“INVESTOR PREFERENCES & PERCEPTIONS ONTrading inEQUITY SECONDARY MARKET”

June 05, 2013 – July 31, 2013
SHERYLL MENEZES
SAL Institute of Management

DESCRIPTION:
Sujish Broking is a remisier (broking organisation) providing services in Equity, Commodity & Currency
Segments.
It is one of the fastest growing organisations providing various kind of services which are tailor-made according
to the requirements of various classes of traders, investors & speculators.
GENERAL INFORMATION:
Sujish Broking & Integrated Financial Services offers the perfect blend of financial services right from Equity,
Commodity & Currency Broking, Research, Investment Advisory, Portfolio Management Services and Equity &
Commodity Advisory services which covers almost all the major areas of the financial markets.
We offer our tech-savvy customers an integrated and innovative platform to trade online as well as offline at no
extra cost.

 Equity Derivatives:
Invest/Trade in Share Markets(NSE, BSE, Futures & Options)
 Commodity Derivatives:
Trade in various commodities like Gold, Silver, Crude Oil, Copper, Jeera, Castor Seeds, etc. (MCX & NCDEX)
 Currency Derivatives:
Trade in various currencies like EURO-INR, USD-INR, JPY-INR etc. (MCX-SX)
 E-Broking:
Trade Online/Offline
 Portfolio Management Services:
Our team of Experts will manage and help you grow your funds.
 Investment Advisory & Trading Calls:
Free for all clients
 Investment in IPOs & other financial instruments:
Free for all clients
 Other allied financial services

Tasks Undertaken:
• Marketing Related Tasks:
The main activity carried out was creating leads of prospective & interested clients for the
organization so that the more experienced Sales team could use resources efficiently & invest time
where success rate would be high.
o One-on-one interaction with the customers
o Preparing daily report
o Potential customer list preparation
o Follow-up
• Manual Tasks:
o Filing, handling documents & parcels
o Scanning the documents along with receiving & sending mail
o Transferring phone calls to the needed person
o Customer dealing
o Data entry

Qualities Learnt During The Internship:
 Optimum use of resources
 Time management
 Coordination
 Co-operation
 Planning
 Professionalism
 Clear & concise communication
 Proper filing and indexing
 Dealing with customers
 Discipline
 Punctuality

The major problems faced at the organization are as follows:
 Understanding the complex industry
 Notion by insiders that all aspects of the industry are well known by all
 Time management: Managing internship & college responsibilities
 Communication barrier
 Approaching new people
 Getting new clients at a time when the Rupee is falling & market scenario is gloomy
 The organization needs to grow & catch momentum to be a major player

RESEARCH:
The research has been done to compare and find out
the present and the future scenario of broking. If we observe, in the
past, people used to take help of agents to find out the market
situation but now we can access online; it’s quite convenient and
easy.
PROBLEM STATEMENT:
Trying to discover & understand the rationale between
the investor’s preferences & perception about the Financial
Market(Equity) & identify the reasons thereby.
RESEARCH OBJECTIVE:
The main aim of any research is to extend knowledge
in the specified field by the application & employment of useful
activities & tools, in this case the instrument of research: structured
formatted questionnaires, & processes. The purpose of this research
is to uncover the answers to questions through the application of
scientific procedures. The main questions remain:
 To find the preferences of investors
 To discover the perceptions of investors
 To identify potential customers
 To recognize the behavior & views
 To relate the rationale with market behaviour
RESEARCH DESIGN:
The research design is descriptive because it covers all
the aspects & is very descriptive.
SAMPLE DESIGN:
Here non-probability sample is taken as random.
DATA COLLECTION:
There are two types of data collection
 Primary
 Secondary
Primary data is used in form of questionnaire. Websites
& brochures have been used for the secondary part.
MODE OF DATA COLLECTION:
Type of sampling: Non-probability convenience based
Sample universe: Ahmedabad City
Size of sample: 100
Instrument of Research: Structured Formatted Questionnaires

PART 1: SOCIO-ECONOMIC PROFILE
1.1) Age:
1.2) Gender:
1.3) Years of schooling:
1.4) Primary Occupation:
1.5) Annual Income:
PART 2: INVESTMENT PROFILE AND PATTERN
2.1) Do you invest in equity?
2.2) If no, what are the reasons?
2.2) On what source of information you apply in the
primary market (IPO)? [multiple selections possible]
 Newspaper advertisement
 Application form/abridged prospectus
 Advice of broker
 Advice of friend/relative
 Brokerage firm
 Discussion in television channels
PART 3: INVESTMENT PREFERENCES & RISK
RETURN PERCEPTIONS
3.1) Which alternatives do you adopt on regular basis?
 Investment: Debentures; Bonds; IPO;
Secondary Market; Mutual Fund; Derivative
 Savings: Post Office, Life Insurance,
Pension Schemes, Scheduled Banks
 Others: Real Estate, Gold/Silver, Others
3.2) From the following, which is your preferred
alternative?
 Bonds
 Debentures
 IPOs
 Secondary Market
 Mutual Funds
 Derivatives
3.3) Primary source of information when applying for
IPOs.
 Newspaper; Application Form;
 Advice of Broker;
 Advice of Friend/Relative;
 Brokerage firm
 Discussions on TV.
QUESTIONNAIRE – Specimen of Survey Instrument (Interview Schedule)
PART 4: FACTORS INVOLVED IN
INVESTMENT EVALUATION AND DECISION
4.1) What is the main factor, which influenced your
decision to invest in a particular firm? [multiple
selections possible]
 Suggestion/tip from friend/colleague
 Opinion of analysts in the print media
 Opinion of experts on the visual media
like television
 Research reports in
newspapers/magazines
 Research reports on stock market related
websites
 Advice of broker/investment advisor

40.89%
50.15%
8.96%
Young
Middle
Old
As can be seen from the pie-chart, majority of the investment in the equity
securities market of equity shares is done by people falling in the young and
middle-aged category. Old aged people tend to invest less in equity shares.
GRAPHICAL REPRESENTATION
FINDINGS
SUGGESTIONS
None
CONCLUSION
As majority of the population in India fall in the young & middle-aged
category, it doesn’t seem to be an issue for the future of the secondary market.
AGE GROUP %
Young category 40.89%
Middle-aged 50.15%
Old-aged 8.96%
AGE GROUP MEANING
Young <=40 years in age
Middle Between 41 years & 60 years
Old > 60 years in age
VARIABLE DESCRIPTION

Males are the major players in the equity securities market with 94.77% share
of the participants. Female participation is quite negligible with just 5.23% of
the total volumes.
GRAPHICAL REPRESENTATION FINDINGS
SUGGESTIONS
Incentives could be given by government specifically to females to motivate
them to raise their role in the secondary market. For e.g. specific exemptions &
deductions in the income-tax act in respect of Capital Gains would be a good
catalyst, provided their male counterparts don’t use the same to circumvent
taxes. Also, financial services meeting the specific needs of females could be
focussed upon.
CONCLUSIONS
A huge potential for the mobilisation of the financial resources of the females is
available, in case they have resources at their disposal. A higher participation
on part of the females
GENDER %
Male 94.77%
Female 05.23%
94.77%
5.23%
Male
Female

2.11%
9.18%
59.93%
28.78%
Up to 5
6 to 10
11 to 15
Above 15
Respondents with higher education invest relatively more widely in this option.
Those with education of 11-15 years claim 59.93% & above 15 years are
28.78% & the most active participants in this category.
FINDINGS
SUGGESTIONS
SEBI, the regulator should take steps to make the trading in the securities
market simpler. Generation of more awareness so that people with lesser
education too take part actively.
CONCLUSIONS
NCLUSION
There seems to be a positive correlation between the education of a person
and participation in the equity securities market. Education has a direct bearing
on the investment in the securities market. Also, as our nation develops &
urbanisation spreads, there will be further penetration of schooling.
YEARS OF SCHOOLING %
Up to 5 02.11%
6 to 10 09.18%
11 to 15 59.93%
Above 15 28.78%

4.37%
13.12%
22.22%
25.44%
34.85% Up to 10000
10001 to 15000
15001 to 20000
20001 to 25000
Above 25000
Here the highest share belongs to those falling in the stratum of highest
income i.e. above Rs.25000 followed by Rs.20001-25000 & so on.
FINDINGS
SUGGESTIONS
None
CONCLUSIONS
Here too, there seems to be a positive correlation between the income of a
person & his participation in the equity securities market. This situation is likely
to exist unless there is rise in the disposal income of the people backed by
awareness amongst the investors.
INCOME %
Up to 10000 04.37%
10001 to 15000 13.12%
15001 to 20000 22.22%
20001 to 25000 25.44%
Above 25000 34.85%

Majority of the respondents(95.59%) do not invest in securities market & only
4.41% of the sample size invests in equity avenue. However many(around
8.56%) of the population opt the Mutual Fund route. Many of the people are
not regular followers or frequent investors in the equity securities market.
4.41%
95.59%
Investor
Non-Investor
GRAPHICAL REPRESENTATION FINDINGS
SUGGESTIONS
Creating awareness should be the primary focus followed by making trade in
shares simpler for the common man. Further, incentives should be given to
people to encourage them to invest in equity shares.
CONCLUSIONS
Investing in shares is not a popular option with the common man. The gap of
market share between the two segments is huge; though some portion of the
non-investor also includes investments Mutual Funds which is routed into
equity market. However, the overall market share still is quite low.
RESPONDENT TYPE %
Investor 04.41%
Non-investor 95.59%

The biggest factors are inadequate financial resources, inadequate information
& no skills. Very few respondents feel that the returns from equity are
inadequate.
4.17%
12.17%
5.74%
24.46%
15.97%
6.96%
30.00%
Inadequate returns
Not sure about safety of
investments
Investment not very
liquid
Inadequate information
No skills
Dissatisfied with role of
regulator
Inadequate financial
resources
SUGGESTIONS
A significant source of retardation in the rate of participation by Indian
households in markets is due to information asymmetry and poor quality of
information. When we examine the controllable reasons for not participating in
markets we find that (in descending order) they are inadequate
information, lack of skills and uncertainty about safety of returns. It is evident
that SEBI could take additional steps to impart skills, reduce the information
asymmetry at the time of participation and put in place more water-tight
measures to guarantee the safety of returns.
Reasons %
Inadequate returns 04.17%
Not sure about safety of investments 12.17%
Investments not very liquid 05.74%
Inadequate information 24.46%
No skills 15.97%
Dissatisfied with the role of regulator 06.96%
Inadequate financial resources 30.00%
FINDINGS
CONCLUSIONS
A lot of factors which are controllable like no inadequate information, no
skills, not sure about the safety of investments lead to non-participation though
these can be strategically tackled over a period of time by SEBI.

Newspaper plays the biggest role in informing people about upcoming IPOs
followed by application form & advice of Broker. There is nothing surprising
with the findings that most market participants are only moderately satisfied
with the information provided by regulators and, in fact, find information from
intermediaries such as brokers more useful.
48.44%
23.70%
20.17%
5.82%
1.35% 0.52%
Newspaper
Application Form
Advice of Broker
Advice of Friend/Relative
Brokerage Firm
Discussions on TV
Information asymmetry and the poor quality of information is the source of
retardation in the rate of participation by potential investors. While applying for
an IPO, investors across all income/education categories list newspapers as
the single source of information. A significant number of investors find the
advice of brokers more useful.
Based on the findings of the survey, it is my opinion that the source of
retardation in the rate of participation by Indian households in the market is
due to both information asymmetry as well as the poor quality of information.
This ought to be of serious significant concern for the regulator since both
current and potential market participants are basing their judgment on
inadequate source of information. SEBI must undertake to fine-tune the
investor camps so that households avoid their unreliable sources of
information.
SOURCE OF INFORMATION %
Newspaper 48.44%
Application Form 23.70%
Advice of Broker 20.17%
Advice of Friend/Relative 5.82%
Brokerage Firm 1.35%
Discussions on TV 0.52%
SUGGESTIONS
FINDINGS
s
CONCLUSIONS

45.99%
19.56%
17.28%
6.40%
2.54%
8.23%
Tip from friend
Opinion of analysis in
print media
Opinion of experts on TV
Research reports in
newspaper/magazines
Research reports in
stock market related
websites
Advice of broker
FACTORS AFFECTING DECISIONS %
Tip from friend 45.99%
Opinion of analysis in print media 19.56%
Opinion of experts on TV 17.28%
Research reports in newspaper/magazines 06.40%
Research reports in stock related websites 02.54%
Advice of Broker 08.23%
Word of mouth seems to be the biggest factor influencing an investor’s
decision. There might be no backing, reliability or credibility about the original
source of information.
SEBI could take steps to create awareness among investors about reliable
sources of information. Also, it could educate people to not take rash decisions
based on word of mouth & rumours. Also, long-term investments should be
encouraged by the government & SEBI to curb speculations; the lower rate of
tax on LTCG i.e. Long Term Capital Gains is an example of it.
SUGGESTIONS
FINDINGS
CONCLUSIONS
Rumours & perceptions are have a significant impact on the decisions taken.
This leads to people making sub-optimal investments based on unfound tips &
leads.

21.00%
46.00%
33.00%
Investors
Savers
Others
CATEGORY OF RESPONDENT %
Investors(Bonds, Debentures, IPOs, Secondary Market, Mutual Funds,
Derivatives, etc.)
21.00%
Savers(Post Office, LIC, Pension Schemes, Scheduled Banks, etc.) 46.00%
Others(Real Estate, Gold, etc.) 33.00%
The market is fairly split among savers, investors and others. The risk-free or
less risky securities attract more investors
SUGGESTIONS
It is imperative that SEBI should take drastic measures to create awareness
about reliable information sources. This will help prevent market participants
from making sub-optimal choices as well as reduce existing institutional
bottlenecks. Quality and source of information significantly influence extent of
participation in financial markets.
This state is likely to sustain & prevail because of the diverse profiles of the
people and their diverse needs.
FINDINGS
CONCLUSIONS
INVESTMENT ALTERNATIVES RETURN
RANK
RISK
RANK
LIQUIDITY
RANK
Investors(Bonds, Debentures, IPOs, Secondary
Market, Mutual Funds, Derivatives, etc.)
2 3 1
Savers(Post Office, LIC, Pension Schemes,
Scheduled Banks, etc.)
3 1 2
Others(Real Estate, Gold, etc.) 1 2 3

15.07%
8.57%
8.47%
21.25%
40.80%
5.85%
Bonds
Debentures
IPOs
Secondary Market
Mutual Funds
Derivatives
 Encouraging & creating awareness about the trading
 Greater participation by SEBI & NSE/BSE as an information base to the
investorsPREFERRED INVESTMENT OPTIONS %
Bonds 15.07%
Debentures 08.57%
IPOs 08.47%
Secondary Market(Equity) 21.25%
Mutual Funds 40.80%
Derivatives (Futures & Options) 05.85%
The strong preference of investors is towards Mutual Funds(40.80%) and
Secondary Markets(21.25%). Though equity might be ranked 2nd, still it
accounts for just 21.25% direct investments indicating majority investors do not
prefer to invest directly in equity securities. Other alternatives like Derivatives,
Debentures & IPOs are not a popular option with the investors.
FINDINGS
SUGGESTIONS
CONCLUSIONS
With the benefits that Mutual Funds offer, people tend to invest in it to have a
more balanced portfolio & better monitoring by experts rather than trying their
hand on direct investment. The players that shall remain will be the big players
e.g. Qualified Institutional Buyers & speculators.

Both the SEBI(7.04%) and BSE/NSE(5.27%) websites are performing only a
marginal role in providing information. At present the preferred source of
information are indeed the print media(28.00%), friends(22.01%) and
brokers(12.20%). Interestingly, we find that the source of information is based
on the print media, a stock market website or advice from brokers, but a
significant constraint seems to be inadequate information about choices
available in the market.
7.04%
5.27%
5.95%
28.00%
7.15%
12.39%
22.01%
12.20%
SEBI website
BSE or NSE website
Concerned company
website
Print media
TV Channel
Direct communications
with company
Friends
Brokers
 This implies that a participant who is likely to base his/her investment
decision on informal sources of information is likely to make sub-optimal
choices in the market place.
 Inadequate information is a significant constraint & also leads in investors
not opting to invest in the secondary market.
SUGGESTIONS
Given that most investors use such informal sources, it is imperative that SEBI
should take drastic measures to create awareness about reliable information
sources. This will help prevent market participants from making sub-optimal
choices as well as reduce existing institutional bottlenecks. Quality and source
of information significantly influence extent of participation in financial markets.
The survey indicated that there is much to be done to provide the current and
potential participants with optimal levels of information.
MOST PREFERRED SOURCE OF INFORMATION %
SEBI website 07.04%
BSE or NSE website 05.27%
Concerned company website 05.95%
Print media 28.00%
TV channel 07.15%
Direct communications with the company 12.39%
Friends 22.01%
Brokers 12.20%
CONCLUSIONS
FINDINGS

“INVESTOR PREFERENCES & PERCEPTIONS ONTrading inEQUITY SECONDARY MARKET”

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