Shanth Project

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CHAPTER 1

INTRODUCTION

1.1 Research Background:

Investment is the commitment of a persons funds to derive future income in the form of

interest, dividend, premiums, pension, pension benefits or appreciation in the value of theircapital purchasing of shares, debenture, post office savings certificate, insurance policies are

all investments in the financial sense. Such investments generate financial assets.

In the economic sense, investment means the net additions to the economys capital stock

which consists of goods and services that are used in the production of other goods and

services. Investment in this sense implies the formation of new and productive capital in the

form of new constructions, plant and machinery, inventories, etc. such investments generate

physical assets.

The two types of investments are, however, related and dependent. The money invested

in financial investments are ultimately converted into physical assets. Thus, all investments

are ultimately converted into physical assets. Thus, all investments result in the acquisition of

some assets either financial or physical.

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1.2 Statement of the problem:

To study the investment pattern and selecting the best avenue according to the need of

investment.

Awareness and knowledge of Customers on various instruments of investment

such as mutual fund, Stock market, commodity market, etc. are less in Chennai.

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1.3 Need for the study:

This project study emphasizes more on finding out the various mode of investment and

the factors considering before investment made by the customers.

In simple, this study outlines the saving behaviour of the customers in Chennai

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1.4 Objectives of the study:

To determine the saving behavior and investment preferences of retail investors in

Chennai.

To under the factors that are considering by the investors on their investment.

To identify the features, the investors look for in various investments.

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1.5 Profile of the industry:

1.5.1 Introduction

The income that a person receives may be used for purchasing goods and services that he

currently requires or it may be saved for purchasing goods and services that he may require in

the future. In other words, income can be what is spent for current consumption abstains from

present consumption for a future use. The person saving a part of his income tries to find a

temporary repository for his savings until they are required to finance his future expenditure.

This results in investment.

1.5.2 Meaning of investment

Investment is activities that are engaged in by people who have saving, i.e. investments

are made from saving, or in other words, people invest their savings. But all savers are not

investors. Investment is an activity which is different from saving. Let us see what is meant by

investment.

It may mean things to many persons. If one person has advanced some money to another,

he may consider his loan as an investment. He expects to get back the money, long with interest

at a future date. Another person may have purchase one kilogram of gold for the purpose of price

appreciation and may consider it as an investment. Yet another person may purchase an

insurance plan for the various benefits it promises in future. That is his investment.

In all these cases it can be seen that investment involves employment of funds with the

aim of achieving additional income or growth in values. The essential quality of an investment is

that it involves waiting for a reward. Investment involves the commitment of resources which

have been saved in the hope that some benefits will accrue in future.

Thus, investment may be defined as a commitment of funds made in the expectation of

some positive rate of return. Expectation of return is an essential element of investment. Since

the return is expected to be realized in future, there is a possibility that the return actually

realized is lower than the return expected to be realized. This possibility of variation in the actual

return is known as investment risk. Thus, every investment involves return and risk.

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1.5.3 Financial and economic meaning of investment

In the financial sense, investment is the commitment of a persons funds to derive future

income in the form of interest, dividend, premiums, pension, pension benefits or appreciation in

the value of their capital purchasing of shares, debenture, post office savings certificate,

insurance policies are all investments in the financial sense. Such investments generate financialassets.

In the economic sense, investment means the net additions to the economys capital stock

which consists of goods and services that are used in the production of other goods and services.

Investment in this sense implies the formation of new and productive capital in the form of new

constructions, plant and machinery, inventories, etc. such investments generate physical assets.

The two types of investments are, however, related and dependent. The money invested in

financial investments are ultimately converted into physical assets. Thus, all investments are

ultimately converted into physical assets. Thus, all investments result in the acquisition of some

assets either financial or physical.

1.5.4 Characteristics of investment

All investments are characterized by certain features. Let us analyze these characteristic

features of investments.

Return

All investments are characterized by the expectation of a return. Infact, investments are made

with primary objective of deriving a return. The return may be received in the form of yield pluscapital appreciation. The return may be received in the form of yield plus capital appreciation.

The dividend or interest received from the investment is the yield. Different types of

investments promise different rates of return. The return from a investment depends upon the

nature of the investment, the maturity period and a host of other factors.

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Risk

Risk is inherent in any investment. The risk may relate to loss of capital, delay in repayment of

capital, non-payment of interest, or variability of returns. The risk of an investment depends on

the following factors.

The longer the maturity period, the larger is the risk.

The lower the credit worthiness of the borrower, the higher is the risk.

The risk varies with the nature of investment. Investments in ownership securities like equity

share carry higher risk compared to investments in debt instruments like debentures and bonds.

Safety

The safety of an investment implies the certainty of capital without loss of money.

Liquidity

An investment which easily saleable or marketable without loss of money and without loss of

time is said to possess liquidity.

1.5.5 Objectives of investment

An investor has various alternative avenues of investment for his savings to flow to.

