ABDUL MAJEEB PASHA SHAIK*; DR. T.N. MURTY**; … · INVESTMENT OBJECTIVES OF THE RETAIL EQUITY...
Transcript of ABDUL MAJEEB PASHA SHAIK*; DR. T.N. MURTY**; … · INVESTMENT OBJECTIVES OF THE RETAIL EQUITY...
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INVESTMENT OBJECTIVES OF THE RETAIL EQUITY INVESTORS IN
INDIA
ABDUL MAJEEB PASHA SHAIK*; DR. T.N. MURTY**;
R.VAMSEE KRISHNA***; V.HEMANTHA GOPI KIRAN****
*Professor,
Nimra College of Business Management,
Vijayawada, Andhra Pradesh, India.
**Director,
Nimra College of Business Management,
Vijayawada, Andhra Pradesh, India.
***Assistant Professor,
Nimra College of Business Management,
Vijayawada, Andhra Pradesh, India.
****M.B.A.Student,
Nimra College of Business Management,
Vijayawada, Andhra Pradesh, India.
ABSTRACT
Investment refers to the employment of funds to assets with the aim of achieving additional
income or growth in value over a given period of time. Today investors have various attractive
avenues of investment with different features matching their needs, not only in India even in the
global markets also. But generally the art of investment is to see that the return is maximized
with minimum risk which is inherent in all investments. The funds allocated by the Indian
investors to various investment avenues depend to a large extent on the various investment
objectives perceived by them. Investors differ in their pattern of objectives for investment. The
study examines that the level of importance assumed by the retail equity investors on various
investment objectives based on the socio economic variables and selective investment profile
factors viz., like liquidity, quick gain, capital appreciation, safety and dividends on various
classes of investors based on residence, age, sex, marital status, educational background, size of
family, members of family, market experience Place of Residence,, Monthly family income, type
of investor, category of investor, Type of market operation and etc,. elements has been
examined using Average Scores and the significance of differences in the average scores of the
different classes of investors tested by using Kruskal Wallis H-Test. Researchers found that
Average Score Analysis reveals the investors attach/attract more importance to liquidity, quick
gain, capital appreciation and safety in equity investments compared to others. At the end based
on studies researcher finds today in India the qualities of equity stocks are greatly useful to all
kinds of investors except in risk appetite and sensitivity point of view with rest of the world in
present scenario.
KEYWORDS: Equities, India, Investment objectives, Investors, Liquidity, Safety.
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INTRODUCTION
„Investment‟ refers to the employment of funds to assets with the aim of achieving additional
income or growth in value over a given period of time. Today investors have various attractive
avenues of investment with different features matching their needs. But generally the art of
investment is to see that the return is maximised with minimum risk which is inherent in all
investments. The funds allocated by the investors to various investment avenues depend to a
large extent on the investment pattern, preferences, risk-return perceptions and the various
investment objectives perceived by them. Investors differ in their pattern of investment,
preferences, perceptions and objectives for investment. Behavioural finance is a new approach to
financial markets that has emerged in response to the difficulties faced by traditional paradigm,
and focuses on investor‟s behaviour and decision-making process (Shanmugasudararm V and Dr.
Balakrishnan V,2006)1. This field merges the concept from financial economics and cognitive
psychology in an attempt to construct a more detailed modern human behaviour in the financial
markets. A rational investor, who can control his emotions, can use his hard earned money
based on right investment objectives can identify the right avenue and as one of the investment
avenue by sparing sufficient time for investment decisions to directly taking part in the stock
market operations.
In the present scenario, coming to the dynamic Indian capital market, daily turnover in
Indian stock market is not less than Rs.1,00,000 crores per day (both cash and F&O). So many
investors (institutional and retail) are investing lot of money in short term and long term point
time horizon. Psychological studies have demonstrated that the pain of losing money from
investments is nearly three times greater than the joy of earning. Small corrections in the capital
market have often disintegrated into full-scale crashes fueled by panicked investors, who made
hasty decisions to avoid losing money in short term, rather than focusing on an investment‟s
long-term potential objective. There is growing literature that suggests an individual‟s
(investors‟) investment decisions, which are affected by investment behavioural biases.
Behavioural finance tries to understand how people forget fundamentals and make investments
based on emotions instead of proper objectives. The volume of literature in this filed has grown
notably over long time back.
REVIEW OF LITERATURE
It is commonly reported that behavioural investment psychology drives financial decision-
making and is a strong vehicle to analyze the individual behavioural influences.
Lewellen(1977)1a
found that age, gender, income and education affects investors‟ preferences
and attitudes towards investment decisions based on their investment objectives.
James M. Poterba(2000) 2
, in his article, “Population Age Structure and Asset Returns: An
Empirical Investigation” investigates the association between population age structure ,
particularly, the share of population in the saving years is motivated by the claim that the ageing
of population in the United States is a key factor in explaining the recent rise in asset values. It
also addresses the associated claim that asset prices will declaim when the large cohort reaches
retirement age and begins to reduce its asset holdings
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Rajarajan V3, (2009), conducted a study entitled, “Investors Life Styles and Investment
Characteristics”, with the objective of analyzing the investors life styles and to analyse the
investment size, pattern, preference of individual investors on the basis of their life styles. Data
was collected from 405 investors in Madras using questionnaire method. The investors were
classified into 3 groups viz., active investors, individualists and passive investors. Cluster
Analysis, Correspondence Analysis and Kruskal Wallis Test were used to study the association
between lifestyle groups and the various investment related characteristics. The study revealed
that the level of expenses, earnings and investment were associated with the size of the
household.
Srivastava Aman(2007),4 in his study, “ An Analysis of Behavior of Investors in India”,
highlights the changes in the Indian business environment since post liberalization and emerging
trends like increase in the number of IPOs, investments by DIIs , FIIs, which lead to the change
in the perception of retail investors in the Indian Stock Market over the last 15 years. This study
also attempts to measure the expectations and confidence of retail investors in the Indian stock
market.
D.S.Chaiubey and Rajat P.Dimri (2009)5 in their research article, “Investment Pattern: A
Psychographic Study of Investors of Garhwal Region of Uttrakhand” identify the investment
perceptions and their behavior for designing effective investment policies. Analysis indicates the
shifting trend of investors from post office and other government investment schemes to
investments in banks, mutual funds and equity etc,.
