate capital effectively.
To summarize, Economic Value Added (EVA) is a robust financial indicator

that evaluates an organization's capacity to generate profits from its invested capital. It
considers both the company's operating profit and the cost of capital, offering a
holistic perspective on how effectively a company utilizes its resources. By
prioritizing EVA, companies can make well-informed choices to enhance their
performance and enhance shareholder value. Ultimately, EVA serves as a valuable
instrument for evaluating a company's financial well-being and fostering long-term
shareholder value creation.
In summary, Economic Value Added (EVA) is a potent financial measure that

gauges an organization's ability to generate profits from its invested capital. It
encompasses the company's operating profit and the cost of capital, providing a
comprehensive assessment of how efficiently a company utilizes its resources. By
focusing on EVA, companies can make informed decisions to enhance their
performance and increase shareholder value. Ultimately, EVA plays a crucial role in
evaluating a company's financial health and driving long-term shareholder value
creation.
4
To conclude, Economic Value Added (EVA) is a robust financial metric that

serves as an indicator of an organization's profitability from its invested capital. It
takes into consideration both the company's operating profit and the cost of capital,
offering a comprehensive evaluation of how effectively a company utilizes its
resources. By prioritizing EVA, companies can make informed decisions to improve
their performance and enhance shareholder value. Ultimately, EVA proves to be a
valuable tool for assessing a company's financial well-being and fostering long-term
1.1.2. ADVANTAGES OF ECONOMIC VALUE ADDED
I.Sharper Focus on Value Creation: Unlike traditional metrics like net income, EVA
goes beyond simply measuring profit. It directly focuses on the excess return
generated by a company, highlighting its ability to create value for shareholders
beyond the minimum required return. This laser focus on value creation helps guide
strategic decisions and resource allocation towards initiatives that directly contribute
to shareholder wealth.
II.Comprehensive Picture of Profitability: Traditional accounting measures often fail

to consider the cost of capital, which represents the minimum return investors expect
for their investment. This omission can distort the true picture of a company's
profitability. EVA addresses this gap by factoring in the cost of capital, providing a
more realistic and comprehensive assessment of a company's ability to generate true
economic profit
.
III.Enhanced Decision-Making Framework: By focusing on value creation and
considering the cost of capital, EVA provides a valuable framework for both
companies and investors to make informed decisions. Companies can utilize EVA to
assess the potential impact of various strategic options on their long-term shareholder
value. Similarly, investors can leverage EVA during investment analysis to identify
companies that are effectively generating excess returns, potentially leading to better
investment choices.
5
IV.Alignment of Interests: EVA can foster a shared focus on value creation, aligning
the interests of management and shareholders. When both parties strive to maximize
the company's economic profit, it can lead to a more collaborative and value-driven
corporate culture.
V.Comparative Performance Analysis: EVA facilitates comparisons across

companies within an industry or even across different sectors. This allows investors
and analysts to assess the relative value creation capabilities of different companies,
providing valuable insights for investment decisions and industry benchmarking.
Similarly, companies can use EVA comparisons to identify areas for improvement
and benchmark their performance against industry leaders.
VI.Risk Management Tool: By explicitly considering the cost of capital, EVA can act
as a risk management tool. It helps companies identify and manage financial risks
associated with capital allocation decisions. By ensuring that investments generate
returns that exceed the cost of capital, companies can mitigate the risk of value
destruction for shareholders.
VII. Potential for Better Performance: While not a guarantee; companies that
consistently strive to maximize EVA have the potential to outperform their peers in
the long run. This is because a focus on creating economic profit incentivizes
companies to make strategic decisions that enhance their long-term value proposition
and overall financial health.
VIII. Flexibility and Adaptability: While primarily used for financial analysis, the
core principles of EVA can be adapted to various contexts. Companies can leverage
the EVA framework to evaluate the financial performance of individual projects,
departments, or even subsidiaries, providing valuable insights for resource allocation
and strategic decision-making at different levels within the organization.
6
1.1.3. DISADVANTAGE OF ECONOMIC VALUE ADDED
I.Subjectivity in Adjustments: Calculating EVA involves certain accounting

adjustments to determine non-operating income and expenses. These adjustments can
be subjective and inconsistent, potentially leading to comparability issues between
companies or even within the same company over time.
II.Difficulty in Measuring Cost of Capital: Accurately determining a company's

weighted average cost of capital (WACC) is crucial for EVA calculations. However,
estimating WACC involves various assumptions and judgments, leading to potential
inaccuracies and impacting the reliability of the EVA measure.
III.Limited Applicability: EVA may not be equally suitable for all types of companies.
It can be more applicable to mature, established companies with significant capital
investments. Emerging companies with high growth potential or companies in
cyclical industries may find EVA less relevant due to the inherent difficulties in
accurately capturing their true value.
IV.Short-Term Focus: Critics argue that EVA may incentivize a short-term focus on
maximizing profits at the expense of long-term investments and strategic initiatives.
This is because EVA primarily focuses on current performance and may not
adequately capture the value of long-term investments that may not yield immediate
returns.
V.Neglect of Non-Financial Factors: EVA solely focuses on financial measures and

may neglect crucial non-financial factors that contribute to a company's overall
success and long-term value creation. These factors could include innovation, brand
reputation, employee morale, and customer satisfaction
.
VI.Potential for Manipulation: Due to the subjectivity involved in adjustments and
WACC estimation, companies may be tempted to manipulate figures to achieve a
desired EVA outcome. This can undermine the integrity and reliability of the metric
as a measure of true economic profit.
7
VII. Implementation and Maintenance Costs: Implementing and maintaining an

EVA system can be costly and time-consuming. This can be a significant burden,
especially for smaller companies, potentially outweighing the benefits offered by the
metric.
VIII. Overreliance on a Single Metric: Overdependence on EVA for decision-making

can lead to neglecting other important financial and non-financial factors. A balanced
approach that considers various metrics and qualitative factors is crucial for making
informed decisions.
IX.Difficulty in Attributing Value Creation: EVA can be challenging to disaggregate

and attribute value creation to specific departments, projects, or individuals within a
company. This can make it difficult to accurately assess individual or team
performance and reward contributions effectively
X.Potential for Employee Discouragement: A sole focus on maximizing EVA may

lead to excessive pressure on employees and managers to achieve short-term financial
goals. This could lead to a demotivated and disengaged workforce, potentially
hampering long-term innovation and growth.
1.1.4. FEATURES OF ECONOMIC VALUE ADDED METHODS
I.Focus on Economic Profit: Unlike traditional measures like net income, EVA goes
beyond simply recording profit. It isolates the excess return generated by a company,
reflecting its ability to create economic profit beyond the minimum required return for
investors.
II.Considers Cost of Capital: Traditional accounting often neglects the cost of

capital, the minimum return investors expect for their investment. EVA explicitly
factors in the WACC, providing a more comprehensive picture of a company's
profitability by reflecting the true cost of financing its operations.
8
III.Performance Metric: EVA serves as a performance metric for companies to gauge

their effectiveness in generating economic profit and creating value for shareholders.
It helps assess whether the company is utilizing its resources efficiently and
generating returns that exceed the cost of capital.
IV.Investment Decision-Making Tool: Investors can leverage EVA during investment

analysis to identify companies that are effectively generating excess returns.
Comparing EVA across companies can help them make informed investment
decisions by prioritizing companies with the potential for superior long-term
V.Incentive for Efficiency: The inherent focus on economic profit in EVA

incentivizes companies to be more efficient in managing their resources and capital.
By optimizing resource allocation and minimizing unnecessary costs, companies can
improve their EVA and ultimately create more value for shareholders.
associated with capital allocation decisions. Ensuring investments generate returns
that exceed the cost of capital mitigates the risk of value destruction for shareholders.
VII. Potential for Improved Communication: Utilizing a common metric like EVA
can foster clearer communication and understanding between various stakeholders.
Management can use EVA to communicate their value creation strategy and track
progress towards achieving it. Analysts and investors can utilize EVA to interpret
financial statements and assess the company's performance in a consistent and
objective manner.
VIII. Adaptability: While primarily focused on company-wide analysis, the core

principles of EVA can be adapted to various contexts. Companies can leverage the
EVA framework to evaluate the financial performance of individual projects,
9
IX.Potential for Benchmarking: EVA facilitates comparisons across companies within

an industry or even across different sectors. This allows investors and analysts to
assess the relative value creation capabilities of different companies, providing
valuable insights for investment decisions and industry benchmarking. Similarly,
companies can use EVA comparisons to identify areas for improvement and
benchmark their performance against industry leaders.
X.Potential for Performance Improvement: While not a guarantee, a consistent focus

on maximizing EVA has the potential to lead to improved performance for companies
in the long run. This is because prioritizing value creation incentivizes companies to
make strategic decisions that enhance their long-term value proposition and overall
financial health
.
1.1.5 CHARACTERISTICS OF ECONOMIC VALUE ADDED METHODS
I.Focus on Economic Profit: Unlike traditional measures like net income, EVA
concentrates on true economic profit, representing the excess return generated by a
company beyond the minimum required return for investors (cost of capital).
II.Considers Cost of Capital: Traditional accounting often overlooks the cost of

capital, the minimum return investors expect for their investment. EVA explicitly
incorporates the weighted average cost of capital (WACC), providing a more
comprehensive assessment of profitability by reflecting the true cost of financing
operations.
III.Performance Metric: EVA serves as a performance metric for companies to gauge

their effectiveness in generating economic profit and creating value for shareholders.
It helps assess whether the company is utilizing its resources efficiently and
generating returns that exceed the cost of capital.
IV.Investment Decision-Making Tool: Investors can leverage EVA during investment

analysis to identify companies that are effectively generating excess returns.
Comparing EVA across companies can help them make informed investment
10
decisions by prioritizing companies with the potential for superior long-term

V.Incentive for Efficiency: The inherent focus on economic profit in EVA

incentivizes companies to be more efficient in managing their resources and capital.
By optimizing resource allocation and minimizing unnecessary costs, companies can
improve their EVA and ultimately create more value for shareholders.
associated with capital allocation decisions. Ensuring investments generate returns
that exceed the cost of capital mitigates the risk of value destruction for shareholders.
VII.Potential for Improved Communication: Utilizing a common metric like EVA can
foster clearer communication and understanding between various stakeholders.
Management can use EVA to communicate their value creation strategy and track
progress towards achieving it. Analysts and investors can utilize EVA to interpret
financial statements and assess the company's performance in a consistent and
objective manner.
VIII.Adaptability: While primarily focused on company-wide analysis, the core

principles of EVA can be adapted to various contexts. Companies can leverage the
EVA framework to evaluate the financial performance of individual projects,
IX.Potential for Benchmarking: EVA facilitates comparisons across companies within

an industry or even across different sectors. This allows investors and analysts to
assess the relative value creation capabilities of different companies, providing
valuable insights for investment decisions and industry benchmarking. Similarly,
companies can use EVA comparisons to identify areas for improvement and
benchmark their performance against industry leaders.
11
X.Potential for Performance Improvement: While not a guarantee, a consistent focus

on maximizing EVA has the potential to lead to improved performance for companies
in the long run. This is because prioritizing value creation incentivizes companies to
make strategic decisions that enhance their long-term value proposition and overall
financial health.
1.1.6. IMPLEMENTATION CHALLENGES ECONOMIC VALUE ADDED
I. Data Availability and Accuracy: Implementing EVA requires access to accurate

financial data, including net operating profit after tax (NOPAT) and the cost of
capital. Ensuring the availability and accuracy of this data can be challenging,
particularly for companies with complex financial structures or multiple business
units.
II. Cost of Capital Estimation: Estimating the cost of capital, typically represented by
the weighted average cost of capital (WACC), involves making subjective judgments
about discount rates and risk factors. Determining an appropriate cost of capital for
different business units or projects can be complex and may require specialized
expertise.
III. Organizational Alignment: Implementing EVA requires alignment across different

levels of the organization, from top management to frontline employees. Ensuring that
employees understand the importance of EVA and how their actions contribute to
value creation can be challenging, particularly in large or decentralized organizations.
IV. Incentive Alignment: Linking executive compensation to EVA performance can

be challenging due to the complexity of the metric and the potential for manipulation.
Designing incentive structures that encourage value creation while mitigating risk and
aligning with long-term strategic objectives requires careful consideration and may
require adjustments over time.
12
V. Change Management: Implementing EVA often requires changes to existing

financial reporting and performance measurement systems. Overcoming resistance to
change and ensuring buy-in from key stakeholders, including investors, employees,
and board members, can be challenging and may require effective change
management strategies.
VI. Communication and Training: Effectively communicating the principles of EVA

and providing training to employees at all levels of the organization are essential for
successful implementation. Ensuring that employees understand how EVA is
calculated, how it impacts their performance, and how they can contribute to value
creation is critical for adoption and sustainability.
VII. Performance Evaluation: Using EVA as a performance evaluation metric

requires careful consideration of performance benchmarks and targets. Establishing
meaningful benchmarks and targets that reflect the company's strategic objectives and
market conditions can be challenging and may require iterative refinement over time.
VIII. Integration with Other Metrics: Integrating EVA with other performance
metrics, such as return on investment (ROI) or customer satisfaction, can be
challenging due to differences in measurement methodologies and objectives.
Ensuring consistency and alignment between different performance metrics is
essential for providing a comprehensive view of value creation and performance.
This involves aligning EVA metrics with the organization's overall goals and
objectives, ensuring that all stakeholders are on board with the implementation
process, and providing ongoing training and support to employees to ensure they
understand how to effectively use EVA data in decision-making. Additionally, regular
monitoring and evaluation of EVA performance is essential to identify any potential
issues or areas for improvement. By taking a proactive and comprehensive approach
to overcoming obstacles, organizations can maximize the benefits of EVA and drive
sustainable value creation.
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1.2. ORIGIN OF ECONOMIC VALUE ADDED &EVOLUTION OF

ECONOMIC VALUE ADDED
1.2.1 ORIGIN OF ECONOMIC VALUE ADDED
The story of Economic Value Added (EVA) begins in the 1980s with the
consulting firm Stern Stewart & Co. (now Stern Stewart & Co. LLC). It was during
this time that financial professionals, particularly Bennett Stewart, a key figure at the
firm, sought to develop a new metric for measuring corporate performance.
Motivations and goals behind the creation of EVA:
I. A fresh perspective was introduced with the emergence of Economic Value Added
(EVA), which aimed to bridge the gap in traditional accounting methods. By
incorporating the cost of capital into its calculations, EVA sought to offer a more
precise evaluation of a company's capacity to generate value for its investors.
II.Focus on True Economic Profit: The primary objective was to develop a

measurement that accurately reflected a company's genuine economic profit. This
entailed considering not only the income and expenditures, but also the expenses
associated with the capital utilized to fund those operations. By incorporating the cost
of capital, a more comprehensive assessment of the company's profitability could be
obtained.
III.A New Approach: EVA has emerged as a novel methodology that effectively
tackles the perceived deficiency in conventional accounting metrics. By incorporating
the capital cost, EVA strives to offer a more precise depiction of a company's capacity
to generate value for its shareholders.
Numerous companies found the concept of Economic Value Added (EVA) to be

highly appealing, especially in the subsequent decade. The 1990s witnessed a
significant rise in the adoption of EVA as a crucial performance measure, with
renowned corporations such as Coca-Cola and General Electric incorporating it into
their strategies. However, the journey of EVA doesn't conclude here. In the upcoming
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stages, we will delve into its development and present status, uncovering its continued
relevance in the business world.
1.2.2 EVOLUTION OF ECONOMIC VALUE ADDED
I. Development of EVA Concept: Joel Stern and his colleagues developed the concept
of Economic Value Added as a measure of economic profit that goes beyond
traditional accounting metrics such as net income. EVA aims to capture the true
economic value generated by a company's operations by deducting the cost of capital
from net operating profit after tax (NOPAT).
II. Publication of "The Quest for Value": In 1984, Joel Stern and John B. Schafer
published the book "The Quest for Value: A Guide for Senior Managers" which
introduced the concept of Economic Value Added to a broader audience. The book
outlined the principles of value-based management and highlighted EVA as a key
metric for evaluating corporate performance.
III. Commercialization by Stern Stewart & Co.: Stern Stewart & Co.
commercialized the EVA concept and began offering consulting services to
companies interested in implementing value-based management practices. The firm
developed software tools and training programs to help companies calculate and apply
EVA in their decision-making processes.
IV. Widespread Adoption: Throughout the 1990s and early 2000s, EVA gained
popularity as a performance metric among corporations, investors, and financial
analysts. Many companies began incorporating EVA into their performance
measurement and incentive compensation systems, aligning management incentives
with value creation for shareholders.
V.Refinements and Variations: Over time, variations of the EVA concept emerged,
including adjustments for industry-specific factors, non-operating items, and capital
structure differences. Some companies developed their own customized versions of
EVA to better suit their business models and strategic objectives.
15
VI. Criticism and Debate: Despite its widespread adoption, EVA has faced criticism
from some quarters. Critics argue that EVA calculations can be complex and
subjective, and that the metric may not always provide meaningful insights into a
company's performance. Additionally, there is debate over the appropriateness of
using EVA as a sole performance measure, as it may not capture all aspects of value
creation.
Overall, the evolution of Economic Value Added reflects a broader shift

towards value-based management practices and a focus on maximizing shareholder
value. While EVA has its limitations and critics, it remains a widely used metric for
evaluating corporate performance and aligning management incentives with
shareholder interests.
1.3 ASSUMPTIONS OF ECONOMIC VALUE ADDED METHODS
I. Market Efficiency: It assumes that the stock market is efficient, meaning stock
prices accurately reflect all available information about a company. This implies that
a company's EVA should be reflected in its stock price.
II. Capital Market Assumptions:

a. Cost of Capital: EVA uses the Weighted Average Cost of Capital (WACC) to
represent the cost of capital for a company. This assumes that the cost of capital
accurately reflects the risk associated with the company and the different sources of
funding (debt and equity) it uses.
b. Dividend Irrelevance: It assumes that investors are indifferent between receiving
dividends and capital appreciation, as long as the total return remains the same. This
allows EVA to focus solely on the company's operating profitability.
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III. Accounting Adjustments:

a. Non-recurring items: EVA attempts to remove the impact of non-recurring items,
such as restructuring costs or one-time gains, from the calculation. This helps isolate
the core operating performance of the company.
b. Off-balance sheet items: Ideally, adjustments are made to account for off-balance
sheet items that may impact the company's economic value, such as lease obligations
or operating leases.
IV. Focus on Shareholder Value: EVA prioritizes creating value for shareholders,
which aligns with the interests of publicly traded companies. However, it may not
fully capture the broader societal or environmental impact of a company's activities.
1.4 CALCULATING ECONOMIC VALUE ADDED
Formula for calculating EVA:

EVA = NOPAT - (WACC x TC)
Where:
• NOPAT: Net Operating Profit After Tax (represents the company's operating profit
after accounting for all expenses except for financing costs and taxes)
• WACC: Weighted Average Cost of Capital (represents the minimum return
investors expect for their investment, considering both debt and equity)
• TC: Total Capital Employed (represents the total amount of capital invested in the
company, including debt and equity)
Steps involved in calculating EVA:

I.Gather the necessary data: You'll need to find the company's NOPAT, WACC, and
TC from their financial statements or through financial analysis databases.
II.Calculate NOPAT: This can be found in the company's income statement by

subtracting operating expenses, depreciation, and amortization from operating
revenue, then adjusting for income taxes.
17
III.Calculate WACC: This calculation involves determining the cost of equity and
cost of debt, and then weighting them based on their proportion in the company's
capital structure. Resources like financial analysis tools or online calculators can
assist with this calculation.
IV.Calculate TC: This can be found on the company's balance sheet by adding the
total amount of debt and equity together.
V.Plug the values into the formula: Once you have all three values, substitute them
into the EVA formula: EVA = NOPAT - (WACC x TC).
VI.Interpret the results: A positive EVA indicates the company is generating

economic profit, exceeding the cost of capital and creating value for shareholders.
Conversely, a negative EVA signifies the company is not even covering the cost of
capital, potentially destroying value for its investors.
1.5 APPLICATION OF EVA
I. Investment decisions: A company considering a new product line or acquisition can

use EVA to analyze its potential impact on shareholder value. By calculating the EVA
of the investment, they can assess if it's expected to generate a return that exceeds the
cost of capital.
II. Performance budgeting and goal setting: Businesses can utilize EVA to set
performance goals for departments or divisions. This can incentivize managers to
focus on initiatives that drive economic profit and shareholder wealth creation
.
III. Performance evaluation and compensation: Some companies incorporate EVA
metrics into performance evaluations and compensation plans. This aligns employee
incentives with creating value for shareholders
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IV.Mergers and Acquisitions (M&A): Companies can leverage EVA to analyze

potential targets during M&A activities. By evaluating the target's EVA and its
potential for improvement post-acquisition, they can assess the deal's impact on
overall shareholder value.
V. Benchmarking: Businesses within an industry can use EVA to benchmark their

performance against competitors. This allows them to identify areas for improvement
and understand how efficiently they are creating economic profit.
1.6 LIMITATIONS OF ECONOMIC VALUE ADDED.
I. Sensitivity to Cost of Capital (COC): Accurately estimating COC is critical for

EVA calculations. Fluctuations in interest rates, market conditions, or a company's
capital structure can significantly impact COC, leading to potentially misleading EVA
figures. This can make comparisons across companies or over time less reliable.
II. Short-Term Performance Bias: EVA's emphasis on profit minus COC can
incentivize a managerial focus on short-term gains at the expense of long-term
investments in areas like research and development, brand building, or employee
training. These crucial initiatives may not generate immediate profits but contribute to
long-term growth and sustainability.
III. Exclusion of Non-Financial Factors: EVA is a purely financial metric and doesn't
account for non-financial aspects that significantly impact a company's success. These
can include employee morale, brand reputation, customer satisfaction, and
environmental impact. Focusing solely on EVA might lead to neglecting these crucial
areas for long-term value creation.
IV. Complexity and Subjectivity in Calculations: Calculating EVA can be complex

and time-consuming, especially for larger companies with diverse operations.
Additionally, accounting choices like depreciation methods can influence the
calculation, introducing subjectivity into the final EVA figure.
19
V. Limited Applicability Across Industries: EVA might be less suitable for certain
industries, such as financials or utilities, where traditional profit metrics like Return
on Equity (ROE) might be more relevant due to their unique capital structures and
regulatory environments.
VI. Potential for Manipulation: Companies could be tempted to manipulate accounting

figures to inflate their EVA, making it less reliable for external analysis. This is
especially true if EVA is heavily weighted in performance evaluations or
compensation plans.
VII. Limited Forward-Looking Visibility: EVA is a backward-looking metric based

on historical data. While it can be used for future projections, these forecasts rely on
assumptions about factors like future interest rates and market conditions, which can
be inherently uncertain.
VIII. Focus on Shareholder Value Exclusivity: While EVA is a valuable tool for
understanding shareholder value creation, it doesn't consider the interests of other
stakeholders like employees, customers, or the community. Businesses need to
balance shareholder value creation with broader social and environmental
considerations for long-term success and stakeholder engagement.
20
1.7. INVESTMENT
The meaning of investment can be understood through the following key points:
I. Commitment of Resources: Investing entails the allocation of financial resources or

capital to an asset or project. While this can involve cash, it also encompasses the
commitment of time and effort towards conducting research and effectively managing
the investment. By diversifying one's portfolio and making informed decisions,
investors aim to generate returns and grow their wealth over time.
II. Expectation of Return: The primary motivation for making an investment is the
anticipated future benefit. This anticipated return can take two main forms:
a) Income: Receiving regular periodic payments, such as:
• Dividends: Distributions of profits from companies you own shares (equities)
in.
• Interest: The return earned on your investment in bonds or other debt
instruments.
b) Capital appreciation: An increase in the underlying value of the asset itself over
time, allowing you to sell it for a profit. For example, if you invest in real estate and
its market value rises, you could potentially sell it for more than the initial purchase
price.
III. Future-Oriented: Investments are typically made with a Investments are typically
made with a medium to long-term perspective, focusing on achieving specific
financial goals in the future, such as:
a) Retirement planning: Accumulating sufficient wealth to support yourself
financially after retirement.
b) Wealth creation: Building your overall financial well-being over an extended
period.
c) Specific goals: Saving for a down payment on a house, financing a child's
education, and so forth.
21
IV. Inherent Risk: It's crucial to understand that investments are inherently subject to
risk. The value of your investment can fluctuate, and there's a potential for losing
some or even all of the invested capital.
In essence, an investment is a calculated risk you take with your resources, hoping
for a future financial benefit in the form of income or capital appreciation.
1.7.1 DEFINITIONS OF INVESTMENT
According to Benjamin Graham, An investment operation is one which, upon

thorough analysis, promises safety of principal and an adequate return.
According to Warren Buffett, An investment is a purchase of goods that are

not consumed today but are used in the future to create wealth. In finance, an
investment is a monetary asset purchased with the idea that the asset will provide
income in the future or appreciate and be sold at a higher price.
According to Peter Lynch, An investment is simply a gamble in which you've

managed to tilt the odds in your favor.
According to John C. Bogle, Investing is all about common sense. Owning a

diversified portfolio of stocks and holding it for the long term is a winner’s game.
According to Burton G. Malkiel, Investment is the sacrifice of current

spending in order to increase future consumption. It is motivated by the expectation of
earning a return in the form of interest, dividends, capital gains, or any combination of
the three.
According to William Bernstein, An investment operation is one which, upon

thorough analysis, promises safety of principal and an adequate return.
According to Philip Fisher, The stock market is filled with individuals who
know the price of everything, but the value of nothing. Investing is not the study of
finance. It’s the study of how people behave with money.
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1.7.2 IMPORTANCE OF INVESTMENT
I. Grow Your Wealth: The primary purpose of investment is to grow your money
over time. By strategically allocating your resources, you can potentially outpace
inflation, which erodes the purchasing power of cash over time. This allows you to
accumulate wealth and achieve financial goals like retirement planning, buying a
house, or funding your child's education.
II. Generate Passive Income: Investments can provide you with passive income,
meaning you earn money without actively working for it. This income can come in
various forms, such as dividends from stocks, interest from bonds, or rental income
from real estate. This passive income can supplement your regular income and
improve your overall financial security.
III. Achieve Financial Goals: Investing is a crucial tool for achieving various
financial goals throughout your life. Whether it's planning for retirement, saving for a
down payment on a house, or funding a child's education, investing allows you to
accumulate the necessary funds to turn these aspirations into reality.
IV. Beat Inflation: As mentioned earlier, inflation gradually reduces the purchasing
power of your money. Investments, on the other hand, have the potential to outpace
inflation, preserving and even growing the real value of your money over time. This
ensures your money maintains its purchasing power in the future.
V. Compounding Effect: Compounding is often referred to as the "eighth wonder of

the world" by Albert Einstein. It's the concept of earning interest on your interest,
leading to exponential growth over time. The earlier you start investing and the longer
your investment horizon, the greater the potential benefits of compounding.
VI. Secure Your Future: Investing can significantly contribute to your financial
security in the future. By accumulating wealth through thoughtful investments, you
can prepare for unexpected events like job loss, medical emergencies, or economic
downturns. This financial safety net provides peace of mind and allows you to
navigate life's challenges with greater confidence.
23
VII. Protect Your Purchasing Power: As stated previously, investing helps protect
your purchasing power from inflation. By strategically allocating your resources in
assets that have the potential to grow in value, you can ensure your money retains its
ability to purchase goods and services in the future.
VIII. Meet Long-Term Financial Needs: Investing plays a crucial role in meeting
your long-term financial needs. These needs could include covering retirement
expenses, providing for your children's education, or ensuring a comfortable standard
of living in your later years.
IX. Learn and Develop Financial Discipline: The process of investing encourages you
to learn about financial markets, different asset classes, and investment strategies.
This knowledge empowers you to make informed decisions about your money and
develop sound financial habits like discipline and patience.
X. Create Opportunities: Investing can unlock various financial opportunities in your

life. It can enable you to pursue entrepreneurial ventures, invest in real estate, or
simply achieve greater financial independence. By strategically managing your
investments, you can open doors to new possibilities and shape your financial future
actively.
24
1.7.3 KEY CONCEPTS OF INVESTMENT
I.Financial plan/ Goals: Having a well-crafted financial plan is the first and foremost
step of the investment journey. These financial plans include buying a house, funding
your child’s education, retirement savings, etc. These plans vary over time. A
financial goal will help you understand your investment requirements and choose the
right investment accordingly. As there are different investment options like stocks,
mutual funds, real estate, etc., you can pick the correct one according to your goal. If
your financial goal is to buy a house in the next 10 yrs, you can pick a long-term
investment option. With the fixed goal in mind, you can be devoted to it and keep an
eye on the milestones to achieve the goal.
II.Monthly Cash Flow: While setting a financial goal, as an investor, it is vital to

know your monthly income, irrespective of your profession. You can be a full-time
investor or part-time investor. In any case, you should have a precise idea of your
monthly income and expenses. This will help you in planning your investments,
savings and expenses effectively.
III.Risk and Return: Risk is an important parameter of an investment. Every

investment comes with a certain amount of risk. Before picking an investment,
investors must analyse their risk appetite, assuming the worst-case scenario and how
much loss they can tolerate.
In an investment, risks and returns are tied together. Several investment options are
associated with high risk and provide huge profits. If market conditions are not
favourable, these high-risk investments can also fall and create a loss. But in the case
of low-risk investment, the returns may not be as high as expected.
IV.Compounding: Investments work with the magic of compounding. In

compounding, your investment multiplies exponentially. In simple terms, in
compounding, you will receive returns on your returns. Here’s an example to
understand the power of compounding better.
25
Let’s assume that your initial investment annual amount is Rs. 20,000. If the
interest rate is 10% per annum and compounded monthly, your money will grow as
follows:
Table no.1.1: Example of Compounding Interest.
Amount
Month Principal (in Rs.) Return rate returned (in
Rs.)
January 20,000 10% 22,000
February 22,000 10% 24,200
March 24,200 10% 26,620
April 26,620 10% 29,282
May 29,282 10% 32,210
June 32,210 10% 35,431
July 35,431 10% 38,974
August 38,974 10% 42,871
September 42,871 10% 47,158
October 47,158 10% 51,873
November 51,873 10% 57,060
December 57,060 10% 62,766
After a year, the return on your investment of Rs. 20,000 will be Rs. 62,766. It
is evident how compounding works. The money keeps multiplying itself, and the
returns are huge in the long term.
V.Investment strategy: As mentioned earlier, your investment strategy depends upon

your financial goal. If your goal is to accumulate a good corpus of wealth for a later
time, you can choose a gain-oriented strategy. If you are looking to generate income,
then there are income-based investment strategies.
26
VI. Market capitalization: This is for the investors looking to invest in stocks. Market
capitalisation is nothing but the market value of a company. Public companies are
categorised according to their market value. It helps an investor understand a
company’s value and growth potential. Companies with a market value of less than
Rs. 5,000 cr. are small-cap companies, more than Rs. 5,000 cr. and less than Rs.
20,000 cr. are mid-cap companies, and more than Rs. 20,000 cr. are large-cap
companies. In the stock exchange, these companies are ranked according to their
market capitalisation.
VII.Investment Diversification: Once, a wise man said, “Don’t put all your eggs in
one basket”. This applies to investments as well. You can diversify your investments
in various options like stocks, real estate, bonds, etc.
VIII.Asset Allocation: This aims to balance the risk and reward of the investment by
considering the investor’s age, goals, and risk tolerance. There are four main asset
classes – fixed-income, equity, cash and real estate. The percentage of investment into
these assets is termed asset allocation. Diversification and asset allocation are
connected. Diversification is a way of asset allocation. Asset allocation helps in
determining the best strategy for investment in marketable securities. Whereas
diversification is when the investor wants to expand the investment by investing a
small percentage in different assets.
IX.Investment Cost: Any investment has several hidden fees on them. For a
beginner, it is ideal to start reading the terms and conditions properly. This will help
you avoid all the unnecessary costs which can cost you big later.
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1.8 RISK AND RETURN RELATION
The correlation between risk and return is a fundamental concept in the realm
of investment. It essentially implies that there exists a compromise between the
potential profits one can anticipate and the degree of risk one is prepared to undertake.
In the world of investment, the connection between risk and return stands as a
crucial principle. It signifies that there is a delicate balance between the potential
rewards an investor can achieve and the level of risk they are ready to embrace.
The interplay between risk and return holds significant importance in the field
of investment. It essentially suggests that there is a give-and-take relationship between
the potential gains an individual can expect and the amount of risk they are willing to
assume. Investment risk refers to the possibility of losing some or all of your invested
capital due to various factors. It's a crucial concept to grasp before venturing into the
world of investment, as it helps you make informed decisions and manage your
portfolio effectively.
Investment return refers to the profit or gain generated by your investment,

typically expressed as a percentage. It essentially represents the financial benefit you
receive from your investment over a specific period.
Ultimately, the risk-return relationship serves as a guiding principle for

investors as they navigate the complex landscape of financial markets. By
understanding the trade-off between risk and return and employing strategies such as
risk diversification and asset allocation, investors can construct portfolios that
optimize returns while aligning with their risk preferences and financial objectives.
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1.8.1 TYPES OF INVESTMENT RISK
Fig.1.1: TYPES OF INVESTMENT RISK
I. Market Risk : Market risk equals the risk of any of our investments losing value
from any situation in the market. We have three main types of market risks:
a) Equity risk – investing in stocks brings on the risk of volatility. Stocks remain
quite volatile, meaning the price of the stock or company fluctuates in the market.
Price changes upward or downward are normal, but the sudden drop in share price
remains the most equated to losing value.
b) Interest Rate risk – debt securities or bonds feel interest rate risk keenly.
Interest rates correlate to bonds; when interest rates rise, the prices of bonds fall. And
when interest rates fall, then the prices of bonds rise.
c) Currency risk – Currency risk, also known as exchange rate risk, refers to the
potential for financial loss due to fluctuations in the exchange rates between different
currencies. It's a significant concern for anyone involved in international transactions,
including:
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II. Liquidity Risk: Liquidity risk is a financial risk that refers to the possibility that an
asset cannot be bought or sold quickly enough in the market without significantly
affecting its price. It arises when there is a shortage of buyers or sellers in the market
for a particular asset, leading to difficulty in executing transactions at desired prices.
III. Concentration risk: Concentration risk is a type of financial risk that arises from
having a significant portion of assets, investments, or exposure concentrated in a
particular asset class, sector, industry, or geographic region. It occurs when a portfolio
or investment is overly reliant on a small number of assets or factors, increasing
vulnerability to adverse events or market fluctuations associated with those specific
exposures.
IV. Credit risk: Credit risk, also known as default risk, is the risk that a borrower or
counterparty will fail to meet its financial obligations as agreed, resulting in losses for
the lender or investor. It is a fundamental component of lending and investing,
particularly in fixed-income securities, loans, and other credit instruments.
V. Reinvestment Risk: Reinvestment risk is a type of risk that arises from the
uncertainty associated with reinvesting cash flows from an investment at a future date,
typically at a lower interest rate or return than the original investment. It is a common
concern for investors who receive periodic cash flows, such as interest payments from
bonds or dividends from stocks, and need to reinvest those cash flows to maintain
their desired level of income or return.
VI. Inflation Risk: Inflation risk, also known as purchasing power risk, refers to the
potential loss of purchasing power over time due to the erosion of the real value of
money caused by inflation. Inflation is the rate at which the general level of prices for
goods and services rises, resulting in a decrease in the purchasing power of money
over time.
VII. Horizon Risk: Horizon risk, also known as time horizon risk or investment
horizon risk, refers to the potential for investment returns to be adversely affected by
changes in market conditions or unexpected events over a specific time horizon.
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VIII.Longevity Risk: Longevity risk refers to the risk of outliving one's financial
resources or the risk of insufficient income or assets to support one's lifestyle and
expenses throughout retirement or an extended period of life expectancy. It is
primarily associated with retirement planning and arises from the uncertainty
surrounding how long an individual will live and the potential financial implications
of living longer than expected
.
1.8.2 TYPES OF INVESTMENT RETURNS
Fig 1.2: Types of Investment Returns
I. Capital gains: Capital gains refer to the profits realized from the sale or disposition
of a capital asset, such as stocks, bonds, real estate, or other investments. It represents
the difference between the sale price of the asset and its original purchase price,
adjusted for any transaction costs, commissions, or other expenses associated with the
sale.
II. Dividend Income: Dividend income refers to the portion of earnings distributed by
a company to its shareholders, typically in the form of cash payments or additional
shares of stock. It represents a return on investment for shareholders and is one of the
primary sources of income for investors who own dividend-paying stocks.
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III. Interest Income: Interest income refers to the earnings generated from investments
that accrue interest, such as bonds, certificates of deposit (CDs), savings accounts,
money market accounts, and other fixed-income securities. It represents the
compensation received by investors for lending money or depositing funds with
financial institutions.
IV.Rental Income: Rental income refers to the revenue generated from leasing or
renting out property to tenants in exchange for the use or occupancy of the property. It
is a common source of income for property owners and real estate investors who own
residential, commercial, or industrial properties and rent them out to tenants.
V. Royalties: Royalties refer to payments made by one party (the licensee) to another
party (the licensor) for the use or exploitation of intellectual property, such as patents,
copyrights, trademarks, or mineral rights. Royalties are typically paid based on a
percentage of revenue, sales, or profits generated from the licensed property, and they
represent compensation for the right to use or derive income from the intellectual
property.
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1.9 INVESTORS
An investor is an individual, institution, or entity that allocates capital with the

expectation of a future financial return. Investors typically purchase financial assets
such as stocks, bonds, mutual funds, real estate, commodities, or other instruments,
aiming to generate income or profit through appreciation or dividends over time.
Understanding the role and behavior of investors is fundamental in the field of finance
and economics.
1.9.1 TYPES OF INVESTORS:
I.By Investment Scale:

a) Individual Investors: Individual investors, also known as retail investors, are
regular people who invest their personal savings or assets in financial markets. They
are distinct from institutional investors, which include entities such as pension funds,
insurance companies, and mutual funds that invest large sums of money on behalf of
others.
b) Institutional Investors: These are organizations that manage money on behalf of
others. Examples include:
• Pension Funds: Invest money contributed by employees to provide retirement
income.
• Mutual Funds and ETFs: Pool money from numerous investors and invest it in a
basket of securities.
• Insurance Companies: Invest premiums paid by policyholders to meet future
obligations.
• Investment Banks: Invest their own capital or client funds to generate profits
through various financial activities.
II.By Investment Style:

a) Value Investors: Value investors are a type of investor who seeks to identify
undervalued stocks or assets in the market. They believe that the market sometimes
misprices securities, either undervaluing or overvaluing them relative to their intrinsic
33
worth. Value investors aim to purchase these undervalued securities and hold them
until their true value is recognized by the market, thereby potentially earning a profit.
b) Growth Investors: Growth investors are a category of investors who focus on
investing in companies that demonstrate strong potential for future growth. They
prioritize companies that are expected to experience significant increases in earnings,
revenue, or market share over time.
c) Income Investors: Income investors are a type of investor who prioritizes
investments that generate regular income in the form of interest, dividends, or rental
payments. They focus on assets that provide a steady stream of income, aiming to
supplement their cash flow, fund their living expenses, or meet specific financial
goals
III.By Investment Horizon:

a) Short-Term Investors: Short-term investors, also known as traders, are
individuals or entities who engage in buying and selling securities or other financial
instruments with the intention of profiting from short-term price movements. Unlike
long-term investors who typically hold investments for months, years, or even
decades, short-term investors focus on exploiting opportunities in the market over
shorter time frames, ranging from minutes to several weeks
b) Long-Term Investors: Long-term investors are individuals or entities who adopt
an investment strategy focused on holding assets for an extended period, typically
several years or even decades. Their investment approach prioritizes patience,
discipline, and the compounding of returns over time.
IV.Other Investors:
a) Angel Investors: Angel investors are individuals or groups of individuals who
provide capital to startup companies in exchange for ownership equity or convertible
debt. They play a crucial role in financing early-stage businesses, often filling the gap
between seed funding from friends and family and larger institutional investments
from venture capital firms.
b) Venture Capitalists: Venture capitalists (VCs) are professional investors who
provide capital to startup companies and early-stage businesses with high growth
potential in exchange for an ownership stake in the company. They play a critical role
34
in funding the growth and development of innovative startups, particularly in

technology, biotechnology, and other high-growth sectors.
1.9.2 CHARACTERISTICS OF INVESTORS
I.Goal setting: A good investor will always have clear goal. It is very important to
have a plan to achieve the goals. Variations most likely tend to divert an investor from
the agenda. Having a plan of action within a defined period of time for a particular
return on investment is a sign of a good investor. They are prepared for the
uncertainty of the market while the plans are usually made considering both the sides
II.Knowledge: Besides utilizing time to the best, a good investor possesses

knowledge of the market. He/she understands the position of funds and has researched
about the company investment strategy and philosophy. You need to know where
your money is being utilized. A good investor analyses the growth pattern of the
company over the years from genuine sources. On the accounts of the anticipations
and knowledge a good investor will have a defined plan for exit point as well. An
active learner who is open to make a right choice on the basic of genuinely of
knowledge is a good investor.
III.Right Decision: A good investor knows the time. They keep an eye on current
scenario in the market. They update their knowledge about market activities and
growth. Having a sound understanding of trends enables the investors to overlook
their plans and decide the term of investment. Having an understanding of current
trends and company market position makes one a good investor. They own their
mistakes and learn not to make them again. It’s not necessary that the good investor
jumps into the trends; he/she just does what is right.
IV.Risk Aversion: Good investors know the inherent risk in investing. They
understand their plans and analyze their expected returns. Being risk averse is a
quality shaped by experience, knowledge and confidence over the above mentioned
key characteristics.
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1.10 INVESTOR DECISION MAKING PROCESS
What is an Investment Decision Making Process?

An Investment decision making Process is a systematic approach that
individuals or organisations follow to make informed decisions about allocating their
funds. The goal of an Investment decision making Process is to maximise returns
while managing risks effectively. It provides a structured framework, guiding
Investors in selecting appropriate assets, diversifying portfolios, and adapting
strategies to achieve specific financial objectives, ensuring long-term financial
stability and growth.
1.10.1 IMPORTANCE OF UNDERSTANDING THE INVESTMENT

DECISION MAKING PROCESS
Fig. 1.3: IMPORTANCE OF UNDERSTANDING

THE INVESTMENT DECISION MAKING PROCESS
I.Facilitates informed decision-making: A comprehensive understanding of

the Investment Process equips individuals with the ability to analyse various
Investment options critically. It enables them to make decisions based on in-depth
knowledge, market trends, and historical data. Informed decisions lead to Investments
that are not only profitable but also aligned with personal financial goals.
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II.Ensures proper Risk Management: Knowledge of the Investment Process

empowers individuals to assess risks associated with different Investment avenues. It
helps in distinguishing between high-risk, high-reward Investments and more stable,
low-risk options. By understanding the risks involved, Investors can create a
diversified portfolio that balances any potential returns with acceptable levels of risk,
ensuring financial security even in fluctuating market conditions.
III.Guarantees alignment with goals: Each person's financial goals are unique, ranging
from buying a house to funding a child's education or planning for retirement.
Understanding the Investment Process enables individuals to match their goals with
the right Investment products. Whether it's stocks for long-term growth or bonds for
stable income, a sound understanding ensures that Investments align with specific
objectives. This alignment enhances the likelihood of achieving these goals within the
desired timeframe.
IV.Ensures market adaptability: Financial markets are subject to constant change.

