09 Chapter 4

CHAPTER FOUR
PERCEPTION OF INVESTORS ON PRE- INVESTMENT

PATTERN IN SECURITIES MARKET
4.1 INTRODUCTION
The present chapter tries to project the Pre-Investment pattern of the

investors in Securities market in Virudhunagar District. The investors prefer to
invest their savings in stock exchange securities and they are having positive
attitude towards the securities market. Before making investment in securities,
how they perceive the purchase pattern is being studied by the researcher.
Investors generally analyse the information available from different sources and
decide about the selection of particular investment products available in the
securities market. Maximum gain at a minimal risk is the mantra of every
investor in the Securities market. Other objectives like safety, liquidity and hedge
against inflation can be considered as subsidiary objectives for choosing the
investment vehicle available in the stock market. The current chapter presents
i) the investors level of awareness towards investment in securities market,
ii) the relationship between the demographic profile variables of the investors and
the Securities market products preferred by them, iii) the relationship between the
investment profile variables of the respondents and the Securities market
products preferred by them and iv) the association between the factors
influencing investment decisions in Securities market products preferred by the
investors.
4.2 AWARENESS OF INVESTORS ABOUT SECURITIES MARKET
In order to achieve the investment objectives, investors develop a variety

of investment strategies. The development of a strategy includes the study of
financial, economic, political and social conditions and aims to forecast future
prices at a certain time-horizon. The responses made by the respondents of the
study areat and their level of awareness regarding the various factors that
influence the market volatility is tested by the researcher. The awareness of
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investors towards security analysis are measured by using Likert’s five point
scale, namely Very high, high , medium, low and very low.
4.2.1 Awareness about Stock
There are a large number of investment products available for the

investors. Some of them are marketable and liquid, while the others are non
marketable. Some of them are also highly risky while others are almost riskless.
The people have to choose proper avenues among them. A common perception
is that the stock market is the best game in the town. Lack of awareness among
the people makes them feel the stock market as gambling but the respondents
might have open discussion with their friends regarding their financial planning
and the friends won’t hesitate to give ideas and advice in financial planning. It is
the human mentality to share the right or wrong with the friends first. Media
news paper and journals may make them updated with the current scenario. For
every investor of the financial market, information about the Securities market
products is an important factor to decide about the selection of the investment
vehicle. The researcher has analyzed from whom and how the respondents have
gained awareness about the stocks of the Securities market and is given in the
below table 4.1.
TABLE 4.1
Awareness about Stock
Very Very
Awareness about stock High Medium Low Mean S.D
high low
Through Count 90 120 48 27 15 3.81 1.113

intermediaries/
Brokerage firms % 29 39 15 9 5
Count 75 150 33 33 9
Through Friend 3.83 1.022
% 25 50 11 11 3
Count 30 105 81 72 12 3.23 1.049
Through Family
% 10 35 27 24 4
Count 45 105 75 60 15
Through Peers 3.35 1.110
% 15 35 25 20 5
Count 69 123 30 42 36 3.49 1.310
Through Media
% 24 41 10 14 12
Source: Computed from Primary Data
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From the table 4.1, it is found that the sense of awareness about the stocks
in the Securities market is mainly created by the friends and it is agreed with a
mean score of 3.83 and the family failed to boost the awareness with a mean
score of 3.23. There is no highest variation among the Intermediaries and
through Friends, as the mean score of intermediaries/brokerage firms have gained
a mean score of 3.81. The highest variation is felt from the statement ‘Through
Media ‘with a standard deviation 1.310 and the lowest variation is through
friends with the standard deviation of 1.022.
Depending upon their specific needs, risk preference and return expected,
the respondents who prefer the Securities market have gained awareness through
friends, brokers, media, peers and family respectively.
4.2.2 Awareness about Sector Affairs
After formulating the investment policy, the securities to be bought have

to be scrutinized through the market, industry and company affairs which are
known as sector affairs. Investor who plans for investment or trade must basically
have an idea about the stock market, industry or company which is preferred by
the investor to be bucketed. The table 4.2 depicts the level of awareness in sector
wise affairs by the respondents and for this purpose of analysis the weighted
average score and standard deviation are calculated.
TABLE 4.2
Awareness about Sector Affairs
Awareness about sector Very Very
High Medium Low Mean S.D
Analysis high low
Thorough Knowledge Count 105 114 48 27 6