Based on the above literature we came to know that retail equity investors investment pattern,
investment priority, risk-return perception and their investment objectives could understand little
bit only. In this connection researcher wants to know what are the investment objectives
instigate or motivate the investor to make investment in equity market.
OBJECTIVES OF THE STUDY
The main objectives of the study are:
To know the investment pattern of the Indian retail equity investors in general and
investment preferences, risk-return perceptions to a limited level and;
To analyze the level of importance assumed by the retail equity investors on various
investment objectives based on the socio economic variables and selective investment
profile factors viz., like liquidity, quick gain, capital appreciation, safety and dividends on
various classes of investors based on demographic factors.
To reveal findings, suggestions and give final conclusions based on the analysis.
LIMITATIONS OF THE STUDY
Through the present research paper is aimed to achieve above-mentioned objective in full
earnest and accuracy, there are some limitations:
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The data has taken from primary sources, so findings are true to the extent of
authentication of the data.
The study was conducted targeting the retail equity investors in the Krishna District,
Andhra Pradesh State only, based on the assumption, researchers are implicate the same
psychology in other parts of India.
HYPOTHESES OF THE STUDY
Hyp 1: Investment objectives of investors are influenced by various factors;
Hyp 2: There is significant relation between objectives of investment and demographic
factors;
Hyp 3: Investors behave rationally towards various capital market information.
RESEARCH METHODOLOGY
The design for the proposed study aims at exploring the investors‟ investment objectives related
to making investment based on their needs and tastes. The questionnaire approach was used for
the collection of data. In this study, the primary data was collected from 500 investors in
Krishna District, Andhra Pradesh State. The primary data collected from various respondents
like retail equity investors, stock market dealers, sub-brokers, authoritative people from various
areas of Krishna District, like Vijayawada, Machilipatnam, Gudivada, Ibrahimpatnam,
Jaggaiapet, Nuzvid, Gannavaram, Vuyyuru. The questionnaire has number of parts and points,
only limited points are taken into account for analysis (which is a part of research thesis). The
investment objectives of the retail equity investors have been identified with the help of -
Average Rank Analysis, Average Score Analysis and Kruskal Wallis H-Test. Software Package
for Social Science (SPSS) has been used for the purpose of the analysis.
ANALYSIS AND INTERPRETATION
The researcher examines the investment pattern of the Indian retail equity investors in
general and investment preferences, risk-return perceptions and investment objectives of the
retail equity investors based on the socio economic variables and selective investment profile
factors viz.,
i. Place of Residence
ii. Age
iii. Gender
iv. Marital Status
v. Educational Level
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vi. Occupation
vii. Family Size
viii. No. of Earning Members in the Family
ix. Monthly Family Income
x. Type of Investor
xi. Category of Investor
xii. Type of Market Operated
xiii. Market Experience
The distribution of sample investors based on their Socio–economic and investment
profile are presented in Table .1. It reveals the following aspects:
(I) PLACE OF RESIDENCE
Investors‟ Place of residence has been broadly classified into eight categories such as
Vijayawada town, Machilipatnam, Gudivada, Nuzivid, Gannavaram, Vuyyuru, Nandigama and
Ibrahimpatnam of Krishna District, Andhra Pradesh, India.. Out of 500 sample investors 56.8%
(284) are from Vijayawada town, 8% (40) are from Machilipatnam, 8.8% (44) are from
Gudivada, 10.8% (54) are from Nuzivid, 2% (10) are from Gannavaram, 6.6% (33) are from
Vuyyuru, 1.6% (8) are from Nandigama and 5.4% (27) are from Ibrahimpatnam.
(II) AGE
Investors have been divided into three categories based on their age as „Young‟ (20 – 40
years), „Middle aged‟ (40 – 60 years) and „Old‟ (60 years and above). Out of 500 sample
investors, 68.2% (341) are Young investors, 27.8% (139) are Middle aged investors and
4% (20) are Old investors.
(III) GENDER
Investors have been divided into two groups based on their gender as „Male‟ and
„Female‟. Out of 500 sample investors, 80.2% (401) are Male investors and 19.8% (99) are
Female investors.
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TABLE.1 DISTRIBUTION OF INVESTORS’ - SOCIO-ECONOMIC AND
INVESTMENT PROFILE
S.No Factors SUB – factors No of investors Percentage
i Place of Residence
Vijayawada town 284 56.8
Machilipatnam 40 8.0
Gudivada 44 8.8
Nuzivid 54 10.8
Gannavaram 10 2.0
Vuyyuru 33 6.6
Nandigama 8 1.6
Ibrahimpatnam 27 5.4
Total 500 100
ii Age
Young 341 68.2
Middle aged 139 27.8
Old 20 4.0
Total 500 100
iii Gender Male 401 80.2
Female 99 19.8
Total 500 100
iv Marital Status Married 336 67.2
Unmarried 164 32.8
Total 500 100
v Educational Level School
Education 46 9.2
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College Education 272 54.4
Professional 176 35.2
Others 6 1.2
Total 500 100
vi Occupation
Salaried 241 48.2
Professional 62 12.4
Business 164 32.8
Others 33 6.6
Total 500 100
vii Family Size
Small 251 50.2
Medium 229 45.8
Huge 20 4.0
Total 500 100
viii No. of Earning Members
In The Family
1 161 32.2
2 266 53.2
3 & above 73 14.6
Total 500 100
ix Monthly Family Income
Low 195 39
Medium 199 39.8
High 106 21.2
Total 500 100
x Type of Investor
Hereditary investor 97 19.4
New generation
investor 403 80.6
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Total 500 100
xi Category of Investor
Long term investor 204 40.8
Day trader 47 9.4
Both 249 49.8
Total 500 100
xii Type of Market Operated
Primary market 71 14.2
Secondary market 178 35.6
Both 251 50.2
Total 500 100
xiii Market Experience
Low 117 23.4
Moderate 213 42.6
High 170 34
Total 500 100
Source: Survey Data
(IV) MARITAL STATUS
Investors have been placed into two groups based on their marital status as „Married‟ and
„Unmarried‟. Out of 500 sample investors 67.2% (336) are Married investors and 32.8% (164)
are Unmarried investors.
(V) EDUCATIONAL LEVEL
Investors have been classified into four categories based on their educational level as
„School Education‟, „College Education‟, „Professionals‟ and „Others‟. Out of 500 sample
investors, 9.2% (46) are investors with School education, 54.4% (272) are investors with College
education, 35.2% (176) are investors with Professional education and 1.2% (6) investors belong
to the Others category.
