PROJECT REPORT

ON
INVESTOR PERCEPTION REGARDING
INVESTMENT IN SHARES
Submitted towards the partial fulfillment of the requirement for the degree of

MASTERS OF BUSINESS ADMINISTRATION

MBA Batch 2016 – 2018

Submitted to: Submitted by:

Prof. RICHU SHARMA SIMRANJEETKAUR

(Professor, HOD) MBA 2nd Year, 4th SEM

Roll No 160600463

1
 DECLARATION

Hereby declare that the project report entitled “INVESTOR PERCEPTION REGARDING

INVESTMENT IN SHARES” submitted for the degree of Master of Business

Administration, is my original work and the project report has not formed the basis for the

award of any diploma, degree, associate ship, fellowship or similar other titles. It has not

been submitted to any other university or institution for the award of any degree or diploma.

SIMRANJEET KAUR

MBA-IV Semester

2
 ACKNOWLEDGEMENT

No serious and lasting achievement or success one ever achieves without the friendly

guidance and cooperation of so many people involved in work.

Foremost of all, I express my gratitude to the Almighty for his blessings and for vesting

wisdom in all my wishes.

A feeling of elation insists me on expressing my heartiest gratitude to Prof. Richu Sharma

who allowed doing my final project under his supervision.

Words are not sufficient to register my sincere regards to my loving parents for their deep

affection and unabated inspiration that really kept me going. They were and unending source

of strength and perseverance during the course of the study. I place my thanks to all those

who spared their time and made it convenient for me to complete the research. I deeply

acknowledge their concern for my research. Last but not the least, I also wish to red cord my

gratitude for any person, my memory has failed to recall, who rendered his/her/their support

and services.

Simranjeet kaur

MBA, IV Semester

3
 CONTENTS

CHAPTER-1 INTRODUCTION………………………………………………….…..5-33

Introduction of share and investment…………………………………………………….5-8

Introduction of stock exchange…………………………………………………………..9-14

Feature of stock exchange………………………………………………………………..15

Ludhiana stock exchange………………………………………………………………..18-33

CHAPTER-2 OBJECTIVE OF STUDY…….……………………………………...34-35

CHAPTER-3 REVIEW OF LITERATURE……………………………………....36-39

CHAPTER-4 RESEARCH METHODOLOGY……………………………………40-41

CHAPTER-5 DATA ANAYLISH AND INTERPRETATION…………………..43-54

SUMMARY…………………………………………………………………………...55

CONCLUSION & RECOMMODATION………………………………………….56--57

BIBLOGRAPHY……………………………………………………………………58

ANNEXURE……………………………….…………………………………………59-60

QUESTIONNAIRE………………………………………………………………….61-64

4
 CHAPTER-1

INTRODUCTION

5
What is share?

A unit of ownership interest In a corporation or financial asset. While owning shares

in a business does not mean that the shareholder has direct control over the business'

day-to- in any profits, if any are declared in the form of dividends. The two main types

of shares are common shares and preferred shares.

In the past, shareholders received a physical paper stock certificate that indicated that they

owned "x" shares in a company. Today, brokerages have electronic records that show

ownership details. Owning a "paperless" share makes conducting trades a simpler and

more streamlined process, which is a far cry from the days were stock certificates needed to

be taken to a brokerage before trade could be conducted While shares are often used to refer

to the stock of a corporation, shares can also represent ownership of other classes of financial

assets, such as mutual funds.

In everyday language, when we talk of shares we normally refer to equity shares of a

company. The terms shares and stacks essentially mean the same thing, the latter being a

more common American usage.

An equity share is evidence of this ownership in a company, the physical evidence of this

ownership is a document called the share certificate. Now days, shares are usually kept in

electronic, or dematerialized, from with a depository participant (banks, brokers, financial

institution) of the National Securities Depository Limited (NSDL). However, if one wants

one can still hold shares in the physical from which has your name endorsed on it, and is

6proof that you had some rights in the company. Your rights are proportionate to the number

of shares you own. Suppose you purchase 100 shares in a company called XYZ Ltd, which

has issued 10,000 shares, then you would own 1 per cent of the company. In short, it would

6
mean that you own 1 per cent of its land, factory, equipment, patents, bank balances and all

its other assets. Therefore, when you invest in shares, you are actually purchasing a fractional

ownership of the company.

Companies issue shares of a certain fixed denomination, called face value or par value of that

share, which is clearly indicated all a share certificate in the physical from. Most shares of

Indian companies have a face value of Rs. 10. recently, however, some companies have split

their Rs. 10 `shares into shares’ of Rs. 5, Rs. 2, and even Rs.1. Face value or par value is the

nominal value of the share in the books of the company. It is important to understand that it

bears no relationship to the share’s market price which fluctuates all the time. Dividends,

however, are issued on the par value of the share and not its market value. It continues to

retain this value, so far as the company is concerned, a share continues to be accounted for in

its books at its books at its face value irrespective of the price at which it may later be bought

or sold in the stock markets

7
What is investment?

Investment essentially refers to what you do with your saving in order to preserve them and

make them grow or yield an income. If you keep your savings in the form of the cash, they

are certainly going to diminish in value because the purchasing power of money is constantly

going down as a result of inflation. (The value of money is judged by the quantity of goods

and services you can buy with it). Therefore if you want to maintain or increase the value of

your savings, you have to keep them in forms other than cash. This is what investment is all

about, development of your savings with the intention of preserving or increasing their value.

This development can be done by using your savings to buy land, residential property,

commercial property, gold, jewellery0, works of art, fixed deposits in banks and companies,

shares, bonds, in fact, anything whose value is likely to either remain constant or appreciate

with time.

Investment also refers to using one’s savings with the intention of earning an income. For

example, if you use your saving to buy a house, it will not only appreciate in value, but it can

also give you a monthly income. In the form of rent.

8
INTRODUCTION TO STOCK EXCHANGE

A stock exchange is a nervous system of the capital market. The changes in the capital

market are brought about by a complex set of factors, all operating on the market

simultaneously.

