Institute of Management

Studies
Indore (D.A.V.V)

SUMMER TRAINING PROJECT

July 2009

“Perception of people towards

investment and various investment
avenues”

ASHISH KUMRAWAT
MBA (FT)
IMS, DAVV

DECLARATION

I, ASHISH KUMRAWAT, student of MBA (FT) from

INSTITUTE OF MANAGEMENT STUDIES, D.A.VV hereby

declare that I have completed this project on " Perception

of people towards investment and various

investment avenues” in the academic year 2008-09. The

information submitted is true and original to the best of

knowledge.

Signature of student
 ACKNOWLEDGEMENT

The most pleasant part of any project is to express

gratitude and bestow honor towards all those who directly or
indirectly contributed to the smooth flow of the project work
and this being the good opportunity; I don’t want to miss it.

Sincere acknowledgement is due foremost to the MR.

AKLANK JAIN, ASM-RELIGARE SECURITIES LTD. Who
endowed me with the valuable opportunity to explore so
interesting and a critical topic as is the subject of the present
report.

I thank my mentor Mr. O.P Gupta for his valuable

inputs in the research and spending so much of valuable
time and effort in helping with my topic.

I also wish to express sincere gratitude to all the

respondents of the project without the kind of co-operation
of whom this work would not have been possible.

Ashis
h Kumrawat
 CONTENTS

• Introduction

• Investment

• Investment need of an investor

• Investment options in India

• Research Methodology

• Data Analysis and Interpretation

• Suggestions and Recommendations

• Conclusion

• Bibliography
 Appendix: Questionnaire

INTRODUCTION
Savings form an important part of the economy of any nation. With
the savings invested in various options available to the people, the money
acts as the driver for growth of the country. Indian financial scene too
presents a plethora of avenues to the investors. Though certainly not the
best or deepest of markets in the world, it has reasonable options for an
ordinary man to invest his savings.
Investment benefits both economy and the society. It is an outgrowth of
economic development and the maturation of modern capitalism. For the
economy as a whole, aggregate investment sanctioned in the current period
is a major factor in determining aggregate demand and, hence, the level of
employment. In the long term, current investment determines the
economy’s future productive capacity and, ultimately, a growth in the
standard of living. By increasing personal wealth, investing can contribute
to higher overall economic growth and prosperity. The process of investing
helps to create financial markets where companies can raise capital. This
too, contributes to greater economic growth and prosperity. Specific types
of investments provide other benefits to society as well.
INVESTMENTS
The dictionary meaning of investment is to commit money in order to earn
a financial return or to make use of the money for future benefits or
advantages. People commit money to investments with an expectation to
increase their future wealth by investing money to spend in future years.
For example, if you invest Rs. 1000 today and earn 10 %over the next year,
you will have Rs.1100 one year from today.

An investment can be described as perfect if it satisfies all the needs of all

investors. So, the starting point in searching for the perfect investment
would be to examine investor needs. If all those needs are met by the
investment, then that investment can be termed the perfect investment.
Most investors and advisors spend a great deal of time understanding the
merits of the thousands of investments available in India. Little time,
however, is spent understanding the needs of the investor and ensuring that
the most appropriate investments are selected for him.

The Investment Needs of an Investor

By and large, most investors have eight common needs from their
investments:
1. Security of Original Capital;
2. Wealth Accumulation;
3. Comfort Factor;
4. Tax Efficiency;
5. Life Cover;
6. Income;
7. Simplicity;
8. Ease of Withdrawal;
9. Communication.

Security of original capital: The chance of losing some capital has been a
primary need. This is perhaps the strongest need among investors in India,
who have suffered regularly due to failures of the financial system.

Wealth accumulation: This is largely a factor of investment performance,

including both short-term performance of an investment and long-term
performance of a portfolio. Wealth accumulation is the ultimate measure of
the success of an investment decision.