(VI) OCCUPATION
Investors have been divided into four groups based on their occupation as „Salaried‟,
„Professionals‟, „Business‟ and „Others‟. Out of 500 sample investors, 48.2% (241) belong to the
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Salaried category, 12.4% (62) belong to the Professional category, 32.8% (164) of the investors
are Businessmen and 6.6% (33) belong to the Others category.
(VII) FAMILY SIZE
Investors have been classified into three categories based on their family size as „Small‟
(less than 4 members), „Medium‟ (4 – 6 members) and „Huge‟ (6 & above members). Out of 500
sample investors, 50.2% (251) belong to Small family, 45.8% (229) belong to Medium family
and 4% (20) belong to Huge family.
(viii) No. Of Earning Members in the family
Investors have been classified into three categories based on the number. of earning
members in their family as „1‟, „2‟, and „3‟ & above‟. Out of 500 sample investors, 32.2% (161)
investors have 1 earning member in their family, 53.2% (266) investors have 2 earning members
in their family and 14.6% (73) investors have 3 & above earning members in their family.
(IX) MONTHLY FAMILY INCOME
Investors have been classified into three categories based on their monthly family income as
„Low‟ (below Rs20,000), „Medium‟ (Rs.20,000 – Rs.40,000) and „High‟ (Rs.40,000 and above).
Out of 500 sample investors, 39% (195) have Low monthly family income, 39.8% (199)
Medium family income and 21.2% (106) have High family income.
(X) TYPE OF INVESTOR
Investors have been classified into two types based on their nature as „Hereditary
Investor‟ and „New Generation Investor‟. Out of 500 sample investors, 19.4% (97) are
Hereditary investors and 80.6% (403) are New generation investors.
(XI) CATEGORY OF INVESTOR
Investors have been classified into three categories based on their period of holding stock
as „Long-term investor‟, „Day trader‟ and „Both‟. Out of 500 sample investors 40.8% (204) are
Long-term investors, 9.4% (47) are Day traders and 49.8% (249) are both long-term investors as
well as day traders.
(XII) TYPE OF MARKET OPERATED
Investors have been divided into three groups based on the type of market operated by
them as operators in „Primary market‟, „Secondary market‟ and „Both‟. Out of 500 sample
investors, 14.2% (71) deal in Primary market alone, 35.6% (178) deal in Secondary market alone
and 50.2% (251) deal in both primary and secondary markets.
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(XIII) MARKET EXPERIENCE
Investors have been classified into three categories based on their market experience as
„Low‟ (less than 1 year) „Moderate‟ (1 – 3 years) and „High‟ (3 years and above). Out of 500
sample investors, 23.4% (117) have Low market experience, 42.6% (213) have Moderate market
experience and 34% (170) have High market experience.
The investment objectives of the retail equity investors have been identified with the help of -
Average Rank Analysis
Average Score Analysis
Test for Paired Differences (Paired „t‟ Test) and
Kruskal Wallis H-Test
Investment objectives refer to the investor‟s purpose of investment. Investment choices or
decisions are found to be the outcome of the three different but related classes of factors namely-
investment preferences, risk-return perceptions and the investment objectives. The funds
allocated by the investor to various investment avenues depend on the level of importance
assumed by him on various investment objectives.
The researcher examines the level of importance for investment assumed by the retail
equity investors on various investment objectives focusing more (except other factors investment
preferences and risk-return perceptions for the time being) viz.,
a. Dividends
b. Capital Appreciation
c. Quick Gain
d. Safety
e. Liquidity
f. Tax Benefits
g. Diversification of Asset Holding
h. Rights/Bonus Issue and Stock Splits and
i. Hedge Against Inflation
The responses of the retail equity investors has been obtained and analysed with the help
of -
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Four Point Scaling Technique
Average Score Analysis and
Kruskal Wallis H-Test
The results based on various socio-economic and investment profile factors are presented
in the form of tables and relevant interpretations.
1. PLACE OF RESIDENCE AND INVESTMENT OBJECTIVES
The level of importance assumed by the investors on various investment objectives based
on their Place of residence is presented in Table .2 in terms of Average scores:
TABLE2. AVERAGES SCORES – PLACE OF RESIDENCE AND INVESTMENT
OBJECTIVES
Investment
Objectives
Place of
Residence
Div
iden
ds
Cap
ital
ap
pre
ciati
on
Qu
ick
gain
Safe
ty
Liq
uid
ity
Tax b
enef
its
Div
ersi
fica
tion
Rig
hts
/ b
on
us
Hed
ge
again
st i
nfl
ati
on
Vijayawada 2.81 3.14 3.06 2.99 3.12 2.61 2.69 2.74 2.68
Machilipatnam 3.2 3 3.05 2.95 3.1 2.88 2.9 3.03 2.8
Gudivada 3.02 2.89 2.89 2.82 2.86 2.86 2.91 2.93 2.82
Nuzvid 2.65 2.67 2.83 3.38 2.98 2.81 2.61 2.8 2.96
Gannavaram 2.9 2.7 2.5 3.1 2.7 2.5 3.0 2.7 2.7
Vuyyuru 2.94 2.91 3.06 2.79 3.21 2.55 2.73 2.76 2.7
Nandigama 3.25 3.0 2.88 2.75 2.5 2.5 2.63 2.5 3.13
Ibrahimpatnam 2.85 3 3.11 3.15 3.3 3 3.04 3.04 2.81
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Table .2. reveals that the investors of Vijayawada town attach more importance to capital
appreciation. The investors of Machilipatnam, Gudivada and Nandigama attach more
importance to dividends. The investors of Nuzvid and Gannavaram attach more importance to
safety and the investors of Vuyyuru and Ibrahimpatnam attach more importance to liquidity.
The level of importance assumed by the investors on various investment objectives varies
with their Place of residence but on comparison it is evident that the investors of Nuzvid have
given very high importance to safety (3.38) than others.
Kruskal Wallis H-test has been applied to test the significance of differences in the
Average Scores of the different classes of investors based on their Place of residence.
Hypothesis: There is no significant difference in the level of importance assumed on
various investment objectives between the different classes of investors
based on their Place of residence.
It is proved in Table 3. that Kruskal Wallis Test reveals that the hypothesis is rejected
(Significant) in 3 cases and in all other cases the hypothesis is accepted (Not significant).