3.95 1.025
on Market
% 35 38 16 9 2
Count 84 135 45 27 9
Thorough Knowledge
3.86 1.022
on industry
% 28 45 15 9 3
Count 90 123 45 36 6
Thorough Knowledge
3.85 1.045
on Company
% 30 41 15 12 2
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Table 4.2 reveals that the level of awareness about Market affairs was
high among the investors since its weighted average score is 3.95, which is very
high compared to the Industry affairs (3.86) that ranks second, closely followed
by the Company affairs which has secured third rank based on the weighted
average score of 3.85. Market affairs ranks first and this may be due to the fact
the changing indices named SENSEX and Nifty needs to be noticed first before
stepping into the securities market.
4.2.3 Awareness about Economic Affairs
The stock market mirrors the general economic scenario. The growth in
gross domestic product and inflation are reflected in the stock prices. The
recession in the economy results in a bear market. The stock prices may be
fluctuating in the short run but in the long run they move either upwards or
downwards. Budget, tax structure and interest rates of RBI also impact the
Securities market in the short term. The investors must be aware of the economic
factors and can fix the correct entry and exit points. By fixing a target for the
stock in the portfolio investor can practice a descent investing process and
prevent any loss. Hence the awareness level of the respondents regarding the
economic affairs is depicted in table 4.3.
TABLE 4.3
Awareness about Economic Affairs
Awareness about Very Very
Economic affairs high low
Count 81 96 54 57 12 3.59 1.186

GDP
% 27 32 18 19 4
Count 69 84 78 48 21
Inflation 3.44 1.205
% 23 28 26 16 7
Count 57 93 72 60 18 3.37 1.174
Interest rates
% 19 31 24 20 6
Count 84 135 51 21 9
Budget 3.88 0.994
% 28 45 17 7 3
Count 45 81 81 63 30 3.16 1.208
Tax structure
% 15 27 27 21 10
150
Table 4.3 vividly describes that with regard to Economic affairs,
respondents are aware of the Government budget which ranks first with the mean
score of 3.88,the variable GDP of the country ranks second (3.59) followed by
Inflation (3.44) Interest rates (3.37) and Tax structure (3.16) respectively.
Normally it is human perception to follow the country‘s budget. Investors
concentrate on GDP growth of the country as it is a main concept that attracts FII
investments which automatically paves path for bull market.
Inflation rate ranks third. When inflation is at a low rate, the stock
market responds with a surge in selling. High inflation causes the investors to
think that companies may hold back on spending; this causes an across the board
decrease in revenue and the higher cost of goods coupled with the drop in
revenue causes the stock market to drop.
Interest rates as established by the Reserve Bank of India and the

individual banks can have an effect on the stock market. Interest rates play a
major role in determining stock market trends. Bull markets are usually
associated with low interest rates and high Capital Gains, and bear markets with
high interest rates and low Capital gains. Interest rates are determined by the
demand for capital – pushes them up and normally indicates that the economy is
thriving and that shares are probably expensive. Low interest indicates low
demand for capital, thus liquidity builds up on the economy, driving share price
down. Other interest rates like that of on Deposits and Borrowings also have
impact on share prices.
4.2.4 Awareness about Industrial Affairs
The industries that contribute to the output of the major segments of the
economy vary in their growth rates and their overall contribution to economic
activity. Some industries grow faster than the GDP and are expected to continue
in their growth. For example the information technology industry has
experienced higher growth rate than the GDP in 1998. The economic
significance and the growth potential of the industry have to be analyzed by the
investors. Industrial affairs include the study of the nature of the product, its
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competitors, Government policy and the allotment of funds towards Research and
development. Table 4.4 clearly pictures the awareness level regarding industrial
affairs.
TABLE 4.4
Awareness about Industrial Affairs
Awareness about Very Very
Industrial affairs high low
Count 132 93 39 30 6
Product Nature 4.05 1.073
% 44 31 13 10 2
Count 87 120 51 33 9
Competition 3.81 1.067
% 29 40 17 11 3
Government Count 60 117 63 51 9

