Académique Documents
Professionnel Documents
Culture Documents
This project is carried out to study the investment pattern of the clients of Equity
master as well as other investors in stock market.
The other objectives are studying the investor’s psyche and segmenting the market.
This is a descriptive type of research and Survey Research method is the basic
research design. The questionnaire was prepared and the 100 clients of Equitymaster
in Mumbai and other 100 investors, who were not subscribers were interviewed for
the purpose of collecting relevant data.
The sample size is based on judgement. We use non-probability convenience
sampling.
On the basis of these findings, suggestions have been made to improve the services
and increase the client base of Equitymaster.
1
QUANTUM INFORMATION SERVICES
TOWARDS A MORE INFORMED FINANCIAL FUTURE
For the last decade and more, the company has been contributing towards the growth
of the Indian markets by providing reliable financial analysis in addition to a
comprehensive database. This information was available to domestic and international
investors through The Quantum Stock Market Yearbook.
The company's annual publication, The Quantum Stock Market Yearbook, provided a
detailed research database of the country's economic and financial outlook. The
Yearbook reviewed the performances upto 200 Indian companies, the trends in major
industries, and provided details on the foreign markets.
With the arrival of the Internet and its worldwide access, Quantum decided to put its
bank of financial information online in 1996. Today, with www.equitymaster.com,
the average Indian investor could base his investment decision on a comprehensive
and relevant database. Widely trusted and vouched for as one of the most reliable
databases on the subject, this information is backed by 10 rich years of experience and
expertise. This site was developed and has evolved as the definitive site on Indian
equities and investments with quality information available in easy to read and easy to
access format.
The company also has a personal finance site for individuals- www.personalfn.com.
Individuals can freely access comprehensive and dependable financial information on
personal financial matters. The site's highly interactive format makes it extremely
user-friendly and appealing.
2
With these two sites, Quantum Information Services has become a leading provider of
Indian corporate information, online. A detailed review of the two sites tells you just
what it is that keeps the investors coming back to Quantum's sites time and time
again.
3
www.equitymaster.com
The investor's best friend
Launched in 1998, this website is a one-stop-source for most extensive research and
information on Indian stocks, foreign exchange markets, India-specific and global
indices, the commodity markets, foreign fund flow, etc. It has grown in recognition
as one of the most reputable and reliable websites on Indian finance and is continually
developing new interactive tools to give visitors more power on the market.
THE LINKS BEHIND THE SUCCESS
The people behind the most reliable and dependable financial sites on India, today are
a team of leading financial and IT professionals, highly respected in their respective
industries for their high levels of commitment and competence. To list, they are:
Ajit Dayal, Co-Founder & Chairman: His reputation as the founder of India's first
equity research company as early as 1990 precedes him everywhere he goes. Ajit has
been a broker, a research analyst (top ranked by Asia Money, Institutional Investor)
and a fund manager during his career. He has also been regularly writing articles on
the stock market, for a long time now.
Riyaz Ladiwala, Co-Founder & Chief Executive Officer: The company's two
products are under his able care. As the product builder, the look, the feel, the
services, the tools, the working and everything else that the sites denote and present is
the result of uncompromising hard work of this net whiz. As the net heats up, Riyaz
looks forward to giving the users more reasons to keep coming back to the Quantum
sites.
Management Committee:
Ajit Dayal Chairman
Riyaz Ladiwala Chief Executive Officer and Director
Murali Krishnan Vice President (Legal & Compliance)
Natraj S Analyst
Payal Tahiliani Vice President (Finance & Administration)
Rahul Goel Vice President (Content) & CEO (Personalfn)
Rakesh Bhuvad Asst. Vice President (Software)
4
Portfolio tracker
This is a program where an investor can keep a track of his stocks. The service also
allows the subscriber to create his mutual fund portfolio and manage it.