A stock exchange is a key institution facilitating the issue and sale of various types of

securities. It is a pivot around which every activity of the capital market revolves. In the

absence of stock exchange, the people with savings would hardly invest in corporate

securities for which there would be no liquidity (buying and selling facility). Corporate

investments from the general public would have been thus lower.

A stock exchange is a place or a market where securities, shares, debentures, bonds, mutual

funds of Joint stock companies, central and state government organizations, local bodies and

foreign government are brought and sold. A stock exchange is a platform for the trade of

already issued securities through primary market.

It is the essential pillar of the private sector and corporate economy. It is the open auction

market where buyer and sellers met and involve a competitive price for the securities. It

reflects hope aspirations and fears of people regarding the performance of the economy.

The stock Exchange defined

The supreme court of India has enunciated the roll of stock exchange in these words:

“A stock exchange fulfills a vital function in the economic development of a nation. Its main

function is to liquefy capital by enabling a person who has invested money in, say a factor or

railway to convert it in to cash by disposing off his the enterprises to someone else.”

9
According To Securities Contracts (regulation) Act, 1956

Stock Exchange means anybody of individuals, whether incorporated or not, constituted

before corporatisation and demutualization under section 4A and 4B or a body corporate

incorporated under the companies Act, 1956 whether under a scheme of corporatisation and

demutualization or otherwise. For the purpose of assisting, regulating or controlling the

business of buying, selling or dealing in securities.

HISTORY OF STOCK EXCHANGES IN INDIA

In INDIA only registered stock exchanges can operate the stock market activities and the

recognition is governed under the provision of securities and contract (Regulation) Act, 1956.

There are 24 Regional stock exchanges in INDIA. Bombay Stock Exchange (BSE) and

National Stock Exchange (NSE) are the two major stock exchanges of INDIA.

BSE is the oldest stock exchange in ASIA. It was established as”The Native Share & Stock

Brokers Association” in 1875. It is the first stock exchange in India to obtain the permanent

recognition in 1956 from the government of India under the Securities Contract Regulation

Act, 1956. BSE in 1986 came out with a stock index i.e. SENSEX that subsequently became

the barometer of the Indian stock market. BSE played a pivotal role in the development of

the Indian capital market and its index, SENSEX, is tracked worldwide. The exchange has

the nation wide reach with a presence in 417 cities and towns of India. It provides an efficient

and transparent market for trading in equity, debt instruments and derivatives.

NSE on the other hand was incorporated as a tax paying company in 1992. In 1993 NSE was

recognized as a stock exchange under the Securities Contract Regulation Act, 1956 and it

commenced operations in the Wholesale Debt Market (WDM) segment in June1994. The

10
capital market equities segment commenced operations in November 1994 and operations in

derivatives segment were started in June 2000. In October 1995, NSE became the largest

stock exchange in the country. NSE launched S&P CNX Nifty in April 1996. NSE is one of

the largest interactive VSAT based stock exchanges in the world. Presently, it supports more

than three 3000 VSATs. The NSE network is the largest private wide area network in India

and first C- Band VSAT. Hstory of stock exchanges of Indian capital market can be date back

to the 18th century as follows:

18th Century

1800 Trading of shares pf East India Co.’s in Kolkata & Mumbai.

1850 Joint Stock Co.’s came into existence.
1860 Speculation & feverish dealing in securities.
1875 Formation of Stock Exchange Mumbai.
1894 Formation of Ahmedabad Stock Exchange

19th Century

11
1908 Formation of Calcutta S
1939 Formation of Lahore &Madras Stock Exchange
1940 Formation of U.P & Delhi Stock Exchange
1956 Securities Contract Regulation Act enacted landmark
1957 Scam of Hari Das Mundra
1988 Securities &Exchange Board of India(SENI)
1991 Scam of M.S Shoes
1992 SEBI given statutory power SEBI Act,1992
1993 National Stock Exchange
1995 Scam of Harshad Mehta
1995 Scam of Sesa Goa
1997 Scam of C.R.B
1998 Scam of BPL & Videocon

20st Century

2000 Depository came into existence

2001 Trading in Futures, Scam of Ketan Parekh
2002 Start of Rolling Settlement & banning of Badla Trading
2002 Introduction of T+3 Settlements in April
2003 Introduction of T+2 Settlement
2004 BSE Sensex touches all the high time of 6194 in Janurary
2005 BSE Sensex touches all the high time of 7100 in July
Similarly, investment in bank deposits, company deposits, debentures and shares will also

give you regular income. On the other hand, investments in gold, jewellery or work of art

appreciate in value but do not provide any income.

According, as an investor you have to decide whether you want your investment to

appreciate in value, to give you a regular income, or a combination of both. To decide this

you will have to make an assessment of what your future requirements for money are going

to be like. It is only then that you ill know to what extent you want your savings to appreciate

in value, and to what extent you want these to provide a regular income. Having done so, you

then have to decode on how and where to deploy your saving so that your future

requirements for money can be best met. This, in essence, in what the art of investment is all

about.

12
Why has investment become so important now?

There was a time, in the 1930s, when prices remained more or less constant. They did rise

marginally but the rise was too small to have a significant impact on the cost of daily living.

As a result most people felt economically secure and did not feel the necessity to take

investment seriously. In the scenario underwent a drastic change. Price began rising steadily

and continuously, and the value of the rupee dropped sharply. The economic security of the

fixed-income groups disappeared. The 1970s and the early 1980s saw a further acceleration

in these trends. Consumer prices have risen by over ten times in the last 33 years. In terms of

purchasing power, the worth of a rupee had fallen to only around 4 paise in 2004 as

compared to 1960. In the forty years from 1960 to 2000, the annually compounded rate of

inflation has been around 7:8 percent.

It is now quite deaf to most people that inflation has come to stay, and to stay permanently

though after forty years of high inflation there is a possibility of a lower rate of inflation in

the 2000s. Salaries and pensions are no longer adequate for meeting daily needs as they once

were. Hard work, thrift and accumulated savings are no longer enough to provide for one’s

future. Saving have to be intelligently investment and you have to actively mange your

investment if you are to succeed in increasing, or at least in preserving, the purchasing power

of your savings. You have not only to make sure that the rupee value of your saving grows

with time, but also that rate of their growth is higher than the rate of ‘inflation.’ If the rate of

inflation is 8 percent your after-tax income must increase by at least 10 percent to 12 percent

if you want to improve your standard of living.