Savings kept as cash are barren and do not earn anything. Hence, savings are invested in assets

depending on their risk and return characteristics. The objective of the investor is to minimize

the risk involved in investment and max the return from the investment.

Thus, the objective of investment can be stated as: Maximization of return, minimization of risk

& hedge against inflation.

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1.5.5 Investment process

The investment process is generally described in four stages. These stages are investment

policy, investment analysis, valuation of securities, and portfolio construction.

I. Investment policy: Determination of ingestible wealth determination of portfolioobjectives. Identification potential investment assets consideration of attributes of

investment assets allocation of wealth to asset categories.

II Investment Valuation: Valuation of stocks, debentures, other assets and bonds.

III. Investment Analysis:

Equity stock analysis

Screenings of industries

Analysis of industries

Quantitative analysis of stocks

Analysis of the economy

Debentures and bond analysis

Qualitative analysis of debentures

Other assets analysis

IV. Portfolio Construction: Determination of diversification level consideration of

investment assets evaluation of portfolio for feedback

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I.6 product profile:

1. Stock Market:

The Bombay stock Exchange (BSE) AND National stock Exchange (NSE) are the two

Primary Exchange in India. In addition there are 22 regional stock exchanges. However the BSE

and NSE have established themselves as the two leading exchange and accounts for about 90%

of the equity volume trade in India.

The primary index of BSE is BSE Sensex comprising 30 stocks. NSE has the S&P NSE 50 index

(nifty) which consists of 50 stocks. The BSE Sensex is the older and more widely followed

index. Both the exchanges have switched over from the open outcry trading system to a fully

automed computerized mode of trading known as BOLT ( BSE on line trading) and NEAT( national exchange automated trading) system. It facilities more efficient processing,

automatic order matching, faster execution of trader and transparency.

A) Equity share:

Ordinary shares are also known as equity shares and they are the most common form of

share in the UK. An ordinary share gives the right to its owner to share in the profits of the

company (dividends) and to vote at general meetings of the company. Since the profits of

companies can vary wildly from year to year, so can the dividends paid to ordinary shareholders.

In bad years, dividends may be nothing whereas in good years they may be substantial. Ordinary

shareholders can vote on all of the issues raised at a general meeting of the company.

The nominal value of a share is the issue value of the share - it is the value written on the

share certificate that all shareholders will be given by the company in which they own shares.

The market value of a share is the amount at which a share is being sold on the stock exchange

and may be radically different from the nominal value.

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Types of stock:

1. Common Stock:

Common stock also referred to as common or ordinary shares, are, as the name implies,

the most usual and commonly held form of stock in a company.

2. Preferred Stock:

Preferred stock sometime called preferred shares, have priority over common stock in

the distribution of dividends and assets.

3. Treasury stock:

Treasury stock are shares that have been bought back from public. Treasury stock is

considered issued, but not outstanding.

4. Dual class stock:

Dual class stock is shares issued for a single company with varying classes indicating

different rights on voting and dividend payments. each kind of shares has its own class ofshareholders entitling different rights.

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B) Preference Shares

Preference shares offer their owners preferences over ordinary shareholders. There are two major

differences between ordinary and preference shares:

Preference shareholders are often entitled to a fixed dividend even when ordinary

shareholders are not.

Preference shareholders cannot normally vote at general meetings.

The preference dividend is fixed in the sense that preference shares are often issued with

the rate of dividend fixed at the time of issue and you might see something like this:4%

preference dividend $ 0.25

Note, that if by any chance a company cannot pay its preference share dividend then it

cannot pay any ordinary share dividend since the preference shareholders have the right to

receive their dividend before the ordinary shareholders under all circumstances - hence the term

'preference'.

Types of preference shares:

1. Cumulative preference shares:

Preference shares are usually cumulative and this means that if this year's dividend wasn't

paid, then it will be carried forward to next year.

2. Non-Cumulative preference shares:

Some preference shares are non-cumulative, if the company cant pay the dividend for

one particular year, the dividend for that year lapses.

3. Redeemable preference shares:

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A preference share may be redeemable which means that at some time in the future, the

company will effectively buy if back.

4. Irredeemable preference shares:

A preference share may be irredeemable which means that at some time in the future, the

company will not effectively buy it back.

5. Convertible Preference Share

Preference shares may be issued with the right of conversion into ordinary shares. These

are called Convertible Preference Share.

6. Non Convertible Preference shares:

Preference shares may be issued without the right of conversion into ordinary shares.

These are called Convertible Preference Share.

7. Participating Preference Share

If a preference share is a participating preference share then the owner of such a share has

the right to participate in, or receive, additional dividends over and above the fixed percentage

dividend.

2.Fixed Deposit:

When you deposit a certain sum in a bank with a fixed rate of interest and specified time period,

it is called a bank fixed deposit (FD). At maturity, you are entitled to receive the principal

amount as well as the interest earned at the pre-specified rate during that period. The rate of

interest varies between 4 and 6 per cent, depending on the maturity period of the FD and the

amount invested.