StockSelect
Earlier it was know as ‘Quantum View’. This product was introduced by the company
in the year 2002. Subscribers to StockSelect get weekly recommendation on the basis
of research done by team of research analysts. In stockselect one gets the
recommended buy price and sell price of the stock. The investment time frame is long
term. Each report provides investment rationale, the investment concerns and
financial analysis with projections. The recommendations given are of fundamentally
strong company. Subscriber can avail either for a softcopy that he/she can receive in
his/her mailbox or can get a hard copy through courier.
Research Reports
Research on India's top 100 companies.
Analysis and Buy/Sell price limits.
The Research Report service from Equitymaster is a great way to start investing in the
stock market. The comprehensive reports on India's leading companies offer not just
valuable analysis, but also provide with buy/sell limits for each stock which updated
regularly to help you identify the right stock for your portfolios.
Equitymaster's Research Reports are conclusive. Using their intelligent query module,
one can screen the universe of companies based on growth and price parameters.
5
Equitymaster has been promoted by the people behind Quantum - India's first equity
research house who have over the years provided advice to retail and institutional
investors.
General Features
EPS updated on quarterly basis, P/E ratios updated in real time Fundamental
analysis.
Each report provides an Investment Summary, Background, 'Reasons to Buy' and
'Reasons not to Buy'. Our views are independent, unbiased and balanced.
Query the Universe. Screen the universe of companies on multiple parameters. Know
the most underpriced stock in the sector and also the most underpriced stock from the
basket of 100 stocks.
New features
Buy/sell price limits for 1-year, 2-year and 3-year time horizons, depending on the
investment time frame.
The company wanted to increase its consumer base by way of personal sales. This
method direct selling could also help the company in certain areas like increasing
communications with the prospective customers and enhancing confidence of the
existing customers.
We had a very good opportunity to work with Equitymaster. It was a very valuable
and helpful experience for us to work as sales representatives. There are many
competitors of Equitymaster in the market. To differentiate Equitymaster provides
unique attributes in their services mentioned above. We had to make people
understand the service’s attribute and their relative importance. We conveyed the
benefits of services to the customers. We made them believe in our services and
6
created a positive attitude towards company. Also we had to solve their queries. At
the end we had to convince them to subscribe to the service and then get the cheque.
We were given target to get subscription worth Rs 60,000 in 45 days and we
outperformed and did business worth Rs 1,00,000.
In this two months, we met around 150 customers. We got a vast experience to read
mind of various people of different cast, religion and culture.
This experience helped us in carrying the following research.
7
TITLE
“Profiling investors in stock market”
OBJECTIVES
LITERATURE REVIEW
8
Investment Philosophy of Warren Buffett
Warren Edward Buffett. Born August 30, 1930, Omaha. Son of Howard and Leila
Buffett.
Warren Buffet, a multi-billionaire and the second richest man in the world, is the most
successful investor in history. Known as the "Oracle of Omaha," he runs Berkshire
Hathaway Inc., the company through which he has made most of his investments.
Another aspect is fundamental analysis of a company, neither of its market price, nor
the attention given to the growing of return on equity.
9
But the most important factor that defines the conservative investment philosophy is
the attitude in front of the investment environment that will be designed by the
following examples.
In the late 1960s stock market has grown too much and PER was over 50. Buffett
analyzed stock-market situation and wrote to his shareholders the following words:
"On one point, however, I am clear, I will not abandon a previous approach whose
logic I understand, although I find it difficult to apply. Even though it may means
foregoing large and apparently easy profits, to embrace an approach which I don’t
fully understand, have not practiced successfully possibly could lead to substantial
permanent loss of capital.’’
When somebody asked him why didn’t buy MICROSOFT, he said that doesn’t
understand business very well and can’t predict the future cash - flows on a long -term
basis. He said about knowing the business where you invest and the circle of
competence that: "doesn’t matter how big is circle, count how well defined its limits
are!’’
Another popular attitude of Buffett is about Macroeconomy: ’’we don’t spend time
analyzing figures about employment rate, interest rate or exchange rate.’’
These examples and Buffett’s attitude conduct us to three elements that define
investment conservative philosophy:
• Understanding of business; Don’t enter in a business that you don’t
understand, even seems to be simple or complicated for others.