3.56 1.082
policy % 20 39 21 17 3
Research and Count 48 108 66 51 27

3.33 1.194
Development
% 16 36 22 17 9
Table 4.4 depicts the awareness on industrial affairs wherein the “Product
nature” ranks first with a mean score of 4.05. It is human nature to study the
product produced in the industry, whether it is consumable or non consumable,
luxurious or of service product and moreover, in the Securities market there is
sector wise movement. For example: Banks, Infrastructure, pharmacy, IT,
FMCG sectors etc may be pullers or draggers of the Nifty and SENSEX.
Competition for the industry ranks second with the mean score of 3.81.
Government policy (3.56) and Research and Development (3.33) rank third and
fourth respectively.
4.2.5 Awareness about Company Affairs
The purpose of knowing company affairs is to help the investors to make

better decisions. The company’s earnings, profitability, operating efficiency,
capital structure and management have to be screened. These factors have direct
bearing on the stock prices and the return of the investors. Based on the
performance of the company, the stock value appreciates in the securities market.
Company with high market share is able to create wealth to the investors in the
152
form of capital appreciation. Hence, the awareness level regarding company
analysis made by the respondents is taken into consideration and the results are
tabulated in table 4.5.
TABLE 4.5
Awareness about Company Affairs
Awareness about Company Very Very
Affairs high low
Count 132 90 39 27 12
Profitability 4.01 1.138
% 44 30 13 9 4
Changes in Sales/ Count 63 99 84 39 15
3.52 1.111
Changes in cost % 21 33 28 13 5
Depletion of Count 51 69 111 51 18
3.28 1.116
Resources % 17 23 37 17 6
Count 42 90 87 63 18
Wages and salary 3.25 1.119
% 14 30 29 21 6
Count 54 69 87 57 33
Taxes 3.18 1.246
% 18 23 29 19 11
Count 84 105 51 36 24
Capital structure 3.63 1.232
% 28 35 17 12 8
Table 4.5 gives a clear picture about the awareness level of the
respondents with regard to company affairs. Profitability ranks first with a mean
score of 4.01 followed by the Capital structure of the company with the mean
score of 3.63. Changes in sales /changes in cost ranks third, with a mean score of
3.52 followed by wages and salary given in the company with a mean score of
3.25 ranks fourth. Depletion of resources ranks fifth with a mean score of 3.28
followed by taxes with a mean score of 3.18.
4.2.6 Awareness about Political and Environmental Affairs
Political affairs, inflation, global market affairs, national and international

affairs play a dominant role in influencing the securities market. It is essential
that the investors who plan for investment, must be aware of political risk,
inflation risk, global market impact and other current affairs. For example the
Prime Minister, Narendra Modi is the indisputable champion of the election and
his government in the first parliamentary majority by a single party since 1984.
153
Formation of stable Government propelled the Indian Securities market to a new
high. If the American DOWJONES closes positively, then the Indian stock
market opens positively and such global cues affect the market and the investors
who plans for investment or trade in Securities market must be aware of current
global scenario and react accordingly. Table 4.6 displays the level of awareness
of investors about the political and the environmental affairs.
TABLE 4.6
Awareness about Political and Environmental Affairs
Awareness about Political Very Very
and Environmental affairs high low
Count 114 102 54 21 9

Political Affairs 3.84 1.019
% 38 34 18 7 3
Global market Count 99 117 54 24 6

3.88 1.004
Affairs % 33 39 18 8 2
Count 99 102 63 36 0
National Affairs 3.97 1.055
% 33 34 21 12 0
International Count 93 108 57 42 0

3.93 1.004
Affairs % 31 36 19 14 0
Table 4.6 unfolds the following fact that National affairs is highly noted
by the respondents as the policy framing for the nation is mainly in the hands of
the political party that rules the nation. Hence it is clear that the National affairs
ranks first with a mean score of 3.97 followed by International affairs.
International affairs need to be analysed because any war breaks out or riots in
foreign will be reflected in the Indian market. SENSEX and Nifty will be
dragged down, so the investors must be aware of the international affairs and quit
in the mean time to avoid financial loss. Global market affairs ranks third with
the mean score of 3.88, as the positive or negative opening of American,
European, Asian markets has its impact on Indian markets. Political affairs ranks
fourth with a mean score of 3.84 as political stability is essential for a country’s
economical growth. Any communal riots or terrorism can be suppressed with
iron hands only if the political party that leads the nation must be strong.
154
4.2.7 Awareness about Fundamental and Technical Affairs
Many indicators about a particular stock analysis are available in the

