A Project Report on a Study of Investors Perception Towards Investment in Equity Market -1

A project report on a study of Investors Perception towards

Investment in Equity Market with special reference

ShareKhan Limited, Mangalore

Submitted by

Karen Sylvia Pais

Reg no: 111290715

Under the valuable guidance of

Ms. Sumathi

Faculty of MBA department

In partial fulfillment of the requirements

For The award of the degree of

Master’s in Business Administration (MBA)

SHRI DHARMASTHALA MANJUNATHESHWARA POST GRADUATE CENTRE FOR MANAGEMENT STUDIES AND RESEARCH

MANGALORE – 575003

2012-2013

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DECLARATION

I hereby declare that this project report titled a study on investors’ perception towards investment

in equity market, SHAREKHAN LIMITED, MANGALORE in partial fulfillment of the Masters

in Business Administration (MBA), Mangalore University, is my original work and has not been

submitted for the award of any other degree, diploma, fellowship or any other similar title or

prizes.

Place: Mangalore Karen Sylvia Pais

Date:

ACKNOWLEDGEMENT

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As I present this project report, I take this opportunity to express my gratitude to all those who

extended their co-operation to me in bringing out this work to a successful culmination.

I owe my sincere thanks to Dr. Devaraj K, Director; SDM PG CENTRE FOR

MANAGEMENT studies AND RESEARCH for the encouragement received from him and all

the staff members of the department.

I would like to express my heart full gratitude to my project guide Ms. Sumathi for providing the

valuable guidance and insight during the course of the project

I owe a deep gratitude to Mr. Adarsh kumar A, Branch In Charge of ShareKhan Limited for

giving the opportunity to do my project and all the staff members for their co-operation and

support.

Place: Mangalore Karen Sylvia Pais

Date:

CONTENTS

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CHAPTER

NO.

TITLE PAGE

NO.

1 INTRODUCTION 5-8

2 INDUSTRY PROFILE 9-12

3 COMPANY PROFILE 22-23

4 INVESTORS PERCEPTION TOWARDS INVESTMENT IN

EQUITY MARKET39-47

5 DATA ANAYLSIS AND INTERPRETATION 48-68

6 FINDINGS AND SUGGESSTIONS 69-72

7 CONCLUSION 73

BIBLIOGRAPHY

INTRODUCTION

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This project report entitled ‘Investors Perception towards investment in equity market focuses on

the investors’ perception towards investment in various sectors regarding equity market, their

preference of investment in equity market, and scope for potential growth of equity market.

Methodology of the Study

This study is one of the best instruments to identify the investing pattern of investors to invest in

various sectors and to study different sectors of Capital market. The study is careful inquiry or

examination to discover new information and relationship and to expand and to vary existing

knowledge. It always starts with question or any problem and finds answer of problem by using

scientific method. It gives complete knowledge about any problem or question.

Objectives of the Study

Every study is conducted within for some specific purpose or to solve some problem. When any

study is conducted it has some primary objective that helps to solve the main problem whereas a

secondary objective helps to solve peripheral problems. The primary and secondary objectives of

this project are:

Primary Objective

The primary objective of carrying out this research is:-

“Investors Perception towards Investment in Equity Market”

Secondary Objective

To find out the most preferred investment option in the Equity Market.

To find out how investors are motivated for investing in Equity Market.

To study the general investment criteria of people.

To know the people’s time horizon for investing in Equity Market and to know the rate of

return expected by them.

To study the interest of people for further investment in Equity Market.

To assess the satisfaction level of investors in Equity Market.

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To classify the different sectors on the basis of investors’ behavior regarding investing in

Equity Market.

To identify the factors which influence the investors while investing in various selected

sectors

Project Design

Project Design is the plan structure and strategy if investigation conceived so as obtain to

question and to control variance. A project design is the master plan or model for acquiring the

information needs for solving the problem. It decides the source of information and methods for

gathering the data. A questionnaire and other forms are tested to use collection of data.

The project design has broadly three categories. They are:-

Exploratory Study

Descriptive Study

Causal Study

Descriptive Study

In this report, Descriptive Study Design is used for conducting survey on “Investors

perception for investing in Equity Market”.

Descriptive Study, also known as statistical study describes data and characteristics about the

population or phenomenon being studied. Descriptive study answer the question who, what,

where, when and how. This study is complex and determines high degree scientific skill to study

the problem. The description is used for frequencies, averages and other statistical calculations.

Often the best approach, prior to writing descriptive study, is to conduct a survey investigation.

Qualitative study often has the aim of description and studies may follow-up with examinations

of why the observations exist and what the implications of the findings are about.

In short Descriptive Study deals with everything that can be counted and studied.

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Data Collection Method

Data collection usually takes place early on in an improvement project and is often formalized

through a data collection plan which often contains the following data collection methods.

The source of data collection method is as follows:-

Primary Data

Secondary Data

Primary Data

Primary Data means data collected directly from first-hand experience. Means data collected for

the first time by any person for any study. There are many methods of collection primary data

and the main methods include:-

Questionnaire Method

Interview Method

Focus Group Method

Observation Method

Case-studies Method

Diaries Method

The Questionnaire Method is used for the purpose of collecting the Primary Data.

Secondary Data

Secondary Data means data which are collected by any one for a particular study purposes and

which are used by others for different purpose.

Secondary Data for the study is collected through company brochures, websites, books and

magazines.

Sampling Plan

Sampling is the process to analyze the whole population by analyzing a part of it. The

effectiveness of the report depends on the sample size selected from the population. Here, target

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population is decided who are the actual and potential investors, each sample has the chance to

be selected on an equal basis and this study has been conducted through surveying the whole of

the equity market. A sample of 100m investors is taken for the purpose of study.

Benefits of the Study

The study carried out under the title of “Investors Perception towards Investing in Equity

Market” will be benefited as under:-

To know in which sector investors are investing more.

The study will be helpful in knowing that what factors consider most important while

selecting the Sectors and company under the sectors.

The study will be helpful in knowing that how the investors are trade in Equity Market.

The study will be helpful in knowing responses regarding problems faced by the

investors while investing in Equity Market.

The study will be helpful in knowing that what are the motivational factors that

encouraging to the investors for investing in Equity Market.

Limitations of Study

As no human being is perfect, it is not possible for anyone to make the best or perfect report.

Each person has some level of knowledge and is affected by some uncontrollable factors within

which he/she has to work. So, it might possible that there can be some limitations in this report

that may be due to my knowledge level or some other factors.

According to me the limitations are:-

Respondents might have felt hesitation in providing information related to their age,

income etc. so, there can be some data that might questionable because of unwillingness

of respondents to give right information.

Sample selected may not represent whole population, as sample size selected is very

small in proportion to population due to time and cost constraints.

The response given by some of the respondents may be biased.

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INDUSTRY PROFILE

The Indian retail brokerage industry consists of primarily act as agents for the buying and selling

of securities on a commission or transaction fee or brokerage basis. An agent charges a fee or

commission for executing buys and sells orders submitted by an investor. A stockbroker may or

may not be also an investment advisor. A stock broker is regulated professional broker who buys

and sells shares of other securities through market makers or Agency Only Firms on behalf of

investor.

Following diagram gives the structure of Indian Financial System:

Fig no: 2.1

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INDIAN FINANCIAL SYSTEM

Financial

Institutions

Financial

Markets

Financial Instruments

Financial

Services

Regulatory Others

Intermediary Non Intermediary

Banking Non-BankingOrganized Unorganized

Primary Secondary

Capital Market Money Market

Primary Secondary

Short term Medium

term

Long

term

Financial Market:

Financial Markets are helpful to provide liquidity in the system and for smooth functioning of

the system. These markets are the centers which provide facilities for buying and selling of

financial claims and services. The financial markets match the demands of investment with the

supply of capital from various sources.

According to the functional basis financial markets are classified into two types:

They are:

Money Market (short term)

Capital Market (long term)

According to institutional basis again classified into two types they are:

Organized Financial Market

Non-Organized Financial Market

The organized market comprises of official market represented by recognized institutions, bank

and government (SEBI) registered/controlled activities and intermediaries. The unorganized

market is composed of indigenous bankers, money lenders, and individual professional and non-

professionals.

Money Market:

Money Market is the place where we can raise short term capital. It is classified into:

Inter-bank call money market

Bill market

Bank loan market

E.g. Treasury Bills, Commercial Papers, Certificate of Deposits etc.

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Capital Market:

Capital Market is the place where we can raise long term capital. It is classified into two types

they are:

Primary Market

Secondary Market

Example: Shares, Debentures, Loans.

Primary Market

Primary Market is generally referred to the market of New Issues of Market for mobilization of

resources by the companies and government undertakings, for new project and also for

expansion, modernization, addition, and diversification and up gradation. Primary market is also

referred to as new issue market. Primary market operations include new issues of shares by new

and existing companies, further and right issues to existing shareholders, public offers, and issue

of debt instruments such as debentures, bonds etc. The primary market is regulated by the

Securities and Exchange Board of India (SEBI a government regulated authority).

Function:

The main services of the primary market are origination, underwriting and distribution.

Origination deals with the origin of the new issue. Underwriting contract make the shares

predictable and remove the element uncertainty in the subscription. Distribution refers to the sale

of securities to the investors.