• Control: Don’t be preoccupied about things that you can’t control like interest
rate or exchange rate, and try to buy only those companies that are not hurt by
inflation, try to control the business (control position in shareholders meeting)
and capital allocation because you’ll influence company’s future.
• Prediction and Counting: This condition is the result of business
understanding that allows prediction and counting of the future cash-flows and
calculation of fundamental value;
The investment style must represent you as a personality and competence level. The
example with MICROSOFT is essential for this case. The fact that Buffett
10
did not understand the Microsoft business and couldn’t predict its cash-flows don’t
mean that nobody else can’t understand and predict it.
Finally, the conservative philosophy is an attitude and philosophy about investment
action based on facts and reasoning and can be defined by four elements:
understanding, control, prediction -counting and subjectivity.
No one has had Warren Buffet's level of success when it comes to investing in the
stock market. For over 30 years, Warren Buffet has obtained unparalleled results
while sticking to his time-tested approach of investing in solid stocks at attractive
prices.
11
_ SHORT-TERM MARKET VOLATILITY DOES NOT CONCERN HIM
_ DAY-TO-DAY STOCK QUOTES ARE MEANINGLESS
Circle of Competence
_ Draw a circle only around businesses that one understands, do not bother about
those outside this circle
_ Never invests in businesses which cannot be understood.
Minimize Risks
_ Searches for investments in which risk is eliminated or minimized. Only take risks
where the chances of total loss are low and gains are substantial
_ Minimize risks greatly by concentrating on only a few holdings (opp. of
diversification) invest over long term & in stable companies
12
Rule-of-Thumb
_ Think of owning stock as being an owner of the company. Study that
company and its competition thoroughly, when invest in the same for the long haul
(> 5 years),
_ Do not use leverage, and do not be led by the market's moves or by what other
investors do.
Buffett’s Success
Buffett’s success is not a matter of luck. But for a success like this, one should have a
clear perception, discipline about his stocks. He should treat his stock as a business
and not a mere stock. Same as one invests in a business for long term he should also
hold the stock for long term & must a complete knowledge of management of
company, the stocks hold should not be diversified much (Circle of Competence).
13
17th may 2004 -The BLACK DAY in Stock Market
Kab Hua
14
Kyun Hua
Warren Buffett
The voting machine & the weighing scales(short term volatility & long term returns)
15
Investor psyche - wrong emotion dominates at the wrong time
Thecy
cleo
ffe
ar, g
ree
dandh
ope
Zuric
hIn
diaMu
tua
lFu
nd
Impact of events “News value” events have temporary impact on stock prices –
provide opportunity to buy or to sell.
16
Large fall in the BSE Sensex in recent memory
News events are forgotten very fast – Kargil war, Iraq war, Sept 11, fall in
governments ; have temporary impact on prices
–
Profit events – have lasting impact on share prices; though often have less news value.
we’ve seen ….
Two/ three wars
•At least three major financial scandals
•Assassination of 2 prime ministers
•At least 3 recessionary periods
•11 different governments and
•An unfair share of natural disasters,
Yet GDP has grown by 15.6% p.a. and the Sensex by 19% p.a.
–Elections are a routine; some changes are inevitable but no material impact on
growth prospects of economy or corporates
–
–The fall has reduced the actual risk, though perceived risk is high at such times
17
–
–There are other risks that are more important e,g., global sentiment towards equities
etc
18
RESEARCH METHODOLOGY
SAMPLE DESIGN:
Sample Population
Clients of Equitymaster and investors in stock market
Sample Unit
Mumbai
Sampling Method
We used Non-probability Convenience sampling.
RESEARCH DESIGN:
A research design is the specification of the methods and procedures for acquiring the
information needed. It is the over all operational pattern or framework of the project
that stipulates what information is to be collected from which sources, by what
procedures.
19
DATA ANALYSIS AND INTERPRETATIONS
The Data collected was then analyzed on the basis of Age & Income as for the
purpose of finding the most attractive segment.