This is the main reason why it has become essential for everyone to acquire a basic

knowledge of investing. You will find it much easier to cope with the economic problems of

13
the future if you know where and when to invest, and also how to manger your investments

efficiently.

FEATURES OF THE STOCK EXCHANGE

 It provides the trading platform where buyers and sellers meet to transact in

securities.

 The stock exchange in India is under the supervision of the regulatory authority, the

Securities and Exchange Board of India

 It is the place where sale and purchase of existing securities is done.

 It enables an investor to adjust his holdings of securities in response to changes in

assessment about risk and return.

 It enables to meet the liquidity needs by providing market for sale of securities.

 Stock exchange is an association of individual members called member brokers.

14
  Stock exchanges are formed for the purpose of regulating and facilitating the buying

and selling of securities.

 Stock exchange operate with due recognition from the govt. under securities and

contract regulation act 1956.

 Stock exchange facilitates trading in securities of the public sector companies as well

as govt. securities.

 It acts as a host of intermediaries which assist in trading of securities and clearing and

settlement of trade.

15
THE LUDHIANA STOCK EXCHANGE LIMITED:

16
PROFILE

Ludhiana Stock Exchange Limited popularly known as LSE is a public limited company

which is dealing in securities as a regional stock exchange under the name Ludhiana Stock

Association Limited to fulfill the vital need of the stock exchange in its regional area or

jurisdiction i.e. Punjab, J&K, and HP. It has its own subsidiary i.e. LSE Securities Limited

and further LSE Securities Limited has its subsidiary namely LSE Commodity Trading

Services Limited.

Flashback on the incorporation of the LSE:

Sh. S.P. Oswal of Vardhman Group and Sh. B.M. Munjal of Hero group established the

Ludhiana Stock Association Limited (LSE) in the year 1983, to fulfill a vital need of having

Stock exchange in the region. Since its inception, the stock exchange has grown

phenomenally. By 1999-2000, the exchange had a total of 284 brokers, out of which 79 were

corporate brokers; it was further classified as 212-proprietor broker, 2-partnership broker and

70-corporate broker. Then there were only 23 sub-brokers registered.

The stock exchange has played an important role in canalizing savings into capital

for the various industrial and commercial units of the state of Punjab and other parts of the

country. LSE became the second bourse in India to introduce modified carried forward

system after BSE on April 6, 1998. LSE also introduced a settlement guarantee fund (SGF).

The SGF guarantees settlement of transactions and the carry forward facility provides

liquidity to the market. LSE became the first in India to start LSE Securities Ltd., a 100%

owned subsidiary of the exchange. The LSE Securities got the ticket as sub-broker of the

NSE. In 1998, the exchange also got permission to start derivative trading. LSE Securities

Ltd has also started its subsidiary LSE Commodity Trading Services Ltd. in the year 2000.

17
For the settlement of dematerialized securities, the stock exchange has also been linked up

with National Securities Depository Ltd. (NSDL) and, Central Depository Securities Ltd.

(CDSL).

WORK PROFILE OF LUDHIANA STOCK EXCHANGE LIMITED:

Governing Council, Committees and Administration: The Council of Management of the

Exchange consists of eleven members, out of whom two are Government Nominees; six are

Public Representatives and one Managing Director who is also Ex-officio member of the

Board. At every Annual General Meeting, one third of the elected Directors retire by rotation.

The Managing Director who is assisted by a Company Secretary and a team of Executives,

Assistants, Technicians and Sub-Staff manages administration of the Exchange. The

Exchange has four Statutory Committees namely Disciplinary Committee, Arbitration

Committee, Defaults Committee and Investor Services Committee. In addition it has

advisory and standing committees to assist the administration.

Corporate governance: LSE is not a listed company but yet it has followed a model of

corporate governance, which is evident from the composition of the Statutory Committees,

the Investors Services Committee and Audit Committee. The Investor Services Committee is

comprises of four Public Representatives and one broker member. It is headed by Sh.D.K.

Malhotra, a legal expert Statutory Committees are represented by brokers and non-brokers in

20:80 ratios.

OPERATIONS OF LUDHIANA STOCK EXCHANGE:

18
Turnover: LSE is one of the leading Stock Exchanges among the Regional Stock Exchanges

of the country, and has been providing a trading platform for the investors situated in Punjab,

J&K, Himachal Pradesh and Chandigarh. At present it has 344 listed companies and among

them, 220 are listed as regional companies. It had been generating significant amount of

business in the secondary market. It recorded a peak turnover of Rs.9154crores during the

year 2000-2001. The structural changes that took place in the recent past in the Capital

Market of the country had a negative impact on the trading volume of the Regional Stock

Exchanges. There has been a significant reduction of turnover during the financial year 2001-

2002, but the reduction in turnover of the Exchange has been more than adequately

compensated by substantial rise in the turnover of LSE Securities Limited, a subsidiary of

Ludhiana Stock Exchange.

Listing: Listing is one of the major functions of a Stock Exchange wherein the securities of

the Companies are enlisted for trading purpose. It is mandatory for the company coming out

with an IPO to get its shares listed on the Stock Exchange.

The Listing Dept. of the LSE deals with listing of securities, further listing of issues like

bonus and rights issues, post-listing compliance of the companies, which are already listed

with LSE. The companies desirous of listing its securities on the Exchange have to sign a

Listing Agreement with the Stock Exchange. After getting the listing approval, the company

has to ensure and report compliance of the post listing requirements. The listing section of

the LSE monitors the post-listing compliance of all the listed companies and follows up with

the companies, which are found deficient in compliance.

19
Settlement Guarantee Fund (SGF): The Stock Exchange established a Settlement

Guarantee Fund (April 6, 1998). It provides guarantee of all the genuine trades made through

the Screen Based Trading System of the Stock Exchange.