How to apply in fixed deposit?

One can get a bank FD at any bank, be it nationalized, private, or foreign. You have to open a FD

account with the bank, and make the deposit. However, some banks insist that you maintain a

savings account with them to operate a FD. When a depositor opens an FD account with a bank, a

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deposit receipt or an account statement is issued to him, which can be updated from time to time,

depending on the duration of the FD and the frequency of the interest calculation. Check deposit

receipts carefully to see that all particulars have been properly and accurately filled in

Returns from Fixed bank deposit:

The rate of interest for Bank Fixed Deposits varies between 4 and 11 per cent, depending

on the maturity period (duration) of the FD and the amount invested. Interest rate also varies

between each bank. A Bank FD does not provide regular interest income, but a lump-sum

amount on its maturity. Some banks have facility to pay interest every quarter or every month,

but the interest paid may be at a discounted rate in case of monthly interest. The Interest payable

on Fixed Deposit can also be transferred to Savings Bank or Current Account of the customer.

The deposit period can vary from 15, 30 or 45 days to 3, 6 months, 1 year, and 1.5 years to 10

years. Example of bank deposit:

Duration Interest rate (%) per annum

15-30 days 4 -5 %

30-45 days 4.25-5 %

46-90 days 4.75--5.5 %

91-180 days 5.5-6.5 %

181-365 days 5.75-6.5 %

1-2 years 6-8 %

2-3 years 6.25-8 %

3-5 years 6.75-8

Table NO: 1.6. (1)

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3. Mutual Fund:

Mutual Fund is an instrument of investing money. A mutual fund is a group of investors

operating through a fund manager to purchase a diverse portfolio of stocks or bonds. Mutual

funds are highly cost efficient and very easy to invest in. By pooling money together in a

mutual fund, investors can purchase stocks or bonds with much lower trading costs than if

they tried to do it on their own. Also, one doesn't have to figure out which stocks or bonds to

buy.

Diversification means spreading out money across many different types of investments.

When one investment is down another might be up. Diversification of investment holdings

reduces the risk tremendously.

Types of Mutual fund:

1. Open-ended funds

An open-end fund is one that is available for subscription all through the year. These do

not have a fixed maturity. Investors can conveniently buy and sell units at Net Asset Value

("NAV") related prices. The key feature of open-end schemes is liquidity

2. Closed-ended funds

A closed-end fund has a stipulated maturity period which generally ranging from 3 to 15

years. The fund is open for subscription only during a specified period. Investors can invest in

the scheme at the time of the initial public issue and thereafter they can buy or sell the units of

the scheme on the stock exchanges where they are listed. In order to provide an exit route to the

investors, some close-ended funds give an option of selling back the units to the Mutual Fund

through periodic repurchase at NAV related prices. SEBI Regulations stipulate that at least one

of the two exit routes is provided to the investor.

3. Interval Funds

Interval funds combine the features of open-ended and close-ended schemes. They are

open for sale or redemption during pre-determined intervals at NAV related prices.

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4. Growth Funds

The aim of growth funds is to provide capital appreciation over the medium to

long term. Such schemes normally invest a majority of their corpus in equities. It has been

proved that returns from stocks, have outperformed most other kind of investments held over the

long term. Growth schemes are ideal for investors having a long term outlook seeking growth

over a period of time. They promise pure capital appreciation with equity shares. They buy

shares in companies with high potential for growth (some of which might not pay dividends).

The NAV of such a fund will tend to be erratic, since these so-called growth shares experience

high price volatility. They also make quick profits by investing in small cap shares and by

investing in initial public offerings of small companies. However, growth strategy may differ

from one fund to another. Not all growth funds operate similarly.

5. Income Funds

The aim of income funds is to provide regular and steady income to investors.

Such schemes generally invest in fixed income securities such as bonds, corporate debentures

and Government securities. Income Funds are ideal for capital stability and regular income. They

aim to provide safety of principal and regular (monthly, quarterly or semi annually) income by

investing in bonds, corporate debentures and other fixed income instruments. The AMC in this

case will also be guided by ratings given to the issuer of debt by credit rating agencies. Wherever

a debt instrument is not rated, specific approval of the board of the AMC is required. Since most

corporate debt is illiquid, the fund tries to provide liquidity by investing in debt of varying

maturity.

6. Balanced Funds

The aim of balanced funds is to provide both growth and regular income. Such

schemes periodically distribute a part of their earning and invest both in equities and fixed

income securities in the proportion indicated in their offer documents. In a rising stock market,

the NAV of these schemes may not normally keep pace, or fall equally when the market falls.

The investors looking for a combination of income and moderate growth. The idea is to get the

best of both the worlds, equity shares and debt. The proportion of the two asset classes depends

on the fund managers' preference for risk against return. But because the investments are highly

diversified, investors reduce their market risk. Normally about 50 to 65 per cent of a portfolio's

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assets are invested in equity shares.