It can be concluded that there is a significant difference in the level of importance
assumed on various investment objectives such as dividends, capital appreciation and liquidity
between the different classes of investors based on their Place of residence.
TABLE3. H-VALUES – PLACE OF RESIDENCE AND INVESTMENT OBJECTIVES
S. No Investment objectives H-values P-values Significance
a Dividends 17.604 .014 S
b Capital appreciation 23.028 .002 S
c Quick gain 7.914 .340 NS
d Safety 10.974 .140 NS
e Liquidity 14.573 .042 S
f Tax benefits 11.025 .139 NS
g Diversification 10.552 .59 NS
h Rights/Bonus 9.526 .217 NS
i Hedge against inflation 6.485 .484 NS
S-Significant(P-Value 0.05) NS-Not Significant(P-Value 0.05)
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2. AGE AND INVESTMENT OBJECTIVES
The level of importance assumed by the investors on various investment objectives based
on their Age is presented below in terms of Average scores.
Table .4. reveals that all the investors, irrespective of their age, attach high importance to
liquidity.
The level of importance assumed by the investors on various investment objectives varies
with their age but on comparison it is evident that old investors have given very high importance
to liquidity (3.2) than others.
Kruskal Wallis H-test has been applied to test the significance of differences in the
Average Scores of the different classes of investors based on their Age.
Hypothesis: There is no significant difference in the level of importance assumed on
various investment objectives between the different classes of investors
based on their Age.
Kruskal Wallis Test reveals in Table. 5. that the hypothesis is accepted (Not significant)
in all the cases.
It can be concluded that there is no significant difference in the level of importance
assumed on various investment objectives between the different classes of investors based on
their Age.
TABLE4.AVERAGE SCORES – AGE AND INVESTMENT OBJECTIVES
Investment
Objectives
Age
Div
iden
ds
Cap
ital
ap
pre
ciati
on
Qu
ick
gain
Saf
ety
Liq
uid
ity
Tax b
enef
its
Div
ersi
fica
tion
Rig
hts
/ b
on
us
Hed
ge
again
st
infl
ati
on
Young 2.82 3.05 3.01 2.99 3.06 2.68 2.77 2.81 2.72
Middle Aged 2.98 2.97 3.01 2.99 3.1 2.71 2.65 2.76 2.78
Old 2.8 2.95 3 3.05 3.2 2.55 2.9 2.8 2.95
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TABLE .5.H-VALUES - AGE AND INVESTMENT OBJECTIVES
S.No Investment objectives H-values P-values Significance
a Dividends 3.854 .146 NS
b Capital appreciation 1.657 .437 NS
c Quick gain .142 .932 NS
d Safety .269 .874 NS
e Liquidity 1.170 .557 NS
f Tax benefits .811 .667 NS
g Diversification 3.919 .141 NS
h Rights/Bonus .249 .883 NS
i Hedge against inflation 1.977 .372 NS
S-Significant(P-Value 0.05) NS-Not Significant(P-Value 0.05)
3. GENDER AND INVESTMENT OBJECTIVES
The level of importance assumed by the investors on various investment objectives based
on their Gender is presented below in terms of Average scores:
Table .6. reveals the male investors attach more importance to liquidity and female
investors attach more importance to quick gain.
The level of importance assumed by the investors on various investment objectives varies
with their gender but on comparison it is evident that female investors have given very high
importance to quick gain (3.5) than others.
Kruskal Wallis H-test has been applied to test the significance of differences in the
Average Scores of the different classes of investors based on their Gender.
Hypothesis: There is no significant difference in the level of importance assumed on
various investment objectives between the different classes of investors
based on their Gender.
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Kruskal Wallis Test reveals in Table .7. that the hypothesis is rejected (Significant) in 3
cases and in all other cases the hypothesis is accepted (Not Significant).
It can be concluded that there is a significant difference in the level of importance
assumed on various investment objectives such as dividends, tax benefits, rights/bonus issues
and stock splits between the different classes of investors based on their Gender.
TABLE6. AVERAGE SCORES – GENDER AND INVESTMENT OBJECTIVES
Investment
Objectives
Gender
Div
iden
ds
Cap
ital
ap
pre
ciati
on
Qu
ick
gain
Safe
ty
Liq
uid
ity
Tax b
enef
its
Div
ersi
fica
tion
Rig
hts
/ b
on
us
Hed
ge
again
st
infl
ati
on
Male 2.82 3.03 2.98 2.96 3.06 2.63 .2.72 2.75 2.72
Female 3.02 2.98 3.15 3.12 3.13 2.92 2.85 2.98 2.86
TABLE7. H-VALUES - GENDER AND INVESTMENT OBJECTIVES
S. No Investment objectives H-values P-values Significance
a Dividends 5.495 .019 S
b Capital appreciation .253 .615 NS
c Quick gain 3.557 .059 NS
d Safety 2.585 .108 NS
e Liquidity 1.098 .295 NS
f Tax benefits 8.097 .004 S
g Diversification 1.900 .168 NS
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h Rights/Bonus 5.122 .024 S
i Hedge against inflation 1.444 .229 NS
S-Significant(P-Value 0.05) NS-Not Significant(P-Value 0.05)
4. MARITAL STATUS AND INVESTMENT OBJECTIVES
The level of importance assumed by the investors on various investment objectives based
on their Marital Status is presented in Table .8. in terms of Average scores:
Table 3.58 reveals that married investors attach more importance to liquidity and
unmarried investors attach more importance to quick gain.
The level of importance assumed by investors on various investment objectives varies
with their marital status but on comparison it is evident that unmarried investors have given very
high importance to quick gain (3.12) than others.
Kruskal Wallis H-test has been applied to test the significance of differences in the
Average Scores of the different classes of investors based on their Marital Status.
Hypothesis: There is no significant difference in the level of importance assumed on
various investment objectives between the different classes of investors
based on their Marital Status.
Kruskal Wallis Test reveals in Table .9. that the hypothesis is accepted (Not significant)
in all the cases.