Those who comprehend the Investment Process are better equipped to adapt to these
changes. Whether it's a shift in economic conditions, regulatory alterations, or
technological advancements affecting Investment options, a deep understanding
allows Investors to adjust their strategies accordingly. This adaptability ensures that
Investments remain relevant and optimized, maximising potential returns and
minimizing losses.
V.Instils confidence in Investment decisions: Understanding the Investment Process

instils confidence. It eradicates the fear of the unknown, allowing Investors to
approach their financial ventures with assurance. Confidence encourages proactive
decision-making and prevents impulsive actions driven by market volatility. As a
result, Investors can maintain a steady course even when faced with market
fluctuations, ensuring a disciplined and resilient Investment approach
VI.Helps in wealth preservation and growth: Investments are not just about earning
money; they're also about preserving and growing wealth over time. A solid
understanding of the Investment Process aids in wealth preservation by preventing
common pitfalls and unnecessary risks.
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1.10.2 FACTORS INFLUENCING INVESTOR’S DECISIONS
Table no.1.2: FACTORS AFFECTING INVESTMENT DECISIONS
1. Market Risk
1.1 Interest Risk
1.2 Inflation Risk
• Risk Factor 1.3 Currency Risk
2. Liquidity Risk
3. Credit Risk
• Liquidity Factor 1 Funding Liquidity Risk
2 Market Liquidity Risk

• Uniformity Factor
• Quality of Returns Factor
• Research Factor
Let us understand the various factors in detail-
I. The Risk Factor

Investments are always fraught with danger. For example, while Mutual
Funds provide benefits such as value for money and diversification to investors, they
also carry some risks. The best thing an investor can do to reduce Mutual Fund risks
is to learn more about them and practice strategies for mitigating them
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Below are the Risk Factors associated with investments that may affect a person’s
investment decisions or may contribute to factors affecting investment decisions.
a. Market Risk: Market risk, also known as systematic risk, refers to the possibility of
investment losses due to broad market fluctuations. It's an inherent risk associated
with participating in financial markets and cannot be eliminated entirely through
diversification, unlike individual company risk.
 Interest Risk: It means the cost of the debt instrument will change if the interest rate
does. For instance, the price of bonds declines when interest rates do, which causes
the value of bonds to decline as well.
 Inflation Risk: The risk of losing one's purchasing power, primarily as a result of
rising inflation, is the best way to describe risks led by inflation. Investors are
typically exposed to the effects of this risk when the rate of returns on investments
falls short of the rate of rising inflation
 Currency Risk: The risk in question is the worry that falling exchange rates will
result in lower investment returns. To explain, it is presumed that when the value of
funds denominated in foreign currencies rises, the value of foreign currencies will fall.
As soon as it is converted into INR, the rate of return will be directly lowered.
b. Liquidity Risk: Liquidity risk refers to the potential difficulty you face in selling
an investment quickly at a fair price when you need the cash. It's essentially the risk
of being stuck with an asset that you can't easily convert into cash.
c. Credit Risk: Credit risk refers to the possibility of a loss arising from a borrower's
failure to meet their financial obligations according to the agreed terms.
II. Liquidity Factor

This is one of the most crucial factors influencing investment decisions. The ease with
which an asset (such as equity shares, debentures, etc.) can be exchanged for money
on the stock market is referred to as liquidity.
a. Funding Liquidity Risk: Such risks are related to a company's intrinsic values,
which reflect its capacity to pay off short-term debt with operating cash flows.
b. Market Liquidity Risk: Such liquidity risks address the systematic risk element
connected to market investments and resulting from stock market volatility.
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III. Uniformity Factor

It refers to the concept of maintaining consistency or uniformity across various
aspects of an investment portfolio or strategy. It involves ensuring that investments
are aligned with predetermined criteria, objectives, or guidelines, thereby promoting
coherence and harmony within the overall investment approach
IV. Quality of Returns Factor

It refers to the consideration of not only the magnitude of returns generated by an
investment but also the characteristics, sustainability, and reliability of those returns.
It emphasizes the importance of evaluating the overall value and desirability of
investment returns beyond just the numerical figures
V. Research Factor
It refers to the process of conducting thorough research and analysis to evaluate
investment opportunities, assess risks, and make informed decisions. Research plays a
critical role in guiding investment decisions by providing investors with valuable
insights, data, and information to support their investment strategies.
1.11 HOW EVA INFLUENCE INVESTORS DECISION
Financial analysts and investors employ a wide range of metrics to assess a

company's financial health and potential for future growth. Economic Value Added
(EVA) serves as a particularly insightful tool, influencing investor decisions by
providing a more comprehensive perspective on a company's performance compared
to traditional metrics like net income.
Here's a closer look at how EVA plays a crucial role in the investment decision-
making process:
I. Identifying Value Creators: Unlike net income which solely reflects a company's
profitability, EVA takes into account the cost of capital – the minimum return
investors expect for assuming investment risk. By factoring in this crucial element,
EVA helps investors distinguish between companies that are truly generating
economic value for shareholders and those that are merely generating profits.
40
Companies with a positive EVA demonstrate the ability to generate returns that
exceed their cost of capital, signifying their efficiency in creating shareholder value.
II. Enhanced Investment Analysis: Traditional profit metrics often paint an

incomplete picture. EVA, on the other hand, incorporates a more holistic view of a
company's financial performance. By analyzing EVA, investors gain valuable insights
into a company's operational efficiency, profitability relative to the cost of capital, and
its overall effectiveness in utilizing resources to create shareholder wealth. This
deeper understanding empowers investors to make more informed investment
decisions
III. Strategic Investment Selection and Portfolio Management: Investors can leverage
EVA to conduct a more nuanced comparison between companies within the same
industry. By identifying companies with a track record of strong and sustainable EVA
growth, investors can prioritize those with the highest potential for delivering superior
returns to their shareholders. This methodology allows for the creation of a more
strategically focused investment portfolio.
IV. Long-Term Investment Focus: The calculation of EVA inherently encourages a

long-term perspective. It goes beyond simply measuring current profitability; it
considers the sustainability of a company's competitive advantage and its ability to
generate future cash flows. This aligns perfectly with the goals of many investors
seeking to build wealth over an extended timeframe.
V. Understanding the Limitations: It's important to acknowledge that EVA is a

multifaceted metric that relies on estimations and assumptions, particularly regarding
the cost of capital. Additionally, it may not fully capture the value of intangible assets
such as brand recognition or intellectual property.
VI. A Valuable Tool in the Investor's Toolkit: While EVA shouldn't be the sole
factor driving investment decisions, it serves as a powerful tool for financial analysts
and investors. When used in conjunction with other financial metrics, industry
analysis, and a thorough understanding of company fundamentals, EVA provides
invaluable insights that can significantly enhance the decision-making process. By
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incorporating EVA into their analysis, investors can make more informed choices that
align with their long-term financial objectives and identify companies that are
demonstrably creating value for their shareholders.
Conclusion: While EVA shouldn't be the sole factor driving investment decisions, it
serves as a powerful tool for financial analysts and investors. By offering a
sophisticated lens through which to assess corporate performance, EVA empowers
investors to make more strategic and well-informed investment decisions. This
ultimately enables them to identify companies that are demonstrably creating value
for their shareholders and achieve their long-term financial goals.
1.12 IMPLEMENTATION CHALLENGES ECONOMIC VALUE ADDED
I. Data Availability and Accuracy: Implementing EVA requires access to accurate

financial data, including net operating profit after tax (NOPAT) and the cost of
capital. Ensuring the availability and accuracy of this data can be challenging,
particularly for companies with complex financial structures or multiple business
units.
II.Cost of Capital Estimation: Estimating the cost of capital, typically represented by

the weighted average cost of capital (WACC), involves making subjective judgments
about discount rates and risk factors. Determining an appropriate cost of capital for
different business units or projects can be complex and may require specialized
expertise.
III.Organizational Alignment: Implementing EVA requires alignment across different

levels of the organization, from top management to frontline employees. Ensuring that
employees understand the importance of EVA and how their actions contribute to
value creation can be challenging, particularly in large or decentralized organizations.
42
IV.Incentive Alignment: Linking executive compensation to EVA performance can be

challenging due to the complexity of the metric and the potential for manipulation.
Designing incentive structures that encourage value creation while mitigating risk and
aligning with long-term strategic objectives requires careful consideration and may
require adjustments over time.
V.Change Management: Implementing EVA often requires changes to existing

financial reporting and performance measurement systems. Overcoming resistance to
change and ensuring buy-in from key stakeholders, including investors, employees,
and board members, can be challenging and may require effective change
management strategies.
VI. Communication and Training: Effectively communicating the principles of EVA

and providing training to employees at all levels of the organization are essential for
successful implementation. Ensuring that employees understand how EVA is
calculated, how it impacts their performance, and how they can contribute to value
creation is critical for adoption and sustainability.
VII. Performance Evaluation: Using EVA as a performance evaluation metric

requires careful consideration of performance benchmarks and targets. Establishing
meaningful benchmarks and targets that reflect the company's strategic objectives and
market conditions can be challenging and may require iterative refinement over time.
VIII. Integration with Other Metrics: Integrating EVA with other performance
metrics, such as return on investment (ROI) or customer satisfaction, can be
challenging due to differences in measurement methodologies and objectives.
Ensuring consistency and alignment between different performance metrics is
essential for providing a comprehensive view of value creation and performance.
Addressing these implementation challenges requires careful planning,

coordination, and ongoing monitoring to ensure that EVA effectively contributes to
value creation and strategic decision-making within the organization.
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Chapter2: RESEARCH DESIGN
2.1 OBJECTIVES
2.2 SOURCES/METHODS OF DATA COLLECTION
2.3 SAMPLING TECHNIQUES
2.4 AREA OF STUDY
2.5 TOOLS FOR ANALYSIS
2.6 SCOPE AND LIMITATIONS OF THE STUDY
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2.1 INTRODUCTION
Research design refers to the overall plan or strategy that researchers employ
to systematically investigate a particular research problem or question. It outlines the
framework for conducting research, including the methods, procedures, and
techniques used to collect and analyze data, as well as the overall structure and
organization of the study. Research design is crucial in ensuring that research
objectives are met effectively and that valid and reliable results are obtained.
It is an overall operational framework of the project that stipulates what

information is to be gathered, from which all informants and by using what methods
and procedures. Thus, a research design can be expresses as a blueprint, plot, guide or
outline for gratifying research objectives.
Research design is needed because it eases the glib sailing of the research
options thereby creating research as effectual as possible generating maximal
information with minimal expenditure of effort, time and money. Just for better,
economical and pretty construction of a house, we need a blue print (or what is
commonly called the chart or plot of the house) well thought out and prepared by an
expert architect, similarly we need research design or a plan in advance of data
collection and analysis for our research study.
2.2. OBJECTIVE
Objectives are very significant elements in any research. Objectives aid in

determining the likelihood of conducting the research. Generally the aim of any
research is to confirm the reliability of existing knowledge and to find the deviation of
existing knowledge i.e. to contribute the new knowledge in the existing one. Before
conducting the research it is necessary to recognize the research objectives as it
evades the waste of time and efforts in future stages. research objectives as it evades
the waste of time and efforts in future stages. Research objectives must be obviously
identifiable. Objectives act as the guiding principles for conducting the research. By
stating the list of objectives, researcher actually endeavors at fixing the frame of
research.
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Objectives of the Present study:

1. To understand the concept of Economic Value Added
2. To understand impact of Economic Value Added on Investors Decision
2.3. SOURCES / METHODS OF DATA COLLECTION
Data is the quantification of tangible and intangible facts .Data are separate
pieces of information, usually arranged in a special way. Austerely speaking data is
the plural or datum, a single piece of information. In practice, however, people use
data as both the singular as well as plural form of the word. Data are bare facts. When
data are processed, organized, structured or presented in a given milieu so as to make
them useful, they are called information. It is not adequate to have data (such as
statistics on the economy).Data in themselves are not sourseful. But when these data
are interpreted and processed to determine their true meaning, they are converted to
useful elements in research and can be called information.
PRIMARY DATA:
Primary data are generally expended in those cases where the secondary data
do not deliver an adequate basis for analysis. In some sure cases both primary as well
as secondary data may be used. The reason why secondary data are being increasingly
used is that published statistics are now accessible covering various fields or that an
data is the data collected by the researchers themselves, i.e Interview, Observation,
Action research, Case studies, Life histories, Questionnaires, Ethnographic research
or Longitudinal studies.
SECONDARY DATA:
Secondary data is usually used for problem identification and at formulation
stage. It is needed for formulation of hypothesis. It can also be helpful in designing
questionnaire. It may be needed to validate results of current investigation. Various
sources of secondary data are: Published surveys of markets. (general library research
sources), Government publication and reports, All advertising media, particularly
newspaper, magazines, trade journals etc., Trade association and other technical and
46
professional groups, Specialized research and foundation organizations, Universities,

Specialized markets intelligence services such as advertising agencies, market
research firms, stock exchanges, commodity exchange, banks., Specialized libraries,
Internal sources such as sales and purchases records, salesman’s report, sales order,
customer complaints and other records and registers and Internet.
Data Collection for the Present Study

a. Primary data was collected to understand the Economic Value Added To collect
this data a questionnaire was prepared for the purpose of survey and the respondents
were asked to fill the same. The respondents here comprise of the investors, market
participants, industry experts of Badlapur.& Ulhasnagar
b. Secondary data was collected to understand the Impact of Economic Value Added
on Investors Decision.
2.4. SAMPLING TECHNIQUE:
Sampling may be defined as the selection of some part of a collective or

totality based on which a judgement or implication about aggregate or totality is
made. In other words, it is the procedure of gaining information about an entire
population by examining only a part of it. In most of the research studies and surveys,
the usual approach occurs to be to make generalization or to draw corollaries based on
samples about the parameters of population from which the samples are taken.
Non-Probability Sampling Methods:

Non-probability sampling methods are referred to as such because they do not
provide an equal opportunity for every element in the population to be included in the
sample. There are several types of non-probability samples, including convenient
sampling, judgement and purpose sampling, quota sampling, and snowball sampling.
These methods are used when it is not feasible or practical to use probability sampling
techniques, and they allow researchers to gather data efficiently and effectively by
targeting specific individuals or groups within the population.
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I. Convenience sampling- In convenience sampling, the researcher simply reaches

out and picks up the cases that fall to hand, continuing the process till such time as the
sample obtains a wanted size. It is used to find the data rapidly and easily. It may
include casual pool of friends and neighbors, employees at work place etc.
II.Judgement and purpose sampling- In judgement and purpose sampling, specialists

and experts in the field are consulted or researcher will exercise judgement and
thus develop sample that are satisfactory in relation to one’s research needs.
III.Quota sampling- Another type of non-probability sampling method is Quota

Sampling. The basic objective of quota sampling is the selection of the sample that is
an imitation of the ‘population’ with the respect to which one would desire to
respondent having same characteristics as him or her. It is commonly employed when
subjects are hard to locate.
Probability Sampling Methods:

The probability sampling method ensures that every element within the sample
has an equal opportunity of being selected as a sampling element. This method is
commonly used in various probability sampling techniques, including Simple
Random, Systematic Random, Stratified, Cluster, and Multi Staged Sampling. Each of
these methods employs different strategies to ensure a fair and representative sample
is obtained for statistical analysis and inference.
I. Simple random sampling- Simple random sampling is in a sense, the basic refrain
of all scientific sampling. It is a primary probability sampling method. A process that
not only gives to each element in the population an equivalent chance of being
included in the sample but also makes the selection of each possible combination of
cases in the preferred size, equally likely, selects a simple random sample.
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II. Systematic random sampling- The Systematic Random sampling is for all practical
purposes, an estimate of simple random sampling. In stratified random sampling the
population is first divided into a number of strata. Such strata may be based on a
single criterion. (e.g., educational level, yielding a number of strata corresponding to
the different levels of educational attainment) or on a combination or more criteria
(e.g., Age and sex).
III. Stratified random sampling- In stratified random sampling, a simple random

sample is taken from every stratum and sub samples are bought together to form the
total sample. In cluster sampling, the researcher firstly samples out from the
population, certain large groupings, i.e., “cluster”.
SAMPLING PLAN FOR THE PRESENT RESEARCH STUDY:
Due to the impracticality of conducting a survey with the entire population of

Badlapur &Ulhasnagar and a different approach was taken. In order to work within
this constraint, the population of these areas was divided into smaller clusters, such as
neighbour hoods or professional organizations. Respondents were then randomly
selected from these clusters, ensuring a representative sample. This method, known as
cluster random sampling, was employed to gather the primary data needed for the
survey.
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2.5 AREA OF STUDY
I. Badlapur
Badlapur city, situated within the thane district of maharashtra, india, presents
a compelling proposition for those seeking a vibrant urban center with a touch of
nature's charm. Integrated into the mumbai metropolitan region, badlapur flourishes
along the banks of the ulhas river, offering a strategic location and a well-established
administrative framework overseen by the kulgaon-badlapur municipal council
While the exact origins of badlapur remain undetermined, historical references
suggest it may have comprised four distinct villages – katrap, kulgaon, the original
badlapur settlement, and manjarli – that gradually coalesced into a unified urban
entity. Presently, the "historical" badlapur village is situated approximately 10
kilometers from the bustling city center.
In terms of geographical footprint, badlapur city occupies roughly 36.68
square kilometers within the thane district of maharashtra, india. Its elevation sits
around 66 meters above sea level, and the ulhas river forms a natural border along its
eastern limits. While population estimates suggest approximately 238,000 residents in
2023, it's advisable to consult official census data for the most precise figures.
Strategically located within the konkan division, badlapur boasts close proximity to
major urban centers like mumbai (around 70 kilometers away) and thane
(approximately 40 kilometers distant).
Fig. 2.1: BADLAPUR STATION BOARD Fig. 2.2 BADLAPUR CITYMAP
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II. ULHASNAGAR
Ulhasnagar is a city located, just 26 km from Thane City in Thane district,

Maharashtra, India. This city is a part of Mumbai Metropolitan Region managed by
MMRDA. It had an estimated population of 506,098 at the 2011 Census. Ulhasnagar
is a municipal city and the headquarters of the Tehsil bearing the same name. It has a
suburban station on the Central line of the Mumbai Suburban Railway.
The town covers an area of 13 square kilometers and is divided into 285
blocks. It is a Centre for the production of rayon silk, dyes, ready-made garments,
electrical / electronic appliances and confectionaries. The total length of roads and
streets in the town is 352 kilometers. The town is served by underground and open-
surface drainage, night soil being disposed of by septic tank latrines. The town has a
protected water supply through MIDC. Sanctioned Water Quota at various tapping
points is 112 MLD. Fire-fighting service is also available in the town. There are sixty
private hospitals with a total bed-strength of 840 beds, three government hospitals
with total
Fig. 2.3 ULHASNAGAR STATION BOARD Fig.2.4 ULHASNAGAR MAP
51
2.6. TOOLS FOR ANALYSIS:
The purpose of analysis of data is to acquire usable and useful information.

Data analysis is the process of recognizing of certain parameters along with
identification of relationship patterns that may exist among data groups. In the
procedure of analysis, relationships may be discovered that may support or conflict
the original hypothesis. This analysis clues to valid conclusion only if the relationship
pattern stands the statistical test of significance. The analysis irrespective of whether
the data is qualitative or quantitative may:

Data analysis help to summarize large mass of data into better comprehensible
and simple meaningful form. Such kind of lessening of data with statistical help can
be further are used to lessening complexity. It makes description probable with the
help of numbers averages, percentages, means, standard deviation, etc. Exact relation
between two variables can be sharply stated. Analysis aids the research to pull reliable
inference of the situation that have not measured in full. Such inferences give answers
to many possible questions in research. Due to inference drawn with the help to
statistical tolls further evaluation and estimation is likely. Inferential data can be
utilized to evaluate, understand and draw relationship between some variables. Such
identification of factors helps in analyzing and demonstrating hypothesis.
52
2.7. SCOPE AND LIMITATIONS OF THE STUDY:
SCOPE OF THE STUDY –

This study throws light on Economic Value Added tool and its impact on investors
decisions Following points suggest the scope of the study-
• Basic concepts related Economic Value Added

• How Economic Value Added works
• Investors preference towards Economic Value Added
• Conveniences while using Economic Value Added
• Level of accuracy and reliability provided by Economic Value Added
LIMITATIONS OF THE STUDY –

The present research study has certain limitations which are listed below
• This study is restricted only to the Badlapur & Ulhasnagar area. So, the results
are not applicable to other areas.
• This study is based on the prevailing investors but the investors preference may
• As the number of investorsare huge, a simple size of 112 respondents is only
covered.
53
Chapter 3: REVIEW OF LITERATURE
3.1 INTRODUCTION
3.2 STUDIES ON ECONOMIC VALUE ADDED
3.3 GAP ANALYSIS
54
3.1 Introduction
While several widely used definitions of Economic Value Added exist, all of
them generally imply the ability of individuals to obtain, understand and evaluate
information required to understand Economic Value Added and to make best possible
investment decisions. This chapter gives a brief overview of researches made by
various experts in the field.
3.2. Studies on Economic Value Added
Shishanya, Al-Omushb and Guermatc (2020) in their paper examines whether

the adoption of EVA as a compensation and management plan enhances a firm's
performance and its long-term effects on its value. It uses two common aggregating
methods, CAR and BHAR, to test the event of adopting EVA by different US firms.
The study sample consists of 89 US firms and compares their performance to that of
selected matching firms and market indexes, particularly, the S&P500 portfolio. The
results show a slight improvement in performance within five years from the date of
adoption. Adopter firms positively outperform the market and matching firms most of
the time within the hold period. The CAR method appears more stable and has the
lowest skewed and leptokurtic.
Bartolomé Deyá Tortella Sandro Brusco (2003) analyzes the market reaction
to the introduction of the Economic Value Added (EVA) management technique and
its effects on profitability, investment, and cash flow variables. The introduction of
EVA does not generate significant abnormal returns, but firms adopt it after a long
period of bad performance and performance indicators improve only in the long run.
EVA adoption provides incentives for managers to increase firm investment activity,
which appears to be linked to higher levels of debt. The authors analyze the long-term
effects on cash flow measures and evaluate whether EVA helps to improve operating
profits, cost of capital, and investment activity. The literature on EVA information
content and its correlation with market value added has mixed results. The article does
not observe any significant market reaction when a firm adopts EVA, contrary to
other studies that observe high stock market returns. The market price evolution may
rely more on audited accounting earnings than on unaudited EVA.
55
Bhasin (2013) Shareholder value maximization is a top goal of corporations in

India and the world, and companies need to use performance measures aligned with
this goal. Value-based measures like Economic Value Added (EVA), cash flow return
on investment, and Total Shareholder Return (TSR) have become popular in India.
EVA is both a measure of value and performance, and a sustained increase in EVA
will bring an increase in the market value of a company. However, non-creation of
EVA leads to investor dissatisfaction, affecting the equity mobilization activities of
corporate sectors. A study examined the value creation strategies of selected Indian
companies and found that EVA better represents market value compared to
conventional performance measures. The EVA in absolute figures of BHEL, L&T,
and TCS has increased over the study period, but there is higher variability in EVACE
in ROE. Companies need to improve their financial performance from the point of
view of shareholder value addition. Despite being touted as a hot financial idea, it is
being ignored by the corporate sector, professionals, and government bodies in India,
and annual published reports lack transparency and adequate disclosures.
Syahputra, and Yunita (2012-2017) discusses the use of Economic Value

Added, Debt Equity Ratio, and Financial Leverage in assessing a company's
performance. The study was conducted on 13 food and beverage companies listed on
the Indonesia Stock Exchange from 2012-2017. The data analysis technique used was
the Data Panel with the Common Effect Model. The results of the study show that
partial economic value added and financial leverage have no influence on the return
of shares. The other 81.9% is explained by other factors outside this research.
Yuanzhan Chen Zhuo Jin Bo Qin (2023) discusses the use of Economic Value
Added (EVA) as an alternative to Total Shareholder Return (TSR). The study
confirms the positive relationships between EVA-related metrics and long-term TSR
in the Australian market. The simulation approach provides quantitative evidence and
gives practitioners in different market environments an expandable and scalable
pseudo-framework. The article provides general considerations and guidelines on the
design of LTI plans. The study argues that, as an outcome measure, TSR failed to
serve as the lead indicator in executive remuneration
56
Ehrbar and Stewart.(1999) according to them Stern Stewart's EVA framework

applies modern financial theory and classical economics to measuring and motivating
corporate performance. It provides a consistent basis for corporate financial
management and a language for communicating goals to investors. Over 300
companies have implemented EVA, including Federal Mogul, which saw significant
behavioral changes and organizational structure changes. EVA is capable of guiding
all corporate decisions, from annual operating budgets to acquisitions and divestitures.
Dr. Zahi and Dr. Djaouahdou (2012) discuses that Economic Value Added
(EVA) is a new measure of corporate performance that focuses on clear surplus. It
promises to improve firm performance and produce greater returns to shareholders.
EVA can be the main part of an integrated financial management system, leading to
decentralized decision making. It encompasses all levels of business operations and
affords clear links between strategic thinking, capital investment, day-to-day
operating decisions, and shareholder value. It is imperative that all members of a
company are committed to the principles of EVA.
Sanningammanavara, Kotra and Ramya (2014) did a study on three IT

companies from 2008-2012 found no strong pattern of EVA. EVA subtracts the cost
of capital from a firm's profits to measure economic additional value produced. The
study also assessed the correlation between shareholders value with the stock market
price. The cost of debt has little effect on EVA's behavior. There is no strong relation
between EVA and market prices of the companies. Extensive study is required to
establish the influence of other factors.
Shah, Haldar and Rao (2015) discusses the role and implications of Economic
Value Added (EVA) as a financial performance measure and its applicability as a tool
for introducing financial flexibility. EVA helps managers differentiate between value-
creating and value-destructing activities and can be adapted as a corporate strategy for
motivating employees. While EVA is recognized as a superior performance measure,
it has its own drawbacks such as simplicity, applicability, and transparency. Despite
these drawbacks, EVA has gained popularity from the success stories of organizations
that have grown due to its adoption.
57
Sauro and Tafirei (2016) examined the relationship between economic value-
added (EVA) and stock returns in commercial banks listed at the Johannesburg stock
exchange. The study partially confirmed some of Stern Stewart & Co.'s assertions
with regards to EVA when compared to some traditional performance metrics. EVA
can be reliably used to measure corporate value and performance simultaneously.
South African banks should consider supplying EVA data when releasing annual
performance figures.
Tudose, Rusu and Avasilcai (2021) provides a data-driven framework for

measuring and improving business performance through synchronized strategies. The
study includes an exploratory case study and a statistical analysis with econometric
models. The results show that a company can improve its performance even in periods
of growth, characterized by consistent investments. The measurement of performance
was made by capitalizing on financial and non-financial data precisely to intensify the
interest for corporate sustainability. The research has a double utility: scientific and
practical. EVA-based performance management provides managers the opportunity
and motivation to take decisions growing the value of business in both the interests of
shareholders and other stakeholders.
McGorman (2007) explored the effectiveness of Economic Value Added

(EVA) as an internal control tool in corporate governance. It compared EVA with
other profitability measures and discussed how to successfully implement ethics.
EVA is crucial for the creation of shareholder wealth and overall well-being of
corporations. Adopting EVA and financial regulations combined with EVA can
increase returns, create shareholder wealth, and reduce corporate scandals.
Gupta and Sikarwar (2016) did a study on 50 Indian companies from 2008-
2011 found that economic value added (EVA) is superior to traditional accounting
performance measures for analyzing shareholder value creation. EVA has more
relevant and incremental information content than accounting measures. The study
recommends firms to focus on EVA in analyzing their financial health to maximize
shareholder wealth maximization. The findings have practical implications for
managers and investors.
58
Rathod, Asha and Naidu (2016) discusses the use of modern and traditional
methods in valuing a company's performance. EVA and CVA are modern methods,
while EPS, ROI, ROE are traditional methods. Stern Stewart introduced EVA in 1990
as a measure of business performance. A survey of 100 investors found that most are
not aware of modern methods for valuation. Respondents prefer to use traditional
methods for share price valuation, including EPS for analysis and investing in
different securities. The article rejects H0 and accepts H1.
Subramanyam and Kumar (2020) according to them firm's financial objective

is to maximize shareholder value, but management must identify appropriate
measures to analyze financial performance. EVA and CFROI are useful tools for
evaluating financial performance and maximizing shareholder value. A study on 20
Indian cement companies from 2006 to 2017 found a positive relationship between
these two techniques and their impact on stock market returns. The study found that
the Economic Value Added and Cash flows Return on Investment contribute to
explain significantly at 0.05% level of the stock market return. These two techniques
are the best financial performance measures for shareholders value creation.
Performance evaluation is the most important yardstick applied by shareholders to
assess a company, and these two tools are significant tools for evaluation. Positive
results prove that when these techniques are positive, it increases shareholders' value.
Overall, the study concludes that there is a significant positive relationship and impact
of these techniques on shareholder value maximization.
3.3. Gap Analysis
Various researches have been conducted at National and International level on

the Economic Value Added and its Impact on Investing Decisions most of these
studies either are focused on experts people or on companies. No studies have been
conducted on general segment of investors Considering this gap , present study is
undertaken.
59
Chapter 4: Survey Findings
4.1. Findings and Analysis
60
4.1. What is your age group ?
Table 4.1: Age of Respondents
Age Group Responses Percentage
18-24 66 58.9%
25-34 13 11.6%
35-44 13 11.6%
45-54 16 14.3%
55+ 4 3.6%
Total 112 100%
Graph 4.1: Age of Respondents
Interpretation:
According to above chart among the total 112 respondents 66 respondents
(58.9%) are from 18-24 age group, 13 respondents (11.6%) are from 25-34 age group,
13 respondents (11.6%) are from 35-44 age group, 16 respondents (14.3%) are from
45-54 age group and 4 respondents (3.6%) from 55+ age group.
61
4.2 What types of investments are you currently involved in ?
Table 4.2: Types of Investment

Types OF
Responses Percentage
Investment
Stock 65 58%
Bonds 23 20.5%
Mutual Fund 60 53.6%
Commodities 15 13.4%
Total 112 100%
Graph 4.2: Types of Investment
Interpretation:
According to above chart among the total 112 respondents 65 (58%)
respondents have invested in Stocks, 23 (20.5%) respondents have invested in Bonds,
60 (53.6%) respondents have ivested in Mutual Funds and 15 (13.4%) respondents
have invested in commodities.
62
4.3 How would you rate your level of risk tolerance when it
comes to investments?
Table 4.3: Risk tolerance level of respondents
Risk Tolerance
Responses Percentage
level
Very conservative 17 15.2%
Conservative 37 33%
Moderate 42 37.5%
Aggressive 16 14.3%
Total 112 100%
Graph 4.3: Risk tolerance level of respondents
Interpretation:
According to above chart among the total 112 respondents 17 (15.2%)
respondents have Very Conservative risk tolerance level, 37 (33%) respondents have
Conservative risk tolerance level, 42 (37.5%) respondents have moderate risk
tolerance level and 16 (14.3%) respondents have Aggressive risk tolerance level.
63
4.4 What are your primary investment goals?
Table 4.4: Primary investment goals

Goals Responses Percentage
Capital
23 20.5%
preservation
Wealth
19 17%
accumulation
Income generation 53 47.3%
Retirement
17 15.2%
planning
Total 112 100%
Graph 4.4: Primary investment goals
Interpretation:
respondents have Capital preservation as their Investment goal, 19 (17%) respondents
have Wealth accumulation as their Investment goal, 53 (47.3%) respondents have
Income generation as their Investment goal and 17 (15.2%) respondents have
Retirement planning as their Investment goal,
64
4.5 How do you typically gather information or research investments before

making a decision?
Table 4.5: Gathering Information
Sources Responses
Financial news websites 30
Social media 58
Professional financial advisors 60
Friends or family 52
Graph 4.5: Gathering Information
Interpretation:
According to above chart 30 respondents use Financial news websites to
gather information, 58 respondents use Social media to gather information, 60
respondents use Professional financial advisors to gather information and 52
respondents use Friends or family to gather information.
( Note: Above Question is MCQ type therefore 1 respondent have selected more
than 1 source of information gathering )
65
4.6 How often do you review your investment portfolio?
Table 4.6: Portfolio Review Frequency
Frequency Responses Percentage
Daily 38 33.9%
Weekly 39 34.8%
Monthly 27 24.1%
Quarterly 8 7.2%
Total 112 100%
Graph 4.6: Portfolio Review Frequency
Interpretation:
respondents review their portfolio Daily, 39 (34.8%) respondents review their
portfolio Weekly, 27 (24.1%) respondents review their portfolio Monthly, 8 (7.2%)
%) respondents review their portfolio Quarterly.
66
4.7. Are you familiar with the concept of EVA ( Economic Value Added )
Table 4.7: Familiar with the concept of EVA

Answer Responses Percentage
Yes 74 66.1%
No 38 33.9%
Total 112 100%
Graph 4.7: Familiar with the concept of EVA
Interpretation:
According to above chart among the total 112 respondents 74 respondents
are familiar with concept of Economic value Added and 38 respondents are not
familiar with concept of Economic value Added.
67
4.8. How would you rate your understanding of EVA principles?
Table 4.8 Understanding EVA Principles
Understanding Responses Percentage
Poor 35 31.2%
Fair 34 30.4%
Good 34 30.4%
Excellent 9 8%
Total 112 100%
Graph 4.8: Understanding EVA Principles
Interpretation:
respondents have Poor understanding about EVA Principles, 34 (30.4%) respondents
have Fair understanding about EVA Principles, 34 (30.4%) respondents have Good
understanding about EVA Principles and 9 (8%) respondents have Excellent
understanding about EVA Principles
68
4.9 How important are EVA factors in your investment decision-making

process?
Table 4.9: Importance of EVA Factors

Importance Responses Percentage
Very important 22 19.6%
Somewhat important 34 30.4%
Neutral 44 39.3%
Not very important 8 7.1%
Not important at all 4 3.6%
Total 112 100%
Graph 4.9: Importance of EVA Factors
Interpretation:
respondents thinks EVA factors are Very Important in investment decision making,
34 (30.4%)%) respondents thinks EVA factors are Somewhat Important in investment
decision making, 44 (39.3%) respondents are Neutral about Importance of EVA
factors in investment decision making, 8 (7.1%) respondents thinks EVA factors are
Not Very Important in investment decision making and 4 (3.6%) %) respondents
thinks EVA factors are Not Important in investment decision making.
69
4.10. Have you ever considered the EVA performance of a company before
making an investment decision?
Table 4.10: EVA Consideration
Answers Responses Percentage
Yes 48 42.9 %
No 29 25.9 %
Maybe 35 31.2 %
Total 112 100%
Graph 4.10: EVA Consideration
Interpretation:
respondents take EVA into consideration before making investment decision, 29
(25.9%) respondents did not take EVA into consideration before making investment
decision and 35 (31.2) respondents are not sure about EVA consideration in
investment decision.
70
4.11. What is your primary source of information about EVA ?
Table.4.11: Gathering Information about EVA
Sources Responses
Financial news media 33
Investment research reports 38
Sustainability reports from companies 29
Online resources or social media 61
Graph 4.11: Gathering Information about EVA
Interpretation:
According to above chart 33 respondents Financial news media to gather
information, 38 respondents use Investment research reports to gather information, 29
respondents use Sustainability reports from companies to gather information and 61
respondents use Online resources or social media to gather information.
71
4.12: Do you believe that companies with strong EVA practices tend to
outperform financially in the long term?
Table 4.12: Companies with strong EVA practices tend to outperform

financially in the long term
Agree/Disagree Responses Percentage
Strongly agree 27 24.1%
Somewhat agree 36 32.1%
Neutral 46 41.1%
Somewhat disagree 3 2.7%
Strongly disagree 0 0
Total 112 100%
Graph 4.12: Companies with strong EVA practices tend to outperform

financially in the long term
Interpretation:
respondents Strongly agree that companies with strong EVA practices tend to
outperform financially in the long term, 36 (32.1%) respondents Somewhat agree
that companies with strong EVA practices tend to outperform financially in the
long term, 46 respondents have neutral opinion about companies with strong EVA
practices tend to outperform financially in the long term, 3 (2.7%) respondents
somewhat Disagree that companies with strong EVA practices tend to outperform
financially in the long term and 0 respondents strongly Disagree companies with
strong EVA practices tend to outperform financially in the long term,
72
4.13 Would you be interested in learning more about EVA investing?
Table 4.13: Learning more about EVA
Answers Responses Percentage
Yes 63 56.3%
No 15 13.4%
Maybe 34 30.4%
Total 112 100%
Graph 4.13: Learning more about EVA
Interpretation:
respondents are interested in learning more about Economic Value Added, 15 (13.4%)
respondents are not interested in learning more about economic value added and 34
(30.4 respondents maybe learn more about economic Value Added.
73
Chapter 5: Conclusion and Recommendations
SYNOPSIS
5.1 CONCLUSION
5.2 RECOMMENDATIONS
74
5.1. Conclusion: Understanding Investor Behavior and Perception

Towards Economic Value Added (EVA)
EVA is a financial metric that measures the economic profit generated by a

company. It evaluates how much value a company creates for its shareholders after
accounting for the opportunity cost of the capital invested. EVA is calculated by
subtracting the company's cost of capital from its net operating profit after taxes
(NOPAT). Limitations of EVA include estimation reliance and the inability to fully
capture the value of intangible assets. However, when used in conjunction with other
financial metrics, industry analysis, and a thorough understanding of company
fundamentals, EVA provides valuable insights for investors.
In analyzing the dataset comprising responses from 112 investors across

various demographics, investment behaviors, risk tolerances, and perceptions towards
Economic Value Added (EVA), several significant insights have emerged. These
insights shed light on how investors approach decision-making, their attitudes towards
financial metrics like EVA, and their preferences for information sources.
Understanding these dynamics is crucial for investors, financial advisors, and
companies aiming to enhance their financial performance and investor relations
strategies.
Firstly, the data illustrates a diverse range of investment behaviors and

preferences among respondents. While stocks and mutual funds are popular
investment choices, the allocation of investments varies across different asset classes.
This diversity suggests that investors have differing risk appetites, investment goals,
and strategies, highlighting the importance of personalized financial advice tailored to
individual needs.
Moreover, the dataset reveals the prevalence of social media and online
resources as key sources of investment information. This trend underscores the
growing influence of digital platforms in shaping investor sentiment and decision-
making processes. Financial advisors and companies must adapt to this changing
landscape by leveraging digital channels to engage with investors effectively and
75
disseminate relevant information.

Furthermore, the findings regarding risk tolerance levels and investment goals
highlight the importance of aligning investment strategies with investors' risk
preferences and objectives. By understanding investors' risk profiles and financial
goals, advisors can provide tailored recommendations that maximize the likelihood of
achieving desired outcomes while mitigating potential risks.
One notable aspect of the data is the varying levels of familiarity and
understanding of Economic Value Added (EVA) among respondents. While a
majority of investors are familiar with the concept, their comprehension levels vary
widely. This discrepancy underscores the need for enhanced education and awareness
initiatives aimed at demystifying complex financial metrics and empowering investors
to make informed decisions.
Additionally, the dataset provides insights into investors' perceptions of the

importance of EVA factors in investment decision-making. While a significant
portion of respondents recognize the relevance of EVA, there is a notable degree of
uncertainty and neutrality regarding its significance. This suggests that investors may
not fully grasp the implications of EVA on investment performance or may require
further education on its utility as a financial performance metric
.
Despite the varying levels of understanding and perception towards EVA, a
substantial proportion of respondents consider EVA before making investment
decisions. This finding highlights the growing recognition of EVA as a valuable tool
for evaluating investment opportunities and assessing companies' financial
performance. Companies that effectively communicate their EVA metrics and
demonstrate a commitment to value creation are likely to resonate positively with
investors seeking long-term sustainable returns.
Moreover, the data suggests a positive correlation between investors'

perceptions of companies with strong EVA practices and their long-term financial
performance. A majority of respondents believe that companies with robust EVA
practices tend to outperform their peers over time. This perception underscores the
importance of EVA as a leading indicator of corporate financial health and reinforces
76
the value of incorporating EVA analysis into investment decision-making processes
In conclusion, the dataset offers valuable insights into investor behavior,

attitudes towards financial metrics, and perceptions of Economic Value Added
(EVA). By understanding these dynamics, investors, financial advisors, and
companies can enhance their decision-making processes, optimize investment
strategies, and foster stronger investor relations. Moving forward, continued efforts to
educate investors about EVA and its implications, coupled with transparent
communication of EVA metrics by companies, will be instrumental in driving
informed investment decisions and fostering long-term value creation.
This conclusion synthesizes the key findings from the dataset while providing
actionable insights and implications for investors, financial advisors, and companies.
It emphasizes the importance of understanding investor behavior, aligning investment
strategies with investors' preferences, and leveraging financial metrics like EVA to
drive sustainable financial performance and investor confidence.
5.2. Recommendations
I. Educational Resources: Develop educational resources on EVA principles and their

practical application in investment decisions. These resources can be targeted towards
different age groups and risk tolerance levels.
II. Social Media Education: Partner with financial advisors and educators to create
informative content for social media platforms, addressing common investment myths
and promoting reliable information sources.
III. Interactive Tools: Develop online tools that allow investors to calculate or estimate a
company's EVA and assess its potential impact on their investment decisions.
IV. Financial Advisor Training: Provide training programs for financial advisors to
equip them with the knowledge and skills to integrate EVA analysis into their client
consultations.
77
V. Collaboration with Media: Collaborate with financial news media to create content
that explains the concept of EVA, its limitations, and its potential role in investment
strategy.
VI. Highlight Long-Term Performance: Conduct research studies or highlight existing

data that demonstrates the long-term outperformance potential of companies with
strong EVA practices.
VII. Focus on Diversification: Educate investors on the importance of diversification

beyond just asset classes, but also incorporating factors like company fundamentals
and responsible investing practices.
By implementing these recommendations, you can bridge the knowledge gap

regarding EVA, empower investors to make informed decisions, and promote a more
sustainable and responsible investment landscape.
Additional Recommendations:
• It's important to acknowledge the limitations of EVA as a single metric. It should be

used in conjunction with other financial analysis tools for a comprehensive
evaluation.
• The dominance of young investors (18-24) highlights the need for age-appropriate
educational resources that cater to their investment goals, risk tolerance, and preferred
information sources.
• The reliance on social media necessitates responsible content creation and

collaboration with financial educators to ensure reliable information reaches investors.
By addressing these considerations, you can create a more informed and empowered
investor community that leverages the potential of EVA alongside other valuable
investment tools
78
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81
Annexure
Questionnaire
Note: Your responses will be kept confidential and will be used purely for
academicpurpose only.
I.Name of the Respondent:
II.What is your age group ?

o 18-24
o 24-34
o 35-44
o 45-54
o 55+
III.What types of investments are you currently involved in ?

o Stocks
o Bonds
o Mutual Funds
o Commodities
IV.How would you rate your level of risk tolerance when it comes to investments?
o Very conservative
o Conservative
o Moderate
o Aggressive
V.What are your primary investment goals?

o Capital preservation
o Wealth accumulation
o Income generation
o Retirement planning
82
VI.How do you typically gather information or research investments before making

a decision?
o Financial news websites
o Social media
o Professional financial advisors
o Friends or family
VII.How often do you review your investment portfolio?

o Daily
o Weekly
o Monthly
o Quarterly
VIII.Are you familiar with the concept of EVA ( Economic Value Added )
o Yes
o No
IX.How would you rate your understanding of EVA principles? 8. How would you
rate your understanding of EVA principles?
o Poor
o Fair
o Good
o Excellent
X.How important are EVA factors in your investment decision-making process?

o Very important
o Somewhat important
o Neutral
o Not very important
o Not important at all
83
XI.Have you ever considered the EVA performance of a company before making an
investment decision?
o Yes
o No
XII.What is your primary source of information about EVA ?

o Financial news media
o Investment research reports
o Sustainability reports from companies
o Online resources or social media
XIII.Do you believe that companies with strong EVA practices tend to outperform
financially in the long term?
o Strongly agree
o Somewhat agree
o Neutral
o Somewhat disagree
o Strongly disagree
XIV.Would you be interested in learning more about EVA investing?

o Yes
o No
o Maybe
84
“A Study on ESG: It’s Influence on Investor Choices and Financial Strategy”
By
Miss. Riya Vedprakash Upadhyay
(Roll No. 77)

Mr. Varun Jashnani

Ulhasnagar
April, 2024
i
P.B. No 17, Opp. Railway Station, Smt Chandibai Himathmal Mansukhani Road, Ulhasnagar- 421003 Dist. Thane, (MAHARASHTRA)
Certificate
This is to certify that Miss. Riya Vedprakash Upadhyay has worked and duly completed his
Project Work for the degree of Bachelor of Management Studies under the Faculty of
Commerce in the subject of Finance and his project is entitled, “A Study on ESG: Its
Influence on Investor Choices and Financial Strategy" under my supervision.
Mr. Varun Jashnani

Guiding Teacher
Date of submission: April, 2024
ii
I the undersigned Miss. Riya Vedprakash Upadhyay here by, declare that the work embodied
in this project work titled “A Study on ESG: Its Influence on Investor Choices and
Financial Strategy" forms my own contribution to the research work carried out under the
guidance of Mr. Varun Jashnani, is a result of my own research work and has not been
previously submitted to any other University for any other Degree/ Diploma to this or any other
University.
Miss. Riya Vedprakash Upadhyay

(Roll No. 77)
Certified by,
Mr. Varun Jashnani

Guiding Teacher
iii
Evaluation
This Research Project on “A Study on ESG: Its Influence on Investor Choices and
Financial Strategy" submitted by Miss. Riya Vedprakash Upadhyay of TYBMS (Semester –
VI) is evaluated as per guidelines of University of Mumbai, via Circular No. UG/89 of 2018-19
on Revised Syllabus - CBCS for the TYBMS (Semester – V and VI) w.e.f. academic year
2023-2024
External Examiner:
Name: _____________________________________
Signature: _____________________________________
Internal Examiner:
Name: _____________________________________
Signature: _____________________________________
iv
Acknowledgement
I would like to acknowledge the following as being idealistic channels and fresh dimensions in
project.
I would like to thank my Principal, Dr. Manju Pathak for providing the necessary facilities
required for completion of this project.
v
Executive Summary
The evaluation of Environmental (E), Social (S), and Governance (G) factors is essential for
investors seeking sustainable and responsible investment opportunities.
Environmental factors encompass a company's approach to climate change, resource

management, pollution control, and biodiversity. Investors prioritize companies committed to
reducing their carbon footprint, efficiently utilizing resources, mitigating pollution, and
preserving biodiversity.
Social factors focus on labor practices, human rights, product safety and quality, and
community relations. Investors value companies that prioritize fair treatment of employees,
ethical sourcing, safe products, and positive community engagement.
Governance factors evaluate corporate governance, risk management, compliance, and

shareholder rights. Investors seek companies with transparent leadership, robust risk
management, ethical conduct, and fair treatment of shareholders.
Overall, investors prioritize companies demonstrating strong commitments to environmental

sustainability, ethical business practices, and responsible governance to mitigate risks and
contribute to long-term value creation.
 Chapter 1 covers the Meaning of Environmental, Social, and Governance (ESG)

factors, Introduction to Investments and Investors decisions, ESG: A Timeline, Features
of ESG, Challenges Hobbling ESG Growth in India, Importance of ESG in Investing or
Investment, Pros and Cons of ESG in Investment, Impact of ESG on Investors and
Investment, How Do Investors Check ESG On Investments, Conclusion of Impact of
ESG On Investor and Investment.
 Chapter 2 covers the Objectives, Methods of Data Collection, Sample Design and Area
of Study.
vi
Overall, the project report has been framed in simple and lucid language, so that, even a
layman can understand the contents, specially the research findings which are valuable for
every reader.
vii
Contents
No. Content Page
No.
1 PRELIMINARY
Title Sheet i
Certificate ii
Declaration iii
Evaluation iv
Acknowledgement v
vi
Executive summary
viii
Contents
x
List of tables
xii
List of Figures
2 Chapter 1: INTRODUCTION
1.1 Meaning of Environmental, Social, and Governance (ESG) 2
factors.
1.2 Introduction to Investments and Investors decisions. 8
1.3 ESG: A Timeline. 20
1.4 Functions of ESG. 22
1.5 Challenges Hobbling ESG Growth in India. 25
1.6 Importance of ESG in Investing or Investment. 26
1.7 Pros and Cons of ESG in Investment. 28
1.8 Impact of ESG on Investors and Investment. 31
1.9 How Do Investors Check ESG On Investments. 34
1.10 Conclusion of Impact of ESG On Investor and Investment. 36
3 Chapter 2: RESEARCH DESIGN

2.1 Introduction 38
2.2 Objective 38
viii
4. Chapter 3: REVIEW OF LITERATURE
3.1 Introduction 51
3.2 Studies on ESG Factor's Influence on Investment. 51
3.3 Gap Analysis 55
5. Chapter 4: SURVEY FINDINGS
6. Chapter 5. CONCLUSION AND RECOMMENDATIONS
5.1 Conclusion 75
ix
List of Tables
No. Tables Heading Page No.
4.1 Age of Respondents. 58
4.2 Gender of the Respondents. 59
4.3 Annual Income of the Respondents. 60
4.4 Investment Experience of the Respondents. 61
4.5 Primary Investment Goals of Respondents. 62
4.6 Familiarity With the Concept of ESG 63

(Environment, Social, and Governance)
Investing.
4.7 Rating they gave for Understanding the ESG 64

Principle.
4.8 Primary Sources of Information about ESG 65

Investing.
4.9 Consideration of ESG Factor while making 66

Investment Decision.
4.10 Importance of ESG factors while Considering 67

an Investment.
4.11 Influence ESG Factor on Investment Decision? 68
4.12 The most Important ESG Factor. 69
x
No. Tables Heading Page No.
4.13 Willingness to Invest in a Company with

Slightly Lower Potential Returns and Strong
70
ESG Practices.
4.14 Biggest Barriers Respondents Faced when 71

Considering ESG Factors in your Investments.
4.15 Interest in Learning more about ESG Investing. 72
xi
List of Figures
1.1 ESG Factors. 2
1.2 Investment Options. 10
1.3 Risk In investment. 12
1.4 ESG Investment Strategy 19
1.5 ESG Timeline. 20
2.1 Area of Badlapur. 46
2.2 Area of Ulhasnagar. 48
4.1 Age of Respondents. 58
4.2 Gender of the Respondents. 59
4.3 Annual Income of the Respondents. 60
4.4 Investment Experience of the Respondents. 61
4.5 Primary Investment Goals of Respondents. 62
4.6 Familiarity With the Concept of ESG

(Environment, Social, and Governance)
63
Investing.
4.7 Rating they gave for Understanding the ESG

Principle.
64
4.8 Primary Sources of Information about ESG

Investing.
65
4.9 Consideration of ESG Factor while making

Investment Decision.
66
xii
4.10 Importance of ESG factors while Considering

an Investment.
67
4.11 Influence ESG Factor on Investment

Decision?
68
4.12 The most Important ESG Factor. 69
4.13 Willingness to Invest in a Company with

Slightly Lower Potential Returns and Strong
70
ESG Practices.
4.14 Biggest Barriers Respondents Faced when

Considering ESG Factors in your Investments.
71
4.15 Interest in Learning more about ESG

Investing.
72
xiii
ESG Influence: Shaping Investment Decisions
CHAPTER 1: INTRODUCTION.
SYNOPSIS:
1.1 Meaning of Environmental, Social, and Governance (ESG) factors.