Comfort factor: This refers to the peace of mind associated with an

investment. Avoiding discomfort is probably a greater need than receiving
comfort. Reputation plays an important part in delivering the comfort
factor.
Tax efficiency: Legitimate reduction in the amount of tax payable is an
important part of the Indian psyche. Every rupee saved in taxes goes
towards wealth accumulation.

Life Cover: Many investors look for investments that offer good return
with adequate life cover to manage the situations in case of any
eventualities.

Income: This refers to money distributed at intervals by an investment,

which are usually used by the investor for meeting regular expenses.
Income needs tend to be fairly constant because they are related to lifestyle
and are well understood by investors.

Simplicity: Investment instruments are complex, but investors need to

understand what is being done with their money. A planner should also
deliver simplicity to investors.

Ease of withdrawal: This refers to the ability to invest long term but
withdraw funds when desired. This is strongly linked to a sense of
ownership. It is normally triggered by a need to spend capital, change
investments or cater to changes in other needs. Access to a long-term
investment at short notice can only be had at a substantial cost.

Communication: This refers to informing and educating investors about

the purpose and progress of their investments. The need to communicate
increases when investments are threatened.
 • Security of original capital is more important when performance
falls.
• Performance is more important when investments are performing
well.
• Failures engender a desire for an increase in the comfort factor.

Perfect investment would have been achieved if all the above-mentioned

needs had been met to satisfaction. But there is always a trade-off involved
in making investments. As long as the investment strategy matches the
needs of investor according to the priority assigned to them, he should be
happy.
The Ideal Investment strategy should be a customized one for each investor
depending on his risk-return profile, his satisfaction level, his income, and
his expectations. Accurate planning gives accurate results. And for that
there must be an efficient and trustworthy roadmap to achieve the ultimate
goal of wealth maximization.

Choosing the Right Investment Options

After understanding the concept of investment, the investors would like to
know how to go about the task of investment, how much to invest at any
moment and when to buy or sell the securities, This depends on investment
process as investment policy, investment analysis, valuation of securities,
portfolio construction and portfolio evaluation and revision. Every investor
tries to derive maximum economic advantage from his investment activity.
For evaluating an investment avenues are based upon the rate of return, risk
and uncertainty, capital appreciation, marketability, tax advantage and
convenience of investment. The following Table should give the clear
picture relating to the investors’ investment decisions in various financial
market instruments. The choice of the best investment options will depend
on personal circumstances as well as general market conditions. For
example, a good investment for a long-term retirement plan may not be a
good investment for higher education expenses. In most cases, the right
investment is a balance of three things: Liquidity, Safety and Return.

Source- Delhi Business Review X Vol. 8, No. 1 (January - June

2007)
Investment Options in India

Source-Delhi Business Review X Vol. 8, No. 1 (January - June

2007)
Fixed Deposits – They cover the fixed deposits of varied tenors offered by
the commercial banks and other non-banking financial institutions. These
are generally a low risk prepositions as the commercial banks are believed to
return the amount due without default. By and large these FDs are the
preferred choice of risk-averse Indian investors who rate safety of capital &
ease of investment above all parameters. Largely, these investments earn a
marginal rate of return of 6-8% per annum.

Government Bonds – The Central and State Governments raise money

from the market through a variety of Small Saving Schemes like national
saving certificates, Kisan Vikas Patra, Post Office Deposits, Provident
Funds, etc. These schemes are risk free as the government does not default
in payments. But the interest rates offered by them are in the range of 7% -
9%.

Money-back insurance - Insurance in India is mostly sold and bought as

investment products. They are preferred because of their add-on benefits like
financial life-cover, tax-savings and satisfactory returns. Even if one does
not manage to save money and invest regularly in financial instruments, with
insurance, the policyholder has no choice. If he does not pay his premiums
on time, his insurance cover will lapse. Money-back Insurance schemes are
used as investment avenues as they offer partial cash-back at certain
intervals. This money can be utilized for children’s education, marriage, etc.
Endowment Insurance – These policies are term policies. Investors have to
pay the premiums for a particular term, and at maturity the accrued bonus
and other benefits are returned to the policyholder if he survives at maturity.