It can be concluded that there is no significant difference in the level of importance
assumed on various investment objectives between the different classes of investors based on
their Marital Status
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TABLE.8. AVERAGE SCORES – MARITAL STATUS AND INVESTMENT
OBJECTIVES
Investment
Objectives
Marital
Status
Div
iden
ds
Cap
ital
ap
pre
ciati
on
Qu
ick
gain
Safe
ty
Liq
uid
ity
Tax b
enef
its
Div
ersi
fica
tion
Rig
hts
/ b
on
us
Hed
ge
again
st i
nfl
ati
on
Married 2.9 3.03 2.96 3.02 3.07 2.72 2.76 2.79 2.77
Unmarried 2.79 3.01 3.12 2.94 3.08 2.62 2.7 2.82 2.71
TABLE9. H-VALUES – MARITAL STATUS AND INVESTMENT OBJECTIVES
S.No Investment objectives H-values P-values Significance
a Dividends 2.378 .123 NS
b Capital appreciation .005 .943 NS
c Quick gain 3.339 .068 NS
d Safety 1.139 .286 NS
e Liquidity .014 .906 NS
f Tax benefits 1.944 .163 NS
g Diversification .543 .461 NS
h Rights/Bonus .084 .772 NS
i Hedge against inflation .715 .398 NS
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S-Significant(P-Value 0.05) NS-Not Significant(P-Value 0.05)
5.EDUCATIONAL LEVEL AND INVESTMENT OBJECTIVES
The level of importance assumed by the investors on various investment objectives based
on their Educational level is presented in Table 3.60 in terms of Average scores:
Table .10. reveals that the investors with school education, college education and
professionals attach more importance to liquidity. But others attach more importance to quick
gain.
The level of importance assumed by the investors on various investment objectives varies
with their educational level but on comparison it is evident that the other category investors have
given very high importance to capital appreciation (3.54) than others.
Kruskal Wallis H-test has been applied to test the significance of differences in the
Average Scores of the different classes of investors based on their Educational level.
Hypothesis: There is no significant difference in the level of importance assumed on
various investment objectives between the different classes of investors
based on their Educational level
Kruskal Wallis Test reveals in Table .11. that the hypothesis is rejected (Significant) in 2
cases and in all other cases the hypothesis is accepted (Not significant).
It can be concluded that there is a significant difference in the level of importance
assumed on various investment objectives such as dividends and capital appreciation between the
different classes of investors based on their Educational level.
TABLE10. AVERAGE SCORES - EDUCATIONAL LEVEL AND INVESTMENT
OBJECTIVES
Investment
Objectives
Educational
Level
Div
iden
ds
Cap
ital
ap
pre
ciati
on
Qu
ick
gain
Safe
ty
Liq
uid
ity
Tax b
enef
its
Div
ersi
fica
tion
Rig
hts
/ b
on
us
Hed
ge
again
st i
nfl
ati
on
School Education 2.96 2.78 2.91 2.96 3.11 2.61 2.83 2.98 2.87
College
Education 2.88 3 3.01 2.93 3.03 2.65 2.68 2.8 2.71
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Professional
Education 2.84 3.1 3.04 3.1 3.12 2.76 2.82 2.76 2.8
Others 1.83 3.54 2.83 3.0 3.5 2.67 2.67 2.5 2.33
TABLE11. H-VALUES-EDUCATIONAL LEVEL AND INVESTMENT
OBJECTIVES
S.No Investment objectives H-values P-values Significance
a Dividends 9.402 .024 S
b Capital appreciation 8.571 .036 S
c Quick gain .885 .829 NS
d Safety 4.147 .246 NS
e Liquidity 3.276 .351 NS
f Tax benefits 2.136 .545 NS
g Diversification 4.787 .188 NS
h Rights/Bonus 4.311 .230 NS
i Hedge against inflation 3.544 .315 NS
S-Significant(P-Value 0.05) NS-Not Significant(P-Value 0.05)
6. OCCUPATION AND INVESTMENT OBJECTIVES
The level of importance assumed by the investors on various investment objectives based
on their Occupation is presented in Table.12. in terms of Average scores.
The investors of salaried class attach more importance to capital appreciation.
Businessmen attach more importance to quick gain. Professionals and other investors attach
more importance to liquidity.
The level of importance assumed by the investors on various investment objectives varies
with their occupation but on comparison it is evident that businessmen have given very high
importance to quick gain (3.17) than others.
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Kruskal Wallis H-test has been applied to test the significance of differences in the
Average Scores of the different classes of investors based on their Occupation.
Hypothesis: There is no significant difference in the level of importance assumed on
various investment objectives between the different classes of investors
based on their Occupation.
Kruskal Wallis Test reveals in Table .13. that the hypothesis is accepted (Not significant)
in all the cases.
It can be concluded that there is no significant difference in the level of importance
assumed on various investment objectives between the different classes of investors based on
their Occupation there is no significant difference between the investors Occupation and the
level of importance assumed by the investors on various investment objectives.
TABLE12. AVERAGE SCORES - OCCUPATION AND INVESTMENT OBJECTIVES
Investment
Objectives
Occupation
Div
iden
ds
Ca
pit
al
ap
pre
ciati
on
Qu
ick
gain
Safe
ty
Liq
uid
ity
Tax b
enef
its
Div
ersi
fica
tion
Rig
hts
/ b
on
us
Hed
ge
again
st
infl
ati
on
Salaried 2.85 3.07 3 3.01 3.05 2.68 2.7 2.76 2.72
Professional 2.85 2.95 2.92 3.05 3.16 2.56 2.89 2.84 2.74
Business 2.9 2.98 3.17 2.95 3.05 2.79 2.69 2.77 2.79
Others 2.73 3 2.97 2.97 3.14 2.42 3.03 3.12 2.79
TABLE13. H-VALUES –OCCUPATION AND INVESTMENT OBJECTIVES
S.No Investment objectives H-values P-values Significance
a Dividends 1.185 .757 NS
b Capital appreciation 1.764 .623 NS
c Quick gain 1.511 .680 NS
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d Safety .901 .825 NS
e Liquidity 3.670 .299 NS
f Tax benefits 6.560 .087 NS
g Diversification 7.005 .072 NS
h Rights/Bonus 6.337 .096 NS
i Hedge against inflation .617 .893 NS
S-Significant(P-Value 0.05) NS-Not Significant(P-Value 0.05)
7. FAMILY SIZE AND INVESTMENT OBJECTIVES
The level of importance assumed by the investors on various investment objectives based
on their Family size is presented in Table .14 . in terms of Average scores.
Table3.64 reveals that the investors belonging to the small and medium size families
attach more importance to liquidity, whereas the investors of huge family attach more
importance to safety.