market through which the investors can decide whether the stock is overvalued or
undervalued. Fundamental indicators are related to the basic intrinsic value, also
referred to as fundamental value of a stock, Earnings per share, stock P/E ratio
and technical indicators are related to the stock market ratings, face value of the
share and past performance of the share. Traders depend mainly on the
technical indicators. Fundamental approach is valid and can produce superior
returns to investors who are committing funds in Cash Market shares in Indian
stock market on a long term perspective. Investors should assess the relative
performance of the economy, the state of the industry and also the financial
health of the companies before choosing a particular share as the medium for
their financial investment. The growth of the individual firm is worth to consider
for assessing the actual worth of a stock. Size effect is visible and investment in
medium/small segments delivers better returns than the returns by large cap
stocks. PE ratio could be effectively used as a tool for locating mispriced stocks
in Indian stock market.
Dimitrios I. Maditinos, Zeljko Sevic, and Nikolaos G. Theriou( 2007)

studied the investors’ behaviour in the Athens Stock Exchange (ASE) and stated
that the individual investors rely more on newspapers/media, while professional
investors rely more on fundamental and technical analysis.1
Based on the primary data and secondary data and forecasted data about a
stock, the investors must be able to predict in advance the performance of the
stock in the market before bracketing it. Hence the level of awareness about
fundamental and technical affairs is measured and given in table 4.7.
1
Dimitrios I. Maditinos, Zeljko Sevic,and Nikolaos G. Theriou( 2007) “ Investors’ Behaviour in
The Athens Stock Exchange (ASE)” Studies in Economics and Finance, 24(1), pp: 32-50.
155
TABLE 4.7
Awareness about Fundamental and Technical Affairs
Awareness about
Very Very
Fundamental and Technical High Medium Low Mean S.D
high low
Affairs
Count 123 117 36 21 3

Price of stock 4.12 0.943
% 41 39 12 7 1
Count 102 126 54 15 3
Stock P/E ratio 4.03 0.901
% 34 42 18 5 1
Earnings per Count 75 156 48 15 6

3.93 0.888
share % 25 52 16 5 2
Stock market Count 84 111 60 45 0

3.78 1.017
ratings
% 28 37 20 15 0
Face value of the Count 78 105 75 30 12

3.69 1.085
share
% 26 35 25 10 4
Count 102 129 39 24 6
Past performance 3.99 0.986
% 34 43 13 8 2
Table 4.7 gives a clear picture about the awareness level of the
respondents with regard to Fundamental and Technical affairs. The Price of
stock ranks first with a mean score of 4.12 followed by Stock P/E ratio with the
mean score of 4.03. Stocks past performance ranks third as the mean score are
3.99 and it is followed by Earnings per share with a mean score of 3.93 and ranks
fourth. Stock market ratings and Face value of share ranks fifth and sixth
respectively with a mean score of 3.78 and 3.69. Price of the stock is the prime
consideration not only for the respondents but for the whole Securities market
investors.
4.3PREFERENCE TOWARDS SECURITIES MARKET PRODUCTS
An effective Security market requires qualities like choice, efficiency and

regulation in order to attract investors. The investor has various alternative
products of investment for his savings to flow, in accordance with his
preferences. Security Market exists to provide the facilities of a marketplace
where potential investors can put their money to work, purchasing securities and
those who already own securities can equally freely and speedily turn them
156
into cash. The most popular Security Market products products to investors are -
i) Cash Market, ii) Futures & Options, iii) Commodities, iv) Mutual fund and
v) Gold BeEs.
TABLE 4.8
Preference Towards Securities market products
Strongly Strongly
Investment Products Agree Neutral Disagree Mean S.D
agree disagree
Count 132 120 18 12 18