END OF AN ERA

The management of the Stock Exchange apprehended that the smaller regional Stock

Exchange would not be able to meet the challenges imposed by expansion of bigger Stock

Exchange like NSE and BSE and might end up losing their entire business to VSAT counters

of the bigger Stock Exchange. In order to prepare for such an eventuality, Stock Exchange set

up a broking arm in the name of LSE Securities Limited (a Subsidiary company of the Stock

Exchange) in January 200 and built infrastructure and IT based sophisticated systems to

enable its members and investors to trade NSE & BSE through the subsidiary route. The

stock Exchange was thus able to convert me “theart” it faced from expansion of NSE & BSE

into an opportunity for its members and investors. As expected, there was a marked shift in

the trading volumes from from the Stock Exchange to the NSE &BSE through the Subsidiary

Company. This shift became more prominent when SEBI introduced compulsory Rolling

Settlement and banned the deferral products like Badia, MCFS and ALBM w.e.f. July 2,

2001 causing thereby an end to arbitrage opportunities between the Stock Exchange and

NSE/BSE. Ultimately, there was complete shift of trading from the stock Exchange to the

LSE Securities Limited in Janaury 2002.

20
TRADING ON BIGGER STOCK EXCHANGE THROUGH SUBSIDIRY

ROUTE

As stated in the preceding para, the Exchange acquired the membership of NSE &BSE

through its subsidiary, the LSE Securities Limited, with the objective of providing an

enabling mechanism to its member brokers to trade on NSE and BSE se sub-brokers of LSE

Securities Limited.

Trading at BSE and NSE was commenced through the subsidiary route from

September 2000 and December 200, respectively, and the trading in F&O segment of NSE

commenced in February 2002.

INVESTOR RELATED SERVICES

Investor Grievances

The Exchange has made3 special arrangements to handle investor’s complaints and

grievances. It has established an investor grievance cell which receives complaints form

investor and follows up the complaints with companies and member-brokers to ensure their

satisfactory redressal. Recording of complaints and monitoring of their redressal has been

fully computerized. The Committee meets periodically to conciliate the grievance between

investors and broker members.

Investor protection fund

The Exchange has set-up an Investor Protection fund in the month of January, 1990 for

providing compensation to individual investors in case of default by a member of the

Exchange. In case any member-broker defaults to meet his obligation towards investors in

21
respect of deals that took place through the system of the Stock Exchange, then the

concerned investors are compensated from this fund.

Investor Service Center

The Exchange has set-up an Investor Service Center in its premises for providing information

relating to Capital Market to the general public. The Center has a well equipped library,

which subscribes to leading economic, financial dailies and periodicals. It also stores the

Annual Report of the companies listed at The Stock Exchange. The Investor Service Center

is also equipped with a terminal for providing “live” rates of trading at NSE and BSE. A large

number of the investors visit the center to utilize the services being provided by the

Exchange.

Web Site of Exchange: www.lse.co.in

The Exchange has got developed its website and it is now up and running. The Website

provides valuable information about the latest market commentary, research reports about

companies, daily status of international markets, a separate module for Internet trading,

information about listed companies and brokers and sub-brokers of the Exchange and its

subsidiary.

Certification Programme in Capital Market

The Exchange in association with Center for industry Institute partnership Programme.

Punjab University Chandigarh launched a one and a half month long certification Programme

in capital market in February 2006. The Exchange has conduct 6batches of this programme

successfully.

22
Investor awareness workshops

The exchange has been organizing investor awareness workshops in the part of Punjab,

Himachal Pardesh, Chandigarh and adjoining areas of Rajisthan and Haryana since March.

2003. The Exchange has so far conducted more than 200 Workshops in all the above

mentioned place to spread awareness about Securities Market as a part of securities market

awareness campaign launched by SEBI.

BOARD OF DIRECTORS OF LSE

NAME DESIGNATION
Sh. Harjit Singh Sidhu Managing Director
Prof. Rajinder Bhandari Public Representative
Sh. D.K. Malhotra Public Representative
Sh. G.S. Bains Public Representative
Dr. B.B. Tandon Public Representative
Sh. Sunil Malhotra Public Representative
Sh. Yash Mahajan Public Representative
Sh. S.C. Aggarwal SEBI Nominee
Sh. Sanjeev Kumar Gupta Director
Sh. Manmohan Juneja SEBI Nominee
Sh. D.P. Gandhi Director

DEPARTMENTS OF LSE

The main aim of LUDHIANA STOCK EXCHANGE is to ensure the safety and security to

the investors and to provide the proper services under the prescribed guidelines of SE 131. So

to maintain the proper system of working of exchange, there are so many different

interconnected departments, which perform the specific functions. There is an organized

network of activities performed in various departments

23
MARGIN SECTION

Margin Section is an important section. This section apart from dealing and regulating the

trading of brokers keeps the check on excessive trading in speculation. Margin is the amount,

which is collected from tile brokers for the safety of transactions. As the transactions are to

be finalized on basis, in the mean time the rates may fluctuate which may lead to default. So

to make the transaction safe, daily margins are collected from brokers. When a member gets

registered in the exchange and with securities exchange board of India (SEBI), then before

starting trading he is supposed to deposit some fixed by SEBI as security.

Now in SEBI rolling settlement prevails. Ultimately margin is the difference between the

limit and trade done by the member. The security deposit by member is called Base

Minimum Capital. If any member wants to do trade up to greater limit then he can deposit

Additional Base Minimum Capital.

CLEARING HOUSE

Clearing house takes care of pay-in and pay-out securities. At this time there is weekly

trading system (Monday to Friday) prevails. And securities are settled by rolling settlement.

Means pay-ill and pay-out of securities is settled on T+3 Basis would commence from

1April, 2002. SEBI decide the following activity schedule for exchanges for the T+3 rolling

settlement.

