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ORIGINAL ARTICLE

ISSN No : 2230-7850

International MultidisciplinaryResearch Journal

Indian Streams

Research Journal

Executive EditorAshok Yakkaldevi

Editor-in-ChiefH.N.Jagtap

Vol 4 Issue 2 March 2014

Mohammad HailatDept. of Mathematical Sciences, University of South Carolina Aiken

Abdullah SabbaghEngineering Studies, Sydney

Catalina NeculaiUniversity of Coventry, UK

Ecaterina PatrascuSpiru Haret University, Bucharest

Loredana BoscaSpiru Haret University, Romania

Fabricio Moraes de AlmeidaFederal University of Rondonia, Brazil

George - Calin SERITANFaculty of Philosophy and Socio-Political Sciences Al. I. Cuza University, Iasi

Hasan BaktirEnglish Language and Literature Department, Kayseri

Ghayoor Abbas ChotanaDept of Chemistry, Lahore University of Management Sciences[PK]

Anna Maria ConstantinoviciAL. I. Cuza University, Romania

Horia PatrascuSpiru Haret University,Bucharest,Romania

Ilie Pintea,Spiru Haret University, Romania

Xiaohua YangPhD, USA

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Flávio de São Pedro FilhoFederal University of Rondonia, Brazil

Kamani PereraRegional Center For Strategic Studies, Sri Lanka

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Delia SerbescuSpiru Haret University, Bucharest, Romania

Anurag MisraDBS College, Kanpur

Titus PopPhD, Partium Christian University, Oradea,Romania

Pratap Vyamktrao NaikwadeASP College Devrukh,Ratnagiri,MS India

R. R. PatilHead Geology Department Solapur University,Solapur

Rama BhosalePrin. and Jt. Director Higher Education, Panvel

Salve R. N.Department of Sociology, Shivaji University,Kolhapur

Govind P. ShindeBharati Vidyapeeth School of Distance Education Center, Navi Mumbai

Chakane Sanjay DnyaneshwarArts, Science & Commerce College, Indapur, Pune

Awadhesh Kumar ShirotriyaSecretary,Play India Play,Meerut(U.P.)

Iresh SwamiEx - VC. Solapur University, Solapur

N.S. DhaygudeEx. Prin. Dayanand College, Solapur

Narendra KaduJt. Director Higher Education, Pune

K. M. BhandarkarPraful Patel College of Education, Gondia

Sonal SinghVikram University, Ujjain

G. P. PatankarS. D. M. Degree College, Honavar, Karnataka

Maj. S. Bakhtiar ChoudharyDirector,Hyderabad AP India.

S.Parvathi DeviPh.D.-University of Allahabad

Sonal Singh,Vikram University, Ujjain

Rajendra ShendgeDirector, B.C.U.D. Solapur University, Solapur

R. R. YalikarDirector Managment Institute, Solapur

Umesh RajderkarHead Humanities & Social Science YCMOU,Nashik

S. R. PandyaHead Education Dept. Mumbai University, Mumbai

Alka Darshan ShrivastavaShaskiya Snatkottar Mahavidyalaya, Dhar

Rahul Shriram SudkeDevi Ahilya Vishwavidyalaya, Indore

S.KANNANAnnamalai University,TN

Satish Kumar KalhotraMaulana Azad National Urdu University

Editorial Board

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Welcome to ISRJISSN No.2230-7850

Indian Streams Research Journal is a multidisciplinary research journal, published monthly in English, Hindi & Marathi Language. All research papers submitted to the journal will be double - blind peer reviewed referred by members of the editorial board.Readers will include investigator in universities, research institutes government and industry with research interest in the general subjects.

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Indian Streams Research Journal ISSN 2230-7850Volume-4 | Issue-2 | March-2014Available online at www.isrj.net

INVESTOR'S PERCEPTION TOWARDS THE CAPITAL MARKET

Abstract:-India's growth story has important implications for the capital market, which has grown sharply with respect to several parameters — amount raised number of stock exchanges and other intermediaries, listed stocks, market capitalization, trading volumes and turnover, market instruments, investor population, issuer and intermediary profiles.

In research, the investigator has used a structured questionnaire for eliciting the required responses relating to investment from general public. For the purpose of secondary data, the investigator has used books and internet. Lot of data was also gained through verbal conversation with the employees of the Ludhiana stock exchange. Lastly, all the data were compiled together to make a complete report by analyzing the data collected.

Keywords: capital market , market instruments , analyzing , intermediary profiles.

INTRODUCTION

Capital market is one of the financial markets where investor buys or sells long term securities. It is an institutional arrangement to borrow and lend money for a longer period of time. It consists of financial institutions like ICICI, IDBI, LIC, UTI etc., who play the role of lenders in the capital market. Business units and corporate are the borrowers in the capital market. It provides long term debt and equity finance for the corporate and government sector. It can be classified into two categories: Primary and Secondary market. Primary market is the one where securities are traded for the first time and in the secondary market existing securities are traded.

LITERATURE REVIEW

THE INVESTIGATOR decided to provide a detailed bibliography at the end of the project and provide a commentary on the more serious works in the main body of the project.

The work in this area can be classified into three broad strands: a) those dealing with functioning of securities markets and financial institutions operating in these markets, b) those pertaining to the investment decision making process of individuals, and c) empirical work on Indian stock markets.

One of the early works on functioning of stock markets and financial institutions was by Simha, Hemalata and Balakrishnan (1979).

Bhole (1982) wrote a comprehensive book on the growth and changes in the structure of Indian capital markets and financial institutions. The book was subsequently updated and revised in 1992. Several books have been written on security analysis and investment in Indian stock markets: Bhalla (1983); Jain (1983), Sahni (1986), Singh (1986); Chandra (1990a), Raghunathan (1991), Avadhani (1992); Yasaswy (1985, 91, 92a, 92b) and Barua et al (1992). These books are primarily written for initiating lay investors to techniques for security analysis and management of investment portfolios.

Basu & Dalal (1993), Barua & Varma (1993a) andRamachandran (1993) have critically examined various facets of the great securities scam of 1992.

Several studies, for example, Sahni (1985), Kothari (1986), Raju (1988), Lal (1990), Chandra(1990b), Francis (1991a), Ramesh Gupta (1991a,c, 1992a), Raghunathan (1991), Varma (1992a),L.C. Gupta (1992) and Sinha (1993) comment upon the Indian capital market in general and trading systems in the stock exchanges in particular and suggest that the systems therein are rather antiquated and inefficient, and suffer from major weaknesses and malpractices. According to most of these

Rachna Bajaj , INVESTOR'S PERCEPTION TOWARDS THE CAPITAL MARKET ” Indian Streams Research Journal | Volume 4 | Issue 2 |

March 2014 | Online & Print

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Rachna Bajaj

Research Fellow In Management , Punjabi University, Patiala.

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studies, significant reforms are required if the stock exchanges are to be geared up to the envisaged growth in the Indian capital market.

The investment decision making process of individuals has been explored through experiments by Barua and Srinivasan (1986, 1987a, 1991). They conclude that the risk perceptions of individuals are significantly influenced by the skewness of the return distribution. This implies that while taking investment decisions, investors are concerned about the possibility of maximum losses in addition to the variability of returns. Thus the mean variance framework does not fully explain the investment decision making process of individuals. Gupta (1991b) argues that designing a portfolio for a client is much more than merely picking up securities for investment. The portfolio manager needs to understand the psyche of his client while designing his portfolio. According to Gupta, investors in India regard equity debentures and company deposits as being in more or less the same risk category, and consider mutual funds, including all equity funds, almost as safe as bank deposits. Chandra (1989) discusses the mistakes made by individual investors in designing their portfolios and suggests suitable remedial measures.

In his recent book, L.C. Gupta (1992) concludes that, a) Indian stock market is highly speculative; b) Indian investors are dissatisfied with the service provided to them by the brokers; c) margins levied by the stock exchanges are inadequate and d) liquidity in a large number of stocks in the Indian markets is very low. While evidently a painstaking work, the conclusions except ̀ c' above seem to be built on wrong or questionable arguments.

On whether SEBI has been successful in improving the functioning of Indian stock markets, the conclusions are mixed.

Pandya (1992) observes that as a regulatory and development body, SEBI's efforts in the direction of investor protection are varied and unlimited.

OBJECTIVE OF STUDY

The investigator was faced with difficult question about what can be classified as a work on CAPITAL MARKETS. A variety of work in economics, accounting and finance would have some linkages with capital markets. Works in corporate finance have strong linkages with security markets. So the investigator decided to have detailed study of capital market.

The following study was mainly done with an objective to know the state of mind of the investors who wanted to invest in the stock market.

RESEARCH METHODOLOGY

Research in common vernacular refers to a search for knowledge. One can also define research as a scientific and systematic search for pertinent information on a specific topic. In fact, research is an art of scientific investigation.

Investor's Perception Towards The Capital Market

2Indian Streams Research Journal | Volume 4 | Issue 2 | March 2014

Type of research Descriptive research.

Sampling technique Simple random sampling.

Sampling size 25

Instrumentation technique Interview, questionnaire

Sources of data collection Primary data was collected by Questionnaire and

secondary data was collected from magazines, books,

and internet.

Software used for data analysis MS-excel

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RESEARCH REGARDING PERCEPTION OF PEOPLE TOWARDS INVESTMENT

ANALYSIS AND INTERPRETATION

The investigator has used a structured questionnaire for eliciting the required responses relating to capital market. 25 respondents were approached for this purpose. The various responses have been classified, and tabulated. A simple statistical analysis is made.

1.Table showing the age group of respondents

Table 1

Graph showing the age group of respondents

Graph 1

Analysis: From the above table we can see that the normal range of respondents belongs to age group 20-30 yrs, with the highest 40%, followed by 20% in rest categories respectively.

Interpretation: 40% of investors fall in the age group 20-30.

2. Table showing occupation of respondents


Age (In years) Frequency %

20-30 10 40

30-40 5 20

40-50 5 20

50 & above 5 20

Total 25 100


.

Table 2

Graph showing the occupation of respondents

Graph 2

Analysis: 35% of the respondents belong to business class 50%are salaried person and rests are the retired persons.Interpretation: 50% of the respondents belong to salaried group.

3. Table showing the areas of investment

Table 3

Graph showing the areas of investment


Occupation Frequency %

Businessman 9 35

Salaried class 12 50

Retired 4 15

Total 25 100


Particulars Frequency Percentage

Banking 9 36

Mutual Funds 4 16

Stock market 6 24

Insurance 6 24

Total 25 100

.

Graph 3

Analysis: The above survey reveals that 36% of the respondents are interested to invest their savings in banks, because of previous recession in the capital market.24% are interested in stock market and insurance sector respectively, rest 16% are interested in mutual funds.

Interpretation: Majority of 36% of respondents are interested in banks.

4. Table showing the reasons why they don't invest in stock market

Table 4

Graph showing the reasons why they don't invest in stock market

Graph 4

Analysis: From the above survey it is clearly inferred that, the respondents who doesn't invest in stock market, 74% of them are due to risk and rest 26% are due to lack of knowledge.

Interpretation: So risk is the main factor for not investing in the stock market.


Particulars Frequency Percen tage

Risk 14 74

Lack of awareness 5 26

TOTAL 19 100


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5. Table showing the perception of respondents for future investment

Table 5

Graph showing the perception of respondents for future investment

Graph 5

Analysis: From the above Graph it can be analyzed that 68% of the respondents are willing for future investment and 32% of the respondents are not willing.

Interpretation: Most of the respondents have positive approach for future investment.

6. Table showing the period of holding the securities

Table 6

Graph showing the period of holding the securities


Particulars F req uency %

Y es 17 68

N o 8 32

T otal 25 100

Period (in years) Frequency Percentage

0-5 3 50

5-10 2 33 .33

10-15 1 16 .67

15-20 0 0

Total 6 100


.

Graph 6

Analysis: From the above table it can be inferred that out of 6 respondents who have directly invested in the stock market 50% are holding securities 0-5 years and no one is holding securities for 15-20 years as the respondents of age group 40 & above are very less. Interpretation: There are mostly short term investors as almost belong to age group 20-30.

7. Table showing the reasons for investment in the stock market

Table 7

Graph showing reasons for investment in the market

Graph 7

Analysis: From the table it is analyzed that 67% investors invest for good returns & 33% invest for passion.

Interpretation: Majority of investors do trading for good returns.


Particulars Frequen cy Percentage

Good returns 4 67

Passion 2 33

T otal 6 100


.

8. Table showing the most liked trading

Table 8

Graph showing the most liked trading

Graph 8

Analysis- From the above table it is implied that 36% like intraday trading and 64% like delivery base trading.

Interpretation- Mostly people prefer delivery basis trading.

9. Table showing the perception of investors regarding how secured the securities are in opening demat account.

Table 9

Graph showing perception of investors regarding how secured the securities are in opening demat account



Intra day 9 36

Delivery basis 16 64

TOT AL 25 100


Excellent 1 16.67

Very Good 2 33.33

Good 3 50

Average 0 0

Total 6 100


.

Graph 9

Analysis: From the above table survey, it can be said that 16% of the shareholders are giving their consent as excellent about Demat, 33% says very good and 50% says that it is a good facility.

Interpretation: Dematerialization plays a major role in providing safety and security to the holders.

FINDINGS

From the above analysis, the following points can be drawn:

Out of the total respondents mostly belongs to age group 20-30 and out of which 6 invest in stock market, 10 in insurance and mutual funds and rest in banking.The main reason for not investing in the stock market is 'risk factor'.Out of 6 stockholders, 3 are holding securities for 0-5 years, 2 are holding for 5-10 years and 1 is holding for 10-15 years. So no one is holding securities for longer period as mostly belong to age group 20-30.64% respondents like delivery basis trading in comparison to intraday.50% stockholders are satisfied with holding securities in demat form.

LIMITATIONS OF STUDY

Study is conducted in limited area only.Probably the time and money constraints can affect my researchDependency too much on secondary data for conducting the research that is insufficient for the research.

CONCLUSION

On the basis of the analysis it is found that investors are investing in the stock market for getting the higher return on their investment. The study also shows that investors are risk averse; so as to diversify risk they are investing in the mutual funds. No one is holding securities for longer period as they are getting newer offers for the investments. The limitation of the study was limited area and time.

BIBLIOGRAPHY

WEBSITES

1.www.google.com2.www.flipkart.com3.www.scribd.com4.www.capitalmarket.com

NEWSPAPER & MAGAZINE

1.The Hindu



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2.Capital market

BOOKS & PUBLICATIONS

1.Avadhani V A (1992), Investment & Securities Markets in India: Investment Management, Himalaya Publishing, and Bombay. p 426.2.Barua S K & Srinivasan G (1987a), "Investigation of Decision Criteria for Investment in Risky Assets", OMEGA: International Journal of Management Science, Vol. 15, No. 3, p. 247-253.3.Barua S K & Srinivasan G (1991), "Experiment on Individual Investment Decision Making Process", Sankhya, Vol. 53, Series B, p. 74-88.4.Barua S K & Varma J R (1993a), The Great Indian Scam: Story of the Missing Rs 4000 crore, Vision Books, Delhi, p. 160.5.Basu Debasish & Dalal Sucheta (1993), Scam: Who Won, Who Lost, Who Got Away, UBS Publishers & Distributors, New Delhi, p. 294.6.Bhalla U K (1983), Investment Management : Security Analysis and Portfolio Management, S. Chand, New Delhi, p. 391.7.Bhole L M (1982), Financial Markets and Institutions : Growth Structure and Innovations, Tata McGraw Hill, New Delhi, p. 360, I edition.8.Bhole L M (1992), Financial Institutions & Markets : Structure Growth and Innovations, II Edition, Tata McGraw Hill, Delhi, p. 527.9.Chandra Prasanna (1989), "Individual Portfolio Management: Mistakes and Remedies", Chartered Financial Analyst, (Sep-Oct), p. 3-5.10.Chandra Prasanna (1990b), "Indian Capital Market : Pathways of Development", ASCI Journal of Management, Vol. 20, No. 2-3 (Sept-Dec), p. 129-137.11.Chandra Prasanna (1990a), Investment Game: How to Win, Tata McGraw-Hill, New Delhi (1990), p. 230.12.Francis C K (1991a), "Towards a Healthy Capital Market", Yojana, Vol. 35, Mar.1-15, p. 11-13.13.Gupta L C (1992), Stock Exchange Trading in India : Agenda for Reform, Society for14.Capital Market Research and Development, Delhi, p. 123.15.Gupta Ramesh (1991a), "Revamping Stock Exchange Operations - Some Suggestions", Working Paper No. 922, (Jan-Mar), Indian Institute of Management, Ahmedabad.16.Gupta Ramesh (1991b), "Portfolio Management : The Process and Its Dynamics", Working Paper No. 923, (Jan-Mar), The Indian Institute of Management, Ahmedabad.17.Gupta Ramesh (1991c), "Regulation of Securities Market in India: Some Issues ", Chartered Secretary, Vol. 21, No. 6 (Jun).18.Gupta Ramesh (1992a), "Development of the Capital Market in India: A Regulatory Perspective", Working Paper No. 997, (Jan-Mar), Indian Institute of Management, Ahmedabad.19.Jain P K (1983), Financial Institutions of India: A Study of UTI, Triveni Publications, New Delhi.20.Kothari Rajesh (1986), "Profile of Recent Developments in Indian Capital Market", Prashanika, HCM-RIPA, Vol. XV, No. 4 (Oct-Dec).21.Lal T (1990), "Primary Capital Market : Some Reflections", Yojana, Vol. 34, June 16-30, p. 9-12.22.Pandya V H (1992), "Securities and Exchange Board of India: Its Role, Powers, Functions and Activities", Chartered Secretary, Vol. 22, No. 9 (Sept), p. 783. 2823.Raghunathan V (1991), Stock Exchanges and Investments: Straight Answers to 100 Nagging Questions, Tata McGraw Hill, New Delhi, p. 176.24.Ramachandran K S (1993), Scanning the Scam: How and Why of the Securities Scandal, NEO Publishing Company, New Delhi, p. 199.25.Sahni S K (1985), Stock Exchanges in India: Practices, Problems, Prospects, North Publishing Corporation, New Delhi, p 344.26.Sinha Sidharth (1993), "The Badla Market and Futures and Options", Unpublished Paper, Indian Institute of Management, Ahmedabad (pending presentation in CBOT Fifth Annual Asia-Pacific Futures Research Symposium, March 14/15, 1994, Taipei).27.Simha S L N, Hemalatha D & Balakrishnan S (1979), Investment Management, Institute of Financial Management and Research, Madras.28.Singh Preeti (1986), Investment Management : Security Analysis and Portfolio Management, Himalaya Publishing, Bombay, p. 579.29.Varma J R, Raghunathan, Korwar A & Bhatt M C (1992a), "The Narasimham Committee Report - Some Future Ramifications and Suggestions", Working Paper No. 1009, (Jan-Mar), Indian Institute of Management, Ahmedabad.30.Yasaswy N J (1985), Equity Investment Strategy, Tata McGraw Hill, New Delhi.31.Yasaswy N J (1991), Growth Stocks, Vision Books, New Delhi, p. 208.32.Yasaswy N J (1992a), Emerging Blue Chips : 1992-93 With Model Portfolios of the 177 Highfliers of the Year, Vision Books, New Delhi, p. 223.33.Yasaswy N J (1992b), PSU Stocks Picking the Winners, Vision Books, New Delhi, p. 206.34.Zahir M A & Khanna Yakesh (1982), "Determinants of Stock Prices in India", Chartered Accountant, Vol. 30, No. 8 (Feb).



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Rachna BajajResearch Fellow In Management , Punjabi University, Patiala


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