Cash Market 4.12 1.091
% 44 40 6 4 6
Count 63 117 36 54 30
Futures &
Options & % 21 39 12 18 10 3.43 1.277
Options
% 17 25 27 17 14
Count 60 93 48 69 30
Commodities 3.28 1.291
% 20 31 16 23 10
Count 63 78 30 75 54
Mutual Fund 3.07 1.439
% 21 26 10 25 18
Count 87 93 36 66 18
Gold BeEs 3.55 1.278
% 29 31 12 22 16
From the above table 4.8, it is evident that the Cash Market is the most
preferred Securities market avenue by the respondents of the study area as the
mean score secured by Cash Market is 4.12 wherein 44 per cent constituting 132
respondents strongly agree that they prefer Cash Market. 40 per cent constituting
120 respondents have agreed Cash Market as their most preferred avenue for
investment. This may be due to the reason that Cash Market is less risky when
compared to Futures & Options and Commodities .They may prefer investment
than trading. Cash Market is followed by Gold BeEs with a mean score of 3.55
which is the respondent’s second preference. This may be the mentality of the
respondents to invest in e-gold rather than to maintain it as physical gold.
Futures & Options ranks third with a mean score of 3.43, where in 39 per cent,
comprising 117 respondents are eager to do Futures & Options as they may be
driven by quick money policy. Commodities market ranks fourth with a mean
score of 3.28 followed by mutual fund with a mean score of 3.07.
157
Overall in a nutshell it can be concluded that most of the respondents are
investors, they prefer investment products rather than trading products and the
awareness regarding diversification of investments in various products is
appreciable.
4.3.1Demographic Profile and the Securities Market Products Preferred
The preference towards various Securities market product are collected

from the respondents in Likert five point scale and ANOVA analysis is used to
test whether the demographic profile variables of the respondents determine the
Securities market products preferred by them.
4.3.1.1 Age group and Securities market products preferred
Age plays a dominant role in taking investment decision, hence it is

tested whether the age of the respondents determine the Securities market
products preferred using ANOVA and the results are provided in the following
table.
Ho1: Age group does not determine the Securities market products preferred by
the respondents.
TABLE 4.9
Age Group and Securities market products preferred
Securities Age Group in years
F p
market 51 & Result
20-30 31-40 41-50 Value value
products above
3.95a 4.03a 4.05a 4.48b
Cash Market 3.393 0.018 Significant
(1.029) (1.199) (1.195) (0.779)
Futures & 3.55b,c. 3.91c 3.23a 2.83a 11.649
0.000 Significant
Options (0.995) (1.117) (1.486) (1.248)
3.73c 3.82c 2.91b 2.43a
Commodities 24.838 0.000 Significant
(1.106) (1.091) (1.422) (1.105)
3.05 a 3.18 a 3.23 a 2.78 a Not
(1.306) (1.431) (1.547) (1.454) significant
3.64 b 3.73 b 3.86 b 2.91 a
Gold BEes 8.349 0.000 Significant
(1.236) (1.194) (1.335) (1.185)
Source: Primary Data
Note: i) The value in the table refers to Mean score
ii) The value within bracket refers to SD
iii) Different alphabets between age denotes significance at 5% level using
Duncan Multiple Range Test (DMRT)
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Table 4.9 clearly reveals that the demographic profile variable age of the
respondents determines most of the Securities market products preferred for
investment. It is inferred that among all the products except Mutual fund the ‘p’
value is less than 0.05 and hence the null hypothesis is rejected for the
demographic profile variable age. It can be concluded that the age factor
influences the Securities market products namely Cash Market, Futures &
Options, Commodities and Gold BEes. Hypothesis framed is accepted in case of
Mutual fund and this may be due to the reason that the Mutual fund is a safer
zone where in the purchase and sale of stock are made by experts team. The
sample respondents are mainly having the attitude of risk averse.
Duncan Multiple Range Test (DMRT) reveals that the investment

decision of the respondents significantly differ in their preference towards
Securities market products irrespective of their age. With regard to Mutual fund
alone the preference does not vary among different age groups.
4.3.1.2 Education and Securities market products preferred
As education plays a vital role in decision making of the respondents and