The following are the market intermediaries associated with the market:

Merchant banker/book building lead manager

Registrar and transfer agent

Underwriter/broker to the issue

Adviser to the issue

Banker to the issue

Depository

Depository participant

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Investors Protection in the Primary Market

To ensure healthy growth of primary market, the investing public should be protected. The term

investor protection has a wider meaning in the market. The principal ingredients of investor’s

protection are:

Provision of all the relevant information

Provision of accurate information

Transparent allotment procedures without any bias

Secondary Market

The primary market deals with the new issue of securities. Outstanding securities are trading in

the secondary market, which is commonly known as stock market or stock exchange. The

secondary market is a market where scrip’s are traded. It is a market place which provides

liquidity to the scrip’s issued in the primary market. Thus, growth of secondary market depends

on the primary market. Trading activities in the secondary market are done through the

recognized stock exchanges which are 23 in number including Over the Counter Exchange of

India (OTCE), National Stock Exchange of India, and Interconnected Stock Exchange of India.

Secondary market operations involve buying and selling of securities on the stock exchange

through its members. The companies hitting the primary market are mandatory to list their shares

on or more stock exchanges in India. Listing of scrip’s provides liquidity and offers an

opportunity to the investors to buy or sell the scrip’s.

The following are the intermediaries in the market:

Broker/member of stock exchange-buyer’s broker and seller’s broker

Portfolio manager

Investment advisor

Share transfer agent

Depository

Depository participants

Stock Markets in India

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Stock exchanges are the perfect type of market securities whether of government and semi-

government bodies or public bodies as also for shares and debentures issued by the joint stock

companies. In the stock market, purchases and sale of shares are affected in conditions of free

competition. Government securities are traded outside the trading ring in the form of over the

counter sales or purchase. The bargains that are struck in the trading ring by the members of the

stock exchanges are the fairest prices determined by the basic laws of supply and demand.

Definition of Stock Exchange

Stock exchange means anybody or individuals whether incorporated or not constituted for the

purpose of assisting, regulating or controlling the business of buying, selling or dealing in

securities. The securities include:

Shares of public company

Government securities

Bonds

History of Stock Exchanges

The only stock exchanges operating in the 19th century were those of Mumbai setup in 1875 and

Ahmadabad in 1973. During the war boom, a number of stock exchanges were organized. Soon

after it became a central subject, central legislation was proposed and a committee headed by

A.D. Gorwala went into the bill for securities regulation. On the basis of the committee’s

recommendations and public discussion, the securities contract (regulation) act became law in

1956.

Functions of Stock Exchanges

Stock exchanges provide liquidity to the listed companies; they help in trading and raise funds

from the market. Over the 120yrs during which the stock exchanges have existed in this country

and through their medium, the central and the state government had raised cores of rupees by

floating public loans. Municipal corporations, trust and local bodies have obtained from the

public their financial requirements, and industry, trade and commerce the backbone of the

country’s economy have secured capital of cores of rupees through the issue of stocks, shares,

debentures for financing their day to day activities, organizing new ventures and completing

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projects of expansion, diversification and modernization. By obtaining listing and trading

facilities, public investment increased and companies were able to raise more funds. The quoted

companies with wide public interest have enjoyed some benefits and assets valuation has become

easier for tax and other purposes.

BOMBAY STOCK EXCHANGE (BSE)

The Bombay Stock Exchange Limited is the oldest stock exchange not only in the country, but

also in Asia with a rich heritage of over 133 years of existence. In the early days BSE was

established as “The Native Share and Stock Brokers Association.”

It was established in the year 1857 and became the first stock exchange in the country to be

recognized by the government. In 1956, BSE obtained a permanent recognition from the

government of India under the securities contract (Regulation) Act 1956.

Today, BSE is the world No1 exchange in terms of number of listed companies and the world’s

fifth in handling the transactions through its electronic trading system.

The companies listed on BSE command a total market capitalization of USD Trillion 1.06 as of

July 2011. BSE reaches to over 400 cities and town nation-wide and has around 4937 listed

companies; with over 7745 script’s being traded as on 31st July 2011.

The BSE Index, SENSEX, is India’s first and most popular stock market benchmark index. The

BSE SENSEX (Sensitiveindex), also called the “BSE 30”, is a widely used market index in India

and Asia. Sensex is tracked worldwide. It constitutes 30 stocks representing 12major sectors. The

SENSEX is constructed on a ‘free-float’ methodology, and is sensitive to market moments and

market realities. Apart from the SENSEX, BSE offers 23 indices, including 13 sectorial indices.

BSE provides an efficient and transparent market for trading in equity, debt instruments and

derivatives.

BSE is the first exchange in India and the second in the world to obtain an ISO 9001:2000

certifications. It is also the first exchange in the country and second in the world to receive

Information Security Management System Standard BS 7799-2-2002 certification for its BSE

On-Line Trading System (BOLT). BSE continues to innovate. In 2006, it became the first

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national stock exchange to launch its website in Gujarati and Hindi and now Marathi to reach out

to a larger number of investors.

BSE On-Line Trading (BOLT)

BSE On-Line Trading (BOLT) facilities on-line screen based trading in securities. BOLT is

currently operating in 25000 Trader workstations located across over 359 cities in India.

BSE Vision

The vision of Bombay Stock Exchange:

“To emerge as the premier Indian Stock Exchange by establishing global benchmarks".

BSE Profile

MD & CEO : Mr. Madhu Kannan

Address : Phiroze Jeejeebhoy Towers, Dalal Street Mumbai-400001, India

Telephone : 91-22-227212334

Website : www.bseindia.com

Trading Hours : Monday-Friday, 9:15am to 3:30pm

Securities : Stocks, Derivatives and Debt

Trading System : Electronic

Indices of BSE

SENSEX

BSE 100 (This covers Banking Sector)

BSE 200 (This covers Capital Goods)

BSE 500 (This covers Consumer Goods)

BSE mid-cap index

BSE small-cap index

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http://www.bseindia.com/

BSE mid-cap index covers the FMCG sector and BSE small-cap index covers the IT, Metal, Oil

& Gas, Power Industry, PSU’s etc. BSE disseminates information on the Price Earnings Ratio,

the Price to Book Value Ratio and the Dividend Yield Percentage on day to day basis of all its

major indices.

The values of all BSE indices are updated every 15 seconds during market hours and displayed

through the BOLT system, BSE website and news wire agencies. All BSE Indices are reviewed

periodically by the BSE Index Committee. This committee which comprises eminent

independent finance professionals frames the broad policy guidelines for the development and

maintenance of all BSE Indices. The BSE Index cell carries out the day to day maintenance of all

indices and conducts research on development of new indices.

Awards Achieved by BSE

The World Council of Corporate Governance has awarded a Golden Peacock Global CSR

Award for BSE’s initiatives in Corporate Social Responsibility (CSR).

ICIA Award for excellence in financial reporting for the year 2006-2007.

BSE has won the Asia-Pacific award HRM awards for its efforts in employer branding

through talent management at work, health management at work and excellence in HR

through technology.

NATIONAL STOCK EXCHANGE (NSE)

HISTORY OF NSE

Capital Market reforms in India and the launch of Securities and Exchange Board of India

(SEBI) accelerated the incorporation of the second Indian Stock Exchange called National Stock

Exchange (NSE) in 1992. After few years of operations, the NSE has become the largest stock

exchange in India. Three segments of the NSE trading platform were established one after

another. The Wholesale Debt Market (WDM) commenced operation in June 1994. Finally, the

Futures and Options segment began in operating 2000. Today the NSE takes 14 th position in the

top 40 futures exchanges in the world.

In 1996, the National Stock Exchange of India launched S&P CNX Nifty and CNX Junior

Indices that make up 100 most liquid stocks in India. CNX Nifty is a diversified index of 50

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stocks from 25 different economy sectors. The indices are owned and managed by India Index

Services and Products Limited (IISL) that has a consulting and licensing agreement with

Standard and Poor’s.

In 1998, The National Stock Exchange of India launched its website and was the first exchange

in India that started trading stock on the internet in 2000. The NSE has also proved its leadership

in the Indian Financial Market by gaining many awards such as ‘Best IT Usage Award’ by

Computer Society in India (in 1996 and 1997) and CHIP Web Award by CHIP magazine (1999).

The National Stock Exchange of India Limited is the Mumbai-based stock exchange. It is the

largest stock exchange in India in terms of daily turnover and number of trades, for both equities

and derivatives trading.

NSE has a capitalization of around ` 47, 01,923 core and is expected to become biggest stock

exchange in India in terms of market capitalization. Though a number of other exchanges exist,

NSE and Bombay Stock Exchange are the two most significant stock exchanges in India and

between them are responsible for the vast majority of share transactions.

NSE is mutually owned by a set of leading financial institutions, banks, insurance companies and

other financial intermediaries in India but its ownership and management operate as separate

entities.

There are at least 2 foreign investor NYSE Euro next and Goldman Sachs who have taken a

stake in the NSE. As of 2010, the NSE VSAT terminals, 2799 total, cover more than 1500 cities

across India. In October 2011, the equity market capitalization of the companies listed on NSE

was US$ 1.46 trillion, making it the second largest stock exchange in South Asia. NSE is the

third largest Stock Exchange in the world in terms of number of trades in equities. It is the

second fastest growing stock exchange in the world with a recorded growth of 16.6%.

