11 - Chapter 4 PDF

CHAPTER - IV
INVESTMENT PREFERENCE AND DECISION
INTRODUCTION
This Chapter examines the investment pattern of the retail equity investors in
general and investment preferences, risk-return perceptions and investment objectives of
the retail equity investors based on the socio-economic variables and selective investment
profile factors.
An investment in equity shares is one of the welcoming trends in the investment

sector. These investments have been found in the primary market, secondary market,
changes in project details and financial parameters. The equity share is always dominated
by the primary market and secondary market and the investors select one of these to their
investment processes and lucrative approach. In this chapter, perception of investors on
primary and Details of present values are analysed with respect to their various
investment options and procedures. The ideas of financial parameters and changes of
project details contribute to the retail investment and their progress. So their elements and
consequences in the present scenario are ascertained through the opinions of respondents.
Several sophisticated and multivariate tools are exploited to obtain the torrent of results
useful for the study. The general impact of financial investments on the equity shares will
be analysed with the support of data collected by using appropriate statistical tools, of
course with necessary interpretations.
As already mentioned though the study related to financial investments and their
impact on the equity shares, the main concentration will be on the perception of the
investors, who are the part and parcel of the equity shares. Hence, the study of
demographic variables regarding the investors is necessary and let us book at them in the
following lines.
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4.2 Age of the Investors
Investment factor often goes with age. Age factor distinguishes the investor
behaviour. Many investing options have carved out a place in the equity shares by
concentrating on a specific age segment. The age of the investors plays a crucial role to
identify the investment behaviour. It is considered as a useful demographic variable to
segment the investors based on their perception of the investment pattern. The
respondents have been divided into four groups, namely, less than 25, 26-40, 41-60 and
above 60. Table 4.1 shows the age of frequency distribution of the sample investors.
Table - 4.1 Age Frequency of Investors
Age Frequency Percentage

Below 25 29 5.7
26-40 278 54.9
41-60 169 33.3
Above 60 31 6.2
Total 507 100
Source: Primary Data
The above table clearly indicates that a maximum percentage of 54.9% of

investors are in the age group of 26 to 40 followed by the investors in the age group 41 to
60 which is 33.3%. It is also found that a less percent of 6.2% of the investors are in the
age group of above 60.
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Figure 4.1: Age of the Investors
4.3 Gender of the Investors
Gender is a useful variable for the equity shares investment because it seems to
reflect the attitudes, options and prudential motives of the investors. Gender is an
important factor to identify the behaviour of the investors. In general, most of the
investors in the equity shares are males. Females are not much exposed to the
effectiveness of retail investment and their consequences. Table - 4.2 shows the
distribution of male and female investors.
Table - 4.2: Gender of the Investors
Gender Frequency Percentage

Male 468 92.4
Female 39 7.6
Total 507 100
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From the above table, it is clear that 92.4% of the investors are males and 7.6%
are females. This profoundly reveals that males are more enthusiastic than females in
equity shares investment. These results are also shown in Figure 4.2.
Figure 4.2: Gender of the Investors
Percentage
4.4 Marital Status of the Investors
Marital status affects the investment pattern of investors. The marital sentiments
force them to invest for their future prospects. This state makes the investor to think twice
before investment. The martial status is considered to be one of the major determinants
for investors. Due to various family commitments, the married investors are not able to
concentrate more on investment in the equity shares. Table - 4.3 indicates the marital
status of the investors.
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Table - 4.3: Marital Status of the Investors
Marital Status Frequency Percentage
Married 407 80.3
Unmarried 93 18.4
Separated 07 1.2
Total 507 100
It is found from the above table that 80.3% investors are married and 18.4% are
unmarried and the remaining 1.2% is separated according to martial status. The married
investors view these investments for their prudential purpose. The graphic figure 4.3
also supports the above interpretation.
Figure 4.3: Marital Status of the Investors
Percentage
4.5 Education of the Investors
Education completely expresses the values of investment, creates attitudinal

changes among investors, more broadly, it reflects a life style with many investment
options in the equity shares. Education is a powerful background for the investors
analysis about the pros and cons of investment in equity shares. Table - 4.4 presents
education wise distribution of the investors.
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Table - 4.4: Education of the Investors
Education Frequency Percentage

School 40 7.9
Diploma 54 10.7
Graduate 247 48.8
Postgraduate 104 20.6
Professional 62 12.0
Total 507 100
It is found that most of the investors are have a good education background.
48.8% of the investors are graduates, 20.6% are post graduates and 12% are
professionals. This shows that the educated investors are able to analyze the advantages
and disadvantages of investment in equity shares and they also concede that they are able
to get transparent information through television and magazines regarding equity shares
in India.
Figure 4.4: Education of the Investors
Education of the investors