Bullion Market – Precious metals like gold and silver had been a safe
heaven for Indian investors since ages. Besides jewellery these metals are
used for investment purposes also. Since last 1 year, both Gold and Silver
have highly appreciated in value both in the domestic as well as the
international markets. In addition to its attributes as a store of value, the case
for investing in gold revolves around the role it can play as a portfolio
diversifier.

Stock Market – Indian stock markets particularly the BSE and the NSE,
had been a preferred destination not only for the Indian investors but also for
the Foreign investors. Although Indian Markets had been through tough
times due to various scams, but history shows that they recovered very fast.
Many types of scrip had been value creators for the investors. People have
earned fortunes from the stock markets, but there are people who have lost
everything due to incorrect timings or selection of fundamentally weak
companies.

Real Estate- Returns are almost guaranteed because property values are
always on the rise due to a growing world population. Residential real estate
is more than just an investment. There are more ways than ever before to
profit from real estate investment.
Mutual Funds - There is a collection of investors in Mutual funds that have
professional fund managers that invest in the stock market collectively on
behalf of investors. Mutual funds offer a better route to investing in equities
for lay investors. A mutual fund acts like a professional fund manager,
investing the money and passing the returns to its investors. All it deducts is
a management fee and its expenses, which are declared in its offer
document.

Unit Linked Insurance Plans - ULIPs are remarkably alike to mutual funds
in terms of their structure and functioning; premium payments made are
converted into units and a net asset value (NAV) is declared for the same. In
traditional insurance products, the sum assured is the corner stone; in ULIPs
premium payments is the key component.
Need for the study:
To study the perception of the people about investment of their savings.
To understand basic requirement of the common man and their view
towards investment.
REVIEW OF LITERATURE

Psychology of Investments and Investor’s Preferences

Every individual investor must follow three principles of investing: using a
long-term investing approach, following the right strategy to maximize the
return on investment and proper allocation of investible funds. While
applying these three principles, an individual investor has to confront his/her
demographics, lifestyle and investment psychology. Whether the investor's
age or occupation or family income has a role of play in making choice of
investment avenues? Is the investor choice affected by his overconfidence,
reference group and framing of the available alternatives? The knowledge of
all these aspects is imperative for all progressive investors, researchers,
financial consultants, academicians, students and the marketer of the
financial products.
Author:
Dr. (Mrs.) Sushant Nagpal
Basics Of investment-By Dr.A.P.Dash, Sr.Faculty, PMI
In this paper he discusses the basic of investment and need for investment.
Investment benefits both economy and the society. It is an outgrowth of
economic development and the maturation of modern capitalism. For the
economy as a whole, aggregate investment sanctioned in the current period
is a major factor in determining aggregate demand and, hence, the level of
employment. In the long term, current investment determines the
economy’s future productive capacity and, ultimately, a growth in the
standard of living. By increasing personal wealth, investing can contribute
to higher overall economic growth and prosperity.

An Investors’ requirements in Indian securities market

By-K.Balanaga Gurunathan Published in Delhi Business review.

A report on financial planners in the growing economy like India

By- Indian Institute of Planning and Management-2006
OBJECTIVES OF THE STUDY:

PRIMARY OBJECTIVE
To Study the various investment avenues and the investors risk preference
towards it.

SECONDARY OBJECTIVES
To find out the general demographic factors of the investors dealing in
capital market.
To find out the preference level of investors on various Capital Market
instruments.
To find out the type of risk which are considered by the investors?
To find out the ways through which the investors minimizes their risk.
RESEARCH METHODOLOGY
Research Design
A Research design is purely and simply the framework of plan for a
study that guides the collection and analysis of data. The study is intended
to find the investors preference towards various investment avenues. The
study design is descriptive in nature.
TYPE OF RESEARCH- DESCRIPTIVE RESEARCH
Descriptive study is a fact-finding investigation with adequate
interpretation. It is the simplest type of research and is more specific.
Mainly designed to gather descriptive information and provides
information for formulating more sophisticated studies.
Sampling Design
Selection of study area: The study area is in Indore.
Selection of the sample size: 100
Sampling Methods
Convenience method of sampling is used to collect the data from the
respondents. Researchers or field workers have the freedom to choose
whomever they find, thus the name “convenience”. About 100 samples
were collected from Indore city and most of the respondents were
customers coming in to financial hubs and commercial complexes.
Formulation of the questionnaire

Data collection

Primary data – collected through Structured Questionnaire.

Secondary data – Earlier records from journals, magazines and other
sources.

Tools used for analysis

Percentage analysis
Chi-square test
Kendall test
ANOVA
Correlation Analysis
Multiple Response Table
Data Analysis and interpretatrion:-

Age of the respondent :-

Table5.1
Age % Of respondent
20-30 25
31-40 36
41-50 27
50 and above 12
Total 100

% Of respondent

50 and
above 20-30
12% 25% 20-30
41-50 31-40
27% 41-50
50 and above
31-40
36%
 Fig- 5.3

Income Group of the Respondent

Table5.2: Income Group of the Respondent

Income group % of Respondent
Bellow 1 lac 32
1-5 lac 61
5-10 lac 7
10 lac and above -

5-10
7%
0- 1
32%
0- 1
1-5
5-10

1-5
61%

Fig-5.4
Fig-5.4
According to survey most of the Respondent income group is above 1
lacks to 5 lacs.

Qualification of the respondents:-

Table5.3 Qualification
Qualification Investor (%)

High School 3

Graduate 48

Post Graduate 14

Professional 26

Others 9

High School
Others 3%
9%
High School
Professional Graduate
26% Graduate Post Graduate
48% Professional
Others
Post
Graduate
14%
Fig-5.5

Different Investment Avenues:-

Table 5.4- Individual preference in the investment avenues

Categories Highly Preferred (%)
Share market 8
Mutual fund 17
Insurance 29
Bank 28
Property 18
Total 100

18% 8%
17%

28%
29%

Share market mutual fund Insurance bank Property

Fig-5.6
Analysis:-The survey result shows that individual does not chose equity as
highly preferred investment tool. Only 8% people have preference on other
investment tool.

Investment Horizon

Table 5.5: Type of investment preferred

Term Investment (%)
SHORT TERM 31
LONG TERM 40
BOTH 29
Total 100

45
40
40
35 31
29
30
25
Series1
20
15
10
5
0
SHORT TERM LONG TERM BOTH

Fig- 5.7
Analysis: The survey result shows that most of the people invest in
the market for long term horizon.

Respondent who have invested in equity market

Table5.6: invested in the equity market

Yes No
19 81

Analysis:- According to survey largely population is untouched with

equity investment only 19% respondent has invested in the equity
market.

Respondent first source of awareness

Table5.7: Percentage of Respondent first source of awareness

Medium/ channel Investor (%)

Investor friends and relative 37

Advertisement and 26
hoardings
Brokerage firm 16

Banks 21

Analysis:- According to survey most of the people aware about equity

market through the investor friends and relative.
Income invested in equity

Table 5.8 Percentage of income invest in equity shares

Percentage of income Percentage of investor
Below 5% 22
5 to 10% 44
10 to 20% 27
20 to 30% 6

Percentage of investor

50
44
45
40
35
30 27
25 22
20
15
10 6
5
0
Below 5% 5 to 10% 10 to 20% 20 to 30%

Fig-5.8

Analysis :- The survey result shows that most of the people invest in
the equity market 5-10% of income.
Awareness about Religare securities

Table 5.9 Respondent who aware about Religare

Yes No

73% 27%

Know about Religare

27

Yes
No

73

Fig- 5.9

Analysis:-
According to the findings Most of the people (73%) know about the
Religare securities.
Preference for selecting broking firm

Table5.10: investor preference while selecting broking firm

Category Rank 1
Brokerage 42
services 30
Research calls 16
Others 12

Analysis : according to survey while selecting the broker firm people gives
first preference to brokerage charge (42%) then other services.
SUMMARY OF FINDINGS:
• From Correlation test, it is found there exist a positive correlation
between the income percentage on investment and the participation
in cash market.

• From One Way ANOVA it is found that there is significant difference

between the annual income and the income percentage towards
investment.

• From the Multiple Response test, it is found that the investors who
invest around 5-10% of their investment mostly considers the market
risk(18%) as the major risk which prevails in the market.

• From the Multiple Response test, it is found that the investors whose
investment is around 10% of their income, consider that the
affordable margin amount for investment in Derivatives is up to
Rs10000/-.

• Most of the aggressive investors are in 21-40 yr. age group. They
should be concentrated as prospective clients.
LIMITATIONS OF THE STUDY

 This is a two months study only.

 Data available was not sufficient, there was lack of availability

of data as most of it was confidential for the companies.

 Sample size is two small.

 Language is one of the construe during questioner filling

 Portfolio requires the churning of proportion of investment in

each sector as well as company from time to time to give
better returns.
CONCLUSION
In the current scenario, investing is very important and investing in stock
markets is a major challenge ever for professionals.
The young people should start investing earlier so that they can reap the
benefits of investing in future.
People should keep their eye open and keep updating themselves about
various investment avenues so that they can get safe returns.
References:
Marketing Research by G C Beri- third edition – © 2000, Tata McGraw-
Hill Publishing Company Ltd.
Investment Management- V.K. Bhalla.
www.nseindia.com
www.stockedge.com
www.religareonline.com
Questionnaire
Name:
1. Age
(a) 20-30 [ ] (b) 31-40 [ ] (c) 41-50 [ ] (d) 51 & above [
]

2. Gender
(a) Male [ ] (b) Female [ ]

3. Educational qualification
(a) High School [ ] (b) Graduate [ ] (c) Post Graduate [ ]
(d) Professional [ ] (e) Others [ ]

4. Annual income
(a) Below 1, 00,000 [ ] (b) 1, 00,000-5, 00,000 [ ]
(c) 5, 00,000-10, 00,000 [ ] (d) Above 10, 00,000 [ ]

5. How did you come to know about equity related investment?

(a) Brokerage firms (b) investor friends & relatives
(c) Advertising & hoardings (d) banks

6. Which factor do you consider most important while choosing an investment option?
(a) How quickly will I be able to increase wealth?
(b) The opportunity for steady growth
 (c) The amount of monthly income the investment will generate
(d) The safety of investment principal

7. What is the investment horizon you prefer?

(a) Short term investment
(b) Long term investment
(c) Both

9. Please indicate your preference on the following investment avenues

Categories Highly Favorable Neutral Unfavorable Highly

Favorable Unfavorable
(a) Share Market
(b)Mutual Funds
(c) Insurance
(d)Bank Deposits
(e) Property

10. Do you want to invest in share market?

(a) Yes (b) No

IF YES THEN PLEASE ANSWER………………………………………………………………………..

11. What is your percentage of your income do you invest in equity shares
a) Below 5%
b) 5 – 10 %
c) 10 – 20%
d) Above 20%

12. Have you heard about Religare Securities Ltd.?

(a) Yes (b) No

13. You are associated with which broking firm?

………………………………………………………………………..

14. Please indicate your preference for selecting broking firm….

Categories Rank-1 2 3 4 5
(a) Brokerage
(b) Services
(c)Research (Calls)
(d)Additional Features

THANK YOU