ORIGINS

The National Stock Exchange of India was promoted by leading financial institutions at the

behest of the Government of India, and was incorporated in November 1992 as a tax paying

company. In April 1993, it was recognized as a Stock Exchange under the Securities Contracts

(Regulation) Act, 1956. NSE commenced operations in the Wholesale Debt Market (WDM)

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segment in June 1994. The Capital Market (Equities) segment of NSE commenced operations in

November 1994, while operations in the Derivatives segment commenced in June 2000.

MARKETS

Currently, NSE has the following major segments of the capital market:

Equity

Futures and Options

Retail Debt Market

Wholesale Debt Market

Currency Futures

NSE has become the first Stock Exchange to get approval for the interest rate futures as

recommended by SEBI-RBI committee, on 31August 2009, a futures contract based on 7% 10

year GOI Bond (NOTIONAL) was launched with quarterly maturities.

HOURS

NSE’s normal trading sessions are conducted from 9:00 am India Time to 3:30 pm India Time on

all days of the week except Saturdays, Sundays and Official Holidays declared by the Exchange

(or by the Government of India) in advance. The exchange in association with BSE (Bombay

Stock Exchange Ltd) thinking to revise its timings from 9:00 am India Time till 5:00 pm India

Time. However, on Dec 17, 2009, after strong protest from brokers, the Exchange decided to

postpone the change in trading hours till Jan 04, 2010. NSE new market timing from Jan 04,

2010 is 9:00 am till 3:30 pm India Time.

NSE GROUP

National Securities Cleaning Corporation Ltd (NSCCL)

National Securities Depository Ltd (NSDL)

India Index Service & Products Ltd (IISL)

NSE.IT Ltd

DotEx International Limited

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Indices of NSE

NSE also set up as index services firm known as India Index Services & Products Limited (IISL)

and has launched several stock indices, including:

S&P CNX Nifty (Standard & Poor’s CRISIL NSE Index)

CNX Nifty Junior

CNX 100 (= S&P CNX Nifty + CNX Nifty Junior)

S&P CNX 500 (= CNX 100 + 400 major players across 72 industries)

CNX Midcap (introduced on 18 July 2005 replacing CNX Midcap 200)

MISSION OF NSE

NSE’s mission is setting the agenda for change in the securities markets in India. The NSE was

set up with the main objectives of:

Establishing a nation-wide trading facility for equities, debt instruments and hybrids.

Ensuring equal access to investors all over the country through an appropriate

communication network.

Providing a fair, efficient and transparent securities market to investors using electronic

trading system.

Enabling shorter settlement cycles and book entry settlements system

Meeting the current international standards of securities markets.

The standard set by NSE in terms of market practices and technologies have become industry

benchmarks and are being emulated by other market participants. NSE is more than a mere

market facilitator. It’s that force which is guiding the industry towards new horizons and greater

opportunities.

NSE has several advantages over the traditional trading exchanges. They are as follows:

NSE brings an integrated stock market trading network across the nation.

Investors can trade at the same price from anywhere in the country since inter-market

operations are streamlined coupled with the countrywide access to the securities.

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Delays in communication, late payments and the malpractices prevailing in the traditional

trading mechanism can be done away with greater operational efficiency and

informational transparency in the stock market operations, with the support of total

computerized network.

Unless stock markets provide professionalized service, small investors and foreign investors will

not be interested in capital market operations. Capital market being one of the major sources of

long-term finance for industrial projects, India cannot afford to damage the capital market path.

In this regard NSE gains vital importance in the Indian capital market system.

Why people trust NSE?

Unbiased

The National Stock Exchange of India (NSEIL) has been trusted by the securities markets for its

unbiased independence and professionalism. The function of forecasting has become more

meaningful as the information comes from a source, which is not only reliable but has no vested

interest of its own in the market movements.

Market Representation

NSE-MIBID/MIBOR is based on rates polled by NSE from a representative panel of 31

banks/institutions/primary dealers.

Transparent

The reference rate is released to all the market participants simultaneously through various

media, making it transparent with the aspiration of the market. Ensuring transparency helps the

market participants to judge the market mood and the probable rate one is likely to encounter in

the market. This information is useful not only to the banks but also to the issuers and investors.

Reliable

The high level of co-relation between actual deals and the reference rate gives an indication of its

reliability. The “Bootstrapping” is scientific and the values are generated through a system that

has been extensively tested. The technique involves generating multiple data sets based on the

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rates polled with a dynamically determined number of identification of outliers, trimming the

data set of its extreme values and computation of the mean and its standard deviation.

Elimination of Noise

The trimming procedure is vulnerable to market manipulation of the rates due to the amount of

sampling noise. Excessive trimming may lead to loss of information whereas no trimming may

lead to excessive influence of the extreme values. To derive a true representative benchmark for

the market NSE ensures that trimming at any point does not exclude more than 20% of the

observation for the bid and for the ask rates.

Consistency

The Exchange ensures that every day the NSE-MIBID/MIBOR along with the respective

standard deviations are disseminated to the market at 0955 (IST) for overnight rate and at 1215

(IST) for 14day, 1month and 3 month rates.

Usage

The NSE-MIBID/MIBOR rate is used as a bench mark rate for majority of deals struck for the

interest Rate Swaps, Forward Rate Agreements, Floating Rate Debentures and Term Deposits.

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COMPANY PROFILE

ShareKhan Ltd is one of the leading retail stock broking house of SSKI Group which is running

successfully since 1922 in the country. It is the retail broking arm of the Mumbai-based SSKI

Group, which has over eight decades of experience in the stock broking business. Sharekhan

offers its customers a wide range of equity related services including trade execution on BSE,

NSE, and Derivatives, depository services, online trading, investment advice etc. the firms online

trading and investment site – www.sharekhan.com - was launched on Feb 8, 2000. The site gives

access to superior content and transaction facility to retail customers across the country. Known

for its jargon-free, investor friendly language and high quality research, the site has a registered

base of over one lakh customers. The content rich and research oriented portal has stood out

among its contemporaries because of its steadfast dedication to offering customers best – of –

breed technology and superior market information. The objective has been to let customers make

informed decisions and to simplify the process of investing in stocks.

On April 17, 2002 Sharekhan launched speed trade, a net-based executable application that

emulates the broker terminals along with host of other information relevant to the day traders.

This was for the first time that a net-based trading station of this caliber was offered to the trader.

In the last six months speed trade has become a de facto standard for the Day Trading

community over the net.

Sharekhan’s ground network includes over 750 centers in 280 cities in India which provide a

host of trading related services.

Sharekhan has always believed in investing in technology to build its business. The company has

used some of the best-known names in the IT industry, like Sun Microsystems, Oracle,

Microsoft, Cambridge Technologies, Nexgenix, Vignette, VeriSignFinancial Technologies India

Ltd, Spider Software Pvt Ltd. to build its trading engine and content. The Morakhiya family

holds a majority stake in company. HSBC, Intel and Carlyle are the other investors. With a

legacy of more than 80 years in the stock markets, the SSKI is one of the leading players in

institutional broking and corporate finance activities. SSKI holds a sizeable portion of the market

in each of these segments. SSKI’s institutional broking arm accounts for 7% of the market for

Foreign Institutional portfolio investment and 5% Domestic Institutional portfolio investment in

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the country and it has 60 institutional clients spread over India, Far East, UK and US. Foreign

Institutional Investors generate about 65% of the organization’s revenue, with a daily turnover of

over US$ 2 million. The Corporate Finance section has a list of very prestigious clients and has

many ‘firsts’ to its credit, in terms of the size of deal, sector tapped etc. the group has placed over

US$ 1 billion in private equity deals. Some of the clients include BPL Cellular Holding, Gujarat

Pipavav, Essar, Hutchison, Planet Asia and Shopper’s Stop.

Achievements of ShareKhan

A Rated among the top 20 wired companies along with Reliance, HUJI, Infosys, etc. by

‘Business Today’, January 2004 edition.

Awarded ‘Top Domestic Brokerage House’ four times by Euro money and Asia money.

Pioneers of online trading in India amongst the top 3 online trading websites from India.

Most preferred financial destination amongst online broking customers.

Winners of “Best Financial Website” award.

India’s most preferred brokers within 5years. “Awaaz customers Award 2005”.

Future Plans:

2, 00,000 plus retail customers being serviced through centralized call centers/web

solutions.

Branches/Semi branches servicing affluent/aggressive traders through high skill financial

advisor.

250 independent investment managers/franchisee servicing 50,000 highly valued clients.

New initiatives Portfolio management Services and commodities trading.

PROFILE OF THE COMPANY

Name of the Company : ShareKhan ltd.