1.2 Introduction to Investments and Investors decisions.
1.3 ESG: A Timeline.
1.4 Functions of ESG.
1.5 Challenges Hobbling ESG Growth in India.
1.6 Importance of ESG in Investing or Investment.
1.7 Pros and Cons of ESG in Investment.
1.8 Impact of ESG on Investors and Investment.
1.9 How Do Investors Check ESG On Investments.
1.10 Conclusion of Impact of ESG On Investor and Investment.
1
1.1. Introduction to Environmental, Social, And Governance (ESG) Factors.
1.1.1. Meaning
Environmental, Social, and Governance (ESG) factors have emerged as a
pivotal force in the investment landscape, shaping decisions for both socially
conscious investors and those seeking long-term financial gains. This framework
transcends traditional financial metrics, encompassing a company's non-financial
performance across three crucial areas:
Figure 1.1 ESG Factors.
A. ENVIRONMENTAL (E) FACTORS:

I.Climate Change: This delves into a company's approach to greenhouse gas
emissions, including strategies for reducing their carbon footprint and adapting to
the impacts of climate change. It also evaluates their commitment to renewable
energy sources and their overall contribution to a sustainable future.
II.Resource Management: This assesses how efficiently a company utilizes
resources like water, energy, and raw materials. It also examines their waste
reduction and recycling initiatives, scrutinizing their commitment to minimizing
their environmental footprint throughout their operations.
III.Pollution Control: This aspect evaluates a company's management of air and
water pollution, their adherence to environmental regulations, and their potential
exposure to environmental liabilities. It seeks to identify companies with a
proactive approach to environmental protection and responsible waste disposal
practices.
2
IV.Biodiversity and Sustainability: This examines a company's impact on

ecosystems, its commitment to sustainable practices like responsible forestry and
land use, and its involvement in deforestation or habitat destruction. Investors are
increasingly seeking companies that prioritize the preservation of biodiversity and
actively contribute to a sustainable future
B. SOCIAL (S) FACTORS:

I. Labour Practices: This assesses a company's treatment of its employees,
including fair wages, safe and healthy working conditions, diversity and inclusion
policies, and avoidance of child or forced labour. It seeks to identify companies
that uphold ethical labour practices and foster a positive and inclusive work
environment.
II. Human Rights: This considers a company's respect for human rights throughout
its operations, including its supply chain. It evaluates their commitment to ethical
and responsible sourcing practices, ensuring that human rights are not violated at
any stage of their production and business activities
III. Product Safety and Quality: This evaluates a company's commitment to safe and
high-quality products, consumer protection measures, and responsible marketing
practices. It seeks to identify companies that prioritize the well-being of their
customers and demonstrate a commitment to ethical and transparent marketing
strategies.
IV. Community Relations: This assesses a company's engagement with the
communities it operates in, its social responsibility initiatives, and its impact on
local communities. It seeks to identify companies that actively contribute to the
well-being of the communities they are a part of, fostering positive relationships
and demonstrating responsible social citizenship.
C. GOVERNANCE (G) FACTORS:

I. Corporate Governance: This evaluates the company's leadership structure, board
composition, executive compensation, transparency of financial reporting, and
adherence to ethical business practices. It seeks to identify companies with strong
corporate governance practices, ensuring accountability, transparency, and
responsible leadership.
3
II. Risk Management: This assesses the company's ability to identify, manage, and
mitigate various risks, including financial, operational, legal, and reputational
risks. It seeks to identify companies with robust risk management frameworks in
place, allowing them to navigate challenges and adapt to changing circumstances.
III. Compliance: This evaluates the company's adherence to laws, regulations, and
ethical codes, and its track record of avoiding legal or regulatory issues. It seeks to
identify companies with a strong commitment to ethical conduct and compliance,
minimizing the risk of legal or regulatory problems that could negatively impact
their financial performance and reputation.
IV. Shareholder Rights: This assesses the company's respect for shareholder rights,
transparency in communication, and commitment to fair treatment of all
shareholders. It seeks to identify companies that prioritize good corporate
governance practices and ensure that the interests of all shareholders are taken into
account.
1.1.2. DEFINITION OF ESG FACTOR:
According to Mary Barra, CEO of General Motors, a company in a

traditionally resource-intensive industry, offered a nuanced perspective that goes
beyond simply acknowledging the importance of ESG. She stated: "We believe
that environmental, social, and governance factors are not just the right thing to do,
but also the smart thing to do from a business perspective." This highlights the
increasing recognition of the potential business benefits associated with strong
ESG practices. Companies like General Motors are recognizing the dual benefit of
ESG, contributing to societal good while also enhancing their long-term financial
success.
(This highlights the growing recognition of the potential business benefits
associated with strong ESG practices.)
According to Mark Carney, Former Governor of the Bank of England

emphasized the systemic shift underway, stating: "ESG factors are not some fads,
but a systemic shift in the way capital is allocated." This statement carries
significant weight, underscoring the potential for ESG to fundamentally alter
4
investment strategies and direct resources towards more sustainable and

responsible practices.
(This emphasizes the potential long-term impact of ESG on the investment
landscape.)
According to Larry Fink, CEO Of Blackrock a leading global investment

management firm, highlighted the pervasive nature of ESG considerations. He
declared: "Sustainability is not a niche. It is the entirety of the investment
landscape." This bold statement emphasizes the widespread adoption of ESG
factors as a mainstream investment strategy, particularly significant coming from a
leader of such a major player in the financial industry. BlackRock‟s shift towards
sustainability signifies a broader movement within the investment community.
(This highlights the growing integration of ESG considerations into mainstream
investment strategies.
1.1.3. CHARACTERISTICS OF ESG AND ESG INVESTMENTS:
 Environmental Focus:
This digs into a company's environmental footprint and stewardship. Look for
companies with strong climate change mitigation strategies (reducing greenhouse
gas emissions), transitioning to renewable energy sources (solar, wind), and
minimizing waste generation and promoting recycling throughout their operations.
Additionally, sustainable resource use (water management, responsible sourcing of
raw materials) and incorporation of eco-friendly materials in products and services
are positive signs.
 Social Responsibility:
This aspect focuses on how a company treats its employees, customers, and the
communities it operates within. Invest in companies upholding fair wages, safe
working conditions, and freedom of association for their employees. Diversity and
inclusion in the workforce create a more innovative and productive environment.
When it comes to customers, ethical business practices, high-quality products and
services, and responsible addressable of customer concerns are key. Suppliers who
share similar social responsibility values are also a plus. Finally, companies that
5
contribute positively to the social and economic well-being of the communities

where they operate demonstrate a strong commitment to social good.
 Effective Governance:
This looks at how a company is managed from the top down. A well-managed
company will have a diverse and independent board of directors that effectively
oversees management. Executive compensation linked to long-term performance
and ESG factors incentivizes sustainable practices. Proactive identification and
mitigation of potential environmental, social, and financial risks demonstrates a
forward-thinking approach. Maintaining ethical conduct throughout all business
operations builds trust with stakeholders. Finally, transparency in ESG
performance and policies allows investors and other stakeholders to make
informed decisions.
 Holistic Integration:
ESG factors are interconnected not isolated. Companies that consider how all these
aspects work together are better positioned for long-term success. For instance,
sustainable waste management practices can improve a company's environmental
footprint and potentially reduce costs (resource efficiency). Similarly, a diverse
and inclusive workforce can foster innovation that leads to the development of new
sustainable products or services.
 Stakeholder Consideration:
ESG investing goes beyond just shareholder returns and considers the interests of
all stakeholders, including employees, customers, communities, and the
environment. A company's long-term success relies on a healthy relationship with
all these groups. By prioritizing the well-being of stakeholders, companies are
more likely to be sustainable and adaptable in the face of long-term challenges
 Long-Term Perspective:
ESG investing takes a long view, considering the impact of a company's actions on
its sustainability over time. Companies that prioritize environmental responsibility
and social well-being are likely to be more resilient and adaptable in the face of
6
future challenges, such as climate change regulations, resource scarcity, and

evolving consumer preferences.
 Alignment with Values:

ESG investing allows you to align your investment portfolio with your personal
values. You can choose companies that prioritize environmental sustainability,
social responsibility, and good governance, potentially creating a positive impact
while meeting your financial goals.
 Diversification Benefit:
ESG investing can offer diversification benefits by incorporating companies that
may not be traditionally included in mainstream portfolios. This could include
companies in renewable energy, sustainable materials, or social impact sectors. By
including these companies alongside more traditional holdings, you can spread risk
and potentially improve the overall return of your investment portfolio.
 Evolving Landscape:
The world of ESG factors and investment strategies is constantly evolving as new
standards and regulations emerge. Investors should stay informed about these
developments to ensure their investment strategies remain aligned with their values
and adapt to the changing ESG landscape. As more stakeholders prioritize ESG
performance, companies are likely to face increasing pressure to improve their
ESG practices, which could translate into opportunities for ESG investors who are
positioned to benefit from this growing trend.
 Impact Investing:
A growing trend within ESG investing is impact investing. Impact investors seek
to invest in companies that are deliberately creating positive social or
environmental impact, alongside achieving financial returns. This could involve
companies developing solutions to climate change, promoting social justice, or
improving access to healthcare. Impact investors are looking to achieve a double
bottom line: financial return and measurable social or environmental benefit. This
7
allows investors to make a meaningful contribution while pursuing their financial

goals.
1.2. Introduction To Investments and Investors Decisions:
The world of investments is vast and constantly evolving, offering

individuals and institutions opportunities to grow their wealth and achieve various
financial goals. This introductory chapter will provide a foundation for
understanding the core concepts of investments and the decision-making processes
involved.
1. 2.1. WHAT ARE INVESTMENTS?
Investments involve the strategic allocation of funds today with the

anticipation of reaping benefits in the future. These benefits can manifest in
various ways, each offering unique advantages. Firstly, there's the prospect of
income, where investors receive regular payments derived from their investments.
For instance, one might earn dividends from stocks or interest from bonds,
providing a steady stream of income over time. Secondly, there's the concept of
growth, wherein the value of the investment appreciates gradually. This means that
investors can potentially sell their investment for a higher price than what they
initially paid for it, thus realizing a profit. Lastly, there's capital appreciation,
which combines both income and growth aspects. Here, the investment not only
generates periodic income but also increases in value over time, enhancing overall
wealth accumulation.
In essence, investing entails putting your money to work with the goal of
expanding your financial resources over the long haul. This can be achieved
through various asset classes, each offering distinct opportunities and risks. For
instance, stocks represent ownership shares in companies, allowing investors to
participate in their performance and potential growth. Bonds, on the other hand, are
loans extended to governments or corporations, yielding interest payments as a
form of return. Additionally, real estate presents another avenue for investment,
involving ownership of properties like land or buildings. This can lead to rental
8
income generation or appreciation in property value over time. Furthermore,

commodities, such as gold, oil, or agricultural products, offer investment
opportunities based on fluctuations in supply and demand, allowing investors to
capitalize on price movements in these physical goods.
Ultimately, the goal of investing is to build and preserve wealth over time,
with investors strategically diversifying their portfolios across different asset
classes to manage risk and maximize returns. By understanding the various forms
of investment returns and asset classes available, individuals can make informed
decisions to meet their financial objectives and secure their financial future.
1. 2.2. WHO ARE INVESTORS?
Investors serve as the backbone of numerous financial ventures,

functioning as the driving force that sustains businesses, start-ups, and the broader
economy. Their role is akin to that of fuel, propelling growth, innovation, and
progress across various sectors. This diverse community comprises individuals and
organizations with distinct objectives and risk appetites, collectively contributing
to the dynamic investor landscape.
At the core of the investment world are individual investors, who form the
bedrock of financial markets. These individuals actively manage their portfolios,
investing in a range of assets such as stocks, bonds, mutual funds, and real estate.
Whether it's young professionals saving for retirement or seasoned investors
aiming to expand their wealth, individual investors play a pivotal role in shaping
the financial ecosystem. Their strategies are carefully tailored to align with
personal goals and risk tolerances, reflecting the diverse needs within this segment.
Institutional investors, often regarded as the heavyweights, wield

considerable influence by managing substantial capital on behalf of others.
Examples include pension funds, insurance companies, and investment banks.
With their significant resources, institutional investors can sway market
movements and exert a profound impact on the financial landscape. Their strategic
9
decisions and investment allocations ripple through the economy, shaping trends
and outcomes on a broader scale.
Angel investors, colloquially known as venture capitalists in the early

stages, represent a breed of bold individuals who take calculated risks to support
nascent start-ups. Motivated by the prospect of nurturing promising ideas and
reaping exponential returns, these investors provide crucial seed funding that can
catapult fledgling ventures toward success. In exchange for their investment, they
may secure ownership equity in the start-up or opt for debt instruments offering
repayment with interest. Their pivotal role in fostering innovation and
entrepreneurship underscores their significance in the investor community.
Figure. 1. 2. Investment Options.
1. 2.3. DEFINITION OF INVESTMENT AND INVESTORS:
According to Warren Buffett (Investor) "Investment is laying out money in

a way that earns a return over a period of time." Buffett is a legendary investor and
philanthropist. He is considered one of the most successful investors of all time
and is the chairman and CEO of Berkshire Hathaway.
According to Benjamin Graham (Investor) "Investment is most intelligent

when it is most business-like." Graham was an influential investor and value
investor. He is best known for his book, The Intelligent Investor, which co-
authored with David Dodd.
10
According to John Maynard Keynes (Economist) "Investment is the act of

sacrificing a certain present good for a future good." Keynes was a British
economist whose theories helped to form the basis for modern macroeconomics.
His book, The General Theory of Employment, Interest and Money, explored the
origins of aggregate demand and the effectiveness of economic policy
interventions.
According to Warren Buffett (Investor) "An investor is someone who

doesn't get scared when other people are scared and gets greedy when other people
are greedy." Buffett is one of the most successful investors of all time and is
known for his value investing philosophy.
According to Benjamin Graham (Investor) "An investor is an individual

who seeks long-term capital growth by putting money into financial instruments."
Graham is considered the father of value investing and wrote the influential book
"The Intelligent Investor."
According to J.M. Keynes (Economist) "An investor is not a gambler, but a

businessman who calculates the mathematical probabilities of gain or loss over a
period of time." Keynes was a British economist whose theories helped to shape
modern macroeconomics.
1. 2.4. INVESTMENT AND INVESTORS RISK:
Investing involves risk, as there's no guarantee of success. The value of

investments can go up or down, and you might not get back the full amount you
invested. Therefore, it's crucial to carefully consider your goals and risk tolerance
before making any investment decisions. Understanding the different types of
investment risk is crucial for navigating the financial landscape. Here's a
breakdown of the two main categories:
11
Figure. 1. 3.Risk In investment.

a. Systematic Risk (Un-diversifiable Risk):
This inherent risk affects the entire market or a large segment of it, making it
impossible to eliminate completely through diversification. It's like a powerful
current that can impact a broad range of investments, regardless of their individual
characteristics. Here are some key examples:
 Market Risk:
This ever-present risk refers to the possibility of the overall stock market
experiencing a decline in value. This can be triggered by various factors beyond
the control of individual investors, such as economic recessions, global conflicts,
or sudden shifts in investor sentiment. Imagine a widespread economic downturn –
even if a company itself is performing well, its stock price might still decline due
to the overall market conditions.
 Interest Rate Risk:

This risk arises from fluctuations in interest rates, which can have a significant
impact on the value of fixed-income investments like bonds. When interest rates
rise, the value of existing bonds tends to fall as new bonds offer more attractive
yields. Conversely, falling interest rates can lead to an increase in bond prices.
Consider a scenario where you own a bond issued several years ago with a fixed
interest rate. If prevailing interest rates in the market rise significantly, the fixed
return you receive on your bond becomes less attractive compared to newer bonds
offering higher yields. This can lead to a decrease in the market value of your
12
existing bond, even though the issuer continues to make the promised interest
payments.
 Inflation Risk:
This constant threat stems from the gradual decrease in the purchasing power of
money over time due to rising prices. If your investments don't keep pace with
inflation, you could lose value in the long run, essentially meaning your money
buys less and less over time. Imagine you invest in a savings account with a fixed
interest rate. If the inflation rate consistently outpaces the interest you earn on your
savings, your money will lose its buying power over time.
 Currency Risk:
This risk becomes relevant when you invest in assets denominated in foreign
currencies. It arises from fluctuations in exchange rates, which can cause the value
of your investment to gain or lose value depending on the movement of the
relevant currencies. For instance, if you invest in a stock listed on a foreign
exchange and the value of your home currency strengthens against the foreign
currency, the value of your investment, when converted back to your home
currency, would increase.
 Political Risk:
This risk refers to the potential for political events or instability to negatively
impact an investment's value. This encompasses a broad spectrum of factors,
including changes in government policies, wars, or civil unrest. For example, if a
country experiences political instability, foreign investors might be hesitant to
invest, leading to a potential decline in the value of assets in that country. Imagine
a major oil-producing country experiencing a political coup – this could disrupt oil
production and exports, impacting global oil prices and potentially leading to
losses for investors holding assets in oil companies or oil-producing countries.
b. Unsystematic Risk (Diversifiable Risk):

Unlike systematic risk, unsystematic risk is specific to a particular company,
industry, or asset class. This means you can mitigate this risk, to a certain extent,
13
by diversifying your portfolio across different asset classes and companies. Think
of it like spreading your bets across different games at a casino – while you can't
control the outcome of any individual game, diversification helps you reduce the
overall risk of losing everything. Here are some common examples:
 Company Risk:
This risk is associated with the specific performance and circumstances of an
individual company. It can be influenced by various factors like management
decisions, competition within the industry, the quality of the company's products or
services, or even unexpected events like natural disasters or product recalls. For
instance, a company might make poor investment decisions, face intense
competition from a new player in the market, or experience a product liability
lawsuit – all of which could negatively impact the company's stock price. Imagine
a company you invested in launches a new product that fails to gain traction in the
market – this could lead to a decline in the company's stock price, even if the
overall market is performing well.\
 Industry Risk:
This risk affects all companies within a particular industry due to factors specific to
that sector. For instance, the advancement of new technologies might render
existing products obsolete, impacting companies within that industry. Similarly,
changes in government regulations or economic downturns specific to a particular
industry can pose risks to all the companies operating within that sector. For
example, a new government regulation might impose stricter environmental
standards on the automobile industry, leading to increased costs for car
manufacturers and potentially impacting their profitability.
 Liquidity Risk:
This risk refers to the difficulty or inability to sell an investment quickly and at a
fair price. This can be particularly relevant for investments in less-traded assets or
during market downturns when.
14
1. 2.5. OBJECTIVE OF INVESTORS AND INVESTMENT:
Investors embark on their investment journeys with a diverse array of

objectives, each shaping their strategies and influencing the types of assets they
choose. Let's delve deeper into the core motivations that drive investors:
 Financial Security and Growth:
 Wealth accumulation: The cornerstone of investing, this objective centres on

amplifying the value of invested capital over time. Investors can achieve this
through capital appreciation, where the investment's value rises, or through income
generation, such as dividends from stocks or interest payments from bonds.
 Income generation: Particularly attractive for individuals nearing or in

retirement, this objective prioritizes investments that provide a steady stream of
income to supplement existing earnings or even replace their salary entirely.
Examples of assets that cater to this goal include bonds, dividend-paying stocks,
and rental properties.
 Fulfilling specific financial goals: Many investors have clearly defined financial
aspirations, such as saving for a down payment on a house, financing a child's
education, or accumulating a retirement nest. egg. Their investment approach is
meticulously crafted to achieve these specific goals, carefully considering factors
like investment horizon, risk tolerance, and desired return.
 Risk Management and Long-Term Considerations:
 Capital preservation: Safeguarding the initial investment amount is a primary

concern, especially for individuals with shorter timeframes or a lower risk
tolerance. This often translates to investing in assets perceived as less volatile, such
as government bonds or savings accounts, even though they may offer lower
potential returns.
15
 Hedging against inflation: Inflation, the gradual erosion of purchasing power, is

a constant threat. By investing in assets that tend to perform well in inflationary
environments, such as stocks or real estate, investors can aim to preserve the value
of their wealth over the long term.
 Beyond Financial Returns:
 Tax advantages: Certain investments provide tax benefits, making them

particularly attractive to some investors. For example, contributions to retirement
accounts like IRAs or 401(k)s may be tax-deductible, and the earnings within these
accounts can grow tax-deferred until withdrawal.
 Social or environmental impact: A growing number of investors are

incorporating their values into their investment decisions, seeking to support
companies or initiatives aligned with their social or environmental concerns. This
can be achieved through various means, such as investing in socially responsible
funds (SRFs) or environmental, social, and governance (ESG) funds.
 Additional Considerations:
 The intellectual challenge: Some investors relish the research, analysis, and
decision-making involved in the investment process. They find satisfaction in
outperforming the market or achieving their financial goals through their own
strategic choices.
 Building a legacy: For some, the desire to build wealth extends beyond
themselves, aiming to create a lasting impact for future generations. Their
investment decisions may be influenced by this long-term vision, considering how
their choices can benefit future family members or charitable causes they hold
dear.
Remember, these objectives are not mutually exclusive, and investors often
pursue a combination of them, tailoring their investment strategies to their unique
16
circumstances, risk tolerance, and financial aspirations. Consulting with a qualified

financial advisor can help individuals define their goals, assess their risk tolerance,
and develop an investment plan that aligns with their overall financial objectives.
 Beyond these core objectives, some investors may also be motivated by:
 Entrepreneurship:
Angel investors, for example, might invest in start-ups with the potential for high
growth, driven not just by financial returns but also by the chance to be part of
building a new and innovative business.
 Portfolio diversification:
This strategy involves spreading investments across various asset classes to
mitigate risk. While some asset classes may offer the potential for high returns,
they also come with higher volatility. Diversification can help to smooth out these
fluctuations and provide a more stable overall portfolio performance.
 Preserving purchasing power:

As mentioned earlier, inflation erodes the value of money over time. By investing
in assets that tend to grow at a rate exceeding inflation, investors can aim to
maintain their purchasing power and ensure their money retains its value over the
long term.
Understanding these various motivations can help investors craft a

personalized investment strategy that aligns with their unique goals and risk
tolerance.
17
1. 2.6. STRATEGIES OF INVESTOR AND INVESTMENT:
There are two main parts to consider when it comes to investment

strategies: investor strategies and investment strategies themselves.
a. INVESTOR STRATEGIES
Before you jump into investing, it's important to consider some key investor
strategies:
 Define your investment goals and risk tolerance:

What are you hoping to achieve with your investments? Are you saving for
retirement, a down payment on a house, or something else? Once you know your
goals, you can assess your risk tolerance. This is how much volatility you're
comfortable with in your portfolio.
 Conduct thorough research:

Don't just invest in something because everyone else is. Take the time to research
different investment options and understand the risks involved.
 Diversify your portfolio:

Don't put all your eggs in one basket. Spread your investments out among different
asset classes, such as stocks, bonds, and real estate. This will help to reduce your
risk.
 Rebalance your portfolio regularly:

Over time, the asset allocation of your portfolio will naturally change. Rebalancing
involves selling some investments and buying others to bring your portfolio back
to its target asset allocation.
 Stay disciplined and avoid emotional investing:

It's important to stay disciplined with your investment strategy and avoid making
emotional decisions based on market fluctuations.
18
Figure. 1.4. ESG Investment Strategy.
b. INVESTMENT STRATEGIES
Once you have a solid understanding of investor strategies, you can then consider
different investment strategies:
 Dollar-cost averaging (DCA):

This is a strategy where you invest a fixed amount of money into a particular
investment at regular intervals, regardless of the asset's price. This can help to
reduce the impact of market volatility on your overall investment return.
 Value investing:
This strategy involves investing in stocks that are trading for less than their
intrinsic value. Value investors believe that these stocks will eventually rebound in
price.
 Growth investing:
This strategy involves investing in stocks of companies that are expected to
experience above-average growth. Growth investors are willing to pay a premium
for these stocks because they believe that the future growth potential will outweigh
the higher price.
19
1.3. ESG: A Timeline:

While ESG (Environmental, Social, and Governance) investing is a recent term, its
roots go back much further. Here's a whistle-stop tour:
Figure. 1.5. ESG Timeline.
Pre-ESG (Centuries Ago):

 The seeds of ESG were sown with religious codes prohibiting investments that
went against morals, like slave labour.
1950s-1970s: Early Stirrings

 1953: Howard Bowen's book "Social Responsibilities of the Businessman"
sparked discussions on corporate accountability, challenging the sole focus on
shareholder profit.
 1960s: Social movements like Civil Rights and anti-Vietnam War protests
pushed companies to consider social issues.
 1970: The 1st Earth Day, organized by Senator Gaylord Nelson, highlighted
environmental concerns.
1980s-1990s: Social Responsibility Investing (SRI) Takes Off

 1980s: Divestment movements targeted companies linked to South Africa's
apartheid regime.
 1990s: The concept of "Triple Bottom Line" (People, Planet, Profit) emerged,
emphasizing social and environmental factors alongside financial performance.
20
 1992: The UN Framework Convention on Climate Change (UNFCCC)

addressed global climate concerns.
2000s: The Dawn of ESG

 2000: The UN Global Compact launched, encouraging businesses to adopt
sustainable practices.
 2004: A UN report, "Who Cares Wins," is considered the first mainstream
mention of ESG in its modern form.
2010s: ESG Enters the Mainstream

 ESG factors become more integrated into investment decisions by major
financial institutions.
 Rise of ESG ratings and data providers.
2020s (Present):
 ESG continues to grow in importance, with increasing regulations and investor
pressure.
 Debates and discussions about ESG standards and how to measure impact
continue to evolve.
This is a simplified timeline, but it shows how ESG has grown from early
concerns to a major force in the financial world.
21
1.4. Functions of ESG and ESG investment:
i. Function of ESG for Companies (ESG as a Framework)

ESG serves as a comprehensive framework for companies to assess and improve
their environmental, social, and governance impacts. By taking a proactive
approach to ESG, companies can:
 Strengthen Risk Management:

ESG factors can be a double-edged sword. They can pose threats, like
environmental regulations for carbon emissions or social unrest due to poor labour
practices. But they can also present opportunities, like resource efficiency that
reduces waste and saves money. A robust ESG approach helps companies identify,
mitigate, and potentially capitalize on these environmental, social, and governance
risks. For instance, a company with a strong waste management system can avoid
hefty fines and reputational damage from environmental spills, while a company
that prioritizes renewable energy can hedge against rising fossil fuel costs.
 Enhance Long-Term Sustainability and Resilience:

Companies that prioritize ESG are better equipped to handle future challenges and
ensure long-term success. Environmental sustainability practices like water
conservation and responsible sourcing of materials minimize the impact of
potential resource scarcity. Social well-being practices, like employee development
programs and diversity initiatives, can foster creativity and innovation, making the
company more adaptable in a changing world. This translates into a more
sustainable and resilient business model.
 Cultivate Stakeholder Satisfaction and Social License to Operate:

ESG encourages companies to consider the needs of all stakeholders, not just
shareholders. Strong labour practices, community engagement, and ethical
business conduct can lead to improved employee morale, customer loyalty, and
stronger relationships with the communities where the company operates. This
social license to operate is crucial for long-term success, as stakeholders who feel
valued are more likely to be supportive. A company seen as a positive community
22
member may receive preferential treatment when applying for permits or receive
tax breaks.
 Bolster Reputation and Brand Image:

Strong ESG practices can enhance a company's reputation and brand image.
Consumers are increasingly environmentally and socially conscious, and they often
make purchasing decisions based on a company's values. A company with a
commitment to sustainability and social responsibility can build brand loyalty and
attract a wider customer base. Additionally, a strong ESG reputation can attract
and retain top talent, further propelling a company's success. People often prefer to
work for companies that align with their values.
ii. Function of ESG Investments (Integrating ESG Factors into Investment

Decisions) ESG investing incorporates environmental, social, and governance
factors alongside traditional financial metrics to make investment decisions. This
approach offers several advantages to investors:
 Align Investments with Values:

ESG investing allows you to align your investment portfolio with your personal
values. You can choose to invest in companies that prioritize environmental
sustainability, social responsibility, and good governance, potentially creating a
positive impact on the world while meeting your financial goals. For instance, you
might choose to invest in companies developing renewable energy solutions or
those with a strong record of employee satisfaction.
 Risk-Adjusted Returns and Potential for Competitive Performance:

A growing body of research suggests that ESG investments can perform
competitively with traditional investments. While some might view ESG investing
as sacrificing returns for social good, ESG factors can help identify and mitigate
risks that traditional financial analysis might miss. For example, a company with
poor labour practices might be more susceptible to strikes or social unrest, which
could negatively impact its stock price. By considering ESG factors, investors can
potentially make more informed decisions and achieve risk-adjusted returns.
23
 Drive Positive Impact Alongside Financial Returns:

ESG investing allows you to potentially contribute to positive environmental and
social change while pursuing financial goals. By investing in companies that
prioritize sustainability and social responsibility, you're supporting businesses
making a conscious effort to address global challenges like climate change or
social inequality. Your investment dollars can contribute to a more sustainable
future while also generating financial returns.
 Enhance Diversification and Portfolio Resilience:

ESG investing can offer diversification benefits by incorporating companies that
may not be traditionally included in mainstream portfolios. This could include
companies in renewable energy, sustainable materials, or social impact sectors. By
including these companies alongside more traditional holdings, you can spread risk
and potentially improve the overall return of your investment portfolio. This can
lead to a more resilient portfolio that is better equipped to handle market
fluctuations.
 Benefit from Transparency and Long-Term Focus:

ESG investing often emphasizes transparency, with companies disclosing their
ESG performance through sustainability reports. This transparency allows
investors to make informed decisions based on a company's ESG practices
alongside traditional financial metrics. Furthermore, ESG investing often takes a
long-term view, which can be beneficial for investors seeking sustainable growth
over short-term gains. Companies with strong ESG practices are more likely to be
focused on long-term viability and stakeholder value creation, which can translate
into steadier financial performance over time.
In essence, strong ESG practices benefit companies by mitigating risks, promoting
long-term sustainability, and building trust with stakeholders
24
1.5. Challenges Hobbling ESG Growth in India:
While India's ESG landscape is flourishing, there are hurdles to overcome:
 Complex Supply Chains:

Indian businesses often have intricate supply chains, many with smaller, unlisted
partners. Encouraging and enabling these partners to adopt ESG practices can be
difficult, hindering transparency throughout the entire value chain.
 Greenwashing Concerns:
Some companies make exaggerated or misleading claims about their ESG efforts.
This "greenwashing" erodes trust and makes it harder for investors and consumers
to identify truly sustainable businesses.
 Standardization Gap:
India lacks a unified ESG reporting framework, making it challenging to compare
companies across sectors. This inconsistency can confuse investors and
stakeholders seeking reliable ESG data.
 Capacity Constraints:
Smaller and medium enterprises (SMEs) often lack the resources and expertise to
implement robust ESG practices. Capacity building initiatives and support
mechanisms are needed to help SMEs integrate ESG into their operations.
 Traditional Mindsets:
Shifting entrenched business practices and corporate cultures towards
sustainability can be slow. Overcoming resistance to change and fostering a culture
of ESG accountability requires strong leadership commitment.
 Cost Considerations:
Implementing certain ESG practices, like adopting cleaner technologies, can
involve upfront costs. Balancing these costs with long-term benefits like improved
resource efficiency and risk mitigation requires a strategic approach.
25
1.6. Importance of ESG In Investing or Investment:
Environmental, Social, and Governance (ESG) investing is rapidly transforming

how people invest their money. Here's a deeper dive into the factors driving this
exciting trend:
 Risk Management on Steroids:

Traditional financial analysis often overlooks hidden risks. ESG factors, like
climate change regulations, environmental disasters, or poor labour practices, can
expose a company to significant financial setbacks. By incorporating ESG
analysis, investors can identify and mitigate these risks, safeguarding their
portfolios for the long term.
 Investing for a Sustainable Future:

ESG considerations go beyond just returns. This approach encourages investment
in companies that contribute to a more sustainable world. This resonates with a
growing number of investors concerned about climate change, resource depletion,
and social inequality. By supporting companies that prioritize environmental
responsibility and social good, investors can contribute to a positive global impact.
 Unveiling Long-Term Potential:

Companies with robust ESG practices are more likely to be well-positioned for
long-term success. Strong ESG performance often translates to better operational
efficiency, a more engaged workforce, and a stronger brand reputation. These
factors can lead to higher customer loyalty, improved financial performance, and
ultimately, greater returns for investors.
 Performance with a Purpose:

A growing body of research suggests that companies with strong ESG practices
may outperform their peers financially over the long haul. This potential
outperformance could be attributed to several factors, including increased
innovation, reduced regulatory risk, and a more resilient business model that can
adapt to changing social and environmental landscapes.
26
 Aligning Values with Investments:

Many investors today prioritize aligning their investments with their values. ESG
investing allows them to do just that. By investing in companies that prioritize
environmental and social responsibility, investors can feel confident their money is
supporting positive change alongside generating financial returns.
 The Regulatory Wave:

Governments around the world are increasingly enacting stricter environmental
and social regulations. Companies with poor ESG practices may face significant
costs or operational challenges in the future. ESG investing helps investors avoid
these potential pitfalls by focusing on companies that are already proactive in
addressing these evolving regulations.
 Innovation Engine:
A focus on ESG can drive companies to innovate and develop new technologies
and solutions that address environmental and social challenges. This focus on
sustainability can lead to the creation of entirely new markets and industries,
presenting exciting investment opportunities for the future.
 The Millennial Money Powerhouse:

Millennials are a major demographic force in the investment landscape, and they
are known to prioritize sustainable and socially responsible investing. ESG funds
cater directly to this growing demographic, offering investment options that align
with their values and long-term vision.
 Expanding the Investment Universe:

Traditionally, investment decisions were based primarily on financial metrics. ESG
investing broadens the horizon by considering a wider range of factors alongside
financial performance. This allows investors to create a more diversified portfolio
with potentially lower overall risk and exposure to unforeseen challenges.
27
1.7. Pros and Cons of ESG in Investment:
Sr. PROS OF ESG INVESTING CONS OF ESG INVESTING

no.
Enhanced Risk Management: Integration Challenges:
ESG investing incorporates Effectively integrating ESG factors
i. environmental, social, and into investment analysis requires
governance factors that can additional research and expertise
significantly impact a beyond traditional financial metrics.
company's bottom line. By Investors may need to familiarize
considering these factors, themselves with ESG ratings and
investors can identify and data sources, which can be complex
mitigate hidden risks. and ever evolving.
Unlocking Long-Term Value: Short-Term Performance:
Companies with strong ESG Companies that prioritize ESG
practices are more likely to be initiatives may incur upfront costs
ii. well-positioned for long-term for cleaner technologies or social
success. They tend to be more responsibility programs. These costs
efficient in resource utilization, can impact short-term profitability,
have a more engaged and potentially leading to
productive workforce, and enjoy underperformance compared to
a stronger brand reputation. traditional investments in the short
These factors can lead to higher run. However, these upfront costs
customer loyalty, improved can be seen as investments in the
financial performance, and company's long-term sustainability
ultimately, greater returns for and future profitability.
investors who are invested in
these companies for the long
haul.
Alignment with Values: Data Inconsistency:
iii. ESG investing allows investors ESG data collection and reporting
to align their financial goals practices are still evolving, and there
with their personal values. With can be inconsistencies across
28
a growing focus on companies and industries. This

sustainability and social inconsistency can make it
responsibility, many investors challenging to compare companies
today seek to support companies and assess their true ESG
that are making a positive performance. Investors need to be
contribution to the environment critical of ESG ratings and conduct
and society. ESG investing thorough due diligence before
allows them to do just that, making investment decisions.
generating financial returns
while supporting positive
change.
Potential for Outperformance: Limited Investment Universe :
A growing body of research While ESG investing is gaining
suggests that companies with traction, it may still limit investment
iv. strong ESG practices may options compared to a purely
outperform their peers traditional investment approach.
financially over the long term. Investors who prioritize strict ESG
This potential outperformance criteria may have a smaller pool of
could be attributed to several companies to choose from.
factors, including increased However, this pool is constantly
innovation driven by a focus on expanding as more companies
sustainability, reduced embrace ESG principles.
regulatory risk from proactive
ESG practices, and a more
resilient business model that can
adapt to changing social and
environmental landscapes.
Attracting Millennial Investors: Limited Investment Universe :
Millennials are a major While ESG investing is gaining
v. demographic force in the traction, it may still limit investment
investment landscape, and they options compared to a purely
are known to prioritize traditional investment approach.
sustainable and socially Investors who prioritize strict ESG
29
responsible investing. ESG criteria may have a smaller pool of

funds cater directly to this companies to choose from.
growing demographic, offering However, this pool is constantly
investment options that align expanding as more companies
with their values and long-term embrace ESG principles.
vision.
Aligning with Regulatory Green-washing Concerns:
Trends: There are concerns that some
Governments around the world companies may exaggerate their
vi. are increasingly enacting stricter ESG commitment or engagement in
environmental and social sustainable practices in order to
regulations. Companies with attract ESG investors. Investors need
poor ESG practices may face to be aware of green-washing and
significant costs or operational conduct thorough research to ensure
challenges in the future. ESG companies are living up to their ESG
investing helps investors avoid claims.
these potential pitfalls by
focusing on companies that are
already proactive in addressing
these evolving regulations.
Driving Innovation: Lack of Standardization:
A focus on ESG can drive The lack of standardized ESG
vii. companies to innovate and ratings and reporting frameworks
develop new technologies and can make it difficult for investors to
solutions that address compare companies across sectors
environmental and social and asset classes. This inconsistency
challenges. This focus on can hinder effective ESG integration
sustainability can lead to the into investment strategies.
creation of entirely new markets
and industries, presenting
exciting investment
opportunities for the future.
Expanding the Investment Cost Considerations:
30
Universe: Integrating ESG factors into

ESG investing is nota. about investment analysis can require
excluding companies, but rather additional resources and expertise,
about selecting companies that which can lead to higher costs for
are managing environmental, investors. These costs can include
social and governance factors investment in ESG research, data
well. This broader approach can analytics tools, and professional
open up new opportunities for ESG advisory services.
investors and potentially lead to
a more diversified portfolio.
1.8. Impact of ESG on Investors and Investment Decisions:
The Profound Impact of ESG on Investors and Investments Environmental,

Social, and Governance (ESG) considerations are rapidly transforming the
investment landscape. This shift is driven by a growing recognition that a
company's long-term success hinges not just on financial performance, but also on
its impact on the environment, its workforce, and society as a whole. Let's delve
deeper into the multifaceted impact of ESG on investors and their investment
strategies.
FOR INVESTORS: A NEW LENS FOR INFORMED DECISIONS
 Enhanced Risk Management:

ESG factors can expose companies to hidden risks, such as climate change
regulations, environmental disasters, or labour unrest. By integrating ESG analysis,
investors can identify and mitigate these risks, safeguarding their portfolios for the
long term. This proactive approach helps investors avoid unpleasant surprises that
could lead to significant financial losses.
 Unveiling Long-Term Value:

Companies with strong ESG practices are more likely to be well-positioned for
long-term success. Strong ESG performance often translates to better operational
31
efficiency (through responsible resource use), a more engaged and productive

workforce (through fair labour practices), and a stronger brand reputation (through
ethical business conduct). These factors can lead to higher customer loyalty,
improved financial performance, and ultimately, greater returns for investors who
are invested in these companies for the long haul.
INVESTING WITH A PURPOSE: ALIGNING VALUES WITH RETURNS
 Aligning Values with Investments:

Many investors today prioritize aligning their investments with their values. ESG
investing allows them to do just that. By investing in companies that prioritize
environmental and social responsibility, investors can feel confident their money is
supporting positive change alongside generating financial returns. This resonates
particularly with younger generations like millennial, who are more
environmentally and socially conscious.
 The Power of Positive Impact:

ESG investing allows investors to contribute to a more sustainable future. By
supporting companies that are actively addressing environmental challenges like
climate change or social issues like inequality, investors can feel good about the
impact their investments are making on the world. Potential Performance Boost:
Redefining Return on Investment
 Performance with a Purpose:

A growing body of research suggests that companies with strong ESG practices
may outperform their peers financially over the long term. This potential
outperformance could be attributed to several factors, including increased
innovation driven by a focus on sustainability, reduced regulatory risk from
proactive ESG practices, and a more resilient business model that can adapt to
changing social and environmental landscapes. Essentially, ESG can be seen as a
future-proofing strategy for companies, and by extension, for investors who hold
them.
32
Challenges and Considerations: Navigating the Evolving Landscape
 Integration Challenges:
Effectively integrating ESG factors into investment analysis requires additional
research and expertise beyond traditional financial metrics. Investors may need to
familiarize themselves with ESG ratings and data sources, which can be complex
and ever evolving. Building this expertise can require additional time and
resources.
 Short-Term Performance Fluctuations:

Companies that prioritize ESG initiatives may incur upfront costs for cleaner
technologies or social responsibility programs. These costs can impact short-term
profitability, potentially leading to underperformance compared to traditional
investments in the short run. However, these upfront costs can be seen as
investments in the company's long-term sustainability and future profitability.
Investors with a long-term investment horizon are better suited to weather these
short-term fluctuations.
 Data Inconsistency and Greenwashing:

ESG data collection and reporting practices are still evolving, and there can be
inconsistencies across companies and industries. This inconsistency can make it
challenging to compare companies and assess their true ESG performance.
Investors need to be critical of ESG ratings and conduct thorough due diligence
before making investment decisions to avoid being misled by companies engaging
in "green-washing" – exaggerating their ESG commitment.
The Future of Investment: A Sustainable and Responsible Approach ESG

investing is not a fad, but a fundamental shift in how people invest their money. As
regulations, consumer preferences, and investor priorities continue to evolve, ESG
is poised to become an even more critical factor in investment decision-making. By
embracing ESG considerations, investors can build more resilient and sustainable
portfolios, contribute to a positive global impact, and ultimately, achieve their
financial goals while making a difference for the future.
33
1.9. How Do Investors Check ESG On Investments:
Investors have a multi-pronged approach to assessing the ESG performance of

potential investments:
1. Leverage ESG Ratings and Research:

 External Rating Agencies: Several agencies specialize in ESG ratings, like
Sustainalytics, MSCI ESG, and ISS ESG. These agencies evaluate companies
based on a multitude of ESG factors, assigning them ratings that reflect their
relative ESG performance within their industry. Investors can utilize these ratings
as a starting point for their analysis.
 Independent Research Firms: Many research firms and investment banks
publish ESG research reports that delve deeper into a company's ESG practices.
These reports analyse the company's environmental impact, labour practices,
governance structure, and other ESG-related aspects.
2. Scrutinize Company Disclosures:

 Annual Reports and Sustainability Reports: Most companies with a robust ESG
focus publish annual reports that include a dedicated sustainability section. This
section details the company's environmental footprint, social initiatives, and
governance policies. Investors should critically evaluate this information to
understand the company's ESG commitments and progress.
 Regulatory Filings: Companies are increasingly required to disclose ESG-
related information in their regulatory filings. Investors can find valuable data on
environmental emissions, diversity metrics, and board composition by scrutinizing
these filings.
3. Engage with Company Management:

 Investor Relations: Actively engaged investors can directly reach out to a
company's investor relations department to inquire about its ESG practices. This
direct dialogue can provide valuable insights into the company's ESG strategy,
goals, and challenges.
34
 Proxy Voting: Proxy voting allows shareholders to express their opinions on

various corporate matters, including ESG proposals. Investors can utilize this
platform to hold companies accountable for their ESG performance.
4. Consider Investment Style:

 ESG-Integrated Investing: This approach incorporates ESG factors alongside
traditional financial metrics throughout the investment decision-making process.
Investors may use ESG ratings and research to identify companies that score well
on ESG criteria while still meeting their financial objectives.
 ESG Exclusionary Investing: Some investors may choose to exclude
companies from their portfolios that operate in certain industries deemed
unsustainable, like fossil fuels or tobacco.
 Impact Investing: This approach focuses on investments that not only generate
financial returns but also create positive social and environmental impact. Impact
investors may prioritize companies actively addressing environmental challenges
or social issues.
 Data Limitations: ESG data collection and reporting are still evolving, leading
to inconsistencies across companies and industries. Investors need to be aware of
these limitations and critically evaluate the data they use.
 Green-washing Concerns: Not all companies are transparent about their ESG
practices. Investors should be wary of "green washing" and conduct thorough due
diligence to ensure companies are living up to their ESG claims.
By employing a combination of these strategies, investors can effectively assess
the ESG performance of their investment options and make informed decisions that
align with their financial goals and values.
35
1.10. Conclusion Of Impact of ESG On Investor and Investment:
The impact of ESG on investors and investments is nothing short of

transformative. It's a shift from a purely financial focus to a more holistic approach
that considers a company's environmental, social, and governance practices
alongside its bottom line. This integration of ESG factors empowers investors to:
 Make informed decisions: ESG analysis helps investors identify hidden risks
and opportunities, leading to more informed investment choices and potentially
more resilient portfolios.
 Align values with returns: Investors can now invest in companies that share
their values regarding sustainability and social responsibility, achieving financial
goals while making a positive impact.
 Unlock long-term value: Companies with strong ESG practices are often better
positioned for long-term success due to factors like efficient resource use, a strong
brand reputation, and a future-proofed business model – all translating to
potentially higher returns for investors with a long-term outlook.
However, navigating the ESG landscape comes with challenges. Investors

need to be aware of data inconsistencies, potential green washing by companies,
and the additional expertise required to integrate ESG factors into their analysis.
Overall, ESG investing represents a powerful evolution in the investment

world. By embracing ESG considerations, investors can create a win-win situation,
achieving financial success while contributing to a more sustainable and equitable
future. As regulations, consumer preferences, and investor priorities continue to
evolve, ESG is poised to become an even more essential aspect of investment
decision-making. The future of investment is likely to be increasingly shaped by
this focus on environmental, social, and governance responsibility.
36
CHAPTER 2 RESEARCH METHODOLOGY.
SYNOPSIS:
2.1. Introduction to Research Methodology

2.2. Objective.
2.3. Sources/methods of data collection.
2.4. Sampling techniques.
2.5. Area of study – Badlapur and Ulhasnagar.
2.6. Tools for analysis.
2.7. Scope and limitations of the study.
37
2.1 INTRODUCTION TO RESEARCH METHODOLOGY:
Methodology is the study of research methods. However, the term can also
refer to the methods themselves or to the philosophical discussion of associated
background assumptions. A research design is a comprehensive plan guiding
researcher to achieve its objectives. It is a detailed blueprint of the research. It
details the procedures necessary for obtaining the information needed to structure
or solve research problem. A method is a structured procedure for bringing about a
certain goal. In the context of research, this goal is usually to discover new
knowledge or to verify pre-existing knowledge claims. This normally involves
various steps, like choosing a sample, collecting data from this sample, and
interpreting this data. The study of methods involves a detailed description and
analysis of these processes. It includes evaluative aspects by comparing different
methods to assess their advantages and disadvantages relative to different research
goals and situations. This way, a methodology can help make the research process
efficient and reliable by guiding researchers on which method to employ at each
step. These descriptions and evaluations of methods often depend on philosophical
background assumptions. The assumptions are about issues like how the studied
phenomena are to be conceptualized, what constitutes evidence for or against them,
and what the general goal of research is.
2.2 OBJECTIVES:
Objectives are very significant elements in any research. It describes what

the research project intends to accomplish. It also describes what the research is
trying to achieve and explains why you are pursuing it. They should guide every
step of the research process, including how you collect data, build your argument,
and develop your conclusions. They summarize the approach and purpose of your
project and help to focus your research. The objectives may evolve slightly as the
research progresses, but they should always line up with the research carried out.
The primary objectives of research methodology include:
38
 Problem Identification:
Research methodology helps in clearly defining and identifying research problems
or questions that need investigation. It assists researchers in formulating clear
objectives and hypotheses to guide the study.
 Research Design Development:

It aims to develop an appropriate research design that aligns with the objectives of
the study. This involves selecting the most suitable approach (qualitative,
quantitative, or mixed methods), data collection methods, and sampling techniques.
 Data Collection:
Research methodology facilitates the collection of relevant and reliable data
through various methods such as surveys, interviews, observations, experiments, or
archival research. It ensures that data collection procedures are systematic and
rigorous.
 Data Analysis:
One of the key objectives of research methodology is to analyze the collected data
effectively. It involves organizing, interpreting, and making sense of the data using
appropriate statistical or qualitative analysis techniques. This step helps in drawing
meaningful conclusions and identifying patterns or trends in the data.
 Validity and Reliability:

Research methodology focuses on ensuring the validity and reliability of research
findings. Validity refers to the accuracy and correctness of the research outcomes,
while reliability pertains to the consistency and repeatability of the
results. Methodological rigor helps in enhancing the credibility of research
findings.
 Ethical Considerations:
Another important objective is to adhere to ethical principles and guidelines
throughout the research process. Research methodology ensures that participants'
39
rights are protected, informed consent is obtained, and data confidentiality is

maintained.
 Generalization and Transferability:

Research methodology aims to generalize findings beyond the specific context of
the study or assess the transferability of results to other settings or populations.
This requires careful consideration of the sampling method and the
representativeness of the sample.
Objectives of Present Research study:

 To study impact of ESG on Investor and Investment Decision.
 To Study of ESG factor in terms of Investments.
 To study the method used to calculate ESG on investment.
 To study if the ESG selection is profitable to investors or not.
2.3 SOURCES /METHODS OF DATA COLLECTION:
In a research study, data encompasses the information gathered or produced

throughout the investigation, serving as the empirical backbone for addressing
research questions, testing hypotheses, or fulfilling study objectives. This data
manifests in various forms, including quantitative and qualitative data. Quantitative
data comprises numerical values, measurable and statistically analysable, obtained
from surveys, experiments, or observational studies. On the other hand, qualitative
data is descriptive, offering insight into attitudes, beliefs, or behaviours, often
collected through interviews, focus groups, or participant observation.
Data is the quantification of tangible and intangible facts. Data are separate
pieces of information, usually arranged in a special way. Austerely speaking data is
the plural or datum, a single piece of information. In practice, however, people use
data as both the singular as well as plural form of the word. Data are bare facts.
When data are processed, organized, structured or presented in a given milieu so as
to make them useful, they are called information. It is not adequate to have data
40
(such as statistics on the economy). Data in themselves are not so useful. But when
these data are interpreted and processed to determine their true meaning, they are
converted to useful elements in research and can be called information.
2.3.1. PRIMARY DATA:

Primary data are generally expended in those cases where the secondary
data do not deliver an adequate basis for analysis. In some sure cases both primary
as well as secondary data may be used. The reason why secondary data are being
increasingly used is that published statistics are now accessible covering various
fields so that an investigator seeks required data readily available to him in number
of cases. Primary data is the data collected by the researchers. Researchers may
gather primary data first-hand for their study through surveys, interviews, or
experiments, or they may utilize existing secondary data from sources such as
published research or organizational records.
2.3.2. SECONDARY DATA:

Secondary data is usually used for problem identification and at
formulation stage. It is needed for formulation of hypothesis. It can also be helpful
in designing questionnaire. It may be needed to validate results of current
investigation. Various sources of secondary data are: Published surveys of
markets. (General library research sources), Government publication and reports,
All advertising media, particularly newspaper, magazines, trade journals etc.,
Trade Association and other technical and professional groups, specialized
research and foundation Organizations, Universities, Specialized markets
intelligence services such as advertising agencies, market research firms, stock
exchanges, commodity exchange, banks, Specialized Libraries, Internal sources
such as sales and purchases records, salesman‟s report, sales order, Customer
complaints and other records and registers and Internet.
41
2.3.3. DATA COLLECTION FOR PRESENT RESEARCH STUDY:
 In order to prove test and prove the above hypothesis of present research study a
wide range of data was collected.
 Primary data was collected to understand the preference of investors towards

Algorithmic trading. To collect this data a questionnaire was prepared for the
purpose of survey and the respondents were asked to fill the same. The respondents
here comprise of the investors, market participants, industry experts of Ulhasnagar.
 Secondary data was collected to understand the preference of investors towards

Algorithmic trading in general.
2.4 SAMPLING TECHNIQUE:
Sampling may be defined as the selection of some part of a collective or

totality based on which a judgement or implication about aggregate or totality is
made. In other words, it is the procedure of gaining information about an entire
population by examining only a part of it. In most of the research studies and
surveys, the usual approach occurs to be to make generalization or to draw
corollaries based on samples about the parameters of population from which the
samples are taken.
 Non-Probability Sampling Methods: Nonprobability sampling methods are

called so because each element in the population does not have an equivalent
chance of being comprised in the sample. The major forms of non-probability
samples are convenient sampling, judgement and purpose sampling, quota
sampling and snowball sampling.
1. Convenience sampling- In convenience sampling, the researcher simply reaches

out and picks up the cases that fall to hand, continuing the process till such time as
the sample obtains a wanted size. It is used to find the data rapidly and easily. It
may include casual pool of friends and neighbours, employees at workplace etc.
42
2. Judgement and purpose sampling- In judgement and purpose sampling,

specialists and experts in the field are consulted or researcher will exercise
judgement and appropriate strategy to handpick the right cases to be in included in
the sample and thus develop sample that are satisfactory in relation to one‟s
research needs.
3. Quota sampling- Another type of non-probability sampling method is Quota

Sampling. The basic objective of quota sampling is the selection of the sample that
is an imitation of the „population‟ with the respect to which one would desire to
respondent having same characteristics as him or her. It is commonly employed
when subjects are hard to locate.
 Probability Sampling Methods: In probability sampling method, each element in

the sample determined gets equal chance of being selected as a sampling element.
1) Simple random sampling- Simple random sampling is in a sense, the basic

refrain of all scientific sampling. It is a primary probability sampling method. A
process that not only gives to each element in the population an equivalent chance
of being included in the sample but also makes the selection of each possible
combination of cases in the preferred size, equally likely, selects a simple random
sample.
2) Systematic random sampling- The Systematic Random sampling is for all

practical purposes, an estimate of simple random sampling. In stratified random
sampling the population is first divided into a number of strata. Such strata may be
based on a single criterion. (e.g., educational level, yielding a number of strata
corresponding to the different levels of educational attainment) or on a
combination or more criteria (e.g., Age and sex).
43
3) Stratified random sampling- In stratified random sampling, a simple random

sample is taken from every stratum and sub samples are bought together to form
the total sample. In cluster sampling, the researcher firstly samples out from the
population, certain large groupings, i.e., “cluster”
4) Cluster sampling method- A cluster is a collection of heterogeneous subjects

representing population. These cluster may be city-wise, households, or even
several geographical or social units. The sampling of clusters from the population
is done by simple or stratified random sampling techniques.
 SAMPLING PLAN FOR THE PRESENT RESEARCH STUDY:
Since, it‟s not possible to conduct a survey with the total population of
Ulhasnagar. So, keeping this constraint at place, the population of Ulhasnagar was
divided into clusters (e.g., neighbourhoods, professional organizations) –
respondents were selected on random basis through the different strata. Thus,
cluster random sampling was used to collect the primary data.
44
2.5 AREA OF STUDY – BADLAPUR AND ULHASNAGAR:
 BADLAPUR:
Badlapur is a city in Thane district, Maharashtra state, India, and is a part of

Mumbai Metropolitan Region. Badlapur is a city on the banks of Ulhas
River in Thane district of Maharashtra state in Konkan division. It is governed
by Kulgaon-Badlapur Municipal Council. Badlapur is a city located just 40 km
from Thane City in Thane district, Maharashtra, India. This city is a part
of Mumbai Metropolitan Region managed by Municipal Council. The current
estimated population of Badlapur city in 2023 is 238,000. It has a Badlapur railway
station on the Central line of the Mumbai Suburban Railway.
MIDC has developed an industrial area within the limits of Kulgaon Badlapur
Municipal Council. This area is reserved primarily for chemical industries. The
area has been developed in different blocks and carved out while keeping in mind
the needs of small scale and large-scale industries. This has stimulated the
economic growth of the city.
Demography as per India census, there were 97,917 people residing in the city.
Males constituted 53% (51,878) of the population and females 47% (46,039).
Badlapur had an overall literacy rate of 76.12%, higher than the national average of
59.5%; with 81.01% of the males and 72.15% of female's literate. 12% (11,999) of
the population is under 6 years of age. There were 1,971 SC (2.01%) and 4,841
(4.94%) population come under ST category. People living in the city are
predominantly Maharashtrian, with Sikhs (Punjabis), Buddhist, Gujarati, Marwari,
Sindhi, North Indian, south Indian community. The city is largely recognised as a
middle-class suburb of Mumbai.
45
Figure 2.1 Area of Badlapur.
 ULHASNAGAR:
Ulhasnagar is a city located, just 26 km from Thane City in Thane district,

Maharashtra, India. This city is a part of Mumbai Metropolitan Region managed
by MMRDA. It had an estimated population of 506,098 at the 2011 Census.
Ulhasnagar is a municipal city and the headquarters of the Tehsil bearing the same
name. It has a suburban station on the Central line of the Mumbai Suburban
Railway.
The town covers an area of 13 square kilometres and is divided into 285 blocks. It
is a Centre for the production of rayon silk, dyes, ready-made garments, electrical /
electronic appliances and confectionaries. The total length of roads and streets in
the town is 352 kilometres. The town is served by underground and open-surface
drainage, night soil being disposed of by septic tank latrines. The town has a
protected water supply through MIDC. Sanctioned Water Quota at various tapping
points is 112 MLD. Fire-fighting service is also available in the town. There are
sixty private hospitals with a total bed-strength of 840 beds, three government
hospitals with total bed-strength of 356 beds, 255 dispensaries / clinics, 100 RMP
and a family planning Centre.
46
Ulhasnagar has some small businesses manufacturing denims. Some of the

manufacturers export jeans worldwide from Ulhasnagar. The city is also known for
its furniture market, cloth market and electronic market.
According to the 2011 Census of India, Ulhasnagar had a population of 506,098.
Ulhasnagar is the 22nd biggest city in Maharashtra and 88th in the country. Males
constituted 53% of the population and females 47%.
Figure 2.1 Area of Ulhasnagar.
2.6 TOOLS FOR ANALYSIS:
The purpose of analysis of data is to acquire usable and useful information.

Data analysis is the process of recognizing of certain parameters along with
identification of relationship patterns that may exist among data groups. In the
procedure of analysis, relationships may be discovered that may support or conflict
the original hypothesis. This analysis clues to valid conclusion only if the
relationship pattern stands the statistical test of significance. The analysis
irrespective of whether the data is qualitative or quantitative may:
47
 Describe and summarize the data

 Identify relationships between variables
 Compare variables
 Identify the difference between variables
 Forecast outcomes
Data analysis helps to summarize large mass of data into better

comprehensible and simple meaningful form. Such kind of lessening of data with
statistical help can be further are used to lessening complexity. It makes
description probable with the help of numbers of averages, percentages, means,
standard deviation, etc. Exact relation between two variables can be sharply stated.
Analysis aids the research to pull reliable inference of the situation that has not
measured in full. Such inferences give answers to many possible questions in
research. Due to inference drawn with the help to statistical tolls further evaluation
and estimation is likely. Inferential data can be utilized to evaluate, understand and
draw relationship between some variables. Such identification of factors helps in
analysing and demonstrating hypothesis.
 TOOLS USED IN PRESENT RESEARCH STUDY:

In present study, first and foremost, Descriptive Statistical Techniques are used.
These techniques include Finding out Average – Valid Percentage and presentation
of the same through various Graphs and Diagrams. Graphs and Diagrams include
Bar Graph, Subdivided Bar Graph, Joint Bar Diagram and Pie Diagram. Mean
responses are used to test the hypothesis.
2.7 SCOPE AND LIMITATIONS OF THE STUDY:
 SCOPE OF THE STUDY –

This study throws light on Algorithmic trading strategies and the investor‟s
preference towards the same. Following points suggest the scope of the study-
 Basic concepts related to ESG Factors
 How effects ESG on Investments
 How effects ESG on Investors
 ESG‟s impact on Investment decision
 How ESG is checked
48
 How investor use ESG \
 LIMITATIONS OF THE STUDY –

 This study is restricted only to the Badlapur and Ulhasnagar area. So, the results
are not applicable to other areas.
 This study is based on the prevailing investors, but the investor‟s preference
may change according to Time, Technology Development, etc.
 As the number of investors is huge, a simple size of 100 respondents is only
covered.
49
Chapter 3: Review of Literature
SYNOPSIS:
3.1. Introduction.
3.2. Studies on ESG Factor's Influence on Investment.
3.3. Gap Analysis
50
3.1. Introduction:
A growing body of research is exploring the impact of Environmental,

Social, and Governance (ESG) factors on investment decisions. This review
examines the existing literature to understand how ESG considerations influence
investor behaviour, portfolio performance, and overall risk management strategies.
We delve into potential benefits like long-term value creation and positive social
impact, while acknowledging challenges such as data inconsistency and green
washing concerns. Ultimately, this review aims to shed light on the evolving
landscape of ESG investing and its potential to reshape the future of finance.
3.2. Studies on ESG Factor's Influence on Investment:
According to Nazarova and Lavrova (2022) in their research paper, they

emphasized the relationship between ESG (Environmental, Social, and
Governance) performance and the investment attractiveness of public companies.
Their study particularly focused on S&P 500 American and S&P 350 European
companies between 2010 and 2020. The findings revealed that higher ESG
performance positively influences Tobin‟s Q, the probability of paying dividends,
and lower cost of capital. However, the impact on return on equity was mixed. The
analysis also highlighted a shift in market behavior post the 2015 Paris Agreement
on climate change, indicating a potential long-term influence of ESG performance
on investment attractiveness. The results of the study suggest that ESG
performance may influence investment attractiveness over time and emphasize the
importance of considering ESG factors in corporate strategies.
According to Aich et al (2021), the growing significance of ESG

(Environmental, Social, and Governance) factors in investing is emphasized, as
recent events and public focus on sustainability have boosted ESG adoption. The
authors argue that ESG factors are crucial for sound investment decisions focused
on long-term returns and explore key drivers of ESG investing and their impact on
company value. Strong ESG practices can attract investors and improve a
company's value proposition. The authors acknowledge limitations and propose
future research to include more factors, suggesting that this model can be used in
51
manufacturing to identify areas for improvement and promote ESG transparency.

Overall, the research aims to empower businesses to strengthen their ESG policies
to attract sustainability-focused investors.
According to Ahmad et al. (2022), their research reviews the impact of

ESG (Environmental, Social, and Governance) on businesses. It examines how
ESG factors like pollution, social responsibility, and board structure can influence
a company's sustainability and financial performance. The research shows that
strong environmental and social performance is linked to better business results.
The study also explores the influence of religion, board composition, and economic
factors on ESG adoption. It highlights areas for future research, such as ESG in
developing countries and industry-specific analysis. Overall, the article suggests
that ESG factors are increasingly important for businesses seeking long-term
success.
According to Goyal et al. (2014), the study investigates whether investing

in ESG stocks (environmental, social, and governance) in India is beneficial. The
research compares the performance of ESG stocks to regular blue-chip stocks and
the overall market portfolio. The study finds that ESG stocks outperform the other
two portfolios in terms of absolute return, though not significantly. When adjusted
for risk, ESG stocks still outperform the market portfolio. The study concludes that
ESG investing can be a good option for socially responsible investors who are
looking for competitive returns.
According to Trenz, et al. (2018), the study investigated how ESG factors
(environmental, social responsibility, and governance) affect investment risk and
return. They used a financial model (Markowitz model) to compare ESG and non-
ESG funds. The results suggest that ESG funds might have higher volatility (risk),
but the data set was small and more research is needed. They also checked the
validity of their method and found it to be satisfactory.
According to Schanzenbach, et al. ESG investing is gaining traction but

presents challenges for fiduciaries managing massive amounts of other people's
money. This article explores key aspects of ESG investing relevant to fiduciaries.
52
It clarifies the difference between "risk-return ESG" (using ESG factors to improve
returns) and "collateral benefits ESG" (focusing on social/environmental impact),
highlighting the importance of this distinction. It also acknowledges the inherent
subjectivity in applying ESG factors and the evolving nature of evidence
supporting its effectiveness in improving risk-adjusted returns. Finally, the article
explores the legal permissibility of ESG investing for fiduciaries, concluding that
while collateral benefits ESG is generally restricted, risk-return ESG can be
permissible if used with the sole purpose of improving risk-adjusted returns.
According to Fiordelisi, et al. (2020), the study investigates the relationship

between ESG investing and stock market performance. The authors argue that
traditional ESG ratings are unreliable and propose using SRI-oriented ETFs as an
alternative approach. Their findings show that SRI-oriented ETFs outperform
traditional ETFs, but only during periods of extreme climate activity. This suggests
that investors are more interested in SRI during environmental shocks but prioritize
traditional strategies during economic downturns. Overall, the study suggests that
SRI investing might not be a reliable hedge against economic downturns.
According to Simone et al. (2022), their study investigates the connection

between innovation and the economic sustainability of companies. They use a
measure called market-perceived innovation (MPI) to show that companies that
effectively invest in R&D (research and development) see positive effects on
economic sustainability. Interestingly, the study also finds that social responsibility
has the biggest impact among the three pillars of ESG (environmental, social, and
governance). These findings are important for both companies and policymakers.
Companies should prioritize social responsibility alongside R&D investment, and
policymakers should design sustainability reforms that consider industry specifics.
The study acknowledges limitations due to the sample (focusing on top R&D
spenders) and period, but the findings are still valuable for setting policy direction.
According to Chelawat (2022), this study examines the impact of ESG

(environmental, social, and governance) investing in India. ESG investing takes
into account environmental, social, and governance factors in addition to
traditional financial metrics. The research indicates that ESG investing in India, as
53
measured by the ESG India Index, entails similar risks but yields better returns
compared to a conventional benchmark index. This suggests that ESG investing
can be advantageous for investors in emerging economies like India. The study
highlights the limited availability of data due to the novelty of ESG investing in
India, but the findings are promising and can offer guidance to investors, asset
managers, and policymakers.
According to Vishali (2024), this study examines Socially Responsible

Investment (SRI) in India, particularly ESG mutual funds. SRI is growing in India,
but investors are still hesitant about incorporating sustainability into their
portfolios. The study finds that the ICICI Prudential ESG Fund performs better
than other ESG funds studied. The Securities and Exchange Board of India (SEBI)
created the Social Stock Exchange (SSE) to help SRI grow. The SSE is a platform
for social enterprises to get capital. This is expected to benefit the investment
industry and make it easier to invest in sustainable development initiatives.
According to Rounok, et al. (2023), their study in Bangladesh examines

how ESG factors impact investment decisions. The study reveals that investors
take into account a company's ESG performance and corporate reputation when
making investment decisions. Prioritizing ESG can enhance a company's
reputation and attract investors. The study emphasizes the necessity of regulations
to encourage ESG adoption. It contributes to behavioral finance by demonstrating
the relationship between ESG and investment decisions, particularly in developing
countries. However, the study is limited by the novelty of ESG investing and the
lack of prior research in Bangladesh. Future research could delve into ESG
investment in other countries and investigate how negative ESG news influences
investors' decisions.
According to Parikh et al. (2023), this study in India examines the impact
of ESG factors on stock returns. The study finds that strong corporate governance
leads to higher returns, but environmental investments may negatively affect
returns in the short term due to upfront costs. The study suggests that government
regulation should prioritize environmental practices despite potential short-term
54
drawbacks. While the study is limited to India and short-term effects, it highlights
the complex relationship between ESG and financial performance.
According to Seth, et al. (2021), this study examines ESG Investing in

India, focusing on its growing importance and the role of ESG Ratings. ESG
Investing considers environmental, social, and governance factors alongside
financial performance. The research highlights its potential to benefit companies,
investors, and society, promoting a more sustainable financial future. While ESG
ratings are a helpful tool, they have limitations. Overall, the study suggests ESG
Investing could become the "new normal" in finance.
According to Patnaik et al. (2023), their study examines how ESG scores
impact institutional investors in India. The research finds that foreign investors
prioritize governance (G) over environmental (E) and social (S) factors. In
contrast, domestic investors do not show a significant relationship between ESG
scores and ownership, suggesting that ESG integration may be less mature among
domestic investors in India. The study acknowledges its limitations and
recommends future research with a longer time frame, more variables, and cross-
country comparisons.
According to Sultana et al. (2017), this study investigates the impact of

environmental, social, and governance (ESG) factors on individual investors in
Bangladesh. The research suggests that investors take ESG issues, especially
governance, into consideration when making investment decisions. The study adds
to the understanding of ESG investing in developing countries and proposes that it
may lead to regulations that enhance ESG practices and reporting in Bangladesh.
This could result in a more stable stock market and attract foreign investment.
3.3.Gap Analysis
Various researches have been conducted at National and International level

on the Economic Value Added and its Impact on Investing Decisions most of these
studies either are focused on expert‟s people or on companies. No studies have
55
been conducted on general segment of investors considering this gap, present study
is undertaken.
56
Chapter 4: Survey Finding.
SYNOPSIS:
4.1 Findings and Analysis.
57
4.1. Age of the Respondents:
Table 4.1: Age of the Respondents.

Age Respondents
68
18 - 25
24
25 - 45
45 – 60 5
Above 60 3
100
Total
Graph 4.1: Age of the Respondents.
Interpretation:
According to this chart among the total of 100 respondents, 68% respondents are
from the age group of 18 – 25, 24% respondents are from the age group of 25 – 45,
5% respondents are from the age group of 45 – 60 and 3% respondent are from the
age group of above 60.
58
4.2. Gender of the Respondent:
Table 4.2: Gender of the Respondents.
Gender Respondents
Male 60
Female 40
Prefer Not say 00
Total 100
Graph 4.2: Gender of the Respondents.
Interpretation:
Male and 60% respondents are Female, and none of the respondent chose Prefer
not to say option.
59
4.3. Annual Income of the Respondents:
Table 4.3: Annual Income of the Respondents.
Annual Income Respondents
Under 2 lakhs 54
2 lakhs – 7 lakhs 33
7 lakhs – 15 lakhs 8
Above 15 lakhs 5
Total 100
Graph 4.3: Annual Income of the Respondents.
Interpretation:
According to the above chart among the total 100 respondents, 54% respondents
belong to the under 2 lakhs income group, 33% respondents belong to the 2 lakhs –
7 lakhs income group, 8% respondents belong to the 7 lakhs – 15 lakhs income
group and rest 5% respondent belong to the above 15 lakhs income group.
60
4.4. Investment Experience of the Respondents:
Table 4.4: Investment Experience.
Experience Respondents
Beginner (Less than 1 year) 67
Intermediate (1-5 years) 28
Experienced (5+ years) 5
Total 100
Graph 4.4 Investment Experiences.
Interpretation:
According to the above chart among the 100 respondents, 67% respondents have
been investing for less than 1 year as a beginner, 28% respondents have been
investing for 1–5 years as a intermediate and 5% respondents have been investing
for more than 5 years as a Experienced.
61
4.5. Primary Investment Goals of Respondents:
Table 4.5: Primary Investment Goals.
Goals Respondents
Capital preservation 25
Wealth accumulation 20
Income generation 49
Retirement planning 6
Total 100
Graph 4.5: Primary Investment Goals of Respondents.
Interpretation:
been investing for Capital preservation, 20% respondents have been investing for
Wealth accumulation, 49% respondents have been investing for Income generation
and 6% respondents have been investing for Retirement planning.
62
4.6. Are the Respondents Familiar With the Concept of ESG (Environment,
Social, and Governance) Investing?
Table 4.6: Familiarity With the Concept of ESG (Environment, Social, and
Governance) Investing.
Level of Familiarity Respondents
Not familiar at all 31
Somewhat familiar 48
Familiar 19
Very familiar 2
Total 100
Graph 4.6: Familiarity With the Concept of ESG (Environment, Social, and
Governance) Investing.
Interpretation:
been investing for Not familiar at all , 48% respondents have been investing for
Somewhat familiar, 19% respondents have been investing for Familiar and 2%
respondents have been investing for Very familiar.
63
4.7. How Much Rating they Gave for Understanding the ESG Principle?
Table 4.7: Rating they gave for Understanding the ESG Principle.
1 12
2 12
3 52
4 15
5 9
Total 100
Graph 4.7:Rating they gave for Understanding the ESG Principle.
Interpretation:
Rated 1for the understanding of ESG Principle, 12% respondents Rated 2 for the
understanding of ESG Principle, 52% respondents Rated 3 for the understanding of
ESG Principle, 15% respondents Rated 4 for the understanding of ESG Principle,
and 9% respondents Rated 5 for the understanding of ESG Principle.
64
4.8. What were the Primary Sources of Information of the respondents

about ESG Investing?
Table 4.8: Primary Sources of Information about ESG Investing.
Financial news media 25
Investment research reports 30
Sustainability reports from 25

companies
Online resources or social media 58
Other 5
(Respondent have been given multiple choice option for above question)
Graph 4.8: Primary Sources of Information about ESG Investing.
Interpretation:
According to the above chart among the total of 100 respondents, 25% has chosen
Financial news media as a source of information, 30% has chosen Investment
research reports as a source of information, 25% has chosen Sustainability reports
from companies as a source of information, 58% has chosen Online resources or
social media as a source of information and 5% has chosen other sources as a
source of information.
65
4.9. Do Respondents Consider ESG Factor while making Investment

Decision?
Table 4.9:Consideration of ESG Factor while making Investment Decision.
Decision Respondents
Yes 55
No 14
Maybe 31
Total 100
Graph 4.9: Consideration of ESG Factor while making Investment Decision.
Interpretation:
According to the above chart among the total of 100 respondents, 56 % agreed that
they consider ESG Factor while making Investment Decision, 14% disagreed that
they consider ESG Factor while making Investment Decision, and 31% unsure that
they consider ESG Factor while making Investment Decision or not.
66
4.10. How Important is ESG factors while Considering an Investment :
Table 4.10: Importance of ESG factors while Considering an Investment

Not important at all 6
Somewhat important 61
Important 29
Very important 4
Total 100
Graph 4.10: Importance of is ESG factors while Considering an Investment
Interpretation:
think ESG is not important, 61% respondents think ESG is somewhat important,
29% respondents think ESG is important, 4% respondents think ESG is very
important.
67
4.11. How Much Influence dose ESG Factor have on Respondents Investment
Decision?
Table 4.11: Influence of ESG Factor on Investment Decision.
A very significant influence 13
A moderate influence 62
A slight influence 25
No influence 00
Total 100
Graph 4.11: Influence of ESG Factor on Investment Decision.
Interpretation:
been considered ESG as a very significant influence, 62% respondents have been
considered ESG as a moderate influence, 25% respondents have been considered
ESG as a slight influence, and no respondents have been considered ESG as a
very significant influence.
68
4.12. Which is the most Important ESG factor?
Table 4.12: The most Important ESG Factor?
Environmental 43
Social 71
Governance 36
Graph 4.12: The most Important ESG Factor?
Interpretation:
According to the above graph, among the total of 100 respondents, 43%
respondents rated Environment as an important factor, 71% respondents rated
Social as an important factor, and 36% respondents rated Governance as an
important factor.
69
4.13. Would they be willing to Invest in a Company with Slightly Lower

Potential Returns if it had Strong ESG Practices?
Table 4.13: Willingness to Invest in a Company with Slightly Lower Potential

Returns and Strong ESG Practices.
Yes, definitely 19
Yes, possibly 52
No, I prioritize return on investment 22
Unsure 8
Total 100
Graph 4.13: Willingness to Invest in a Company with Slightly Lower Potential

Returns and Strong ESG Practices.
Interpretation:
According to the above graph, among the total of 100 respondents, 19% agreed
with Yes definitely, 52% agreed with Yes possibly, 22% agreed with no because
they prioritize return on investment, and 8% are Unsure.
70
4.14. What are the Biggest Barriers Respondents Faced when Considering
ESG Factors in your Investments?
Table 4.14: Barriers Respondents Faced when Considering ESG Factors in your
Investments.
Barriers Respondents
Lack of understanding of ESG factors 48
Difficulty finding reliable ESG data 28
Limited investment options focused on 42

ESG
Higher fees associated with ESG 14

investments
Other 9
4.14:Biggest Barriers Respondents Faced when Considering ESG Factors in your

Investments.
Interpretation:
According to the above chart among the 100 respondents, 48% respondents Lack
of understanding of ESG factors, 28% respondents Difficulty finding reliable ESG
data, 42% respondents Limited investment options focused on ESG, 14%
respondents Higher fees associated with ESG investments, 9% respondents Other.
71
4.15. Would they be Interested in Learning more about ESG Investing?
Table 4.15: Interest in Learning more about ESG Investing.
Yes 64
No 8
Maybe 28
Total 100
Graph 4.15: Interest in Learning more about ESG Investing.
Interpretation:
According to the above chart among the total of 100 respondents, 64 % showed
interest in learning ESG Investing, 8 % showed non interest in learning ESG
Investing, and 28% are unsure or confused
72
Chapter 5: Conclusion and Recommendations.
SYNOPSIS:
5.1. Conclusion.
5.2. Recommendations.
73
5.1. Conclusion:
In conclusion, the analysis of the data presented in the chart sheds light on
the attitudes, behaviours, and perceptions of investors regarding Environmental,
Social, and Governance (ESG) factors in their investment decision-making
process. The findings provide valuable insights into the current landscape of ESG
investing, including the level of awareness, the importance attributed to ESG
factors, the sources of information utilized, and the challenges faced by investors
in integrating ESG considerations into their investment strategies.
First and foremost, it is evident from the data that there is a growing
recognition of the importance of ESG factors among investors. The majority of
respondents indicated that they consider ESG factors while making investment
decisions, with a significant portion agreeing that ESG is either somewhat or very
important. This highlights a shift in investor preferences towards sustainable and
responsible investing practices, driven by a desire to align their investment
portfolios with their values and contribute to positive social and environmental
outcomes.
Furthermore, the data suggests that there is a considerable level of

familiarity with ESG principles among investors, with a significant percentage
rating themselves as somewhat familiar or familiar with ESG. This indicates that
investors are actively seeking information and educating themselves about ESG
considerations, reflecting a growing awareness of the potential impact of ESG
factors on investment performance and risk management.
However, despite the increasing awareness and interest in ESG investing,

the data also reveals several challenges and barriers that investors face in
incorporating ESG considerations into their investment decision-making process.
One of the most prominent challenges identified is the lack of understanding of
ESG factors, with nearly half of the respondents citing this as a significant barrier.
This highlights the need for investor education and awareness-building initiatives
to address the knowledge gap and provide investors with the necessary information
74
and tools to effectively integrate ESG considerations into their investment

strategies.
In addition, the data indicates that investors encounter difficulties in finding

reliable ESG data, which is essential for evaluating the ESG performance of
companies and making informed investment decisions. This underscores the
importance of improving data quality and transparency in ESG reporting and
disclosure, as well as the need for standardized frameworks and metrics to
facilitate comparability and consistency in ESG analysis.
Moreover, the data suggests that there is a limited availability of investment

options focused on ESG, which may constrain investors' ability to build diversified
and well-performing ESG portfolios. This highlights the importance of expanding
the range of ESG investment products and solutions available to investors,
including ESG-themed funds, ETFs, and other sustainable investment vehicles.
Furthermore, the data indicates that investors perceive higher fees

associated with ESG investments as a barrier, which may deter them from
allocating capital towards sustainable and responsible investment strategies. This
underscores the need for greater cost transparency and competitive pricing in the
ESG investment space to make these strategies more accessible and attractive to
investors.
Despite these challenges, the data also reveals a strong interest and
willingness among investors to learn more about ESG investing, with a significant
percentage expressing interest in acquiring knowledge and skills in this area. This
presents an opportunity for investment professionals, financial advisors, and other
stakeholders to play a proactive role in educating and empowering investors to
embrace ESG considerations and integrate them into their investment decision-
making process.
Overall, the findings of the analysis underscore the importance of ESG

factors in investment decision-making and the need for concerted efforts to address
the challenges and barriers hindering the widespread adoption of ESG investing.
75
By enhancing investor education, improving data quality and transparency,

expanding investment options, and reducing barriers to entry, the investment
community can unlock the full potential of ESG investing and drive positive
change towards a more sustainable and responsible financial system.
5.2. Recommendations :
Recommendations for Enhancing ESG Integration in Investment Decision Making.
In light of the conclusions drawn from the analysis of the data presented, it
is imperative to provide actionable recommendations aimed at addressing the
challenges and barriers identified and fostering the broader adoption and
integration of Environmental, Social, and Governance (ESG) factors into
investment decision making. These recommendations encompass various aspects
of investor education, data quality and transparency, product innovation, regulatory
frameworks, and industry collaboration.
1. Investor Education and Awareness Building:
 Develop comprehensive educational programs and resources to increase

investor understanding of ESG factors, including their relevance, significance, and
impact on investment performance and risk management.
 Collaborate with industry associations, academic institutions, and advocacy

groups to organize workshops, seminars, and webinars on ESG investing, targeting
both individual and institutional investors.
 Incorporate ESG considerations into existing financial literacy initiatives and

professional development programs for financial advisors, asset managers, and
other investment professionals.
76
 Leverage digital channels and social media platforms to disseminate

educational content and engage with investors on ESG-related topics, fostering a
culture of continuous learning and knowledge-sharing within the investment
community.
2. Enhancing Data Quality and Transparency:
 Advocate for standardized ESG reporting frameworks and metrics to improve

comparability, consistency, and reliability of ESG data disclosed by companies.
 Encourage companies to adopt best practices in ESG reporting and disclosure,

including the use of third-party assurance and verification processes to enhance the
credibility and trustworthiness of their ESG disclosures.
 Collaborate with data providers, research firms, and technology companies to
develop innovative solutions for ESG data collection, analysis, and integration,
leveraging advances in artificial intelligence, machine learning, and natural
language processing.
 Support initiatives aimed at enhancing ESG data coverage and availability,

particularly in emerging markets and sectors where data gaps are prevalent, to
enable more comprehensive and informed ESG analysis and decision-making.
3. Expanding ESG Investment Options:
 Encourage the development and launch of new ESG-themed investment

products and solutions, including ESG-focused mutual funds, exchange-traded
funds (ETFs), and impact investing vehicles, to meet the growing demand from
investors for sustainable and responsible investment opportunities.
 Work with asset managers, wealth managers, and financial advisors to

integrate ESG considerations into their investment strategies and product offerings,
providing investors with a broader range of ESG-aligned investment options
tailored to their risk preferences, financial goals, and values.
77
 Foster partnerships between asset owners, asset managers, and ESG research
providers to develop customized ESG investment solutions and strategies that
address specific investor needs and objectives, such as thematic investing,
exclusionary screening, and impact measurement.
4. Regulatory Support and Policy Alignment:
 Advocate for regulatory reforms and policy initiatives that promote ESG
integration and disclosure by companies, asset managers, and institutional
investors, including mandatory ESG reporting requirements, fiduciary duty
clarifications, and tax incentives for ESG investments.
 Collaborate with policymakers, regulators, and standard-setting bodies to

harmonize ESG reporting standards and frameworks at the national, regional, and
global levels, facilitating cross-border investment flows and promoting consistency
and comparability in ESG data disclosure.
 Support efforts to incorporate ESG considerations into investment stewardship

and engagement practices, including shareholder activism, proxy voting, and
corporate governance advocacy, to drive positive change in corporate behavior and
performance.
5. Industry Collaboration and Knowledge Sharing:
 Foster collaboration and knowledge sharing among industry stakeholders,

including investors, companies, asset managers, research providers, and advocacy
groups, to exchange best practices, lessons learned, and success stories in ESG
integration and impact measurement.
 Establish industry-wide platforms, forums, and working groups dedicated to

advancing ESG investing and sustainability practices, facilitating dialogue,
collaboration, and innovation across the investment value chain.
78
 Encourage industry associations, trade groups, and professional bodies to

develop ESG competency standards, certifications, and accreditation programs for
investment professionals, promoting excellence and integrity in ESG-related
practices and decision-making.
Support initiatives that promote diversity, equity, and inclusion within the
investment industry, including efforts to increase representation of women,
minorities, and underrepresented groups in leadership positions and decision-
making roles.
6. Continuous Monitoring and Evaluation:
 Establish mechanisms for ongoing monitoring, evaluation, and benchmarking

of ESG integration practices and performance outcomes, including the
development of key performance indicators (KPIs), benchmarks, and scorecards to
track progress and identify areas for improvement.
 Conduct regular surveys, polls, and stakeholder consultations to gather

feedback and insights from investors, asset managers, companies, and other
stakeholders on their ESG experiences, preferences, and challenges, informing
future initiatives and interventions.
 Publish regular reports, white papers, and case studies highlighting trends,
innovations, and best practices in ESG investing and sustainability, disseminating
knowledge and fostering a culture of transparency, accountability, and continuous
improvement within the investment community.
In conclusion, the recommendations outlined above provide a roadmap for

enhancing ESG integration in investment decision making, addressing the
challenges and barriers identified, and unlocking the full potential of sustainable
and responsible investing to drive positive social, environmental, and financial
outcomes. By adopting a collaborative, multi-stakeholder approach and leveraging
technology, innovation, and policy support, the investment industry can play a
79
leading role in advancing the transition to a more sustainable and equitable global
economy.
80
Bibliography
1) Ahmad et al. (2022). Impact of ESG Factors on Businesses: A Review. Journal

of Business Ethics, 1-24.
2) Aich, A., et al. (2021). Significance of ESG Factors in Investing: A Review.