the association between the Securities market products preferred are tested using
analysis of variables and the results are provided in the following table
Ho2: Education does not determine the Securities market products preferred by
the respondents.
TABLE 4.10
Education and Securities market products preferred
Securities Education
F p
market High Post Profes- Result
products Graduate Others value Value
School Graduate sional
3.87 4.08 4.09 4.30 4.75
Cash Market 2.103 0.080 Not significant
(1.036) (1.114) (1.108) (1.109) (0.452)
Futures & 3.60 3.47 3.52 3.40 2.00
4.272 0.002 Significant
Options (0.889) (1.191) (1.357) (1.440) (1.279)
3.73 3.26 3.35 3.10 2.25
(0.863) (1.276) (1.281) (1.386) (1.712)
3.27 3.11 2.96 3.25 1.75
Mutual fund 3.182 0.014 Significant
(1.355) (1.379) (1.499) (1.525) (0.866)
3.67 3.71 3.61 3.30 2.50
Gold BeEs 3.276 0.012 Significant
(1.314) (1.281) (1.140) (1.319) (1.168)
159
From the table 4.11 it is crystal clear that the educational qualification in
other terms academic background plays a dominant role in deciding the
investment in Securities market products as the hypothesis framed is rejected in
case of Futures & Options, Commodities, Mutual fund and Gold BeEs. There is
no significant association between academic background and the Cash Market.
The hypothesis is accepted and this may be due to the fact that Cash Market is the
very base and common which does not require more technical knowledge and
time to learn. Hence it can be concluded that the respondents varied in
educational qualification yet majority of them are interested in participating in the
market as investors than as traders or speculators.
4.3.1.3 Occupation and Securities market products preferred
Occupation of the respondents may influence the choice of selecting the

Securities market vehicle hence the association between the occupation and the
Securities market products preferred are tested using analysis of variables and the
results are provided in the following table.
Ho3: Occupation does not determine the preference towards Securities market
products preferred by the respondents.
TABLE 4.11
Occupation and Securities market products preferred
Securities
Entrepre Profes- House Govt Pvt F p
market Retired Significance
neur sional wife Employee Employee Value Value
products
3.90 3.86 4.78 4.50 4.04 4.23

(1.100) (1.134) (0.424) (0.878) (1.156) (1.135)
Futures & 3.50 3.95 3.67 3.50 3.24 2.62

Options (1.255) (1.007) (0.832) (1.342) (1.403) (1.227)
3.40 3.33 3.44 3.67 3.32 2.46

(1.291) (1.257) (1.086) (1.454) (1.264) (1.097)
Mutual fund 3.40 3.10 3.33 3.25 2.88 2.54

(1.475) (1.489) (1.271) (1.663) (1.315) (1.295)
3.90 4.19 3.67 3.92 3.12 2.38

(1.189) (1.189) (0.961) (1.052) (1.219) (1.016)

160
From the table 4.11 it is found that the p value is less than 0.05 in case of
Cash Market(0.001), Commodities(0.001), Mutual fund(0.000), Gold BeEs
(0.000)and hence the hypothesis is rejected. There is significant association
between the occupation of the respondents and the Securities market products
preferred by them. Selection of the investment products varies with the
occupational status and this may be due to the reason that the respondents must
spare time to track the ups and downs in the market. As the market timings are
from 9.00 a.m to 3 p.m, watching the market trend during the working hours may
disturb their occupation.
4.3.1.4 Monthly Income and Securities market products preferred
Monthly income of the respondents plays a dominant role in selecting the

Securities market vehicle hence the association between the monthly income and
the Securities market products preferred are tested using analysis of variables and
the results are provided in the following table 4.12.
Ho4: Monthly income does not determine the Securities market products
preferred by the respondents.
TABLE 4.12
Monthly Income and Securities market products preferred
Monthly Income
Securities
F p
market Above Result
10000- 25001- 50001- Value value
products 75,000
25000 50000 75000
3.89 4.23 4.09 4.20 Not
(1.173) (0.997) (1.331) (0.991) significant
Futures & 3.81. 3.15 3.73 3.40

Options (0.989) (1.404) (1.153) (1.214)
3.63 3.13 3.09 3.27
(1.101) (1.351) (1.331) (1.304)
3.15 2.89 3.09 3.47 Not
(1.246) (1.423) (1.466) (1.727) significant
3.70 3.26 3.64 4.13