Year of Establishment : 1925

Headquarter : ShareKhan SSKI

A-206 Phoenix House

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Phoenix Mills Compound

Lower Parel

Mumbai-Maharashtra, INDIA- 400013

Nature of Business : Service Provider

Services : Depository Services, Online Trading,

Mutual Fund , IPO’s, PMS and

Technical Research

Number of Employees : 2800

Turnover : ` 10000 corers daily

Offices : More than 640 outlets in 280 cities

Clients: Demat A/c : 112000

Trading A/c : 110000

Working Capital : More than 3200 corers

Special Features : ShareKhan Classic Account

ShareKhan Trade Tiger Account

Dial-n-Trade

Website : www.sharekhan.com

Slogan : You’re Guide to The Financial Jungle

Vision

To be the best retail broking Brand in the retail business of stock market

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http://www.sharekhan.com/

Mission

“To educate and empower the individual investor to make better investment decisions through

quality advice and superior service.”

The ShareKhan provides its Customers First Step program, built specifically for all investors, so

treatment is-

“Your Guide To The Financial Jungle” means “Our commitment to being your guide

throughout your investing lifecycle” the institutional broking arm of SSKI was also awarded

‘India’s best broking house for 2004 by Asia Money brokers poll recently and it has also won the

prestigious Awaaz Consumer Vote Awards 2005 for the Most Preferred Stock Broking Brand in

India, in the investment Advisors category.

They have 650 share shops across 280 cities in India to get a host of trading related services- our

friendly customer service staff will also help with any account related queries.

ShareKhan won the award by the vote of consumers around the country, as part of India’s largest

consumer study cover 7000 respondents- 21 products and services across 21 major cities. The

study, initiated by Awaaz- India’s first dedicated Consumers Channel and member of the

worldwide CNBC Network and AC Nielsen- ORG Marg, was aimed at understanding the brand

preferences of the consumers and to decipher what are the most important loyalty criteria for the

consumer in each vertical.

The reasons behind the preferences for brands were unveiled by examining the following:

Tangible features of product/service.

Softer, intangible features like imagery, equity driving preference.

Tactical measures such as promotional/pricing schemes.

ShareKhan is infact-

Among the top 3 branded retail service providers.

No 1 player in online business.

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Largest network of branded broking outlets in the country serving more than 7,00,000

clients.

Brand Name

The company as a whole in its offline business has named itself as SSKI Securities Private

Limited- Shripal Sevantilal Kantilal Ishwarlal Private Limited. The company has preferred to

name themselves under a blanket family name. But, in its online division started since 1997, the

company preferred to name itself as “SHAREKHAN” itself suggests the business in which the

company is dealing so that the customer could easily identify the product or service category.

Role of ShareKhan

Interface between the stock exchange and the investor

Assistance to investors in precise allocation of funds.

Building awareness amongst general public about stock market.

Core Services of ShareKhan

As a ShareKhan customer you can decide the channel through which you want to receive

different Services.

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Fig No: 3.1

Other Services Provided By ShareKhan

Online Services

Offline Services

Derivatives Services: Demat & Remat Transactions

Derivatives Trading (Futures and Options)

Commodities Trading

IPOs and Mutual Funds Distribution

Fundamental Research

Technical Research

Portfolio Management

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Equity and Derivatives Trading

Depository Services

Online Services

Commodities Trading

Dial-N-Trade

Portfolio Management

Share shops

Fundamental Research

Technical Research

SHAREKHAN SIMPLYFING IT ALL FOR YOU

Free access to investment advice from Share Khan’s Research team

ShareKhan Value Line (a monthly publication with reviews of recommendation,

stocks to watch out for etc.)

Daily research reports and market review (High Noon & Eagle Eye)

Pre-market Report (Morning Cuppa)

Daily trading calls based on Technical Analysis

Cool trading products (Daring Derivatives and Market Strategy)

Personalized Advice

Live Market Information

Internet-based Online Trading: Speed Trade

Online Services

Online BSE and NSE executions (through BOLT & NEAT terminals)

Mutual Funds

Commodity Futures

PMS (Portfolio Management Services)

Demat Services

Share Shops

Offline Services

Trading with the help of Dealer

Trading without credit

By calling to the share shops

Credit facility (only in Delivery-based)

Special website for Offline Clients: www.mysharekhan.com

Physical contract notes

The company provided mainly two types of services to their customers for the Demat Accounts.

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http://www.mysharekhan.com/

Online Account

In the Online account, the company simply provides the terminal to the customers or clients and

the clients can do trading himself/herself when he/she wants. The charges of offline account is

Rs.750/-, which is varies from company to company. Online accounts are most popular than the

offline accounts. In online accounts, the company provides 3 types of facilities to their clients as

per the requirements:

Classic Accounts

Trade Tiger Accounts

Dial- n – Trade

Classical Accounts:

In this account, it is very simple to do trading. Here customer has first to open Demat account

with ShareKhan and after opening an account he can get login ID and password. With the help of

login ID and password, the client can login to the ShareKhan.com and in the classic a/c whatever

company’s information the clients wants, he has to type the company’s name or code and he will

get all the necessary information about that company and he can buy or sell the that company’s

stock or shares. But, here in the classical account the client can access only one scrip at a time.

Features of Classical Account

Classical account enables you to buy and sell shares through our website. You get features like:

Online trading account for investing in Equities and Derivatives via ShareKhan.com

Integration of : Online trading + Bank + Demat account

Instant cash transfer facility against purchase and sale of shares

Make IPO bookings

You get Instant order and trade confirmations by e-mail

Streaming quotes

Personalized Market Scan with your own customized stock triker

Single screen interface for cash and derivatives

Portfolio tracker

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Trade Tiger Account

Earlier it was known as Speed Trade and now it is known Trade Tiger. This account is same as

fast trade account. But, difference between these two accounts is that in the Trade Tiger Account

the client can access unlimited scrips at a time and buy and sell the share from whenever they

want. This account also provides the charts and graphs, so that the clients can easily understand

about the stock of the company. This is only for big clients and dealer kind of customers. This

account is mainly for active traders who trade frequently during the trading session.

Features of Trade Tiger Account:

A single platform for multiple exchange BSE and NSE, MCX, NCDEX, Mutual Funds,

IPOs

Multiple Market Watch available on Single Screen

Multiple Charts with Tick by Tick Intraday and End of Day Charting powered with

various studies

Graph studies include Average, Brand – Bollinger, Know Sure Thing, MACD, RSI etc.

Apply studies such as Vertical, Horizontal, Trend, Retracement and free lines

User can save his own defined screen as well as graph template that is, saving the layout

for future use.

User – defined alert settings on an input Stock Price trigger.

Dial-n-Trade

Features:

Two dedicated numbers for placing orders with cell phone or landline. Toll free

number: 1-800-22-7050.

Simple and Secure interactive voice response based system for authentication.

No waiting time. Enter the PIN to be transferred to telebrokers

Offline Account

This is simple way to do trading. In the offline account, the client can place the order by

telephone or through personal visit in office. The client who is very busy in their jobs orbusiness,

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they can directly place order by the telephone or the client who are not much busy; they can

come to the office of ShareKhan.

ShareKhan also provide the Dial-n-Trade service to their customers. So that customers can

directly place the order by the telephone.

Demat Account Opening and Brokerage Charges

Table No. 3.1: Fee structure for General Individual

Charges Classical Account Trade Tiger Account

Account Opening Charges ` 750/- ` 1000/-

Brokerage

Intra-day: 0.10%

Delivery : 0.50%

Intra-day : 0.10%

Delivery : 0.50%

Annual Maintenance Charges

` NIL first year

` 400/= p.a. from second year

onwards

For Intra-day Trades

This is subject to a minimum brokerage of 5 paisa per share. This means that if the share

price you trade in `50/- or less, a minimum brokerage of 5 paisa per share will be

charged.

For Delivery Based Trades

This is subject to a minimum brokerage of 10 paisa per share. Minimum brokerage of 10

paisa per share will be applicable when the share price is ` 20/- or less.

Share Mobile

ShareKhan launches Share Mobile, an exclusive live streaming quotes and trading facility

for its online trading customers.

A person can carry stock market terminal with him anywhere anytime.

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ShareKhan brings a freedom of being mobile where it is so easy with share mobile to

track favorite stocks price movement tick-by-tick

How Share Mobile empowers

Live tick by tick stock price

Latest news headlines

Track My Trade Portfolio investment

Live Research Fundamental and Trading Calls

ShareKhan Depository Services

ShareKhan Depository Services offers dematerialization services to individual and corporate

investors. ShareKhan as a team of professionals and the latest technological expertise dedicated

exclusively to Demat department, apart from a national network of franchisee, making the

services quick, convenient and efficient.

Trading in Commodity Futures

It provides with facility to trade in commodities (Bullion: Gold, silver and agricultural

commodities) through a wholly owned subsidiary of its Parent SSKI. ShareKhan is a member of

two Commodity Exchange and offers trading facility at both these exchanges:

o Multi Commodity Exchange of India (MCX)

o National Commodity and Derivative Exchange, Mumbai (NCDEX)

Software (Technology) used in ShareKhan

ShareKhan is using different technology for the running of their daily transactions. Mainly for

the trading, the companies using three software are:

ODIN (VSAT Based)

Trade Tiger (WEB Based)

Classic/Fast Trade (WEB Based)

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And also NEAT System used for making transaction in NSE listed company and same way

BOLT System used for making transaction BSE listed company. For the client information or

customer service, the company using 2 software:

CIS – Client Information System

BOC – Back Office.