Sustainability, 13(15), 8401.
3) Chelawat, (2022). Performance of ESG Investing in India: Evidence from ESG

India Index. Indian Journal of Finance, 16(2), 46-55.
4) Fiordelisi,., et al; (2020). ESG Investing and Stock Market Performance: A

Review. European Financial Management, 26(3), 619-654.
5) Goyal, A., et al. (2014). Performance of ESG Stocks in India: Evidence from
Blue-chip Stocks and Market Portfolio. Journal of Finance and Accounting,
1(2), 53-68.
6) Nazarova, E., & Lavrova, D. (2022). ESG Performance and Investment

Attractiveness: Evidence from S&P 500 and S&P 350 Companies. Journal of
Sustainable Finance & Investment, 12(4), 375-391.
7) Parikh, H., et al. (2023). Impact of ESG Factors on Stock Returns in India: A
Study. International Journal of Management Sciences and Business Research,
12(3), 15-28.
8) Patnaik, S., et al. (2023). Impact of ESG Scores on Institutional Investors in

India: A Study. Journal of Emerging Market Finance, 22(1), 45-60.
9) Rounok, A., et al. (2023). ESG Factors and Investment Decisions: Evidence
from Bangladesh. International Journal of Business and Management, 18(3),
37-52.
81
10) Schütz, P., et al. (2018). Impact of ESG Factors on Investment Risk and
Return: A Study. Journal of Sustainable Finance & Investment, 8(2), 132-148.
11) Seth, M., et al. (2021). ESG Investing in India: Growing Importance and Role
of ESG Ratings. Indian Journal of Finance, 15(4), 32-47.
12) Simone, L., et al. (2022). Innovation and Economic Sustainability: A Study.
Journal of Innovation & Knowledge, 7(3), 147-162.
13) Sultana, N., et al. (2017). Impact of ESG Factors on Individual Investors in
Bangladesh: A Study. Journal of Sustainable Development, 10(4), 67-82.
14) Trenz, J., et al. (2018). Effect of ESG Factors on Investment Risk and Return:
A Study Using Markowitz Model. Journal of Finance and Economics, 6(4),
102-118.
15) Vishali. (2024). Socially Responsible Investment in India: Evidence from ESG
Mutual Funds. Journal of Social Responsibility, 19(1), 88-104.
These references provide a comprehensive overview of various aspects of

ESG investing, including its impact on businesses, stock market performance,
individual investors, and institutional investors across different countries and
regions.
82
Annexure
Questionnaire
academic purpose only
1. Name
2. Age
o 18 - 25
o 25 – 45
o 45 – 60
o Above 60
3. Gender
o Male
o Female
o Prefer Not say
4. Annual Income
o Under 2 lakhs
o 2 lakhs - 7 lakhs
o 7 lakhs - 15 lakhs
o Above 15 lakhs
5. Investment Experience
o Beginner (Less than 1 year)

o Intermediate (1-5 years)
o Experienced (5+ years)
83
6. What are your primary investment goals?
o Capital preservation
o Wealth accumulation
o Income generation
o Retirement planning
7. Are you familiar with the concept of ESG (Environmental, Social, and
Governance) investing?
o Not familiar at all

o Somewhat familiar
o Familiar
o Very familiar
8. How would you rate your understanding of ESG principles?
o1
o2
o 3
o 4
o 5
9. What is your primary source of information about ESG investing?
□ Financial news media

□ Investment research reports
□ Sustainability reports from companies
□ Online resources or social media
□ Other
84
10. Do you consider ESG factors (environmental, social, and governance)

when making investment decisions?
o Yes
o No
o Maybe
11. How important are ESG factors to you when considering an investment?
o Not important at all

o Somewhat important
o Important
o Very important
12. How much influence do ESG factors have on your investment decisions?
o A very significant influence

o A moderate influence
o A slight influence
o No influence
13. Which of the following ESG factors are most important to you?
□ Environmental (e.g., climate change, pollution)

□ Social (e.g., labor practices, diversity)
□ Governance (e.g., executive compensation, board structure)
14. Would you be willing to invest in a company with slightly lower potential
returns if it had strong ESG practices?
o Yes, definitely
o Yes, possibly
o No, I prioritize return on investment
o Unsure
85
15. What are the biggest barriers you face when considering ESG factors in
your investments?
□ Lack of understanding of ESG factors

□ Difficulty finding reliable ESG data
□ Limited investment options focused on ESG
□ Higher fees associated with ESG investments
□ Other
16. Would you be interested in learning more about ESG investing?
o Yes
o No
o Maybe
86
“"Currency Evolution: Analyzing the Aftermath of High-Denomination Note
Withdrawal”
By
Mr. Nilesh Dattatray Vishe
(Roll No. 83)

Mr. Varun Jashnani

Ulhasnagar
April, 2024
i
P.B. No 17, Opp. Railway Station, Smt Chandibai Himathmal Mansukhani Road, Ulhasnagar- 421003 Dist. Thane, (MAHARASHTRA)
Certificate
This is to certify that Mr. Nilesh Dattatray Vishe has worked and duly completed his Project
Work for the degree of Bachelor of Management Studies under the Faculty of Commerce in the
subject of Finance and his project is entitled, “Currency Evolution: Analyzing the Aftermath
of High-Denomination Note Withdrawal” under my supervision.
Mr. Varun Jashnani

Guiding Teacher
Date of submission: 06 April, 2024
ii
I the undersigned Mr. Nilesh Dattatray Vishe here by, declare that the work embodied in this
project work titled “Currency Evolution: Analyzing the Aftermath of High-Denomination
Note Withdrawal" forms my own contribution to the research work carried out under the
guidance of Mr. Varun Jashnani, is a result of my own research work and has not been
previously submitted to any other University for any other Degree/ Diploma to this or any other
University.
Mr. Nilesh Dattatray Vishe

(Roll No. 83)
Certified by,
Mr. Varun Jashnani

Guiding Teacher
iii
Evaluation
This Research Project on “Currency Evolution: Analyzing the Aftermath of High-

Denomination Note Withdrawal" submitted by Mr. Nilesh Dattatray Vishe of TYBMS
(Semester – VI) is evaluated as per guidelines of University of Mumbai, via Circular No.
UG/89 of 2018-19 on Revised Syllabus - CBCS for the TYBMS (Semester – V and VI) w.e.f.
academic year 2023-2024
External Examiner:
Name: _____________________________________
Signature: _____________________________________
Internal Examiner:
Name: _____________________________________
Signature: _____________________________________
iv
Acknowledgement
I would like to acknowledge the following as being idealistic channels and fresh dimensions in
project.
I would like to thank my Principal, Dr. Manju Pathak for providing the necessary facilities
I would like to thank my HOD, Dr. Sunil Lalchandani for providing the necessary facilities
v
Executive Summary
The argument in favor of demonetization is based on the belief that extinguishing cash,
particularly black money, can correct the economy's incentive structure. However, its
impact on the economy, including credit availability, spending, and government
finances, depends on the extent of demonetization. The ₹2000 note, introduced in 2016
to address the post-demonetization currency needs, is now being phased out due to its
limited use and the RBI's "Clean Note Policy." Demonetization involves stripping a
currency unit of its legal tender status, often to combat black money. Currency, issued
by a country's central bank, is essential for trade and financial transactions. Each
country has its own currency, like the Swiss franc or Japanese yen, while the euro
serves multiple European nations. In India, the currency is the Indian Rupee (INR),
issued by the central bank.
 Chapter 1 covers the Meaning Currency Evolution, History of currency evolution,

Impact of denomination, Importance of denomination, Advantages and Disadvantages
of denomination, Futures and benefits of denomination, Rumors of 200 notes and
Withdrawal of ₹2000 denomination currency notes by RBI.
 Chapter 2 covers the Objectives, Methods of Data Collection, Sample Design and Area
of Study.
Overall, the project report has been framed in simple and lucid language, so that, even a
layman can understand the contents, specially the research findings which are valuable for
every reader.
vi
Contents
No. Content Page
No.
1 PRELIMINARY
Title Sheet i
Certificate ii
Declaration iii
Evaluation iv
Acknowledgement v
vi
Executive summaryContents
ix
List of tables
x
List of Figures
2 Chapter 1: INTRODUCTION
1.1 What is currency. 2
1.2 Meaning 4
1.3 History 6
1.4 Defination 8
1.5 Impact of denomination in public and small vendors 9
1.6 Importance of denomination 10
1.7 Feature and benefits of denomination in public and small 11
vendors
1.8 Rumors of 2000 note 14
1.9 Withdrawal of 2000 denomination currency notes by RBI 22
1.10 Overview of denomination in 2000 note currency 30
3 Chapter 2: RESEARCH DESIGN

2.1 Introduction 32
2.2 Objective 33
vii
4. Chapter 3: REVIEW OF LITERATURE
3.1 Introduction 43
3.2 Reviews 44
3.3 Gap Analysis 48
5. Chapter 4: SURVEY FINDINGS
6. Chapter 5: CONCLUSION AND RECOMMENDATIONS
5.1 Conclusion 66
7. Bibliography 69
8. Annexure
Questionnaire 71
viii
List of Tables
No. Table Heading Page No.
1.9.1 2000 note circulation 2016-23. 22
1.9.2 2000 note return from circulation in post withdrawal. 23

1.9.3 Total deposit and gross loan advance reported by 24
commercial bank.
4.1 Gender of respondents. 50
4.2 No. of respondents age group wise. 51
4.3 Responses on how often use cash for transaction. 52
4.4 Responses on face challenges in exchanging 53
period.
4.5 Responses on withdrawal of high denomination 54
note impact business.
4.6 Withdrawal of high denomination notes was 55
beneficial for economy.
4.7 Responses on truest in the currency system 56
changed after the withdrawal.
4.8 Responses on faced any challenges in adapting 57
to lower denomination notes.
4.9 Responses on use of digital payment methods 58
has increased since the withdrawal.
4.10 Responses on help in curbing black money or 59
illicit transactions.
4.11 Responses on impact on travel plan. 60
4.12 Responses on high denomination notes lead to 61

any changes in investment decisions.
4.13 Responses on rate of convenience of using lower 62
denomination notes for daily transaction.
4.14 Responses on changes in spending habits since 63
the withdrawal of high denomination notes.
4.15 Responses on rate the government handling of 64
ix
List of Figures
1.4 Impact of denomination in 2000 note currency 6
1.5 Impact on small vendors and customers 9
1.6 Importance of denomination 10
1.7.1 Features of denomination in public and small vendors 12
1.7.2 Benefits for the public 13
1.7.3 Benefits on small vendors 10
1.7.4 Features and benefits in economy 11
1.7.5 Problem face by public 12
2.1 Neral railway station 39
2.2 Neral map 39
4.1 Gender of respondents. 50
4.2 No. of respondents age group wise. 51
4.3 Responses on how often use cash for 52
transaction.
4.4 Responses on face challenges in exchanging 53
period.
4.5 Responses on withdrawal of high 54
denomination note impact business.
4.6 Withdrawal of high denomination notes was 55
beneficial for economy.
4.7 Responses on truest in the currency system 56
changed after the withdrawal.
4.8 Responses on faced any challenges in adapting 57
to lower denomination notes.
4.9 Responses on use of digital payment methods 58
has increased since the withdrawal.
4.10 Responses on help in curbing black money or 59
illicit transactions.
4.11 Responses on impact on travel plan. 60
x
4.12 Responses on high denomination notes lead to 61
4.13 Responses on rate of convenience of using 62
lower denomination notes for daily transaction.
4.14 Responses on changes in spending habits since 63
4.15 Responses on rate the government handling of 64
xi
Currency evolution: Analysing the aftermath of high-denomination note withdrawal
CHAPTER 1
Introduction to large denomination currency
Synopsis:
1.1 What is Currency
1.2 Meaning
1.3 History
1.4 Definition
1.5 Impact of denomination in public and small vendors
1.6 Importance of denomination
1.7 Features and benefits of denomination in public and small vendors
1.8 Rumours of 2000 note:
1.9 Withdrawal of ₹2000 denomination currency notes by RBI
1.10 Overview of demonetization in 2000 note currency
1
Chapter 1:- Introduction
1.1 What is Currency:
Currency:
In exchanging goods and services, we need a common denominator to value the
goods and services. A currency acts as an intermediary and is necessary to perform as
a common denominator. Currency serves as a means of exchanging commodities and
services. Money in the form of paper or coins, issued by a government and accepted at
face value, is known as currency. In bartering, goods and services were exchanged
directly for other goods and services.
Currency has replaced bartering as the primary means of exchanging goods and
services in the modern world. Money in the form of currency has existed for at least
3000 years. Earlier, it used to exist in the form of coins. Now, paper bills are more
common. Modern money is usually useless on its own, and this is one thing that makes
it modern. The other form of currency is based on market factors. Most modern
currencies of the world are based on market factors, and the central banks only perform
some operations to regulate wild movements.
Fiat currencies are used by most of the world’s major economies today. Since
they are not tied to anything real, governments can make new money when they have
trouble paying their bills. This gives more options for dealing with problems, making it
possible to spend too much.
Hyperinflation is the biggest danger of making too much money. Each currency
unit is worth less when there are more of them. Moderate inflation is usually safe, but
unchecked devaluation can make it much harder for people to buy things. If annual
inflation is more than 5%, each person’s savings will be worth 5% less than the year
before, assuming they don’t earn any interest. It gets harder and harder to keep up the
same level of living. Because of this, central banks in developed countries usually try
to stop inflation by taking money out of circulation when the currency’s value drops
too much. Most central banks agree that some inflation is good. Most developed
2
countries believe 2% inflation to be good, and developing countries like India believe
4-6% inflation to be good.
You can bring as much foreign money as you want into India. Using the
currency declaration form, you must tell the customs officials at the airport when you
arrive in India if the value of the foreign currency in cash is more than US$5,000 or if
the value of the cash plus T.C.s is more than US$10000 (CDF).In India, the central
bank, i.e. the RBI, has issued Indian Rupee (INR) as the standard currency. Its value is
determined by market factors.
A currency comes from the Latin word “currere” which means “to run” or “to
flow.” The word “money” comes from the Latin word “monere,” which means “to warn.
“The Mesopotamian shekel was the first known form of currency. It was made about
5,000 years ago. Between 650 and 600 B.C., Lydian and Ionian aristocrats paid their
soldiers with stamped silver and gold coins in Asia Minor.
Money is the paper bills and coins that people use to buy things. A merchant can
easily sell their goods and pay the people they trade with by taking the money.The most
accepted global currencies are the U.S. Dollar, U.K. pound sterling, Euro, Japanese Yen,
Australian Dollar, etc. Some other currencies are the Canadian Dollar, Chinese Yuan,
Indian Rupee, Brazilian Real, Ruble, Turkish Lira, etc.
3
1.2 Meaning:
The argument posited in favour of demonetisation is that the cash that would be
extinguished. Would be “black money” and hence, should be rightfully extinguished to
set right the perverse. Incentive structure in the economy. While the facts are not
available to anybody, it would be foolhardy to argue that this is the only possibility.
Therefore, it is imperative to evaluate the short run and medium-term impacts that such
a shock is expected to have on the economy. Further, the impact of such a move would
vary depending on the extent to which the government decides tore monetise. This
paper elucidates the impact of such a move on the availability of credit, spending, and
levelling of activity and government finance.
The ₹2000 denomination banknotes were introduced on November 10, 2016

under Section 24(1) of Reserve Bank of India (RBI) Act, 1934, to expeditiously meet
the currency requirement of the economy post withdrawal of legal tender status of all
₹500 and ₹1000 banknotes in circulation at that time. This was stated by Union Minister
of State for Finance Shri Pankaj Chaudhary in a written reply to a question in Rajya
Sabha today.The Minister stated that vide RBI’s Press Release dated 19.05.2023.
RBI has conveyed that 89% of ₹2000 denomination notes were issued prior to
March 2017 and are close to the end of their useful life which spans from 4-5 years.
According to Pan-India survey of public conducted by RBI, ₹ 2000 denomination
banknotes are no longer preferred for transactions. Further, the Minister stated, the
stock of banknotes in other denominations continues to be adequate to meet the
currency requirement of the public. In view of above and in pursuance of RBI’s “Clean
Note Policy”, it was decided by RBI to withdraw the ₹2000 denomination banknotes
from circulation.
Demonetization is the stripping a currency unit of its status as legal tender.

Demonetization becomes a necessary when there is a change of national currency. The
old unit of currency has to be retired and replaced with a new unit of currency. It include
either introducing new notes or coins of the same denomination or completely replacing
the old denomination with the new denomination which is often carried out as an
4
ambush on the black money and market. The opposite of demonetization is called as
remonetisation in which a form of payment is restored as legal tender.
Currency is a commonly accepted form of money, including coins and paper

notes which is issued by a government and circulated within the economy. As used a
medium of exchange for goods and services, currency forms the basis for any trade.
The currency or legal Tender is issued by a country’s central bank or a monetary
authority. The national currency of a Country is usually the principal currency used for
most of the financial transactions in that country. Basically each country has its own
currency as Switzerland’s official currency is the Swiss France, And Japan’s official
currency is called the yen. An exception would be the euro, which is used as the
currency for a group of European countries called European Union. In India the
currency is called the Indian Rupees (INR). In most of the cases, the central bank of a
country has the absolute right to issue money or the currency for circulation.
5
1.3 History:
HISTORY OF INDIAN CURRENCY

Paper Money as a legal tender was first introduced in the late eighteenth century.
The Victoria portrait series was initially issued in few denominations of 10, 20, 50, and
100. Then the Victoria portrait was replaced by the following under print series in 1867.
Rs.1000 and Rs.10,000 currencynotes were circulated between 1938 and 1946. Notes
in Ashoka Pillar watermark series in Rs 10denomination were first issued between the
year 1967 and 1992, Rs 20 in 1972 and in 1975, Rs 50in 1975 and 1981 and Rs 100
was launched between 1967-1979. The banknotes issued during this period carried the
symbols which represent the science and technology, patron and orientation to Indian
arts. In 1980, the legendary Satyamev Jayatetruth alone shall prevail’ Was incorporated
under the national emblem for the first time ever.
The highest of all denomination sever printed and circulated by the Reserve
Bank of India (RBI) was the Rs 10,000 note in 1938and was issued again in 1954.
Mahatma Gandhi (MG) series banknotes were issued in 1996 in the denominations of
Rs 5, (introduced in November 2001), Rs 10 (June 1996), Rs 20 (in August2001), Rs
50 (March 1997), Rs 100 (in June 1996), Rs 500 (in October 1997) and Rs 1,000 (in
November 2000).
The Mahatma Gandhi Series -

2005 bank notes were issued in the denomination of Rs 10, Rs 20, Rs 50, Rs
100, Rs 500 and Rs 1,000 and carried some additional/extra security features as
compared The Southern Regional Conference on Management Education A Global
Perspective, Organized by PSG Institute of Management, Coimbatore 06.01.2017 to
the 1996 MG series. A new redesigned series of Rs500 banknotes and a new
denomination of, Rs 2000 banknote are added and are in circulation since 10th of
November 2016.
DEMONETIZATION IN INDIA:
In India demonetization has happened thrice. The first was on the 12th of
January 1946 (Saturday),second on 16th of January 1978 (Monday) and the third was
on 8th of November 2016 (Tuesday).In the January of 1946, notes of denominations
6
1,000 and 10,000 rupees were withdrawn from circulation and new notes of
denominations 1,000, 5,000 and 10,000 rupees were introduced in1954. Then Janata
Party coalition government again demonetised banknotes of denominations 1,000,
5,000 and 10,000 rupees on 16th of January 1978 with the notion of curbing counterfeit
currency and black money. The highest of all denominations ever printed by the reserve
Bank of India was the Rs 10,000 note in 1938 and was again in 1954. But these notes
were demonetized in the January of 1946 and again in the January of 1978, based on
the RBI data.
The first occurrence was in 1946 and the second in 1978 during which an
ordinance was issued to phase out various notes with denominations of Rs 1,000, Rs
5,000 and Rs 10,000 respectively. The demonetization of denominations Rs. 500 and
Rs. 1,000 banknotes was a policy decision carried out by the government of India on
8th of November 2016. In the declaration, the use of denominations of all’s. 500 and Rs.
1,000 banknotes of the Mahatma Gandhi Series would be invalid after the midnight of
the same day, and was also announced that the new Rs. 500 and Rs. 2,000 banknotes of
the Mahatma Gandhi New Series will be issued in exchange for the abovementioned
old currency notes. The move by the government is defended as an attempt to eliminate
a reasonable volume of currency notes which is in the circulation because of inflation.
7
1.4 Definition:
DEFINITION of ‘Demonetization’
Demonetization is the act of stripping a currency unit of its status as legal tender.
It occurs whenever there is a change of national currency: The current form or forms of
money is pulled from circulation and retired, often to be replaced with new notes or
coins. Sometimes, a country completely replaces the old currency with new currency.
The opposite of demonetization is remonetisation, in which a form of payment is
restored as legal tender.
Impact of denomination in 2000 note currency:
The impact of denominations in currency notes, such as the 2000 rupee note in
India, can vary depending on economic factors, government policies, and public
perception. Here are some general impacts:
Convenience: Higher denomination notes can reduce the volume and weight of
cash transactions, making it more convenient for individuals and businesses to carry
and handle large sums of money.
Counterfeiting: Higher denomination notes are often more secure and
incorporate advanced security features, which can help reduce counterfeiting to some
extent.
Cash hoarding: Higher denomination notes can potentially facilitate cash
hoarding, as people may prefer to store larger sums of money in physical cash, which
can impact liquidity in the economy.
Impact on spending: Some studies suggest that the availability of higher
denomination notes can influence spending behavior, with people potentially more
inclined to spend when smaller denominations are more prevalent.
Tax evasion and black money: Higher denomination notes can be more
conducive to tax evasion and the generation of black money, as they can facilitate
transactions that are harder to trace.
Impact on banking: Higher denomination notes can affect banking behavior,
with people potentially opting to hold more cash outside the banking system, which can
impact deposit mobilization and liquidity in banks. Overall, the impact of denomination
in currency notes is complex and can vary depending on a range of factors.
8
1.5 Impact of denomination in public and small vendors:
The impact of the 2000-rupee denomination note on the public and small
vendors can vary based on several factors. Here are some general points:
Figure 1.5 impacts on small vendors and customers
Convenience
Counterfeiting Change
Concerns Availaibility
Cash
Acceptance
Transaction
Convenience: The 2000-rupee note can be convenient for transactions involving

larger amounts, as it reduces the need for carrying multiple lower denomination notes.
Change Availability: One challenge with the 2000-rupee note is the availability
of change. Small vendors might face difficulties in providing change for customers
paying with a 2000-rupee note, especially for smaller purchases.
Acceptance: Initially, there might have been some reluctance from small
vendors to accept the 2000-rupee note due to uncertainty or lack of familiarity.
However, as time passes, acceptance tends to improve.
Cash Transactions: In areas where digital payments are less common, the
availability of 2000-rupee notes can facilitate cash transactions for both the public and
small vendors.
Counterfeiting Concerns: The higher denomination notes are often targeted by
counterfeiters. Small vendors might need to be more vigilant in checking the
authenticity of 2000-rupee notes.
9
Overall, the impact of the 2000-rupee note can be mixed, with benefits in terms
of convenience for larger transactions but challenges related to change availability and
acceptance in smaller transactions.
1.6 Importance of denomination:
Figure 1.6 Importance denomination
Value
represantation
Security
Convenience
features
Currency Storage and

management transportation
The denomination of a currency note, such as the 2000 rupee note, is important
for several reasons:
Value Representation: Denomination indicates the value of the currency note.
In the case of a 2000 rupee note, it represents a higher value compared to lower
denominations, such as 100 or 500 rupee notes.
Convenience: Higher denomination notes reduce the number of notes people
need to carry for large transactions, making transactions more convenient.
Storage and Transportation: Higher denomination notes require less storage
space and are easier to transport compared to the same value in lower denomination
notes.
Currency Management: Denominations are used in currency management to
ensure an optimal mix of notes in circulation to meet the demand for different
transaction sizes.
Security Features: Higher denomination notes often incorporate more security
features to deter counterfeiting.
10
Overall, the 2000 rupee note, with its high denomination, plays a significant role
in the Indian currency system, facilitating larger transactions and reducing the logistical
burden associated with cash handling.
1.7 Features and benefits of denomination in public and small vendors:
The 2000 rupee note, like other currency denominations, has several features
and benefits for both the public and small vendors
Features on denomination in public and small vendors:

Security Features: The note is equipped with various security features such as
watermarks, security threads, and color-shifting ink to prevent counterfeiting.
Size and Design: The size and design of the note make it easy to distinguish
from other denominations, aiding in quick transactions.
Durability: Currency notes are made from materials that make them durable for
circulation, reducing the need for frequent replacement.
Denomination Value: The 2000 rupee denomination provides a higher value,
which can be beneficial for transactions involving larger amounts of money.
Accessibility: The availability of the 2000 rupee denomination makes it easier
for individuals and businesses to handle large transactions without the need for a
significant number of lower denomination notes.
Benefits for the Public:

Convenience: The 2000 rupee note reduces the number of notes needed for
transactions involving larger amounts, making it more convenient for everyday
transactions.
Storage: It is easier to store and carry larger amounts of money in the form of
2000 rupee notes compared to smaller denominations.
Reduced Risk: Carrying larger amounts in higher denomination notes reduces
the risk of loss or theft compared to carrying the equivalent value in smaller
denominations.
11
Benefits for Small Vendors:

Efficiency: Accepting 2000 rupee notes can make transactions more efficient,
especially for businesses that deal with higher-value transactions.
Reduced Cash Handling: Dealing with higher denomination notes means fewer
notes to count and handle, reducing the time and effort required for cash management.
Security: Accepting 2000 rupee notes reduces the risk of counterfeit notes, as
these notes are equipped with advanced security features.
Overall, the 2000 rupee note provides a convenient and secure way to handle
larger transactions for both the public and small vendors.
Features and benefits of denomination in economy:
Figure1.7.1: Features and benefits in economy
convenience
reduce security
printing costs features
inflation hedge
higher value accessibility
durability
Convenience: The 2000 rupee note allows for easier transactions for larger
amounts, reducing the need to carry a large number of lower denomination notes.
Security features: It is equipped with various security features such as
watermarks, security threads, and color-shifting inks to prevent counterfeiting.
Accessibility: The 2000 rupee note makes it easier to store and transport large
sums of money, which can be useful for businesses and individuals.
Durability: Being made of polymer material, the 2000rupee note is more durable
than paper currency, which can increase its lifespan and reduce the need for frequent
replacements.
12
Higher value: It allows for transactions of higher value compared to lower

denomination notes, making it more suitable for larger purchases or transactions.
Reduced printing costs: Since higher denomination notes are used for larger
transactions, it can reduce the overall printing costs for the central bank compared to
printing an equivalent value in lower denomination notes.
Inflation hedge: Higher denomination notes can act as a hedge against inflation,
as their value remains relatively stable over time compared to lower denomination
notes.
These features and benefits make the 2000 rupee note a valuable tool for
transactions, savings, and financial management.
Problem face by general public of Denomination in 2000 note currency:

1.7.2: problem face by public
The 2000 rupee note was introduced in India as part of the demonetization
exercise in 2016. While it was intended to make transactions more convenient, there
are several challenges faced by the general public and small vendors regarding this
denomination.
Difficulty in making change:

One of the primary challenges is the difficulty in obtaining change for a 2000
rupee note, especially for small transactions. This can be inconvenient for both
customers and shopkeepers.
13
Limited acceptance: Some small vendors, particularly in rural areas, may be

reluctant to accept 2000 rupee notes due to the challenges of making change. This limits
the usability of the denomination.
Storage concerns: The higher value of the 2000 rupee note means that people
need to carry fewer notes for large transactions, but it also means that they need to carry
more cash overall, which can be cumbersome and risky.
Counterfeiting concerns: Being a higher denomination, the 2000 rupee note is a
target for counterfeiters. This can lead to distrust of the note and reluctance to accept it.
Impact on informal economy: The high denomination can also impact the
informal economy, where cash transactions are more common. The lack of availability
of change can disrupt these transactions.
Tracking expenses: For individuals, using 2000 rupee notes can make it more
challenging to track expenses, as smaller transactions are not recorded individually.
Overall, while the 2000 rupee note can be convenient for larger transactions, its
high denomination and the associated challenges make it less practical for everyday
use, especially for the general public and small vendors.
1.8 Rumours of 2000 note:
Prime Minister Narendra Modi may have surprised India after he announced on
Tuesday that Rs 500 and Rs 1,000 notes would no longer be legal tender, but one part
of the new system didn’t come completely out of the blue. For a few days now, pictures
of new Rs 2,000 notes have been floating around the internet and Modi announced that
these will be issued for limited circulation soon. But those pictures also came with some
rather fantastical rumours about these notes.
According to these rumours which were circulating on Whats App even before
the demonetisation announcement, the new notes would come with what is variously
described as a “micro nano GPS chip”, which is supposed to be able to help track
individual notes by way of satellite.
NOTE DEMONETISATION
No, the RBI hasn’t announced an Rs 2,000 note with a ‘nano GPS chip’ that it
can track RBI’s official release about the notes doesn’t mention a tracking chip.
14
Rohan Venkataramakrishnan
Nov 09, 2016 · 08:19 am
Prime Minister Narendra Modi may have surprised India after he announced on
Tuesday that Rs 500 and Rs 1,000 notes would no longer be legal tender, but one part
of the new system didn’t come completely out of the blue. For a few days now, pictures
of new Rs 2,000 notes have been floating around the internet and Modi announced that
these will be issued for limited circulation soon. But those pictures also came with some
rather fantastical rumours about these notes.
According to these rumours which were circulating on WhatsApp even before

the demonetisation announcement, the new notes would come with what is variously
described as a “micro nano GPS chip”, which is supposed to be able to help track
individual notes by way of satellite.
The technology even has its own serious-sounding abbreviation, NGC, and the
rumours – some of which made their way to the mainstream media, like this Zee News
post – “the chip has been fitted in such a way that it can detect Rs 2000 notes even from
120 meters below the ground. That would be astounding, if it were true. Except it isn’t.
On Wednesday, the RBI dismissed the rumours entirely saying that such technology
does not exist anywhere in the world.
According to the rumours, the technology would have meant that piles of cash
would be detectable from space, making life much easier for police forces (and anti-
corruption crusaders). And it’s not impossible, even if it may sound so. American
engineers have developed ways to embed radio frequency identification chips on paper
in ways that could aid tracking.
Finance Secretary Ashok Lavasa said that the new notes that will be introduced
will be “high security”, suggesting, as is routine, that new currency paper comes with
added security features that make them harder to counterfeit. But he did not mention
any tracking features.
15
When the Reserve Bank of India officially announced all the details about the
new Rs 2,000 notes, however, there was no mention of any NGC.There are a few
interesting elements to the new note. Besides the colour, it will include a picture of
Mangalyaan, the Indian spacecraft that made it all the way to Mars. Details about the
currency does not include any mention of new security or tracking features, which
presumably the RBI would want to advertise if they had implemented such technology.
Rumours might always insist that the government may not be telling us about
the new technology – all the better to detect illicit cash piles once the notes are in
circulation – but it seems unlikely that such information would be kept hidden, or that
people would not discover the chips soon after they are out in the economy.
And even though the technology appears to be possible, barring fantastical

notions of satellites being able to track piles of cash deep into the ground, it also might
not yet be affordable enough to actually put on currency, even high-denomination notes.
Why has RBI Withdrawn Rs.2000 Notes from Circulation?

Following the unprecedented move of the RBI, people are wondering why the
Rs.2000 note was discontinued. Here are a few reasons behind such a bold decision.
Keeping a Check on Black Money One of the main motives behind the ban on
Rs.2000 notes is curbing the black money and keeping a check on the evasion of taxes.
Black money refers to the money that is kept unaccounted for to evade taxes.
Discontinuing the Rs.2000 note, popular among black money hoarders, is likely to help
curb the hoarding of unaccounted cash.To Tackle Counterfeit Currency Rs.2000 is a
currency note of the highest denomination, making it highly susceptible and vulnerable
to counterfeiting. Counterfeiting of currency notes can be misused in different ways,
threatening the country’s integrity.
Disrupting the Illegal Activities Counterfeited Rs.2000 notes were the major
source of funding for terrorists, money launderers, and corruption. By banning the
circulation of Rs.2000 notes, the government hopes to disrupt such activities and
operations. Promoting a Cashless Economy for the past years, the government is
16
focussing a lot on making India a cashless economy. The Rs.2000 note ban is followed
by the government’s objective to digitize transactions in the country.
Clean Note Policy The clean note policy is RBIs initiative to promote the
circulation of high-quality and clean banknotes. Under this policy, RBI withdraws unfit
and damaged notes from circulation.
How to deposit or exchange Rs.2000 Note at a bank?

Here are the steps to follow if you want to exchange/ deposit Rs.2000 note –
 Step 1. Go to any nearest bank branch, whether you have an account there or not.
 Step 2. Carry valid Id proof such as Aadhaar, PAN, Passport, Voter Id, driving
license, and your bank details.
 Step 3. Get a deposit slip from the bank and fill it in with the necessary details like
name, denomination, number of notes, and bank account number. The RBI has set
a limit of exchanging a maximum of 10 notes at a time or a limit of Rs 20000/-.
 Step 4. Submit the deposit slip and the notes you wish to deposit to the bank teller.
 Step 5. After depositing the money, you will receive an acknowledgment slip from
the bank confirming the deposit of Rs.2000 notes.
Decision of government to discontinue 2000rs notes:

The Reserve Bank of India has decided to withdraw INR 2,000 notes from
circulation in pursuance of the central bank’s Clean Note Policy. The RBI has said
banknotes in INR 2,000 denomination will continue to be legal tender, which implies a
consumer can purchase goods using the currency. The INR 2,000 denomination
banknotes were introduced in 2016 under Section 24 (1) of the RBI Act, 1934, after the
withdrawal of legal tender status of all INR 500 and INR 1,000 banknotes in circulation
at that time. The demonetization of INR 500 and INR 1,000 notes in 2016 rattled the
banking system as Indians flocked bank branches and ATMs to get their notes
exchanged to legal tender, and the sudden move left many citizens in anger and dismay
at the sheer abruptness of the move.
The withdrawal of the INR 2,000 banknotes, however, is not demonstrative of

demonetization and is a move similar to what the RBI has undertaken in the past. The
17
RBI, in 2013-2014, withdrew all banknotes issued prior to 2005 from circulation and
citizens were required to exchange those notes by approaching banks in a similar way.
The Reserve Bank had also clarified then that the notes issued before 2005 would
continue to be legal tender.
What Does the RBI Say on INR 2000 Banknotes?

The RBI said in a press statement that the objective of introducing INR2,000
banknotes was met once banknotes in other denominations became available in
adequate quantities. Therefore, printing of INR 2,000 banknotes was stopped in 2018-
19.
Statistics reveal the total value of these banknotes, which are in circulation and
are issued prior to March 2017, has declined from INR 6.73 lakh cr at its peak as on
March 31, 2018 to INR 3.62 lakh cr constituting only 10.8% of notes in circulation on
March 31, 2023. It points to the fact that the INR 2,000 notes have reached the end of
their life span of four to five years.
The RBI outlined that the INR 2,000 denomination is not commonly used for
transactions and the stock of banknotes in other denominations continues to be adequate
to meet the currency requirement of the country.
Advantages and Disadvantages of Demonetization:

Demonetization is the process in which the legal currency of a nation is declared
invalid for physical monetary transactions by the government. In this, the particular
denomination of notes or coins ceases to exist as legal tender. The objective of
demonetizing a nation’s currency can be different in each case. Still, the most likely
objectives behind this are to curb corruption or remove currency of higher
denomination that is unnecessary, to counter counterfeit currency, etc.
Therefore, under demonetization, the legal tender of the existing currency is

cancelled and pulled out from circulation in the country, and the new currency is issued.
The reason for such a decision varies depending on the country, but the core aim behind
this is to safeguard national interest.
18
Advantages of Demonetization
Increases Deposits with the Banks Demonetization impacts the tendency of
people to store physical notes in their homes. It is due to the cancellation of the legal
tender of the banknotes, as it makes it very difficult for people to exchange their money
with the newly issued currency in banks. This increases the liquidity with the banks as
they receive more funds now, as people abstain from keeping cash in their homes.
Improves Currency Circulation Due to demonetization, people deposit their

physical cash in the banks for exchange with valid currency; this helps extract all the
struck cash piled in the homes that were out of circulation. For a healthy economy, the
continuous flow of currency is very important; if the currency is in circulation, there
will be less stress on the government to print new notes and incur extra expenses.
Helps in Contouring Counterfeit Currency One of the biggest advantages of

demonetization is that it completely thrashes the counterfeit currency lobby. The
cancellation of legal tender destroys the usage of printed counterfeit currency notes. It
is a major blow to the counterfeit currency industry, and governments often make such
decisions in case the problem of counterfeit notes spreads widely in the country.
Helpful in Tracing Black Money Countering the problem of black money is the
most used reason for demonetization. In demonetization, the old currency ceases to
exist, so the black money held by the corrupt people in physical form becomes useless
as they are unable to exchange that money in the bank if they will go and exchange that
money from the bank, those corrupt people will come under the radar of tax and
vigilance departments. It makes it easier for the authorities to track corrupt people
because they cannot provide true information regarding their income.
Therefore, it is a win-win situation for the government from both sides as they
get the chance to track the corrupt person when he comes to exchange the money, and
even if that person does not come to exchange the money in the bank, the money has
no value and remain as a piece of paper.
Downside Movement of Lending Rates As a result of demonetization, the

circulation of money improves, and the banks’ deposit base grows positively; this helps
19
reduce lending rates. Banks are better positioned to lend more to businesses due to
increased liquidity at low rates. This leads to the growth of more infrastructural
activities and provides growth opportunities.
Helps in Countering Illegal Activities Demonetization halts the circulation of

current currency; this affects various illegal activities operationalized in the country,
like hawala, terror financing, etc. The stripping of the legal tender status of the currency
nullifies the existing currency used for financing such criminal activities and puts the
brake on their operation. It is a very important weapon in the fight against such illegal
activities.
Disadvantages of Demonetization
Causes Panic among the Public Cancelling the legal tender of currently
available money is disturbing news for the common public. It creates havoc among the
public regarding their earned money, leading to panic among them. After that, people
have to put some extra effort into exchanging invalid currency notes, which is an
excruciating phase for the public. This is the inconvenience that people face during
demonetization.
Halt in the Economic Development Demonetization disrupts the monetary

circulation of the country, and for some periods, the physical monetary transaction
becomes very difficult due to the cancellation of existing currency. The transaction
problem hindrances the business and economic activities of the country for some
moment, resulting in a short period of standstill in the country’s economic growth.
Recalibration of ATMs In demonetization, the government cancels the existing

currency and issues a new currency; this process poses the problem of the recalibration
of ATMs. Recalibration of ATMs means modifying the ATMs as per the requirements
of the newly issued notes and removing the system of pre-existed notes so that it can
dispense the new notes without any error. Recalibrating all the ATMs in the country is
a big challenge for the authorities.
Causes Liquidity Crunch The invalidation of existing currency and improper

supply of newly issued currency creates the situation of liquidity crisis in the market.
20
The non-availability of ample liquidity in the market obstructs economic activities and
the common public’s living. In a country where the digital transaction is not widely
accepted, this becomes the biggest problem because people can only purchase their
bread if they have the money in their bank accounts. Therefore, a liquidity crisis is a
major concern for the public and the government that comes with demonetization.
Short-term Downfall in the GDP The country that decides to demonize has to
bear the curse of downside movement of GDP in the short run. It is due to the
disturbance in the financial position of the businesses and economic activities. It causes
disruption in the financial sector that destabilizes the growth vehicle. But after some
time, the economy tends to get back on track when the liquidity recovers in the market.
Therefore, even a financially strong country has to face falling GDP for a short time.
Payment Crisis Cancelling the legal tender of a country’s currency creates a

payment crisis. A country whose payment system is not digital faces the problem of a
payment crisis. The labors cannot get their payments, the traders do not receive their
payments, and the country’s retail business faces difficulties in operation, all due to the
non-availability of legal tender cash among the public. So, all the monetary transactions
get disturbed, from the payment of bills to the retail trade.
Demonetization is important for fighting various evils like corruption,

counterfeit currency racket, tax evasion, etc. It helps in tracing and restricting illegal
economic activities. As we know, everything comes with a cost, demonetization also
has some major concerns like an inconvenience to the public for a while, a standstill in
the growth of the economy, a liquidity crisis, etc. Therefore, it is a bold decision to
make for the betterment of the country, but authorities should take this step with proper
planning and great precision.
Downside Movement of Lending Rates As a result of demonetization, the

circulation of money improves, and the banks’ deposit base grows positively; this helps
reduce lending rates. Banks are better positioned to lend more to businesses due to
increased liquidity at low rates. This leads to the growth of more infrastructural
activities and provides growth opportunities
21
1.9 Withdrawal of ₹2000 denomination currency notes by RBI:
Giving more information, as per RBI, the data on ₹2000 denomination

banknotes in circulation (volume and value) for the years 2016 to 2023 as on end March
each year is as follows:
Figure 1.9.1: ₹2000 note circulation 2016-23
Banknotes of ₹2000 denomination in Circulation since 2016
Volume
Year Value (₹ crore)
(crore pieces)
2016 - -
2017 329 6,57,063
2018 336 6,72,642
2019 329 6,58,199
2020 274 5,47,952
2021 245 4,90,195
2022 214 4,28,394
2023 181 3,62,220
As per RBI, the Minister stated, the details of the volume and value of ₹2000
denomination banknotes in circulation and banknotes returned from circulation post
withdrawal of ₹2000 currency notes are as follows:
22
Figure 1.9.2: ₹2000 note return from circulation in post withdrawal
Value (in lakh

₹2000 Denomination Volume (crore pieces)
crore)
Circulation as on May 19,

177.93 3.56
2023
Circulation as on June 30,
41.8 0.84
2023
Banknotes returned from
Circulation
136.13 2.72
since May 19, 2023 till June
30, 2023
Giving more information, the Minister stated that as per RBI, the data on ‘Total
Deposits outstanding’ and ‘Gross Loans and advances outstanding’, as reported by the
Scheduled Commercial Banks, is as follows: When the Reserve Bank of India officially
announced all the details about the new Rs 2,000 notes, however, there was no mention
of any NGC. There are a few interesting elements to the new note. Besides the colour,
it will include a picture of Mangalyaan, the Indian spacecraft that made it all the way
to Mars. Details about the currency does not include any mention of new security or
tracking features, which presumably the RBI would want to advertise if they had
implemented such technology .
23
Figure 1.9.3: Total deposit and gross loan advance reported by

commercial banks
Gross Loans and
Total Deposits outstanding Advances
outstanding
As on
(Gro (Value (Gr
(Values)
wth) s) owth)
(in Rs crore)
(In %) (in Rs crore) (In %)
31-Mar-22 1,71,72,755 10.17 1,27,50,006 11.85
30-Jun-22 1,71,77,836 10.05 1,30,94,857 15.53
30-Sep-22 1,77,42,610 10.84 1,36,92,970 18.63
31-Dec-22 1,81,43,432 11.27 1,41,30,450 16.77
31-23 1,90,56,113 10.97 1,47,57,129 15.74
Conditions for exchanging the 2000rs notes:

The government introduced Rs.2000 in 2016 after the demonetisation drive. On
19 May 2023, the Reserve Bank of India (RBI) announced that Rs.2000 note, India’s
highest denomination currency, will be withdrawn from 30 September 2023. The RBI
extended the last date to exchange or deposit Rs.2000 notes to 7 October 2023 from 30
September 2023. The RBI stated that withdrawing Rs.2000 was due to its ‘Clean Note
Policy’.
However, Rs.2000 will still remain legal tender after 7 October 2023. The RBI
stated that people could visit their nearest bank branches and deposit or exchange their
Rs.2000 banknotes by 7 October 2023.
Total Rs.2000 notes deposited with banks

According to the RBI data, about 96% of the Rs.2000 banknotes in circulation
as of 19 May 2023 have been returned. The RBI stated that as per the data received
from banks, out of the total value of Rs.3.56 lakh crore of Rs.2000 banknotes in
circulation as of 19 May 2023, Rs.3.42 lakh crore had been received by the banks,
leaving only Rs.0.14 lakh crore in circulation as on 29 September 2023.
24
Total Rs.2000 notes printed by RBI

Around 89% of the Rs.2000 denomination notes were issued before March
2017. The total value of Rs.2000 banknotes in circulation has declined from Rs.6.73
lakh crore constituting 37.3% of notes in circulation (as on 31 March 2018), to Rs.3.62
lakh crore constituting only 10.8% of notes in circulation (as on 31 March 2023). It has
been observed that Rs.2000 denomination currency is not commonly used for
transactions. Further, the banknotes in other denominations continue to be adequate for
meeting the currency requirements of the public.
Deposit limit of Rs.2000 notes

People can deposit Rs.2000 banknotes at the bank where they have an account.
The RBI has stated that there is no deposit limit for Rs.2000 notes. But, the general
KYC and other cash deposit statutory norms will apply. When a person deposits
Rs.2000 notes in a Basic Savings Bank Deposit (BSBD) or Jan Dhan account, the usual
limits will apply.
In this regard, Canara Bank has informed that they are giving a 100% waiver on
cash remittance charges on Rs.2, 000 denomination notes deposits. This applies to
savings and current accounts.
As per Bule 114B of the Income Tax Rules, it is mandatory for an individual to
quote the PAN number when the cash deposit in a single day with a post office or bank
exceeds Rs.50,000. Thus, if a person wants to deposit Rs.2000 banknotes amounting to
more than Rs.50,000 in a single day, he/she must quote the PAN number. Quoting the
PAN is not mandatory when the amount deposited is below Rs.50,000 in a day.
Last day to deposit Rs.2000 note:

The RBI has stated that people can approach the banks or post offices to deposit
or exchange their Rs.2000 notes from 23 May 2023. The last date for the deposit or
exchange of Rs.2000 notes was 30 September 2023, which is extended to 7 October
2023.
25
Can Rs.2000 notes be deposited in CDM?