24
Settlement cycle schedule:

Sr. Day Description of Activity Trade

No.
1 T Trade Date
2 T+1 Custodial Confirmation
3 T+3 Securities and Funds pay in and pay-out
4 T+4 Auction of shortage in deliveries
5 T+6 Auction pay-in/pay-out as soon as possible

T is Means TRADING PERIOD

COMPUTER SECTION

The growing technicalities and increase in workload has enhanced the importance of

computer section in Ludhiana Stock Exchange. This department mainly referred to EDP i.e.

electronic data processing section. This section is that backbone of entire stock exchange

would come to halt if this department becomes inactive.

It prepares several reports namely: -

 Scrip’s wise statement of each member for each settlement period

 Sub broker wise delivery bill receive order (after payout)

 Downloading of delivery order.

 Downloading of receiving order.

 And broker on sub broker wise final settlement.

 HDFC bank entries.

 Scrip wise statement

25
 Computer facilitates easily updating and automatically adopting of new rates, once we

feed new limits the whole calculation to be done through computer will change. Rates are

updated either daily or month wise as per the requirements.

MARKET SURVEILLANCE SECTION

The main task of this section is to see the market sanctity and maintenance so that the

investors are not cheated. So market surveillance entails scientifically identifying points in a

stock price movement or trading volumes, which don't match with the company's

fundamentals. So the price and volume trends in stock exchange are checked for

abnormalities scientifically.

INVESTORS GRIEVANCE SECTION

LSE has a separate investor's grievance cell, which receives complaints from investors and

follows up the complaints with companies and member broker to ensure their satisfactory

redressal. For providing better services to the investors the stock exchange has maintained

investor protection fund. In this fund Rs.500 is collected from each member annually.

Apart from this 1% of the total listing fee is collected and 10% interest covered on

company deposits is also transferred to the Investor Protection Fund. It has also set up

Investor Service Fund in favor of which 20% of the listing fee is transferred and it is used for

26
the maintenance of Investor Service Center, holding of seminars for investor/brokers benefit,

and publication of LSE Bulletin.

ACCOUNTS SECTION

Most of the work in the Account Section of LSE is done manually, although the computers

are used for the purpose of making Trail Balance, Income and Expenditure Account and

Balance Sheet. The annual report of LSE is generally published on August every year.

Some of the important polices of LSE are as follows:

 The company follows accrual system of accounting and recognizes income and

expenditure accordingly.

 Depreciation is provided on written down value method in accordance with according

to the manner specified in schedule XIV of the Companies Act 1956.

 Fixed costs are stated at historical costs less depreciation.

 Stock/Inventory (stationery) is valued at cost.

 Interest on funds borrowed which is attributable to construction of fixed assets and

other indirect expenditure during construction is included under work in progress.

The company has the procedure of receiving shares and scrip’s of various companies as

securities against the performance of the contract. No accounting entries of such transaction

are made in respect of defaulting members by crediting security account and debiting

member's investment a/c. The shares in such a case are valued at prices on the date of transfer

deeds.

27
LSE SECURITIES LIMITED

PROFILE

OBJECTIVES OF THE COMPANY

LSE Securities Limited is a subsidiary of the Ludhiana Stock Exchange, which was formed

with an objective to enhance business and investment opportunities for the investors and

members of Ludhiana Stock Exchange at large, through innovative products by

encompassing a variety of activities related to the capital market.The company has a paid-up

capital of Rs 5.55 crores.

INTRODUCTION OF THE LSE SECURITIES LTD.

LSE Securities Ltd., was incorporated in January, 2000 with a view to revive the capital

market in the region and for taking full advantage of the emerging opportunities being

provided by expansion of bigger stock exchanges like NSE and BSE. The company since its

inception has marched forward rapidly and achieved many milestone in a short span of

existence.

GOVERNING COUNCIL

28
The Council of the management of the Company comprises of 10 directors of which 3are

broker members and 7non-brokers. Five non broker members are Independent Directors of

eminent status from the field of finance, law and management and remaining two are Chief

Executive Officer of LSE Securities Limited and Executive Director of the holding company

(Ludhiana Stock Exchange), who are on the Board of the company as ex-officio Directors.

Thus the council of management has representation of sub-brokers as well as professionals

and subject specialists representing various fields of business activities. Operations of the

company are run in a professional, transparent and fair manner keeping in view of the interest

of investors as well as other stake-holders.

CORPORATE MEMBERSHIP OF NSE & BSE

SEBI, at the initiative of LSE, permitted smaller Stock Exchanges, to trade on bigger Stock

Exchanges through their subsidiary companies. The Ludhiana Stock Exchange floated its

subsidiary company, the LSE Securities Limited, with the objective of obtaining trading

rights on bigger Stock Exchanges. It has obtained corporate membership of both NSE and

BSE in the first half of year 2000.

TRADING AT NSE AND BSE

The LSE Securities Ltd. commenced trading operations in Capital Market Segments of BSE

and NSE in September, 2000 and December 2000 respectively. The turnover of the Company

at NSE and BSE is growing by leaps and bounds ever since in incorporation. There was

encouraging response from the sub-brokers especially at NSE counters. During the financial

year 2005-06, the Company recorded a turnover of Rs. 7975 crores and Rs.3834 crores in

29
"Capital Market" segments of NSE and BSE respectively. For the year ended 2005-2006,

there were 128 sub-brokers registered for NSE and 68 for BSE.

F&O SEGMENT OF NSE

The LSE Securities Ltd. commenced trading operations in Future and Options Segment of

NSE in February 2002. The Company became the first subsidiary of any Regional Stock

Exchange which commenced trading in “F&O” Segment of NSE. Response to trading

facilities in the “F&O” segment of NSE has been very encouraging and volumes generated in

this segment soon exceeded those in “Capital Market” segment.

TRADING THROUGH V-SATS

The LSE Securities Limited has provided facility to its sub-brokers for trading on NSE and

BSE through VSAT counters which are located outside Stock Exchange Building. During

2005-2006, 27 sub-brokers of the company have been trading through VSAT on NSE and 13

on BSE.