Hierarchy of ShareKhan

Fig No: 3.2

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C.E.O

Branch Head

Cluster Head

Regional Head

Country Head

City Sales Manager

Dealer

Sales Executive

….1…… ….2…… ….3…… ….4……

Trainee

Management Team

Mr. Dinesh Morakhia – Owner of the company

The ShareKhan Group of Companies was brought to life by Mr. Dinesh Murikya. He ventured

into stock trading with an intention to raise capital for his own independent enterprise. However,

he recognized the opportunity offered by the stock market to serve individual investors. Thus,

India’s first retail-focused stock-broking house was established in 1925. Under his leadership,

ShareKhan became the first broking house to embrace new technology for faster, more effective

and affordable services to retail investors.

Mr. Tarun Shah – Chief Executive Officer

A science graduate from St. Xavier’s College, Mumbai and Mr. Tarun Shah started his

professional life in sales and marketing in a chemicals company. His hands on approach and

rigorous experience in sales led him to higher challenges that the capital markets provided.

In 1987, he joined SSKI, a brokerage firm with over five decades of legendary service to its

credit. The capital markets at that time was undergoing a sea change in its character and SSKI

under the vision and guidance of Shripal Morakhia and the commitment and hardwork of Mr.

Shah was able to change and adopt the new business practices to achieve significant growth in a

competitive environment.

Accepting new challenges is a way of life for Mr. Tarun Shah. To ensure that SSKI’s foray into

retail stock broking through ShareKhan meets with the same success every other SSKI venture

has, Mr. Tarun Shah moved in to spearhead this new effort as CEO of the ShareKhan.

Mr. Shankar Vailaya – Director (operations) of the company

A graduate in commerce from the University of Mangalore and an Associate of The Member of

the Institute of Chartered Accountants of India, Mr. Shankar Vailaya heads the operations,

finance and legal functions. He is responsible for settlements, depository operations, risk and

compliance and regulatory and other commitments and Treasury.

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Shankar has managed broking operations through the most turbulent times of the post securities

scam period in 1922 and has managed to steer clear of a flurry of bad papers in the market during

1994-95.

Mr. Jaideep Arora – Director (Products & Technology) of the company

Jaideep Arora completed his B.Tech from IIT (Kanpur) and his PGDM from IIM Kolkata.

Jaideep worked with ICICI for 8 years where his work spanned a gamut of functions, which

included project finance, equity sales and brokerage, investments etc. during his tenure there he

set up and headed the ‘Institutional Equity Brokerage Desk’ at ICICI Securities and Finance Co.

Ltd.

Jaideep joined ShareKhan in June 2000 as Head of Product Development. A year later he took

over the reins of the business at ShareKhan. At present Jaideep’s responsibilities include

spearheading ShareKhan’s online foray and overall customer acquisition effort.

Pathik Gandotra : Head of Research

Rishi Kohli : Vice President of Equity Derivatives

Nikhil Vora : Vice President of Research

Reason to Choose ShareKhan Limited

Experience

SSKI has more than eight decades of trust and credibility in the Indian stock market. In the Asia

Money broker’s poll held recently, SSKI won the ‘India’s Best Broking House for 2004’ award.

Ever since it launched ShareKhan as its retail broking division in February 2000, it has been

providing institutional level research and broking services to individual investors.

Technology

With its online trading account one can buy and sell shares in an instant from any PC with an

internet connection. One can get access to its powerful online trading tools that will help him

take complete control over his investment in shares.

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Accessibility

ShareKhan provides ADVICE, EDUCATION, TOOLS and EXECUTION services for investors.

These services are accessible through its centers across the country over the internet (through the

website www.sharekhan.com) as well as over Voice tool.

Knowledge

In a business where the right time can translate into direct profits, one can get access to a wide

range of information on ShareKhan Limited’s content-rich portal. One can also get a useful set of

knowledge-based tools that will empower him to take informed decisions.

Convenience

One can call its Dial-N-Trade number to get investment advice and execute his transactions.

ShareKhan ltd. has a dedicated call-center to provide this service via a Toll Free Number 1800-

22-7500 & 1800-22-7050 from anywhere in India.

Customer Service

ShareKhan Limited’s customer service team will assist one for any help that one may require

relating to transactions, billing, demat and other queries. Its customer service can be contacted

via a toll-free number, email or live chat on www.sharekhan.com.

Investment Advice

ShareKhan has dedicated research teams of more than 30 people for fundamental and technical

researches. Its analysts constantly track the pulse of the market and provide timely investment

advice to its clients in the form of daily research emails, online chat, printed reports and SMS on

their mobile phone.

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SWOT ANALYSIS OF SHAREKHAN

Strengths

Online Trading Facility

It is pioneer in online trading with turnover Rs.400 corers and more than 800 peoples

working in the organization.

Largest Chain of Retail Share Shops in India

88years of Experience in securities market

Dedicated and responsive workforce/staff

Value added service for HNI client

Research center

ShareKhan has dedicated research teams for fundamental and technical research. Which

constantly track the pulse of the market and provide timely investment advice free of cost

to its clients which has a strike rate of 70-80%

Membership of NSE & BSE

Trading option like Future & Option and Commodities

Volume based differentiated products

Weakness

Localized presence due to insufficient investments for country wide expansion.

Lack of awareness among customers because of non-aggressive promotional strategies

(print media, newspaper etc.)

Lesser emphasis on customer retention

Focuses more on HNIs than retail investors which results in meager market-share as

compared to close competitors.

Problems due to network crash

Unawareness among Investors

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Opportunity

With the booming capital market it can successfully launch new services and raise its

client’s base

It can easily tap the retail investors with small saving through promotional channels like

print media, electronic media etc.

As interest on fixed deposits with post office and banks are all time low, more and more

small investors are entering into stock market.

Abolition of long term capital gain tax on shares and reduction in short term capital gain

is making stock market as hot destination for investment among small investors.

Increasing usage of internet through broadband connectivity may boost a whole new

breed of investors for trading in securities.

Threats

Aggressive promotional strategies by close competitors may hamper ShareKhan’s

acceptance by new clients.

Lack of sufficient branch-offices for speedy delivery of services.

Other players are providing margin funds to investors on easy terms where as there is no

such facility in ShareKhan.

More and more players are venturing into this domain which can further reduce the

earnings of ShareKhan.

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INVESTORS PERCEPTION TOWARDS INVESTMEMT IN EQUITY MARKET

The money you earn is partly spent and the rest saved for meeting future expenses. Instead of

keeping the savings idle you may like to use savings in order to get return on it in the future. This

is called Investment.

One needs to invest to:

Earn return on your idle resources

Generate a specified sum of money for a specific goal in life

Make a provision for an uncertain future

One of the important reasons why one needs to invest wisely is to meet the cost of Inflation.

Inflation is the rate at which the cost of living increases. The cost of living is simply what it costs

to buy the goods and services you need to live.

Investor

An investor is any party that makes an investment

An individual who commits money to investment products with the expectation of

financial return.

The term has taken on a specific meaning in finance to describe the particular types of

people and companies that regularly purchase equity or debt securities for financial gain

in exchange for funding an expanding company.

Investors Behavior

Generally, Investors Behavior regarding the any investment is primary concern with to minimize

risk while maximizing return, as opposed to a speculator, who is willing to accept a higher level

of risk in the hopes of collecting higher than average profits.

While, some people are also believes in “High Risk, High Return” many investors purchase a

particular stock with the intention of making a big profit over a short period of time. However,

this action is not investing, but a pure gambling.

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The stock market is characterized by the trade-off between risk and return. The higher the risk

the investor is willing and able to take, the higher the potential rewards from the investment.

Therefore, if a particular investment offers high returns, it is an indication that it will come with

a high risk burden.

Some people are also believes in that there is no safe investment that will provide with high

returns over a short period of time. Therefore, one should direct their resources toward long-term

investment that are more likely to reward with high returns.

Investors Behavior regarding the financial investment is closely related with the “Behavioral

Economics” and Behavioral Economics” are closely related fields making up a separate branch

of economic and financial analysis using social, cognitive and emotional factors in understanding

the economic decisions of investment, and their effects on market prices, returns and the

allocation of resources.

Information of Equity Market and various sectors

What is Equity Market?

A market where in investors buys and sells securities providing ownership of a company’s

shares.

The market in which shares are issued and traded, are either through exchanges or over the

counter markets. Also known as the stock market, it is one of the most vital arrears of a market

economy because it gives companies access to capital and investors a slice of ownership in a

company with the potential to realize gains based on its future performance.

Equity market, or stock market, is a system through which company shares are traded. The

equity market offers investors an opportunity to participate in a company’s success through an

increase in its stock price. With enhanced opportunity, however, the equity market usually

carries greater risk than debt markets.

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Indian Equity Market

The Indian Equity Market is more popularly known as the Indian Stock Market. The Indian

equity market has become the third biggest after China and Hong Kong in the Asian region.

According to the largest report by ADB, it has a market capitalization of nearly $600 billion. As

of March 2009, the market capitalization was around $598.3 billion (` 30.13 lakh core) which is

one-tenth of the combined valuation of the Asia region. The market was slow since early 2007

and continued till the first quarter of 2009.