25
Index stock
20
LargeCaps
15 Midcaps
10 F&O
Any
5
0
<25 25-40 40+ <25 25-40 40+
35
30
25
20
1
5
1
0
0
<
25 25-40 40+ <
25 25-40 40+
LessthanRs20 20-1
00 1
00-500 morethan500 Any
8
6
4
2
0
<
25 25-40 40+ <
25 25-40 40+
<3Months 3-1
2Months 1
-3Years >3Years Daytrading Any
20
(4)Value of your investment in shares
30
25
20
1
5
1
0
0
<
25 25
-40 40+ <
25 25
-40 40+
<1lacs 1
-5lacs 5-1
0lacs >
10lacs donotdisclose
30
25
20
1
5
1
0
0
<
25 25-40 40+ <
25 25-40 40+
<
10% 1
0-25% 25-50% >
50% Donot consider
40
35
30
25
20
1
5
1
0
0
<25 25
-40 40+ <
25 25
-40 40+
Fu
ndamen
tal Tech
nicals Tips Oth
ers
21
(7) Reasons for Investment
45
40
35
30
25
20
1
5
1
0
0
<25 25-40 40+ <25 25
-40 40+
Investm
entavenue Passion highreturns Friends Others
(8)Allocation of funds
3500
3000
2500
2000
1
500
1
000
500
0
<
25 25-40 40+ <
25 25-40 40+
Equity Mutual Fund fixeddeposit Cash Others
50
40
30
20
1
0
0
< 25 25-40 40+ <
25 25-40 40+
dalal Street Capital Market BusinessIndia Eco times Business Std
OutlookMoney Businessline Oth None
22
(10) Financial web sites visited
50
45
40
35
30
25
20
1
5
1
0
5
0
<
25 25-40 40+ <25 25-40 40+
eqtm moneycontrol myiris indiainfoline capitolmktg yahoo Oth None
23
Income Wise Analysis
(1) Companies preferred for investment
25
20
1
5
1
0
0
<
20 20-50 50+ donot <
20 20-50 50+ donot
25
20
1
5
1
0
0
<
20 20-50 50+ donot <
20 20-50 50+ donot
LessthanRs20 20-1
00 1
00-500 morethan500 Any
24
30
25
20
1
5
1
0
0
<
20 20-50 50+ donot <
20 20-50 50+ donot
<3Months 3-1
2Months 1
-3Years >3Years Daytrading Any
25
20
1
5
1
0
0
<
20 20-50 50+ donot <
20 20-50 50+ donot
<1lacs 1
-5lacs 5-10lacs >
10lacs donot disclose
40
35
30
25
20
1
5
1
0
5
0
<
20 20-50 50+ donot <
20 20-50 50+ donot
<
10% 1
0-25% 25-50% >
50% Donot consider
25
(6) Basis of investment
45
40
35
30
25
20
15
10
0
<
20 20-50 50+ donot <
20 20-50 50+ donot
35
30
25
20
1
5
1
0
0
<
20 20-50 50+ donot <20 20-50 50+ donot
Investment avenue Passion highreturns Friends Others
(8)Allocation of funds
3000
2500
2000
1
500
1
000
500
0
<
20 20-50 50+ donot <
20 20-50 50+ donot
Equity Mutual Fund fixeddeposit Cash Others
26
(9)Reading pattern
40
35
30
25
20
1
5
1
0
0
<20 20-50 50+ donot <
20 20-50 50+ donot
dalal Street Capital Market BusinessIndia Ecotimes BusinessStd
OutlookMoney Businessline Oth None
35
30
25
20
1
5
1
0
0
<
20 20-50 50+ donot <
20 20-50 50+ donot
eqtm moneycontrol myiris indiainfoline capitolmktg yahoo Oth None
27
So the segment for Equitymaster to concentrate is investors of the age more than 25
years and having income of Rs25000-50000 per month .
Having defined the group the data was further scrutinized to learn more about
the investing habits of the target group.