The level of importance assumed by the investors on various investment objectives varies
with their family size but on comparison it is evident that investors of huge family have given
very high importance to safety (3.15) than others.
Kruskal Wallis H-test has been applied to test the significance of differences in the
Average Scores of the different classes of investors based on their Family size.
Hypothesis: There is no significant difference in the level of importance assumed on
various investment objectives between the different classes of investors
based on their Family size.
Kruskal Wallis Test reveals in Table .15. that the hypothesis is rejected (Significant) in
one case and in all other cases the hypothesis is accepted (Not significant).
It can be concluded that there is a significant difference in the level of importance
assumed on the investment objective namely tax benefits between the different classes of
investors based on their Family size.
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TABLE14. AVERAGE SCORES –FAMILY SIZE AND INVESTMENT OBJECTIVES
Investment
Objectives
Family Size
Div
iden
ds
Cap
ital
ap
pre
ciati
on
Qu
ick
gain
Safe
ty
Liq
uid
ity
Tax b
enef
its
Div
ersi
fica
tion
Rig
hts
/ b
on
us
Hed
ge
again
st
infl
ati
on
Small 2.88 3.02 3 2.97 3.06 2.8 2.82 2.86 2.79
Medium 2.83 3.03 3.02 3 3.09 2.55 2.66 2.7 2.69
Huge 2.9 2.9 3.10 3.15 3.05 2.9 2.8 3 2.8
TABLE.15. H-VALUES- FAMILY SIZE AND INVESTMENT OBJECTIVES
S.No Investment objectives H-values P-values Significance
a Dividends .506 .777 NS
b Capital appreciation .213 .899 NS
c Quick gain .686 .710 NS
d Safety .729 .694 NS
e Liquidity .143 .931 NS
f Tax benefits 10.930 .004 S
g Diversification 5.547 .062 NS
h Rights/Bonus 5.581 .061 NS
i Hedge against inflation 1.418 .492 NS
S-Significant(P-Value 0.05) NS-Not Significant(P-Value 0.05)
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8. NO. OF EARNING MEMBERS IN THE FAMILY AND INVESTMENT OBJECTIVES
The level of importance assumed by the investors on various investment objectives based
on the No. of earning members in their family is presented in Table 3.66 in terms of Average
scores:
Table. 16. reveals that the investors with one or two earning members in the family attach
more importance to liquidity whereas the investors with 3 or more earning members in the
family attach more importance to capital appreciation.
The level of importance assumed by the investors on various investment objectives varies
with the No. of earning members in the family but on comparison it is evident that the investors
with one or two earning members in their family give very high importance to liquidity (3.09)
than others.
Kruskal Wallis H-test has been applied to test the significance of differences in the
Average Scores of the different classes of investors based on the No. of earning members in their
family.
Hypothesis: There is no significant difference in the level of importance assumed on
various investment objectives between the different classes of investors
based on the No. of earning members in their family.
Kruskal Wallis Test reveals in Table .17. that the hypothesis is accepted (Not significant)
in all the cases. It can be concluded that there is no significant difference in the level of
importance assumed on various investment objectives between the different classes of investors
based on the No. of earning members in their family.
TABLE 16. AVERAGE SCORE – NO. OF EARNING MEMBERS AND INVESTMENT
OBJECTIVES
Investment
Objectives
No of
Earning
Members
Div
iden
ds
Cap
ital
ap
pre
ciati
on
Qu
ick
gain
Safe
ty
Liq
uid
ity
Tax b
enef
its
Div
ersi
fica
tion
Rig
hts
/ b
on
us
Hed
ge
again
st i
nfl
ati
on
One 2.88 3.01 3.01 2.91 3.09 2.62 2.78 2.8 2.75
Two 2.82 3.02 3 3.05 3.09 2.7 2.72 2.79 2.74
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Three &
Above 3 3.08 3.07 2.97 3.01 2.79 2.74 2.81 2.79
TABLE17. H-VALUES-NO OF EARNING MEMBERS AND INVESTMENT
OBJECTIVES
S.No Investment objectives H-values P-values Significance
a Dividends 3.465 .177 NS
b Capital appreciation .755 .686 NS
c Quick gain .492 .782 NS
d Safety 1.755 .416 NS
e Liquidity .490 .783 NS
f Tax benefits 1.602 .449 NS
g Diversification .603 .740 NS
h Rights/Bonus .036 .982 NS
i Hedge against inflation .347 .841 NS
S-Significant(P-Value 0.05) NS-Not Significant(P-Value 0.05)
9. MONTHLY FAMILY INCOME AND INVESTMENT OBJECTIVES
The level of importance assumed by the investors on various investment objectives based
on their Monthly family income is presented in Table 3.68 in terms of Average scores:
Table .18. eveals that the investors with low monthly family income attach more
importance to quick gain, whereas the investors with medium and high monthly family income
attach more importance to liquidity.
The level of importance assumed by the investors on various investment objectives varies
with their monthly family income but on comparison it is evident that the investors with medium
family income have given very high importance to liquidity (3.15) than others.
Kruskal Wallis H-test has been applied to test the significance of differences in the
Average Scores of the different classes of investors based on their Monthly family income.
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Hypothesis: There is no significant difference in the level of importance assumed on
various investment objectives between the different classes of investors
based on their Monthly family income.
Kruskal Wallis Test reveals in Table .19. that the hypothesis is rejected (Significant) in 3
cases and accepted (Not significant) in all others cases. It can be concluded that there is a
significant difference in the level of importance assumed on various investment objectives such
as safety, liquidity and tax benefits between the different classes of investors based on their
Monthly family income.