(1.219) (1.284) (1.319) (1.100)
161
The table 4.12 reveals that the ‘p’ values of the variables Cash Market
(0.142), Mutual fund (0.122) are greater than the significant value 0.05. Hence
the null hypothesis is accepted. There is no significant association between the
monthly income of the respondents and the Securities market products namely
Cash Market and Mutual fund. The ‘p’ value is less than 0.05 in case of Futures
& Options (0.001 ), Commodities(0.034 ) and Gold BeEs ( 0.001) hence the null
hypothesis is accepted and concluded that monthly income of the respondents
decides their choice of Securities market products namely Futures & Options,
Commodities and Gold Bees. Hence it can be concluded that the monthly
income plays a significant role in the choice of investment products and most of
the respondents are having the attitude of risk averse and prefer the safer zone of
Cash Market and Mutual fund.
4.3.1.5 Monthly financial requirement and Securities market products

preferred
Monthly financial requirement of the respondents and their preference

towards Securities market products needs to be studied as it is an important basic
demographic profile upon which the investment idea is built. So the association
between the financial requirement and the Securities market products preferred
are tested using analysis of variance and the results are provided in the following
table 4.13
Ho5: Monthly financial requirement does not determine the Securities market
products preferred by the respondents.
162
TABLE 4.13
Monthly financial Requirement and Securities market products preferred
Securities Monthly financial requirement
F p
market Fluctuate Fluctuate Stable & Result
Value value
products widely moderately fixed
3.93 4.23 4.07 Not
(1.355) (0.797) (1.242) significant
Futures & 3.27 3.59 3.32 Not
1.909 0.150
Options (1.405) (1.055) (1.428) significant
3.40 3.43 3.07 Not
(1.468) (1.079) (1.409) significant
2.53 3.59 2.71
Mutual Fund 17.394 0.001 Significant
(1.375) (1.307) (1.424)
3.60 3.93 3.12
(1.214) (1.140) (1.316)

The table 4.13 depicts that there is significant association between

financial requirement of the respondents and the Securities market products
namely Mutual fund and Gold BeEs as the ‘p’ values are lesser than 0.05 whereas
in case of Cash Market, Futures & Options and Commodities, the ‘p’ value is
greater than 0.05. Hypothesis framed is accepted in case of Cash Market (0.245),
Futures & Options (0.150), and Commodities (0.068) whereas it is rejected in
case of Mutual fund (0.001), Gold BeEs (0.001) and this may be due to the
reason that the respondents financial requirement steer them towards choosing
the safest products of Mutual fund and Gold BeEs.
4.3.1.6 Percentage of savings on the Income and the Securities market

products preferred
Percentage of savings on the income of the respondents and their preference

towards the Securities market products needs to be studied as it is an important
investment profile upon which the investment idea is built. So the association
between the percentage of savings and the Securities market products preferred
are tested using analysis of variance and the results are provided in the following
table 4.14.
163
Ho6: Percentage of savings on the income does not determine the Securities
market products preferred by the respondents.
TABLE 4.14
Percentage of Savings on the Income and the Securities
market products preferred
Percentage of savings on the income
Securities
Between Between F p
market Between Result
Below Value value
products 10%to 15% to 20% to-
10%
15% 20% 25%
Cash 3.95 3.85 4.33 4.31

Market (.999) (1.207) (.912) (1.175)
Futures & 3.59. 3.50 3.43 3.19 Not

0.730 0.483
Options (1.191) (1.125) (1.341) (1.417) significant
3.55 3.42 3.40 2.71

(1.112) (1.123) (1.364) (1.383)
Mutual 3.02 3.15 3.09 2.59

Fund (1.161) (1.270) (1.613) (1.509)
3.55 3.54 3.90 3.10

(1.234) (1.192) (1.307) (1.259)