60
50
40
30 Percentage
20
10
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4.6 Occupation of the Investors
Many investment companies and stock brokers have found that occupational
category can also be used to distinguish the investment pattern. Occupation of the
investors paves the way and also induces the investment pattern of the investors. Table -
4.5 depicts the occupation of investors surveyed, among five groups according to their
occupation.
Table - 4.5: Occupation of the Investors
Occupation Frequency Percentage
Government 70 13.8
Private 218 43.0
Self-employed 166 32.7
Agriculture 07 1.3
Retired 46 9.2
Total 507 100
In this table, it is identified that most of the investors are working in private
concerns or running their own business, that is 43% and 32.7% of investors are employed
in private or in their business concerns. The Government employees are not enthusiastic
more in equity shares investment and retired people and agriculturalists also show the
least interest in investing their surplus in equity shares project details. The above facts
have been shown in Figure 4.5 also.
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Figure 4.5: Occupation of the Investors
4.7 Income of the Investors
Income has long been an important variable for distinguishing investment

segments. It is known that affluent investors are much enthusiastic in investment and
need better returns. The respondents are divided into four income groups according to
their annual income. Income is the most important factor for all the investors to allot
separate amount for the investment, which will be used for their future purpose. Table -
4.6 explicitly shows the income of the respondents.
Table - 4.6: Income of the Investors
Income Frequency Percentage

Below 1 lakh 135 26.6
1-2 lakhs 198 39.1
2-3 lakhs 116 22.9
Above 3 lakhs 58 11.4
Total 507 100
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It is found from the table that 39.1% investors belong to the income groups of Rs.
1 - 2 lakhs and 26.6% investors have the income less then Rs. 1 lakhs, 22.9% are in the
income of groups of Rs. 2 - 3 lakhs. The investors with more than Rs. 3 lakhs income do
not show more interest on investments in equity shares. Figure 4.6 also illustrates the
above data.
Figure 4.6: Income of the Investors
4.8 Nature of Family of the Investors
Nature of family is an important factor affecting the regular investment pattern.

Family nature is considered as one of the burdens affecting the investment behaviour of
investors. Family members of investors are classified into three groups as shown in the
table - 4.7.
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Table - 4.7: Nature of Family of the Investors
Nature of family Frequency Percentage

Joint 194 38.3
Nuclear 313 61.7
Total 507 100
From the above table, it is clear that the investors in the joint family are not much
enthusiastic in investment in the equity shares and the investors of nuclear family are able
to invest more amount of their income in equity shares. Figure 4.7 also indicates the
above observation.
Figure 4.7: Nature of the Family of Investors
4.9 Number of Dependents of the Investors
The number of dependents is playing a significant role in deciding the investment

amount of the investors and it is presented in table - 4.8.
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Table - 4.8: Number of Dependents of the Investors
Number of Dependents Frequency Percentage

No dependents 70 13.8
1 dependent 49 9.7
2 dependents 121 23.9
More than 4 dependents 69 13.5
Total 507 100
When the number of dependents is more in the family, their investment behaviour
pattern also changes significantly. The number of dependents and investment are
inversely proportional to each other. When the number of dependents is more in the
family, they do not have ample money for investment in this present economic situation.
Figure 4.8 also indicates the same inference.
Figure 4.8: Number of Dependents of the Investors
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4.10 House Ownership of the Investors
Own house and rented house investors behave in a different manner during their
investment proceedings. Rented house exploits their income and hampers them from
investment. Table - 4.9 indicates two types of investors.
Table - 4.9: House Ownership of the Investors
House Ownership Frequency Percentage
Own 434 85.7
Rented 73 14.3
Total 507 100
It is inferred from the table that most of the investors in equity shares have their
own house. If they have their own houses, they divert their income in the form of
investment in equity shares. It is also found that 85.7% of the investors have their own
houses and 14.3% are in rented house. Figure 4.9 also supports the above facts.
Figure 4.9: House Ownership of the Investors
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4.11 Type of Investors
There are two types of investors in share market of India. The hereditary
investors develop the investment habit as their character and some investors are induced
by the liberalization and transparency of share market investment. The following
Frequency Distribution Table 4.10 reveals the response of investors about their type
towards share market investment:
Table -4.10: Type of investors
Valid Cumulative
Type Frequency Percentage
Percentage Percentage
New
428 84.4 84.4 84.4
generation
Options
Hereditary 79 15.6 15.6 100.0
Total 507 100.0 100.0
From the above table it is found that 84.4% of the respondents in Chennai are new
generation investors who know about the risk and return in equities, whereas, 15.6% of
them are hereditary investors. This implies that maximum number of investors is new
generation and induced by policies of liberalization and transparency in Indian capital
market.
4.12 Category of investors
The investors differ in their category based on their long term investment pattern
and daily trading approach in Indian share market. The following frequency distribution
Table 4.11 presents two different categories of investors
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Table 4.11: Category of Investors
Category Frequency Valid Percent Cumulative Percent
Both 365 72 72
Daily traders 64 12.6 84.6
Long term 78 15.4 100
Total 507 100
From the above table it is found that 72% of the respondents establish
themselves as both long term investors and daily traders and 12.6%of them operate
equity investment daily. It is also found that 15.4% of the investors have the habit of long
term investment in equities.
From the above analysis it is inferred that maximum number of respondents are
interested towards long term investment and daily trading of shares.
4.13 Number of Years of Dealing with Securities Markets
Investment Behaviour of the investor can be easily analyzed through the number
of years of dealing with securities markets. In fact, the experience makes a man perfect
by dealing in the securities markets so that the investor may come to know the changes in
securities markets. It is believed that wisdom comes only form ones own experience. In
this study four classification have been considered namely below 5 years, 6 10 years,
11 - 15 years and above 15 years. The following frequency distribution Table 4.12
expresses the distribution of the samples according to the number of years dealing with
securities markets.
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Table-4.12: Frequency Distribution of Number of Years of Dealing with Securities
Markets
Cumulative
years Frequency Valid Percent
Percent
Valid Below 5 years 277 54.7 54.7
6 10 years 130 25.6 80.2
11 15 years 89 17.6 97.8
Above 15 years 11 2.2 100.0
Total 507 100.0
Source: Primary data
From the above table it is revealed that a maximum of 54.7% of investors are
dealing less then 5 years of experience in the securities market followed by 25.6% of
investors are having the experience in the securities market for 6 to 10 years , 17.6% of
the investors have been dealing for the period of more than 11 years but less than 15
years of experience and only 2.2% of the investors are dealing in the securities market
with the experience of more than 15 years of experience with securities market. So the
percentage analysis revealed that most of the investors are having the experience in the
securities market just below 5 years which shows that young investors and educated
person are now entering into the securities markets.
4.14 Number of companies invested.
People have several means to get to know about the available investment schemes
in different companies in different sectors and these sources are motivating the potential
investors to make investments in particular companies.
The following Frequency Distribution Table 4.13 reveals the response of

investors pertaining to number of companies invested:
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Table-4.13: Number of companies invested
Number of companies Frequency Percent Valid Percent Cumulative

Percent
Response Less than 10 376 74.1 74.1 74.1
More than 10 131 25.9 25.9 100.0
Total 507 100.0 100.0
From the above table it is found that 74.1% of the respondents in Chennai
invested in less than 10 companies and remaining 25.9% of them are attracted towards
more than 10 companies share market investment. This denotes that maximum number of
customers possess the updated knowledge about less than 10 companies for their
investment.
4.15 Size of Investment
The size of investment has an important bearing on the share market investment
of the individuals. The investment habits of the individuals will be highly influenced by
the size of investment in their hands. The following frequency distribution Table 4.14
expresses the distribution of the samples according Size of investment dealing with
securities markets.
Table-4.14 Distribution of Samples on the Basis of size of investment
Size of Investment Frequency Valid Percent Cumulative Percent
Less than Rs. 1,00,000 54 10.7 10.7
Rs. 1,00,000- Rs. 2,00,000 180 35.4 46.1
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Rs. 2,00,000-Rs. 3,00,000 119 23.5 69.6
Rs. 3,00,000 and above 154 30.4 100.0
Total 507 100.0
From the above table it is found that 10.7 % of the respondents have an
investment of less than Rs. 1, 00,000. The investment level of 35.4 % of the respondents
is between Rs. 1, 00,000 and Rs. 2, 00,000. 23.5 % of them have an investment size
which ranges from Rs.2, 00,000 to Rs. 3, 00,000. The annual size of 30.4 % of the sample
ranges above Rs.3, 00,000. From the above analysis it is clear that large number of
respondents have an annual income ranging between Rs. 1, 00,000 and Rs.2, 00,000.
4.16 Source of Investment.
The investors enthusiastically invest their own funds or borrowed funds to derive
maximum return with in the short span of time.
The following Frequency Distribution Table 4.15 reveals the response of

investors about their source of funds to invest in equities:
Table-4.15 Source of Investment
Valid Cumulative
Internet Banking Frequency Percent
Percent Percent
Response Own funds 489 90.6 90.6 90.6
Borrowed
51 9.4 9.4 100.0
funds
Total 540 100.0 100.0
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From the above table it is found that 90.6% of the respondents in Chennai are able
to invest own funds in equities whereas, 9.4% of them borrow funds to invest in equities.
This indicates that maximum number of investors invest own funds to obtain better
returns.
4.17 Percentage of Savings Invested In Securities Markets
The Behaviour of investors can be easily analyzed through the percentage of

savings invested in the securities markets. In fact the surplus income induces the
investors to participate in the securities market in order to earn high returns. Propensity to
invest can be defined as the percentage of current income invested; its known that
investments are made out of surplus income. If the proportion of investment to income is
higher, then the propensity is said to be higher. In this study four classifications have
been considered namely below 25%, 26 50%, 51 75%, and 76 100 % of savings
invested in to the securities markets. The following frequency distribution Table 4.16
expresses the distribution of the sample according to the percentage of savings invested
in the securities markets.
Table-4.16 Frequency Distribution of Percentage of Savings Invested In Securities

Markets
Valid Cumulative
Percentage of savings Frequency
Percent Percent
Valid Below 25% 528 64.0 64.0
26% - 50% 188 22.8 86.8
51% 75% 104 12.6 99.4
76% - 100% 5 0.6 100.0
Total 507 100.0
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From the above table it is ascertained that a maximum of 64% of sample size are
investing their fund out of their savings below 25%, followed by 22.8% of sample size
are participating in the securities market out of their savings between 26 50%, on
sample size of 12.6% of the investors are investing their fund out of their saving between
51 75% and only 0.6% of the sample size are investing their saving between 76
100%. So the percentage analysis revealed that most of the investor are invest their
money out of their saving below 25% of the surplus money that they had.
4.18 Sources of Information
A successful investor in securities market must keep himself abreast of the latest
information, all the required information especially the one relating to specific companies
/ industries is not available at one place, so investors are able to get transparent
information about their dealings in securities market through various avenues like News
Paper, Journals and Magazines, Television Channels, Stock Brokers, Investment
Consultancy, Web sites and friends and Relatives. The following table 4.17 presents the
combined frequency distribution of various avenues of information.
Table 4.17 : Sources of Information
Sources Of Information No. Of Responded Percentage
News Papers 400 77.6
Television Channels 336 66.4
Stock Brokers 286 56.5
Journals & Magazines 256 50.8
Friends & Relatives 203 40
Investment Consultant 200 39.4
Web Sites 179 35.3
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From the above combined frequency distribution table it is ascertained that a
maximum of 77.6% of investors get the information about the securities market through
news papers followed by 66.4% of investors get the information through television
media, 56.5% of investors receive the information through the stock brokers, 50.8% ,
40%, 39.4% and 35.3% of the investors obtain the information about the securities
through journals and magazines, friends and relatives, investment consultant and web
sites respectively. So the combined frequency distribution analysis revealed that a major
percentage of the investors are getting the information through news papers television
and stock brokers.
4.19 Criteria for Investments
Table 4.18: Criteria for Investments
Cumulative
Criteria Frequency Valid Percent
Percent
Sector based 253 49.9 50.2
Financial performance 252 49.6 99.5
other 2 0.5 100
Total 507 100.0
From the above table 4.18 it is found that a maximum of 49.9 percent of investors
investing their investment after a careful analysis of company based on their sector in
which it belongs. Some 49.6 percent of investors are investing their money after
analyzing the financial performance of the companies and only 0.5 percent of investors
are considering some other factors like present market condition and new production
strategies. So it is highlighted from the above table that most of the investors are
channalised their investment after a careful analysis of the sector considered in which the
company belonging.
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4.20 Member of investors forum
Investors awareness about criteria, forum, malpractices of intermediaries, and

mode of trading financial sector reforms are highlighted in the following discussion.
Table 4.19: Member of investors forum
Frequency Valid Percent Cumulative Percent
Yes 435 85.8 85.8
No 72 14.2 100.0
Total 507 100.0
From the above table 4.19 it is ascertained that a maximum of 85.8 percent of
investor are possessing experience in dealing their investment forums followed by 14.2
percent of investor doesnt have any experience with the forum of investors So the
percentage analysis table reveals that most of the investors in securities market are having
much experience with forum of investors in dealing their investment affairs.
4.21 Awareness of Malpractice of Intermediaries

Table 4.20: Awareness of Malpractice of Intermediaries
Yes 416 82.1 82.1
No 91 17.9 100.0
Total 507 100.0
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From the above frequency table 4.20 it is ascertained that a maximum of 82.1
percent of investors in securities market are aware of the malpractice of intermediaries
followed by 17.9 percent of investors are not known the malpractices done by the
intermediaries. So the percentage analysis reveals that most of the investors in Indian
securities market are having the knowledge about the malpractices done by the
intermediaries like share brokers etc.
4.22 Mode of Trading
Table 4.21: Mode of trading
Online 416 82.1 82.1
Off line 91 17.9 100.0
Total 507 100.0
From the above frequency table 4.21 it is ascertained that a maximum of 82.1
percent of investors in securities market are aware of the online trading and they buy and
sell their equities followed by 17.9 percent of investors deal with offline trading. So the
percentage analysis reveals that most of the investors in Indian securities market are
having the knowledge about the on line trading conveniently.
4.23 Awareness of Financial Sector Reforms in India
Table 4.22: Awareness of Financial Sector Reforms in India
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Yes 504 99.5 99.5
No 3 0.5 100.0
Total 507 100.0
From the above table 4.22 it is ascertained that a maximum of 99.5 percent of
investors in the Indian securities market are aware of the reforms made in the Indian
financial system, followed by only 0.5 percent of investors are dont have the awareness
of financial sector reforms in India. So it is inferred by the percentage analysis that
majority of the investors in Indian securities market are aware of the financial sector
reforms made by the Government of India.
4.24 The Impact of Indices on investors
People have several means to get to know about the available investment schemes
and these sources are motivating the potential investors to make investments in a
particular investment avenue. Investment decision making is the process of identifying
various alternatives, evaluating each alternative and choosing the best alternative based
on the priorities, expectations and risk tolerance of the investor. Investors could make
decision on their own or can rely on the advice of another person. It is very important that
the investors do their home work whether they take independent decisions or rely on
others. In this study five classifications of indices have been considered namely sensex,
CNX nifty, CNX Nifty Junior, CNX midcap and CNX Midcap 200. The following
frequency distribution Table 4.23 expresses the distribution of the samples according to
the source of index about investment avenues.
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Table 4.23: Frequency Distribution Of index
Valid Cumulative
Influencers Frequency
Percent Percent
Valid Sensex 217 42.9 42.9
CNX Nifty 47 9.2 52.1
CNX Nifty Junior 161 31.9 84.0
CNX Mid cap 62 12.1 96.1
CNX Midcap 200 20 3.9 100.0
Total 507 100.0
In can be seen that out of the sample size 42.9% of the investment decisions are
taken based on sensex index followed by 31.9% of the investors decisions are influenced
by the index of Nifty, 12.1% of the investors decisions are influenced by the index of
Nifty junior, 9.2% of the sample size of investors decisions are influenced by the index
of CNX Midcap and only 3.9% of the investors decisions are influenced by the CNX
madcap 200. So the percentage analysis revealed that most of the investors decisions are
influenced and taken by the observations of sensex index.
4.25 Association between Sources of Information and Preference of Industry
The non-parametric chi-square test is applied to find the association between

source of the information useful for the investors and their ranking preference of their
investment industry. Different sources of information stated in the questionnaire are
considered for the analysis.
a) News papers and Investment in Different Industries
The association between information through newspapers and different industry is

displayed in table 4.24.
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Table 4.24: Chi-square Value for Sources of Information with
regard to Newspapers
Industry Chi-square value Sig Result
Banking 27.538 0.001 Association
Steel 27.654 0.001 Association
Cement 27.087 0.000 Association
IT 10.517 0.161 No association
Pharma 18.236 0.011 Association
Manufacturing 28.220 0.000 Association
Textile 16.320 0.022 Association
Automobile 29.118 0.000 Association
From the above table, it is found that the information through Newspaper plays a
crucial role in identifying all the industries except IT industry.
b) Journals, Magazines and Investment in Different Industries
The association between information through Journals, magazines and different

industries is presented in table 4.25.
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Table 4.25: Chi-square Value for Sources of Information with regard to Journals
and Magazines
Steel 10.748 0.150 No Association
Cement 12.742 0.079 No Association
Pharma 8.385 0.300 No Association
From the above table it is found that the information through Journals and
magazines is useful for investors to invest in banking, manufacturing, textile and
automobile industries.
c) TV channels and Investment in Different Industries
The association between information through TV channels and different industry

is presented in table 4.26.
Table 4.26: Chi-square Value for Sources of Information with

regard to TV
125
Manufacturing 7.386 0.390 No Association
Textile 6.760 0.454 No Association
Automobile 12.086 0.098 No Association
From the above table it is inferred that banking, steel and cement industry are
concentrated by the investors with the help of information through TV channels.
d) Stock Brokers and Investment in Different Industries
The association between information through stockbrokers and different industry

is presented in the table 4.27.
Table 4.27: Chi-square Value for Sources of Information with regard to Stock
Brokers
IT 36.211 0.000 Association
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As far as the capital market investment and selection of industry is concerned, the
stockbrokers give more information to the investors in selecting the industry.
e) Investment Consultants and Investment in Different Industries
The association between information through investment consultants and different

industries is presented in the table 4.28.
Table 4.28: Chi-square Value for Sources of Information with regard to

Investment Consultant
Cement 12.014 0.100 No Association
From the above table, it is ascertained that the investment consultants

significantly guide the investors to invest in banking, steel, IT, manufacturing, textile and
automobile industries respectively.
f) On line Websites and Investment in Different Industries
The association between information through on line websites and different

industry is presented in table 4.29.
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Table 4.29: Chi-square Value for Sources of Information with regard to On Line
Website

From the above table it is found that web sites give profuse source of information
for investors about the performance of banking, cement, IT, pharma, manufacturing, and
g) Friends, Relatives and Investment in Different Industries
The association between information through friends, relatives and different

industries is presented in the table 4.30.
Table 4.30: Chi-square Value for Sources of Information with regard to Friends
and Relatives
128
From the above table it is found that friends and relatives are give more useful
information about the performance of banking, cement, IT, pharma, manufacturing, and
It is concluded that the different sources of information play the vital role in the
investors behaviour they promote the knowledge of every investor to think prudently
about the consequences of their investment.
4.26 Preference of Investments and their Ranks with regard to equity investment
The ranking method helps the researcher to identify which investment avenues are
most preferred. Table - 4.31 presents the mean, standard deviation and their respective
rankings based on the mean.
Table - 4.31: Mean and Standard Deviation for Preference of

Investments and their Ranks
Variable Mean S.D. Rank

Shares 1.86 1.42 1
Fixed Deposit 3.72 1.81 2
Real Estates 3.93 1.88 3
Mutual Funds 4.33 1.73 4
Government Bonds 4.40 1.79 5
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Gold 4.81 2.02 6
Debentures 4.99 1.62 7
It is inferred from the above table that the mean is found according to the ranks
assigned to the variables by the investors. The most preferred investments are well
established and the investors strongly agree that the investment in capital market alone
gives more returns with minimum market risk. So they prefer share market as rank 1
followed by fixed deposit, real estate, mutual funds, government bonds, gold and
debentures in order. The first preference is due to appreciable returns besides the
maximum risk.
4.27 Ranking Analysis for Preference of Investments in Industry
The ranking analysis is executed for the different preference of investment in

industry such as banking industry, steel industry, cement industry, IT industry, Pharma
industry, manufacturing industries, textile industry and automobile industry and the
following preferences are arranged in order in table - 4.32.
Table - 4.32: Mean and Standard Deviation for Ranking of Industries

Banking Industry 3.17 2.20 1
IT Industry 3.45 2.43 2
Cement Industry 4.51 1.20 3
Pharma Industry 4.81 1.76 4
Automobile Industry 4.87 2.37 5
Manufacturing Industry 4.88 2.17 6
Textile Industry 6.02 2.07 7
From the above table, it is found that according to the rank of preference, the
investors invest their money in the above mentioned industries. They invest their money
safely in banks in the form of deposits and give second preference to IT industry
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followed by cement and pharma industry. This also shows that the investors concentrate
more on the safety of their investments in banks.
4.28 Reasons for Investments and their Ranks in equity Market.
Investments return, tax benefits and liquidity are preferred by investors for
different reasons. The result of the sample means, standard deviations and their ranks are
established below in table - 4.33.
Table - 4.33: Mean and Standard Deviation of Reasons for

Investments and their Ranks

Return 1.27 .550 1
Liquidity 2.18 .678 2
Tax benefits 2.54 .616 3
From the above table, it is concluded that the investors give first preference to
better returns followed by liquidity and tax benefits. So, it can be concluded that all type
of investors demand more returns with no risk. So they prefer share market fabricated
with minimal risk.
4.29 Ranking Analysis for Investment Style in equity Market
Different style of investments like conservative, calculative, intuitive, impulsive,

risk taking are verified to identify the most popular investment style of the investors.
Table - 4.34 presents the mean and standard deviation and rank of preference of
investment style.
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Table - 4.34: Mean and Standard Deviation of Preference of
Investment Style

Calculative 1.94 1.19 1
Conservative 2.78 1.35 2
Risk taking 2.97 1.43 3
Impulsive 3.45 1.07 4
Intuitive 3.88 1.24 5
From the above table, it is found that the investors adopt the modes of calculative,
conservative, risk taking, impulsive and intuitive in the respective order. The investors
first notion of investment is the strategic calculation regarding safety, return and liquidity.
They also give less importance to conservative and risk taking separately. It also reveals
that the investors are very calculative in earning more profit from their investments.
4.30 Ranking Analysis for the Preference of Stock Exchange for Investing in
equity market
The different stock exchanges like NSE, BSE and MSE are useful for the
investors to deal with the capital market. Generally the investors in Tamil Nadu prefer
these three stock exchanges for their investment in secondary market. Table - 4.35
presents the rank of preference of investors of secondary market.
Table - 4.35: Mean and Standard Deviations for Preference in Choosing Stock
Exchanges

NSE 1.44 0.684 1
BSE 2.04 0.689 2
MSE 2.49 0.741 3
132
It is inferred from the above table that the investors investing in secondary
market, give their first preference to NSE followed by BSE and MSE respectively. The
NSE is the most popular among the investors of capital market.
Paired sample t-test is to identify the significant difference in the means among
the five factors of the risk and return in equity market. This tool is also useful to identify
the most popular factors of risk and return. The mean scores of each factor is presented in
the table - 4.36, which is useful to identify the popular factor among the investors
Table 4.36: Paired Samples Statistics for the Factors of the

risk and return
Std. Std. Error

Pair Factors Mean N
Deviation Mean
Pair 1 Shares 4.1576 507 .58216 .02028
Debentures 4.0445 507 .56689 .01975
Pair 2 Shares 4.1576 507 .58216 .02028
Mutual funds 4.1675 507 .58990 .02055
Pair 3 Shares 4.1576 507 .58216 .02028
Stock futures 4.2031 507 .58191 .02027
Pair 4 Shares 4.1576 507 .58216 .02028
Real estates 3.8706 507 .55730 .01941
Pair 5 Debentures 4.0445 507 .56689 .01975
Mutual funds 4.1675 507 .58990 .02055
Pair 6 Debentures 4.0445 507 .56689 .01975
Stock futures 4.2031 507 .58191 .02027
Pair 7 Debentures 4.0445 507 .56689 .01975
Real estates 3.8706 507 .55730 .01941
Pair 8 Mutual funds 4.1675 507 .58990 .02055
Stock futures 4.2031 507 .58191 .02027
Pair 9 Mutual funds 4.1675 507 .58990 .02055
133
Real estates 3.8706 507 .55730 .01941
Pair 10 Stock futures 4.2031 507 .58191 .02027
Real estates 3.8706 507 .55730 .01941
The above table indicates the mean values of the factors of capital market
reforms. It ranges from the minimum mean value of 3.87 for real estates to the maximum
of 4.0 for stock futures.
The correlation table - 4.37 presents the relationship among all the factors which
are inter linked.
Table 4.37: Paired Samples Correlations for the Factors of

the investment in equity Market
Pair Factors N Correlation Sig.

Pair 1 Shares & Debentures 507 .645 .000**
Pair 2 Shares & Mutual funds 507 .673 .000**
Pair 3 Shares & Stock futures 507 .550 .000**
Pair 4 Shares & Real estates 507 .467 .000**
Pair 5 Debentures & Mutual funds 507 .556 .000**

Pair 6 Debentures & Stock futures 507 .429 .000**
Pair 7 Debentures & Real estates 507 .533 .000**
Pair 8 Mutual funds & Stock

507 .514 .000**
futures
Pair 9 Mutual funds & Real estates 507 .449 .000**
Pair 10 Stock futures & Real estates 507 .323 .000**
Source: Primary Data; ** - Significant at 0.01 level
As observed from the above table, the five factors constitute the efficient capital
market reforms and the correlation co-efficient are highly significant. So, all reforms are
134
inter linked to accrue benefits to the investors. Paired sample t-test and their
consequences are established in table - 4.37.
Table 4.38: Paired Samples Test Values for the Factors of the Latest
Reforms in Capital Market
Sig. (2-
Pair Factors t df
tailed)
Pair 1 Shares - Debentures 6.707 506 .000**
Pair 2 Shares - Mutual funds -.598 506 .550
Pair 3 Shares - Stock futures -2.364 506 .018*
Pair 4 Shares - Real estates 14.000 506 .000**
Pair 5 Debentures - Mutual funds -6.471 506 .000**
Pair 6 Debentures - Stock futures -7.415 506 .000**
Pair 7 Debentures - Real estates 9.189 506 .000**
Pair 8 Mutual funds - Stock futures -1.769 506 .077
Pair 9 Mutual funds - Real estates 14.140 506 .000**
Pair 10 Stock futures - Real estates 14.390 506 .000**
Source: Primary Data; ** - Significant at 0.01 level; * Significant at 0.05 level
The paired sample statistical table 4.38 clearly reveals that the investors are very
much attracted towards capital market with mean (4.20), followed by mutual funds (mean
= 4.17), shares (mean = 4.16), Debentures (mean = 4.04) and finally real estates (mean =
3.87). Though the means are different, paired sample t-test would check the statistically
significant differences among them. It is also found that shares and mutual funds are
equally treated (t = 0.598) by the investors for their risk and return. The mutual funds
and stock futures are also equally popular among the investors (t = 1.769) for both risk
and return. So it is inferred that the investors are very much attracted by capital market
after understanding the attractive financial sector reforms. The transparency about the
performance of the companies issuing the shares and continuous monitoring of central
government and the RBI raises the confidence among the investors besides the market
135
risk. It is also found that the investors are willing to invest their hard earned money to
have lucrative returns in the short span of time.
4.31 Rate of return
The investors expect different percentage of investment as their returns with

safety and security. Both the new companies and the existing ones can raise capital on the
new issue market. The prime function of the new issue market is to facilitate the transfer
of funds from the willing investors to the entrepreneurs setting up new corporate
enterprises or going in for expansion, diversification, growth or modernization. Besides,
helping corporate enterprises in securing their funds, the new issue market channelises
the savings of individuals and others into investment. In this study four classification
have been considered namely below 12%, 12-24%, 24-36%, and 36% and above as the
returns.
Table 4.39: Frequency Distribution of Percentage of expected return
Valid Cumulative
Percentage of investment Frequency
Percent Percent
Valid Below 12% 300 59.2 59.2
12% - 24% 82 16.2 75.4
24% 36% 28 5.6 81.0
36% above 97 19.0 100.0
Total 507 100.0
From the above table 4.39 it is ascertained that a maximum of 59.2% of the
investors expect to get return below 12% of their investments followed by 19% of the
136
investors prefer to invest 36% and above of their investments, 16.2% of the investors
prefer only 24 36% of their investments to be returned only 5.6% of the investors prefer
to invest between 12 to 24% of their investments as returns. So the percentage analysis
revealed that most of the investors expect below 25% of their total investment from
equities market.
4.32 SUMMARY
In this chapter investment pattern, preferences, risk-return perceptions and

investment objectives of the retail equity investors have been identified.
137

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CHAPTER - IV

INVESTMENT PREFERENCE AND DECISION

An investment in equity shares is one of the welcoming trends in the investment

Table - 4.1 Age Frequency of Investors

Age Frequency Percentage

26-40 278 54.9

41-60 169 33.3

Total 507 100

Source: Primary Data

The above table clearly indicates that a maximum percentage of 54.9% of

4.3 Gender of the Investors

Table - 4.2: Gender of the Investors

Gender Frequency Percentage

Figure 4.2: Gender of the Investors

4.4 Marital Status of the Investors

Marital Status Frequency Percentage

Married 407 80.3

Total 507 100

Source: Primary Data

Figure 4.3: Marital Status of the Investors

4.5 Education of the Investors

Education completely expresses the values of investment, creates attitudinal

Education Frequency Percentage

Figure 4.4: Education of the Investors

Education of the investors

Table - 4.5: Occupation of the Investors

Occupation Frequency Percentage

Private 218 43.0

Self-employed 166 32.7

Total 507 100

Source: Primary Data

4.7 Income of the Investors

Income has long been an important variable for distinguishing investment

Table - 4.6: Income of the Investors

Income Frequency Percentage

Figure 4.6: Income of the Investors

4.8 Nature of Family of the Investors

Nature of family is an important factor affecting the regular investment pattern.

Nature of family Frequency Percentage

Figure 4.7: Nature of the Family of Investors

4.9 Number of Dependents of the Investors

The number of dependents is playing a significant role in deciding the investment

Number of Dependents Frequency Percentage

Figure 4.8: Number of Dependents of the Investors

Table - 4.9: House Ownership of the Investors

House Ownership Frequency Percentage

Own 434 85.7

Total 507 100

Source: Primary Data

Figure 4.9: House Ownership of the Investors

Table -4.10: Type of investors

Total 507 100.0 100.0

4.12 Category of investors

Category Frequency Valid Percent Cumulative Percent

Daily traders 64 12.6 84.6

Long term 78 15.4 100

Total 507 100

4.13 Number of Years of Dealing with Securities Markets

Valid Below 5 years 277 54.7 54.7

6 10 years 130 25.6 80.2

11 15 years 89 17.6 97.8

Above 15 years 11 2.2 100.0

Total 507 100.0