7. Money Market Funds

The aim of money market funds is to provide easy liquidity, preservation of capital and moderate

income. These schemes generally invest in safer short-term instruments. Returns on these

schemes may fluctuate depending upon the interest rates prevailing in the market. These are

ideal for Corporate and individual investors as a means to park their surplus funds for short

periods. Also known as Liquid Plans, these funds are a play on volatility in interest rates.

Most of their investment is in fixed-income instruments with maturity period of less than a

year. Since they accept money even for a few days, they are best used to park short-term

money, which otherwise earns a lower return in a savings bank account.

3. Insurance

The insurance that covers loss of an interest in a property due to legal defects and

that is required if the property has a mortgage.

Title insurance is a police issued by title insurance company, assuring that the title

is a clear in the name of title owner. That means if owner wish to sale the property,that time he don't have any problem to sell that. If any problem creates after selling the

property to the new owner that time title insurance company will pay the damage for

that or take action to solve that problem.

Insurance as Investment

Agreed, insurance may not be the best place to invest your hard-earned money. But there

are sufficient reasons for one to believe that it can be a highly lucrative avenue to facilitate

savings. People often talk about yield on investment and tend to compare their values with thoseavailable on various insurance schemes. This is particularly typical within the Indian sub-

continent where one conveniently forgets the element of risk covered by life insurance.

It is extremely unfair to compare the performance of insurance against other investments

without considering the core features of insurance. The very essence of insurance is to protect

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your family from the uncertainty of your life. Hence it proves very logical to evaluate the costs

involved towards this feature. Ask yourself this question

When you pay insurance premium for your car, do you get anything if fortunately no

mishap happens? This means that you spent the amount to secure a valuable property.

Hence you must accept that out of the total amount paid by you for your life insurance, a

certain amount is used for providing the risk cover and only the balance can be utilised as

savings.

In other words, the total premium you pay minus the amount evaluated as the cost of

insurance must be considered as the amount invested to get the maturity amount. If you calculate

the yield from returns, you will be in for a surprise.

4. Public Provident Fund (PPF):

Introduction:

Under this scheme, there is a return at the -interest rate of 8% p.a. The minimum

investment limit is Rs. 500/- and maximum limitation is Rs. 70,000/-. It can be

opened any time throughout the year. It can be operated either single or jointly. In case

of minor, with parent/guardian. There is also a facility of nomination in this scheme.

Highlights:

The Public Provident Fund Scheme is a statutory scheme of the Central

Government of India.

The Scheme is for 15 years.

The rate of interest is 8% compounded annually.

The minimum deposit is 500/- and maximum is Rs. 70,000/- in a financial year.

One deposit with a minimum amount of Rs.500/- is mandatory in each financial year.

Public

The deposit can be in lump sum or in convenient installments, not more than 12

Installments in a year or two installments in a month subject to total deposit of

Rs.70,000/-.

It is not necessary to make a deposit in every month of the year. The amount of

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deposit can be varied to suit the convenience of the account holders.

The account in which deposits are not made for any reasons is treated as

discontinued account and such account can not be closed before maturity.

The discontinued account can be activated by payment of minimum deposit of

Rs.500/- with default fee of Rs.50/- for each defaulted year.

Account can be opened by an individual or a minor through the guardian.

The deposits shall be in multiple of Rs.5/- subject to minimum amountofRs.500/-.

The deposit in a minor account is clubbed with the deposit of the account of

the Guardian for the limit of Rs.70, 000/-.

The PPF scheme is operated through Post Office and Nationalized banks.

Deposits in PPF qualify for rebate under section 80-C of Income Tax Act. Deposits are

exempt from wealth tax.

Nomination facility available. Best for long term investment.

5. National Savings Certificate:

What is National Savings Certificate?

National Savings Certificates (NSC) is certificates issued. by Department of post,

Government of India and is available at all post office counters in the country. It is a

long term safe savings option for the investor. The scheme combines growth in

money with reductions in tax liability as per the provisions of the Income Tax Act,

1961. The duration of a NSC scheme is 6 years.

National Savings Certificate, popularly known as NSC, is a time-tested tax

saving instrument that combines adequate returns with high safety.

National Savings Certificate can be purchased by the following:

An adult in his own name or on behalf of a minor.

A minor,

A trust

Two adults jointly,

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Hindu Undivided Family

National Savings Certificates are available in the denominations of Rs.100, Rs 500,

Rs. 1000, Rs. 5,000 & Rs.10,000. There is no maximum limit on the purchase of the

certificates.

Period of maturity of a certificate is six years. Presently, maturity value of a

certificate of Rs.100 denomination is Rs.160.10. Maturity value of a certificate of any other

denomination is at proportionate rate. Premature encashment of the certificate is not

permissible except at a discount in the case of death of the holder(s), forfeiture by a Pledge

and when ordered by a court of law.

