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INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI
SECURITIES
Submitted in partial fulfillment of the requirements for the award ...
SATHYABAMA UNIVERSITY
(Established under Section 3 of UGC Act, 1956)
Jeppiaar Nagar, Rajiv Gandhi Salai, Chennai - 600 119...
DECLARATION
I RAM.G (Reg.No. 3241319) hereby declare that the Project Report entitled
“INVESTMENT OPPORTUNITIES AVAILABLE ...
ACKNOWLEDGEMENT
My sincere thanks to our Honorable Founder and Chairman Col. Dr. JEPPIAAR.,
M.A., B.L., Ph.D, Chancellor, ...
ABSTRACT
The research work is undertaken on the Study of Investment opportunities with special
reference to ICICI Securiti...
CHAPTER – 1
INTRODUCTION
INTRODUCTION
Investment is an art provided it is well learnt. Learning to live with the anxiety of the
unknown is part of ...
A financial market is a mechanism that allows people to easily buy and sell
(trade) financial securities (such as stocks a...
Money market has the following investment alternatives:
1. Derivatives market, which provide instruments for the managemen...
The study will be focusing on the investment pattern adopted by the investors,
areas of investment available to investors ...
Not all investment will be profitable as investors will not always
make the correct investment decision over the period of...
This study has been undertaken in ICICI Securities Ltd., which was incorporated
in the year 2000, offering a wide range of...
1.1 PROBLEM STATEMENT
The statement of the problem under study is to analyze the investment pattern of
investors and their...
1.2 OBJECTIVES OF THE STUDY
 PRIMARY OBJECTIVES:
 To study the investment pattern of investors in ICICI Securities
Ltd.,...
1.3SCOPE OF THE STUDY
The primary market starts from broad environmental factors to the industry, which
influences the sha...
1.4LIMITATIONS OF THE STUDY
• The study is limited only to 150 investors.
• The study is limited to investors of ICICI Sec...
CHAPTER - 2
COMPANY & INDUSTRY
INFORMATION
2.1 INDUSTRY PROFILE
Most of the trading in the Indian stock market takes place on its two stock exchanges:
the Bombay Sto...
TRADING MECHANISM
Trading at both the exchanges takes place through an open electronic limit order book,
in which order ma...
MARKET INDEXES
The two prominent Indian market indexes are Sensex and Nifty. Sensex is the oldest
market index for equitie...
Most portfolio investments consist of investment in securities in the
primary and secondary markets, including shares, deb...
2.2 COMPANY PROFILE
ICICI Group offers a wide range of banking products and financial
services to corporate and retail cus...
ICICI Prudential Asset Management is the third largest mutual fund with average
asset under management of Rs. 688.16 billi...
I-Sec PD’s leadership position and research expertise have been consistently
recognized by domestic and international agen...
PRODUCTS AND SERVICES
 EQUITY
o Trading in shares: ICICIdirect.com offers various options to the investors while
trading ...
o Limit Order: Allows an investor to place a buy/sell order at a price defined by
him/her. The execution can happen at a p...
 CURRENCY DERIVATIVES
ICICI Direct offers a simple and convenient way to trade and hedge the currency
risk in four pair o...
 GENERAL INSURANCE
General Insurance products cover Health, Home, Motor and Travel, and help
protect the financial health...
 TAX SERVICES
In today's busy world assessing one's tax well in advance and investing in
right tax saving products with o...
BOARD OF DIRECTORS
ICICI Securities Limited.
 Ms. Chanda D. Kochhar, Chairperson
 Mr. Uday Chitale
 Mr. Narendra Murkum...
AWARDS AND RECOGNITION
 RETAIL SERVICES
 ICICIdirect.com, won the ‘Outlook Money Best e- Brokerage Award’ eighth time
in...
 ICICI Securities awarded the Asiamoney `Best Domestic Equity House’ for 2012
 Vikash Mantri tops The Wall Street Journa...
 TECHNOLOGY
 Fairfax Business Media has recognized ICICI Securities as a recipient of ‘CIO
100 Asia’ award in 2013.
 IC...
CHAPTER – 3
REVIEW OF LITERATURE
The Indian capital market has changed dramatically over the past decade, since 2000.
Changes have also been taking place i...
3.1 PAST RESEARCH WORK ABOUT THE INVESTMENT
BASIC INVESTMENT RULES
Grewal S.S and Navjot Grewall revealed some basic inves...
IMPORTANCE OF THE RATE OF RETURN IN INVESTMENTS
Jack Clark Francis (1986) revealed the importance of the rate of return in...
NATURE OF MARKET RISK
Lewis Mandell (1992) reviewed the nature of market risk, which according to him is very
much 'global...
PRINCIPLES DETERMINING SUCCESS IN STOCK MARKET
Carter Randal (1992) offered to investors the underlying principles of winn...
TURNAROUND STOCKS
Yasaswy N.J. (1993) disclosed how 'turnaround stocks' offer big profits to bold investors
and also the r...
STOCK RISKS
Yasaswy J.N. (1993) evaluated the quantum of risks involved in different types of
stocks. Defensive stocks are...
DERIVATIVES
R.Venkataramani (l994) disclosed the uses and dangers of derivatives. The derivative
products can lead us to a...
NEED FOR DOING FUNDAMENTAL ANALYSIS
Pattabhi Ram.V (1995) emphasized the need for doing fundamental analysis and doing
Equ...
RISK MANAGEMENT IN RELATION TO BANKS
S.Rajagopal. (1996) commented on risk management in relation to banks. He opined
that...
PROCESSES INVOLVED IN RISK MANAGEMENT
V.T.Godse.(1996) revealed the two separate but simultaneous processes involved in
ri...
3.2 RESEARCH GAP
The study analyzes the investment pattern of investors which is based upon
various parameters like income...
CHAPTER – 4
RESEARCH
METHODOLOGY
DEFINITION OF POPULATION
The study is mainly related to know the investment pattern of the investors on different
products...
SAMPLE SIZE
The population being large, the survey was carried among 150 respondents, all of them
are the investors in ICI...
CHAPTER – 5
DATA ANALYSIS AND
INTERPRETATION
Data analysis is a body of methods that help to describe facts, detect patterns, develop
explanations, and test hypotheses...
Table 5.1.1: INVESTORS KNOWLEDGE OF FINANCE
Parameter No. of
respondents
% of
respondents
An expert in the field of financ...
Fig 5.1.1: CHART SHOWING INVESTORS KNOWLEDGE OF FINANCE
To conclude from above fig 5.1.1, many investors have proficient k...
Table 5.1.2: INVESTORS OBJECTIVE OF INVESTMENT
Parameter No. of
respondents
% of
respondents
Wealth preservation 70 46.67
...
Fig 5.1.2: CHART SHOWING INVESTORS OBJECTIVE OF INVESTMENT
To conclude, many investors invest with the objective of preser...
Table 5.1.3: INVESTORS RESPONSE TO MARKET FLUCTUATIONS
Parameter No. of
respondents
% of
respondents
Yes 128 85.33
No 22 1...
Fig 5.1.3: CHART SHOWING INVESTORS RESPONSE TO MARKET
FLUCTUATIONS
To conclude, many investors alter their investment patt...
Table 5.1.4: INVESTMENT PORTFOLIO OF INVESTORS
Parameter No. of respondents % of respondents
Mutual funds 20 13.33
Equity ...
Fig 5.1.4: CHART SHOWING INVESTMENT PORTFOLIO OF INVESTORS
To conclude, many investors have invested in E-Gold investment ...
Table 5.1.5: INVESTORS TENDENCY TO GET UPDATES FROM ICICI
Parameter No. of
respondents
% of
respondents
Yes 143 95.33
No 7...
Fig 5.1.5: CHART SHOWING INVESTORS TENDENCY TO GET UPDATES FROM
ICICI
To conclude, many investors want to keep themselves ...
Table 5.1.6: INVESTORS NEED FOR PERSONALIZED INVESTMENT ADVISING
Parameter No. of
respondents
% of
respondents
Yes 145 96....
Fig 5.1.6: CHART SHOWING INVESTORS NEED FOR PERSONALIZED
INVESTMENT ADVISING
To conclude, many investors prefer personaliz...
Table 5.1.7: INVESTORS NEED FOR BRANCH ADVISORY SERVICES
Parameter
No. of
respondents
% of
respondents
Yes 100 66.67
No 50...
Fig 5.1.7: CHART SHOWING INVESTORS NEED FOR BRANCH ADVISORY
SERVICES
To conclude, many investors get the advice from the N...
Table 5.1.8: SOURCE OF INVESTORS’ INVESTMENT IDEA
Parameter
No. of
respondents
% of
respondents
Self-awareness 57 38
Finan...
Fig 5.1.8: CHART SHOWING SOURCE OF INVESTORS’ INVESTMENT IDEA
To conclude, many investors take investment decisions on the...
Table 5.1.9: INVESTORS SAFETY AND SECURITY
Parameter No. of
respondents
% of
respondents
Yes 145 96.67
No 5 3.33
Total 150...
Fig 5.1.9: CHART SHOWING INVESTORS SAFETY AND SECURITY
To conclude, many investors are assured of their safety and securit...
Table 5.1.10: RATE OF BROKERAGE PAID BY INVESTORS
Brokerage Rate
(in %)
No. of
respondents
% of
respondents
0.05 120 80
0....
Fig 5.1.10: CHART SHOWING RATE OF BROKERAGE PAID BY INVESTORS
To conclude, many investors are engaged in intra-day or dail...
Table 5.1.11: INVESTMENT TERM OF INVESTORS
Parameter No. of
respondents
% of
respondents
Short term 84 56
Long term 48 32
...
Fig 5.1.11: CHART SHOWING INVESTMENT TERM OF INVESTORS
To conclude, many investors have invested in short term investments...
Table 5.1.12: INVESTORS’ FREQUENCY OF INVESTMENT
Parameter No. of
respondents
% of
respondents
Daily 42 28
Weekly 28 18.66...
Fig 5.1.12: CHART SHOWING INVESTORS’ FREQUENCY OF INVESTMENT
To conclude, many investors prefer daily investment in the eq...
Table 5.1.13: INVESTMENT DECISION OF INVESTORS
Parameter
No. of
respondents
% of
respondents
Risk involved 40 26.67
Return...
invest based on their past performance and 10% of investors invest based on
miscellaneous factors like gaining firsthand e...
To conclude, many investors invest in the equity market with the hope of growth
of their investment in the future.
Table 5...
From the above table 5.1.14, it is inferred that out of 150 investors, 57.33% agree
to sell their risky investments and pu...
To conclude, many investors are risk averse and tend to sell their risky
investments and put the money in safer investment...
ups and downs in the short-term value of their investments, 10% strongly agree to
tolerate sharp ups and downs in the shor...
Table 5.1.16: RISK MANAGEMENT TECHNIQUE ADOPTED BY INVESTORS
Parameter No. of
respondents
% of
respondents
Switching 52 34...
switching technique to manage their risk and remaining 16% of investors follow short
selling investment technique to manag...
To conclude, many investors follow cut-loss technique to manage their
risk, so that they can at least minimize the propose...
investors are just satisfied, 17.33% of investors are dissatisfied, 9.33% of investors are
highly dissatisfied with the se...
To conclude, many investors are highly satisfied with the services offered by
ICICI Securities.
Table 5.1.18: MODE OF INVE...
From the above table 4.1.18, it is inferred that out of 150 investors, 84.67% of
investors do online trading, 10% of inves...
To conclude, many investors are engaged in online trading and trade by
themselves or by relationship managers who does mar...
Table 5.2.1: TABLE SHOWING CROSS-TABULATION BETWEEN
INVESTMENT_DECISION VARIABLE AND FREQUENCY_OF _INVESTMENT
VARIABLE
Tab...
Since p<1.20, we reject the null hypothesis in favor of the alternative hypothesis. Hence,
there is significant difference...
Alternate hypothesis (H1): The rate of brokerage paid by investors is associated with the
type of investment portfolio of ...
The above table 5.3.1 provides the mean and standard deviation for each
combination of the groups of the independent varia...
STATISTICAL SIGNIFICANCE OF THE TWO-WAY ANOVA
Table 5.3.2: TABLE SHOWING TWO-WAY ANOVA
INFERENCE:
The above table 5.3.2 re...
CHAPTER – 6
FINDINGS, SUGGESTIONS
AND CONCLUSION
FINDINGS
 The investment pattern of the investors’ depends upon their level of income,
frequency of investment, their inv...
SUGGESTIONS
 It is recommended that investors’ decision should be based on the broker’s
advice.
 Risk and return should ...
CONCLUSION
The study is conducted among the investors in ICICI Securities, particularly in
Nanganallur area. The investmen...
SCOPE FOR FURTHER RESEARCH
The study is conducted by taking a limited number of sample size of 150 investors,
which is sta...
REFERENCES
1) Grewal and Navjot Grewal, “Profitable Investment in shares”, Vision Books Pvt.
Ltd., Connaught Place, New De...
APPENDIX
QUESTIONNAIRE
• Name: ___________________________
• Contact No/E-mail id: ____________________________
1) Age
Les...
5) Annual investments (in INR)
Less than 25,000 25,000-50,000 50,001-1,00,000 1,00,001-2,00,000
2,00,001 & above
6) How go...
10) If you are dealing through brokers (on phone), do you want to trade/ invest
online?
Yes No
11) In which of the followi...
13) Are you a short term or a long term investor?
Short term
Long term
Both
14) What is your frequency of investments?
Dai...
17) When the market goes down, I tend to sell some of my riskier investments and
put the money in safer investments.
I dis...
21) Do you want personalized Investment advising at your branch/ city?
Yes No
22) At present, is your branch advising you ...
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INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES

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This is an original project undertaken by me at ICICI Securities Limited, Chennai with a project duration of 2 months. This project work is bilaterally sound as the main aim was to market a finance product.

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  1. 1. INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES Submitted in partial fulfillment of the requirements for the award of Master of Business Administration by RAM.G (Reg. No. 3241319) DEPARTMENT OF MANAGEMENT STUDIES FACULTY OF BUSINESS ADMINISTRATION SATHYABAMA UNIVERSITY JEPPIAAR NAGAR, RAJIV GANDHI SALAI, CHENNAI – 600119. TAMILNADU. APRIL 2014
  2. 2. SATHYABAMA UNIVERSITY (Established under Section 3 of UGC Act, 1956) Jeppiaar Nagar, Rajiv Gandhi Salai, Chennai - 600 119 www.sathyabamauniversity.ac.in DEPARTMENT OF MANAGEMENT STUDIES BONAFIDE CERTIFICATE This is to certify that this Project Report is the bonafide work of Ram.G (Reg. No. 3241319) who carried out the project entitled “INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES” under our supervision from December 2013 to February 2014. Internal Guide External Guide Mrs.S.JOYCE, MBA, Ph.D Mr.S.SUKUMAR Head of the Department Dr. S. MUTHUMANI Submitted for Viva voce Examination held on_____________________ Internal Examiner External Examiner Mrs.S.JOYCE, MBA, Ph.D
  3. 3. DECLARATION I RAM.G (Reg.No. 3241319) hereby declare that the Project Report entitled “INVESTMENT OPPORTUNITIES AVAILABLE IN ICICI SECURITIES” done by me under the guidance of Mrs.S.JOYCE, MBA, Ph.D (Internal) and Mr.S.SUKUMAR (External) at ICICI SECURITIES Ltd., Chennai is submitted in partial fulfillment of the requirements for the award of Master degree in Business Administration. SIGNATURE OF THE CANDIDATE DATE: PLACE:
  4. 4. ACKNOWLEDGEMENT My sincere thanks to our Honorable Founder and Chairman Col. Dr. JEPPIAAR., M.A., B.L., Ph.D, Chancellor, Sathyabama University, Tamil Nadu, Chennai, India for his sincere endeavour in educating us in this premier institution. I would like to express my deep gratitude and heartfelt thanks to our beloved Directors Dr. Marie Johnson B.E., M.B.A.. M.Phil., Ph.D., and Dr. Mariazeena Johnson B.E., M.B.A., M.Phil., Ph.D., for motivating me to complete this project work. I would like to place my graceful thanks to Dr. B. Sheela Rani, M.S. (By Research), Ph.D., Vice Chancellor for the assistance and encouragement offered throughout my project work period. I express my heartfelt thanks to Dr. S. S. Rau, M.B.A., Ph.D., Registrar and sincere thanks to Dr. K.V. Narayanan. M.E., Ph.D., Controller of Examinations, Sathyabama University for their valuable support offered to conclude my project. I wish to express my deep sense of gratitude to Dr. S. Muthumani Ph.D., Head of the Department his valuable suggestions and encouragement offered throughout my project work. I wish to express my sincere thanks to my Internal Project Guide Mrs.S.Joyce, MBA, Ph.D and External Project Guide Mr.S.Sukumar, Executive Sales Manager, ICICI Securities, for their constant support at all the stages of the project work. I would also like to thank all the Faculty Members, Department of Management Studies for their help rendered to complete my project work in time. RAM.G
  5. 5. ABSTRACT The research work is undertaken on the Study of Investment opportunities with special reference to ICICI Securities Ltd. The main objective of the research is to identify the investment pattern of investors in ICICI Securities, particularly in Nanganallur area. The secondary objective is to study the investment decisions of investors and to study the difference between various investment options offered by ICICI Securities. The research study conducted is descriptive in nature. Both primary and secondary data are collected to meet the requirements. For collecting data a structured questionnaire method is used as an instrument. The questionnaire consists of multiple choices, open ended and close ended questions. The sampling procedure followed in this study is convenient sampling, which is a non- probability sampling and the sample size is 150. Percentage analysis, Two-way ANOVA and Chi-Square Test were used for the research purpose. The study reveals that many investors alter their investment pattern when there are market fluctuations. The study found that investment objective of most of the investors’ is wealth preservation and that most of the respondents invest daily. The study indicated that investment in e-gold equity scheme is considered less risky. Investments in mutual funds and F&O are considered as high risk. The study reveals that many investors invest in the equity market with the hope of growth of their investment in the future. The study suggests that awareness level should be created about different investment alternatives so that the investor may diversify his portfolio to reduce his risk.
  6. 6. CHAPTER – 1 INTRODUCTION
  7. 7. INTRODUCTION Investment is an art provided it is well learnt. Learning to live with the anxiety of the unknown is part of investing. Investing is not about gambling or speculation, it is about taking reasonable risks to get steady rewards. Investment is as simple as jumping into opportunities rather than conclusions. One can invest in capital market as it is beneficial to him/her in three ways viz, Capital appreciation, Dividend and Bonus. Out of the Indian population of 1.21 billion people (as on Dec 2013), only 2% are into the capital market. The study is oriented with analyzing the investment opportunities available in ICICI Securities. As such, the study also includes analysis of the investment pattern of investors according to their portfolio and decisions taken by them when making an investment. An investment refers to the commitment of funds at present, in anticipation of some positive rate of return in future. Today the spectrum of investment is indeed wide. An investment is confronted with array of investment avenues. Among all investment, investment in equity is in best high proportion. This is because the history of stock market is booming and bursts overnight millionaires, an instant pauper. Indian economy is doing indeed well in recent years. The study has been undertaken to analyze the investment pattern of investors in ICICI Securities residing in Nanganallur. The main reasons behind the study are the factors investment decision, time horizon, frequency of investment and the risk taking ability of the investors. The percentage of Indian investors investing in the Indian equity market is very less as compared to foreign investors.
  8. 8. A financial market is a mechanism that allows people to easily buy and sell (trade) financial securities (such as stocks and bonds), commodities (such as precious metals or agricultural goods), and other fungible items of value at low transaction costs and at prices that reflect the efficient market hypothesis. Financial markets have evolved significantly over several hundred years and are undergoing constant innovation to improve liquidity. The Indian financial market has also grown substantially. The Indian stock markets are now amongst the best in the world in terms of modernizations and the technology. India was among the few countries, which was not badly affected by the contagion effects of the Asian crisis of 1997. Policy makers attribute this to the slow and cautious pace of capital account liberalization. Today–with the ‘feel good’ factor about India in the global arena rising, increased confidence of the investors in the Indian market, Sensex looking more attractive than ever before, foreign exchange reserves at an all-time high of more than $140 billion – is the most vulnerable period for the regulators of the Indian financial sector, particularly SEBI and RBI. The financial markets can be divided into different subtypes: 1. Capital market which consists of: Stock markets, which provide financing through the issuance of shares or common stock, and enable the subsequent trading thereof. 2. Bond market, which provide financing through the issuance of Bonds, and enable the subsequent trading thereof. 3. Commodity markets, which facilitate the trading of commodities. 4. Money market, which provide short term debt financing and investment.
  9. 9. Money market has the following investment alternatives: 1. Derivatives market, which provide instruments for the management of financial risk. 2. Futures market, which provide standardized forward contracts for trading products at some future date. 3. Insurance market, which facilitates the redistribution of various risks. 4. Foreign exchange market, which facilitates the trading of foreign exchange. The capital markets consist of primary markets and secondary markets. Newly formed (issued) securities are bought or sold in primary markets. Secondary markets allow investors to sell securities that they hold or buy existing securities. ICICI Securities Limited amongst the leading Brokerage Houses and the value based financial services which make it preferred service provider. As India’s fastest growing financial services conglomerate, with deep moorings in the Indian economy for over five decades, ICICI Group of companies have endeavored to contribute to address the challenges posed to the community in multiple ways. The ICICI group has following companies which include: ICICI Bank, ICICI Prudential Life Insurance Company, ICICI Securities Limited, ICICI Securities Primary Dealership Limited, ICICI Lombard General Insurance Company, ICICI Prudential Asset Management Company, and ICICI Venture. It provides prime brokerage services in the area of Equity, Commodities, Derivatives Depository services, IPO Underwritings, Mutual Fund Distribution, insurance product distribution, the company also provides investment management services like Portfolio Management Services, Portfolio Advisory Services.
  10. 10. The study will be focusing on the investment pattern adopted by the investors, areas of investment available to investors and how their behavior is changing. They are now leaving behind the traditional approach of investment like fixed deposits, gold, post office schemes, bank deposits etc. Investors are now looking towards new diversification of their wealth by making investment in mutual funds, capital market, derivatives, insurance, ETF(Exchange traded funds) etc. Like most developed and developing countries Indian investors are searching for new investment avenues. Mutual funds have become one of the largest financial intermediaries in the leading world economies. Every person has his/her own set of plans for savings to meet any financial adversity in future that suddenly occurs and to be a market leader the company has to be aware of its competitors and investors behavior as the competition is very high. A mutual fund is a form of collective investment that pools money from many investors and invests their money in stocks, bonds, short-term money market instruments, and/or other securities. In a mutual fund, the fund manager trades the fund’s underlying securities, realizing capital gains or losses, and collects the dividend or interest income. The investment proceeds are then passed along to the individual investors. Similarly there are various other investment products in the Indian Financial Market such as fixed income securities, bond, equity shares, public deposits, commercial paper, certificate of deposits etc. Many individuals find investments to be fascinating because they can actively participate in the decision making process and see the results of their choices.
  11. 11. Not all investment will be profitable as investors will not always make the correct investment decision over the period of years, however one should earn a positive return on a diversified portfolio. In addition there is a thrill from the major success, along with the agony associated with the stock that dramatically rose after you sold or did not buy. Both the big fish you catch and the big fish that get away can make wonderful stories. Investment is not a game but a serious subject that can have a major effect on the investor’s future well being. Virtually everyone makes investment. Even if the individual does not select specific assets such as stock, investment are still made through participation in pension plans, and employee saving program or through purchase of life insurance or a home. Each of these investments has a common characteristic such as potential returns and the risk one must bear. The future is uncertain, and one must determine how much risk he/she is willing to bear since higher return is associated with accepting more risk. The individual should start by specifying investment goals. Once these goals are established, the individual should be aware of the mechanics of investing and the environment in which investment decisions are made. These include the processes by which securities are issued and subsequently bought and sold, the regulations and tax laws that have been enacted by various levels of government, and the sources of information concerning investment that are available to the individual.
  12. 12. This study has been undertaken in ICICI Securities Ltd., which was incorporated in the year 2000, offering a wide range of services including investment banking, institutional broking, retail broking and private wealth management. This project contains the investment opportunities available in ICICI Securities as well as the investment pattern of investors particularly in Nanganallur area, who are the clients of ICICI Securities Ltd., which has the largest customer base of 26 lakhs customers all over India and provides a complete bouquet of products in equity, debt, forex, depository, derivatives and allied services in India.
  13. 13. 1.1 PROBLEM STATEMENT The statement of the problem under study is to analyze the investment pattern of investors and their investment decision on different investment alternatives provided by ICICI. This problem tries to identify the investors’ framework of investment based on different equity products offered by ICICI Securities Ltd. FIG 1.1 CHART SHOWING PERFORMANCE OF DIFFERENT INVESTMENT PORTFOLIOS AS ON JANUARY, 2014
  14. 14. 1.2 OBJECTIVES OF THE STUDY  PRIMARY OBJECTIVES:  To study the investment pattern of investors in ICICI Securities Ltd., particularly in Nanganallur area.  To find the most preferred investment product by the investors of ICICI Securities.  SECONDARY OBJECTIVES:  To study about the investment decisions of investors.  To study about the different investment alternatives provided by ICICI Securities Ltd.
  15. 15. 1.3SCOPE OF THE STUDY The primary market starts from broad environmental factors to the industry, which influences the share price and finally analyzing the companies’ potentiality by considering possible risk associated with securities for investing public. Since the share prices of the company is empirically found to depend up to 50% on the performance of the industry and the economy, studying those related field provide insights for selecting different products of ICICI Securities. The time horizon, income and risk factors play a significant role while selecting particular product of ICICI, as it can create an opportunity for one product and may not for the other, the analyzing impact of income and risk on investment pattern of investors is important. The study shows that frequency of investment, factors determining investment decision, income level and investment objective play more significant role in deciding the investment pattern. So analyzing the factors that affect investment pattern of investors and other investment criteria provide more valuable insights. Indian capital markets have been receiving global attention, especially from sound investors, due to the improving macroeconomic fundamentals. No two investors are alike. Their investment depends upon the risk profile, time horizon and savings made. There is a greater scope as ICICI Securities provide tailor made portfolio for all class of investors and traders as well. For the world financial markets, an exposure in a regulated market has always been the safest investment choice. Though, currently, there are concerns about commodities in the Indian market, these can be addressed by taking a closer look at the scenario. A comparison of the regulated and unregulated marketplace will help to understand how risk can be avoided.
  16. 16. 1.4LIMITATIONS OF THE STUDY • The study is limited only to 150 investors. • The study is limited to investors of ICICI Securities • The study covers the respondents in Nanganallur area alone. • Interpretations drawn in this study are based on the assumption that the respondents have given correct information. • The economy and industry have a wide picture so it becomes very difficult in real time to encompass the broader views of all the investors in the given period of time. • Besides the study has limitation of time, place and resources.
  17. 17. CHAPTER - 2 COMPANY & INDUSTRY INFORMATION
  18. 18. 2.1 INDUSTRY PROFILE Most of the trading in the Indian stock market takes place on its two stock exchanges: the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). The BSE has been in existence since 1875. The NSE, on the other hand, was founded in 1992 and started trading in 1994. However, both exchanges follow the same trading mechanism, trading hours, settlement process, etc. At the last count, the BSE had about 4,700 listed firms, whereas the rival NSE had about 1,200. Out of all the listed firms on the BSE, only about 500 firms constitute more than 90% of its market capitalization; the rest of the crowd consists of highly illiquid shares. Almost all the significant firms of India are listed on both the exchanges. NSE enjoys a dominant share in spot trading, with about 70% of the market share, as of 2009, and almost a complete monopoly in derivatives trading, with about a 98% share in this market, also as of 2009. Emerging markets like India, are fast becoming engines for future growth. Currently, only a very low percentage of the household savings of Indians are invested in the domestic stock market, but with GDP growing at 7-8% annually and a stable financial market, investors might see more money joining the race. India started permitting outside investments only in the 1990s. Foreign investments are classified into two categories: foreign direct investment (FDI) and foreign portfolio investment (FPI). All investments, in which an investor takes part in the day-to-day management and operations of the company, are treated as FDI, whereas investments in shares without any control over management and operations, are treated as FPI.
  19. 19. TRADING MECHANISM Trading at both the exchanges takes place through an open electronic limit order book, in which order matching is done by the trading computer. There are no market makers or specialists and the entire process is order-driven, which means that market orders placed by investors are automatically matched with the best limit orders. As a result, buyers and sellers remain anonymous. The advantage of an order driven market is that it brings more transparency, by displaying all buy and sell orders in the trading system. However, in the absence of market makers, there is no guarantee that orders will be executed. All orders in the trading system need to be placed through brokers, many of which provide online trading facility to retail customers. Institutional investors can also take advantage of the direct market access (DMA) option, in which they use trading terminals provided by brokers for placing orders directly into the stock market trading system. SETTLEMENT CYCLE AND TRADING HOURS Equity spot markets follow a T+2 rolling settlement. This means that any trade taking place on Monday, gets settled by Wednesday. All trading on stock exchanges takes place between 9:15 am and 3:30 pm, Indian Standard Time (+ 5.5 hours GMT), Monday through Friday. Delivery of shares must be made in dematerialized form, and each exchange has its own clearing house, which assumes all settlement risk, by serving as a central counterparty.
  20. 20. MARKET INDEXES The two prominent Indian market indexes are Sensex and Nifty. Sensex is the oldest market index for equities; it includes shares of 30 firms listed on the BSE, which represent about 45% of the index’s free-float market capitalization. It was created in 1986 and provides time series data from April 1979, onward. Another index is the S&P CNX Nifty; it includes 50 shares listed on the NSE, which represent about 62% of its free-float market capitalization. It was created in 1996 and provides time series data from July 1990, onward. MARKET REGULATION The overall responsibility of development, regulation and supervision of the stock market rests with the Securities & Exchange Board of India (SEBI), which was formed in 1992 as an independent authority. Since then, SEBI has consistently tried to lay down market rules in line with the best market practices. It enjoys vast powers of imposing penalties on market participants, in case of a breach. For making portfolio investment in India, one should be registered either as a foreign institutional investor (FII) or as one of the sub-accounts of one of the registered FIIs. Both registrations are granted by the market regulator, SEBI. Foreign institutional investors mainly consist of mutual funds, pension funds, endowments, sovereign wealth funds, insurance companies, banks, asset management companies etc. At present, India does not allow foreign individuals to invest directly into its stock market. However, high-net-worth individuals (those with a net worth of at least $US50 million) can be registered as sub-accounts of an FII. Foreign institutional investors and their sub accounts can invest directly into any of the stocks listed on any of the stock exchanges.
  21. 21. Most portfolio investments consist of investment in securities in the primary and secondary markets, including shares, debentures and warrants of companies listed or to be listed on a recognized stock exchange in India. FIIs can also invest in unlisted securities outside stock exchanges, subject to approval of the price by the Reserve Bank of India. Finally, they can invest in units of mutual funds and derivatives traded on any stock exchange. An FII registered as a debt-only FII can invest 100% of its investment into debt instruments. Other FIIs must invest a minimum of 70% of their investments in equity. The balance of 30% can be invested in debt. FIIs must use special non-resident rupee bank accounts, in order to move money in and out of India. The balances held in such an account can be fully repatriated. The government of India prescribes the FDI limit and different ceilings have been prescribed for different sectors. Over a period of time, the government has been progressively increasing the ceilings. FDI ceilings mostly fall in the range of 26-100%. By default, the maximum limit for portfolio investment in a particular listed firm, is decided by the FDI limit prescribed for the sector to which the firm belongs. However, there are two additional restrictions on portfolio investment. First, the aggregate limit of investment by all FIIs, inclusive of their sub-accounts in any particular firm, has been fixed at 24% of the paid-up capital. However, the same can be raised up to the sector cap, with the approval of the company’s boards and shareholders. Secondly, investment by any single FII in any particular firm should not exceed 10% of the paid-up capital of the company. Regulations permit a separate 10% ceiling on investment for each of the sub-accounts of an FII, in any particular firm. However, in case of foreign corporations or individuals investing as a sub-account, the same ceiling is only 5%. Regulations also impose limits for investment in equity-based derivatives trading on stock exchanges.
  22. 22. 2.2 COMPANY PROFILE ICICI Group offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialized group companies and subsidiaries in the areas of personal banking, investment banking, life and general insurance, venture capital and asset management. With a strong customer focus, the ICICI Group Companies have maintained and enhanced their leadership positions in their respective sectors. ICICI Bank is India’s second-largest bank with total assets of Rs. 4,736.47 billion (US$ 93 billion) at March 31, 2012 and profit after tax Rs. 64.65 billion (US$ 1,271 million) for the year ended March 31, 2012. The Bank has a network of 2,791 branches and 10,021 ATMs in India, and has a presence in 19 countries, including India. ICICI Prudential Life Insurance is a joint venture between ICICI Bank, a premier financial powerhouse, and Prudential plc, a leading international financial services group headquartered in the United Kingdom. ICICI Prudential Life was amongst the first private sector insurance companies to begin operations in December 2000 after receiving approval from Insurance Regulatory Development Authority (IRDA). ICICI Prudential Life’s capital stands at Rs. 47.91 billion (as of March 31, 2012) with ICICI Bank and Prudential plc holding 74% and 26% stake respectively. For FY 2012, the company garnered Rs.140.22 billion of total premiums and has underwritten over 13 million policies since inception ICICI Lombard General Insurance Company, is a joint venture between ICICI Bank Limited, India’s second largest bank with consolidated total assets of over USD 91 billion at March 31, 2012 and Fairfax Financial Holdings Limited, a Canada based USD 30 billion diversified financial services company engaged in general insurance, reinsurance, insurance claims management and investment management. ICICI Lombard GIC Ltd. Is the largest private sector general insurance company in India.
  23. 23. ICICI Prudential Asset Management is the third largest mutual fund with average asset under management of Rs. 688.16 billion and a market share (mutual fund) of 10.34% as on March 31, 2012. The Company manages a comprehensive range of mutual fund schemes and portfolio management services to meet the varying investment needs of its investor’s through 117 branches spread across the country. ICICI Venture is one of the largest and most successful alternative asset managers in India with funds under management of over US$ 2 billion. It has been a pioneer in the Indian alternative asset industry since its establishment in 1988, having managed several funds across various asset classes over multiple economic cycles. ICICI Venture is a wholly owned subsidiary of ICICI Bank. ICICI Securities Ltd is the largest integrated securities firm covering the needs of corporate and retail customers through investment banking, institutional broking, retail broking and financial product distribution businesses. Among the many awards that ICICI Securities has won, the noteworthy awards for 2012 were: Asiamoney `Best Domestic Equity House for 2012; ‘BSE IPF D&B Equity Broking Awards 2012’ under two categories:- Best Equity Broking House – Cash Segment and Largest E-Broking House; the Chief Learning Officer Award from World HRD Congress for Innovation in Learning category. IDG India’s CIO magazine has recognized ICICI Securities as a recipient of CIO 100 award in 2009, 2010, 2011 and 2012. I-Sec won this awards 4 times in a row for which the CIO Hall of Fame award was additionally conferred in 2012. ICICI Securities Primary Dealership Limited (‘I-Sec PD’) is the largest primary dealer in Government Securities. It is an acknowledged leader in the Indian fixed income and money markets, with a strong franchise across the spectrum of interest rate products and services – institutional sales and trading, resource mobilization, portfolio management services and research. One of the first entities to be granted primary dealership license by RBI, I-Sec PD has made pioneering contributions since inception to debt market development in India under discretionary portfolio management.
  24. 24. I-Sec PD’s leadership position and research expertise have been consistently recognized by domestic and international agencies. In recognition of their performance in the Fixed Income market, they have received the following awards:  “Best Domestic Bond House” in India – 2007, 2005, 2004, 2002 by Asia Money  “Best Bond House” – 2009, 2007, 2006, 2005, 2004, 2001 by Finance Asia  “Best Domestic Bond House” – 2009 by The Asset Magazine’s annual Triple A Country Awards  Ranked volume leader – by Greenwich Associates in 2010 Asian Fixed-Income Investors Study. Ranked 5th in ‘Domestic Currency Asian Credit’ with market share of 4.5%, Only Domestic entity to be ranked.  “Best Debt House in India” – 2012 by EUROMONEY ICICI SECURITIES LIMITED- AN OVERVIEW ICICI Securities Ltd is an integrated securities firm offering a wide range of services including investment banking, institutional broking, retail broking, private wealth management, and financial product distribution. ICICI Securities sees its role as ‘Creating Informed Access to the Wealth of the Nation’ for its diversified set of clients that include corporates, financial institutions, high net-worth individuals and retail investors. Headquartered in Mumbai, ICICI Securities operates out of 66 cities and towns in India and global offices in Singapore and New York. ICICI Securities Inc., the step down wholly owned US subsidiary of the company is a member of the Financial Industry Regulatory Authority (FINRA) / Securities Investors Protection Corporation (SIPC). ICICI Securities Inc. activities include Dealing in Securities and Corporate Advisory Services in the United States. ICICI Securities Inc. is also registered with the Monetary Authority of Singapore (MAS) and operates a branch office in Singapore.
  25. 25. PRODUCTS AND SERVICES  EQUITY o Trading in shares: ICICIdirect.com offers various options to the investors while trading in shares. o Cash Trading: This is a delivery based trading system, which is generally done with the intention of taking delivery of shares or monies. o Margin Trading: Investors can do an intra-settlement trading up to 3 to 4 times of their available funds, wherein they take long buy/ short sell positions in stocks with the intention of squaring off the position within the same day settlement cycle. o MarginPLUS Trading: Through MarginPLUS investors can do an intra- settlement trading up to 25 times of their available funds, wherein they take long buy/ short sell positions in stocks with the intention of squaring off the position within the same day settlement cycle o CallNTrade®: CallNTrade® allows investors’ to call on a local number in their city and trade on the telephone through Customer Service Executives of ICICI. This facility is currently available in over 11 major states across India. o Trading on NSE/BSE: Through ICICIdirect.com, investors’ can trade on NSE as well as BSE. o Market Order: Investors could trade by placing market orders during market hours that allows them to trade at the best obtainable price in the market at the time of execution of the order.
  26. 26. o Limit Order: Allows an investor to place a buy/sell order at a price defined by him/her. The execution can happen at a price more favorable than the price, which is defined by the investor. Limit orders can be placed by investor during holidays & non market hours too.  DERIVATIVES o FUTURES - Through ICICIdirect.com, investors can now trade in index and stock futures on the NSE. In futures trading, investors’ can take buy/sell positions in index or stock(s) contracts having a longer contract period of up to 3 months. Trading in FUTURES is simple. If, during the course of the contract life, the price moves in investors’ favour (i.e. rises in case investor have a buy position or falls in case investor have a sell position), investor makes a profit. o OPTIONS - An option is a contract, which gives the buyer the right to buy or sell shares at a specific price, on or before a specific date. For this, the buyer has to pay to the seller some money, which is called premium. There is no obligation on the buyer to complete the transaction if the price is not favorable to him. To take the buy/sell position on index/stock options, investor has to place certain % of order value as margin. With options trading, investor can leverage on his/her trading limit by taking buy/sell positions much more than what he/she could have taken in cash segment.
  27. 27.  CURRENCY DERIVATIVES ICICI Direct offers a simple and convenient way to trade and hedge the currency risk in four pair of Currencies- Dollar, Euro, Pound and Japanese Yen against Indian Rupee. By offering the choice of trading in different asset class of Currencies ICICI offers investors’ the opportunity to diversify their portfolio.  MUTUAL FUNDS Since the process of selecting the right mutual fund is complex and tedious, the experts from ICICI have researched the funds and using certain criterion have created a choice of funds. ICICI Direct offers facilities like making a lump sum investment, redemption, switches within same funds, setting up systematic investment plans etc.  EXCHANGE TRADED FUNDS Exchange Traded Funds or ETFs are securities that are traded, like individual stocks, on an exchange. Unlike regular open-end mutual funds, ETFs can be bought and sold throughout the trading day like any stock. Most ETFs charge lower annual expenses than many mutual funds. As with stocks, one must pay a brokerage to buy and sell ETF units.  LIFE INSURANCE Term life insurance ensures that family of the insured receives a large lump sum amount, called the sum assured, in the unfortunate event of death of the policyholder. By offering this benefit at extremely competitive rates, Term insurance plans provide an opportunity to get the protection of insurance cover at extremely affordable prices.
  28. 28.  GENERAL INSURANCE General Insurance products cover Health, Home, Motor and Travel, and help protect the financial health of the investor from unforeseen events that strike close to home. ICICI Lombard is the leading private general insurance company and has one of the best products.  FIXED DEPOSITS & BONDS o CORPORATE FIXED DEPOSITS: ICICI offers a range of Corporate Fixed Deposits varying in tenures, interest rates & institutions to suit the investment needs of the investor. The deposit schemes have been specially chosen from high-safety options to ensure that investors’ enjoy the twin benefits of returns and protection. o BONDS: Bond refers to a security issued by a company, financial institution or government which offers regular or fixed payment of interest in return on the amount borrowed money for a certain period of time. Thus by purchasing a bond, an investor loans money for a fixed period of time at a predetermined interest rate. While the interest is paid to the bond holder at regular intervals, the principal amount is repaid at a later date, known as the maturity date.  LOANS ICICIdirect offers a wide variety of Loan Products from ICICI bank to suit customer requirements. ICICI strives to provide best products and services to its customers at their doorstep.
  29. 29.  TAX SERVICES In today's busy world assessing one's tax well in advance and investing in right tax saving products with optimum returns seems to be a difficult task. Along with this also comes the pain of standing in long queues for filing the tax returns timely. ICICI offers the following tax services:  Computation of taxable income and tax payable  Advice on tax optimization investments  Filing of tax return with the tax authorities  eLOCKER ICICIdirect.com's eLocker helps its customers with the convenience and flexibility to store and retrieve their important documents when they need them. They can store scanned copies of their Passport, PAN, Agreements or even medical reports securely under their ICICI direct account. With eLocker, they can store documents in one central secure location and know that their documents are just a few clicks away.  TRADE RACER Trade Racer is a trading platform which provides investors with Live streaming quotes & Research Calls, integrated fund transfer system along with multiple watch list facility. Power-packed with new features, Trade Racer gives investors’ the power to identify market opportunities while enjoying the attractive new look and feel of the trading terminal.
  30. 30. BOARD OF DIRECTORS ICICI Securities Limited.  Ms. Chanda D. Kochhar, Chairperson  Mr. Uday Chitale  Mr. Narendra Murkumbi  Ms. Zarin Daruwala  Mr. Anup Bagchi, Managing Director & CEO  Mr. Ajay Saraf, Executive Director  Mr. Ketan Patel ICICI Securities Holding Inc.  Mr. Sandeep Batra, Director  Mr. Sriram Iyer, Director  Mr. Warren Law ICICI Securities, Inc.  Mr. Anup Bagchi, Chairman  Mr. Ajay Saraf  Mr. Jaideep Goswami  Mr. Subir Saha  Mr. Robert Ng
  31. 31. AWARDS AND RECOGNITION  RETAIL SERVICES  ICICIdirect.com, won the ‘Outlook Money Best e- Brokerage Award’ eighth time in a row. Previously, the firm won the award in 2004, 2005, 2007, 2008, 2009, 2010 and 2011.  ICICI Securities won the ‘Outlook Smart use Technology eRetailer of the year 2013’ conferred by FIHL in association with HomeShop18.com.  ICICIdirect.com won the ‘Stock Broker of the Year’ award at the Money Today FPCIL Awards 2012.  ICICI Securities Business Partners (Sub Broker channel) won the ‘Franchisor of the Year’ at the Franchise Awards 2012 for the fourth time in a row.  ICICI Securities won the ‘BSE IPF D&B Equity Broking Awards 2012’ under two categories: o Best Equity Broking House – Cash Segment o Largest E-Broking House  ICICI Securities won the ‘Chief Learning Officer Award’ from World HRD Congress for Innovation in Learning category.  ICICI Securities won the ‘Grand Jury Award’ for ‘Commendable performance by National Financial Advisor (Retail) – Online’ at the CNBC TV 18 – Financial Advisor Awards 2011. The awards 31ecognize India’s best Financial Advisors.  ICICI Securities Business Partners (Sub Broker channel) won the ‘Franchisor of the Year at the Franchise Awards 2011’, third time in a row.  INSTITUTIONAL SERVICES
  32. 32.  ICICI Securities awarded the Asiamoney `Best Domestic Equity House’ for 2012  Vikash Mantri tops The Wall Street Journal’s Asia’s Best Analysts survey in the media sector for 2010  ICICI Securities has awarded as the Best Investment Bank 2008 by Global Finance Magazine  The Corporate Finance group also was awarded a runner-up Best Merchant Banker by Outlook Money in 2007.  ICICI Securities topped the Prime Database League Tables 2007 for money raised through IPOs/FPOs.  The equities team was adjudged the ‘Best Indian Brokerage House-2003’ by Asiamoney.  ICICI direct has also won the ‘CNBC AWAAZ 2007 Consumer Award’ for the Most Preferred Brand of Financial Advisory Services.  ‘Best Broker’ – Web 18 Genius of the Web Awards 2007
  33. 33.  TECHNOLOGY  Fairfax Business Media has recognized ICICI Securities as a recipient of ‘CIO 100 Asia’ award in 2013.  ICICI Securities has been awarded the ‘NASSCOM IT Innovation Awards 2013’.  ‘CIO Masters for Collaboration and Cloud’ was awarded by Biztech2 (Network 18) in 2013.  ICICI Securities has been conferred by Dataquest in 2012 o Business Technology Excellence award o Business Technology Innovation award  IDG India has recognized ICICI Securities as a recipient of CIO 100 award in 2009, 2010, 2011 and 2012, four times in a row.  IDG India has conferred the CIO Hall of Fame award in 2012.  EMC Transformers Award was presented for best use of IT to transform business in 2012  CIO Masters for Virtualization was awarded by Biztech2 (Network 18) in 2012  ICICI Securities was the Bloomberg UTV CXO Awards Finalist for Best Utilization of IT to Transform Business in 2011  ICICI Securities was conferred the Gold CIO award jointly by CIOL and Dataquest at the Enterprise Awards 2010  ICICI Securities was the NASSCOM CNBC IT User Awards Finalist in 2009 and 2010  Indian Bank’s Association Business Technology Awards was presented for Best Online Trading Platform in 2006 and 2007
  34. 34. CHAPTER – 3 REVIEW OF LITERATURE
  35. 35. The Indian capital market has changed dramatically over the past decade, since 2000. Changes have also been taking place in government regulations and technology. The expectations of the investors are also changing. The only inherent feature of the capital market, which has not changed is the 'risk' involved in investing in corporate securities. Managing the risk is emerging as an important function of both large scale and small-scale investors. Risk management of investing in corporate securities is under active and extensive discussion among academicians and capital market operators. "Switching from security to security accomplishes nothing but to increase transactions costs and harm performance. Thus, even if markets are less than fully efficient, indexing is likely to produce higher rates of return than active portfolio management. Both individual and institutional investors will be well served to employ indexing for, at the very least, the core of their equity portfolio”, (Malkiel, 2005). While behavioral literature focuses on how individual investors manage their portfolios and that how an active portfolio management offers various strategies for beating the benchmarks. Among investors a common tendency of holding losers for long and selling winners quickly has been pointed out by Shefrin and Statman (1985). They named it as the disposition effect. They related their findings to the concepts of “loss aversion”, the issue of “self -control”, “mental accounting”, and the “aspiration to avoid regret”. Diversification and risk-management techniques are crucial concepts in the portfolio theory. However mostly investors fail to diversify their portfolios properly. It is because they determine risks at individual asset level instead of determining at portfolio level.
  36. 36. 3.1 PAST RESEARCH WORK ABOUT THE INVESTMENT BASIC INVESTMENT RULES Grewal S.S and Navjot Grewall revealed some basic investment rules and rules for selling shares. They warned the investors not to buy unlisted shares, as Stock Exchanges do not permit trading in unlisted shares. Another rule that they specify is not to buy inactive shares, ie, shares in which transactions take place rarely. The main reason why shares are inactive is because there are no buyers for them. They are mostly shares of companies, which are not doing well. A third rule according to them is not to buy shares in closely-held companies because these shares tend to be less active than those of widely held ones since they have a fewer number of shareholders. They caution not to hold the shares for a long period, expecting a high price, but to sell whenever one earns a reasonable reward. INVESTMENT MANAGEMENT Preethi Singh disclosed the basic rules for selecting the company to invest in. She opined that understanding and measuring return and risk is fundamental to the investment process. According to her, most investors are 'risk averse'. To have a higher return the investor has to face greater risks. She concludes that risk is fundamental to the process of investment. Every investor should have an understanding of the various pitfalls of investments. The investor should carefully analyze the financial statements with special reference to solvency, profitability, EPS, and efficiency of the company.
  37. 37. IMPORTANCE OF THE RATE OF RETURN IN INVESTMENTS Jack Clark Francis (1986) revealed the importance of the rate of return in investments and reviewed the possibility of default and bankruptcy risk. He opined that in an uncertain world, investors cannot predict exactly what rate of return an investment will yield. However he suggested that the investors can formulate a probability distribution of the possible rates of return. He also opined that an investor who purchases corporate securities must face the possibility of default and bankruptcy by the issuer. Financial analysts can foresee bankruptcy. He disclosed some easily observable warnings of a firm's failure, which could be noticed by the investors to avoid such a risk. IMPORTANCE OF THE RATE OF RETURN IN INVESTMENTS David.L.Scott and William Edward4 (1990) reviewed the important risks of owning common stocks and the ways to minimize these risks. They commented that the severity of financial risk depends on how heavily a business relies on debt. Financial risk is relatively easy to minimize if an investor sticks to the common stocks of companies that employ small amounts of debt. They suggested that a relatively easy way to ensure some degree of liquidity is to restrict investment in stocks having a history of adequate trading volume.
  38. 38. NATURE OF MARKET RISK Lewis Mandell (1992) reviewed the nature of market risk, which according to him is very much 'global'. He revealed that certain risks that are so global that they affect the entire investment market. Even the stocks and bonds of the well-managed companies face market risk. He concluded that market risk is influenced by factors that cannot be predicted accurately like economic conditions, political events, mass psychological factors, etc. Market risk is the systemic risk that affects all securities simultaneously and it cannot be reduced through diversification. INVESTMENT TIPS Nabhi Kumar Jain (1992) specified certain tips for buying shares for holding and also for selling shares. He advised the investors to buy shares of a growing company of a growing industry. Buy shares by diversifying in a number of growth companies operating in a different but equally fast growing sector of the economy. He suggested selling the shares the moment company has or almost reached the peak of its growth. Also, sell the shares the moment you realise you have made a mistake in the initial selection of the shares. The only option to decide when to buy and sell high priced shares is to identify the individual merit or demerit of each of the shares in the portfolio and arrive at a decision.
  39. 39. PRINCIPLES DETERMINING SUCCESS IN STOCK MARKET Carter Randal (1992) offered to investors the underlying principles of winning on the stock market. He emphasized on long-term vision and a plan to reach the goals. He advised the investors that to be successful, they should never be pessimists. He advised the investors to watch and invest. He insisted that investors should do a market watch so that they would be aware of the market fluctuations which help them to invest in growing companies that perform well in stocks as well as the market. He revealed that though there has been a major economic crisis almost every year, it remains true that patient investors have consistently made money in the equities market. He concluded that investing in the stock market should be an un-emotional endeavour and suggested that investors should own a stock if they believe it would perform well. SPECULATIVE CHARACTER OF INDIAN STOCK MARKET L.C.Gupta (1992) revealed the findings of his study that there is existence of wild speculation in the Indian stock market. The over speculative character of the Indian stock market is reflected in extremely high concentration of the market activity in a handful of shares to the neglect of the remaining shares and absolutely high trading velocities of the speculative counters. He opined that, short- term speculation, if excessive, could lead to "artificial price". An artificial price is one which is not justified by prospective earnings, dividends, financial strength and assets or which is brought about by speculators through rumours, manipulations, etc. He concluded that such artificial prices are bound to crash sometime or other as history has repeated and proved.
  40. 40. TURNAROUND STOCKS Yasaswy N.J. (1993) disclosed how 'turnaround stocks' offer big profits to bold investors and also the risks involved in investing in such stocks. Turnaround stocks are stocks with extraordinary potential and are relatively under priced at a given point of time. He also revealed that when the economy is in recession and the fundamentals are weak, the stock market, being a barometer of the economy, also tends to be depressed. A depressed stock market is an ideal hunting ground for 'bargain hunters', who are aggressive investors. Sooner or later recovery takes place which may take a very long time. He concluded that the investors' watch work is 'caution' as he may lose if the turnaround strategy does not work out as anticipated. FUTURES AS A TOOL TO COVER SHORT-TERM RISKS Sunil Damodar (1993) evaluated the 'Derivatives' especially the 'futures' as a tool for short-term risk control. He opined that derivatives have become an indispensable tool for finance managers whose prime objective is to manage or reduce the risk inherent in their portfolios. He disclosed that the over-riding feature of 'financial futures' in risk management is that these instruments tend to be most valuable when risk control is needed for a short- term, ie, for a year or less. They tend to be cheapest and easily available for protecting against or benefiting from short term price. Their low execution costs also make them very suitable for frequent and short term trading to manage risk, more effectively.
  41. 41. STOCK RISKS Yasaswy J.N. (1993) evaluated the quantum of risks involved in different types of stocks. Defensive stocks are low risk stocks and hence the returns are relatively low but steady. Cyclical stocks involve higher risks and hence the rewards are higher when compared to the growth stocks. Growth stocks belong to the medium risk category and they offer medium returns which are much better than defensive stocks, but less than the cyclical stocks. The market price of growth stocks does fluctuate, sometimes even violently during short periods of boom and bust. He emphasized the financial and organizational strength of growth stocks, which recover soon, though they may hit bad patches once in a way. RELATIONSHIP BETWEEN RISK, INVESTOR PREFERENCES AND INVESTOR BEHAVIOUR Donald E Fischer and Ronald J. Jordan(1994) analyzed the relation between risk, investor preferences and investor behaviour. The risk return measures on portfolios are the main determinants of an investor's attitude towards them. Most investors seek more return for additional risk assumed. The conservative investor requires large increase in return for assuming small increases in risk. The more aggressive investor will accept smaller increases in return for large increases in risk. They concluded that the psychology of the stock market is based on how investors form judgements about uncertain future events and how they react to these judgements.
  42. 42. DERIVATIVES R.Venkataramani (l994) disclosed the uses and dangers of derivatives. The derivative products can lead us to a dangerous position if its full implications are not clearly understood. Being off- balance shekt in nature, more and more derivative products are traded than the cash market products and they suffer heavily due to their sensitive nature. He brought to the notice of the investors the 'Over the counter product' (OTC) which are traded across the counters of a bank. OTC products (eg. Options and futures) are tailor made for the particular need of a customer and serve as a perfect hedge. He emphasized the use of futures as an instrument of hedge, for it is of low cost. IDENTIFICATION OF COMPANY TO INVEST K.Sivakumar (1994) disclosed new parameters that will help investors identify the best company to invest in. He opined that Economic Value Added (EVA) is more powerful than other conventional tools for investment decision making like EPS and price earning ratio. EVA looks at how capital raised by the company from all sources has been put to use. Higher the EVA, higher the returns to the shareholder. A company with a higher EVA is likely to show a higher increase in the market price of its shares. To be effective in comparing companies, he suggested that EVA per share (EVAPS) must be calculated. It indicates the super profit per share that is available to the investor. The higher the EVAPS, the higher is the likely appreciation in the value in future. He also revealed a startling result of EVA calculation of companies in which 200 companies show a negative value addition that includes some blue chip companies in the Indian Stock Market.
  43. 43. NEED FOR DOING FUNDAMENTAL ANALYSIS Pattabhi Ram.V (1995) emphasized the need for doing fundamental analysis and doing Equity Research (ER) before selecting shares for investment. He opined that the investor should look for value with a margin of safety in relation to price. The margin of safety is the gap between price and value. He revealed that the Indian stock market is an inefficient market because of the absence of good communication network, rampant price rigging, the absence of free and instantaneous flow of information, professional broking and so on. He concluded that in such inefficient market, equity research will produce better results as there will be frequent mismatch between price and value that provides opportunities to the long-term value oriented investor. INTERNATIONAL FACTORS OF RISKS AND THEIR EFFECT ON FINANCIAL MARKETS Philippe Jhorion and Sarkis Joseph Khoury (1996) reviewed international factors of risks and their effect on financial markets. He opined that domestic investment is a subset of the global asset allocation decision and that it is impossible to evaluate the risk of domestic securities without reference to international factors. Investors must be aware of factors driving stock prices and the interaction between movements in stock prices and exchange rates. According to them the financial markets have become very much volatile over the last decade due to the unpredictable speedy changes like oil price shocks, drive towards economic and monetary unification in Europe, the wide scale conversion of communist countries to free market policies etc. They emphasized the need for tightly controlled risk management measures to guard against the unpredictable behaviour of financial markets.
  44. 44. RISK MANAGEMENT IN RELATION TO BANKS S.Rajagopal. (1996) commented on risk management in relation to banks. He opined that good risk management is good banking. A professional approach to risk management will safeguard the interests of the banking institution in the long run. He described risk identification as an art of combining intuition with formal information and risk measurement is the estimation of the size, probability and timing of a potential loss under various scenarios. ESTIMATION OF RETURNS Charles.P.Jones (1996) reviewed how to estimate security return and risk. To estimate returns, the investors must estimate cash flows the securities are likely to provide. Also, investors must be able to quantify and measure risk using variance or standard deviation. Variance or standard deviation is the accepted measure of variability for both realised returns and expected returns. He suggested that the investors should use it as the situation dictates. He revealed that over the past 12 years, returns in stocks, bonds, etc. have been normal. Blue chip stocks have returned an average of more than 16% per year. He warned that the investors who believe that these rates will continue in the future also, will be in trouble. He also warned the investors not to allow themselves to become victimised by "investment gurus".
  45. 45. PROCESSES INVOLVED IN RISK MANAGEMENT V.T.Godse.(1996) revealed the two separate but simultaneous processes involved in risk management. The first process is determining risk profile and the second relates to the risk management process itself. Deciding risk profile is synonymous with drawing a risk picture and involves the following steps: 1. Identifying and prioritizing the inherent risks 2. Measuring and scoring inherent risks. 3. Establishing standards for each risk component 4. Evaluating and controlling the quality of managerial controls. 5. Developing risk tolerance levels. He opined that such an elaborate risk management process is relevant in the Indian context. The process would facilitate better understanding of risks and their management. PORTFOLIO DIVERSIFICATION Goetzmann and Kumar (2001) studied diversification in the light of demographic variables and found that investors who are non-professionals and have low income usually hold less diversified portfolios as they fail to do proper portfolio allocation. They revealed that sudden investment without a proper or half-knowledge is sure to bring potential losses to the investors. They concluded that diversified investment portfolio of an investor is based on the awareness level of the investor and the charges incurred then and there to trade in more than one portfolio at the same time.
  46. 46. 3.2 RESEARCH GAP The study analyzes the investment pattern of investors which is based upon various parameters like income of the investor, time horizon and the risk taking ability of the investor. Modern risk management techniques help the investors to a large extent by avoiding any further losses with the help of an intelligent guess and continuous market watch. It is very clear that the investors are risk averse. The study covers three risk management techniques, namely, (i) Switching, (ii) Cut-loss and (iii) Short selling. (i) Switching technique enables an investor to switch or move to a safer investment alternative if he/she comes to know that the market fluctuations are going to be a hard hit. In this case, an investor just switches his/her portfolio temporarily or permanently depending upon the market performance. (ii) Cut-loss technique assists an investor by procuring limited order at the time of market fluctuations. When the market is down, obviously investors do not place bulk orders but tend to sell out the orders-in-hand. (iii) Short selling is a brand new technique whereby an investor procrastinates any possible losses. This technique can be adopted only in intra-day trading whereby an investor can sell the equity shares in the first place, at ongoing price or market price. When their share price comes down, the investor can procure or buy them at a low price, which is a profitable transaction. Since the risk management techniques were not used by previous researchers, inclusion of the risk management techniques adopted by modern investors to avoid any proposed risks involved in investment, helped to overcome the flaws and hence the gaps in research have been filled up in this study.
  47. 47. CHAPTER – 4 RESEARCH METHODOLOGY
  48. 48. DEFINITION OF POPULATION The study is mainly related to know the investment pattern of the investors on different products of ICICI Securities. Their investment objective, frequency of investment and factors determining their investment decision has to be analyzed so as to reveal their investment framework. The population here was being investors in ICICI Securities particularly in Nanganallur area. TYPE OF RESEARCH This is a descriptive research where survey method is adopted to collect primary information from the investors using required scales and the required secondary information for the analysis. PRIMARY DATA A questionnaire schedule was prepared and the primary data was collected through survey method. SECONDARY DATA Secondary data has been obtained from client database provided by ICICI for the purpose of the study.
  49. 49. SAMPLE SIZE The population being large, the survey was carried among 150 respondents, all of them are the investors in ICICI Securities Ltd., Nanganallur. They will be considered adequate to represent the characteristics of the entire population of Nanganallur. SAMPLING PROCEDURE The sampling procedure followed in this study is non-probability convenient sampling. Simple random sampling procedures are used to select the respondent from the client database. The research work is carried out on the basis of structured questionnaire. The study is restricted to the investors in ICICI Securities particularly in Nanganallur area. TOOLS FOR DATA ANALYSIS The analysis of data collection is completed and presented systematically with the use of SPSS 16.0, MS-Excel and MS-Word. The various tools which were used to analyze data are:  Chi square test,  Two-way ANOVA and  Percentage analysis.
  50. 50. CHAPTER – 5 DATA ANALYSIS AND INTERPRETATION
  51. 51. Data analysis is a body of methods that help to describe facts, detect patterns, develop explanations, and test hypotheses. The data analysis is carried out using SPSS tool where the variables that are to be tested for independence is entered and results are identified. The various tests done by using Microsoft Excel and SPSS 16.0 are percentage analysis, chi-square test and two-way ANOVA. 5.1 PERCENTAGE ANALYSIS Percentage method refers to a specified kind which is used in making comparison between two or more series of data. Percentages are based on descriptive relationship. It compares the relative items. Since the percentage reduces everything to a common base and thereby allow meaning comparison. Percentage = Number of respondents X 100 Total no of respondents
  52. 52. Table 5.1.1: INVESTORS KNOWLEDGE OF FINANCE Parameter No. of respondents % of respondents An expert in the field of finance 40 26.67 Proficient in finance 46 30.67 No idea about finance but stay up-to-date 40 26.67 Limited to knowing things about stock market 24 16 Total 150 100 INFERENCE: From the table 5.1.1, it is inferred that out of 150 investors, 30.67% of investors have proficient knowledge in finance, 26.67% of investors are expert in finance, 26.67% of investors do not know much about finance and 16% of investors have limited knowledge about finance.
  53. 53. Fig 5.1.1: CHART SHOWING INVESTORS KNOWLEDGE OF FINANCE To conclude from above fig 5.1.1, many investors have proficient knowledge in finance.
  54. 54. Table 5.1.2: INVESTORS OBJECTIVE OF INVESTMENT Parameter No. of respondents % of respondents Wealth preservation 70 46.67 Purchase of home 40 26.67 Education funding 30 20 Retirement planning 10 6.66 Total 150 100 INFERENCE: From table 5.1.2, it is inferred that out of 150 investors, 46.67% of investors invest for wealth preservation, 26.67% of investors invest with the objective of buying a house, 20% of investors invest with the aim of education funding and 6.66% of investors invest for retirement planning.
  55. 55. Fig 5.1.2: CHART SHOWING INVESTORS OBJECTIVE OF INVESTMENT To conclude, many investors invest with the objective of preserving their wealth.
  56. 56. Table 5.1.3: INVESTORS RESPONSE TO MARKET FLUCTUATIONS Parameter No. of respondents % of respondents Yes 128 85.33 No 22 14.67 Total 150 100 INFERENCE: From the above table 5.1.3, it is inferred that out of 150 investors, 85.33% of investors do respond to the market fluctuations by altering their investment pattern and 14.67% of investors do not get affected even when there are market fluctuations.
  57. 57. Fig 5.1.3: CHART SHOWING INVESTORS RESPONSE TO MARKET FLUCTUATIONS To conclude, many investors alter their investment pattern when there are market fluctuations.
  58. 58. Table 5.1.4: INVESTMENT PORTFOLIO OF INVESTORS Parameter No. of respondents % of respondents Mutual funds 20 13.33 Equity 35 23.33 E-gold 45 30 Corporate debentures 18 12 IPOs 20 13.33 F&O 12 8 Total 150 100 INFERENCE: From the above table 5.1.4, it is inferred that out of 150 investors, 30% of investors have invested in E-Gold, 23.33% of investors have invested in Equity, 13.33 have invested in Mutual funds, 13.33 have invested in IPO’s, 12% of investors have invested in Corporate debentures and 8% of investors have invested in Futures & Options.
  59. 59. Fig 5.1.4: CHART SHOWING INVESTMENT PORTFOLIO OF INVESTORS To conclude, many investors have invested in E-Gold investment avenue, wherein they procure the value of gold in legal papers (or) paper gold.
  60. 60. Table 5.1.5: INVESTORS TENDENCY TO GET UPDATES FROM ICICI Parameter No. of respondents % of respondents Yes 143 95.33 No 7 4.67 Total 150 100 INFERENCE: From table 5.1.5, it is inferred that out of 150 investors, 95.33% of investors prefer to get updates from ICICI and 4.67% of investors are satisfied with existing services and do not prefer to get any updates from ICICI.
  61. 61. Fig 5.1.5: CHART SHOWING INVESTORS TENDENCY TO GET UPDATES FROM ICICI To conclude, many investors want to keep themselves updated about the services rendered by ICICI via different communication medium.
  62. 62. Table 5.1.6: INVESTORS NEED FOR PERSONALIZED INVESTMENT ADVISING Parameter No. of respondents % of respondents Yes 145 96.67 No 5 3.33 Total 150 100 INFERENCE: From the above table 5.1.6, it is inferred that out of 150 investors, 96.67% of investors prefer personalized investment advising from ICICI and 3.33% of investors invest with their own insights.
  63. 63. Fig 5.1.6: CHART SHOWING INVESTORS NEED FOR PERSONALIZED INVESTMENT ADVISING To conclude, many investors prefer personalized investment advising from ICICI by matching the available portfolio with their income, risk taking ability and time horizon.
  64. 64. Table 5.1.7: INVESTORS NEED FOR BRANCH ADVISORY SERVICES Parameter No. of respondents % of respondents Yes 100 66.67 No 50 33.33 Total 150 100 INFERENCE: From the above table 5.1.7, it is inferred that out of 150 investors, 66.67% of investors say that they get advice from ICICI and 33.33% of investors say that they do not get any advice from ICICI regarding their portfolio management.
  65. 65. Fig 5.1.7: CHART SHOWING INVESTORS NEED FOR BRANCH ADVISORY SERVICES To conclude, many investors get the advice from the Nanganallur ICICI branch regarding their investment and they feel that the extension of service helps them in cautious investment.
  66. 66. Table 5.1.8: SOURCE OF INVESTORS’ INVESTMENT IDEA Parameter No. of respondents % of respondents Self-awareness 57 38 Financial advisors 35 23.33 Brokers’ advice 20 13.33 Friends/relatives’ advice 20 13.33 Media 18 12 Total 150 100 INFERENCE: From the above table 5.1.8, it is inferred that out of 150 investors, 38% of investors are self-aware, 23.33% of investors got financial advice, 13.33% of investors got advice from the brokers, 13.33% of investors secured advice from their close associates and 12% of investors gained advice via media.
  67. 67. Fig 5.1.8: CHART SHOWING SOURCE OF INVESTORS’ INVESTMENT IDEA To conclude, many investors take investment decisions on their own and are self-aware about what is going on around them and the equity market as well.
  68. 68. Table 5.1.9: INVESTORS SAFETY AND SECURITY Parameter No. of respondents % of respondents Yes 145 96.67 No 5 3.33 Total 150 100 INFERENCE: From the above table 5.1.9, it is inferred that out of 150 investors, 96.67% of investors feel satisfied about the safety and security of their investment in ICICI and 3.33% of investors are unsatisfied about safety and security in ICICI.
  69. 69. Fig 5.1.9: CHART SHOWING INVESTORS SAFETY AND SECURITY To conclude, many investors are assured of their safety and security of their investment in ICICI securities.
  70. 70. Table 5.1.10: RATE OF BROKERAGE PAID BY INVESTORS Brokerage Rate (in %) No. of respondents % of respondents 0.05 120 80 0.55 30 20 Total 150 100 INFERENCE: From the above table 5.1.10, it is inferred that out of 150 investors, 80% of investors’ trade in intra-day and pay 0.05% brokerage and 20% of investors’ trade in delivery and pay 0.55% brokerage.
  71. 71. Fig 5.1.10: CHART SHOWING RATE OF BROKERAGE PAID BY INVESTORS To conclude, many investors are engaged in intra-day or daily trading and pay 0.05% of brokerage to ICICI.
  72. 72. Table 5.1.11: INVESTMENT TERM OF INVESTORS Parameter No. of respondents % of respondents Short term 84 56 Long term 48 32 Both 18 12 Total 150 100 INFERENCE: From the above table 5.1.11, it is inferred that out of 150 investors, 56% are short term investors, 32% are long term investors and the remaining 12% have invested in both short term and long term investment as well.
  73. 73. Fig 5.1.11: CHART SHOWING INVESTMENT TERM OF INVESTORS To conclude, many investors have invested in short term investments so as to get faster return on investment.
  74. 74. Table 5.1.12: INVESTORS’ FREQUENCY OF INVESTMENT Parameter No. of respondents % of respondents Daily 42 28 Weekly 28 18.66 Monthly 20 13.33 Quarterly 12 8 Half yearly 18 12 Annually 30 20 Total 150 100 INFERENCE: From the above table 5.1.12, it is inferred that out of 150 investors, 28% prefer daily investment, 20% prefer annual investment, 18.66% prefer weekly investment, 13.33% prefer monthly investment, 12% prefer half-yearly investment and 8% prefer quarterly investment.
  75. 75. Fig 5.1.12: CHART SHOWING INVESTORS’ FREQUENCY OF INVESTMENT To conclude, many investors prefer daily investment in the equity market.
  76. 76. Table 5.1.13: INVESTMENT DECISION OF INVESTORS Parameter No. of respondents % of respondents Risk involved 40 26.67 Return on investment 25 16.66 Past performance 15 10 Future Growth 55 36.67 Other factors 15 10 Total 150 100 INFERENCE: From the above table 5.1.13, it is inferred that out of 150 investors, 36.67% of investors expect future growth of their investment, 26.67% of investors invest based on risk factor, 16.66% of investors expect return on their investment, 10% of investors
  77. 77. invest based on their past performance and 10% of investors invest based on miscellaneous factors like gaining firsthand experience in investment. Fig 5.1.13: CHART SHOWING INVESTMENT DECISION OF INVESTORS
  78. 78. To conclude, many investors invest in the equity market with the hope of growth of their investment in the future. Table 5.1.14: TENDENCY OF INVESTORS TO SHIFT TO A SAFER INVESTMENT PATTERN WHEN THE MARKET FLUCTUATES Parameter No. of respondents % of respondents I disagree 10 6.67 I somewhat agree 54 36 I agree 86 57.33 Total 150 100 INFERENCE:
  79. 79. From the above table 5.1.14, it is inferred that out of 150 investors, 57.33% agree to sell their risky investments and put the money in safer investments, 36% somewhat agree to sell their risky investments and put the money in safer investments and 6.67% totally disagree to sell their risky investments. Fig 5.1.14: CHART SHOWING TENDENCY OF INVESTORS TO SHIFT TO A SAFER INVESTMENT PATTERN WHEN THE MARKET FLUCTUATES
  80. 80. To conclude, many investors are risk averse and tend to sell their risky investments and put the money in safer investments. Table 5.1.15: INVESTORS TOLERANCE OF SHORT TERM FLUCTUATIONS FOR POTENTIAL LONG-TERM GAINS Parameter No. of respondents % of respondents Strongly agree 15 10 Agree 27 18 Disagree 53 35.33 Strongly Disagree 55 36.67 Total 150 100 INFERENCE: From the above table 5.1.15, it is inferred that out of 150 investors, 36.67% strongly disagree to tolerate sharp ups and downs in the short-term value of their investments in return for potential long-term gains, 35.33% disagree to tolerate sharp ups and downs in the short-term value of their investments, 18% agree to tolerate sharp
  81. 81. ups and downs in the short-term value of their investments, 10% strongly agree to tolerate sharp ups and downs in the short-term value of their investments. Fig 5.1.15: CHART SHOWING INVESTORS TOLERANCE OF SHORT TERM FLUCTUATIONS FOR POTENTIAL LONG-TERM GAINS To conclude, many investors strongly disagree to tolerate sharp ups and downs in the short-term value of their investments in return for potential long-term gains.
  82. 82. Table 5.1.16: RISK MANAGEMENT TECHNIQUE ADOPTED BY INVESTORS Parameter No. of respondents % of respondents Switching 52 34.67 Cut-loss 74 49.33 Short-selling 24 16 Total 150 100 INFERENCE: From the above table 5.1.16, it is inferred that out of 150 investors, 49.33% of investors follow cut-loss technique to manage their risk, 34.67% of investors follow
  83. 83. switching technique to manage their risk and remaining 16% of investors follow short selling investment technique to manage their risk. Fig 5.1.16: CHART SHOWING RISK MANAGEMENT TECHNIQUE ADOPTED BY INVESTORS
  84. 84. To conclude, many investors follow cut-loss technique to manage their risk, so that they can at least minimize the proposed losses by procuring limited stocks by watching the market. Table 5.1.17: INVESTORS SATISFACTION LEVEL OF SERVICES OFFERED BY ICICI Parameter No. of respondents % of respondents Highly satisfied 78 52 Satisfied 32 21.33 Dissatisfied 26 17.33 Highly dissatisfied 14 9.33 Total 150 100 INFERENCE: From the above table 5.1.17, it is inferred that out of 150 investors, 52% of investors are highly satisfied with the services offered by ICICI Securities, 21% of
  85. 85. investors are just satisfied, 17.33% of investors are dissatisfied, 9.33% of investors are highly dissatisfied with the services offered by ICICI Securities. Fig 5.1.17: CHART SHOWING INVESTORS SATISFACTION LEVEL OF SERVICES OFFERED BY ICICI
  86. 86. To conclude, many investors are highly satisfied with the services offered by ICICI Securities. Table 5.1.18: MODE OF INVESTMENT MADE BY THE INVESTORS Parameter No. of respondents % of respondents Online trading 127 84.67 Brokers 15 10 Both 8 5.33 Total 150 100 INFERENCE:
  87. 87. From the above table 4.1.18, it is inferred that out of 150 investors, 84.67% of investors do online trading, 10% of investors do trading through brokers and 5.33% of investors do both online and offline trading. Fig 5.1.18: CHART SHOWING MODE OF INVESTMENT MADE BY THE INVESTORS
  88. 88. To conclude, many investors are engaged in online trading and trade by themselves or by relationship managers who does market watch and assist the investors, regarding profitable companies to invest. 5.2 CHI-SQUARE TEST The Chi square test procedure tabulates a variable into categories and computes Pearson chi-square statistic. This goodness-of fit test compares the observed and expected frequencies in each category to test that all categories contain the same proportion of values or test that each category contains a user-specified proportion of values. It is a statistical method to test whether two variables are independent or homogeneous. The chi-square test for independence examines whether knowing the value of one variable helps to estimate the value of another variable. The chi-square test for homogeneity examines whether two populations have the same proportion of observations with a common characteristic. HYPOTHESIS: Null hypothesis (H0): There is no significant difference between the investment decision of investors and frequency of investment made by the investor. Alternate hypothesis (H1): There is significant difference between the investment decision of investors and the frequency of investment made by the investor.
  89. 89. Table 5.2.1: TABLE SHOWING CROSS-TABULATION BETWEEN INVESTMENT_DECISION VARIABLE AND FREQUENCY_OF _INVESTMENT VARIABLE Table 5.2.2: TABLE SHOWING PEARSON CHI-SQUARE INFERENCE:
  90. 90. Since p<1.20, we reject the null hypothesis in favor of the alternative hypothesis. Hence, there is significant difference between the investment decision of investors and the frequency of investment made by the investors. 5.3 TWO-WAY ANOVA The two-way ANOVA compares the mean differences between groups that have been split on two independent variables (called factors). The primary purpose of a two-way ANOVA is to understand if there is an interaction between the two independent variables on the dependent variable. The two-way analysis of variance (ANOVA) test is an extension of the one-way ANOVA test that examines the influence of different categorical independent variables on one dependent variable. While the one-way ANOVA measures the significant effect of one independent variable, the two-way ANOVA is used when there are more than one independent variable and multiple observations for each independent variable. The two-way ANOVA can not only determine the main effect of contributions of each independent variable but also identifies if there is a significant interaction effect between the independent variables. HYPOTHESIS: Null hypothesis (H0): The rate of brokerage paid by investors is independent from primary investment objective.
  91. 91. Alternate hypothesis (H1): The rate of brokerage paid by investors is associated with the type of investment portfolio of investor. Table 5.3.1: TABLE SHOWING DESCRIPTIVE STATISTICS OF INDEPENDENT VARIABLES TYPE_OF_INVESTMENT_AVENUE & PRIMARY_INVESTMENT_OBJECTIVE OVER DEPENDENT VARIABLE CURRENT_BROKERAGE
  92. 92. The above table 5.3.1 provides the mean and standard deviation for each combination of the groups of the independent variables type_of_investment_avenue & primary_investment_objective. In addition, the table provides "Total" rows, which allows means and standard deviations for groups only split by one independent variable. The plot of the mean “current brokerage” score for each combination of groups of "primary objective of investment" and "type of investment avenue" are plotted in a line graph, as shown below: Fig 5.3.1: LINE-GRAPH SHOWING PLOT OF THE MEAN CURRENT_BROKERAGE
  93. 93. STATISTICAL SIGNIFICANCE OF THE TWO-WAY ANOVA Table 5.3.2: TABLE SHOWING TWO-WAY ANOVA INFERENCE: The above table 5.3.2 reveals that there is significant difference between mean “current brokerage” and “primary investment objective” but there is no significant difference between mean “current brokerage” and “type of investment avenue” (p < .0005). Hence we reject null hypothesis in favor of alternate hypothesis. So, the rate of brokerage paid by investors is associated with the type of investment portfolio of investor.
  94. 94. CHAPTER – 6 FINDINGS, SUGGESTIONS AND CONCLUSION
  95. 95. FINDINGS  The investment pattern of the investors’ depends upon their level of income, frequency of investment, their investment portfolio, their risk taking ability and their investment decision.  Many investors are engaged in intra-day or daily trading which is a short-term investment and pay 0.05% of brokerage to ICICI.  Many investors take investment decisions on their own and are self-aware about what is going on around them and the equity market as well.  Future growth of investment and risk involved are the deciding factors of investment by the investors.  Return on investment and financial advisory services are the two important factors for those investors who have invested in equity market.  Many investors have invested in E-Gold investment avenue, wherein they procure the value of gold in electronic form.  Many investors follow cut-loss technique to manage their risk, so as to minimize any proposed losses by procuring limited stocks by watching the market movement.  Many investors alter their investment pattern by selling their risky investments and putting the money in safer investments when there are market fluctuations.
  96. 96. SUGGESTIONS  It is recommended that investors’ decision should be based on the broker’s advice.  Risk and return should be evaluated before taking an investment decision.  There should be regular updates from ICICI to the investors via sms updates as it will help them to invest with a caution.  Investors who want to avoid risk should invest in treasury notes or high-rated municipal bonds, debentures etc.  A periodic client meet can be organized and conducted so that different investors get to know others and can secure better ideas, share smart investment techniques and get benefitted by the company.  Since the investors expect trading in commodities, ICICI can venture into commodity trading and diversify its business.  As investors’ decision is based on the study of different sources, ICICI can go for T.V commercials so as to attract interest of potential investors.  Since some of the investors’ portfolio is diversified, there is a huge scope for ICICI to venture into new services and broaden the portfolio of other investors.  ICICI Securities can expand its business by setting up new branches where they have high volume of clients.
  97. 97. CONCLUSION The study is conducted among the investors in ICICI Securities, particularly in Nanganallur area. The investment pattern of investors’ are driven by various factors like type of investment avenue preferred by the investor, risk taking ability of the investor, time horizon preferred by investor to claim his/her return on investment, frequency of investment, etc. The study shows how different factors have an impact on the framework of investment made by the investor. However it is very difficult to come to a definite conclusion that how does the pattern of investment differs from one investor to that of another investor. But still the study concludes to an extent that investors’ alter their investment pattern by selling their risky investments and putting the money in safer investments in particular investment product like e-gold, which has gained increasing popularity due to low risk involved and sequentially comes equity product, mutual funds, and other investment avenues which has performed well in the past, and supported with strong demands will perform well in the future. Indian economy has not yet reached up to the mark in world equity market as majority of the investment even in Indian equity market comes from foreign direct investment. On a scale of 100 percent, only 2 percent of the total Indian population of 1.2 billion (as of December 2013) is engaged in equity market. Out of the 2 percent, only 1.8 percent of the investors are active traders, rest of them are dormant traders. The study also draws an important conclusion that the investors are keen to invest in short term and less risky products and are very much interested in future growth of their investments. Investors are aware about the factors affecting their short term as well as long term investment plans and they do self-analysis before making investment.
  98. 98. SCOPE FOR FURTHER RESEARCH The study is conducted by taking a limited number of sample size of 150 investors, which is stated earlier. This study reflects the impact of various factors that determine the investment pattern of investors who are residing in Nanganallur. Investment is a wider concept. So the study can expand the number of investors who are into equity market and the geographical area of the respondents governing the study can also be expanded. There might be a chance that the response of the investors’ of different nature are varied due to diversity in social life, living pattern, income level, etc that needs to be studied further. The Indian equity market is not up to the mark when compared to world market. This is because of the blind spots present in equity market. Many notable experts say that it would take at least a year to get a clear view of the equity market. The risk proportion is a notable parameter when a person decides before investing. So in the future, the scope of the study needs to be briefed according to the requirements of the investor. Nowadays many housewives spend their spare time by buying and selling securities without any assistance or advice. This lands them in trouble by causing a dent in their wallet. In the future, the study can cover investors who invest from home. Many experts say that investors even fail to a pilot study about the performance of the company where they invest in. As a result they do not watch the market situation. This leads them to buy the securities at a higher price and sell the securities at a lower price, which is a huge loss. So the study needs to cover vital aspects of investment like market watch, smart investment techniques, systematic investment planning, etc.
  99. 99. REFERENCES 1) Grewal and Navjot Grewal, “Profitable Investment in shares”, Vision Books Pvt. Ltd., Connaught Place, New Delhi 2011, Pg. 36-42. 2) Preethi Singh, “Investment Management”, Himalaya Publishing House, New Delhi, 2006, Pg. 48-54. 3) Website: http://financenmoney.in/category/personal-financeinvestment-planning 4) “An Introduction To The Indian Stock Market”, http:/investopedia.com/articles/stocks/09/indian-stock-market.asp, last accessed on 27th December, 2013.
  100. 100. APPENDIX QUESTIONNAIRE • Name: ___________________________ • Contact No/E-mail id: ____________________________ 1) Age Less than 20 20-30 31-40 41-60 More than 60 2) Educational level PUC Graduate Post-Graduate Professional Others ………………. 3) Occupation Government employee Private Sector employee Self-Employed Retired Others…………………. 4) Annual income (in INR) Less than 1 lakh 1-2 lakhs 2-3.5 lakhs 3.5-5 lakhs More than 5 lakhs
  101. 101. 5) Annual investments (in INR) Less than 25,000 25,000-50,000 50,001-1,00,000 1,00,001-2,00,000 2,00,001 & above 6) How good is your knowledge of finance? An expert in the field of finance Proficient in finance Don't know much about finance but I keep myself up-to-date Limited to knowing things like how the stock market is moving 7) What is your primary objective for accumulating assets? Wealth preservation Purchase of a home Education funding Retirement planning 8) Do you invest/ trade online? Yes No 9) If Yes, you invest through: Online trading Brokers Both
  102. 102. 10) If you are dealing through brokers (on phone), do you want to trade/ invest online? Yes No 11) In which of the following investment avenues have you invested? Mutual Funds Equity E-Gold Corporate Debenture IPOs F&O 11) State the reason behind the choice of your investment options Self-awareness Financial Advisors Broker’s Advice Friends’/Relatives’ Advice Media 12) What is the current brokerage that you pay? Intraday____% Delivery____% Futures_____% Options____%
  103. 103. 13) Are you a short term or a long term investor? Short term Long term Both 14) What is your frequency of investments? Daily Weekly Monthly Quarterly Half-yearly Annually 15) Your investment decision is depending on? Risk involved Return on Investment Past performance Future Growth Other factors……………. 16) Market movement affects your investment pattern? Yes No
  104. 104. 17) When the market goes down, I tend to sell some of my riskier investments and put the money in safer investments. I disagree I somewhat agree I agree 18) I can tolerate sharp ups and downs in the short-term value of my investments in return for potential long-term gains Strongly Agree Agree Disagree Strongly Disagree 19) Which of the following risk management technique you use mostly? Switching Cut-loss Short-selling 20) Do you expect to get regular updates about various Investment options from your Bank? Yes No
  105. 105. 21) Do you want personalized Investment advising at your branch/ city? Yes No 22) At present, is your branch advising you on your Investment Portfolio Management? Yes No 23) How satisfied are you with the services offered by ICICI Securities? Highly satisfied Satisfied Dissatisfied Highly Dissatisfied 24) How satisfied are you with safety and security of ICICI Securities? Yes No 25) What kind of new product/service would you want to add to your current portfolio from ICICI Securities? _____________________________ 26) Do you have any suggestions to make ICICI Direct product/service better? ……………………………………………………………………………………………… ………………………………………………………………………………………………

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