TABLE 18. AVERAGE SCORES – MONTHLY FAMILY INCOME AND
INVESTMENT OBJECTIVES
Investment
Objectives
Monthly
Family
Income
Div
iden
ds
Cap
ital
ap
pre
ciati
on
Qu
ick
gain
Safe
ty
Liq
uid
ity
Tax b
enef
its
Div
ersi
fica
tion
Rig
hts
/ b
on
us
Hed
ge
again
st i
nfl
ati
on
Low 2.9 2.96 3.01 2.84 2.97 2.53 2.72 2.88 2.71
Medium 2.9 3.08 2.99 3.12 3.15 2.75 2.69 2.75 2.75
High 2.72 3.03 3.06 3.06 3.14 2.85 2.87 2.73 2.8
TABLE 19. H-VALUES- MONTHLY FAMILY INCOME AND INVESTMENT
OBJECTIVES
S. No Investment objectives H-values P-values Significance
a Dividends 3.159 .206 NS
b Capital appreciation 2.131 .345 NS
c Quick gain 1.116 .572 NS
d Safety 9.651 .008 S
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e Liquidity 5.992 .050 S
f Tax benefits 11.166 .004 S
g Diversification 2.988 .235 NS
h Rights/Bonus 3.751 .153 NS
i Hedge against inflation .717 .699 NS
S-Significant(P-Value 0.05) NS-Not Significant(P-Value 0.05)
10. TYPE OF INVESTOR AND INVESTMENT OBJECTIVES
The level of importance assumed by the investors on various investment objectives based
on the Type of Investor is presented in Table .20. in terms of Average scores:
Table 3.70 reveals the hereditary investors attach more importance to safety and liquidity
whereas new generation investors attach more importance to liquidity only.
The level of importance assumed by the investors on various investment objectives varies
with the type of investor but on comparison it is evident that hereditary investors have given very
high importance to safety (3.15) and liquidity (3.15) than others.
Kruskal Wallis H-test has been applied to test the significance of differences in the
Average Scores of the different classes of investors based on the Type of investor.
Hypothesis: There is no significant difference in the level of importance assumed on
various investment objectives between the different classes of investors
based on the Type of investor.
Kruskal Wallis Test reveals in Table .21. that the hypothesis it rejected (Significant) in 2
cases and in all other cases the hypothesis is accepted (Not significant). It can be concluded
that there is a significant difference in the level of importance assumed on various investment
objectives such as safety and tax benefits between the different classes of investors based on the
Type of investor.
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TABLE20. AVERAGE SCORES – TYPE OF INVESTOR AND INVESTMENT
OBJECTIVES
Investment
Objectives
Type of
Investor
Div
iden
ds
Cap
ital
ap
pre
ciati
on
Qu
ick
gain
Safe
ty
Liq
uid
ity
Tax b
enef
its
Div
ersi
fica
tion
Rig
hts
/ b
on
us
Hed
ge
again
st
infl
ati
on
Hereditary
Investor 2.85 2.95 2.97 3.15 3.15 2.89 2.85 2.84 2.86
New
Generation
Investor
2.87 3.04 3.02 2.96 3.06 2.64 2.72 2.79 2.72
TABLE 21. H-VALUES-TYPE OF INVESTOR AND INVESTMENT OBJECTIVES
S. No Investment objectives H-values P-values Significance
a Dividends .163 .686 NS
b Capital appreciation 1.763 .184 NS
c Quick gain .076 .782 NS
d Safety 4.170 .041 S
e Liquidity 2.044 .153 NS
f Tax benefits 5.940 .015 S
g Diversification 1.568 .210 NS
h Rights/Bonus .410 .522 NS
i Hedge against inflation 1.274 .259 NS
S-Significant(P-Value 0.05) NS-Not Significant(P-Value 0.05)
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11. CATEGORY OF INVESTOR AND INVESTMENT OBJECTIVES
The level of importance assumed by the investors on various investment objectives based
on the Category of investor is presented in Table .22. in terms of Average Scores:
Table 3.72 reveals that the long term investors attach more importance to safety and day
traders attach more importance to quick gain. The investors falling under the category „both‟
attach more importance to liquidity.
The level of importance assumed by the investors on various investment objectives varies
with the category of investor but on comparison it is evident that day traders have given very
high importance to quick gain (3.19) than others.
Kruskal Wallis H-test has been applied to test the significance of differences in the
Average Scores of the different classes of investors based on the Category of investor.
Hypothesis: There is no significant difference in the level of importance assumed on
various investment objectives between the different classes of investors
based on the Category of investor.
Kruskal Wallis Test reveals in Table .23. that the hypothesis is rejected (Significant) in 3
cases and in all other cases the hypothesis is accepted (Not significant).
It can be concluded that there is a significant difference in the level of importance
assumed on various investment objectives such as quick gain, safety, rights / bonus issues and
stock splits between the different classes of investors based on the Category of investor.
TABLE22. AVERAGE SCORES – CATEGORY OF INVESTOR AND INVESTMENT
OBJECTIVES
Investment
Objectives
Category of
Investor
Div
iden
ds
Cap
ital
ap
pre
ciati
on
Qu
ick
gain
Safe
ty
Liq
uid
ity
Tax b
enef
its
Div
ersi
fica
tion
Rig
hts
/ b
on
us
Hed
ge
again
st i
nfl
ati
on
Long-term investor 2.8 3.08 2.92 3.1 3.07 2.67 2.75 2.65 2.76
Day Trader 2.98 2.85 3.19 2.68 2.94 2.66 2.6 2.96 2.79
Both 2.89 3 3.05 2.97 3.1 2.71 2.76 2.89 2.73
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TABLE23. H-VALUES – CATEGORY OF INVESTOR AND INVESTMENT
OBJECTIVES
S. No Investment objectives H-values P-values Significance
a Dividends 2.131 .345 NS
b Capital appreciation 3.866 .145 NS
c Quick gain 5.918 .042 S
d Safety 7.776 .020 S
e Liquidity .960 .619 NS
f Tax benefits .502 .778 NS
g Diversification .921 .631 NS
h Rights/Bonus 11.531 .003 S
i Hedge against inflation .178 .915 NS
S-Significant(P-Value 0.05) NS-Not Significant(P-Value 0.05)
12. TYPE OF MARKET OPERATED AND INVESTMENT OBJECTIVES
The level of importance assumed by the investors on various investment objectives based
on the Type of market operated by them is presented in table 3.74 in terms of Average scores:
Table .24. reveals that the primary market operators attach more importance to capital
appreciation, secondary market operators attach more importance to quick gain and the investors
operating in both the markets attach more importance to liquidity.
The level of importance assumed by the investors on various investment objectives varies
with the type of market operated by them but on comparison it is evident that the investors
operating in both the markets have given very high importance to liquidity (3.17) than others.
Kruskal Wallis H-test has been applied to test the significance of differences in the
Average Scores of the different classes of investors based on the Type of market operated by
them.
Hypothesis: There is no significant difference in the level of importance assumed on
various investment objectives between the different classes of investors
based on the Type of market operated by them.