People can exchange Rs.2000 note denominations at the local Cash Deposit
Machines (CDMs) at their convenience.
RBI guidelines for Rs. 2,000 note exchange

People who have an account in a bank can visit their bank branch where they
have an account and provide their account details to streamline and exchange Rs.2000
notes. The RBI guidelines state that there is no requirement for a requisition slip or ID
proof for exchanging Rs.2000 notes.
The RBI has also stated that even a non-account holder can exchange Rs.2000
banknotes at any bank branch without any ID proof. However, there is a limit on the
exchange of Rs.2000 banknotes. A person can exchange Rs.2000 banknotes up to a
limit of Rs.20,000 at a time. The exchange facility of Rs.2000 notes is free of cost.
How to exchange Rs.2000 note in the bank?

The facility for exchanging Rs.2000 notes is available at 19 Regional Offices
(ROs) of RBI having issue departments till 7 October 2023. People can also exchange
Rs.2000 banknotes at any nearest bank branch from 23 May 2023.
Though the RBI instruction is clear that the exchange of Rs.2000 notes across
the counter should be provided without insisting on a request slip or ID proof since
these notes continue to be legal tender, certain public sector banks have adopted a
different strategy.
Certain public sector banks have issued guidelines for the exchange Rs.2000
banknotes from non-account holders to submit identity proof mandatorily. Below is a
list of a few banks that have issued instructions regarding ID proof for exchanging
Rs.2000 notes.
State Bank of India (SBI)

The State Bank of India (SBI) has made it clear that the public is not required
to give or show any ID proof or fill up a requisition slip for exchanging Rs.2000 notes
up to the RBI exchange limit of Rs.20,000 at a time in any SBI branch
26
Punjab National Bank

Punjab National Bank (PNB) informed that any branch of PNB will not demand
ID proof or ask to fill up a requisition slip to exchange Rs.2000 notes up to the RBI
exchange limit of Rs.20,000 at a time.
Indian Bank
Indian Bank is asking non-account holders to submit ID proof, such as an
Aadhaar card, driving license or PAN card, to exchange Rs.2000 notes.
HDFC Bank
HDFC Bank requires all customers and non-customers to fill out a form to
exchange Rs.2000 notes. Customers need not show ID proof but must mention their
customer ID or bank account number on the form. Non-customers must show ID while
submitting the form to exchange Rs.2000 notes.
ICICI Bank
ICICI Bank requires non-customers to fill out a cash deposit slip and provide
ID proof along with their mobile number to exchange Rs.2000 notes. However,
customers need not fill out any form or show ID proof to exchange Rs.2000 notes.
Kotak Mahindra Bank

Kotak Mahindra Bank requires customers and non-customers to fill out a form
to exchange Rs.2000 banknotes. Customers need not show ID proof but must provide
their CRN and account number on the form. Non-customers must show ID while
submitting the form to exchange Rs.2000 notes.
Since RBI has announced the withdrawal of Rs.2000 banknotes, all persons
having Rs.2000 banknotes must deposit them in their bank accounts by 7 October 2023.
They can also get them exchanged at any bank branch without any ID proof up to a
limit of Rs.20,000 at a time.
The RBI stated that 50% of Rs.2000 notes in circulation had been returned to
banks within 20 days of the withdrawal announcement. The value of the notes that have
27
been returned is Rs.1.8 lakh crore as of 8 June 2023. The RBI Governor Shaktikanta
Das said that 85% of Rs.2,000 notes have returned as bank deposits.
Exchange/deposit Rs.2000 banknotes after 7 October

From 8 October 2023, the procedure for deposit or exchange of Rs.2000
banknotes will be as follows: The deposit or exchange of Rs.2000 notes will be stopped
at bank branches. However, individuals or entities can exchange Rs.2000 banknotes at
the 19 RBI Issue Offices up to a limit of Rs. 20,000 at a time. Individuals and entities
can tender Rs.2000 banknotes at the 19 RBI Issue Offices for credit into their bank
accounts.
Such credit or exchange is subjected to relevant RBI, submission of valid

identity documents, government regulations and due diligence as deemed by the RBI.
Courts, government departments, law enforcement agencies or other public

authorities involved in investigation proceedings or enforcement can deposit or
exchange Rs.2000 banknotes as required at any of the 19 RBI Issue Offices without any
limit.
People’s doubts regarding discontinuation of 2000rs notes:

How many Rs.2000 notes can be deposited in a bank?
The RBI has stated that there is no deposit limit for Rs.2000 notes. Thus, an
individual can deposit any number of Rs.2000 notes in their accounts. The respective
bank rules for deposit will apply.
Does Rs.2000 note have a chip?

No. There is no chip in Rs.2000 notes.
Why is Rs.2000 note banned in India?

The RBI introduced Rs.2000 note in November 2016 to meet the currency
requirement of the economy. The printing of Rs.2000 was stopped in 2018-19 once the
notes of other denominations were available in adequate quantities. Currently, these
notes are at the end of their estimated lifespan of 4-5 years, and it is no longer commonly
used for transactions. Thus, in pursuance of the ‘Clean Note Policy’, the RBI decided
28
to withdraw the Rs.2000 denomination banknotes from circulation from 7 October

2023.
What is the RBI’s ‘Clean Note Policy’?

The RBI’s ‘Clean Note Policy’ seeks to give the public good-quality currency
notes and coins with better security features, while soiled notes are withdrawn from
circulation. The RBI had decided to withdraw all banknotes issued before 2005 from
circulation since they had fewer security features compared to banknotes printed after
2005. However, the banknotes issued before 2005 continued to be legal tender. The RBI
has instructed banks to give only clean and good-quality notes to the public, avoiding
recycling worn-out notes they received.
What will happen to Rs.2000 notes after 7 October 2023?

Individuals or entities can exchange Rs.2000 banknotes after 8 October 2023 at
the 19 RBI Issue Offices up to Rs. 20,000 at a time. They can also tender Rs.2000 notes
at the 19 RBI Issue Offices for credit into their bank accounts. However, such exchange
or credit will be subject to relevant government regulations, RBI, submission of valid
identity documents and due diligence deemed by RBI.
Demonetization is the stripping a currency unit of its status as legal tender.

Demonetization becomes a necessary when there is a change of national currency. The
old unit of currency has to be retired and replaced with a new unit of currency. It include
either introducing new notes or coins of the same denomination or completely replacing
the old denomination with the new denomination which is often carried out as an
ambush on the black money and market. The opposite of demonetization is called as
remonetisation in which a form of payment is restored as legal tender.
29
1.10 Overview of demonetization in 2000 note currency.
The 2000 rupee note is a denomination of the Indian currency. It was introduced
by the Reserve Bank of India (RBI) in November 2016, following the demonetization
of the old 500 and 1000 rupee notes. Here is an overview of the features and benefits
of the 2000 rupee note for the public and small vendors:
Security Features: The 2000 rupee note comes with several security features to
prevent counterfeiting. These include a watermark, security thread, latent image, color-
shifting ink, and micro lettering.
Convenience: The higher denomination of the 2000 rupee note reduces the need
to carry large amounts of cash, making transactions more convenient for individuals
and businesses.
Ease of Identification: The distinct color and design of the 2000 rupee note make
it easy to identify and differentiate from other denominations, which is helpful for both
the public and small vendors during transactions.
Value for Transactions: The 2000 rupee note is useful for making high-value
transactions, such as purchasing goods or services that require a larger amount of
money.
Availability: While initially introduced in large numbers, the circulation of the
2000 rupee note has reduced over time, and it may not be as commonly available as
other denominations.
Acceptance: The widespread acceptance of the 2000 rupee note by businesses
and individuals facilitates its use for various transactions.
30
Chapter: 2
Research Design
Synopsis:
2.1 Introduction
2.2 Objectives
2.5 Area of Study: CHM College
2.7 Scope and Limitations of the Study
31
Chapter 2: Research design
2.1: Introduction:
A research design is indeed a crucial component of any research study. It serves

as a comprehensive plan or blueprint that outlines the steps and procedures necessary
to achieve the objectives of the research. It provides structure and guidance to the
researcher in order to gather the required information and effectively address the
research problem.
Think of it as a detailed framework that specifies the methods, procedures, and

strategies to be employed for data collection, analysis, and interpretation. Just like a
blueprint or plot is essential for the construction of a house, a research design is essential
for the smooth and efficient execution of a research study.
By having a well-thought-out research design, researchers can ensure that their

efforts are maximized in terms of generating relevant and reliable information while
minimizing the expenditure of resources such as time and money. It allows researchers
to approach their study in a systematic and organized manner, leading to more fruitful
and meaningful results.

 Objectives
 Data Collection
 Sampling Techniques
 Tools for Analysis
 Scope and Limitations of the Study
32
2.2 Objectives:
Objectives play a vital role in research. They help in determining the purpose
and feasibility of the research study. The primary aim of any research is to either
validate existing knowledge or contribute new knowledge to the existing body of
knowledge.
Before embarking on a research study, it is essential to clearly identify and

articulate the research objectives. This allows researchers to focus their efforts and
resources in a targeted manner, avoiding any wastage of time and resources in future
stages. By defining the research objectives, researchers establish a framework and
direction for their study.
Research objectives serve as guiding principles for the entire research process.
They provide a roadmap for the researcher to follow, helping them stay on track and
achieve their desired outcomes. By stating the objectives, researchers outline the
specific areas of investigation and ensure that their research remains focused and
purposeful. This not only enhances the efficiency of the study but also contributes to
the overall quality and credibility of the research findings.

1) To know about actual present outcomes of the note banned decision.
2) To know the potential of the note ban decision.
3) To estimate the consequences for future of the note ban decision.
4) To know the impact of note ban decision on the Indian economy.
5) To know the impact of note ban decision on the small vendors and customers.
33
2.3 Sources / Methods of Data Collection:
Data is the quantification of tangible and intangible facts. It consists of separate

pieces of information that are usually arranged in a specific way. While “datum” refers
to a single piece of information, people often use “data” as both the singular and plural
form of the word. Data, in their raw form, are just bare facts. However, when they are
processed, organized, structured, or presented in a meaningful way, they become useful
and can be called information. Simply having data is not enough; it is the interpretation
and processing of data that give them true meaning and convert them into valuable
elements in research or any other field.
Primary data and Its sources:-

Primary data is a type of data that is collected by researchers directly from main
sources through interviews, surveys, experiments, etc. Primary data are usually
collected from the Source—where the data originally originates from and are regarded
as the best kind of data in Research.
In this research, researcher conduct survey through Google forms and collect
information.
Secondary data:-
Aside from consulting the primary origin or source, data can also be collected
through a third Party, a process common with secondary data. It takes advantage of the
data collected from previous research, and uses it to carry out new research. Secondary
data is the data that has already been collected through primary sources and made
readily available for researchers to Use for their own research. It is a type of data that
has already been collected in the past.
In this study, a researcher collected data from secondary resources.
Sources of secondary data:-

Sources of secondary data includes: books, personal sources, newspaper,
website, government Record etc. Secondary data are known to be readily available
compared to that of primary Data. It requires very little research and need for manpower
to use these sources. With the advent of electronic media and the internet, secondary
34
data sources have become more easily accessible. Some of these sources are highlighted
below.
 Books
Books are one of the most traditional ways of collecting data. Today, there are books
Available for all topics you can think of. When carrying out research, all you have to
do is Look for a book on the topic being researched on, then select from the available
repository of Books in that area. Books, when carefully chosen are an authentic source
of authentic data and can be useful in preparing a literature review.
 Journal
Journals are gradually becoming more important than books these days when data
collection is concerned. This is because journals are updated regularly with new
publications on a Periodic basis, therefore giving to date information.
 Newspapers
In most cases, the information passed through a newspaper is usually very reliable.
Hence, making it one of the most authentic sources of collecting secondary data. The
kind of data commonly shared in newspapers is usually more political, economic, and
educational than Scientific. Therefore, newspapers may not be the best source for
scientific data collection.
 Websites
The information shared on websites are mostly not regulated and as such may not be
Trusted compared to other sources. However, there are some regulated websites that
only Share authentic data and can be trusted by researchers.
Data Collection for the Present Study:

 The current study as stated above has one hypothesis. With the aim to test and
prove that hypothesis, a wide range of data was required and collected.
 Primary data was collected to understand the impact of the discontinuation of
the large denominations notes on the general public and specifically on small
35
vendors. To achieve this objective a questionnaire was made and responses from
the people was collected.
 Secondary data is collected from library, text books, and journals, articles from
newspapers and from relevant websites available on internet.
2.4 Sampling Techniques:
Sampling is a technique that is commonly used in research studies and surveys

to gain information about a larger population through an examination of a smaller
sample. By selecting a representative sample of the population, researchers can draw
conclusions about the overall characteristics, behaviours, and beliefs of the larger
group, without having to analyse every single member of the population. However, it
is important to ensure that the sample is truly representative of the population, in order
to achieve accurate and reliable results.
2.4.1 Non probability sampling method:

Non-probability sampling is a branch of sample selection that uses non-random
ways to select a group of people to participate in research:
Unlike probability sampling and its methods, non-probability sampling doesn’t

focus on accurately representing all members of a large population within a smaller
sample group of participants. As a result, not all members of the population have an
equal chance of participating in the study. In fact, some research would deliver better
results if non-probability sampling was used. For example, if you’re trying to access
hard-to-reach social groups that aren’t usually visible, then a representative sample
wouldn’t yield suitable candidates.
Instead, you may opt to select a sample based on your own reasons, including
subjective judgment, sheer convenience, volunteers, or – in the above example –
referrals from hidden members of society willing to speak out.
Non-probability sampling is typically used when access to a full population is

limited or not needed, as well as in the following instances: You may want to gain the
views of only a niche or targeted set of people, based on their location or characteristics.
36
To ensure that there is plenty of data about the views of these specific people, it would
make sense to have a sample full of people meeting the criteria.
If there is a target market that you want to enter, it may be worthwhile doing a
small pilot or exploratory research to see if new products and services are feasible to
launch.
If money and time are limited, non-probability sampling allows you to find
sample candidates without investing a lot of resources.
Where members are not represented traditionally in large populations or fly

under the radar, like far-left and right-wing groups, it’s necessary to approach these
subjects differently.
2.4.2 Probability sampling method:

Probability sampling is a technique in which the researcher chooses samples
from a larger population using a method based on probability theory. For a participant
to be considered as a probability sample, he/she must be selected using a random
selection.
This statistical method used to select a sample from a population in such a way
that each member of the population has a known, non-zero chance of being selected.
The most critical requirement of probability sampling is that everyone in your
population has a known and equal chance of getting selected. Probability sampling uses
statistical theory to randomly select a small group of people (sample) from an existing
large population and then predict that all their responses will match the overall
population.
Selecting the right sample is crucial for obtaining accurate and reliable results.
One of the most popular and effective methods for selecting a sample is probability
sampling. Let’s explore the different types of probability sampling. From simple
random sampling to stratified random sampling, we’ll break down each method to help
you determine which one is best for your research project.
37
Here are some of the most effective types of probability sampling:

Simple Random Sampling: This method involves randomly selecting a sample
from the population without any bias. It’s the most basic and straightforward form of
probability sampling.
Stratified random Sampling: This method involves dividing the population into
subgroups or strata and selecting a random sample from each stratum. This technique
is useful when the population is heterogeneous and you want to ensure that the sample
is representative of different subgroups.
Cluster Sampling: This method involves dividing the population into groups or
clusters and then randomly selecting some of those clusters. This technique is useful
when the population is spread out over a large geographical area. But it is not possible
or practical to survey everyone.
Systematic Sampling: This method involves selecting every nth member of the
population after a random starting point is chosen. Probability sampling is widely used
in research. It ensures that the sample is representative of the population, allows
researchers to estimate the level of uncertainty in the results, and makes it possible to
generalize the findings to the population.
Sampling plan for present study:

Since, it’s not possible to conduct a survey with the total population of NERAL.
So, keeping this constraint at place, the population of NERAL was divided into clusters
(e.g., General public and small vendors etc.)– Respondents were selected on random
basis through the different strata. Thus, cluster random sampling was used to collect the
primary data.
38
2.5 Area of Study: NERAL
Neral is a town in Raigad district in the Indian state of Maharashtra. It is 83 km+

developing city of Raigad district which is well connected to Panvel, Mumbai, Thane
and Pune. Local people from communities like Agri, Kumbhar, Brahamin, Muslim, etc.
settled here because this place was key route to Matheran and vikatgad which were
politically important for Maratha Empire, Mughal Empire and East India Company
.
Neral to Matheran Train Route was developed by East India Company for
trading and colonial purposes. Hutatma vir bhai kotwal was a great hero who rebel
against British Police in Neral – Matheran. The village was founded around in the 12th
century by Chanche family, due to heavy floods wiped out their most of the cultivating
land. The place where Chanche family shifted Neral Pada Many other families from
surrounding villages followed the same in following years to safeguard themselves
from regular floods affecting their homes, farms and animals.
Figure 2.1: Neral city figure2.2: Map
39
2.6 Tools for analysis:
Data analysis is indeed a crucial process that allows us to extract useful and
meaningful information from raw data. By analysing data, we can gain insights into
various parameters and identify patterns or relationships that exist among different data
groups. The analysis process involves several steps, including describing and
summarizing the data, identifying relationships between variables, comparing
variables, identifying differences between variables, and even forecasting outcomes.
By summarizing large amounts of data into a more comprehensible form, data analysis
helps us better understand complex information.
Through statistical techniques, data analysis enables us to quantify and describe

relationships between variables with measures such as averages, percentages, means,
and standard deviations. These analyses provide a basis for drawing reliable inferences
and making conclusions that go beyond the data at hand.
Furthermore, data analysis supports prediction, estimation, and generalization

by using the inferences drawn from statistical tools. Inferences and relationships
identified through analysis allow for further evaluation, estimation, and the testing of
hypotheses. This process ultimately contributes to a deeper understanding of various
factors and their impacts on the research or the subject under study.
Data analysis plays a crucial role in transforming raw data into meaningful and
actionable insights, supporting decision-making processes, and facilitating the progress
of research and understanding. The purpose of data analysis is acquire usable and useful
information. This involves the process of examining specific parameters and identifying
patterns of relationships that may exist among different data groups. During the analysis
process, relationships may be discovered that either support or conflict with the original
hypothesis or assumptions. By subjecting these relationships to statistical tests of
significance, we can determine the validity of the conclusions drawn from the analysis.
Statistical tests of significance help us evaluate whether the observed

relationship patterns are likely to occur by chance or if they are indeed statistically
significant. This is crucial in ensuring the reliability and credibility of the conclusions
40
and insights derived from the data analysis. By employing rigorous statistical testing,
data analysis allows us to draw valid and meaningful conclusions that go beyond mere
correlations or chance associations. This helps us gain a deeper understanding of the
data, make informed decisions, and contribute to further research and knowledge in a
particular field.
Ultimately, the process of data analysis serves to transform raw data into
invaluable insights, providing a solid foundation for decision-making, problem-solving,
and advancing our understanding of the subject matter at hand.

In present study, first and foremost, Descriptive Statistical Techniques are used.
These techniques include Finding out Average – Valid Percentage and presentation of
the same through various Graphs and Diagrams. Graphs and Diagrams include Bar
Graph, Subdivided Bar Graph, Joint Bar Diagram and Pie Diagram. Mean responses
are used to Test the hypothesis.
2.7 Scope and Limitations of the Study:
 Scope of the study:

Following points suggest the scope of the study-
1. Basic concepts related to denomination
2. How effects denomination to general public and small vendors
3. Denomination impact on public.
 Limitations of The Study:

1. This study is restricted only to the Neral area. So, the results are not applicable to
other areas.
2. This study is based on the impact of large denomination currency on general public.
3. Sample size of 100 respondents is only covered.
4. The statistical techniques used for the analysis have their own limitations
41
Chapter 3
Review of Literature
Synopsis:
3.1 Introduction
3.2 Reviews
3.3 Gap Analysis
42
Chapter 3: Review of Literature
3.3 Introduction:
Currency evolution has been a subject of significant interest and study,

particularly in the context of policy changes such as the withdrawal of high-
denomination notes. This review examines the implications and aftermath of such
policy decisions, focusing on the impact on economies, financial systems, and society
at large.
High-denomination notes, often considered the backbone of cash transactions,

have played a crucial role in economies worldwide. However, in recent years, several
countries have taken steps to withdraw or demonetize these notes, citing reasons such
as curbing black money, reducing corruption, and promoting a cashless economy.
The withdrawal of high-denomination notes is a complex process with far-

reaching consequences. It affects various stakeholders, including governments,
financial institutions, businesses, and individuals. Understanding the implications of
these policy decisions requires a comprehensive analysis of the economic, social, and
political factors at play.
This review aims to synthesize existing literature on the subject, highlighting

key findings, methodologies, and gaps in research. By examining the aftermath of high-
denomination note withdrawal, this review seeks to contribute to the ongoing discourse
on currency evolution and its implications for modern economies.
43
3.2 Reviews:
According to Beg and Joshi (2017), Demonetization in India was a surprise

move by the government to control black marketing. It affected different people
differently, especially the poor and people living in remote areas. The study was
conducted in January-February 2017 to assess the perception of the people about the
impact of demonetization. The initial impact on the people was negative, with several
people even dying due to standing in queues. However, the use of debit and credit cards
and digital payments has increased, which is one step forward in Prime Minister
Narendra Modi’s vision of making India a digital economy.
According to Dharanipriya and Karthikeyan (2019), India demonetized Rs.500

and Rs.1000 currency notes to fight corruption, counterfeit currency, and black money.
This resulted in a severe contraction in income and consumption in the economy, hitting
farmers harder. The sale of Kharif crop has become difficult, and farmers were unable
to get access to the inputs required at the right time. However, post-demonetization
farmers started using cashless transactions which may be a positive sign towards
digitalization of agriculture. The agriculture sector has witnessed growth despite the
sharp slip in overall growth of the economy.
According to Shirley (2017), India demonetized all 500 and 1,000 banknotes to
crack down on illicit and counterfeit cash. However, this has had a negative impact on
businesses, common people, and financial institutions. Most of the black money is kept
in land, buildings, or gold or kept abroad. Those who held large quantities of black
money seem to have found creative ways to launder it. The design of demonetization
was fundamentally flawed, with no impact study carried out. A better solution would
have been to shift the balance of economic decision making away from the state to firms
and consumers.
44
According to kumar (2017), India has announced that Rs. 500 and Rs. 1000
notes will no longer be legal tender to tackle black money, corruption, and terrorism.
The move is a financial surgical strike and aims to tackle all three issues affecting the
economy. The Prime Minister’s master stroke is reportedly to destroy the base of
corruption in India. The demonetization drive may not curb black money fully, but it
has major impact in curbing black money to large extent.
According to Chandrakar (2017), Politicians in India are using demonetization

of currency notes to defend the interests of the poor, but data from the Reserve Bank of
India shows they are being disingenuous. Long queues at banks and post offices are
from three sections of the population: richer, dishonest, and below poverty line (BPL).
A Bayesian network prediction scheme was proposed to predict the outcome of
demonetisation, which largely affected BPL population. The government could have
reduced the pains of all sections of society with better planning and accurate
predictions. Commodity and cash market transactions are likely to feel an immediate
impact.
According to Singh and Singh (2016), India has a high level of currency in
circulation, with 87% being Rs 500 and Rs 1,000 notes. This cash is generated through
economic transactions that are not reported to tax authorities or through corruption.
Scrapping these notes could either bring the money back into the system or cause it to
disappear. If the money disappears, the economy will not benefit, but if it finds its way
in the economy, it could have a meaningful impact.
According to Mohd. (2016) , Demonetization in India is the process of replacing

old currency with a new one to stop counterfeiting and crack down on black money.
The move has implications for the economy, especially for rural areas and urban
households that deal largely in cash. While formal modes of payments such as debit and
credit cards, net-banking, and digital wallets will get a boost, it will take a long time to
be felt among the middle classes and the poor. The timing of the announcement has
been somewhat surprising, and the UPI system is likely to be fully operationalised only
by January 2017. If the move had been announced in advance, it could have been self-
defeating. The impact on all sections of society and parts of the economy will be felt
only in the long-term.
45
According to Suresh and Bharathi (2017), Paper examines the impact of foreign
exchange rates on Indian Stock Market Index during demonetisation. The study uses
Generalized Autoregressive Conditional Heteroscedastic (GARCH) models to capture
the symmetry effect. The results show an upward trend in Indian stock market and
Indian currency with the decrease in foreign exchange rate.
According to N Arora and P Arora (2017), a survey on 400 people in

Ahmedabad shows that demonetization has been accepted by the majority of people in
India. Despite problems like lack of money, long queues, and unavailability of cash,
most people view the drive as positive. The majority believe that black money exists in
the country and measures should be taken to restrain its circulation. Online payments
will reduce the risk of carrying money, save time, and bring transparency in the system.
However, illiterate people will face major problems and cashless transactions will bring
risks of security.
According to malviya (2024), the shift towards a cashless economy, accelerated

by digital payment technologies, has global implications. This paper examines the
impact of demonetization initiatives on the economy, focusing on economic, social, and
technological factors. It explores the convenience of digital transactions, increased
financial inclusion, and potential for reducing illicit activities. The paper provides case
studies of countries that have implemented cashless measures and analyses the
motivations, challenges, and outcomes of these initiatives. While monetization is
negatively interpreted by some, it is a major tool to control the economy from black
marketing. Cashless economy plays a critical role in controlling corruption and
demonetizing currencies.
46
According to Eusebius (2017), The Indian government demonetized two major

currency notes to combat corruption and black money. The paper analyses the positive
and negative impacts of the process, distinguishing between undisclosed and black
income. The process has affected different sections of society differently, creating
awareness and caution about black money accumulation. The demonetization process
has created a sense of fear and awareness about cashless payments, but rural areas are
still reluctant to go cashless. The future of black money in India depends on legal and
legislative measures taken by the government.
According to Parvathy (2017), Demonetisation in India led to long queues

outside banks and ATMs. The government removed high value currency notes from
circulation to fight against black money, corruption, and terrorism. The impact on
various sectors of the economy was short-lived, with a significant improvement in
digital modes of payment post-demonetisation. The negative impact on the economy
has been transient, with remonetisation moving at an accelerated pace. Demonetisation
is expected to have a positive impact over the medium to long-term, with greater
formalisation and increased use of digital payments. If successful, demonetisation will
become a boon to the economy.
According to Karthikeyan and Thomas (2017), Demonetization in India

removed two legal tender units of currency, the INR 500 and 1000, to combat inflation
and corruption. It is necessary whenever there is a change of national currency. The
process involves introducing new notes or coins of the same currency or completely
replacing the old currency with new currency. Demonetization is a liquidity shock that
creates a situation where lack of currencies jams consumption, investment, production,
employment etc. The impact for the future of India is positive, with a booming e-culture
and transparent banking apps. However, certain criminal activities still follow this
pattern, which account for a minuscule fraction of the black money.
According to L. Pali and G. Pali (2019), Demonetization in India had a short-

term impact on agriculture, farmers, daily earners, common people, beggars, and street
hawkers. It aimed to curb the circulation of black money, eliminate counterfeit currency,
and promote transparency in the economy. However, the informal economy heavily
relies on cash transactions, making it difficult for the government to track and regulate
47
them. The lack of liquidity resulted in a decline in demand for goods and services,
leading to a slowdown in economic growth. The demonetization has highlighted the
need for comprehensive and well-planned policies to achieve sustainable and inclusive
economic growth in the long term.
According to Ravindra and Jyoti (2017), Demonetization is the process of

replacing old currency units with new ones, which is a major decision that impacts all
citizens of India. This study examines the impact of demonetization on the 500 and
1,000 rupee notes, which form 86.4% of the total currency in circulation in India. The
aim is to remove “black money” from the economy, but it may discourage some from
creating new reserves. Demonetization creates a liquidity shock and a sudden stop in
currency availability, affecting consumption, investment, production, and employment.
It may also wipe out corruption and tax evasion in the real estate market.
3.3 Gap Analysis:
Various researches have been conducted at National and International level on

the subject matter. Most of these studies either are focused on general segment of People
or on youth. No studies have been conducted on Level of analysing high denomination
notes withdrawal among the people of neral. Considering this gap, present study is
undertaken.
48
Chapter 4
Survey Findings
Synopsis:
4.1 Findings and Analysis
49
Chapter 4: Survey findings
4.1 Findings and Analysis:
1) Personal information:
Table 4.1: Gender of respondents
Gender Responses Percentage
Male 50 49%
Female 52 51%
Total 102 100%
Figure 4.1: Gender of respondents
Of the total number of 102 respondents, 52 respondents representing 51% are

female and 50 respondents representing 49% are Males.
50
Table 4.2:No. Of respondents age group - Wise

Age group Responses Percentage
Under 18 5 4.9%
18-30 86 84.3%
31-45 10 9.8%
46-60 1 1%
Above 60 - -
Total 102 100%
Graph 4.2: No. Of respondents age group – wise
From the total number of 102 respondents, 86 belonged to 18-30 age group
representing 84.3%), 10 belonged to the 31-45 age group(representing 9.8%) ,5
belonged to the under 18 age group (representing 4.9%) and 1 belong to the 46-60 age
group (representing 1℅).
51
Table 4.3: Responses on how often on use cash for transactions.

Cash transaction Responses Percentage
Daily 65 63.7%
Weekly 21 20.6℅
Monthly 1 1%
Rarely 12 11.8%
Never 3 2.9%
Total 102 100%
Graph 4.3: Responses on how often on use cash for transactions.
From the total number of 102 respondents, 65 respondents representing 63.7%

are Daily cash transactions people, 21 respondents representing 20.6% are people
weekly cash transactions,12 Respondents representing 11.8% are people rarely cash
transactions, 3 Respondents representing 2.9% are people never cash transactions and
1 respondents representing 1% are people monthly cash transaction.
52
Table 4.4: Responses on face any challenges in exchanging high-

denomination notes during the withdrawal period.
Challenges face Responses Percentage
Yes 69 67.6%
No 33 32.4%
Total 102 100%
Graph 4.4: Responses on face any challenges in exchanging high-

denomination notes during the withdrawal period.
Of the total number of 102 respondents, 69 respondents representing 67.6%%

are face challenges in exchanging high denomination notes and 33 respondents
representing 32.4 are not face any challenges in exchanging high-denomination notes.
53
Table 4.5: Responses on withdrawal of high-denomination notes impact

business.
Impact business Responses Percentage
Increased digital 57 55.9%
transactions
Decreased sales 12 11.8%
No impact 33 32.4%
Total 102 100%
Table 4.5: Responses on withdrawal of high- denomination notes impact

business.
From the total number of 102 respondents, 57respondents representing (84.3%

) are increased in digital transactions in their business, 12respondents (representing
9.8%) are decreased sales in their business and 33 respondent (representing 4.9%) are
No impact in their business.
54
Table 4.6: withdrawal of high-denomination notes was beneficial for the

economy.
Benefits of economy Responses Percentage

Yes 50 49%
No 33 32.4%
Not sure 19 18.6%
Graph 4.6: Withdrawal of high- denomination notes was beneficial for the
economy.
Total number of 102 respondents,50 respondents representing 49% are

withdrawal of high-denomination notes was benefit for economy, 33 respondents
representing18.6% are not benefit for economy and 19 respondents representing 32.4%
are not sure.
55
Table 4.7: Responses on trust in the currency system changed after the
withdrawal.
Truest after Responses Percentage
withdrawal
Increased 43 42.2%
Decreased 21 20.6%
No change 38 37.3%
Total 102 100%
Graph 4.7: Responses on truest in the currency changed after the

withdrawal.
Total number of 102 respondents,43 respondents representing 42.2% are trust

increased in currency changed after the withdrawal, 21 respondents representing 20.6%
are decreased truest in currency changed after the withdrawal and 38 respondents
representing 37.3% are no change the truest.
56
Table 4.8: Responses on faced any challenges in adapting to lower

denomination notes.
Challenges face Responses Percentage
Yes 35 34.3%
No 51 50%
Not applicable 16 15.7%
Total 102 100%
Graph 4.8: Responses on faced any challenges in adapting to lower

denomination notes.
The total number of 102 respondents,35 respondents representing 34.3% are

face challenges in adapting lower denomination notes, 51 respondents representing
50%% are not face any challenges in adapting lower denomination notes and 16
respondents representing 15.7% are not applicable.
57
Table 4.9: Responses on use of digital payment methods has increased

since the withdrawal.
Increased digital Responses Percentage
payments
Yes 76 74.5%
No 15 14.7%
Not sure 11 10.8%
Total 102 100%
Graph 4.9: Responses on use of digital payment methods has increased

since the withdrawal.
The total number of 102 responses, 76 respondents representing 74.5% are

digital payment method has increased since the withdrawal, 15 respondents
representing 14.7% are no digital payment methods has increased since the withdrawal
and 11 respondents representing 10.8% are not sure.
58
Table 4.10: Responses on the withdrawal of high-denomination notes has

helped in curbing black money or illicit transactions.
Help curbing Responses Percentage
black money
Yes 58 56.9%
No 17 16.7%
Not sure 27 26.5%
Total 102 100%
Graph 4.10: Responses on the withdrawal of high-denomination notes has

helped in curbing black money or illicit transactions.
The total number of 102 responses, 58 respondents representing 56.9%are help

in curbing black money, 17 respondents representing 16.7% are not help in curbing
black money and 27 respondents representing 26.5% are not sure.
59
Table 4.11: Responses on withdrawal of high-denomination notes impact

travel plans.
Impact on travel Responses Percentage
plans
Reduced travel 58 56.9%
No impact 44 43.1%
Total 102 100%
Graph 4.11: Responses on withdrawal of high-denomination notes impact

travel plans.
Of the total number of 102 respondents, 58 respondents representing 56.9% are

impact on reduced travel plan and44 respondents representing 43.1% are not impact to
travel plan.
60
Table 4.12: Responses on withdrawal of high-denomination notes lead to

Changes investment Responses Percentage
decision
Yes 54 52.9%
No 48 47.1%
Total 102 100%
Graph 4.12: Responses on withdrawal of high-denomination notes lead to

The total number of 102 respondents, 54 respondents representing 52.9% are

changes in investment decision and 48 respondents representing 47.1% are no changes
in investment decision.
61
Table 4.13: Responses on rate the convenience of using lower

denomination notes for daily transactions.
Rate on convenience Responses Percentage
Very convenient 24 23.5%
Somewhat convenient 32 31.4%
Neutral 39 38.2%
Somewhat inconvenient 3 2.9%
Very inconvenient 4 3.9%
Graph 4.13: Responses on rate the convenience of using lower

denomination notes for daily transaction.
From the total number of 102 respondents, 24 respondents representing 23.5%

are very convenient using lower denomination notes for daily transaction, 32
respondents representing 31.4% are somewhat convenient,39 Respondents representing
38.2% are neutral, 3 Respondents representing 2.9% are somewhat inconvenient and 4
respondents representing 3.9% are very inconvenient in using lower denomination
notes for daily transaction.
62
Table 4.14: Responses on any changes in spending habits since the

withdrawal of high-denomination notes?
Change spending habits Responses Percentage
Yes 72 70.6%
No 30 29.4%
Total 102 100%
Graph 4.14: Responses on any changes in spending habits since the

withdrawal of high-denomination notes.
The total number of 102 respondents, 72 respondents representing 70.6% are

changes spending habits and 30 respondents representing 29.4% are no changes in
spending habits.
63
Table 4.15: Responses on rate the government’s handling of the

withdrawal of high-denomination notes.
Rate of govt. Handling Responses Percentage
Excellent 26 25.5%
Good 51 50%
Fair 19 18.6%
Poor 6 5.9%
Total 102 100%
Graph 4.15: Responses on rate the government’s handling of the

withdrawal of high- denomination notes.
the total number of 102 respondents, 26 respondents representing 25.5% are

Excellent rate of government handling the withdrawal of high-denomination notes, 51
respondents representing 50% are good rate of handling,19respondents representing
18.6% are fair rate of handling and 6 respondents representing 5.9% are poor rate of
government handling the withdrawal of high-denomination notes.
64
Chapter 5
Conclusion and Recommendations
Synopsis:
5.1 Conclusion
5.2 Recommendations
65
Chapter 5: Conclusion and Recommendations
5.1 Conclusion:
The data collected from 102 respondents provides a comprehensive view of the
impact of the withdrawal of high-denomination notes on various aspects of society. The
demographic distribution shows a slight skew towards females, with the majority of
respondents falling within the 18-30 age group. Daily cash transactions are prevalent
among the majority, and most respondents faced challenges in exchanging high-
denomination notes. Interestingly, a significant portion reported an increase in digital
transactions following the withdrawal. There is a split opinion regarding the benefits of
the withdrawal for the economy, with a notable percentage unsure.
Trust in currency changed after the withdrawal shows a mixed response, with
a sizable portion reporting no change in trust. While some faced challenges in adapting
to lower denomination notes, the majority did not face any issues. The increase in digital
payment methods and its impact on curbing black money are areas where opinions vary.
The withdrawal seems to have influenced travel plans for many, with a slight majority
reporting reduced travel. Investment decisions also saw some changes post-withdrawal.
Lower denomination notes are perceived as convenient for daily transactions by a
significant portion. The withdrawal has also impacted spending habits for the majority.
Overall, the government’s handling of the withdrawal receives mixed reviews, with a
notable portion rating it as good or excellent.
66
5.2 Recommendation:
Based on the survey results regarding currency denominations, several

recommendations can be made to address the challenges and opportunities identified.
Firstly, given that a significant percentage of respondents face challenges in

exchanging high-denomination notes, measures should be taken to improve the
accessibility and availability of lower denomination notes. This could include
increasing the circulation of lower denomination notes and ensuring that they are
readily available at banks and ATMs. Additionally, efforts should be made to educate
the public on the benefits of using lower denomination notes, such as convenience in
daily transactions.
.
Secondly, the survey indicates that digital payment methods have increased
since the withdrawal of high-denomination notes. To further encourage this trend, the
government and businesses should continue to promote digital payment options and
expand their acceptance. This could include offering incentives for digital transactions
and improving the infrastructure for digital payments in rural and remote areas.
Furthermore, the survey highlights the need for increased trust in currency
following the withdrawal of high-denomination notes. To address this, the government
should focus on enhancing the security features of currency notes and improving
transparency in currency management. Measures should also be taken to combat
counterfeit currency and increase public awareness about how to identify genuine notes.
Additionally, the survey indicates that the withdrawal of high-denomination

notes has had an impact on spending habits and investment decisions. To support
individuals and businesses in adapting to these changes, financial literacy programs
should be implemented to educate the public about prudent financial management and
investment strategies.
Moreover, the survey suggests that the withdrawal of high-denomination notes

has helped in curbing black money. To further strengthen this effort, the government
should continue to implement anti-corruption measures and improve tax compliance
67
mechanisms. This could include increasing the use of digital transactions to track and
trace financial transactions more effectively.
In conclusion, the survey results provide valuable insights into the impact of
currency denominations on various aspects of the economy and society. By
implementing the above recommendations, policymakers can address the challenges
identified and capitalize on the opportunities presented to promote a more efficient,
transparent, and inclusive financial system.
68
Bibliography
Beg and Joshi, Journal of Commerce and Trade | October 2017 | Vol. XII | No.
2 | UGC Approved Journal No. 48687
Dharanipriya and Karthikeyan, International Journal of Development Extension

(ISSN: 0976-8025) 13Vol.10: Issue (2)June-December, 2019
Shirley, Special Issue Published in International Journal of Trend in Research

and Development (IJTRD), ISSN: 2394-9333, www.ijtrd.com
Kumar, Globus An International Journal of Management &IT A Refereed

Research Journal Vol 9 / No 1 / Jul-Dec 2017 ISSN: 0975-721X
Chandrakar, Second International Conference on Computing and

Communications Technologies (ICCCT’17)
Singh and Singh, 3rd international Conference on Recent innovations in science,

technology, management and Environment Indian federation of United Nation
association, new Delhi, India 18 Dec 2016
Mohd, International Journal of Innovative Research and Advanced Studies

(IJIRAS) Volume 3 Issue 12, November 2016 ISSN: 2394-4404
Suresh and Bharathi, Faculty of Management and Commerce, Ramaiah

University of Applied Sciences, Bangalore 560 054
N arora and P arora, Research Guru: Online Journal of Multidisciplinary

Subjects (Peer-Reviewed)
Malviya, Journal of Arts, Humanities and Social Sciences ISSN (o): 2581-6241
Monthly, Peer-Reviewed, Refereed, Indexed Journal Impact Factor: 6.831 Volume – 7,
Issue – 02 February – 2024
69
Eusebius, IOSR Journal of Humanities and Social Science (IOSR-JHSS)

Volume 22, Issue 5, Ver. 8 (May. 2017) PP 73-75 e-ISSN: 2279-0837, p-ISSN: 2279-
0845. www.iosrjournals.org
Parvathy, International research journal of business and management – IRJBM

ISSN 2322-083X
Karthykeyan and Thomas, International journal of Management, IT and

Engineering http://www.ijmra.us, Email: editorijmie@gmail.com
L. Pali and G. Pali, International Journal of Research in Informative Science

Application & Techniques (IJRISAT) ISSN-2581-5814
Ravindra and Jyoti, Navjyoy / Vol. V / Issue -IV ISSN 2277-8063
70
Annexure
Questionnaire
academic Purposes only
What is your gender?

o Male
o female
Age group (In years)

o Under 18
o 18-30
o 31-45
o 46-60
o Above 60
How often do you use cash for transactions?
o Daily
o Weekly
o Monthly
o Rarely
o Never
Did you face any challenges in exchanging your high-denomination notes during the
withdrawal period?
o Yes
o No
How did the withdrawal of high-denomination notes impact your business (if
applicable)?
71
o Increase digital transaction

o Decreased sales
o No impact
Do you think the withdrawal of high-denomination notes was beneficial for the
economy?
o Yes
o No
o Not sure
How has your trust in the currency system changed after the withdrawal?
o Increased
o Decreased
o No change
Have you faced any challenges in adapting to lower denomination notes?
o Yes
o No
o Not applicable
72
Do you think the use of digital payment methods has increased since the withdrawal?
o Yes
o No
o Not sure
Do you think the withdrawal of high-denomination notes has helped in curbing black
money or illicit transactions?
o Yes
o No
o Not sure
How did the withdrawal of high-denomination notes impact your travel plans?
o Reduced travel
o No impact
Did the withdrawal of high-denomination notes lead to any changes in your investment
decisions?
o Yes
o No
73
How would you rate the convenience of using lower denomination notes for daily
transactions?
o Very convenient
o Somewhat convenient
o Neutral
o Somewhat inconvenient
o Very inconvenient
Have you noticed any changes in spending habits since the withdrawal of high-
denomination notes?
o Yes
o No
How do you rate the government’s handling of the withdrawal of high-denomination

notes?
o Excellent
o Good
o Fair
o Poor
74
“A Study On Impact Of Finfluencers On Investor’s Decision
Making”
By
Ms. Prajakta Prashant Parab
(Roll No. 48)

Mrs. Vridhi Rupani

Ulhasnagar
April, 2024
i
(MAHARASHTRA)
Certificate
This is to certify that Ms. Prajakta Prashant Parab has worked and duly completed
of Commerce in the subject of Finance and his project is entitled, “A Study On Impact
Of Finfluencers On Investor’s Decision Making” under my supervision.
investigations.
Mrs. Vridhi Rupani

Guiding Teacher
ii
I the undersigned Ms. Prajakta Prashant Parab here by, declare that the work
embodied in this project work titled “A Study on impact of Finfluencers on investor’s
decision Making” forms my own contribution to the research work carried out under
the guidance of Mrs. Vridhi Rupani, is a result of my own research work and has not
been previously submitted to any other University for any other Degree/ Diploma to
this or any other University.
Ms. Prajakta Prashant Parab

(Roll No. 48)
Certified by,
Mrs. Vridhi Rupani

Guiding Teacher
iii
Evaluation
This Research Project on “A Study on impact of Finfluencers on investor’s decision

making" submitted by Ms. Prajakta Prashant Parab of TYBMS (Semester – VI) is
evaluated as per guidelines of University of Mumbai, via Circular No. UG/89 of 2018-
2019 on Revised Syllabus - CBCS for the TYBMS (Semester – V and VI) w.e.f.
academic year 2023-24.
External Examiner:
Name: _____________________________________
Signature: _____________________________________
Internal Examiner:
Name: _____________________________________
Signature: _____________________________________
iv
Acknowledgement
this project.
I would also like to thank my HOD, Dr Sunil Lalchandani for providing the necessary
me throughout my project and helped me to complete the project within the time frame.
v
Executive Summary
This study investigates the influence of finfluencers on investor decision-making.

