1) Describe the profile of an Indian investor. An investor profile is a reflection of an investors goals and objectives.

It defines how much risk someone is willing to accept and also the kinds of rewards or returns that he is expecting. There seems to be a revolution in the Indian stock markets. From the unpredictable times, the stock market has come a long way. More people are investing in more instruments than ever before, and doing it intelligently. To understand the profile of an Indian investor following are the factors: TURMOIL OF THE NINETIES: If you watched the roller coaster of the Indian market in the nervous nineties, you would swear that this was no way to make a living. Your hard earned money was probably safer in nationalized banks, post offices or fixed deposits. The people in nineties were not much informed and more confident as compared to know. WINDS OF CHANGE: Theres a new breed of Indian investor- younger, more informed, more confident, well paid and independent on making investment decision. The days of going to your broker are gone and Demat is in. Theres another quiet revolution, one thats significant in the Indian context. More and more women are educating themselves and investing online, and are smilingly successful. However, now most investors have a broad purpose rather than a specified plan while making investments. FINANCIAL REFORMS: The market is open, is mostly free and fair, theres honest competition and you can find information on any aspect online. Investor education is on the rise and resources are available on every self-respecting website. The board is deadly serious about cleaning up the market place and is proactively offering you more and more avenues. Indian investors are blooming at the right time, in the right place.

2) What are the factors that influence investment decisions of an Indian investor? The factors that influence investment decisions of an Indian investor are as follows: PAST MARKET TRENDS:

History repeats itself. Sometimes markets learn from their mistakes. One needs to understand how various asset classes have performed in the past before planning ones finances. RISK APPETITE: Risk differs from person to person and the risk appetite is the ability to tolerate the risk. It depends on various factors such as investors financial responsibilities, environment, basic personality depending upon the degree of risk an investor is prepared to take. The investor may be classified as a risk taker, risk averter or indifferent. RATE OF RETURN: The primary objective of an investor is of earning returns on the sum invested. Return can vary based on the type of investment instruments. The portfolio of the investments may have to be readjusted depending on the rate of return earned from each of the investments. This will help an investor to earn an increased rate of return from his investments. INFLATION: It is a factor that can affect the investors return on investment. An investment has to beat the inflation so that the return of the investor can be positive. LIQUIDITY: It is a factor that affects an investment decision. The market can be twisted anytime and if any jerk reaction comes from any news for buying then the investor fails to grasp the opportunity if he doesnt have much money in hand. The investor should have enough liquidity for an emergency or for any investment strategy to earn high rate of return. TAXATION BENEFITS: Tax plays an important role on our income and that will affect our investment decisions. There are investments for which the returns are either not taxed or have a low tax. An individual have to understand the tax laws and invest according to make high return on investments. FREQUENCY OF RETURN: The frequency of an individuals return on his investment is also very important. The investor should carefully follow these for efficient reinvestment and also for the use of the returns for various needs of an

individual. The part of return can be reinvested and the rest are used for any needs that may crop up. DURATION: Short-term investments are usually considered less risky in comparison to long-term investments. But in stock markets long-term investment are less risky. Personal investment is affected by level of knowledge an individual investor possesses about different investments instruments.

3) What are the factors determining investor profile? An investor profile defines an individuals preferences in investment decisions. The factors that determine investor profile are as follows: Short term trading (active management) or long term holding (buy and hold). Risk averse or risk seeker. All classes of assets or just one. Value stock, growth stocks, quality stocks, defensive or cyclical stocks. International diversification. Big cap or small cap stocks. Investment funds. The investor profile is determined by Personal objective or social traits such as age, gender, income, wealth, family, tax situation. Subjective attitudes, linked to the emotions and beliefs. 4) Write short notes on: a) Turmoil of the nineties. If you watched the roller coaster of the Indian stock market in the nervous nineties, you would swear that this was no way to make a living. Your hard earned money was probably safer in nationalized banks, post offices, or fixed deposits. The people in this period were not much informed and confident as compared to know. As the people well less knowledgeable about the stock market, they throw their money in without real knowledge and before they could know the market collapsed, taking your savings with

it. Now there seems to be a revolution in the stock markets. People are investing in more instruments than ever before and doing it intelligently. b) Financial planning. Financial planning is the planning where the entire financial picture of a client is taken into consideration from all the relevant angles to provide a comprehensive solution. In India, financial planners are also known as the financial advisor. However these two terms are technically not synonymous and their roles have functional differences. Some planners may also be called as comprehensive or holistic financial planners. Personal financial planning is broadly defined as a process of determining an individuals financial goals, purposes in life and lifes priorities, and after considering his resources risk profile and current lifestyle, to detail a balanced and realistic plan to meet those goals. Scope of financial planning for an Indian Investor : Investment decision covers all the areas of his/her financial needs. The scope of planning includes the following: RISK MANAGEMENT AND INSURANCE PLANNING: Managing cash flow risks through sound risk management and insurance techniques. INVESTMENT AND PLANNING ISSUES: Planning, creating and managing capital accumulation to generate future capital and cash flows for reinvestment and spending. RETIREMENT PLANNING: Planning to ensure financial independence at retirement. TAX PLANNING: Planning for the reduction of tax liabilities and the freeing up of cash flows for other purposes. ESTATE PLANNING: Planning for the creation, accumulation, conservation and distribution of assets. CASH FLOW AND LIABILITY MANAGEMENT: Maintaining and enhancing personal cash flows through debt and lifestyle management. EDUCATION PLANNING: This planning is for kids and family members.

c) Advantage and disadvantage of Demat account. The term Demat, in India, refers to a dematerialized account for individual citizens to trade in listed stocks or debentures, required for investors by The securities exchange board of India (SEBI). In a Demat account, shares and securities are held electronically. Advantage of Demat account: Its a safe and convenient way to hold securities. Immediate transfer of securities. There is no stamp duty on transfer of securities. Elimination of risks associated with physical certificates such as bad delivery, fake securities, delays, theft etc. There is a major reduction in paperwork involved in transfer of securities, reduction in transaction cost etc. Reduces brokerage charges. Change in address recorded with DP gets registered with all companies in which investor holds securities eliminating the needs to correspond with each of them separately. Disadvantage of Demat account: Trading in securities may become uncontrolled in case of dematerialized securities. It is difficult for capital market regulator to keep a close watch on the trading in dematerialized securities and see to it that trading does not act as a detriment to investors. The role of key market players needs to be supervised as they have the capability of manipulating the market. Multiple regulatory frameworks have to be confirmed. Agreements are entered at various levels in the process of dematerialization. These may cause anxiety to the investor desirous of simplicity.