The Indian Equity Market depends on three factors-

Funding into equity from all over the world

Corporate houses performance

Monsoons

The equity market is also affected through trade integration policy. The country has advanced

both in foreign institutional investment (FII) and trade integration since 1995. This is a very

attractive field for making profit for medium and long term investors, short-term swing and

position traders and very intra-day traders.

The Indian market has 22 stock exchanges. The larger companies are enlisted with BSE and

NSE. The smaller and medium companies are listed with OTCEI (Over the Counter Exchange of

India). The functions of the Equity Market in India are supervised by SEBI (Securities Exchange

Board of India).

The Indian Equity Market was not well organized or developed before independence. After

independence, new issues were supervised. The timing, floatation costs, pricing, interest rates

were strictly controlled by the Controller of Capital Issue (CII).

Introduction of Sectors

Meaning of Sector

There are many companies or scrip that manufacturer the same products and provide services are

specified under the particular name that called Industry or Sector.

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There are many other different kinds of industries, and often organized into different classes or

variety of industrial classification it’s sector.

In this Report, I have studied on Five Sectors which are:

Oil and Gas Sector

The oil and gas industry in recent years has been characterized by rising consumption of oil

products, declining crude production and low reverse accretion. India remains one of the least-

explored countries in the world, with a well density among the lowest in the world. India is the

fourth largest oil consumption zone in Asia, even though on a per capita basis the consumption is

a mere 0.1 tones, the lowest in the region- this makes the prospects of the Indian Oil industry

even more exciting.

The oil and gas industry has been instrumental in fuelling the rapid growth of the Indian

economy. The petroleum and natural gas sector which includes transportation, refining and

marketing of petroleum products and gas industry constitutes over 15 percent of the GDP.

India’s domestic demand for oil and gas is on the rise. As per the Ministry of Petroleum, demand

for oil and gas is likely to increase which is 186.54 million tons in 2008-09. India is emerging as

the global hub for oil refining with capital costs lower by 25 to 50 percent over other Asian

countries. Already, the fifth largest country in the world in terms of refining capacity, with share

of 3 percent of the global capacity by 45percent or 65.3 to 242 million tons per annum over the

next five years.

Banking Sector

Banking in India originated in the last decades of the 18th century. The oldest bank in existence

in India is the State Bank of India; a government owned bank that traces its origins back to

June18 and that is the largest commercial bank in the country. Central banking is the

responsibility of the Reserve Bank of India, which in 1935 formally took over these

responsibilities from the Imperial Bank of India.

The banking sector will navigate through all the aspects of the Banking System in India. It will

discuss upon the matters with the birth of the banking concept in the country to new players

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adding their names in the industry in coming few years. The banker of all banks, Reserve Bank

of India (RBI), the Indian Banks Association (IBA) and top 20 banks like IDBI, HSBC, ICICI,

etc.

With the Indian economy moving on to a high growth trajectory, consumption levels soaring and

investment riding high, the Indian banking sector is at a watershed. Further, as Indian companies

globalize and people of Indian origin increase their investment in India, several Indian banks are

pursuing global strategies.

In the Third Quarter Review of Monetary Policy for 2009-10, the RBI observed that the Indian

economy showed a degree of resilience as it recorded a better than expected growth of 7.9

percent during the second quarter of 2009-10

The industry has been growing faster than the real economy, resulting in the ratio of assets of

commercial banks to GDP increasing to 92.5percent during exceptionally well in the financial

sector with the price to book value being second only to China, according to a report by (BCG)

Boston Consultancy Group.

IT Sector

Over the past decade, the Information Technology (IT) industry has become one of the fastest

growing industries in India. The key segments that have contributed significantly (96 percent of

total) to the industry’s exports include – Software and services (IT services) and IT – enabled

services (IT’s) i.e. business services. Over a period of time, India has established itself as a

preferred global sourcing base in these segments and they are expected to continue to fuel

growth in the future.

At present, India is emerging as one of the popular Software outsourcing locations to offer cost

effective software solutions. The contribution of India in Software Outsourcing is remarkable.

One just cannot reject the reality that currently India is described as the most prospering name in

software outsourcing. Now there are several grounds for this flourishing popularity of the

offshore IT outsourcing services of India. The prime reason for choosing India, as an offshore

development partner in software outsourcing business is the availability of enormous pool of

educated manpower combined with world-class quality offerings.

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India’s IT growth in the world is primarily dominated by IT software and services such as

Custom Application Development and Maintenance (CADM), System Integration, IT

Consulting, Application Management, Software testing, and web services. India’s domestic

market has also become a force to reckon with, as the existing IT infrastructure evolves both in

terms of technology and depth of penetration

Infrastructure Sector

Infrastructure is the basic physical and organizational structures needed for the operation of a

society or enterprise, or the services and facilities necessary for an economy to function. The

term typically refers to the technical structures that support a society, such as roads, water

supply, sewers, power grids, and telecommunication.

India’s Infrastructure has been expanding at an accelerated pace to support the economic growth

rate of over 9 percent. The six core-infrastructure industries, which account for a combined

weight of 26.68 percent in the index of industrial production (IIP), registered a growth of 8.6

percent in 2006-07 as against 6.2 percent during 2005-06. The growth has continued space

during the current fiscal, with the six core-infrastructure industries growing at the rate of 6.9

percent during April-September 2007. Significantly, electricity recorded a growth rate of 7.6

percent compared to 6.7 percent in the same period last year.

Infrastructure investment in India is set to grow dramatically accelerated by 5.3 percent in 2008-

09. India has become a major outbound investor and people are engaging with Indians to seek

investment into their countries, said the Minister for Road Transport and Highways, Mr. Kamal

Nath. According to investment banking company Goldman Sachs, India’s infrastructure sector

will require US$ 1.7 trillion investment in the next 10 years. It also added that such investment

would come more from the domestic market than overseas.

Automobile Sector

Automobile industry is one of the fastest growing industries of the world. With more than 2

million new automobiles rolling out each year, on roads of India, the industry is set to grow

further.

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Automobile industry made its silent entry in India in the nineteenth century. Since the launch of

the first car in 1897, India automobile industry has come a long way. Today India is the largest

three wheeler market in the world and is expected to take over China as the second largest

automobile market, in the coming years.

Some facts on Automobile industry in India:

India has fourth largest car market in the world.

India has the largest three wheeler market in the world.

India is the second largest producer of two wheelers in the world

India ranks fifth in the production of commercial vehicles

The growth of the Indian middle class along with the growth of the economy over the past few

years has attracted global auto majors to the Indian market. Moreover, India provides trained

manpower at competitive costs making India a favored global manufacturing hub. The

attractiveness of the Indian markets on one hand and the stagnation of the auto sector in markets

such as Europe, US and Japan on the other have resulted in shifting of new capacities and flow

of capital to the Indian automobile industry.

Global auto majors such as Japanese auto majors Suzuki, Honda and Korean car giant Hyundai

are increasingly banking on their Indian operations to add weight to their businesses, even as

numbers stay uncertain in developed markets due to economic recession and slowdown.

According to figures released by the Society of Indian Automobile Manufactures (SIAM),

domestic passenger car sales have increased 32.28 percent to reach 145,905 units in January

2010, against 768,698 units in the January 2010 from 110,300 units in the same month last year.

Across all categories, total sale of vehicles increased 44.94 percent to 1,114,157 units in January

2010, against 768,698 units in the January 2009. The Indian auto industry is likely to see a

growth of 10-12 percent in sales in 2010, according to a report by the global rating firm.

Indian has become second largest maker of small cars, overtaking Brazil. Small cars for 80

percent of the domestic market (up from 75 percent last year) and exports are growing at top

speed. According to SIAM, small car exports rise 53 percent between April and September 2009

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to 197,249 units against 129,090 units a year ago. In order to make India a power to reckon with

automotive sector the government launched the Automotive Mission Plan (APM) 2006-2016.

The vision of the APM is “To emerge as the destination of choice in the world for design and

manufacture of automobiles and auto components with output reaching a level of US$ 145billion

accounting for more than 10 percent of the GDP and providing additional employment to

25million people by 2016.” As per the AMP, it is estimated that the total turnover of the

automotive industry in India would be in the order of US$ 122 billion – US$ 159 billion in 2016.

Further, by 2016, the automotive sector would double its contribution to the country’s GDP from

current levels of five percent to 10-12 percent.

List of Companies under these Five Sectors

Oil and Gas Sector

Indian Oil Corporation

ONGC (Oil and Natural Gas Corporation India)

Essar Oil Limited

Gas Authority of India Limited

Oil India Limited

India LPG

Oil Gas India

Banking Sector

State Bank of India

ICICI Bank

Axis Bank

HDFC (Housing Development Financial Corporation)

HSBC

IDBI Bank

Union Bank of India

Central Bank of India

IT Sector

Infosys

TCS Limited

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Wipro

HCL


DLF

Reliance Infrastructure

HCC Infrastructure

IRB Infrastructure

Automobile Sector

Hero Honda

Bajaj Auto

Tata Motors

Maruti Suzuki

TVS Motors

Mahindra Motors

.

DATA ANALYSIS AND INTERPRETATION

Table No: 5.1

Gender wise classification of respondents

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Variable No of Respondents Percent

Male 75 75

Female 25 25

Total 100 100

Fig No: 5.1

Interpretation

From the above table and chart, it is clear that 75 percent of respondents are male and 25

percent are female.