Interest accrued on the certificates every year is liable to income tax but deemed to

have been reinvested. Income Tax rebate is available on the amount invested and interest

accruing under Section 88 of Income Tax Act, as amended from time to time. Income tax relief

is also available on the interest earned as per limits fixed vide section 80L of Income Tax, as

amended from time to time.

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3.8.5) Highlights:

Minimum investment Rs. 500/- No maximum limit.

Rate of interest 8% compounded half yearly. Rs. 1000/- grow to Rs. 1601/- in six

years.

Companies, Trusts, Societies and any other Institutions not eligible to purchase.

Non-resident Indian/MF can not purchase. No pre-mature encashment.

Annual interest earned is deemed to be reinvested and qualifies for tax rebate forfirst 5 years under section 80 C of Income Tax Act.

Maturity proceeds not drawn are eligible to Post Office Savings account interest for

a maximum period of two years.

Facility of reinvestment on maturity, encashment of certificates through banks,

purchase/ payment to the holder of Power of attorney and Nomination.

Certificate can be pledged as security against a loan to banks/ Govt. Institutions.

Certificates are transferable from one Post office to any Post office. Certificates are

transferable from one person to another person before maturity.

Duplicate Certificate can be issued for lost, stolen, destroyed, mutilated or

defaced certificate.

Tax Saving instrument - Rebate admissible under section 80 C of Income

tax Act.

Interest income is taxable but no TDS.

Deposits are exempt from Wealth tax.

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CHAPTER 2

REVIEW OF LITERATURE

PROJECT TITLE:

A project on Customer preference of various Investment Avenues in Mohali and Chandigarh

with reference to Karvy stock Broking pvt ltd

CONCLUSION AND RECOMMENDATIONS

After completing the survey and watching the analysis, the conclusion is that the before

investment, investors do have focus on Tax savings, Income, Capital preservation etc. They also

have a predetermination of the time period of investment.

AGE GROUP

According to my view the age group of 21-30 can be great potential investors for the company as

they have high risk profile, more disposable income, and the time horizon is perfect 3-5 years.

Recommendation for this category is company must follow up these high potential

customers, they can be offered Equity shares because this group of people has a high risk

profile and they can afford to takes risks which is usually associated with equity shares.

This group of customers can also be offered Mutual funds because in that also the

exposure is in equities. ULIPS can also be offered to this group. The ULIP has a 20%-

22% return which good enough for investment. The main focus should be to reach to the

customer; these customers are aware of ULIPs and aware of other product. Company

should try to reach them and tap the investor.

Mutual Funds can also be offered as they have high risk profile. Company should take

initiative to get demat account of these customers.

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The age group of 31-40 years, investors is with Moderate risk profile, most of the

investors are from the 10,000-15,000 Rs per month disposable income. Company will get

a good investor with diluted risk profile. Company can offer them ULIPs, and Fixed

Deposits as investment instrument. Mutual funds can be an option but that must be a debt

fund to invest.

The age groups of 41-50 years, investors are from the 15,000-20,000 Rs disposable

income group. Investors in this group are invested in Insurance sector, the primary

focuses of these investors are retirement and time horizon is likely to be 6-9 years. This is

also good potential group for the retirement plan in ULIPs. Fixed deposits can be a good

option for them.

For the age group of above 50 years, the risk profile would be low moderate, as the term

is not more than 3 years. Investors have invested in insurance sector but in this age

insurance would not be a good option for investor. Company should try to minimise therisk tolerance by offering fixed deposits.

In the survey there was lot of people who were in the age group of above 60. For this

group of people the company can target Fixed deposits which gives continues return like

monthly interests so that they can keep on getting returns.

OCCUPATION

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If we see the survey data it will be seen that respondents are majorly Service people and

Business Class. Depending upon the data I conclude that the service class has a time horizon of

3-5 years and risk tolerance Low- Moderate. They invested in FDs, Equity shares, Mutual Fund

and ULIPs.

Recommendation Is Company should tap this class by innovative marketing strategies

as they already invested, and offer FDs, ULIPs. Mutual fund can be a lucrative offer if

the Fund is any moderate fund or debt fund.

For the business class, the risk profile is high-very high. Most investor are with negative

return acceptability and time horizon is < 3 years. Company should offer Mutual funds

with risk profile High to very high thus investor can get a high return. Apart from this

company should offer to open demat account with them.

DISPOSIBLE INCOME

The disposable income bracket less than Rs.5000 per month are basically safe investors

and have not and do not prefer investing in mutual funds and ULIP. Thus positioning of

these products should be such that people are attracted towards this scheme. Emphasis on

marketing of the products should be given.

Respondents under disposable income bracket Rs.5, 000-Rs.10, 000 have mainly invested

in insurance and real estate. But when survey was done and their preferences were asked

these respondents strongly preferred investing in these strategies.