Kruskal Wallis Test reveals in Table .25. that the hypothesis is rejected (Significant) in 4
cases and in all other cases the hypothesis is accepted (Not significant). It can be concluded that
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there is a significant difference in the level of importance assumed on various investment
objectives such as capital appreciation, safety, liquidity and tax benefits between the different
classes of investors based on the Type of market operated by them.
TABLE.24. AVERAGE SCORES - TYPE OF MARKET OPERATED AND
INVESTMENT OBJECTIVES
Investment
Objectives
Type of
Market Operated
Div
iden
ds
Cap
ital
ap
pre
ciati
on
Qu
ick
gain
Safe
ty
Liq
uid
ity
Tax b
enef
its
Div
ersi
fica
tion
Rig
hts
/ b
on
us
Hed
ge
again
st
infl
ati
on
Primary Market 2.93 3.03 2.97 2.82 2.92 2.48 2.62 2.8 2.68
Secondary Market 2.93 2.9 3.05 2.93 3.01 2.62 2.69 2.7 2.66
Both 2.79 3.1 2.99 3.09 3.17 2.79 2.82 2.86 2.83
TABLE25. H-VALUES–TYPE OF MARKET OPERATED AND INVESTMENT
OBJECTIVES
S. No Investment objectives H-values P-values Significance
a Dividends 3.783 .151 NS
b Capital appreciation 7.862 .020 S
c Quick gain .544 .762 NS
d Safety 6.069 .048 S
e Liquidity 7.239 .027 S
f Tax benefits 7.348 .025` S
g Diversification 3.635 .162 NS
h Rights/Bonus 3.378 .185 NS
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i Hedge against inflation 3.976 .137 NS
S-Significant(P-Value 0.05) NS-Not Significant(P-Value 0.05)
13. MARKET EXPERIENCE AND INVESTMENT OBJECTIVES
The level of importance assumed by the investors on various investment objectives based
on their Market experience is presented in Table .26. in terms of Average scores:
Table 3.76 reveals that the investors with low market experience attach more importance
to safety, the investors with moderate market experience attach more importance to liquidity and
investors with high market experience attach more importance to capital appreciation.
The level of importance assumed by the investors on various investment objectives varies
with their market experience but on comparison it is evident that investors with high market
experience have given very high importance to capital appreciation (3.11) than others.
Kruskal Wallis H-test has been applied to test the significance of differences in the
Average Scores of the different classes of investors based on their Market experience.
Hypothesis: There is no significant difference in the level of importance assumed on
various investment objectives between the different classes of investors
based on their Market experience.
Kruskal Wallis Test reveals in Table .27. that the hypothesis is accepted (Not significant)
in all the cases.
It can be concluded that there is no significant difference in the level of importance
assumed on various investment objectives between the different classes of investors based on
their Market experience.
TABLE26. AVERAGE SCORES - MARKET EXPERIENCE AND INVESTMENT
OBJECTIVES
Investment
Objectives
Market
Experience
Div
iden
ds
Cap
ital
ap
pre
ciati
on
Qu
ick
gain
Safe
ty
Liq
uid
ity
Tax b
enef
its
Div
ersi
fica
tion
Rig
hts
/ b
on
us
Hed
ge
again
st i
nfl
ati
on
Low 2.94 3.05 3.06 3.09 3.03 2.82 2.78 2.81 2.77
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Moderate 2.88 2.94 3 2.93 3.08 2.68 2.75 2.8 2.8
High 2.79 3.11 2.99 3 3.1 2.6 2.71 2.78 2.67
TABLE27. H-VALUES - MARKET EXPERIENCE AND INVESTMENT OBJECTIVES
S. No Investment objectives H-values P-values Significance
a Dividends 3.053 .217 NS
b Capital appreciation 4.422 .110 NS
c Quick gain .066 .967 NS
d Safety 1.838 .399 NS
e Liquidity 1.021 .600 NS
f Tax benefits 4.360 .113 NS
g Diversification .848 .654 NS
h Rights/Bonus .102 .951 NS
i Hedge against inflation 2.183 .336 NS
S-Significant(P-Value 0.05) NS-Not Significant(P-Value 0.05)
FINDINGS AND CONCLUSION
Based on the above analysis researchers found that the Investment objectives of the retail equity
investors has been identified and summarized as follows:
The level of importance assumed by the retail equity investors on various investment
objectives has been examined using Average Scores and the significance of differences in the
average scores of the different classes of investors has been tested using Kruskal Wallis H-Test.
Average Score Analysis reveals that investors attach more importance to liquidity, quick
gain, capital appreciation and safety compared to others. The level of importance assumed by the
investors on various investment objectives vary with their socio-economic and investment
profile:
The following classes of investors attach more importance to Liquidity:
Investors Residing at Vuyyuru and Ibrahimpatnam
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Investors of all Age groups
Male investors
Married investors
Investors with School, College and Professional education.
Investors who are Professionals and Others.
Investors from Small and Medium family
Investors with One or Two earning members in the family
Investors of Medium and High income group
Hereditary and New generation investors
Both Long term investors and Day traders
Both Primary and Secondary market operators
Investors with moderate market experience.
The following classes of investors attach more importance to Quick gain:
Female investors
Unmarried investors
Investors who are Businessmen
Investors of Low income group
Day traders
Secondary market operators
The following classes of investors attach more importance to Capital appreciation:
Investors of Vijayawada town
Investor who belong to other category in Educational level
Investors who belong to Salaried class
Investors with three and above earning members in the family
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Primary market operator
Investors with high market experience
The following classes of investors attach more importance to safety:
Investors of Nuzvid and Gannavaram
Investors of Huge family
Hereditary investor
Long-term investor
Investors with low Market experience
The following classes of investors attach more importance to dividends
Investors of Machilipatnam, Gudivada and Nandigama.
Kruskal Wallis H-Test reveals that there is a significant difference in the average scores
of different classes of investors with regard to the level of importance assumed by them on
various investment objectives. What are the hypotheses‟ formulated on various points most of
them are true. Based on old and present analysis researchers are in position to understand and
assumed that most of our Indian investors‟ psychological tendencies are same. Now a days so
many tools/sources are available for analysis of equity stocks. Hence, the investors should make
up their mind-set before taking investment decisions. From the above study, retail equity
investors should understand that, they should develop a clear investment objective with long
term investment perspective/orientation, based on fundamental analysis of various equity scrips,
while making their investment. Then only they will enjoy the fruits of their investments and
satisfy their mottos.
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International Journal of Social Science & Interdisciplinary Research
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