Table No: 5.2

Age wise classification

Variable No of Respondents Percentage

Before 20 years None None

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21-30 years 10 10

31-40 years 15 15

41-50 years 20 20

51-60 years 34 34

60 & Above 21 21

Total 100 100

Fig No: 5.2

Interpretation

10 percent of respondents are from 21-30 years.


20 percent of respondents are from 41- 50 years.


21 percent of respondents are from 60 & above.

Table No: 5.3

Table showing the occupation of respondents


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Business 30 30

Service 25 25

Student None None

Employee 45 45

Total 100 100

Fig No: 5.3

Interpretation

30 percent of respondents are into business whereas 25 percent are into service and 45

percent are employed.

Table No: 5.4

Yearly income of the respondents


Less than `100000 None None

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`100000-`200000 10 20

`200000-`300000 30 30

`300000-`400000 20 20

`400000-`500000 35 35

Above `500000 5 5

Total 100 100

Fig No: 5.4

Interpretation

10 percent of the respondents belongs to ` 100000- ` 200000 whereas, 30 percent of

respondents belongs to ` 200000 - ` 300000.

20 percent of the respondents belongs to ` 300000 - ` 400000 whereas, 35 percent of

respondents belongs to ` 400000 - ` 500000 and 5 percent of respondents belong to

above ` 500000.

Table No: 5.5

Respondents investing in equity market

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Yes 75 75

No 25 25

Total 100 100

Fig No: 5.5

Interpretation

75 percent of investors are investing in equity market whereas,

25 percent of investors are not investing in equity market.

Table No: 5.6

Investments which provides the best returns


Equity Shares 63 63

IPO 8 8

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Bonds 10 10

Mutual Fund 7 7

Fixed Deposits 2 2

Total 100 100

Fig No: 5.6

Interpretation

It is cleared that 63 percent of investors opted equity market as the best returns compared to

other investment options. 8 percent of investors have opted IPO as best returns whereas, 10

percent of investors have opted Bonds as best returns, 7 percent of investors have opted Mutual

Funds as best returns and 2 percent of investors have opted fixed deposits as best returns.

Table No: 5.7

Factors that motivates to invest in equity market


Return 45 45

Liquidity 30 30

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Safety 5 5

Capital Appreciation 15 15

Others 5 5

Total 100 100

Fig No: 5.7

Interpretation

45 percent of investors are motivated by return to invest in equity market.

30 percent of investors are motivated by liquidity to invest in equity market.

5 percent of investors are motivated by safety to invest in equity market.

15 percent of investors are motivated by capital appreciation to invest in equity market

While 5 percent of investors are motivated by other factors like – investment, profit etc.

to invest in equity market.

Table No: 5.8

Percentage of the respondent’s income to invest in equity market


Less than 5 % 23 23

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5% - 10% 45 45

10% - 15% 17 17

15% - 20% 7 7

20% - 25% 5 5

More than 25% 3 3

Total 100 100

Fig No: 5.8

Interpretation

23 percent of the investors are investing less than 5 percent of their income in equity

market.

45 percent of investors are investing 5 percent to 10 percent of their income in equity

market.


market.


market.

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market.

3 percent of investors are investing more than 25 percent of their income in equity

market.

Table No: 5.9

Trading in equity


Intraday 15 15

Delivery 25 25

Speculation 30 30

Arbitrage 17 17

Hedging 12 12

Total 100 100

Fig No: 5.9

Interpretation

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According to this chart:

15 percent of the investors are doing intraday trading in equity market. Intraday trading is

trading for that one day only. Means any securities that are purchase and sell within the

day.

25 percent of the investors are investing in equity market as a delivery base trading.

Delivery based trading is normally considered as a safer approach for trading in shares

when compared to day trading. Delivery based trading involves buying shares on a

market day and selling them after receiving the delivery of those shares in demat account.

30 percent of the investors are trading in equity market as a speculator. Speculators are

those classes of investors who willingly take higher than average risk in return for a

higher than average profit potential in future. A speculators aim primarily at quick profit

from a short term acquisition of assets.

17 percent of investors are arbitrage in equity market. Arbitrage means that purchases

securities in one market for immediate resale in another in the hope of profiting from the

price differential.

12 percent of investors are trading in equity market as hedgers. Hedging means reducing

or controlling risk. Hedgers wish to eliminate or reduce the price risk to which they are

already exposed.

Table No: 5.10

The time horizon for investing in equity market


Less than 1 month 14 14

1 – 3 months 28 28

3 – 6 months 15 15

6 – 12 months 18 18

More than 12 months 25 25

Total 100 100

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Fig No: 5.10

Interpretation

14 percent of investors invest in equity market for less than 1 month.

28 percent of investors invest in equity market for the period of 1 month to 3 months.

15 percent of investors’ time horizon for in equity market is 3 to 6 months.

18 percent of investors’ time horizon for in equity market is 6 to 12 months.

25 percent of investors’ invest in equity market for more than 12 months.

Table No: 5.11

The rate of return expected by the respondents


5% - 10% 12 12

10% - 15% 18 18

15% - 20% 32 32

20% - 25% 26 26

25% - 30% 8 8

Total 100 100

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Fig No: 5.11

Interpretation

12 percent of investors expect 5% - 10% return from equity market.

18 percent of investors expect 10% – 15% return from equity market.




Table No: 5.12

Investors’ satisfaction with the current performance of the equity market in terms of expected return.


Fully Satisfied 17 17

Satisfied 42 42

Neutral 28 28

Unsatisfied 10 10

Fully unsatisfied 3 3

Total 100 100

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Fig No: 5.12

Interpretation

17 percent of investors are fully satisfied from the current performance of equity market.

42 investors are satisfied from equity market.

28 percent of investors are neutral with current performance of equity market.

10 percent of investors are unsatisfied from equity market.

While 5 percent of investors are fully unsatisfied from the equity market.

Table No: 5.13

The respondents who are influenced to enter the equity market


Friends 30 30

Relatives 12 12

Advisers 26 26

Media 17 17

Research report 26 26

Magazines 5 5

Total 100 100

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Fig No: 5.13

Interpretation

Friends motivate 30 percent of the investors to enter into the equity market.

Relatives motivate 12 percent of the investors to enter into the equity market.

26 percent of investors enter in equity market by the advice of financial advisor.

Media motivate 17 percent of the investors to enter into the equity market.

Research report 10 percent of the investors to enter into the equity market.

5 percent of investors are motivated by reading magazines to enter into the equity market.

Table No: 5.14

Factor considered being the most important while selecting the sector.

Variable No of Respondent Percentage

Market Trend 36 36

Profitability 28 28

Economic Condition 14 14

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Industry Condition 16 16

Government Policy 6 6

Total 100 100

Fig No: 5.14

Interpretation

36 percent of the investors have considered market trend as most important factor while

selecting the sector.

28 percent of the investors have considered profitability as most important factor while


14 percent of the investors have considered economic condition as most important while


16 percent of the investors have considered industry condition as most important while


6 percent of the investors have considered government policy as most important while


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Table No: 5.15

Preferences of the sectors

Variables No of Respondents

1 2 3 4 5

Total

Oil and Gas Sector 58 20 12 6 4 100

Banking Sector 10 14 60 5 11 100

IT Sector 25 4017 10 8 100

Infrastructure Sector 15 10 8 18 49 100

Automobile Sector 6 17 2145 11 100

On the basis of the above table investors have given 1st to 5th rank for the following sectors

Table No: 5.16

Variable No of Respondents Rank

Oil and Gas 58 1st

IT Sector 40 2nd

Banking Sector 60 3rd

Automobile 45 4th

Infrastructure 49 5th

Interpretation

Oil and Gas Sector

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58 investors gave first rank, 20 investors gave second rank, 12 investors gave third rank,

6 investors gave fourth rank and 4 investors gave fifth rank to this sector.

Here, overall 58 investors have selected oil and gas sector as first rank in comparison

with first rank of all sectors.

IT Sector


10 investors gave fourth rankand 8 investors gave fifth rank to this sector.

Here, overall 40 investors have selected IT sector as second rank in comparison with

second rank of all sectors.

Banking Sector


5 investors gave fourth rank and 11 investors gave fifth rank.

Here, overall 60 investors have selected banking sector as third rank in comparison with

third rank of all sectors.

Automobile Sector



Here, overall 45 investors have selected automobile sector as fourth rank in comparison

with fourth rank of all sectors.




Here, allover 49 investors have selected infrastructure sector as fifth rank in comparison

with fifth rank of all sectors.

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Table No: 5.17

Preferences based on the factors for selecting a company

Variable No of Respondents

1 2 3 4 5 6

Total

EPS 10 44 8 16 20 2 100

Dividend 6 20 46 7 9 12 100

Brokers Advice 10 23 11 3 44 9 100

Market capitalization 9 16 10 50 8 7 100

Performance of Company 5 10 8 6 9 62 100

PE Ratio 54 13 4 10 2 17 100

Table No: 5.18

Variable No of Respondents Rank

PE Ratio 54 1st

EPS 44 2nd

Dividend 46 3rd

Market Capitalization 50 4th

Brokers Advice 44 5th

Performance of Company 62 6th

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Interpretation

PE Ratio


10 investors gave fourth rank, 2 investors gave fifth rank and 17 investors gave sixth

rank.