While referring to the response received form the sample for the 1st question it can be
stated that majority of the people are more interested in investing in
Index stock
Large Caps
Mid caps
A very small percentage of the sample is interested in investing in f&o the main
reason being lack of knowledge with regards to the trading process.
28
Subscribers Non Subscribers
< 3 Months 8.1 15
3-12 Months 35.1 15
1-3 Years 27 65
> 3 Years 8.1 5
Day trading 16.2 10
Any 13.5 5
In reference to the timeframe of there investment it can be seen that not much of the
investors prefer to stay invested in a stock for not more than 3 years. Also it reveals
that a good number of people prefer day trading in comparison to the other options
available. This phenomenon is mainly due to lack of knowledge in respect to the
benefits one can derive by staying invest for a long time rather than day trading.
29
avenue
Passion 27 15
high returns 64.8 80
Friends 2.7 15
Others 0 0
Higher returns are on the top of the ladder when it comes to reasons for investment in
the markets. We can also look at the trend in the interest rate (Continuously falling)
because of which the people are forced to take the risk. A noticeable percentage of the
sample also consider the same investment option as a good investment avenue
through which they can diversify there risk. Where as a very miniscule percentage of
the subscriber sample invest because of social need in the market but the same is high
in case of the non subscribers.
If Given a sum of Rs.100/- how would you invest it in all of the following
Subscribers Non Subscribers
Equity 1965 920
Mutual Fund 410 225
fixed deposit 385 405
Cash 690 325
Others 260 125
For an investor it is very crucial how he bifurcates his funds so as to maximizes
returns but at the same time try and keep the risk factor as low as possible. Thus from
the above distribution it can be seen that the sample uses a 50-50 method of
investment in general.
They are ready to invest 50% of the amount in the stocks so as to maximize profit but
at the same time also investin other options where there is low returns but more of
gurantee.
30
eqtm 75.6 30
moneycontrol 51.3 80
myiris 5.4 5
indiainfoline 16.2 15
capitolmktg 27 5
yahoo 0 10
Oth 37.8 25
None 16.2 0
In terms of financial web sites visited there is a disparity mainly because subscribers
have paid to equitymaster and will prefer to visit the site more than any other site of
the same nature.
31
Observations
• People invest in the companies with good management and don’t pay much
attention to the stock price.
• There is a good enough segment of long term investors. Also day traders and short
term investors play safe game by investing some capital in long term and
minimizing risk.
Short term market volatility does not concern them. Day to day sock quotes
are meaningless for them.
• A long term investor posses traits like discipline, patience, flexibility, courage,
confidence
32
RECOMMENDATIONS
Increase Visibility
when the non subscribers were asked about www.equitymaster.com
it can be clearly seen that the visibility was low as compared to
www.moneycontrol.com thus the company should take dinosaur steps to increase it
by advertising in magazines & news papers. The location of the office can also be
used by putting sign boards on the walls of the office facing the road.
Sponsored links
Equitymaster can pay search engines like google to put sponsored link of
Equitymaster for the publicity purpose and to increase the number of hits.
33
APPENDIX
Questionnaire
(1) Companies you prefer to invest in?
Index Stocks
Large Caps
Mid Caps
Futures & Options
Any
(4) What is the value of your investment in shares? (Size of your Portfolio)
< 1 lacs
1 lacs to 5 lacs
5 lacs to 10 lacs
> 10 lacs
(5) What returns do you expect from your investments in shares, annually?
<10% 10%-25% 25%-50% >50%
(8) If Given a sum of Rs.100/- how would you invest it in all of the following
Equity Shares
Mutual Funds
Fixed Deposits
Cash
Others
34
Capital Markets
Business India
Economic Times
Business Standard
Outlook Money
Business Line
Others Please Specify______________________________
(13) Age:
(17) Income
< 20,000
20,000-50,000
50,000+
BIBLIOGRAPHY
35
Books and journals
Websites
www.equitymaster.com
www.bseindia.com
Events
Equitymaster’s seminar “What next?”
36