Investment behavior

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Introduction
When it comes to money we are not as rational as we think we are, when there are n numbers
of options available in the market, it confuses most of the Indian, the same people who have
65% their income as disposable income, which is second highest in the world, where is the
right path, which can maximize the returns with least risk. To unfurl is ambiguous web of
which mainly horrify 98% of Indians, who do not invest in equity market, I have conducted a
survey on their Investment behavior.

Respondents’ profiles
Investment is one of the foremost concerns of every individual as their small savings of today
are to meet the expenses of tomorrow, to make survey diversified I have selected 6 students
of 5 different premier B schools such as IIM Rohtak, MDI Gurgaon, XIM Bhuvneshwar and I am
thankful to two of the professors of T.A Pai Management Institute to act as a respondent , as
most of the Investment in the equity market is done by people sitting inside the glass door,
rest two of the respondents are from Corporate world. Ages of the respondents are in in the
range of 20 to 46, to diversify it on the basis of gender, 30% of the respondents selected by me
are females.

Analysis
In case of excess capital, around half of the respondents will diversify their investments
to minimize the risk components, investment in terms of mutual fund though being very
skeptical option in the mind of Indian investors has been chosen by one fifth of the
respondents. For justify their choices different reasons were give such as ‘’Greater
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returns’’, ‘’Risk reduction’’, ‘’it would be good combination of low risk low return, high
risk high return, liquid and non-liquid assets’', One of the respondent justified equal
investment as it represents the optimum mix of risk, returns and time required to
research.

When investor has got a choice to maximize his/her returns, most of the people
preferred stock market and line of the reasoning was somewhat similar in
everyone’s case, as per respondent from corporate world , perfect analysis
combined with patience will give you enormous returns.

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Three biggest risk, when it comes to invest in stock market for most of the
respondents were different as their frame of reference were different. Market risk
is one of the common risks mentioned by respondents, an MBA students described
his risks as Uncertainty of Government policies, Inflationary risks, and flawed
business models of Organizations, huge fluctuation of the market is also
considered as one of the risk associated with stock market by one of the
professors.

When it comes to prefer a route for investment in equity market more than half of
the people from paid advisors, as equity advisor helps making right decision is one
of the reasons given by a female respondent, mutual funds still create a
psychological barrier in the mind of investors as none of the respondents

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preferred it as their initial route, as per one of the Corporate respondent, time
poverty leads her to take advise from equity analyst.

Expectations from stock market revolve around high returns, one of respondent
mentioned as 15%+ returns, and one of the professors envisage market risk
premium addition to the returns, Growing economy, decent market sentiment,
gradual structural shift to business friendly government policies are the some of
the expectations from respondents.

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Conclusion

What investor look for? The short answer is that every investor is different, and
each has their own set of criteria. Some may base their decisions purely on the
facts; others might be more inclined to factor their feel for the people at the helm
into the equation. Some may be in the right frame of mind for risk-taking; others
might be playing it safe for a while, or waiting to see how out-standing
investments play out.

Indian equity market after 142 years

Indian equity market in 2017 reflected resurrection in consumption demand,

growth led by policy reforms, move towards digitization, monetary stance of
global central banks and economic policy decisions. The impact of demonetization
may weigh on consumption demand and on the growth of various industries in the
near term, dragging down the GDP growth for FY17 by 50 bps. The approval of
promulgation of the Special Bank Notes (SBNs) (Cessation of liabilities) ordinance
by the President of India could likely bring about a gain to the government on
account of allowance given to the RBI to extinguish its liability towards unreturned
SBNs. We can expect the impact of this currency replacement program to be short
lived as new notes come into circulation (45% back in circulation as on December
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17th). Additionally, this move should help to increase the share of formal economy
and digital economy. Post the fixation of tax structure by the GST council, GST law
now awaits implementation in 2017. This simplification of tax structure along with
reforms pertaining to land, labor, infrastructure sectors and modification in FDI
policy could contribute to sustainable growth over medium term. International
rating agency, Moody’s, upgraded India’s government debt rating from Baa3 to
Baa2 on November 16 with a stable outlook. Moody’s believes that the reforms
consisting of fairly significant moves like GST implementation, digitization via
demonetization and the frontal attack on bank NPAs will not only strengthen
India’s institutional framework but also increase productivity and help sustainable
growth. Foreign portfolio Investors are likely to increase their allocation to India as
Indian becomes more attractive in risk-adjusted terms. External commercial
borrowings (ECBs) could get cheaper as the rate of interest is calculated as a
spread over the LIBOR and this spread is inversely related to the risk perception.

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