Disposable Income Bracket of Rs.15, 000-Rs.20, 000 are the strong contenders for

investing their money and these people have invested in real estate, insurance and fixed

deposits. Moreover there is mixed preferences for their investments thus proper

segmentation of the sample should be done accordingly marketing strategies should be

adopted.

Though there is a small percentage of respondents in disposable income bracket above

Rs.20, 000 who least prefer investing in mutual fund. But this is the segment which can be well

targeted and their portfolio should be such that gives them more returns. The case ofULIP is

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different as people strongly prefer investing in this investment strategy. Thusemphasis for

selling ULIP in this income bracket.

CHAPTER 3

RESEARCH METHODOLOGY

3.1 Research Design:

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Research means a scientific and systematic search for pertinent information on a

specific topic. Research is a careful investigation or inquiry especially through search for new

facts in any branch of knowledge. Research comprises defining and redefining problems,

formulating hypothesis or suggested solutions; collecting, organizing and evaluating data;

making deductions and reaching conclusions; and at last carefully testing the conclusions to

determine whether they fit the formulating hypothesis.

Methodology is defined as the study of methods by which we gain knowledge, it deals

with cognitive processes imposed on research by the problems arising from the nature of its

subject matter

Descriptive type of research has been used in this study; it involves surveys and fact

findings enquire of different kinds the major purpose of descriptive research is the description of

the state of affairs, as it exists at present. The main characteristics of this method are that the

researcher has no control over the variable; he can only report what has happened or what is

happening. The methods of research utilized in descriptive research are survey methods of all

kinds, including comparative and correlation methods.

Research design is a conceptual structure within which research is conducted. A research

design is the detailed blueprint used to guide a research study towards its objective. It is a series

of advanced decision taken together comprising a master plan or a model for conducting the

research in consonance with the research objectives. Research design is needed because it

facilitates the smooth sailing of the various research operations, thereby making research as

efficient as possible yielding maximum information with the minimum effort, time and money.

3.2 Sampling Design:

The sample size for the present study consists of 100 respondents.

3.3 Data Collection Method:

Primary Data :

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Primary data required for the study has been collected with the help of a questionnaire.

The questionnaire was so framed so that all the important aspects pertaining to the different

objectives have been dealt with at length.

Secondary Data :

Different existing sources of data have been tapped to the maximum extent to supplement

the primary data. Sources of secondary data include finance related websites, books, etc

3.4 Statistical tools for Data Analysis:

Percentage Analysis

Percentage refers to a special kind of ratio in making comparison between two or more

data and to describe relationships. Percentage can also be used to compare the relation

terms the distribution of two or more sources of data.

Number of Respondents

Percentage of Respondents = -------------------------------- X 100

Total Respondents

Weighted Average Method:

Weighted mean

Weighted mean enables us to calculate an average that takes into account the importance

of each value to the overall total.

Weighted mean (xw) = (wx)/ w

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Where xw = symbol for the weighted mean

w = weighted assigned to each observation

(wx) = sum of the weight of each element times that element

w = sum of all of the weights

Chi Square Test

In this research I had used the CHI-SQUARE TEST to analyze the data collected from

the respondents. While analyzing the data the chi-square tables were framed and the relevant

calculated values. The calculated value was compared with the table value to ascertain the level

of significance of the customers are accomplished. Based on the inferences the researcher has

presented extensive discussions on each of the factors analysed.

There are many situations in which is not possible to make anyrigid assumption about the

distribution of the population form which samples being drawn. This limitation can be taken care

of any non-parametric tests chi square test is one non-parametric test used in this study to find

out whether two or more attributes are associated or not. The use of this test has clearly stated

whether the attributes compared are independent of each other or dependent on each other. This

test is used in statistical work. The symbolX a Greek letter representing chi. The quantity of

chi-square describes the magnitude of discrepancy between theory and observed frequencies. It

is defined ad (O-E) the whole square divided by E.

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`Where,

O refers to Observed Frequency

E refers to Expected Frequency

Chi-square analysis can be used when the data consists of count on frequencies with

which each category of tabulation or cross tabulation appears. Chi-square is useful when ourobjective is to determine the significance of observed association of attributes in contingency

table involving two or more variables. This is called the test of independence.

The following steps are to be conducted for Chi-Square test:

1. Calculate the expected frequencies. This is calculated by the following equation:

E=RTCT/N

Where,

RT- The Row total for the rows containing the cells.

CT- The Column total for the column containing the cells.

N- The Total number of observations.

2. The differences between the observed and expected frequencies are calculated and

the square of the difference are obtained individually.

3. The values of (O-E)2 obtained should be divided by the respective expected

frequencies to obtain the total of (O-E)2/E. This value is X.

X= (O-E)2/E

4. The next step is to find the degree of freedom. It is found by the following

formula:

(no. of rows-1) x (no. of columns-1)

i.e. (r-1) (c-1)

5. The X at the calculated degree should be compared with the tables.

If the calculated value is lesser than the table value Null Hypothesis is

Accepted

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If the calculated value is greater than the table value Null Hypothesis is

Rejected.