Finfluencers, prominent on social media, hold sway over investor choices. Through a
mixed-methods approach, including quantitative analysis and qualitative exploration,
the research uncovers several key findings. Firstly, finfluencers enjoy widespread reach
and credibility, attracting investors seeking financial insights. However, trust levels
vary based on factors like transparency and expertise. Investors frequently rely on
finfluencers for market analysis and stock recommendations, affecting their decision-
making processes. Despite their popularity, finfluencers pose risks such as
misinformation and biases, necessitating critical evaluation by investors. The study's
implications stress the need for cautious consideration of finfluencer advice and suggest
regulatory measures to promote transparency and consumer protection.In conclusion,
this research underscores the significant role finfluencers play in shaping investor
behaviour, emphasizing the importance of informed decision-making amidst the
evolving landscape of financial information dissemination on social media platforms
• Chapter 1 covers the Meaning of “Influencers” and “Finfluencers”, Influencers

way of earning money, Rise of Finfluencers, Impact of Finfluencers on
Investment, Role, Factors affecting trust in Finfluencers, Impact of
Finfluencer's, Recommendations, Advantages, Disadvantages, Comparison of
Finfluencers with Traditional Financial Advisor, SEBI’s Guidelines, Key Points
about Finfluencers, Restrictions by SEBI, Impact of SEBI’s New Regulations,
Controversy around Finfluencers.
• Chapter 2 covers the Introduction, Objectives, Methods of Data Collection,

Sample Design and Area of Study, Tools For Analysis, Scope And Limitations
• Chapter 3 covers the Introduction, Review of Literature and Gap Analysis.
vi
Contents
No Content Page
No.
1 Preliminary
Title i
Certificate ii
Declaration iii
Evaluation iv
Acknowledgement v
Contents vii
List of tables ix
List of Graphs x
2 Chapter 1: Introduction
2
1.1 Meaning of “Influencers”
2
1.2 Meaning of “Finfluencers”
2
1.3 Types of Finfluencers
4
1.4 Influencers way of earning money
5
1.5 Rise of Finfluencers
7
1.6 Impact of Finfluencers on Investment
9
1.7 Role of Finfluencers
10
1.8 Factors affecting trust in Finfluencers
12
1.9 Impact of Finfluencers Recommendations on
Investment decision
14
1.10 Advantages of Finfluencers
15
1.11 Disadvantages of Finfluencers
17
1.12 Comparison of Finfluencers with Traditional Financial
Advisor
20
1.13 SEBI’s Guidelines on Finfluencers
21
1.14 Key Points about Finfluencers
23
1.15 Restrictions on Finfluencers by SEBI
25
1.16 Impact of SEBI’s New Regulations on Finfluencers
26
1.17 Controversy around Finfluencers
vii
3 Chapter 2: Research Design
2.1 Introduction 29
2.2 Objectives 29
2.3 Sources / Method of Data Collection 31
2.7 Scope and Limitations 37
4 Chapter 3: Review Of Literature

3.1 Introduction 40
3.2 Review of Literature at International and National 41
Level
3.3 Gap analysis 44
5 Chapter 4: Data Analysis, Interpretation And

Presentation
Data analysis 46
Interpretation and presentation 46
Finding Summary 58
6 Chapter 5: Conclusion And Recommendations

5.1 Conclusion 60
7 Bibliography 63
8 Annexure
• Questionnaire 65
viii
List of Tables
Sr. No. Particular Page No.
4.2 Gender of Respondent 47
4.3 Respondents based on Occupation 48
4.4 Respondents based on Income 49
4.5 Frequency of consuming content from Finfluencers 50
4.6 Platforms followed by Respondents 51
4.7 Preference of respondents on finfluencers financial advice 52
4.8 Investments made by Respondents based on Finfluencers 53
Recommendations
4.9 Primary risk associated with the advices from the 54
Finfluencers
4.10 Result from the advices given by Finfluencers 55
4.11 Satisfaction review from Respondents 56
4.12 Performance of Finfluencers in Investment decisions based 57
on ratings
ix
List of Graphs
Sr. No. Particular Page No.
1.1 Unregistered Advisors, Beware 23
2.1 Image Of Kalyan Station 35
2.2 Map Of Kalyan 36
4.2 Gender of Respondent 47
4.3 Respondents based on Occupation 48
4.4 Respondents based on Income 49
4.5 Frequency of consuming content from Finfluencers 50
4.6 Platforms followed by Respondents 51
4.7 Preference of respondents on finfluencers financial advice 52
4.8 Investments made by Respondents based on Finfluencers 53
Recommendations
4.9 Primary risk associated with the advices from the 54
Finfluencers
4.10 Result from the advices given by Finfluencers 55
4.11 Satisfaction review from Respondents 56
4.12 Performance of Finfluencers in Investment decisions based 57
on ratings
x
A Study on impact of Finfluencers on investor’s decision making
Synopsis
1.4 Influencers way of earning money
1.8 Factors affecting trust in Finfluencers
1.9 Impact of Finfluencers Recommendations on Investment decision
1.12 Comparison of Finfluencers with Traditional Financial Advisor
1.14 Key Points about Finfluencers
1.15 Restrictions on Finfluencers by SEBI
1.16 Impact of SEBI’s New Regulations on Finfluencers
1.17 Controversy around Finfluencers
1

An influencer is a person who has a large and engaged social media following and can
influence the opinions, behaviors, and purchase decisions of their followers.
Influencers typically specialize in a specific niche or industry, such as beauty, fashion,

fitness, travel, or food, and are known for their expertise, creativity, and authenticity.
They create and share content on social media platforms
like Instagram, YouTube, TikTok, using their platforms to build a loyal following and
establish themselves as thought leaders in their respective fields.
Influencers partner with brands to promote products or services to their followers

through sponsored posts or collaborations. These partnerships can be lucrative for both
the influencer and the brand, as they can increase brand awareness, drive sales, and
build brand loyalty.

Financial influencer or 'Finfluencer', is a person who gives information and advice to
investors on financial topics - usually on stock market trading, personal investments
like mutual funds and insurance, primarily on various social media platforms. They
might be compensated by the business offering the product or service.
Finfluencers are individuals with a significant presence on social media platforms who
offer financial advice, share personal experiences related to money management, and
discuss various investment topics.
Their general discussion includes stocks, budgeting, property, cryptocurrency, and
financial trends. Finfluencers often have a large following, and their advice and
recommendations can influence the financial decisions of their audience.
However, concerns arise regarding their qualifications and the potential risks associated
with their recommendations.
1.Personal Finance Coaches: These finfluencers focus on providing practical advice

and strategies to help individuals manage their personal finances more effectively. They
may offer guidance on budgeting, saving, debt management, and building emergency
funds.
2
2.Investment Gurus: Investment gurus specialize in providing insights and

recommendations on investing in financial markets. They may offer analysis on stocks,
bonds, mutual funds, ETFs (exchange-traded funds), and other investment vehicles.
Some investment gurus focus on specific investment strategies such as value investing,
growth investing, or dividend investing.
3.Financial Planners: Financial planners offer comprehensive financial planning

services tailored to individuals' unique financial goals and circumstances. They help
clients create personalized financial plans, manage investments, plan for retirement,
and navigate complex financial decisions such as buying a home or funding education.
4.Personal Finance Bloggers/Vloggers: Personal finance bloggers and vloggers create

content in the form of articles, videos, and podcasts to educate and inform their
audience about various aspects of personal finance and investing. They may cover
topics such as frugal living, side hustles, credit management, and achieving financial
independence.
5.Real Estate Experts: Real estate experts focus on providing advice and insights
related to investing in real estate properties. They may offer guidance on buying,
selling, renting, and managing residential or commercial properties. Real estate
finfluencers may also share tips on real estate investing strategies, market trends, and
property management.
6.Cryptocurrency Influencers: With the rise of cryptocurrencies like Bitcoin and

Ethereum, cryptocurrency influencers specialize in providing information, analysis,
and opinions on digital currencies and blockchain technology. They may offer insights
on cryptocurrency investing, trading strategies, and navigating the volatile crypto
markets.
7.Financial Educators: Financial educators focus on promoting financial literacy and

educating individuals about fundamental financial concepts and principles. They may
offer workshops, courses, and seminars on topics such as basic budgeting, investing
basics, retirement planning, and managing financial risks.
8.Social Media Influencers: Social media influencers leverage platforms like

Instagram, Twitter, YouTube, and TikTok to share financial tips, insights, and
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recommendations with their followers. They often combine personal finance advice
with lifestyle content to engage and attract a broader audience.
1.4 Finfluencers way of earning money

Finfluencers have gained popularity and influence due to their ability to reach large
audiences and provide financial education and guidance in a relatable and accessible
manner. Here's a breakdown of what finfluencers do and why they matter:
1.Educational Content: Finfluencers create content that educates people about various
aspects of personal finance and investing. They break down complex financial concepts
into simple, easy-to-understand terms, making it easier for their followers to grasp
important financial principles.
2.Investment Advice: Many finfluencers offer investment advice, sharing their

insights on different investment strategies, asset classes, and market trends. They may
discuss topics like stocks, bonds, mutual funds, ETFs (exchange-traded funds), real
estate, and retirement planning.
3.Budgeting and Saving Tips: Finfluencers provide practical tips and strategies for
budgeting, saving money, and managing debt. They offer advice on how to create and
stick to a budget, reduce expenses, build an emergency fund, and pay off debt.
4.Financial Goals and Planning: Finfluencers help their followers set financial goals
and develop personalized financial plans to achieve them. They emphasize the
importance of setting goals, creating a financial roadmap, and staying disciplined in
pursuit of financial success.
5.Motivation and Inspiration: Beyond providing information and advice, finfluencers

motivate and inspire their followers to take control of their finances, make smart
financial decisions, and work towards financial independence and security.
6.Community Building: Finfluencers foster a sense of community among their

followers, creating platforms where people can connect, share experiences, and support
each other on their financial journeys. They often encourage engagement through
comments, questions, and discussions.
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7.Brand Partnerships and Sponsorships: Some finfluencers collaborate with brands

and financial institutions to promote products, services, and affiliate links. While this
can be a source of income for finfluencers, it's important for them to maintain
transparency and disclose any potential conflicts of interest.
8.Social Media Influence: Finfluencers leverage the power of social media to reach a
wide audience and impact people's financial decisions and behaviors. They use
platforms like Instagram, YouTube, and TikTok to share content, engage with
followers, and build their brand and influence.
Finfluencers have been around for a while, but they gained prominence and popularity
during the COVID-19 pandemic, when millions of people were stuck at home and
looking for ways to cope with economic uncertainty and volatility. Finfluencers offered
them a source of information, education, entertainment, and motivation to take charge
of their finances and invest in the stock market. The immense influence that finfluencers
have over the masses can play a positive role in spreading financial awareness and
literacy. Through their engaging content, most finfluencers are seen encouraging people
to save more, invest wisely, diversify their portfolios, and achieve their financial goals.
They also demystify complex financial concepts and jargon, making them accessible
and relatable to the common man. However, just like the two sides of a coin, the
finfluencer landscape also has another aspect to it.
The rise of "finfluencers" - financial influencers on social media - has sparked a

complex conversation about trust and responsibility in the investment world. While
some investors find value in their engaging content and accessible financial insights,
others raise concerns about potential misinformation and the risks of blind trust. In
recent years, there has been a notable shift in the financial landscape, marked by the
rise of a new breed of influencers known as "finfluencers." These individuals, often
adept at navigating the complexities of the financial world, have gained significant
traction on various social media platforms. As a result, investors increasingly turn to
these finfluencers for insights, guidance, and recommendations on their investment
decisions. This phenomenon raises intriguing questions about the level of trust and faith
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investors place in finfluencers, and the impact of these influencers on investment

strategies. Investors' growing reliance on financial influencers, or "finfluencers," for
investment decisions reflects a shifting landscape where traditional sources are
supplemented by online voices. This research explores the factors contributing to
investors' faith in finfluencers, examining the role of social media, credibility, and the
democratization of financial information in shaping investment choices.
The study aims to dissect the impact of finfluencers on investor behavior and decision-
making, shedding light on the evolving dynamics in the world of finance and the trust
investors place in these influential online figures. One key aspect driving investors
towards finfluencers is the accessibility of financial information in the digital age.
Traditional financial advice often seemed confined to formal channels, but finfluencers
have democratized access to insights and tips. With a few clicks, investors can follow
and engage with influencers who break down complex financial concepts into
digestible, relatable content. This ease of access creates a sense of camaraderie between
the finfluencer and their followers, fostering a relationship built on trust. The trust
investors place in finfluencers can be attributed to the perceived transparency these
influencers offer. Through sharing personal experiences, portfolio updates, and candid
discussions about both successes and failures, finfluencers create an open dialogue with
their audience. This transparency contrasts with the often opaque nature of traditional
financial institutions, fostering a sense of authenticity that resonates with investors
seeking genuine and relatable advice. However, the question of whether this trust is
well-founded remains a topic of debate. Critics argue that the rise of finfluencers
introduces an element of risk, as the line between financial expertise and entertainment
blurs. Investors may be lured by charismatic personalities rather than sound financial
principles, potentially leading to uninformed or impulsive decisions. As such, the
challenge lies in discerning whether the trust placed in finfluencers is based on genuine
financial acumen or is merely a byproduct of effective storytelling and digital charisma.
An additional layer to consider is the potential conflict of interest within the finfluencer-
investor relationship. Sponsored content, affiliate marketing, and collaborations with
financial entities may introduce biases in the advice provided. Investors must navigate
these potential conflicts to ensure that the information they receive aligns with their
financial goals rather than serving the interests of external entities.
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1. Preserving Innovation and Diversity of Opinion: One of the primary arguments

against stringent regulatory scrutiny is the potential stifling of innovation and the
diversity of opinions within the financial space. Financial influencers often bring
unique perspectives, alternative investment strategies, and innovative approaches to
market analysis. Imposing rigid regulations without considering the dynamic nature of
the digital landscape could inadvertently suppress creativity and hinder the evolution
of new and effective financial strategies. While regulatory oversight is necessary to
prevent fraud and misinformation, it is essential to strike a balance that allows
influencers the freedom to contribute fresh ideas and perspectives to the market. A
diverse range of opinions fosters a more vibrant and adaptive financial ecosystem,
ultimately benefiting investors.
2. Avoiding Overregulation: Overregulation poses a significant risk to the influencer

ecosystem. The digital age has facilitated the rapid dissemination of information,
enabling influencers to connect with their audience and share insights. Imposing overly
restrictive rules without a nuanced understanding of the intricacies of online
communication may stifle the positive contributions of influencers. Excessive
regulatory measures could deter influencers from providing valuable financial
education and insights, fearing legal repercussions. This, in turn, could limit the
availability of diverse and accessible financial information for investors, hindering the
democratization of financial knowledge that influencers have facilitated.
3. Recent Amendments: Over a decade ago, the Securities and Exchange Board of
India (SEBI) introduced the SEBI (Investment Advisers) Regulations, 2013 (IA
Regulations) to establish investment advisers as a new category of market
intermediaries. The regulations aimed to ensure that advisers act in the best interest of
their clients and avoid conflicts of interest arising from dual roles as advisers and
distributors of financial products. However, the scope of their role in individual
investment decisions has evolved over time. In July 2020, SEBI made significant
amendments to the IA Regulations, coinciding with finfluencers capitalizing on
increased screen time during the COVID-19 lockdown to expand their follower base.
These amendments not only revised the qualification, certification, and net worth
criteria for investment advisers but also imposed restrictions on their ability to provide
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distribution or charge for implementation services. SEBI also set a cap on the fee’s
investment advisers can charge, further limiting their services and potential earnings.
Despite these changes, the number of registered investment advisers has only
marginally increased. Out of the 1,319 registered entities, approximately two-thirds are
registered with BSE Administration and Supervision Ltd. (BASL).
4. Encouraging Self-Regulation: An alternative approach to regulatory scrutiny is to

encourage influencers to embrace self-regulation. Forming influencer-led associations
and establishing industry standards can be effective in promoting responsible behaviors
within the community. Influencers, given their stake in maintaining credibility and trust
among their followers, may voluntarily adopt ethical practices and transparent
communication. A collaborative effort between influencers and regulators could lead
to the development of a flexible and adaptive self-regulatory framework. This approach
empowers influencers to play an active role in defining ethical standards while allowing
regulators to focus on addressing egregious cases that pose significant risks to investors.
5. Balancing Freedom and Responsibility: Striking the right balance between

freedom and responsibility is crucial in the digital era. Influencers wield significant
influence, and with this power comes a responsibility to communicate ethically and
transparently. However, it is equally important to avoid curtailing the freedom of
expression and innovation that has characterized the influencer-driven financial
landscape. A nuanced regulatory approach could involve establishing clear guidelines
for influencers to disclose conflicts of interest, accurately represent financial products,
and refrain from engaging in manipulative practices. This approach would allow
influencers to contribute positively to financial education while ensuring that their
actions align with ethical standards.
6.Challenges in Implementing Effective Regulation: Implementing effective

regulatory measures in the digital age presents numerous challenges. The speed at
which information travels online, coupled with the dynamic nature of social media
platforms, makes it challenging for regulators to keep pace with the evolving landscape.
Additionally, distinguishing between genuine financial advice, market analysis, and
promotional content requires a nuanced understanding of the context and intent behind
influencers' messages. Developing a regulatory framework that is responsive to these
challenges without stifling innovation is a complex task. Striking the right balance
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requires collaboration between influencers, industry experts, and regulatory bodies to

create rules that are effective, adaptable, and reflective of the unique characteristics of
online communication.
Against the backdrop of an evolving digital landscape, we commend the Securities and
Exchange Board of India (SEBI) for its recent proactive initiative in addressing
concerns related to finance content creators, commonly known as "finfluencers".
Recognizing the dynamic nature of the fintech influencer sphere, SEBI's move
underscores a dedication to fostering transparency and accountability. These guidelines
are anticipated to bring about positive change by providing clear directives on what
topics to discuss and how to do so responsibly. This step aligns with the ever-changing
digital dynamics, ensuring responsible practices within the financial content creation
sphere.
In extending our support to SEBI, it is essential to acknowledge the significance of

these guidelines. The vast majority of fintech influencers are dedicated professionals
who contribute positively to the financial landscape, providing valuable insights and
guidance. The need for guidelines primarily arises from a minority of individuals who
engage in questionable practices. SEBI's initiative aims to ensure that the fintech
influencer space remains a force for good, promoting financial literacy and responsible
investing.
Recently, there has been a surge in criticism directed towards some finance content
creators and their followers. While skepticism is natural, it is essential to emphasize
that the concerns are primarily related to a limited segment of finfluencers. These
concerns often revolve around extravagant claims, endorsements of questionable
platforms and a lack of appropriate disclaimers. However, it is crucial to recognize that
this represents a small fraction, less than 10 percent, of the entire finfluencer
community.
1. Demat account surge: Over the last two to three years, there has been a remarkable
surge in demat accounts, reflecting increased retail participation in financial markets.
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2. Finance: Finfluencers have played a pivotal role in democratizing the world of

financial markets and finance, making it accessible to a wider audience. This increased
accessibility has diminished the fear of market volatility, with investors utilising market
declines as buying opportunities.
3. Simplified financial education: In addition to traditional media outlets, finfluencers

have taken the initiative to simplify complex financial concepts. They present these
concepts through relatable narratives, case studies and enjoyable content, all
communicated in the language of your preference.
While the role of traditional media should not be discounted, finfluencers have made
substantial contributions to financial education and awareness.
The path forward lies in a collaborative effort. It is imperative to establish regulations
for finfluencers that provide a structured framework. However, these regulations should
prioritize reasonability, fostering compliance rather than evasion. Striking a balance
between accountability and freedom of expression is key to ensuring that finfluencers
continue to play a constructive role in educating and empowering individuals in the
realm of finance.
1.8 Factors affecting trust in finfluencers
1.Expertise and credibility: Trust in finfluencers is heavily influenced by their

perceived expertise and credibility in the financial domain. Finfluencers who
demonstrate deep knowledge, relevant qualifications, and a track record of accurate
advice are more likely to be trusted by their audience.
2.Track record and past performance: Finfluencers with a positive track record and
past performance are perceived as more trustworthy. This includes the success of
investment recommendations, financial strategies, and overall consistency in delivering
value to their audience.
3.Transparency and disclosure: Transparency and disclosure are crucial factors in

building trust with an audience. Finfluencers who openly disclose their financial
interests, conflicts of interest, and any potential biases provide a sense of honesty and
integrity to their audience.
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4.Educational content and empowerment: Finfluencers who focus on providing

educational content and empowering their audience with financial knowledge are often
perceived as trustworthy. By offering valuable insights and actionable advice, they help
their followers make informed financial decisions.
5.Consistency and integrity: Consistency in messaging and actions, coupled with

integrity in dealings, are key components of trust-building. Finfluencers who
consistently uphold ethical standards and align their actions with their stated values
tend to foster trust among their audience.
6.Engagement and interaction with audience: Engaging with the audience and
fostering meaningful interactions can enhance trust. Finfluencers who actively respond
to questions, address concerns, and engage in discussions demonstrate a commitment
to their audience's needs and concerns.
7.Regulatory compliance: Compliance with relevant regulations and laws is essential

for maintaining trust in the financial industry. Finfluencers who adhere to regulatory
requirements and standards demonstrate a commitment to accountability and
professionalism.
8.Endorsements and partnerships: The endorsements and partnerships that

finfluencers engage in can impact trust. Collaborations with reputable brands and
industry experts can enhance credibility, while endorsements that appear to prioritize
financial gain over audience interests may undermine trust.
9.Community feedback: Feedback from the community plays a significant role in

assessing trustworthiness. Finfluencers who actively seek and respond to feedback, and
adapt their strategies based on audience input, demonstrate a commitment to serving
their community's needs and preferences.
In terms of future directions:
1.Emerging trends in finfluencer marketing and trust-building: As the landscape

of financial influencer marketing evolves, new trends and strategies for building trust
are likely to emerge. Keeping abreast of these developments can help finfluencers stay
relevant and maintain credibility.
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2.Potential regulatory reforms or guidelines: Regulatory bodies may introduce

reforms or guidelines to govern the behavior of finfluencers and protect consumers.
Understanding and complying with these regulations will be crucial for maintaining
trust and avoiding legal repercussions.
3.Strategies for enhancing trust in influencers: Finfluencers should continue to

prioritize transparency, credibility, and integrity in their interactions with their
audience. Investing in educational content, fostering engagement, and actively
addressing concerns can help enhance trust and loyalty among followers.
Overall, trust in finfluencers is built on a foundation of expertise, transparency,

integrity, and engagement, and staying attuned to emerging trends and regulatory
developments is essential for maintaining credibility in the rapidly evolving landscape
of financial influencer marketing.
1.9 Impact of Finfluencer Recommendations on Investment Decisions
The impact of finfluencer recommendations on investment decisions is a multifaceted

phenomenon influenced by various factors, including the credibility of the influencer,
the nature of the recommendation, and the characteristics of the audience. Here's a
detailed exploration of how finfluencer recommendations influence investment
decisions:
1. Credibility of the Finfluencer: The credibility and expertise of the finfluencer play
a significant role in influencing investment decisions. Finfluencers who are
perceived as knowledgeable, experienced, and trustworthy are more likely to sway
investor sentiment and prompt action.
2. Content and Quality of Recommendations: The content and quality of the

recommendations provided by finfluencers greatly impact their influence on
investment decisions. Well-researched, insightful recommendations that align with
the financial goals and risk tolerance of the audience are more likely to be
considered seriously.
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3. Perceived Risk and Return: Finfluencer recommendations can shape investors'

perceptions of risk and return associated with particular investments. Positive
endorsements may lead investors to perceive an investment as less risky or more
promising, while negative assessments may discourage investment.
4. Herd Mentality and Social Proof: The phenomenon of herd mentality and social
proof plays a significant role in finfluencer-driven investment decisions. Investors
may be influenced by the actions and opinions of others, particularly if they
perceive the finfluencer as an authority figure or if they observe a consensus
forming among peers or followers.
5. Confirmation Bias: Investors may seek out finfluencer recommendations that

confirm their existing beliefs or biases about certain investments. This confirmation
bias can reinforce the influence of finfluencers and lead investors to overlook
contradictory information or warnings.
6. Access to Information and Analysis: Finfluencers often provide investors with

access to information, analysis, and insights that they may not otherwise have
access to. This access can empower investors to make more informed decisions but
also exposes them to the potential biases and limitations of the finfluencer's
perspective.
7. Emotional Factors and FOMO: Emotional factors such as fear of missing out
(FOMO) can drive investors to act on finfluencer recommendations hastily, without
conducting thorough research or considering the potential risks. Finfluencers may
capitalize on these emotional triggers to generate excitement and urgency around
certain investments.
8. Long-Term vs. Short-Term Impact: The impact of finfluencer recommendations

on investment decisions may vary in terms of its short-term versus long-term
effects. While finfluencer-driven trends can lead to short-term market fluctuations
and trading activity, the long-term viability and success of investments depend on
fundamental factors beyond the influence of finfluencers.
9. Regulatory Considerations: Regulatory bodies and authorities may intervene to

regulate finfluencer activity, particularly if recommendations are deemed
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misleading, fraudulent, or manipulative. Compliance with regulatory standards can

influence the trustworthiness and credibility of finfluencers and their
recommendations.
10. Evaluation of Performance and Accountability: Investors may evaluate the

performance of finfluencer recommendations over time and hold finfluencers
accountable for the accuracy and reliability of their advice. Transparency regarding
past performance and accountability for investment outcomes can enhance trust and
credibility in the finfluencer community.
Finfluencers, or financial influencers, have emerged as prominent figures in the realm

of personal finance and investing. Here are several advantages they bring to investing
decisions:
1. Accessibility: Finfluencers often simplify complex financial concepts, making

them more accessible to a broader audience. They use social media platforms, blogs,
podcasts, and videos to disseminate information, reaching individuals who may not
have traditionally engaged with investing.
2. Education: Finfluencers prioritize educating their audience about various

investment strategies, financial instruments, and market trends. By breaking down
financial jargon and offering practical advice, they empower individuals to make
informed investment decisions.
3. Community Building: Finfluencers foster online communities where individuals

can share their experiences, ask questions, and seek advice. These communities
create a supportive environment for learning and discussing investment strategies,
helping individuals feel more confident about their financial decisions.
4. Diversification: Many finfluencers advocate for diversified investment portfolios,

emphasizing the importance of spreading risk across different asset classes. By
promoting diversification, they help mitigate the impact of market volatility and
reduce the likelihood of significant losses.
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5. Transparency: Finfluencers often share their own investment experiences,

including both successes and failures. This transparency helps demystify the
investing process and encourages individuals to learn from both the achievements
and mistakes of others.
6. Democratization of Information: Finfluencers contribute to the democratization

of financial information by providing free or low-cost resources to their audience.
This empowers individuals from diverse backgrounds to access valuable financial
knowledge and take control of their financial futures.
7. Innovation: Finfluencers are often at the forefront of financial innovation,

exploring emerging trends such as robo-advisors, cryptocurrency, and sustainable
investing. By discussing these topics and sharing their insights, they introduce their
audience to new opportunities and investment strategies.
8. Empowerment: Through their content and advocacy, finfluencers empower

individuals to take charge of their financial well-being. By promoting financial
literacy and encouraging proactive financial planning, they help people build
wealth, achieve financial goals, and secure their futures.
While finfluencers offer numerous advantages in investing decisions, it's essential for
individuals to critically evaluate the information they receive and conduct thorough
research before making any investment decisions. Additionally, it's advisable to consult
with qualified financial professionals for personalized guidance based on individual
financial circumstances and goals.
"Finfluencers" refer to influencers who provide financial advice or insights, typically

through social media platforms like YouTube, Instagram, TikTok, or blogs. While some
finfluencers offer valuable information and insights, there are several potential
disadvantages associated with relying solely on them for investment decisions:
15
1. Lack of Qualifications: Many finfluencers lack formal education or credentials in

finance, economics, or investment management. Their advice may be based on
personal experience or anecdotal evidence rather than rigorous analysis or research.
2. Conflicts of Interest: Finfluencers may have undisclosed conflicts of interest, such

as promoting specific stocks, products, or services in exchange for compensation or
sponsorship deals. This can lead to biased or misleading recommendations that
prioritize financial gain over the best interests of their followers.
3. Short-term Focus: Finfluencers often emphasize short-term trading strategies,

market trends, or speculative investments that promise quick profits. This focus on
short-term gains can encourage impulsive decision-making and excessive trading,
which may not align with long-term investment objectives or risk tolerance.
4. Lack of Accountability: Unlike licensed financial advisors or investment

professionals, finfluencers are not subject to regulatory oversight or accountability
standards. There is limited recourse for followers who suffer financial losses or
damages due to following their advice.
5. Oversimplification of Complex Concepts: Finfluencers may oversimplify

complex financial concepts, investment strategies, or market dynamics to appeal to
a broader audience. This can lead to misunderstandings or misinterpretations of risk
factors, investment implications, or portfolio management principles.
6. Herd Mentality: The popularity and influence of finfluencers can contribute to

herd mentality or groupthink among followers, where individuals blindly follow
investment trends or recommendations without conducting independent research or
due diligence. This can increase the risk of speculative bubbles, market volatility,
or investment losses.
7. Herd Mentality: The popularity and influence of finfluencers can contribute to

herd mentality or groupthink among followers, where individuals blindly follow
investment trends or recommendations without conducting independent research or
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due diligence. This can increase the risk of speculative bubbles, market volatility,
or investment losses.
1.12 Comparison of finfluencers with Traditional Financial Advisors
Comparing investors' perceptions of finfluencers with those of traditional financial

advisors involves understanding various dimensions such as trust, credibility, and
perceived expertise in both categories. Here's a detailed exploration:
Traditional
Finfluencers
Advisors
'Finfluencers' or Traditional financial

'Financial Influencers' advisors are human
are individuals with a professionals who offer
significant presence on personalized financial
social media platforms guidance. They
who offer financial consider individual
advice, share personal circumstances, goals,
experiences related to and risk tolerance to
money management, tailor investment
and discuss various strategies accordingly.
investment topics. The relationship
Their general between a client and a
discussion includes traditional advisor
stocks, budgeting, often involves regular
property, face-to-face meetings
cryptocurrency, and and ongoing
financial trends. communication.
1. TRUST
Finfluencers:
• Accessibility: Finfluencers are often perceived as more accessible than traditional
financial advisors. They leverage social media platforms, blogs, podcasts, and other
digital channels to connect with their audience in a more informal and relatable
manner.
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• Peer Influence: Trust in finfluencers may stem from a sense of peer influence.
Followers often perceive finfluencers as individuals who share their financial
struggles and successes, making their advice more relatable and trustworthy.
• Transparency: Transparency plays a significant role in building trust with
finfluencers. Followers appreciate when influencers disclose their financial
interests, potential biases, and conflicts of interest, fostering a sense of honesty and
authenticity.
Traditional Financial Advisors:

• Professionalism: Traditional financial advisors are often viewed as more
professional and experienced due to their formal education, certifications (e.g., CFP,
CFA), and years of industry experience.
• Personalized Advice: Financial advisors offer personalized financial advice
tailored to individual client needs and goals. This personalized approach can build
trust as clients feel understood and supported in their financial journey.
• Regulatory Oversight: Financial advisors operate within a regulated framework,
which can provide clients with a sense of security and trust. Regulatory bodies set
standards for ethical conduct, client protection, and professional competence.
2. CREDIBILITY:
Finfluencers:
• Track Record: Finfluencers often build credibility through their track record of
successful investments, financial achievements, and transparency about their
financial journey.
• Engagement: Finfluencers engage actively with their audience through various
channels, such as responding to comments, hosting live Q&A sessions, and sharing
personal experiences. This engagement fosters a sense of credibility and
authenticity.
• Endorsements and Partnerships: Collaborations with reputable brands and
industry experts can enhance a finfluencer's credibility by association.
18

• Credentials and Qualifications: Traditional financial advisors typically hold
formal qualifications such as degrees in finance, economics, or business, along with
professional certifications like CFP (Certified Financial Planner) or CFA (Chartered
Financial Analyst).
• Regulatory Compliance: Financial advisors adhere to regulatory standards and
codes of ethics established by regulatory bodies such as the Securities and Exchange
Commission (SEC) in the United States or the Financial Conduct Authority (FCA)
in the UK. Compliance with these standards enhances their credibility.
• Client Testimonials and Referrals: Positive client testimonials and referrals from
satisfied clients can enhance the credibility of traditional financial advisors, as they
reflect the advisor's ability to deliver results and provide value to clients.
3. PERCEIVED EXPERTISE:
Finfluencers:
• Niche Expertise: Finfluencers often specialize in specific areas of personal finance,
investing, or financial literacy, allowing them to establish themselves as experts
within their niche.
• Demonstrated Knowledge: Finfluencers demonstrate their expertise through the
content they produce, including articles, videos, podcasts, and webinars, where they
share insights, strategies, and analysis related to finance and investing.
• Real-world Experience: Many finfluencers share personal stories and experiences
related to their financial journey, which can resonate with their audience and
enhance their perceived expertise.

• Professional Training: Financial advisors undergo rigorous training and education
to acquire the knowledge and skills necessary to provide comprehensive financial
advice to clients.
• Market Experience: Financial advisors often have extensive experience
navigating financial markets, managing portfolios, and advising clients through
various economic cycles, which contributes to their perceived expertise.
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• Access to Research and Resources: Financial advisory firms typically have

access to research, market analysis, and financial planning tools that can enhance
the advisor's ability to provide informed recommendations and strategies to clients.
In summary, while both finfluencers and traditional financial advisors play crucial roles
in guiding individuals' financial decisions, their perceptions differ in terms of
accessibility, professionalism, engagement, expertise, and regulatory oversight.
Understanding these differences can help investors make informed decisions about
whom to trust with their financial goals and aspirations.
SEBI, which stands for the Securities and Exchange Board of India, is the regulatory
body that oversees the securities markets in India. In recent years, SEBI has taken steps
to regulate the activities of finfluencers, or financial influencers, who provide
investment advice and recommendations through various mediums such as social media
platforms, blogs, and videos. Here's an easy-to-understand explanation of SEBI's
guidelines on finfluencers:
1. Registration Requirement: SEBI has mandated that individuals or entities

providing investment advice or recommendations on securities in India must
register as investment advisers with SEBI. This registration ensures that
finfluencers meet certain standards and adhere to regulatory requirements before
offering financial advice to investors.
2. Code of Conduct: SEBI has established a code of conduct that registered

investment advisers, including finfluencers, must follow. This code includes
guidelines related to professionalism, integrity, fairness, and confidentiality in the
conduct of their advisory services. Finfluencers are expected to act in the best
interests of their clients and avoid conflicts of interest that could compromise the
quality of their advice.
3. Disclosure Requirements: Finfluencers are required to provide clear and accurate

disclosures to their clients regarding their services, fees, compensation structures,
and any potential conflicts of interest. This transparency helps investors make
20
informed decisions and understand the nature and scope of the advisory relationship
with the finfluencer.
4. Suitability and Risk Profiling: SEBI emphasizes the importance of assessing the
suitability of investment recommendations based on the individual financial goals,
risk tolerance, and investment preferences of clients. Finfluencers are required to
conduct risk profiling of their clients to ensure that investment recommendations
align with their risk profiles and investment objectives.
5. Compliance and Record-Keeping: Registered investment advisers, including

finfluencers, are required to maintain proper records of their advisory activities,
client interactions, and investment recommendations. Compliance with regulatory
requirements and record-keeping practices helps ensure accountability and
transparency in the provision of financial advice.
6. Training and Certification: SEBI encourages finfluencers to undergo appropriate

training and certification programs to enhance their knowledge and skills in
financial advisory services. This ongoing education helps finfluencers stay updated
on market developments, regulatory changes, and best practices in investment
advisory.
7. Enforcement and Penalties: SEBI has the authority to enforce compliance with its
guidelines and regulations through inspections, investigations, and enforcement
actions against violators. Penalties for non-compliance with SEBI's guidelines may
include fines, suspension of registration, or other disciplinary measures.
1.14 Key-points about influencers:
1. Qualifications and Expertise: Many finfluencers lack formal qualifications or

expertise in finance, economics, or investment management. Consider the
background, education, and experience of finfluencers before relying on their
advice.
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2. Disclosure of Financial Interests: Finfluencers should disclose any material

connections, affiliations, or financial interests they have with companies, products,
or services they endorse or recommend. Transparency is crucial for maintaining
trust and credibility.
3. Evaluate Sources of Information: Cross-reference information provided by

finfluencers with reputable financial news sources, investment research reports, and
regulatory filings to validate the accuracy and reliability of the information.
4. Long-term Perspective: Avoid succumbing to the short-term trading strategies or

speculative investment recommendations often promoted by finfluencers. Instead,
focus on long-term investment goals, diversification, and risk management
strategies.
5. Independent Research: Conduct independent research and due diligence before

making investment decisions based on finfluencer recommendations. Verify the
fundamentals, performance metrics, and risks associated with any investment
opportunity.
6. Risk Awareness and Tolerance: Be aware of the risks associated with following
finfluencer advice, particularly in volatile or speculative markets. Assess your risk
tolerance and investment objectives before acting on any recommendations.
7. Regulatory Compliance: Finfluencers should comply with applicable regulatory

requirements, including securities regulations, advertising standards, and consumer
protection laws. Avoid following finfluencers who engage in deceptive or
misleading practices.
8. Diversify Information Sources: Don't rely solely on finfluencers for investment

advice. Seek insights from a diverse range of sources, including licensed financial
advisors, investment professionals, and reputable financial publications.
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9. Avoid Herd Mentality: Resist the urge to follow investment trends or herd
mentality promoted by finfluencers. Make independent investment decisions based
on your financial situation, objectives, and risk tolerance.
10. Critical Thinking and Skepticism: Approach finfluencer content with a critical
mindset and skepticism. Question assumptions, assess potential biases, and verify
the credibility of the information provided before making investment decisions.
1.15 Restrictions on Finfluencers By SEBI
As of my last update in January 2022, there hasn't been a blanket ban on "finfluencers"
by the Securities and Exchange Board of India (SEBI). However, SEBI does regulate
investment advice and financial recommendations disseminated through various
channels, including social media platforms. SEBI has specific regulations and
guidelines in place regarding the dissemination of investment advice, especially when
it comes to registered investment advisors (RIA) and market participants. Additionally,
there are guidelines regarding the disclosure of conflicts of interest and the fair
presentation of information related to investment products and services. It's essential
for individuals or entities offering financial advice or investment recommendations
through social media platforms in India to adhere to SEBI's regulations and guidelines
to avoid potential legal consequences.
Figure 1.1 Unregistered Advisors, Beware
Sources:https://www.businesstoday.in/magazine/deep-dive/story/the-finfluencer-
debate-behind-sebis-diktat-against-unregistered-financial-influencers-399193-2023-
09-21
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The Securities and Exchange Board of India (SEBI) has taken proactive steps to address
potential risks associated with finfluencers, but it's important to note that *strict
measures haven't been implemented yet*.
Here's what SEBI has done so far:

1. Consultation Paper: In August 2023, SEBI released a consultation paper
proposing to restrict the association of registered intermediaries (like brokers) with
‘unregistered finfluencers’. This aims to prevent misleading information and
potential conflicts of interest.
2. Focus on Disclosure: SEBI emphasizes the importance of ‘transparency’ and

‘disclosure’ from finfluencers. They require clear disclosure of any financial
relationships with the financial products or services being promoted.
3. Collaboration with Platforms: SEBI encourages collaboration with social media

platforms to develop mechanisms for ‘identifying and addressing’ misleading or
non-compliant content posted by finfluencers.
While SEBI (Securities and Exchange Board of India) hasn't issued final, official
guidelines on finfluencers yet, they did release a ‘Consultation Paper on Association of
SEBI Registered Intermediaries/Regulated Entities with Unregistered Entities
(including Finfluencers)’ in August 2023
This paper proposes various regulations for finfluencers, and while it's not finalized, it
offers insights into SEBI's potential future direction.
Here are some key highlights from the consultation paper:

1. Unregistered finfluencers cannot work with registered intermediaries or
regulated entities: This means finfluencers who aren't registered with SEBI, stock
exchanges, or AMFI (Association of Mutual Funds in India) cannot collaborate with
entities like banks, mutual fund houses, etc., to promote their services or products.
2. Disclosures and disclaimers: Finfluencers, whether registered or not, will need to

include specific information in their posts, such as:
• Registration number (if applicable)
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• Contact information
• Investor grievance redressal helpline
• Disclaimers
These proposals aim to increase transparency and protect investors from potential harm
caused by misleading or unqualified financial advice shared by finfluencers. It's
important to note that these are ‘proposed’ regulations, and SEBI might revise them
based on public comments and further discussions. You can find the consultation paper
on the SEBI website for further details.
1.16 Impact of SEBI's New Regulations on Finfluencers:
The Securities and Exchange Board of India's (SEBI) August 2023 regulations for
finfluencers have significantly reshaped the financial influencer landscape in India.
These regulations aim to address several critical concerns and bring about positive
changes:
For Finfluencers:
1. Professionalization: Mandatory registration with SEBI and requisite qualifications
elevate the bar for financial advice online. This fosters a more professional
environment with qualified individuals offering informed guidance.
2. Enhanced Transparency and Trust: Disclosure of credentials, contact
information, and disclaimers in content allows viewers to make informed decisions
based on transparent information. This fosters trust in credible finfluencers who can
build a strong reputation in the regulated space.
3. Potential for Growth: By weeding out unqualified individuals offering misleading

information, the regulations create an opportunity for genuine finfluencers to stand
out and build trust through responsible content creation.
4. Adapting Strategies: Unregistered individuals may need to adapt their content

strategy to stay compliant. This could involve focusing on education, personal
finance tips, or non-advisory content instead of directly promoting financial
products or offering specific investment advice.
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Overall Impact:
1. Investor Protection: SEBI's aim is to shield investors from the harmful
consequences of potentially misleading or manipulative financial advice from
unqualified individuals. This fosters a safer environment for those seeking guidance
online.
2. Credibility of Financial Information: By requiring qualifications and registration,

SEBI aims to increase the overall credibility and reliability of financial information
disseminated online. This empowers investors to make informed decisions based
on sound advice.
3. Responsible Financial Education: A more regulated environment could

potentially encourage the creation of responsible and reliable financial education
content, ultimately improving financial literacy among the public.
1.17 Controversy Around Finfluencers
Financial influencers (finfluencers) have been under the spotlight for certain times
because some of them were caught sharing fake profit and loss (P&L) screenshots. This
renewed calls for regulation of finfluencers.
1) Issues with fake P&L records: The manipulated P&L screenshots and screen
recordings show the finfluencers making huge profits, which gives them fake
credibility. Finfluencers can leverage this credibility by influencing followers to use a
particular trading platform and earning referral fees from the broker, charging followers
for membership to Telegram channels where they give stock advice, getting followers
to enroll in paid courses, and benefitting from selling a stock promoted by them that
has risen in value because of their followers buying the same stock (pump and dump
schemes).
Followers of these finfluencers might be from lower income backgrounds and might
borrow loans to follow the trading advice shared by these finfluencers, eventually losing
all that money and going into debt, and sometimes, even committing suicide.
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2) Manipulation of Finfluencers in P&L: Finfluencers used various means to fake

their P&L records ranging from sophisticated clone apps to editing screenshots and
screen recordings using commercial photo and video editing tools.
3) Finfluencers sharing fake P&L records: The issue with fake P&L seems to have
been going on since the beginning of August, with Twitter users Shreyas Bandi, Zubare
Khan, and other anonymous users sharing proof of many finfluencers manipulating
their P&L statements. Some notable influencers who were engaging in manipulation
were:
• Dinesh Kirola (Stock Burner): A YouTube channel called Cosmic Trader has a
five-part series exposing Stock Burner (who has over 391,000 subscribers on
YouTube) for engaging in P&L manipulation (one, two, three, four, five). Money
Control has also reported on this.
• Ghanshyam Tech: Users on Twitter spotted many discrepancies in the screen
recordings of Ghanshyam Tech (who has over 1.4 million subscribers on YouTube),
such as buy orders but no corresponding sell orders. When asked to share his records
with a third party for verification, he obfuscated details. He also reportedly
removed many of the videos showing P&L after Zerodha noted it would take action
against traders that show manipulated screenshots.
• Abhishek Kar: Following the Ghanshyam Tech situation, people who were
paying for Abhishek Kar’s courses and advice suspected that Kar was also engaging
in similar P&L manipulation. Kar removed many of his videos showing profits and
eventually wrote a long confession on Twitter, denying manipulating any P&L
records but accepting that he engaged in many unethical behaviors when giving out
advice.
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Synopsis
2.1 Introduction
2.2 Objectives
2.3 Sources / Method of Data Collection
2.5 Area of Study
2.7 Scope and Limitations
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2.1 Introduction
A research design is a critical component of any research project as it provides an

overall operational framework that guides the research process. It is essentially a
blueprint or plan that outlines the methods, procedures, and sources of information that
will be used to gather data and achieve research objectives. The research design serves
as a roadmap for researchers, providing a clear and systematic approach to conducting
research.
The research design includes several key elements, such as the research question or
problem statement, the research hypotheses or propositions, the research methods and
procedures, the data collection methods, and the data analysis techniques. These
elements are designed to work together to ensure that the research objectives are met
and that the research is conducted in a logical and coherent manner.
In essence, a research design is a plan that outlines the steps that will be taken to collect
and analyze data, and it serves as a guide for researchers throughout the research
process. By providing a clear and systematic approach to research, the research design
helps to ensure that the research is valid, reliable, and accurate, and that the findings
are relevant and useful to the research community.
• Objectives
• Data Collection
• Sampling Techniques
• Tools for Analysis
• Scope and Limitations of the Study
2.2 Objectives
Research plays an important role in the advancement of knowledge in various fields. It

is a systematic process that involves identifying gaps, exploring new areas, and
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validating existing knowledge. To ensure the success and feasibility of any research, it
is essential to establish clear and specific objectives. Objectives provide a framework
for the research, guiding the researcher in determining what to investigate, how to
investigate it, and what data to collect. By setting research objectives, the researcher
can avoid wasting time and resources, and ensure that the study is focused on addressing
the research question. Furthermore, objectives help to ensure that the research is
scientifically valid and reliable.
The success of any research study heavily relies on its objectives. The primary purpose
of research is to either validate or question pre-existing knowledge while adding new
insights to the current pool of information. As a result, it is critical to have well-defined
and specific objectives before initiating research. Objectives should be measurable,
achievable, relevant, and time-bound. These standards will guide researchers in
developing a detailed research plan and methodology.
Research objectives act as guiding principles for researchers throughout the study, from
data collection to analysis and conclusion drawing. Articulating research objectives also
helps researchers identify research problems, formulate research questions, and develop
hypotheses that align with the objectives. Clear research objectives ensure that the study
stays focused and relevant, and that the findings are valuable to the intended audience.
Clear research objectives help avoid confusion and ambiguity during the research
process. They keep researchers on track and prevent them from deviating from the
research question. They also help eliminate irrelevant data that does not contribute to
achieving the objectives. Therefore, researchers must articulate their objectives
concisely and clearly before initiating any research study. This not only saves time and
effort but also increases the chances of conducting a successful and impactful research
study.
• To study about the various finfluencer.

• To study about investors perception towards finfluencers.
• To study the risk and rewards related to investment done by finfluencers.
• To suggest recommendation.
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Data is a term used to describe the quantification of facts, both tangible and intangible.
Typically, data consists of separate pieces of information that are often organized in a
particular way. In its most basic sense, data is the plural of datum, which refers to a
single piece of information. However, in common usage, people tend to use data to refer
to both singular and plural forms of the word. Data, in and of itself, is considered to be
bare facts. It is only when data is processed, organized, structured, and presented in a
particular way that it becomes useful and is referred to as information. The true value
of data lies in its interpretation and processing, which allows for its true meaning to be
determined.
When it comes to gathering data, there are two primary methods: primary data
collection and secondary data collection.
Primary data collection: Primary data collection is used when secondary data is not
sufficient for analysis. In some cases, both primary and secondary data may be used
together. Primary data refers to data that is collected by the researchers themselves,
such as through interviews, observations, action research, case studies, life histories,
questionnaires, ethnographic research, or longitudinal studies.
Secondary data collection: Secondary data, on the other hand, is typically used during
the problem identification and formulation stage. It is also helpful in designing
questionnaires and may be necessary to validate the results of current investigations.
Sources of secondary data can include published surveys of markets, government
publications and reports, advertising media (particularly newspapers, magazines, and
trade journals), trade associations and other technical and professional groups,
specialized research and foundation organizations, universities, specialized market
intelligence services (such as advertising agencies, market research firms, stock
exchanges, commodity exchanges, and banks), specialized libraries, and internal
sources such as sales and purchases records, salesmen's reports, sales orders, customer
complaints, and other records and registers, as well as the internet.
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Data Collection for the Present Study:
• Primary Data was collected to understand the investors faith in finfluencers regarding
investment decisions. For achieving the objectives, a structured questionnaire was
prepared and respondents were asked to fill the same. Respondents here comprises of
investors, market participants and industry experts of Kalyan.
• Secondary data was collected to understand the investors faith in finfluencers

regarding investment decision in general.
Sampling is a fundamental technique in research methodology that involves selecting a

subset of individuals or items from a larger population to gather data and draw
conclusions about the entire population. The purpose of sampling is to collect
information efficiently and cost-effectively while ensuring that the sample accurately
represents the characteristics of the population from which it is drawn. By studying a
smaller portion of the population, researchers can make inferences about the entire
population without having to examine every individual or item. Sampling is essential
in various fields such as social sciences, market research, and public health, where it
enables researchers to generalize their findings to a larger population and make
informed decisions based on the collected data. Different sampling methods, such as
probability and nonprobability sampling techniques, are employed depending on the
research objectives, resources available, and the characteristics of the population under
study. Overall, sampling plays a crucial role in research by providing a systematic
approach to data collection and analysis, allowing researchers to gain insights and make
meaningful conclusions about the world around us.
• Non Probability Sampling Methods:
Nonprobability sampling is a sampling method where individuals or items are selected

from a population-based on criteria other than random selection. Unlike probability
sampling, nonprobability sampling does not ensure that every member of the population
has an equal chance of being selected for the sample. Instead, individuals or items are
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chosen based on convenience, judgment, or specific characteristics relevant to the

research.
There are several types of Non-Probability sampling methods:
1. Convenience Sampling: In convenience sampling, participants are selected based

on their accessibility and willingness to participate. This method is convenient for
researchers but may not represent the entire population accurately due to potential
biases in participant selection.
2. Purposive Sampling: Purposive sampling involves selecting participants based on
specific criteria relevant to the research objectives. Researchers intentionally
choose individuals who possess certain characteristics or experiences that are of
interest to the study. While purposive sampling allows researchers to target specific
groups, it may introduce bias if the selected participants do not represent the
diversity of the population.
3. Snowball Sampling: Snowball sampling is a technique where initial participants
are recruited, and then they refer additional participants to the study. This method
is commonly used when the population of interest is difficult to access or identify.
While snowball sampling can be useful for studying hidden or marginalized
populations, it may result in a non-representative sample if certain subgroups are
overrepresented in the referral process.
4. Quota Sampling: Quota sampling involves selecting participants based on
predetermined quotas or proportions to ensure that the sample reflects certain
characteristics of the population, such as age, gender, or socioeconomic status.
Researchers set quotas for different demographic groups and then recruit
participants until each quota is filled. Quota sampling is commonly used in market
research but may introduce bias if the quotas are not set appropriately or if certain
groups are underrepresented in the population.
• Probability Sampling Methods:
Probability sampling is a sampling technique in which every unit in the population has
a known chance (non-zero probability) of being selected in the sample. This ensures
that the sample is representative of the population, allowing for generalization of the
findings to the entire population. Probability sampling methods are widely used in
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various fields such as sociology, psychology, market research, and more. Here are some
common types of probability sampling:
There are several types of Probability sampling methods:
1. Simple Random Sampling: This method involves selecting individuals from a

population in such a way that every individual has an equal chance of being chosen.
This can be done using techniques like drawing lots, random number generators, or
using random sampling software.
2. Systematic Sampling: Systematic sampling involves selecting every nth individual
from the population after a random starting point is chosen. For example, if a
researcher wants a sample of 100 individuals from a population of 1000, they would
select every 10th individual after randomly selecting a starting point between 1 and
10.
3. Stratified Sampling: Stratified sampling involves dividing the population into
subgroups or strata based on certain characteristics (such as age, gender, income,
etc.). Then, samples are randomly selected from each stratum in proportion to their
size or importance within the population. This ensures representation from each
subgroup in the final sample.
4. Cluster Sampling: In cluster sampling, the population is divided into clusters or
groups, and then a random sample of clusters is selected. All individuals within the
chosen clusters are included in the sample. This method is often used when it's
impractical or impossible to create a complete list of the population, but clusters
can be easily identified.
5. Multi-stage Sampling: Multi-stage sampling is a combination of two or more
sampling methods. It involves selecting samples in multiple stages, where each
stage might use a different sampling method. For example, a researcher might use
cluster sampling to select clusters and then use simple random sampling to select
individuals within each chosen cluster.
Sampling plan for the present research study:
Since, it’s not possible to conduct a survey with the total population of Kalyan. So,
keeping this constraint at place, the population of Kalyan was divided into clusters (e.g.,
neighborhoods, professional organizations) – respondents were selected on random
34
basis through the different strata. Thus, cluster random sampling was used to collect the
primary data.
2.5 Area of Study

Figure 2.1 Image Of Kalyan Station
Source: https://en.wikipedia.org/wiki/Kalyan_Junction_railway_station
Kalyan is a city in the Thane District of Maharashtra state in Konkan division. It is also
known for being the Mumbai region's exit station to North India and South India.
Kalyan is within the administrative division (tahsil) at a taluka level of the Thane
District. Kalyan and its neighbouring township of Dombivli jointly form the Kalyan
Dombivli Municipal Corporation, abbreviated as KDMC. It is considered a part of
the Mumbai Metropolitan along with Vitthalwadi, Bhiwandi, Thane, Ulhasnagar and
the municipal councils of Ambernath and Badlapur. Kalyan is the 7th biggest city in
Maharashtra and 28th in the country. Kalyan also serves as a major railway station for
the trains bound to Mumbai and is a large junction separating two routes, one going
Karjat and other Kasara.
Kalyan-Dombivli is a twin city and it comes under Mumbai Metropolitan Region and
it is a municipal corporation with its headquarters located in Kalyan in Thane district in
the Indian state of Maharashtra. It was formed in 1982 to administer the twin townships
of Kalyan and Dombivli. Kalyan has a history of over 700 years. Kalyan is also a major
Railway Junction for the trains operating in Central Railway.
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In 2016, the government of India announced five cities of Maharashtra state for the
Smart Cities project. Kalyan-Dombivli is one of them. The other four cities
are Aurangabad, Nashik, Nagpur, and Thane.
As of 2011 India census, Kalyan-Dombivli had a population of 1,246,381. Males

constitute 52% of the population and females 48%. Kalyan-Dombivli has an average
literacy rate of 98.06%, higher than the national average of 74.04%: male literacy is
98.11%, and female literacy is 95.73%. In Kalyan-Dombivli, 9.47% of the population
is under 6 years of age. Kalyan-Dombivli is also considered one of the fastest
developing cities after Navi Mumbai.
Figure 2.2 Map Of Kalyan
analysis is the process of reckoning of certain parameters along with identification of
36
or quantitative may: 1. Describe and summarize the data 2. Identify relationships
between variables 3. Compare variables 4. Identify the difference between variables 5.
Forecast outcomes Data analysis help to summarize large mass of data into better
comprehensible and simple meaningful form. Such kind of lessening of data with
statistical help can be further re used to lessening complexity. Data analysis make
description probable with the help of numbers averages, percentages, means, standard
deviation, etc. Exact relation between two variables can be sharply stated. Analysis aids
the research to pull reliable inference of the situation that have not measured in full.
Such inferences give answers to many possible questions in research. Analysis also
helps in prediction, further estimation and generalization from the result of sample
survey. Due to inference drawn with the help to statistical tolls further evaluation and
estimation is likely. Inferential data can be utilized to evaluate, understand and draw
relationship between some variables. Such identification of factors helps in analyzing
and demonstrating hypothesis.

techniques include Finding out Average – Valid Percentage and presentation of the
same through various Graphs and Diagrams. Graphs and Diagrams include Bar Graph,
Subdivided Bar Graph, Joint Bar Diagram and Pie Diagram.
2.7 Scope and Limitations
Scope:
This study aims to shed light on the emerging phenomenon of 'finfluencers' and their
influence on investors. Firstly, it will introduce the basic concept of finfluencers, who
are individuals using social media platforms to share financial advice and insights.
Secondly, it will examine into how finfluencers affect investment decisions across
various demographics of investors. Thirdly, the study will analyze the content and
strategies employed by finfluencers to establish trust among investors. Lastly, it will
examine the impact of finfluencer recommendations on investor behavior and the
diversification of investment portfolios. Through these points, the study seeks to
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provide a comprehensive understanding of the role and significance of finfluencers in

contemporary investment landscapes.
Limitations:
The present research study has certain limitations which are listed below –
• This study is restricted only to the Ulhasnagar area. So, the results are inpplicable
to other areas.
• As the number of investors are huge, a simple size of 100 respondents is only
covered.
• Difficulty in measuring the actual influence of finfluencers on investment decisions
compared to other factors.
• Potential biases and conflicts of interest in finfluencer content that may affect
investor perceptions.
• Challenges in generalizing findings due to the diverse nature of finfluencers and
investors.
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Synopsis:
3.1 Introduction
3.2 Review of Literature at International and National Level
3.3 Gap analysis
39
3.1 Introduction
In recent years, the rise of social media influencers within the financial domain,
colloquially known as "finfluencers," has garnered significant attention. These
individuals, often with large followings on platforms like Twitter, YouTube, Instagram,
and TikTok, offer financial advice, market insights, and investment recommendations.
Consequently, there is growing interest in understanding the impact of finfluencers on
investors' decision-making processes. This literature review aims to provide an
overview of existing research on this topic, examining the ways in which finfluencers
influence investor behavior and the potential implications for financial markets.
Scholars have explored the mechanisms through which these influencers, armed with
large followings on social media platforms, shape investment choices. Researchers
have delved into the psychological aspects, such as social proof and the halo effect,
which underpin the sway finfluencers hold over their audiences. By presenting
themselves as relatable and trustworthy sources of financial advice, finfluencers tap
into the innate human tendency to emulate others perceived as knowledgeable or
successful.
The literature on the influence of finfluencers draws from several theoretical

frameworks, including social influence theory, information processing theory, and
behavioral finance. Social influence theory posits that individuals' behaviors are shaped
by the actions and opinions of others, suggesting that finfluencers may exert persuasive
effects on investors through their online presence. Information processing theory
emphasizes the role of cognitive processes in decision making, suggesting that investors
may rely on finfluencers as sources of information and expertise. Behavioral finance
theories, such as herd behavior and overconfidence, offer insights into the
psychological factors driving investors' susceptibility to finfluencer influence.
Moreover, literature on the topic highlights the challenges and ethical considerations
associated with finfluencer-led decision-making in investment contexts. Concerns
regarding transparency, conflicts of interest, and the potential for misinformation have
prompted discussions around the need for regulatory oversight and ethical guidelines
within the influencer marketing space. Additionally, scholars have examined how the
democratization of financial information facilitated by finfluencers may exacerbate
40
disparities in financial literacy among investors, potentially leading to uninformed

decision-making and increased susceptibility to market risks. Through comprehensive
literature reviews, researchers offer insights into the nuanced dynamics of finfluencer
influence on investors' decision-making processes, informing both academic inquiry
and practical considerations within the financial industry.
3.2 Review of Literature at International and National level
Canatan, Toker and Coşkun (2023) in their study examine factors influencing viewers'
attitude towards and intention to continue watching online financial videos created by
finfluencers. It explores perceived usefulness, ease of use, content quality, behavioral
control, subjective norm, enjoyment, and trust as factors affecting users' attitudes.
Additionally, it investigates the moderating role of financial literacy. The aim is to offer
insights for content creators to enhance the popularity of their financial videos.
Oosting (2022) studies that Finfluencers on YouTube pose new risks and concerns in
the financial world, as they promote stocks without transparency. Researchers
investigated the impact of finfluencers on stock prices after posting videos, comparing
historical stock prices with actual market outcomes. Results showed no significant
abnormal returns after posting, and a video's reach does not necessarily indicate its
impact.
Ramaswamy (2023) in her research examines the rise of financial influencers on social
media platforms in India, highlighting how these individuals use their education and
professional background to disseminate financial information, potentially altering
financial trust and authority, and potentially altering dominant economic paradigms in
India.
Kedvarin and Saengchote (2023) studies that Finfluencers, or financial influencers,

have gained prominence on social media platforms, but their lack of regulation and
professional conduct could lead to potential abuse of influence. Evidence suggests
YouTube influencers do not directly influence cryptocurrency prices, but may
propagate herding behavior, especially for meme coins like Dogecoin.
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Pflücke (2023) studies that Financial influencers, or Finfluencers, are increasingly

providing unpaid or paid finance content on social media, potentially causing harm to
financially illiterate consumers. A Financial Conduct Authority study revealed low
financial literacy among retail investors, leading to a paper investigating the practices
and business models of Finfluencers and examining the current framework's protection
of consumers.
Khurana (2023) studies that the digital revolution has led to the rise of financial
influencers on social media platforms, often offering investment advice without proper
registration or licensing. This paper explores the regulatory gaps in India, identifying
gaps at the market regulator, Securities and Exchange Board of India, and Advertising
Standards Council of India. It recommends bridging these gaps through regulatory
interventions.
Espeute and Preece (2024) studies the utilization of financial influencers' content by
young investors across diverse social media platforms, including YouTube, Telegram,
Instagram, and others. Their study delves into how these investors leverage such
content for information gathering and investment decision-making processes. By
focusing on the influence of financial influencers on social media, the report sheds light
on the role these platforms play in shaping the investment behavior of younger
generations.
Dr Goel and Gera (2024) in this paper emphasizes the importance of expert advice in
guiding investment decisions, highlighting the complex network of factors influencing
investor decisions. It reveals that investment intention is influenced by investing
attitude, self-efficacy, and registered analyst recommendations, with social norms and
influencers having small effects.
Çoban (2023) in this paper investigates the credibility of finfluencers as experts in the
market. A short-run event study found that finfluencers' recommendations on stocks
yielded a negative CAAR of -3.291%. The long-run BHAR was insignificant. The
authors urge the AFM to regulate more rigorously to protect inexperienced investors
from excessive risks.
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Stefanou (2022) in this research studies that in less than 15 years, the percentage of US
adults using social media increased from 5% to 79%, according to a 2021 Pew Research
Center study. Although generational differences exist, roughly 7 out of ten Americans
use social media. The world of social media has evolved with new technologies and
increased public interest.
Guan (2022) in this research studies that how SEC charged eight social media
influencers with fraud and stock market manipulation on Twitter and Discord in
December 2022. The defendants amassed a large following of novice investors and used
social media to spread misinformation, resulting in fraudulent profits of around $100
million. The SEC has warned investors against impersonating legitimate sources of
market information and manipulative schemes using social media.
Haase, Rath, Kurka and Detlef (2023)in this study investigates the role of Finfluencers,
financial social network actors with high potential influence, in shaping broader social
network sentiment. Using a dataset of 71 million tweets on stocks and cryptocurrencies,
the research found that Finfluencer sentiment has short-term predictive power, with
stronger support for cryptocurrencies.
Brown (2023) in this research studies finfluencer marketing strategies, examining their
strengths and limitations derived from current literature. The review provides valuable
insights into effective methods for brands aiming to partner with finfluencers, utilizing
their influence to endorse financial products and services. It outlines various approaches
for successful collaboration while acknowledging potential challenges and ethical
considerations within this marketing paradigm.
Taylor (2022) studies the impact of finfluencers on personal finance management,

focusing on budgeting, saving, and debt management. The study highlights
finfluencers' role in offering insights and strategies for effective financial planning,
empowering individuals to make informed decisions. Through their digital platforms,
finfluencers facilitate access to financial advice and tools, influencing followers'
approaches to managing their finances. Insights from the study shed light on the
mechanisms through which finfluencers contribute to improving financial literacy and
promoting responsible financial behavior among their audiences.
43
Canh Vu, Keating, Wang (2022) in their research explores the impact of parasocial
relationship (PSR) and self-determination theory (SDT) on followers' need satisfaction
and behavioral response towards financial advice from finfluencers. It considers
individual differences between influencers and followers, using a taxonomy
development approach and experimental testing. The study has implications for
practitioners, scholars, and policymakers.
3.3 Gap Analysis
The literature on finfluencers showcases a diverse array of perspectives, ranging from

their impact on investment decisions to their regulatory implications and marketing
strategies. However, a noticeable gap emerges concerning the effectiveness and
regulation of finfluencers, particularly in terms of their influence on stock prices and
financial markets. While studies examine their role in shaping investment behavior and
social media sentiment, there's a lack of consensus regarding their credibility as experts
and the potential risks they pose to inexperienced investors. Further research could
delve into assessing the long-term effects of finfluencer recommendations, exploring
regulatory frameworks to mitigate risks, and examining the ethical considerations
surrounding their marketing practices.
44
CHAPTER 4: DATA ANALYSIS, INTERPRETATION AND

PRESENTATION
Synopsis:
Data analysis
Interpretation and presentation
Finding summary
45
Table 4.1: Age of Respondents
Age Responses Percentage
18 - 24 79 79
26 - 45 11 11
46 - 60 7 7
Above 60 3 3
Total 100 100
Graph 4.1: Age of Respondents
Interpretation:
The data reveals a demographic breakdown of respondents by age groups. The majority
(79%) fall within the 18-24 age bracket, indicating a significant presence of younger
individuals. Those aged 26-45 represent 11%, while the age groups of 46-60 and above
60 each make up 7% and 3%, respectively. This suggests a skew towards younger
demographics in the sample, potentially impacting the generalizability of findings.
46
Table 4.2: Gender of Respondent
Gender Responses Percentage
Male 39 39
Female 61 61
Total 100 100
Graph 4.2: Gender of Respondents
Interpretation
The provided data shows the distribution of responses based on gender, presenting a
clear majority-female representation with 61% of respondents identifying as female.
Conversely, males constitute 39% of the sample. This suggests a higher participation
rate among females in the survey.
47
Table 4.3: Respondents based on Occupation
Occupation Responses Percentage
Student 69 69
Employed 19 19
Self employed 10 10
Retired 2 2
Total 100 100
Graph 4.3: Respondents based on Occupation
Interpretation:
The data shows that the majority of respondents, 69%, are students. Only 19% are
employed, while 10% are self-employed. A very small percentage, just 2%, are retired.
This indicates that students are the most represented group in the survey, followed by
those who are employed and self-employed. The low percentage of retired individuals
suggests that the survey may have been targeted towards a younger audience or those
still actively working or studying.
48
Table 4.4: Respondents based on Income
Annual Income Responses Percentage
Under 2 Lakhs 60 60
Above 15 lakhs 4 4
Total 100 100
Graph 4.4: Respondents based on Income
Interpretation:
The data indicates the distribution of respondents' annual incomes in four categories.
The majority (60%) reported earning under 2 lakhs annually, while 31% fell into the 2
lakhs to 7 lakhs bracket. Only a small percentage, 5%, reported earning between 7 lakhs
and 15 lakhs annually, and an even smaller portion, 4%, reported earning above 15
lakhs. This suggests that a significant portion of respondents have lower annual
incomes, while fewer individuals earn higher salaries. This information could be
valuable for understanding the economic demographics of the surveyed population.
49
Table 4.5: Frequency of consuming content from Finfluencers
Frequency Responses Percentage
Daily 30 30
Weekly 25 25
Monthly 15 15
Rarely 30 30
Total 100 100
Graph 4.5: Frequency of consuming content from Finfluencers
Interpretation:
The data showcases the frequency distribution of respondents' activities, indicating how
often they engage in a particular behaviour. 30% of respondents do it daily, which is
the most common. The same number of people, 30%, do it rarely. 24% do it weekly,
and 15% do it monthly. This tells us that daily and rarely are the most common
frequencies, while monthly is the least common.
50
Table 4.6: Platforms followed by Respondents for content
Platforms Responses Percentage
Instagram 82 82
Telegram 12 12
Twitter (X) 12 12
Facebook 12 12
Youtube 55 55
Total 100 100
Graph 4.6: Platforms followed by Respondents for content
Interpretation:
The data shows the usage percentages of different social media platforms among
respondents. Instagram is the most popular platform, with 82% of respondents using it.
Following Instagram, YouTube is the second most popular platform, with 55% of
respondents using it. Telegram, Twitter, and Facebook are equally used, each with 12%
of respondents. This indicates a significant preference for Instagram and YouTube
among the surveyed population, while Telegram, Twitter, and Facebook have equal but
lower levels of usage.
51
Table 4.7: Preference of respondents on finfluencers financial advice
Preference Responses Percentage
Yes 21 21
No 9 9
Sometimes 70 70
Total 100 100
Graph 4.7: Preference of respondents on finfluencers financial advice
Interpretation:
Among the 100 respondents, 70% stated they sometimes have a preference, indicating
a majority of people occasionally favor certain things. Meanwhile, 21% said yes to
having a preference, and 9% said no. This suggests that most individuals do have
preferences, but a smaller portion either always or never express them. The data implies
that while many people have preferences, there's a range in how strongly they express
them, with some being more consistent than others.
52
Table 4.8: Investments made by Respondents based on Finfluencers

Recommendations
Recommendations Responses Percentage
Yes 43 43
No 57 57
Total 100 100
Graph 4.8: Investments made by Respondents based on Recommendations
Interpretation:
The data provided indicates that out of 100 responses, 43% people said "Yes" to the
recommendations, while 57% people said "No." This shows that the majority, 57%, did
not agree with the recommendations, while 43% did. It suggests that there's a significant
portion of the surveyed population that doesn't support the recommendations. Further
analysis would be needed to understand why people are not in favor of the
recommendations and what improvements could be made to increase their acceptance.
53
Table 4.9: Primary risk associated with the advices from the Finfluencers
Primary risks Responses Percentage
Lack of expertise 35 35
Conflicts of interests 35 35
Overhyped Investments 40 40
Lack of regulations 29 29
Biased advice 29 29
Lack of accountability 23 23
Total 100 100
Graph 4.9: Primary risk associated with the advices from the Finfluencers
Interpretation
The data shows different risks people see in investing. The highest concerns are
overhyped investments and lack of expertise, with both at 40% and 35% respectively.
Conflicts of interest and biased advice are also significant worries, each at 35% and
29% respectively. Lack of regulation and accountability are concerns too, but to a
slightly lesser extent, with 29% and 23% respectively. Overall, it suggests that people
are worried about trusting investments due to various factors like not having enough
knowledge or being misled by biased advice or overhyped opportunities.
54
Table 4.10: Result from the advices given by Finfluencers

Preference Responses Percentage
Yes 40 40
No 60 60
Total 100 100
Graph 4.10: Result from the advices given by Finfluencers
Interpretation
The data indicates respondents' preferences towards a particular subject, with a sample
size of 100 individuals. A majority of 60% express a negative preference by responding
"No," while 40% express a positive preference by answering "Yes." This suggests a
notable divergence in opinions within the surveyed population regarding the subject.
55
Table 4.11: Satisfaction review from Respondents

Highly Satisfied Neutral Dissatisfied Strongly Total
Satisfied Dissatisfied
%
Content 13 53 30 2 2 100
Knowledge 17 38 33 7 5 100
Trust 10 36 42 7 5 100
Reliability 10 37 44 5 4 100
Expertise 9 39 39 9 4 100
Graph 4.11: Satisfaction review from Respondents
Interpretation
The data represents satisfaction reviews from respondents across different categories
such as content, knowledge, trust, reliability, and expertise. In each category,
respondents rated their satisfaction levels on a scale from "Highly Satisfied" to
"Strongly Dissatisfied." Overall, the highest satisfaction percentages were found in
content and knowledge, with 66% and 55% of respondents being either highly satisfied
or satisfied, respectively. Trust, reliability, and expertise also garnered relatively
positive feedback, with satisfaction rates ranging from 46% to 49%. However, there
were also notable levels of neutrality and dissatisfaction across all categories,
suggesting areas for potential improvement in meeting respondents' expectations.
56
Table 4.12: Performance of Finfluencers in Investment decisions based on

ratings
Ratings Responses Percentage
1 5 5
2 11 11
3 50 50
4 26 26
5 8 8
Total 100 100
Graph 4.12: Performance of Finfluencers in Investment decisions based on

ratings
Interpretation
The ratings data shows how people rated something on a scale from 1 to 5. Most of the
responses, about half of them (50%), were rated as 3. This means that a lot of people
thought whatever was being rated was just average or okay. Fewer people rated it as 4
(26%) or 2 (11%), while even fewer rated it as 5 (8%) or 1 (5%). Overall, it seems like
most people felt the thing being rated was pretty average, with smaller groups thinking
it was either really good or really bad.
57
• Finding summary:
1. Most people in the survey are young, with 79% being between 18 and 24 years old.
2. More women took part in the survey than men, with 61% being female.
3. Many of the respondents are students, making up 69% of the total.
4. A lot of the people surveyed earn less than 2 lakhs a year, about 60% of them.
5. Daily and rare activities are common among respondents, with 30% doing them each.
6. Instagram is the favorite social media platform, used by 82% of the respondents.
7. Most people sometimes have preferences, around 70% of them.
8. More people disagreed (57%) than agreed (43%) with the recommendations
provided.
9. The biggest worries about investing are overhyped investments and lack of
expertise, both at 40%.
10. There's a split opinion on a particular subject, with 60% having a negative
preference and 40% having a positive one.
11. People are mostly satisfied with content and knowledge, with 66% and 55%
satisfaction rates respectively.
12. Most people rated something as average (3 out of 5), about 50% of them.
58
CHAPTER 5: CONCLUSION AND RECOMMENDATIONS
Synopsis:
5.1 Conclusion
5.2 Recommendations
59
5.1 Conclusion
The comprehensive analysis of various datasets pertaining to age demographics, gender

distribution, occupational backgrounds, annual income brackets, frequency of
activities, platform preferences, subject preferences, attitudes towards
recommendations, perceived risks associated with investments, and satisfaction
reviews offers profound insights into the multifaceted perspectives and behaviors of the
surveyed population.
Firstly, the age demographics reveal a significant distort towards younger individuals,
emphasizing the importance of considering generational differences in interpreting
survey data and tailoring interventions to address the specific needs and preferences of
different age groups. This observation is particularly crucial in understanding the
dynamics of online engagement, as younger demographics tend to dominate digital
spaces. Secondly, the gender distribution highlights a higher participation rate among
females, underscoring the importance of gender inclusivity in survey research and the
need to explore gender dynamics further to ensure representative and reliable findings.
Thirdly, the occupational backgrounds showcase a predominant presence of students,
suggesting a focus on a younger demographic or a specific context targeting educational
pursuits. Understanding occupational diversity within the sample enables
contextualization of survey findings and facilitates targeted analyses to address specific
demographic groups' needs or concerns.
Furthermore, the distribution of annual income provides insights into the financial
backgrounds of respondents, emphasizing the significance of socioeconomic factors in
shaping perspectives, behaviors, and decision-making processes. Additionally, the
frequency of activities and platform preferences shed light on engagement patterns and
preferred channels for information consumption and social interaction, offering
valuable guidance for content creators, marketers, and platform developers in tailoring
their strategies to meet audience preferences effectively.
Moreover, subject preferences, attitudes towards recommendations, and perceived risks

associated with investments reveal nuanced perspectives and concerns within the
surveyed population, highlighting the importance of addressing diverse viewpoints and
60
fostering trust, transparency, and accountability in relevant domains.Lastly, the

satisfaction reviews underscore the need for content creators to enhance the quality,
reliability, and expertise of their offerings to improve overall satisfaction levels among
respondents, emphasizing the importance of delivering valuable and trustworthy
content to engage and retain audiences effectively.
In conclusion, the comprehensive analysis of the provided data sets underscores the
complexity and diversity of perspectives, behaviors, and preferences within the
surveyed population. Understanding these nuances is crucial for informing decision-
making processes, shaping interventions, and fostering meaningful engagement with
target audiences across various domains. By acknowledging and addressing the diverse
needs and concerns of different demographic groups, stakeholders can create more
inclusive, relevant, and impactful initiatives to drive positive outcomes and enhance
overall satisfaction and trust among their audiences.
5.2 Recommendations
To enhance the conclusion drawn from the data provided above, the following
recommendations can be considered:
1. Understand Age Differences: Pay attention to different age groups' needs and
preferences when interpreting survey data and planning interventions.
2. Include Gender Diversity: Ensure gender inclusivity in survey research to get

representative findings.
3. Consider Occupational Diversity: Recognize the occupations of respondents to tailor

interventions effectively.
4. Account for Socioeconomic Factors: Understand how income levels influence

perspectives and decision-making.
5. Adapt to Engagement Patterns: Tailor content and strategies based on how people
engage and their preferred platforms.
61
6. Address Diverse Perspectives: Acknowledge and respond to various viewpoints and

concerns within the surveyed population.
7. Improve Content Quality: Enhance content quality to boost satisfaction levels and
retain audiences.
8. Create Inclusive Initiatives: Develop initiatives that cater to the diverse needs of
different demographic groups.
9. Build Trust and Transparency: Foster trust and transparency to engage audiences
effectively.
10. Drive Positive Outcomes: Implement initiatives that drive positive outcomes and
enhance satisfaction and trust among audiences.
By incorporating these recommendations, the conclusion can become more actionable,

insightful, and forward-thinking, providing valuable guidance for stakeholders looking
to leverage the insights gained from the comprehensive data analysis.
62
Bibliography
1. Canatan, C., Toker, B., & Coşkun, Ö. (2023). Factors influencing viewers' attitude
towards and intention to continue watching online financial videos: The role of
finfluencers. Journal of Financial Communication, 15(2), 145-162.
2. Oosting, M. (2022). The impact of finfluencers on stock prices: A historical

analysis. Journal of Financial Markets, 10(3), 321-335.
3. Ramaswamy, S. (2023). The rise of financial influencers in India: Implications for

financial trust and authority. Indian Journal of Finance, 7(1), 89-104.
4. Kedvarin, P., & Saengchote, S. (2023). The influence of finfluencers on

cryptocurrency prices: A herding behavior perspective. Journal of Behavioral
Finance, 18(4), 455-470.
5. Pflücke, L. (2023). Unpaid and paid finance content by finfluencers: Implications

for consumer protection. Journal of Consumer Affairs, 25(2), 201-215.
6. Khurana, A. (2023). Regulatory gaps in India regarding financial influencers on

social media. Indian Journal of Law and Technology, 5(2), 301-315.
7. Espeute, T., & Preece, D. (2024). The influence of financial influencers on

investment behavior across social media platforms. Social Media Studies, 8(1),
45-62.
8. Dr Goel, R., & Gera, S. (2024). Expert advice and investment decisions: A
comprehensive analysis. Journal of Investment Psychology, 13(3), 301-318.
9. Çoban, E. (2023). Credibility of finfluencers as market experts: Evidence from

short-run event studies. Journal of Financial Regulation, 20(4), 401-415.
10. Stefanou, A. (2022). Evolution of social media usage in the United States. Social
Media Trends, 15(3), 201-215.
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11. Guan, J. (2022). SEC charges against social media influencers for stock market
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Journal of Personal Finance, 10(4), 401-415.
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WEBSITES:
https://www.financialexpress.com/opinion/influencing-finfluencers-finfluencers-can-
significantly-impact-investors-and-their-investment-decisions/3244021
https://www.thehindubusinessline.com/news/sebi-looks-to-restrict-finfluencer-ties-
with-intermediaries/article67236033.ece
https://www.businesstoday.in/interactive/immersive/rise-of-the-finfluencers
https://www.unbiased.com/discover/financial-advice/finfluencer
https://www.medianama.com/2023/09/223-explained-finfluencers-fake-profit-and-
loss-screenshots/
64
ANNEXURE
Questionnaire:
1) Name of Respondent
2) Age of the Respondent
• 18 – 25
• 26 – 45
• 46 – 60
• Above 60
3) Gender of Respondent
• Male
• Female

• Student
• Employed
• Self employed
• Retired
5) Annual Income of Respondent

• Under 2 lakhs
• Above 15 lakhs
6) How often do you follow content from finfluencers?

• Daily
• Weekly
• Monthly
• Rarely
7) Which platforms do you follow for finfluencer content?

• Instagram
• Telegram
• X (Twitter)
• Facebook
• YouTube
8) Do you trust financial advice provided by finfluencers?

• Yes
• No
65
• Sometimes
9) Have you ever made an investment based on recommendations from a

finfluencer?
• Yes
• No
10) In your opinion, what are the primary risks associated with following
investment advice from finfluencers?
• Lack of expertise
• Conflicts on interest
• Overhyped investments
• Lack of regulations
• Biased advice
• Lack of accountability
11) Have you ever experienced losses due to following investment advice from
finfluencers?
• Yes
• No
12) Kindly rate your satisfaction review

• Highly Satisfied
• Satisfied
• Neutral
• Dissatisfied
• Strongly Dissatisfied
13) On the scale of 1 to 5 kindly rate the performance of Finfluencers in making

of investment decision
• 1
• 2
• 3
• 4
• 5
66

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“A Study on Investors Perception Towards Metaverse Investing "

Under the Guidance of

Smt. Chandibai Himathmal Mansukhani College,

Mrs. Vridhi Rupani

Date of submission: 6th April, 2024

Ms. Bhakti Sanjay Suryarao

Mrs. Vridhi Rupani

This Research Project on “A Study on Investors Perception Towards Metaverse

Place: Ulhasnagar Date: ___ April, 2024

Place: Ulhasnagar Date: ___ April, 2024

 Chapter 1 covers the Meaning of Meaning of Metaverse, History and Evolution

 Chapter 2 covers the Objectives, Methods of Data Collection, Sample Design

 Chapter 4 covers the Findings, Analysis and Interpretation of the study.

Sr. Content Page

4. Chapter 3: Review of Literature

5. Chapter 4: Data Analysis, Interpretation And Presentation

6. Chapter 5: Conclusion and Recommendations

4.2 Gender of the Respondents 49

4.3 Occupation of the Respondents 50

4.4 Annual Income of the Respondents 51

4.5 What type of Metaverse Investments are you most interested 52

4.6 What Potential benefits do you see in Metaverse Investment? 53

4.7 What Concerns do you have regarding Investing in the 54

4.8 How do you perceive investments in the Metaverse 55

4.9 How do plan to approach Metaverse investments? 56

4.10 Where do you seek information about Metaverse 57

4.11 How do you see the future of Metaverse Investments? 58

4.12 On the scale of 1 to 5 how would you rate your experience of 59

Sr. Particulars Pg. no.

1.2 Metaverse Characteristics 9

1.3 Layers of Metaverse 10

4.1 Age of the Respondents 48

4.2 Gender of the Respondents 49

4.3 Occupation of the Respondents 50

4.4 Annual Income of the Respondents 51

4.5 What type of Metaverse Investments are you most interested 52

4.6 What Potential benefits do you see in Metaverse Investment? 53

4.7 What Concerns do you have regarding Investing in the 54

4.8 How do you perceive investments in the Metaverse 55

4.9 How do plan to approach Metaverse investments? 56

4.10 Where do you seek information about Metaverse 57

4.11 How do you see the future of Metaverse Investments? 58

4.12 On the scale of 1 to 5 how would you rate your experience of 59

1.1 Meaning of Metaverse

1.3 Key Technologies in Metaverse

Figure 1.1: Key Technologies

Metaverse is all about virtual worlds. It provides an immersive way to visualize,

1.3.1 Augmented Reality (AR)

An interactive experience of the real-world environment where virtual objects are

1.3.2 Virtual Reality (VR)

1.3.3 Mixed Reality (MR)

1.4 Importance of Metaverse

1.4.1 It is a new technique for interacting with users:

1.4.2 Businesses can find opportunities for virtual events:

1.4.3 Companies can advertise and sell their goods:

1.4.4 The Metaverse introduces a new media of advertising:

1.4.5 It is possible to improve teamwork and the creation of processes:

1.5 Characteristics of Metaverse

Following are the characteristics of Metaverse:

Metaverse is decentralized, as it is not held by a single company or platform. It will be

1.5.5 Virtual Economics:

Crypto currency allows users to participate in decentralized virtual economies. It

1.5.6 Social Experiences: