KARNATAKA UNIVERSITY DHARWAD GEN Society’s GLOBAL BUSINESS SCHOOL BHAIRIDEVARAKOPPA HUBLI.(Affiliated to Karnataka University, Dharwad & Recognized by AICTE, New Delhi) PROJECT REPORT ON “Influence of Capital Market Information on Investment Decisions” SUBMITTED BY Hardeep Singh Hundal MBA11007028 UNDER THE GUIDANCE OFInstitute Guide: Organization Guide:Mr. M.N Manik Mr. Sadanand C
G.E.N.Society’s GLOBAL BUSINESS SCHOOL BHAIRIDEVARKOPPA, HUBLI – 580025 (Recognized by AICTE, New Delhi & Affiliated to Karnatak University, Dharwad) CERTIFICATEThis is to certify that Mr. Hardeep Singh Hundal of MBA II Semester, Exam No.MBA11007028 has successfully completed her Project work titled, “Influence of Capital Market Information on Investment Decisions” at Angel Broking Limited, Belgaum” From 9th July 2012 to 8th September 2012.Dr. Ramakant Kulkarni Prof. R R Kulkarni Prof. M.N.Manik
DECLARATION I Hardeep Singh Hundal MBA II semester student of Gen Society‟s, GlobalBusiness School, Hubli, hereby declare that the project entitled “Influence of CapitalMarket Information on Investment Decisions” in Angel Broking Belgaum is submitted byme to Karnataka University, Dharwad in partial fulfillment for the requirements for the awardof the degree of “Master of Business Administration (MBA)”. This project report is a workprepared by me under the guidance of Mr. M.N. Manik.Place: Hubli Hardeep Singh HundalDate: 15th September 2012 MBA II Semester
ACKNOWLEDGEMENT It is my privilege to have accomplished this study under the guidance of Mr. M.NManik my faculty and guide, for taking keen interest full involvement, dynamic motivationand valuable guidance extended to me throughout the project. I express my sincerest gratitude and thanks to honorable Mr. Sadanand.C (ChannelPartner) for whose kindness I had the precious opportunity of attaining Training at AngelBroking, under this brilliant untiring guidance I could complete the Project being undertakenon “Influence of Capital Market Information on Investment Decision” successfully intime. His meticulous attention and valuable suggestions have helped me in simplifying theproblem in the work. I would also like to thank the overwhelming support of all the peoplewho gave me an opportunity to learn and gain knowledge about the various aspects of theindustry. I am indebted to all staff members of Angel Broking Limited for their valuablesupport and cooperation during the entire tenure of this project. Not to forget, the faculty members of Global Business School, Hubli who have keptmy spirits surging and helped me in delivering my best and made me reach up to thisplatform.
Executive Summary The Summer Inplant Project at “Angel Broking” has given an exposure intothe investment scenario in India. The project while working at “Angel Broking”includes advisory services i.e. educating the existing and potential investors about stockmarket as an alternative source to investment. This involves catering to the queries of theinvestors about the concept of stock market, the various options that an investor can investhis money into, funds management of investors. Analyzing the investors‟ behavior includes understanding the concerns a person hastowards Stock Market, his stages in life and wealth cycle, the effect of the investmentsmade by the peer groups, effect of the profession he/she is in, education qualification,importance of tax benefits, the most preferred saving tool etc. and this all is analyzed withthe help of a schedule prepared. Through the systematic investment plan invest a specific amount for a continuousperiod, at regular intervals. By doing this, the investor get the advantage of rupee costaveraging which means that by investing the same amount at regular intervals, the averagecost per unit remains lower than the average market price.
TABLE OF CONTENTSSL.No Topic Pg.No 1 Industry Profile 1-16 2 Company Profile 17-37 3 Literature Review 38-40 4 Objectives 41 5 Limitations 41 6 Research Methodology 41-44 7 Analysis 45-68 8 Findings 69 9 Conclusion 70 10 Questionnaire 71-73 11 Bibliography 74
Industry ProfileFinancial services Financial services are the economic services provided by the finance industry, whichencompasses a broad range of organizations that manage money, including credit unions,banks, credit card companies, insurance companies, consumer finance companies, stockbrokerages, investment funds and some government sponsored enterprises.History of Indian Stock Market The Indian broking industry is one of the oldest trading industries that have beenaround even before the establishment of BSE in 1875. BSE is the oldest stock market inIndia. The history of India stock trading starts with 318 persons taking membership in Nativeshare and Stock Brokers Association, which we know by the name Bombay Stock Exchangeor BSE in short. In 1965, BSE got permanent recognition from the Government of India.BSE and NSE represent themselves as synonyms of India stock market. The history of Indiastock market is almost the same as the history of BSE The regulations and reforms been laid down in the equity market has resulted in rapidgrowth and development .Basically the growth in the equity market is largely due to theeffective intermediaries. The broking houses not only act as an intermediate link for theequity market but also for the commodity market, the foreign currency exchange market andmany more. The broking houses have also made an impact on foreign investors to invest inIndia to certain extent. In the last decade, the Indian brokerage industry has undergone adramatic transformation. Large and fixed commissions have been replaced by wafer thinmargins, with competition driving down the brokerage fees, in some cases to a few basispoints. There have also been major changes in the way the business is conducted. The scopeof services have enhanced from being equity products to a wide range of financial services.Financial Products The survey also revealed that in the past couple of years, apart from trading, the firmshave started various investment value services. The sustained growth of the economy in pastcouple of years has resulted in broking firms offering many diversified services related toIPO‟s, mutual funds, company research etc. However, the core trading activity is still the
predominant form of business, forming 90% of the firms in the sample. 67% firms areengaged in offering IPO related services. The broking industry seems to have capitalized onthe growth of the mutual fund industry, which pegged at 40% in 2006. More than 50% of thesample broking houses deal in mutual fund investment services. The average growth in assetsunder management in last two years is almost 48% company research services. Additionally,a host of other value added services such as fundamental and technical analysis, investmentbanking, arbitrage etc are offered by the firms at different levels.Capital market Capital market is a market for securities (debt or equity), where business enterprises(companies) and governments can raise long-term funds. Capital market may be classified asprimary markets and secondary markets. In primary market new stock or bond issues are soldto investor via a mechanism known as underwriting. In secondary markets, existing securitiesare sold and brought among investors or traders, usually on a security exchange, over thecounter or elsewhere. The capital market includes e stock market (equity securities) andBond market (debt).Primary and Secondary Capital Markets A company cannot easily attract investors to invest in their securities if the investorscannot subsequently trade these securities at will. In other words, securities cannot have agood primary market unless it is ensured of an active secondary market.Primary Market Securities generally have two stages in their lifespan. The first stage is when thecompany initially issues the security directly from its treasury at a predetermined offeringprice. Primary market is the market for issue of new securities. It therefore essentially consistof the companies issuing securities, the public subscribing to these securities, the regulatoryagencies like SEBI and the Government, and the intermediaries such as brokers, merchantbankers and banks who underwrite the issues and help in collecting subscription money fromthe public. It is referred to as Initial Public offer (IPO). Investment dealers frequently buyinitial offering on the primary market and the securities on the secondary market.
Secondary Market The second stage is when an investor or dealer makes the shares, bought from acompany treasury, available for sale to other investors on the secondary market. Secondarymarket is the market for trading in existing securities, after they have been created in theprimary market. It essentially consists of the public who are buyers and sellers of securities,brokers, mutual funds, and most importantly, the stock exchanges where the trading takesplace, such as the BSE (Bombay Stock Exchange) or NSE (National Stock Exchange). Indian Stock ExchangeStock MarketA stock market or equity market is a public entity (a loose network of economic transaction,not a physical facility or discrete entity) for the trading of company stock (shares) andderivatives at an agreed price; these are securities listed on a stock exchange as well as thoseonly traded privately.Stock exchange A stock exchange provides services for stock brokers and traders to trade stocks,bonds and other securities. Stock exchanges also provide facilities for issue and redemptionof securities and other financial instruments and capital events including the payment ofincome and dividends. Securities traded on stock exchange include shares issued bycompanies, unit trusts, derivatives, pooled investment products and bonds.Equity/Share Total equity capital of a company is divided into equal units of small denominations,each called a share. For example, in a company the total equity capital of Rs. 2,00,00,000 isdivided into 20,00,000 units of Rs 10 each. Each such unit of Rs. 10 is called a share. Thus,the company then is said to have 20, 00,000 equity share of Rs 10 each. The holders of suchshares are members of the company and have voting rights. There are now stock markets invirtually every developed and most developing economy, with the world‟s biggest being inthe United States, UK, Germany, France, India and Japan.
Market participants Market participants include individual retail investors, institutional investors such asmutual funds, banks, insurance companies and hedge funds, and also publically tradedcorporations trading in their own shares.Trading Participants in the stock market range from small individual stock investors to largehedge fund traders, who can be based anywhere.Listing Listing means admission of securities of an issuer to trading privileges on a stockexchange through a formal agreement. The prime objective of admission to dealing on theExchange is to provide liquidity and marketability to securities.Securities A Security gives the holder an ownership interest in the assets of a company. Forexample, when a company issues security in the form of stock, they give the purchaser aninterest in the company‟s assets in exchange for money. There are a number of reasons why acompany issues securities: meeting a short – term cash crunch or obtaining money for anexpansion are just two.WHAT IS SEBI AND WHAT IS ITS ROLE? In 1988 the Securities and Exchange Board of India (SEBI) was established by theGovernment of India through an executive resolution, and was subsequently upgraded as afully autonomous body (a statutory Board) in the year 1992 with the passing of the Securitiesand Exchange Board of India Act (SEBI Act) on 30th January 1992. In place of GovernmentControl, a statutory and autonomous regulatory board with defined responsibilities, to coverboth development & regulation of the market, and independent powers have been set up.Paradoxically this is a positive outcome of the Securities Scam of 1990-91.
OBJECTIVES OF SEBI The promulgation of the SEBI ordinance in the parliament gave status to SEBI in 1992. According to the preamble of the SEBI, the three main objectives are: To protect the interests of the investors in securities To promote the development of securities market To regulate the securities marketFUNCTIONS OF SEBI The main functions entrusted with SEBI are: Regulating the business in stock exchange and any other securities market Registering and regulating the working of stock brokers, share transfer agents, bankers to the issue, trustees of trust deed, registrars to an issue, merchant bankers, underwriters, portfolio managers, investment advisers and such other intermediaries who may be associated with securities market in any manner. Registering and regulating the working of collective investment schemes including mutual funds Promoting and regulating self-regulatory organizations Prohibiting fraudulent and unfair trade practices in the securities market Promoting investors education and training of intermediaries in securities market Prohibiting insiders trading in securities Regulating substantial acquisition of shares and takeover of companies Calling for information, undertaking inspection, conducting enquiries and audits of the stock exchanges, intermediaries and self-regulatory organizations in the securities market. Since its inception SEBI has been working targeting the securities and is attending tothe fulfillment of its objectives with commendable zeal and dexterity. The improvements inthe securities markets like capitalization requirements, margining, establishment of clearingcorporations etc. reduced the risk of credit and also reduced the market. SEBI has introduced the comprehensive regulatory measures, prescribed registrationnorms, the eligibility criteria, the code of obligations and the code of conduct for different
intermediaries like, bankers to issue, merchant bankers, brokers and sub-brokers, registrars,portfolio managers, credit rating agencies, underwriters and others. It has framed bye-laws,risk identification and risk management systems for Clearing houses of stock exchanges,surveillance system etc. which has made dealing in securities both safe and transparent to theend investor. Another significant event is the approval of trading in stock indices (like S&P CNXNifty & Sensex) in 2000. A market Index is a convenient and effective product because of thefollowing reasons: It acts as a barometer for market behavior; It is used to benchmark portfolio performance; It is used in derivative instruments like index futures and index options; It can be used for passive fund management as in case of Index Funds. Two broad approaches of SEBI is to integrate the securities market at the nationallevel, and also to diversify the trading products, so that there is an increase in number oftraders including banks, financial institutions, insurance companies, mutual funds, primarydealers etc. to transact through the Exchanges. In this context the introduction of derivativestrading through Indian Stock Exchanges permitted by SEBI in 2000 AD is a real landmark. SEBI appointed the L. C. Gupta Committee in 1998 to recommend the regulatoryframework for derivatives trading and suggest bye-laws for Regulation and Control ofTrading and Settlement of Derivatives Contracts. The Board of SEBI in its meeting held onMay 11, 1998 accepted the recommendations of the committee and approved the phasedintroduction of derivatives trading in India beginning with Stock Index Futures. The Boardalso approved the "Suggestive Bye-laws" as recommended by the Dr LC Gupta Committeefor Regulation and Control of Trading and Settlement of Derivatives Contracts. SEBI then appointed the J. R. Verma Committee to recommend Risk ContainmentMeasures (RCM) in the Indian Stock Index Futures Market. The report was submitted in
November1998. However the Securities Contracts (Regulation) Act, 1956 (SCRA) requiredamendment to include "derivatives" in the definition of securities to enable SEBI to introducetrading in derivatives. The necessary amendment was then carried out by the Government in1999. The Securities Laws (Amendment) Bill, 1999 was introduced. In December 1999 thenew framework was approved. Derivatives have been accorded the status of `Securities. Theban imposed on trading in derivatives in 1969 under a notification issued by the CentralGovernment was revoked. Thereafter SEBI formulated the necessary regulations/bye-lawsand intimated the Stock Exchanges in the year 2000. The derivative trading started in India atNSE in 2000 and BSE started trading in the year 2001.Bombay Stock Exchange Bombay Stock Exchange is the oldest stock exchange in Asia with a rich heritage,now spanning three centuries in its 133 years of existence. What is now popularly known asBSE was established as "The Native Share & Stock Brokers Association" in 1875. BSE isthe first stock exchange in the country which obtained permanent recognition (in 1956) fromthe Government of India under the Securities Contracts (Regulation) Act 1956. BSEs pivotaland pre-eminent role in the development of the Indian capital market is widely recognized. Itmigrated from the open outcry system to an online screen-based order driven trading systemin 1995. Earlier an Association of Persons (AOP), BSE is now a corporatized anddemutualised entity incorporated under the provisions of the Companies Act, 1956, pursuantto the BSE (Corporatization and Demutualization) Scheme, 2005 notified by the Securitiesand Exchange Board of India (SEBI). With demutualization, BSE has two of worlds bestexchanges, Deutsche Börse and Singapore Exchange, as its strategic partners. Over the past 133 years, BSE has facilitated the growth of the Indian corporatesector by providing it with an efficient access to resources. There is perhaps no majorcorporate in India which has not sourced BSEs services in raising resources from the capitalmarket. Today, BSE is the worlds number 1 exchange in terms of the number of listedcompanies and the worlds 5th in transaction numbers. The market capitalization as onDecember 31, 2007 stood at USD 1.79 trillion. An investor can choose from more than 4,700listed companies, which for easy reference, are classified into A, B, S, T and Z groups. TheBSE Index, SENSEX, is Indias first stock market index that enjoys an iconic stature, and is
tracked worldwide. It is an index of 30 stocks representing 12 major sectors. The SENSEX isconstructed on a free-float methodology, and is sensitive to market sentiments and marketrealities. Apart from the SENSEX, BSE offers 21 indices, including 12 sect oral indices. BSE has entered into an index cooperation agreement with Deutsche Börse. Thisagreement has made SENSEX and other BSE indices available to investors in Europe andAmerica. Moreover, Barclays Global Investors (BGI), the global leader in ETFs through itsiSharesÂ brand, has created the iSharesÂ BSE SENSEX India Tracker which tracks theSENSEX. The ETF enables investors in Hong Kong to take an exposure to the Indian equitymarket. The first Exchange Traded Fund (ETF) on SENSEX, called "SPICE" is listed onBSE. It brings to the investors a trading tool that can be easily used for the purposes ofinvestment, trading, hedging and arbitrage. SPICE allows small investors to take a long-termview of the market. BSE provides an efficient and transparent market for trading in equity,debt instruments and derivatives. It has a nation-wide reach with a presence in more than 359cities and towns of India. BSE has always been at par with the international standards. Thesystems and processes are designed to safeguard market integrity and enhance transparencyin operations. BSE is the first exchange in India and the second in the world to obtain an ISO9001:2000 certification. It is also the first exchange in the country and second in the world toreceive Information Security Management System Standard BS 7799-2-2002 certification forits BSE On-line Trading System (BOLT). BSE continues to innovate. In recent times, it hasbecome the first national level stock exchange to launch its website in Gujarati and Hindi toreach out to a larger number of investors. It has successfully launched a reporting platformfor corporate bonds in India christened the ICDM or Indian Corporate Debt Market and aunique ticker-cum-screen aptly named BSE Broadcast which enables informationdissemination to the common man on the street. In 2006, BSE launched the DirectorsDatabase and ICERS (Indian Corporate Electronic Reporting System) to facilitateinformation flow and increase transparency in the Indian capital market. While the DirectorsDatabase provides a single-point access to information on the boards of directors of listedcompanies, the ICERS facilitates the corporate in sharing with BSE their corporateannouncements. BSE also has a wide range of services to empower investors and facilitate
smooth transactions: Investor Services: The Department of Investor Services redressesgrievances of investors. BSE was the first exchange in the country to provide an amount of Rs.1 milliontowards the investor protection fund; it is an amount higher than that of any exchange in thecountry. BSE launched a nationwide investor awareness programme- Safe Investing in theStock Market under which 264 programmes were held in more than 200 cities. The BSE On-line Trading (BOLT): BSE On-line Trading (BOLT) facilitates on-line screen based tradingin securities. BOLT is currently operating in 25,000 Trader Workstations located acrossover 359 cities in India. BSEWEBX.com: In February 2001, BSE introduced the worlds firstcentralized exchange-based Internet trading system, BSEWEBX.com. This initiative enablesinvestors anywhere in the world to trade on the BSE platform. Surveillance: BSEs On-LineSurveillance System (BOSS) monitors on a real-time basis the price movements, volumepositions and members positions and real-time measurement of default risk, marketreconstruction and generation of cross market alerts. BSE Training Institute: BTI impartscapital market training and certification, in collaboration with reputed management institutesand universities. It offers over 40 courses on various aspects of the capital market and financial sector.More than 20,000 people have attended the BTI programmes Awards The World Council ofCorporate Governance has awarded the Golden Peacock Global CSR Award for BSEsinitiatives in Corporate Social Responsibility (CSR). The Annual Reports and Accounts ofBSE for the year ended March 31, 2006 and March 31 2007 have been awarded the ICAIawards for excellence in financial reporting. The Human Resource Management at BSE haswon the Asia - Pacific HRM awards for its efforts in employer branding through talentmanagement at work, health management at work and excellence in HR through technologyDrawing from its rich past and its equally robust performance in the recent times, BSE willcontinue to remain an icon in the Indian capital
National Stock Exchange The National Stock Exchange of India is a stock Exchange that is located in Mumbai,Maharashtra. The National Stock Exchange basically function in three market sections, thatis, (CM) the Capital Market Section); F&Q (The Future and Options Market Sections) andWDM (Wholesale Debt Market Segment). It is important place where the trading of shares,debt etc takes place. It was in year 1992 that the National stock Exchange was for the first timeincorporated in India. It was not regarded as a stock exchange at once. Rather, the nationalStock exchange was incorporated as a tax paying company and had got the recognition of astock exchange only in year 1993 the recognition was given under the provisions of theSecurities Contracts (Regulation) Act, 1956. The National Stock exchange is highly active in the field of market capitalization andthus aiming it the ninth largest stock exchange in the said field. Similarly, the trading of thestock exchange in equities and derivatives is so high that it has resulted in high turnovers andthus making it the largest stock exchange in India. It is the stock exchange wherein there is the facility of electronic exchange offeringinvestors. This facility is available in almost types of equitable transactions such as equities,debentures, etc. it is also the largest stock exchange if calculated in the terms of tradedvalues.
Origin and History of the National Stock Exchange The National Stock exchange was incorporated for the first time in November, 1992.The national stock exchange was not incorporated as the national stock exchange; rather, ithad got the recognition of the recognized stock exchange in April, 1993. The National stockExchange has increased its trading facilities in June 1994 when the WDM (Wholesale DebtMarket Segment) was gone live. It is basically one of the three market segments in which thenational stock Exchange works. In the same year, 1994 November, the Capital Market (CM)segment of the stock exchange goes live through VSAT. The National Stock Exchange has become the first Clearing Corporation in India bythe introduction of NSCCL in April 1995. In the same year, 1995 July, it has introduced theInvestor protection fund which is a very important function introduced by the national StockExchange. The National stock Exchange had grown with leaps and bounds and had showntremendous growth mainly in all the fields and thus making it the largest stock exchange ofIndia by October, 1995. The concept of NSCCL was extended by the introduction of clearing and settlementwith the help of NSCCL in year 1996. The National stock Exchange has introduced its Indexfor the first time in year April 1996. The index was known as the S&P CNXNifty Index. Inyear June 1996, it has introduced the Settlement Guarantee Fund. The National SecuritiesDepositor Fund was launched by the National Stock exchange in year 1996, November, andthus making it the first stock exchange who becomes the first depository in India. Because of the efforts and introduction of new concept in the field of trading, theNational stock Exchange has received the BEST IT USAGE award by the computer Societyof India in the year November, 1996. It has also received an award for the TOP IT USER inthe name of “Dataquest award” in year December, 1996. The National stock exchange has also introduced another index in year December1996 in the name of CNX Nifty Junior in year 1996. It had again received an award for theBEST IT USAGE award by the computer Society of India in the year December, 1996. InMay, 1998 it had launched its first website. Further in October 1999, it had launched the
NSE.IT LTD. Further in year October, 2002, it had launched the Government securitiesindex. The growth of the National Stock Exchange has been tremendous in every field. Ithad introduced several programmes and has achieved various achievements and awards whileworking best in the field in which it is working. The efforts and hard work that is contributedby the National Stock exchange has been tremendous and thus making an important andunique stock exchange in India.Over The Counter Exchange of India (OTCEI) OTCEI (Over The Counter Exchange of India) was incorporated in 1990 as a Section25 company under the Companies Act 1956 and is recognized as a stock exchange underSection 4 of the Securities Contracts Regulation Act, 1956. The Exchange was set up to aidenterprising promoters in raising finance for new projects in a cost effective manner and toprovide investors with a transparent & efficient mode of trading. Modeled along the lines ofthe NASDAQ market of USA, OTCEI introduced many novel concepts to the Indian capitalmarkets such as screen-based nationwide trading, sponsorship of companies, market makingand scrip less trading. As a measure of success of these efforts, the Exchange today has 115listings and has assisted in providing capital for enterprises that have gone on to buildsuccessful brands for themselves like VIP Advanta, Sonora Tiles & Brilliant mineral water,etc.
Trading at OTCEI is done over the centers spread across the country. Securitiestraded on the OTCEI are classified into: Listed Securities - The shares and debentures of the companies listed on the OTC can be bought or sold at any OTC counter all over the country and they should not be listed anywhere else Permitted Securities - Certain shares and debentures listed on other exchanges and units of mutual funds are allowed to be traded. Initiated debentures - Any equity holding at least one lakh debentures of a particular scrip can offer them for trading on the OTC.OTCEI Is the first screen based nationwide stock exchange in India. Is the first exchange to introduce Market Making in India. Is the first exchange to introduce Sponsorship of companies in India. Is the only exchange to allow listing of companies with paid-up below Rs.3 crores. Is the only exchange to allow companies with less than 3 year track record to tap capital market. Has shifted trading from counter receipts to share certificates. Has introduced Weekly Settlement Cycle. Allows short selling. Allows De-mat trading through NSDL. Has tied-up with NSCCL for Clearing.
DETAILS OF STOCK EXCHANGESSr.No. Name of the Exchange Valid Upto1 Ahmedabad Stock Exchange Ltd. PERMANENT2 Bangalore Stock Exchange Ltd. PERMANENT3 Bhubaneswar Stock Exchange Ltd. June 04, 20124 Bombay Stock Exchange Ltd. PERMANENT 5 Calcutta Stock Exchange Ltd. PERMANENT6 Cochin Stock Exchange Ltd. November 07, 20118 Delhi Stock Exchange Ltd. PERMANENT9 Gauhati Stock Exchange Ltd. April 30, 201211 Interconnected Stock Exchange of India Ltd. November 17, 2011
12 Jaipur Stock Exchange Ltd. January 08, 201213 Ludhiana Stock Exchange Ltd. April 27, 201214 Madhya Pradesh Stock Exchange Ltd PERMANENT15 Madras Stock Exchange Ltd. PERMANENT18 MCX Stock Exchange Ltd September 15, 201119 National Stock Exchange of India Ltd. PERMANENT20 OTC Exchange of India August 22, 201221 Pune Stock Exchange Ltd. September 01, 201223 U.P. Stock Exchange Limited June 02, 201224 United Stock Exchange of India Limited March 21, 201225 The Vadodara Stock Exchange Ltd. January 03, 2012
COMPANY’S PROFILENAME OF THE COMPANY: ANGEL STOCK BROKING LTD.REGISTERED OFFICE: G-1, Akruti Trade Centre, Road No. 7, MIDC Marol, Andheri (E), Mumbai – 400 093BRANCH OFFICE: ANGEL STOCK BROKING LTD. Indraprastha Building, 2nd Floor, Block No: 228-229 Pancheshwar Tower Road, Jamnagar- 361001FORM OF ORGANISATION: Private SectorPROMOTER: Mr. Dinesh ThakkarACCOUNTING YEAR: 1ST April to 31st March
INTRODUCTION AND HISTORY: “Angel Broking” is the retail broking arm of SSKI, an organization with more than eight decades of trust & credibility in the stock market. It is Indias leading retail financial Services Company with We have over 250 share shops across 115 cities in India. While our size and strong balance sheet allow us to provide you with varied products and services at very attractive prices, our over 750 Client Relationship Managers are dedicated to serving your unique needs. Angel Broking is lead by a highly regarded management team that has invested crores of rupees into a world class Infrastructure that provides our clients with real-time service & 24/7 access to all information and products. Our flagship Angel Broking Professional Network offers real-time prices, detailed data and news, intelligent analytics, and electronic trading capabilities, right at your fingertips. This powerful technology complemented by our knowledgeable and customer focused Relationship Managers. We are creating a world of Smart Investor. Angel Broking offers a full range of financial services and products ranging from Equities to Derivatives enhance your wealth and hence, achieve your financial goals. Angel Broking Client Relationship Managers are available to you to help with your financial planning and investment needs. To provide the highest possible quality of service, Angel Broking provides full access to all our products and services through multi- channels.INTRODUCTION TO ANGEL Angel Broking Limited is one of the leading and professionally managed stockbroking firm involved in quality services and research. Incorporated in December 1997 inMumbai, India, Angel Broking provides retail related services encompassing Ebroking,Investment Advisory, Portfolio Management Services, Wealth Management Services andCommodities Trading. It is a member of Bombay Stock Exchange and National StockExchange. It is also a registered depository participant with CDSL.
The membership of the company with The Stock Exchange Mumbai was originallyin the name of Mukesh R. Gandhi, which was eventually turned into a corporate membershipin the name of Angel Broking Limited. Angel Broking Limited is managed by Mr. DineshThakkar and he is well supported by Mr. Mukesh Gandhi, a fifteen years veteran in themarket. The group is well supported by a professional and qualified research team andefficient operations and back office team, which comprises of highly dedicated and qualifiedindividuals. Angel has an in-house, state of art research department. Angel believes inreaching out to the customer at the farthest end rather than by reaching out to them. Thecompany in its endeavor to give its client the best has opened up several branches all overMumbai, which are efficiently integrated with the Head Office. Angel Broking Limited is primarily into retail stock broking, with a customer base ofretail investors, which has been increasing at a compounded growth rate of 100% every year.The company has huge network sub-brokers in Mumbai and other places outside Mumbai,registered with SEBI, who act as channel partners for the company. The company presentlyhas total staff strength of around 150 employees who are spread accordingly across the headoffice and all the branches. Angel has empowered its physical presence throughout Indiathrough various strategies which it has been adopting efficiently and effectively over a periodof time, like opening up of branches at various places, tie-ups with various agencies and salesagents, buy-outs of smaller regional outfits and appointment of sub-brokers and franchisees.Moreover Angel has been tapping and including high net-worth and self-employedindividuals it its vast array of clients.
Mission: To be India‟s First Multinational providing complete financial services solution acrossthe Globe.Vision To provide best value for money to investors through innovative products,trading/investments strategies, state of the art technology and personalized service.Motto To have complete harmony between quality-in-process and continuous improvementto deliver exceptional service that will delight our Customers and Clients.Business Philosophy Ethical practices & transparency in all our dealings Customers interest above our own Always deliver what we promise Effective cost managementCRM Policy: Customer is King “A Customer is the most Important Visitor on our premises. He is not dependent onus, but we are dependent on him. He is not an interruption in our work. He is the purpose ofit. He is not an outsider in our business. He is part of it. We are not doing him a favor byserving him. He is doing us a favor by giving us an opportunity to do so.” -Mahatma Gandhi
Quality Assurance Policy We are committed to providing world-class products and services which exceedthe expectations of our customers, achieved by teamwork and a process ofcontinuous improvement.History & Milestones Angel Brokings tryst with excellence in customer relations began in 1987. Today,Angel has emerged as one of the most respected Stock-Broking and Wealth ManagementCompanies in India. With its unique retail-focused stock trading business model, Angel iscommitted to providing „Real Value for Money‟ to all its clients. The Angel Group is amember of the Bombay Stock Exchange (BSE), National Stock Exchange (NSE) and the twoleading Commodity Exchanges in the country: NCDEX & MCX. Angel is also registered as aDepository Participant with CDSL. Awarded with Broking House with Largest Distribution Network and Best RetailBroking House at Dun & Bred street Equity Broking Awards 2009· August, 2008 Crossed500000 trading accounts October 2011, Angel Broking bagged the Dun & Bradstreet Equity Broking Awards 2011 for Best Retail Broking House and Fastest Growing Equity Broking House (Large Firms) at Dun & Bradstreet Equity Broking Awards 2011. March 2011, Angel Broking was awarded with Best in Contribution Investor Education & Category Enhancement of the year and Best Commodity Research of the year November 2010, Angel Broking bags the coveted „Major Volume Driver‟ Award by BSE for 2009-10 October 2009, Angel Broking bags the coveted „Major Volume Driver‟ Award by BSE for 2008-09
May 2009, Angel Broking wins two prestigious awards for Broking House with Largest Distribution Network and Best Retail Broking House at Dun & Bradstreet Equity Broking Awards. November 2008, Angel Broking wins the esteemed „Major Volume Driver‟ Award by BSE for 2007-2008 August 2008, Angel Broking crosses 5,00,000 mark in unique trading accounts November 2007, Angel Broking augments its business with introduction of Insurance Distribution in alliance with Birla Sun Life November, 2007 „Major Volume Driver‟ for 2007 March2007, Angel Broking crosses the benchmark of 2, 00,000 unique trading accounts December, 2006 Created 2500 business associates September, 2006 Launched Mutual Fund and IPO business July, 2006 launched the PMS function October, 2005 „Major Volume Driver‟ award for 2005 September, 2004 Launched Online Trading Platform April, 2004 Initiated Commodities Broking division April, 2003 first published research report November, 2002 Angel‟s first investor seminar March, 2002 developed web-enabled back office software
November, 1998 Angel Capital and Debt Market Ltd. Incorporated December, 1997 Angel Broking Ltd. IncorporatedAngel’s Presence: Nation- wide network of 21 regional hubs. Presence in 124 cities. 6800 + sub brokers & business associates. 5.9 lakh + clients.
Angel Group CompaniesAngel Broking Ltd. Member on the BSE and Depository Participant with CDSLAngel Capital & Debt Market Ltd Membership on the NSE Cash and Futures & Options SegmentAngel Commodities Broking Ltd. Member on the NCDEX & MCXAngel Securities Ltd. Member on the BSE. Management TeamMr.Dinesh Thakkar Chairman and MDMr.Lalit Thakkar Director – ResearchMr.Amit Majumdar ED - Operations & FinanceMr.Rajiv Phadke ED - Human Resources & Corporate CommunicationsMr.Vinay Agrawal ED - Equities BrokingMr.Nikhil Daxini ED - Sales and MarketingMr.Hitungshu Debnath ED - Distribution & Wealth ManagementMr.Ketan Shah Associate Director - Information TechnologyMs.Pinky Kothari Associate Director - Sales And Marketing
PRODUCTS & SERVICES: Equity Trading Depository services Commodity Trading Mutual Funds services Margin Financing Corporate Advisory Group Portfolio Management SystemEquity Trading: For the first time Angel Broking investing commodity the power to be associated withthe elite dealing rooms and freedom to execute trade on there own. That is one may tradefrom their branches or trade own over the net and with that expertise and assistance.Depository Services: Angel Broking is among the few major Depository Participants holding securitiesworth more than Rs.6000 crore under its management .RSL provides depository servicesinvestors as a depository participant with NSDL and CDSL.Commodity Trading: Commodities are a word originated from the French word „commodity‟ means benefitprofit. Angel commodity Limited is a member of both the exchange (MCX & NCDEX) thatallows trading in all the commodities traded at both the exchange. At present, trading incommodities is restricted to futures contracts only.Benefits of Commodity Trading: To investors: investors always look for alternative investments avenues where theycan diversify their funds to achieve their financial goals. In financial market, commodities
have rapidly emerged as a major investment tool as they help in diversifying investments andto hedge against inflation, greatest threat to any investor.Mutual Funds Services: Angel Broking is also promoting mutual funds of all companies. The servicespectrum spans treasury-related as well as general investment requirements. A dedicatedmutual fund research desk is constantly monitoring the environment for new opportunities.Allocation across sectors and maturities are actively managed for the client base. Fundperformance is constantly monitored to optimize returns for the customers taking into accountthe risk/reward profile of the client.Corporate Advisory Group: Corporate advisory group provides various solutions to corporate banks and FIs on themanagement of debit, equity and investments. The service extends from advising client toearn maximum profit by investing through selected papers like MF/PMF etc.Portfolio Management System: Angel offers discretionary PMS to investors in order to assist them inmanaging their funds amidst continuous changing market dynamics and increasingcomplexities of investing. Investing in equity market requires in depth knowledge andthorough analysis coupled with clear understanding of domestic and international economies.Investors need the services of an expert to manage their funds and deliver good returns indiverse market conditions. Continuous wealth creation with an emphasis on capitalpreservation is essential in today‟s complex markets. In order to systematically diversify the holdings of clients across varied sectors andwith and intention to give them handsome returns, Angel devised the concept of the ModelPortfolio: Angel came out with its first Model Portfolio in August 2002. Since then it hascome out with Model Portfolios which have consistently outperformed the Sensex. In fact thelatest model portfolio by Angel has successfully outperformed the Sensex by a whopping80% Angel‟s Portfolio Advisory Team had a successful track record of assisting its clients inmanaging their portfolios for over 4 years. The Portfolio Management Process starts with understanding each investor‟s riskappetite and return expectations. The Portfolio Management Team not only draws support
from Angel‟s in-house research team for new investment ideas but also has its own stockspicking by adopting bottom up research. FUNDAMENTAL RESEARCH SERVICESThe Sunday Weekly Report: This weekly report is the ace of all reports. It offers a comprehensive market overviewand likely trends in the week ahead. It also presents few top picks based on an in-depthanalysis of technical and fundamental factors. It gives short term and long term outlook onthese scrips, their price targets and trading strategies. Another unique feature of this report isthat it provides an updated view of about 70 prominent stocks on an ongoing basis.The Industry Watch: This report provides an in-depth analysis of specific industries which are likely tooutperform others in the economy. It analyzes their strengths and weaknesses and ascertainstheir future outlook. The final view is arrived at after thorough interaction with industryexperts. Also comparative performances of various companies in the sector are evaluated andtop picks are recommended.Stock Analysis: Angel‟s stock research has performed very well over the past few years and the AngelModel Portfolio has consistently outperformed the benchmark indices. The fundamentals ofselect scrip‟s are thoroughly analyzed and an actionable advice is provided along withinvestment rationale for each scrip.Flash News: Key developments and significant news announcements that are likely to have animpact on markets / scrip‟s are flashed live on trading terminals. Flash news keeps the marketparticipants updated on an online basis and helps them to reshuffle on their holdings
TECHNICAL RESEARCH SERVICENifty Tracker: Nifty Futures is the most traded instrument with highest volumes in F & O andexcellent liquidity. The team tracks the Nifty Future and generates calls based on uniquetrading system which is a result of their focused research over the past few years. Theobjective is to generate positive returns for traders who are looking for a high risk / highreward product.Online Chart: An online forum to help clients, specifically day traders in judging the directions ofthe market and stocks which are in the limelight.Intraday Calls: For day traders, Angel provides intra-day calls with entry, exit and stop loss levelsduring market hours. These calls are flashed on their terminals. Their analysts continuouslytrack the calls and provide recommendations according to the market movements.Position Calls: Angel‟s “Position Trading Calls” are based on thorough analysis of the pricemovement in select scrip‟s. These calls are for a 10-15 day time span with stop loss and targetlevels. These calls are flashed on their terminals during market hours.Derivative Strategies: Their analysts take view on the Nifty and select stocks based on the derivatives dataand technical tools. Suitable “Derivative Strategies” are devised, which are flashed on theirterminals and published in their reports.
Futures Calls: A customized product for HNIs to help them trade with leveraged position; whereinclients are advised on the stocks with entry, exit and stop loss level for short term benefits.Over and above this, financial status of the calls is monitored at all times. INVESTMENT ADVISORY DESKAt Angel, they have a dedicated Investment Advisory Desk: To help manage client‟s equity portfolio and create wealth To help client understand their risk profile and define investment goals realistically To minimize client‟s risk and maximize their returns To help client decide what to buy / sell and when to buy / sell To help client‟s understand macro-economic trends and sectoral / company developments To help client restructure their portfolio based on sound research
SWOT Analysis A SWOT analysis focuses on the internal and external environments, examiningstrengths and weaknesses in the internal environment and opportunities and threats in theexternal EnvironmentStrength Service Distribution network Marketing ProductsWeakness Customer Satisfaction Branding Competition from BanksOpportunities Ever increasing market Improving technology Unfulfilled needs of Customers Education levelThreats New competitors Technology based business
COMPETITORS DETAILS STOCK HOLDING CORPORATION OF INDIA LIMITED ICICI direct.com SHARE KHAN UTI SECURITIES MARWADI GROUP HDFC SECURITIES KARVY STOCK BROKING LIMITED KOTAK SECURITIES RELIANCE MONEY ANAGRAM SECURITIESSHCIL (STOCK HOLDING CORPORATION OF INDIA LIMITED) Stock Holding Corporation of India Limited (SHCIL) was promoted by publicfinancial institutions and insurance majors like IDBI, UTI, ICICI, LIC, GIC and itssubsidiaries, IFCI and IIBI. SHCIL was incorporated as a public limited company on July 28,1986. SHCIL provides depository, post trading, custodial services, securities lending toinstitutional investors and retail investors. Other auxiliary services provided by SHCILinclude derivatives clearing, PF fund accounting, SGL constituent account services, mutualfunds and other capital market instruments distribution.
ICICI direct.com ICICI Bank is Indias second-largest bank with total assets of about Rs.1,67,659crores at March 31, 2005 and profit after tax of Rs. 2,005 crores for the year ended March 31,2005 (Rs. 1,637 crores in fiscal 2004). ICICI Bank has a network of about 560 branches andextension counters and over 1,900 ATMs. ICICI Bank offers a wide range of bankingproducts and financial services to corporate and retail customers through a variety of deliverychannels and through its specialized subsidiaries and affiliates in the areas of investmentbanking, life and non-life insurance, venture capital and asset management. ICICI Bank set up its international banking group in fiscal 2002 to cater to the crossborder needs of clients and leverage on its domestic banking strengths to offer productsinternationally. ICICI Bank currently has subsidiaries in the United Kingdom, Canada andRussia, branches in Singapore and Bahrain and representative offices in the United States,China, United Arab Emirates, Bangladesh and South Africa.SHAREKHAN Sharekhan is an equities focused organization tracing its lineage to SSKI, a veteranequities solutions company with over 8 decades of experience in the Indian stock markets. Inthe stock markets Sharekhan does not claim expertise in too many things. Sharekhansexpertise lies in stocks and thats what he talks about with authority. So when he says thatinvesting in stocks should not be confused with trading in stocks or a portfolio-based strategyis better than betting on a single horse, it is something that is spoken with years of focusedlearning and Experience Sharekhan brings a user- friendly online trading facility, coupledwith a wealth of content that will help investors stalk the right shares.
UTI SECURITIES UTI Bank is a registered member (Depository Participant) of NSDL. India‟s firstdepository. We can avail all of the depository-related services by just opening an accountwith NSDL through UTI Bank. UTI Bank provides services like dematerialization of shares,rematerilialization, pledge-Hypothecation, freezing/ locking Of Accounts, transfer of sharesand settlements, receipt of corporate benefits, holdings & transaction statements on email,tele depository services.MARWADI SHARES AND FINANCE PRIVATE LIMITED Marwadi Shares and Finance Pvt. Ltd. Was incorporated in 1992.Marwadi Groupservicing more than 75000 clients, more than 554 pin codes. The company ranked among top50 broking houses. It has 250 franchisee / sub-brokers and authorized person‟s network.
HDFC SECURITIES HDFC Securities, a trusted financial service provider promoted by HDFC Bank andJP Morgan Partners and their associates, is a leading stock broking company in the country,serving a diverse customer base of institutional and retail investors. HDFCsec.com providesinvestors a robust platform to trade in Equities in NSE and BSE , and derivatives in NSE. Ourwebsite will support you with the highest standards of service, convenience and hassle-freetrading tools. Our research team tracks the economy, industries and companies to provide youthe latest information and analysis. Our content offers financial information, analysis,investment guidance, news & views, and is designed to meet the requirements of everyonefrom a beginner to a savvy and well-informed trader.KARVY STOCKBROKING LIMITED Karvy offers a full range of financial services and products ranging from Equities toResearch to enhance your wealth and hence achieve your financial goals.
KOTAK SECURITIES Kotak Securities, an affiliate of Kotak Mahindra Bank, is the stock-broking anddistribution arm of the Kotak Mahindra Group. The institutional business division, whichbrings you AKSESS, primarily covers secondary market broking. It caters to the needs offoreign and Indian institutional investors in Indian equities (both local shares and GDRs,Global Depository Receipts). The division also has a comprehensive research cell withsectorial analysts covering all the major areas of the Indian economy. The group a net worthof over Rs.1, 550 crores and employs over 3,000 employees in its various businesses. With apresence in 59 cities in India and offices in New York, London, Dubai and Mauritius, itservices a customer base of over 5, 00,000. Kotak Mahindra has partnerships with Goldman Sachs (one of the worlds largestinvestment banks and brokerage firms), Ford Credit (one of the worlds largest dedicatedautomobile financiers) and Old Mutual (a large insurance, banking and asset managementconglomerate).RELIANCE MONEY Reliance Money is an endeavour to change the way India trades in financial marketsand avails of various financial services. Reliance Money ensures maximum security with aunique security token to keep your online account safe.
ANAGRAM SECURITIES Anagram Securities is the part of the Rs. 2000 crores Lalbhai Group. It was found in1993 and is a member of the National Stock Exchange. Last year their trading crossed Rs.17000 crores with around 5000 people making. They are dealing only in Stock Market andnothing else. Though they are doing good research work regarding companies and marketwhich will be the beneficial to the investors. Gujarat state is one of the most important fieldsof their business.And they have about 30 branches throughout Gujarat
Literature Review Meleanie Cao and Jason Wei (2004) investigated whether stock market returns arerelated to body temperature. Their study suggested that lower temperature leads to aggressionwhere as higher temperature leads to apathy and aggression. Aggression would lead to morerisk taking activities while apathy could impede risk taking. Apathy dominates aggressionwhen temperature is high. David Hirshleifer and Itzhak Ben-David (2011) examine howinvestor preferences and beliefs affect trading in relation to past gains and losses. Investorsare much more likely to sell big losers than small ones. Their findings provide no clearindication that realization preference helps explain investor trading behavior. SC Myers and NS Majluf (1984) consider that a firm must issue common stock inorder to raise money to undertake valuable investment opportunity. Management is assumedto know more about the firms value than potential investors and Investors interpret the firmsactions rationally. An equilibrium model of the issue-invest decision is developed under theseassumptions and the model shows that firms may refuse to issue stock, and therefore maypass up valuable investment opportunities. Richard W. Sias and David A. Whidbee (2008)investigate whether insider trading is related to net demand by institutional versus individualinvestors. Their tests reveal a strong inverse relation between insider trading and institutional.First, institutional investors are more likely to provide the liquidity necessary for insiders totrade. Second, insiders are more likely to buy low valuation and low lag return stocks whileinstitutions are attracted to the opposite security characteristics. Last, the results areconsistent with the hypothesis that insiders are more likely to view their securities asovervalued following a period when institutions were net buyers and undervalued following aperiod when institutions were net sellers. R Kaniel, G Saar, S Titman (2004) investigated aunique dataset that enables us to determine the aggregate buy and sell volume of individualinvestors for a large cross-section of NYSE stocks. And found that individuals trade as if theyare contrarians, and the stocks that individuals buy exhibit positive excess returns in thefollowing month. RON KANIEL, GIDEON SAAR, and SHERIDAN TITMAN (2008) investigatesthe dynamic relation between net individual investor trading and short-horizon returns for alarge cross-section of NYSE stocks. The evidence indicates that individuals tend to buystocks following declines in the previous month and sell following price increases.
E Boehmer, EK Kelley (2009) used a broad panel of NYSE-listed stocks between1983 and 2004, and studied the relation between institutional shareholdings and the relativeinformational efficiency of prices, measured as deviations from a random walk. Stocks withgreater institutional ownership are priced more efficiently, and showed that variation inliquidity does not drive this result. Mark L Mitchell and J Harold Mulhrin (1994) studied the relation between newsannouncements reported by Dow Jones & Co and found out that the relation between newsand market activity is not strong. K.Shanti Swarup (2003) in her study indicated thatinvestors give more importance to their analysis than broker‟s advice while investing inprimary markets. Ning Zhu (2002) investigates individual investors bias towards nearbycompanies. Using data from a large U.S. discount brokerage and found that individualinvestors tend to invest in companies closer to them relative to the market portfolio. Dimitrios I Maditinos, Zejiko Sevic and Nikolas G Theorine (2007) used aquestionnaire to examine the various methods and techniques used by the Greek investors onterms of stock market forecasting. They found out that the investors rely more on newspapersand media while professionals rely more on fundamental and technical analysis to makeinvestment decisions. Balaji S Iyer and R Kumar Bhaskar (2002) studies the investorspsychology and behavior and provides an insight into the working of an investors mind in thestock markets. Dr.Vanita Tripathi (2008) examines the various investment strategies inIndian stock market. Her study revealed that investors use both fundamental as well astechnical analysis while investing in Indian stock market. Lewellen (1977) found that age,gender, income and education affects investor‟s preferences and attitudes towards investmentdecisions. Terrance Odean and Brad M Barber (2008) tested and confirmed the hypothesisthat individual investors are net buyers of attention grabbing stocks (e.g. socks in news).John.R.Nofsinger (2001) studied the trading behavior of institutional and individualinvestors and found out that investors conduct a high degree of trading around news releasesespecially earnings and dividend news. Institutions buy and sell on both good and bad news,individual investors only trade on good news. Michael Graham, Jussi Nikkinen and PetriSahlström (2003) investigated the relative importance of U.S macroeconomic news releases
for stock valuation. They study on 11 macroeconomic announcements and found 5 out of 11announcements have significant influence on stock valuation. Graciela L. Kaminsky andSergio L. Schmukler (1999) analysis what type of news moves the market and found outthat the movements are triggered by local and neighboring country news, with news aboutagreement with international organization and credit rating agencies have the most weight.Paul.C.Tetlock (2011) tests whether stock market investors appropriately distinguishbetween new and old information about firms and find that investors trade more aggressivelywhen news is stale.
TITLE OF THE PROJECT:“Influence of Capital Market Information on Investment Decisions”Need for the study: To know the Investment Decisions of the Investors. To study the behavior of Investors on various market announcements. To know what kind of Investment Investors prefer.PURPOSE OF THE STUDY: The study was undertaken to gather information from the respondents regardingimpact of market information on investment decisions of the investors in Belgaum region.OBJECTIVES OF THE STUDYThe Objectives of the study are to: To study the various factors that influence the investors decision making process. To analyze the investment pattern of investors to various capital market information. To examine the relationship between age, income and the investment portfolio of the investors.LIMITATIONS OF THE STUDYThe present research paper was aimed to achieve the defined objectives in full earnest andaccuracy, there were certain limitations: The study was conducted targeting the investors in Belgaum city only. The primary data has been collected through a structured questionnaire to a sample of 100 investors in Belgaum city, which may not reflect the opinion of the entire population.
HYPOTHESIS OF THE STUDYH0: Investment decisions of investors are not influence by various factorsH1: Investment decisions of investors are influenced by various factors.Ho: There is no significant relationship between the age and income of the investors and theirinvestment portfolio.H1: There is a significant relationship between the age and income of the investors and theirinvestment portfolio.H0: Investors do not behave rationally towards various capital market information.H1: Investors behave rationally towards various capital market information.
Research MethodologyExploratory research The research is exploratory in nature as the research is to know the behavior of theInvestors and their decision making process to various capital market information.Data Collection Method Primary Data Secondary DataPrimary Data Primary data was collected through a structured questionnaire. The Questionnaire wasdistributed in two phases. Firstly through online platform by E-mail. Secondly in offline Questionnaire‟s were hand delivered mainly through broker‟s office in the city.The questionnaire was divided into three parts: In the first part, the demographic factors of the investors were recorded primarily for their classification. The second part of the questionnaire was related to the investment details of the investor. The final part of the questionnaire was related to the behavioral details, which recorded the investor‟s reaction to the various capital market information.Secondary Data Under Secondary sources, information was collected from internal & externalsources. We made use of Internet (such as search engine www.google.com,www.angelbroking.com) miscellaneous sources (such as brochures, pamphlets) underexternal sources.
Sampling Design Sampling Unit: Belgaum Sampling Size: 100 Sampling Method: Simple Random SamplingMeasurement techniques used Software Package for Social Science (SPSS) has been used for the purpose of this analysis. Anova test was used to know whether Investment decisions are influenced by various factors, and to find out whether there is significant relationship between income of the investors and their investment portfolio. CHI SQUARE test was used for testing the relationship between age and behavior of investors to the various information announcements. More specifically the process was organized. The research questionnaire was pre-testedthrough pilot survey. In its draft form it went under a pre test with Channel Partner of twodifferent companies. The second pre-test was conducted after discussion with the experts inthe field.
ANALYSIS OF THE RESULTSAGE DISTRIBUTION OF THE RESPONDENT From the questionnaire it was observed that maximum numbers of respondents fall in31-40 years category. The next highest number of respondents falls in 21-30 years category.Thus around 65% of the respondents are below 40 years of age and are relatively young. TABLE 1: SHOWING THE AGE DISTRIBUTION OF THE RESPONDENTS Age Group No of Respondents 21 -30 Years 22 31 -40 Years 43 41-50 years 17 51 Years and above 18 Total 100
INCOME DISTRIBUTION OF THE RESPONDENTS Most of the investors fall under the income level of below Rs 2,00,000. From this wecan say that this is probably because most of the investors i.e. around 57% of the respondentsfell under the age group of less than 40years.TABLE 2: SHOWING THE INCOME DISTRIBUTION OF THE RESPONDENTS Income Levels No of Respondents Less than 2 Lakhs 38 Between 2 -4 Lakhs 19 Between 4 -6 Lakhs 22 Above 6 Lakhs 21 Total 100
OCCUPATION DISTRIBUTION OF RESPONDENTS: It was disclosed that most of respondents are of Business class. Thus around 38% ofrespondents are of business class. Next to Business is private employee that is 25% whichshows because of low income they will be less aggressive in investing in different investmentavenues.TABLE 3: SHOWING THE OCCUPATION DISTRIBUTION OF THERESPONDENTS Occupation No of Respondents Government Employee 12 Private Employee 25 Business 38 Pensioner 14 Housewife 3 Student 8 Total 100
EXPERIENCE IN INVESTMENT OF THE RESPONDENT It was disclosed that 33% of the people have experience between 1-3 Years followedby 30% people have experience of more than 5 Years.TABLE 4: SHOWING THE OCCUPATION DISTRIBUTION OF THERESPONDENT Experience in Investment No of Respondents Less than 1 Year 12 Between 1-3 Years 33 Between 3-5 Years 25 More than 5 Years 30 Total 100
INVESTMENT AVENUES OF THE RESPONDENTS When it is about investment in primary or secondary instrument almost 32% ofrespondents invest in equity market. Next to equity is Commodities which is preferred byalmost 16% of respondents. Next to Commodities is Savings Bank and Mutual Fund that is15% it may be quite because of attraction towards less risky and assure returns & becausehigh fluctuation behavior in the equity. 12% investors were interested in investing in RealEstate 10% in Insurance.TABLE5: SHOWING THE INVESTMENT AVENUES OF THE RESPONDENTS Investment Avenues No of Respondents Commodities 16 Savings Bank 15 Mutual Fund 15 Insurance 10 Stock Market 32 Real Estate 12 Total 100
KIND OF INVESTMENT OF THE RESPONDENTS It was found that 50 % of the respondents opt for Long Term Investment where as25% Short Term and 21% Medium term Investment.TABLE 6: SHOWING KIND OF INVESTMENT OF THE RESPODENTS Kind of Investment No of Respondents Intraday 4 Short Term 25 Medium Term 21 Long Term 50 Total 100
INVESTORS PREFERENCE ABOUT LARGE AND SMAAL STOCKS It was found out that 48% of the respondent feel that Large Cap stocks are less riskythan Mid and Small Cap stocks while 31% of the respondent tend to be neutral.TABLE 7:SHOWING INVESTORS PREFERNCE ABOUT LARGE AND SMALL Preferance No of Respondents I Strongly agree 10 I agree 38 Neutral 31 I disagree 8 I Strongly disagree 13 Total 100
INVESTORS REACTION TO THE ANNOUNCEMENT OF GOOD RESULTS: When the results announced by the company are better than the expectation, 68% ofinvestors wanted to buy more shares, which shows that for investors if the performance ofcompany is good the company carries future growth potential which translates into goodreturns on stock. 20% of investors preferred to hold the stock with a view that goodperformance was already discounted by the market and there is little scope of futureappreciation & 12% of investors preferred to sell the stock with a view to encash the goodresult.TABLE 8: SHOWING INVESTORS REACTION TO THE ANNOUNCEMENT OFGOOD RESULTS Result announced Good No of Respondents Buy 68 Sell 12 Hold 20 Total 100
INVESTORS REACTION TO RESULTS NOT AS PER MARKET EXPECTATION If the company performance was not as per expectation 14% investors want to buy thestock and 17% want to hold the stock with a view to get long term return and 69% ofinvestors preferred to sell the stock.TABLE 9: SHOWING INVESTORS REACTION TO RESULTS NOT AS PERMARKET EXPECTATION Result announced Not Good No of Respondents Buy 14 Sell 69 Hold 17 Total 100
INVESTORS REACTION TO THE DECLARATION OF DIVIDEND: It was found that 29% of investors preferred to hold the stock after declaration ofdividend because of long term gain which was expected by the investor as a result of goodperformance of company, while 57% investors preferred to buy the stock which shows goodperformance of company attracts the investment and only 14 of investors sell the stock afterthe dividend declaration with a view to book profits and liquidate their holdings.TABLE 10: INVESTORS REACTION TO THE DECLARATION OF DIVIDEND Declaration of Dividends No of Respondents Buy 57 Sell 14 Hold 29 Total 100
INVESTORS REACTION TO ISSUING OF BONUS SHARES: In case of bonus declaration 28% of investor‟s favored holding the stock, so that theycould avails the opportunity of better price from the stock in future to gain good return. While46% of investors wish to buy more stocks when bonus is declared as for them bonus is goodsign for the company and the prospective returns gained by them & only 28% wanted to sellthe stock and book profits as they were cautious of unpredictable market movements.TABLE 11: INVESTORS REACTION TO THE ISSUING OF BONUS SHARES. Declaration of Bonus Shares No of Respondents Buy 46 Sell 26 Hold 28 Total 100
INVESTORS REACTION ON ANNOUNCEMENT OF STOCK SPLIT It was found that 64% of investors wanted to sell the stocks as they were uncertainabout the company‟s future growth. While 20% of the investors wished to hold on to thestock and 16% wanted to buy the stock.TABLE 12: INVESTORS REACTION ON ANNOUNCEMENT OF STOCK SPLIT Declaration of Stock Split No of Respondents Buy 16 Sell 64 Hold 20 Total 100
INVESTORS REACTION ON ANNOUNCEMENT OF COMPANY TO ACQUIRESIMILAR KIND OF COMPANY. In case of acquisition 37% of the investors favored buying the stock because of longterm gain which was expected by the investor. While 36% of the investors tend to sell thestock and 27% of the investors wish to hold on to the stock assuming that the share price willtouch the highs it did before.TABLE 13: INVESTORS REACTION ON ANNOUNCEMENT OF COMPANY TOACQUIRE SIMILAR KIND OF COMPANY. Declaration of ACQURING No of Respondents Buy 37 Sell 36 Hold 27 Total 100
INVESTORS REACTION ON ANNOUNCEMENT OF A COMPANY GETTINGDELISTED FOR RESTRUCTURE PURPOSE. It was disclosed that 85% wished to sell the stock as they didn‟t have faith in thefuture of the company or cut their losses and No respondent indicated a willingness to buysuch scrip.TABLE 14: INVESTORS REACTION ON ANNOUNCEMENT OF A COMPANYGETTING DELISTED FOR RESTRUCTURE PURPOSE. Declaration of Restructure Purpose No of Respondents Buy 0 Sell 85 Hold 15 Total 100
REACTION ON ANNOUNCEMENT OF GOVT INCREASING STT. In case of increase of STT by the Government 51% tend to sell the stock. While 39%wish to Hold and 10% buy the Stock.TABLE 15: INVESTORS REACTION ON ANNOUNCEMENT OF GOVTINCREASING STT. Increase in STT No of Respondents Buy 10 Sell 51 Hold 39 Total 100
TABLE 16: TEST OF SIGNIFICANCE FOR RELATIONSHIP BETWEEN AGE OF THE INVESTORS AND INVESTMENT DECSIONS. H0: Investment decisions of investors are not influenced by various factors. H1: Investment decisions of investors are influenced by various factors. ANOVA Sum of Df Mean Square F Sig. Squares Between .880 3 .293 .400 .753Marketing GroupsConditions Within Groups 70.430 96 .734 Total 71.310 99 Between 5.350 3 1.783 .657 .581 GroupsBrokers Within Groups 260.690 96 2.716 Total 266.040 99 Between 13.614 3 4.538 1.213 .309Self GroupsAnalysis Within Groups 359.136 96 3.741 Total 372.750 99 Between 3.106 3 1.035 .469 .705Professional‟ Groupss Within Groups 211.894 96 2.207 Total 215.000 99 Between .661 3 .220 .079 .971Friends GroupsAdvice Within Groups 266.579 96 2.777 Total 267.240 99 Between .539 3 .180 .099 .961Intuition Groups Within Groups 174.771 96 1.821 Total 175.310 99 It was hypothesized (Table 16) to know whether there is a significant relationship between age of the investors and their investment decisions. However, the Anova tests revealed that age does not have a significant influence on any factors. Hence the null hypothesis is accepted that there is no significant association between the age of the investors and their investment decisions.
TABLE 17: TEST OF SIGNIFICANCE BETWEEN INCOME OF THE INVESTORSAND THEIR INVESTMENT PORTFOLIOH0: There is no significant relationship between the income of the investors and theirinvestment portfolio.H1: There is a significant relationship between the income of the investors and theirinvestment portfolio. ANOVA Sum of Df Mean F Sig. Squares Square Between 3.389 3 1.130 .730 .537Commoditie Groupss Within Groups 148.611 96 1.548 Total 152.000 99 Between 8.018 3 2.673 1.490 .222Savings Groupsbank Within Groups 172.142 96 1.793 Total 180.160 99 Between 3.684 3 1.228 .749 .525Mutual GroupsFunds Within Groups 157.276 96 1.638 Total 160.960 99 Between .321 3 .107 .518 .671 GroupsInsurance Within Groups 19.839 96 .207 Total 20.160 99 Between 11.538 3 3.846 2.236 .089Stock GroupsMarket Within Groups 165.102 96 1.720 Total 176.640 99 Between .939 3 .313 .130 .942Real Estate Groups Within Groups 232.061 96 2.417 Total 233.000 99 It was hypothesized (Table 17) to know whether there is a significant relationshipbetween income of the investors and their portfolio. However, the anova tests revealed thatincome does not have a significant influence on investment portfolio.
H0: Investors do not behave rationally towards various capital market information.H1: Investors behave rationally towards various capital market information. Age * Result announced by a company is better than market expectation. Cross tabulation Count Result announced by a company is better than market expectation. Buy Sell Hold Total 21-30 15 4 3 22 31-40 27 5 11 43 Age 41-50 10 2 5 17 51 > 16 1 1 18 Total 68 12 20 100 Chi-Square Tests Value df Asymp. Sig. (2-sided)Pearson Chi-Square 6.613a 6 .358Likelihood Ratio 7.251 6 .298Linear-by-Linear .991 1 .319AssociationN of Valid Cases 100a. 6 cells (50.0%) have expected count less than 5. The minimum expected countis 2.04. The value of chi-squared statistic is 6.613. The chi-squared statistic has 6 degree offreedom. The p value (.358) is more than 0.5. Hence there is no significant relationshipbetween Age and If Company results are good.
Age * Result announced by a company is not as per market expectation. Cross tabulation Count Result announced by a company is not as per market expectation. Buy Sell Hold Total 21-30 4 15 3 22 31-40 6 30 7 43 Age 41-50 2 10 5 17 51 > 2 14 2 18 Total 14 69 17 100 Chi-Square Tests Value df Asymp. Sig. (2-sided)Pearson Chi-Square 2.972a 6 .812Likelihood Ratio 2.749 6 .840Linear-by-Linear .298 1 .585AssociationN of Valid Cases 100a. 6 cells (50.0%) have expected count less than 5. The minimum expected count is 2.38. The value of chi-squared statistic is 2.972. The chi-squared statistic has 6 degree offreedom. The p value (.812) is more than 0.5. Hence there is no significant relationshipbetween Age and If Company results are not good.
Age * When company declares Dividends. Cross tabulation Count When company declares Total Dividends. Buy Sell Hold 21-30 11 3 8 22 31-40 25 6 12 43 Age 41-50 9 3 5 17 51 > 12 2 4 18 Total 57 14 29 100 Chi-Square Tests Value Df Asymp. Sig. (2-sided) Pearson Chi-Square 1.529a 6 .958 Likelihood Ratio 1.514 6 .959 Linear-by-Linear .865 1 .352 Association N of Valid Cases 100 a. 4 cells (33.3%) have expected count less than 5. The minimum expected count is 2.38. The value of chi-squared statistic is 1.529. The chi-squared statistic has 6 degree offreedom. The p value (.958) is more than 0.5. Hence there is no significant relationshipbetween Age and If Company announces Dividends.
Age * When company issues bonus shares. Cross tabulation Count When company issues bonus shares. Total Buy Sell Hold 21-30 7 8 7 22 31-40 23 10 10 43 Age 41-50 7 5 5 17 51 > 9 3 6 18 Total 46 26 28 100 Chi-Square Tests Value df Asymp. Sig. (2-sided)Pearson Chi-Square 4.002a 6 .676Likelihood Ratio 4.090 6 .665Linear-by-Linear Association .081 1 .776N of Valid Cases 100a. 3 cells (25.0%) have expected count less than 5. The minimum expected count is 4.42. The value of chi-squared statistic is 4.002. The chi-squared statistic has 6 degree offreedom. The p value (.676) is more than 0.5. Hence there is no significant relationshipbetween Age and If Company issues bonus shares.
Age * Announcement by your company of acquiring similar kind of company. Cross tabulation Count Announcement by your company of acquiring similar kind of company. Total Buy Sell Hold 21-30 9 8 5 22 31-40 15 16 12 43 Age 41-50 8 5 4 17 51 > 5 7 6 18 Total 37 36 27 100 Chi-Square Tests Value df Asymp. Sig. (2-sided) a Pearson Chi-Square 1.792 6 .938 Likelihood Ratio 1.797 6 .937 Linear-by-Linear .403 1 .525 Association N of Valid Cases 100 a. 2 cells (16.7%) have expected count less than 5. The minimum expected count is 4.59. The value of chi-squared statistic is 1.792. The chi-squared statistic has 6 degree offreedom. The p value (.938) is more than 0.5. Hence there is no significant relationshipbetween Age and If Company acquiring similar kind of company.
Age * Company getting delisted for Restructure purpose. Cross tabulation Company getting delisted for Restucture purpose. Sell Hold Total 21-30 17 5 22 31-40 37 6 43 Age 41-50 14 3 17 51 > 17 1 18 Total 85 15 100 Chi-Square Tests Value df Asymp. Sig. (2-sided) aPearson Chi-Square 2.420 3 .490Likelihood Ratio 2.637 3 .451Linear-by-Linear 1.656 1 .198AssociationN of Valid Cases 100a. 3 cells (37.5%) have expected count less than 5. The minimum expected count is2.55. The value of chi-squared statistic is 2.420. The chi-squared statistic has 3 degree offreedom. The p value (.490) is more than 0.5. Hence there is no significant relationshipbetween Age and Restructure purpose.
Age * If Government increases STT. Cross tabulation Count If Government increases STT. Total Buy Sell Hold 21-30 3 10 9 22 31-40 4 22 17 43 Age 41-50 2 8 7 17 51 > 1 11 6 18 Total 10 51 39 100 Chi-Square Tests Value df Asymp. Sig. (2-sided) Pearson Chi-Square 1.458a 6 .962 Likelihood Ratio 1.487 6 .960 Linear-by-Linear .000 1 .999 Association N of Valid Cases 100 a. 4 cells (33.3%) have expected count less than 5. The minimum expected count is 1.70. The value of chi-squared statistic is 1.458. The chi-squared statistic has 6 degree offreedom. The p value (.962) is more than 0.5. Hence there is no significant relationship.Based on the P values of various capital market information. It is concluded thatinvestors do not behave rationally to capital market information.
FINDINGS The research found that 65% of the people were below 40 years of age and were relatively young. When the income profiles of the investors were analyzed, It was found that 57% of the respondent were under the income level of below Rs 4,00,000/-, Around 38% of the respondent were under 2, 00,000/-. When the results announced by the company were better 68% of the respondent wanted to buy more shares. 20% of the investors preferred to hold on to their existing earnings and 12% of the investors preferred to book their profits. Unlike a dividend announcement in case of bonus announcement, it was found a lesser percentage of investors willing to buy more shares. Only 46% of the investors were willing to buy in case of bonus announcement against 57% of investors who were willing to buy in the case of dividend announcement. The number of investors willing to sell the shares is slightly on the higher side with 26% of the investors willing to book profits on bonus announcement against 14% in case of dividends. The number of cautious investors is more or less the same with 29% of dividend and 28% of bonus announcement investors preferred the wait and watch policy. It was hypothesized that investors behave rationally towards various capital market information. Using Chi-square test to find if there is any association between investor behavior and various capital market information, based on the P values of various capital market information. It is concluded that investors do not behave rationally to capital market information. Test of significance shows there is no relationship between age of the investors and their investment decisions. Test of significance shows that income of the investors and their portfolio have no relationship between them.
Conclusion The research brings out certain characteristics of investors living in Belgaum. The ability to understand the judgment criteria like rationality and irrationality in investment pattern and behavior which enables the investor to be cautious as its consequences affect the lifestyle, asset value and relationship with others. The present study has shown that investors prefer investing in both primary and secondary market instruments. Investment decisions are influenced by various information available in the market. The investors stay invested in certain companies for the long term growth in their earning capacity. Investor‟s decisions are influenced by psychological factors and behavioral in accordance with the research results shown in other countries. Anyone ambitious of achieving a threshold of success in the capital market must acquire adequate knowledge in behavioral finance.
QUESTIONNAIRE1) Name: ____________________________________________2) Age : _______3) Gender a) Male b) Female4) Occupation a) Government Employee b) Private Employee c) Business d) Pensioner e) Housewife f) Student5) Income Per Annum a) Less than 2 Lakhs b) Between 2-4 Lakhs c) Between 4-6 Lakhs d) Above 6 Lakhs6) Experience in Investment? a) Less than 1 Year b) Between 1-3 Years c) Between 3-5 Years d) Above 5 Years7) Which of the following consist your portfolio? (Rank the following 1- least important, 5 – more important) a) Commodities/Gold b) Saving bank c) Mutual Funds d) Insurance e) Stock Market f) Real Estate
8) What kind of Investment do u prefer? a) Intraday b) Short Term Investment c) Medium Term Investment d) Long Term Investment9) The Large Cap stocks are less risky than small & Mid-cap stocks. a) I strongly agree b) I agree c) Neutral d) I disagree e) I strongly disagree10) How do you make your investment decisions? (Rank the following 1- least important, 6 – more important) a) Market condition b) Brokers advise c) Self analysis d) Professional advisors recommendation e) Friends advise f) Intuition11) How do you respond if (Tick any one of the following) a. Result announced by a company is better than market expectation Buy Sell Hold b. Result announced by a company is not as per market expectation Buy Sell Hold12) How do you respond if company declares Dividends? Buy Sell Hold13) How do you respond to a company announcement of issuing bonus shares? Buy Sell Hold14) How do you respond to an announcement of stock split? Buy Sell Hold15) How do you respond to an announcement made by your company to acquire a similar kind of company? Buy Sell Hold16) How do you respond if a company is getting delisted for restructure purpose? Buy Sell Hold17) How do you respond if Government increases the STT. Buy Sell Hold
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