3.5 Limitations of the study

The study would be confined only to Chennai.

Due to time constraints, the survey had not been conducted in all areas of Chennai.

Only 100 respondents are surveyed, so that result may not be accurate.

The study would adopt convenience sampling and hence could inherit the limitations of

the same.

Personal bias and prejudice of the respondents could affect the results of the study

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CHAPTER 4

DATA ANALYSIS AND INTERPRETATION

1. Percentage Analysis

Customer Interest about investment

Table No: 4.1

Interest about interest No of customers %

Yes 92 92

No 8 8Total 100 100

(Source: primary data)

Chart No: 4.1

Inference:

The above table indicates that 92% of the respondents are interested in investment only 8% of

respondents are not interested in investment.

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Occupation of the Respondents

Table No: 4.2

Occupation No of customers %

Government Employee 11 11

Private Employee 63 63

Businessmen 16 16

Retired 6 6

Others 4 4

Total 100 100


Chart No: 4.2

Inference:

The above table indicates that 63% of the respondents are private employs and 6% of the

respondents are retired people.

Age group of the Respondents

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Table No: 4.3

Respondent Age group No of customers %

20-40 years 37 37

41-60 years 44 44

Above 60 years 19 19

Total 100 100


Chart No: 4.3

Inference:

The above table indicates that 44% of the respondents are 41-60 years old than 19% of the

respondents are above 60 years old.

Respondent Annual house hold income

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Table No: 4.4

Annual house hold

incomeNo of customers %

Less than 1.5 lakh 27 27

Between 1.5 to 3 lakh 39 39

Between 3 to 5 lakh 19 19

Above 5 lakh 15 15

Total 100 100


Chart No: 4.4

Inference:

The above table indicates that 39% of the respondents are having between 1.5 to 3 lakh annul

house hold income and 15% of the respondents are having above 5 lakh annual house hold

income.

Respondent preference for investment

Table No: 4.5

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Preference for investment No of customers %

Mutual fund 6 6

Fixed deposit 51 51

Insurance 22 22

Property 11 11

Shares 10 10

Total 100 100


Chart No: 4.5

Inference:

The above table indicates that 51% of the respondents prefer fixed deposit after that they prefer

insurance following by property and shares.

Purpose of investment

Table No: 4.6

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Chart No: 4.7

Proportion of Investment %

Mutual Fund 5

Fixed Deposits 30

Insurance 15

Property 10

Gold 25

Shares 6Banks 9

Total 100


Chart No: 4.7

Inference:

The above table indicates that 30% of the respondents proposed 30% of money for fixed deposit

and then 5% of the respondents are proposed to invest Mutual fund.

Respondent interested in type of Mutual fund:

Table No: 4.8

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Interested in Mutual Fund No of customers %

UTI 13 13

Reliance Mutual Fund 19 19

SBI Mutual Fund 47 47

ICICI Prudential Mutual Fund 11 11

Others 10 10

Total 100 100


Chart No: 4.8

Inference:

TheAbove table indicates that 47% of the respondents have to prefer only in SBI Mutual fund

and 10% of them interested other companies Mutual funds

Expected return on investment per annum:

Table No: 4.9

Expected return per annum No of customers %

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Less than 10% 14 14

Between 10% to 30% 67 67

Above 30% 19 19

Total 100 100


Chart No: 4.9

Inference:The above table indicates that 67% of the respondents expected 10% to 30% return per annum

and 14% of respondents expected less than 10% return on investment.

Ability to face the Risk

Table No: 4.10

Risk taken ability No of customers %

Minimum Risk 16 16Moderate Risk 72 72

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High Risk 12 12

Total 100 100


Chart No: 4.10

Inference:

The above table indicates that 72% of the respondents ability to take Moderate risk and 12 of

the respondents take high risk.

2. Weighted Average

Table No: 4.11

Preference for investment

OPTION Preference for Investment

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WEIGHTAGENO.OF

RESPONDENTSTOTAL MEAN

Mutual Fund 5 6 30 0.3

Fixed Deposit 4 51 204 2.04

Insurance 3 22 66 0.66

Property 2 11 22 0.22

Shares 1 10 10 0.1

Total = 100

Chart No: 4.11

Inference:

Most of the respondents (2.04) are prefer to invest Fixed Deposit.

3. Chi square TableTable NO: 4.12

Age vs Preference

Preference Age Total

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20yrs-40yrs 41yrs-60yrs above 60yrs

Mutual fund 3 3 0 6

Fixed deposit 23 10 18 51

Insurance 4 18 0 22

Property 7 4 0 11

Shares 0 9 1 10

Total 37 44 19 100

Hypothesis:

Ho There is no significant relationship between the Age of the respondents and Preference of

Investment.

H1 There is a significance relationship between the Age of the respondents and Preference of

Investment.

Table calculation ofX

OBSERVED

FREQUENCY

EXPECTED

FREQUENCY(O-E) (IO-EO)2/E

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3 2.22 0.78 0.2741

23 18.87 4.13 0.90392

4 8.14 -4.14 2.10561

7 4.07 2.93 2.1093

0 3.7 -3.7 3.7

3 2.64 0.36 0.04909

10 22.44 -12.44 6.8963

18 9.68 8.32 7.15107

4 4.84 -0.84 0.14578

9 4.4 4.6 4.80909

0 1.14 -1.14 1.14

18 9.69 8.31 7.12653

0 4.18 -4.18 4.18

0 2.09 -2.09 2.09

1 1.9 -0.9 0.42632

CALCULATE VALUE 43.1072

Degree of freedom = (r-1) (c-1)

= (5-1) (3-1)

= 8

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(8, 0.05) Table value = 15.51

TV < CV

Hence H1 is accepted.

Inference:

Since the Calculated Value is greater than the Table value, Alternate Hypothesis is

accepted.

Therefore, there is significant relationship between the Age of the respondents and

Preference of Investment.

Table NO: 4.13

Age VS Purpose of Investment

PurposeAge

Total20yrs-40yrs 41yrs-60yrs above 60yrs

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Children Education 24 25 0 49

Retirement 0 2 14 16

House 12 14 5 31

Tax savings 1 3 0 4

Total 37 44 19 100

Hypothesis:

Ho There is no significant relationship between the Age of the respondents and Purpose of

Investment.

H1 There is a significance relationship between the Age of the respondents and Purpose of

Investment.

Table calculation ofX

OBSERVED

FREQUENCY

EXPECTED

FREQUENCY(O-E) (IO-EO)2/E

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24 18.13 5.87 1.90054

0 5.92 -5.92 5.92

12 11.47 0.53 0.02448

1 1.48 -0.48 0.15567

25 21.56 3.44 0.54886

2 7.04 -5.04 3.60818

14 13.64 0.36 0.00951

3 1.76 1.24 0.87364

0 9.31 -9.31 9.31

14 3.04 10.96 39.514

5 5.89 -0.89 0.13448

0 0.76 -0.76 0.76

CALCULATE VALUE 62.7591

Degree of freedom = (r-1) (c-1)

= (4-1) (3-1)

= 7

(7, 0.05) Table value = 14.07

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TV < CV

Hence H1 is accepted.

Inference:

Since the Calculated Value is greater than the Table value, Alternate Hypothesis is accepted.

Therefore, there is significant relationship between the Age of the respondents and Purpose of

Investment.

CHAPTER 5

SUMMARY

5.1 FINDINGS:

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From Percentage Analysis,

Majority of the respondents (92%) are interested in invest various investment

avenues.

Most of the respondents (63%) are private employees they are invested in various

investment instruments.

Most of the respondents (44%) are aged between 41-60 years.

Most of the respondents (39%) are having 1.5 to 3 lakh annual house hold income.

Majority of respondents (51%) are preferred to invest only in fixed deposit only.

Most of the respondents (49%) are invested only for his/her childrens education

following by build a house.

Most of the respondents (30%) are invest in fixed deposit only.

Most of the respondents (47%) prefer to invest SBI mutual funds followed by

Reliance mutual fund.

Majority of respondents (67%) are expected 10% to 30% return on investment for per

annum.

Majority of respondents (72%) are ability to take moderate risk about investing their

money in various investment instruments.

FromWeighted Average Analysis:

Most of the respondents (2.04) are prefer to invest Fixed Deposit.

From Chi square Test Analysis:

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The Calculated Value is greater than the Table value, Alternate Hypothesis is accepted

So, There is significant relationship between the Age of the respondents and Preference

of Investment.

The Calculated Value is greater than the Table value, Alternate Hypothesis is accepted

So, there is significant relationship between the Age of the respondents and Purpose of

Investment.

5.2 SUGGESTIONS & RECOMMENDATIONS:

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Most of the respondents are investing in a fixed deposit and SBI, Reliance Mutual

funds. Senior citizens are preferred some guaranteed savings as well as good returns from

the reliable companys

Do not overtrade.

Do not trade on rumors.

Do not trade in all stocks of one sector.

It's better to buy the wrong stocks at the right time than to buy the right

stocks at the wrong time.

Trade with the trends rather than trying to pick tops and bottoms.

As long as a market is acting right, don't rush to take profits.

Don't buy something because it is low priced.

Money cannot be made everyday from the markets.

Avoid making average, when stock is coming down.

Don't watch or trade too many stocks at once.

5.3 CONCLUSION:

After completing the survey and watching the analysis, the conclusion is that the

before investment, investors do have focus on security, Income, Capital preservation,

Interest, etc. People are mostly invested in Bank deposit and LIC insurance because of

security. But they are not investing on others avenues of investment.

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