Here, overall 54 investors have selected PE Ratio as first rank in comparison with first

rank of all the factors.

EPS


16 investors gave fourth rank, 20 investors gave fifth rank and 2 investors gave sixth

rank.

Here, overall 44 investors have selected EPS as second rank in comparison with second


Dividend

6 investors gave first rank, 20 investors gave second rank, 46 investors gave third rank, 7

investors gave fourth rank, 9 investors gave fifth rank and 12 investors gave sixth rank.

Here, overall 46 investors have selected dividend as third rank in comparison with third


Market Capitalization


50 investors gave fourth rank, 8 investors gave fifth rank and 7 investors gave sixth rank.

Here, overall 50 investors have selected market capitalization as fourth rank in

comparison with fourth rank of all the sectors.

Broker’s Advice

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10 investors gave first rank, 23 investors gave second rank whereas 11 investors gave

third rank, 3 investors gave fourth rank, 44 investors gave fifth rank and 9 investors gave

sixth rank.

Here, overall 44 investors have selected broker’s advice as fifth rank in comparison with

fifth rank of all the sectors.

Performance of Company

5 investors gave first rank, 10 investors gave second rank, 8 investors gave third rank, 6

investors gave fourth rank, 9 investors gave fifth rank and 62 investors gave sixth rank.

Here, overall 62 investors have selected performance of company as sixth rank in

comparison with sixth rank of all the sectors.

FINNDINGS AND SUGGESSTIONS

FINDINGS

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75 percent of respondents are investing in Equity Market, while 25 percent of investors

are not investing in Equity Market as per sample size of 100.

63 percent of investors believe that Equity Market is better investment option and will

provide the best returns in compare to other investment.

45 percent of investors who are dealing in equity market they are motivated by Return

factor and 30 percent of investors are motivated by Liquidity and some investor also

consider Capital Appreciation and Safety factor while investing in equity market in

various sectors.

45 percent of the investors are ready or interested to invest their 5%-10% of income in

equity market. It means many investors trust on the growth of equity market as they are

ready to spend major proportion of their income.

Very few investors want to deal in Hedging trading which shows that they consider safety

factors while investing. 30 percent of investors are trading in equity market as Speculator,

means 30 percent of investors who willingly take higher-than-average risk in return for a

higher-than-average profit potential.

28 percent of investors invest in equity market for the period of 1 to 3 months and the

same proportion of investors are investing for long period more than a year.

32 percent of investors expect 15%-20% return from equity market and 26 percent of

investors expect 20%-25% return from equity market. Here, investors are more expects

from equity market.

42 percent of investors are satisfied with current performance of the equity market in

terms of expected return, while 28 percent of investors are Neutral about equity market.

Most of the investors are motivated by their friends to enter in the equity market and

some investors are motivated by Advisers, Media, Research Report and other factors like

and self-study of current scenario of equity market.

36 percent of the investors have considered Market Trend and 28 percent of the investors

have considered Profitability as a most important factor while selecting the Sector. There

are also other factors like- Government Policy, Industry Policy and Economic Condition

are important factor while selecting the sector.

14 investors selected Oil and Gas sector as a First Rank (in comparison with First Rank

of all sectors)

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20 investors have selected IT sector as Second Rank

53 investors have selected Banking sector as Third Rank

8 investors have selected Automobile sector as Fourth Rank

5 investors have selected Infrastructure sector as Fifth Rank

It is also found that 26 investors have selected Price Earnings Ratio as First Rank in

comparison of selecting the company of their choice.

19 investors have considered Earnings per Share as Second Rank

17 investors have selected Dividend as Third Rank

16 investors have selected Performance of Company as Fourth Rank

15 investors have selected Brokers Advice as Fifth Rank

6 investors have considered Market Capitalization as Sixth Rank

SUGGESTIONS

For Investors

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The investors should prefer investment for long term investment strategy that provides

moderate return with liquidity.

Investors should not invest in only equity market but also invest in other Safe Securities

like- Fixed Deposits, Government Securities, Bonds Mutual Funds and Insurance etc.

which also provides moderate returns.

For example: One should prefer

Equity – 50 percent

Other Securities – 50 percent

So, one can get moderate return with liquidity.

Investors should invest money at lower price and sell the stock at higher price.

Investors should select company on the basis of PE ratio, EPS, Current Growth of

Company and Market Capitalization and many more. So, investors can get higher return

on their investment.

They should always invest extra money in stock market and should not invest by taking

loan from banks or other resources.

For Company

75 percent are investing in equity market, so more focus should be on 25 percent of

investors who are not investing in equity market.

Broking firms or companies should promote equity investment aggressively for long term

investment purpose.

Majority of investors are investing in secondary market (equity market) and very few

investors are investing in primary market. So, here broking firm should promote to their

client for investing in primary market.

Company should have to concentrate on those people who are not investing in equity

market because of high risk than covert them in investing other security like- Mutual

Fund, Bonds and Insurance etc. which also provides moderate return.

The Stock Broking firm should also provide better services to the investor to increase the

satisfaction level of the investors.

Company should focus on students also because equity market has risk and younger

generation likes to take risk.

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Majority investors are investing in Oil and Gas sector and IT sector. So, Company should

also suggest to investors for investing other sector which is also profitable.

CONCLUSION

From the survey it is found that majority are investing in equity market only due to high return

and hedge the risk by investing their major proportion of income in equity market. Here, most of

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the people trade in equity market as a speculation and they invests for one to three months.

Generally, the investors who invest for long period, that is, for more than a year are surely

beneficial in equity market. Most of the investors are motivated by their friends and Medias

advise to enter into equity market and are expecting something more from the equity

market.Majority of the investors prefer the Oil and Gas sector for their investment as on the basis

of market trend, profitability, industry condition and economic condition while selecting the

sector and investors have also considered Price Earnings Ratio, Earning per Share and Dividend

as the most important factors while selecting a company under these selected sectors. Hence it is

found that even though most of the investors are satisfied with equity market, there are few who

are not satisfied with equity market yet.

Bibliography

Books:

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Gordon & Natrajan, “Financial Markets and Services” second revised edition reprint,

Himalaya Publishing House, 2005.

Investment Management- V.A. AVADHANI

Websites:

www.sharekhan.com

www.nseindia.com

www.bseindia.com/markets/equity.aspx

Newspaper:

Economic Times

Other:

Sharekhan’s brochure

NCFM-capital market dealers module

QUESTIONNAIRE ON INVESTORS’ PERCEPTION

TOWARDS INVESTMENT IN EQUITY MARKET

73

http://www.nseindia.com/


I am Karen Sylvia Pais final year MBA student of SDM College of post-graduate center and

research studies. I am conducting a project on investors’ perception towards investment in equity

market. This project is taken as a partial requirement for the completion of my MBA degree

under Mangalore University.

I seek your kind assistance in completing the questionnaire by taking your valuable time. This

information is purely for an academic purpose and will be treated as highly confidential.

1. Name:

2. Gender:

Male Female

3. Age:

Below 20 years 21 to 30 years 31 to 40 years

41 to 50 years 51 to 60 years Above 60 years

4. Occupation:

Business Student Service Employee

5. Income (yearly)

Less than ` 100000 ` 100000 to ` 200000

` 200000 to ` 300000 ` 300000 to ` 400000

` 400000 to ` 500000 Above ` 500000

6. Do you invest in Equity Market?

Yes No

7. If you want to invest, which investment option would you feel provides the best returns?

Equity Shares IPO Mutual Fund

Bonds’ Fixed Deposits

8. Which factors motivates you to invest in Equity Market?

Return Liquidity Safety

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Capital Appreciation If any other please specify…………………….

9. What percentage of your income would you invest in Equity Market?

Less than 5% 5% - 10% 10% - 15%

15% - 20% 20% - 25% More than 25%

10. How do you trade in Equity Market?

Intraday Delivery Speculation

Arbitragers Hedging

11. What is the time horizon for investing in Equity Market?

Less than 1 month 1 – 3 months 3 – 6 months

6 – 12 months More than 12 months

12. What is the rate of return expected by you from Equity Market in a year?

5% - 10% 10% - 15% 15% - 20%

20% - 25% 25% - 30% 30% above

13. Are you satisfied with the current performance of the Equity Market in terms of expected

return?

Fully Satisfied Satisfied Neutral

Unsatisfied Fully Unsatisfied

14. Who influenced you to enter into Equity Market?

Friends Relative Advisers

Media Research Report Magazines

15. Which factor do you consider is most important while selecting the sectors?

Market Trend Profitability Economic Condition

Industry Condition Government Policy

16. Rank the following sectors based on your preference for investment?

Oil and Gas sector Infrastructure sector Banking sector

Automobile sector IT sector

17. Rank the most important factor selecting a company of your choice?

Earnings per Share Dividend Brokers

Market Capitalization Performance of Company PE Ratio

18. If any suggestion from your side, then please specify……………………………………

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Documents

A Project Report on a Study of Investors Perception Towards Investment in Equity Market -1