CERTIFICATION IN FINANCIAL MARKET

In order to provide professional services to the investors of LSE Securities Limited through

its sub-brokers, the company motivated its sub-brokers and its staff to qualify the

certification in financial markets conducted by NSE. All trading terminals for Capital Market

Segment and F&O segment are being operated by the persons after having qualified the said

certification

30
DEPOSITORY PARTICIPANT SERVICES – NATIONAL SECURITIES

DEPOSITORY LIMITED (NSDL)

The LSE Securities Ltd. commenced its operations as Depository Participant of NSDL in

August 2000. The DP services provided by the Company have technology edge over other

DPs, as DP of the company is the only On-line Real-Time DP in the region. As a result of

efficient services and competitive rates, the Company has been able to increase its market

share in the DP business at the cost of other DPs in the region. As on date DP of NSDL and

CDSL of the Company at Ludhiana is servicing over 35000 beneficiary accounts

DEPOSITORY PARTICIPANT SERVICES – CENTRAL DEPOSITORY SERVICES

(INDIA) LIMITED (CDSL)

In order to further strengthen its services to sub-brokers and investors, the Company applied

for the DP of CDSL. It started DP operations of CDSL in December 2001. With the

operationalisation of DP Services of CDSL, the Company has been able to provide delivery

of shares to sub-brokers and investors on the day of pay-out which in turn helps the sub-

brokers to give timely deliveries to their clients. Introduction of CDSL operations has also

enabled the sub-brokers and investors of the Company to timely meet the pay-in obligations

of securities purchased by the investors on BSE and sold next day on NSE through the

Company and vice-versa.

EXPANSION PROJECTS

To increase its presence in the region further, the company plans to open its branches of

Depository Services in the major cities of the region. To start with, it has already opened its

branches at Jalandhar Amritsar and Chandigarh.

31
BOARD OF DIRECTORS

SH. JATINDER GARG CHAIRMAN

SH. VIJAY SINGHANIA VICE-CHAIRMAN
SH. H.S.SIDHU DIRECTOR
SH.LALIT KISHORE DIRECTOR
SH. SUKH JIWAN RAI DIRECTOR
SH. ANURAG ARORA DIRECTOR
SH. ASHWANI KUMAR PUBLIC REPRESENTATIVE
DR. M.A.ZAHIR PUBLIC REPRESENTATIVE
SH. P.C.GARG PUBLIC REPRESENTATIVE
SH.AJAY CHAUDARY PUBLIC REPRESENTATIVE
SH.VINAY SRIVASTAV PUBLIC REPRESENTATIVE

32
 CHAPTER-2

Objectives of Study

Objectives of Study

 To study the investor’s attitude towards investment in shares.

 To know about investment objectives of investors.

 To find out the ways to attract more investments towards shares.

 To study investor perception regarding Ludhiana Stock Exchange functioning.

33
 CHAPTER-3
34
 REVIEW
OF
LITERATUR

REVIEW OF LITERATURE

Various studies on Investment pattern & Investment behavior of investors had been
conducted in foreign countries. However, in Indian context, the number is quite few.

35
Depending on the various issues of investment, the review has been discussed in brief as
follows:
Charles (1999) has analyzed that the astonishing growth in Americans' stock portfolios in the
1990s has been a major force behind the growth of consumer spending. This article reviews
the relationship between stock market movements and consumption. Using various
econometric techniques and specifications, the authors find that the propensity to consume
out of aggregate household wealth has exhibited instability over the postwar period. They
also show that the dynamic response of consumption growth to an unexpected change in
wealth is extremely short lived, implying that forecasts of consumption growth one or more
quarters ahead are not typically improved by accounting for changes in existing wealth.

Bhardwaj (2003) has stated the literature on globalization, He found the pervasiveness of the
West’s perception of the world affect on Indian investors that affects the trends in investor’s
Choice. They are hugely affected by the west’s views and so changes in Indian trends occur.

Ranganathan (2003), has stated the investor behavior from the marketing world and
financial economics has brought together to the surface an exciting area for study and
research behavioral finance. The realization that this is a serious subject is, however, barely
dawning. Analysts seem to treat financial markets as an aggregate of statistical observations,
technical and fundamental analysis. A rich view of research waits this sophisticated
understanding of how financial markets are also affected by the „financial behavior‟ of
investors. With the reforms of industrial policy, public sector, financial sector and the many
developments in the Indian money market and capital market, mutual funds that has become
an important portal for the small investors, is also influenced by their financial behavior.
Hence, this study has made an attempt to examine the related aspects of the fund selection
behavior of individual investors towards Mutual funds, in the city of Mumbai. From the
researchers and academicians point of view, such a study will help in developing and
expanding knowledge in this field.

Shrotriya (2003) conducted a survey on investor preferences in which he depicted the

linkage of investment with the factor so considered while making investment. He says “There

36
are various factors and their linkage also. These factors help us how to ensure safety,
liquidity, capital appreciation and tax benefits along with returns.”

Dijk (2007) has conducted 25 years of research on the size effect in international equity
returns. Since Banz's (1981) original study, numerous papers have appeared on the empirical
regularity that small firms have higher risk-adjusted stock returns than large firms. A quarter
of a century after its discovery, the outlook for the size effect seems bleak. Yet, empirical
asset pricing models that incorporate a factor portfolio mimicking underlying economic risks
proxied by firm size are increasingly used by both academics and practitioners. Applications
range from event studies and mutual fund performance measurement to computing the cost
of equity capital. The aim of this paper is to review the literature on the size effect and
synthesize the extensive debate on the validity and persistence of the size effect as an
empirical phenomenon as well as the theoretical explanations for the effect. We discuss the
implications for academic research and corporate finance and suggest a number of avenues
for further research.

Vasudev (2007) analysed the developments in the capital markets and corporate governance
in India since the early 1990s when the government of India adopted the economic
liberalization programme. The legislative changes significantly altered the theme of Indian
Companies Act 1956, which is based on the Companies Act 1948 (UK). The amendments,
such as the permission for nonvoting shares and buybacks, carried the statute away from the
earlier “business model” and towards the 'financial model' of the Delaware variety.
Simultaneously, the government established the Securities Exchange Board of India (SEBI),
patterned on the Securities and Exchange Commission of US. Through a number of other
policy measures, the government steered greater investments in the stock market and
promoted the stock market as a central institution in the society. The article points out that the
reform effort was inspired, at least in part, by the government’s reliance on foreign portfolio
inflows into the Indian stock market to fund the country’s trade and current account deficits.

Johnson (2008) has stated that Product quality is probably under-valued by firms because
there is little consensus about appropriate measures and methods to research quality. The

37
authors suggest that published ratings of a product's quality are a valid source of quality
information with important strategic and financial impact. The authors test this thesis by an
event analysis of abnormal returns to stock prices of firms whose new products are evaluated
in the Wall Street Journal. Quality has a strong immediate effect on abnormal returns, which
is substantially higher than that for other marketing events assessed in prior studies. In dollar
terms, these returns translate into an average gain of $500 million for firms that got good
reviews and an average loss of $200 million for firms that got bad reviews. Moreover, there
are some important asymmetries.
Rewards to small firms with good reviews of quality are greater than those to large firms
with good reviews. On the other hand, large firms are penalized more by poor reviews of
quality than they are rewarded for good reviews. The authors discuss the research,
managerial, investing, and policy implications.

38
 CHAPTER -4

RESEARCH

METHODOLOGY

RESEARCH METHODOLOGY

The Advanced learner’s Dictionary of current English lays down the meaning of Research as

“a careful investigation or inquiry especially through search for new facts in any branch of

knowledge.

39
For the present project, four segments of consumer’s belonging to different occupation were

chosen as opinion makers as they helped us to know more clearly about overall investor

perception regarding investment in shares. I conducted my research in Ludhiana Market.

For the investor survey, a sample size of 100 investors was taken.

For conducting the investor survey, the self administered scheduler with both open-ended and

closed-ended questions were used. The interview method for investor was also used.

The area for conducting investor survey or investor/probable investors in shares was mainly

the feroze Gandhi Market as in Ludhiana Stock Exchange and surrounding financial

institution; I got the required respondents belonging to different parts of Ludhiana.

The style of sampling was convenient sampling.

Limitations of the study

 As the survey is based on convenient sampling, probability is there that sample may

as may not represent the whole of the target segment.

 The survey was restricted to Ludhiana and as such results cannot be generalized.

40
  Bias on the part of respondents to provide the information.

 Sample size in too small, thus it takes into account only a fraction of total population

of Ludhiana.

 Time factor puts hindrance in survey

CHAPTER-5
41
 DATA ANALYSIS

AND

INTERPRETATION

DATA ANALYSIS AND INTERPRETATION

Table (No.1)

Q1.) What is your occupation?

Investor occupation
Catagories Percentage (%)
Business 50
Service 32

42
 Profession 12
Any other 6
Total 100

Chart (No.1)

Table (No.2)

Q2.) Do you make investment?

Yes No Total

Business 50 0 50

Service 32 0 32

Profession 12 0 12

Any other 6 0 6

43
Total 100 0 100

Chart (No.2)

So we, conclude that all classes are interested in the investment.

Table (No.3)

Q3.) In which of the followings schemes do you invest?

Mutual Insurance Fixed Any

Catagories Fund Saving A/c Shares policies deposites other

Business 14 6 50 0 4 0
Profession 8 0 12 2 2 0
Service 12 6 32 8 0 0
Any other 4 2 6 0 6 0

Chart (No.3)

44
Table (No.4)

Q4.) What is main objective of your in vestment?

Catagories Profit maximization Tax Benefits Future Security Any other

Business 42 0 8 0
Profession 8 4 0 0
45
Service 16 2 14 0
Any other 4 2 0 0
Chart (No.4)

Table (No.5)

Q5.) Are you satisfied with the service of Ludhiana stock

Exchange?
Investor satisfaction
Catagories Yes NO
Business 44 6
Profession 12 0

Service 30 2

Any other 6 0

46
chart (No.5)

Q6 If you have invested the shares, please specify the share name?

Ans. Most of the response dent have invested in shares of the companies including RCOM,

SBI BANK, ICICI BANK, DLF,INFOSYS, TCS, RIL., WIPRO and PNB BANK.

Table (No.6)

Q7.) Which type of investment in shares do you prefer?

Catagories Long term Short term

Business 30 20
Profession 10 2
Service 22 10
Any other 2 4

47
chart (No.6)

Table (No.7)

Q8.) Through Whom make your investment in shares?

Through Whom Investor May Invest.
Catagories Broker Self Agent Total
Business 42 8 0 50
Service 28 4 0 32
Profession 10 2 0 12
Any other 4 2 0 6
Total 84 16 0 100

chart (No.7)

48
Table (No.8)

Q9.) How much earning do you invest in shares?

Catagories 0-10 10-20. 20-30. >30
Business 14 12 12 12
Profession 2 2 8 0
Service 10 10 10 2
Any other 2 0 2 2

chart (No.8)

49
 Table (No.9)

Q10.) Do you satisfied the service of Ludhiana stock exchange is

providing you?
AGREE(3) NEUTRAL(2) DISAGREE(1) Total Mean value
INVESTMENT

ADVISE 64 20 16 100 2.48

TIMELY 84 12 4 100 2.8
SERVICES 92 4 4 100 2.88
TECHNOLOGY 98 2 0 100 2.98
TRUST 100 0 0 100 3
chart (No.9)

50
Q11. Rank the following features according to you while investing in share? Rank (1,

2,3…..6)

Higher rank, greater the importance.

(a) Good rate of return ( )

(b) Tax free Income ( )

(c) Portfolio ` ( )

(d) Liquidity ( )

(e) Diversification ( )

(f) Every month’s proper report ( )

Ans:-

51
 Case -1(Business) Most of the respondent in the occupation were in favour of good

rate of return as a future while investing in shares followed by those people in favour of tax

free income and the rest were in favour of liquidity as the No.1 feature and other option were

given lesser ranks.

Case -2(service) Most of the respondent in the occupation were in favour of good rate of

return as the No.1 raking as the feature while investing, indicating that most of them want

proper return on their investment.

Case -3(Profession) Again, Most of the respondent in the occupation were in favour of good

rate of return as the No.1 raking as the feature while investing, indicating that most of them

want proper return on their investment

Case -4 (Any other) Again, Most of the respondent in the occupation were in favour of good

rate of return as the No.1 raking as the feature while investing, indicating that most of them

want proper return on their investment.

Q12. What are changes you recommend in the functioning of Ludhiana Stock

Exchange?

Ans. Almost all respondent were recommending no changes in the functioning of

Ludhiana stock exchange. While few were in favour of investment advice from the exchange.

52
 SUMMARY

The research is conducted to study the present share market scenario in Ludhiana Market. It

involves study of consumer perception regarding investment shares in ludhiana.

The investor survey revealed that the major features making shares competitive are

good returns and Tax free income where as other feature like liquidity Diversification,

portfolio Manegement as compare to those two features.

The investor survey raveled that large segment of respondents from all occupation are

interested in investment in saving accounts. Where business class is leading from other

classes in investment in shares market.

The investor survey revealed that there is very less awareness about the mutual funds in the

market. So the present need is to educate the potential market and develop the overall market

53
as for as the Mutual funds Scenario in concerned. Whereas most respondents prefer long term

investment in share market to get benefit of tax free income and profit maximization.

Mostly the respondents were found satisfied with the functioning of Ludhiana Stock

Exchange.

CONCLUSIONS:

In sample of 100 respondents selected by me in analyzing, I came to following conclusion:-

 Maximum overall investment is in made business Class.

 Business class is ahead of all other classes in field of investment in shares, which

shows they are ready to face some risks while investing.

 Profit maximization is the main objective of maximum number of respondent from

each occupation segment.

 Mostly, the selected sample respondents prefer long-term investment in shares due to

TAX-free income benefit.

 Maximum respondents make investment in shares through brokers, which helps us

conclude they trust more on brokers than agents as investing by themselves.

54
  Maximum proportion of respondents in each segment invest 20-30 % of their earning

in shares. It help us to know the perception of investors of their on shares these days

 Mostly respondents of our sample size are satisfied with the service of Ludhiana

Stock Exchange Ltd., which shows the status that Ludhiana Stock Exchange Ltd is in

the minds of the investors.

 Good rate of return and TAX-free income in case of long term investment in shares

are the main features given top most priority while investing in shares.

RECOMMENDATION

 The conclusions on previous pages show that service class, profession and other

occupation segment lags behind business class while investing in shares.

 I recommend Ludhiana Stock Exchange Ltd. Should develop more trust of investors

from these classes in shares investment so as to increase their investment proportion

in shares.

 I also recommended to opt for efficient attractive schemes by various companies

while inviting investor to buy their shares.

 Salaried class should also be encouraged to invest in stocks because they can get

quick and easy returns, and also get tax benefits.

55
  Stock Exchange should open an investment advice counter for the potential investors

so as to make them aware of benefits of investment in stocks and also remove the

hesitations regarding investment, if any.

 Investor should not keep his main objective as profit maximization, but should also

eye at the other benefits of investments like future security, tax benefits, etc.

BIBLIOGRAPHY

Website:-

www.nseindia.com

www.google.com

www.nsdl.com

www.csdl.com

www.lse.co.in

www.lse.co.in./lseas/home.asp

56
Annexure

S.NO CHARTS NAME PAGE NO

1 INVESTOR OCCUPATION 52
2 INVESTMEN PERCEPTION 54
3 SCHEMES OF INVESTMENT 56
4 OBJECTIVE OF INVESTMENT 58
5 SATISFACTION REPORT ON SECURITIES LTD. 60
6 TYPE OF INVESTMENT IN SHARES 62
7 THROUGH WHOM MAKE INVESTMENT 64
8 PERCENTAGE OF EARNING INVESTED 66
9 PERCEPTION OF DIFFERENT FACTORS 68

57
S.NO TABLES NAME PAGE NO
1 INVESTOR OCCUPATION 51
2 INVESTMEN PERCEPTION 53
3 SCHEMES OF INVESTMENT 55
4 OBJECTIVE OF INVESTMENT 57
5 SATISFACTION REPORT ON SECURITIES LTD. 59
6 TYPE OF INVESTMENT IN SHARES 61
7 THROUGH WHOM MAKE INVESTMENT 63
8 PERCENTAGE OF EARNING INVESTED 65
9 PERCEPTION OF DIFFERENT FACTORS 67

58
Questionnaire

Topic: Investor perception regarding investment in shares.

Q1. What is your occupation?

(a) Business (b) Service

(c) Profession (d) Any other

Q2. Do you make investment?

(a) Yes (b) No

Q3. In which of the following schemes do you invest?

(a) Saving account (b) fixed deposits

(c) Insurance policies (d) Share market

(e.) Mutual fund (f) Any other ( Please specify )

59
Q4. What is main objective of your investment?

(a) Profit maximization (b) Tax benefits

(c) Future Security (d) Any other (Please Specify)

Q5. If you have invested in shares, please specify the name of shares

……………………………………………………………………….

Q6. Rank the following features according to you while investing in share? Rank

(1, 2,3…..6)

Higher rank, greater the importance.

(a) Good rate of return ( )

(b) Tax free Income ( )

(c) Portfolio ` ( )

(d) Liquidity ( )

(e) Diversification ( )

(f) Every month’s proper report ( )

Q7. Which type of investment in shares do you prefer?

(a) Long term (b) Short term

60
Q8. Through whom make your investment in shares?

(a) Broker (b) Agent (c) Self

Q9. How much earning do you investing in shares?

(a) 5-10% (b) 10-20%

(c) 20-30% (d) >30%

Q10. Are you satisfied with the service of Ludhiana stock exchange?

(a) Yes (b) No

Q11 Do you agree that Ludhiana Stock Exchange is providing you services like?

Agree Disagree

Timely

Trust

Technology
Investment advise

Services

61
Q12. What are changes you recommend in the functioning of Ludhiana Stock

Exchange?

………………………………………………………………………………………….

…………………………………………………………………………………………

62