The table 4.14 unfolds the fact that there is significant association
between the percentage of savings and the Securities market products namely
Cash Market (0.022), Futures & Options (0.483), Commodities (0.000), Mutual
fund (0.000) and Gold BeEs (0.000) as the ‘p’ value for the above is than 0.05,
whereas in case of Futures & Options alone the ‘p’ value is greater than 0.05.
Hence the hypothesis framed is accepted only in case of Futures & Options. So it
is concluded that the percentage of savings plays a dominant role in choosing the
investment products. Respondent’s allocation of their savings in futures &
options market is very low and the result can be arrived as the majority of the
respondents are reluctant to take risk.
164
4.3.2 Social Status and the Securities market products preferred
Social status of the respondents such as gender, marital status and the type
of family determines their preference towards Securities market products. Hence
the association between the social status and their preference towards Securities
market products which was received in likert five point scales is analysed using
t-test.
4.3.2.1 Gender and Securities market products preferred
Gender of the respondents and their preference towards the Securities

market products are tested. The hypothesis framed is
Ho7: Gender does not determine the Securities market products preferred by the
respondents
TABLE 4.15
Gender and Securities market products preferred
Securities market Gender t
p value Result
products Male Female Value
4.05 4.21 Not

(1.139) (1.017) significant
3.31 3.60
Futures & Options 7.533 0.006 Significant
(1.320) (1.201)
3.22 3.36 Not
3.12 3.00 Not
3.34 3.83
(1.324) (1.158)

Table 4.15 clearly reveals that there is no significant difference between

male and female respondents in case of preference towards the Securities market
products namely Cash Market (0.685), Mutual fund (0.829) and Commodities
(0.282) as the ‘p’ value is greater than 0.05. The null hypothesis framed is
165
accepted. In case of Futures & Options (0.006) and Gold BeEs (0.000) the null
hypothesis framed is rejected as the ‘p’ value is less than 0.05. It can be assumed
that there is no significant difference among male and female respondents of
study area in case of preference towards Cash Market, Mutual fund and
Commodities but there is significant difference among male and female in
choosing Futures & Options and Gold BeEs for investment.
4.3.2.2 Marital Status and Securities market products preferred
Marital status of the respondents plays a dominant role in selecting the

Securities market vehicle. Hence the association between the marital status and
the results are provided in the following table
Ho8: Marital status does not determine the Securities market products preferred
by the respondents.
TABLE 4.16
Marital Status and Securities market products preferred
Marital status
Securities market t p
Result
products Married Single value value
4.22 3.91
(1.000) (1.240)
3.25 3.81
(1.279) (1.190)
3.24 3.38
Commodities 0.373 0.542 Not significant
(1.288) (1.300)
2.32 2.75
Mutual Fund 0.704 0.402 Not significant
(1.432) (1.386)
3.25 2.69
Gold BeEs 0.218 0.641 Not significant
(1.257) (1.321)

166
From the table 4.16, the analysis reveals that the ‘p’ value of the variables
Cash Market (0.075), Commodities (0.542), Mutual fund (0.402) and Gold BeEs
(0.641) are greater than the significant value 0.05. Hence the hypothesis framed
is accepted. There is no significant association between the marital status of the
respondents and the Securities market products namely Cash Market,
Commodities, Mutual fund and Gold BeEs. The null hypothesis is rejected in
case of Futures & options alone as the ‘p’ value is 0.011 which is less than the
significant value of 0.05.and concluded that the demographic profile variable
named marital status acts as a major factor in deciding the selection of Securities
market products for investment. It can be concluded that most of the respondents
are married hence they prefer to play safe. So Cash Market and Mutual fund are
their top priority. Marital status plays a significant role in preferring to do
Futures & Options.
4.3.2.3 Type of Family and Securities market products preferred
Type of Family of the respondents plays a dominant role in selecting the

Securities market vehicle hence the association between the type of Family and
the results are provided in the following table 4.17.
Ho9: Type of family does not determine the Securities market products preferred
by the respondents
TABLE 4.17
Type of family and Securities market products preferred
Securities market Type of family
t value p value Result
products Nuclear Joint
4.02 4.22
(1.241) (0.917)
3.10 3.75
(1.364) (1.103)
3.02 3.53
(1.306) (1.230)
2.82 3.31
(1.429) (1.412)
3.33 3.76
(1.320) (1.202)
167
The table 4.17, reveals that the ‘p’ values of the variables Cash Market
(0.134), commodities (0.746) and Mutual Fund (0.796) are greater than the
significant value 0.05. There is no significant association between the type of
family of the respondents and the Securities market products namely Cash
Market, Commodities and Mutual fund. The ‘p’ values of Futures & options
(0.000) and Gold BeEs (0.111) are less than the significant value of 0.05 and
hence the hypothesis framed is rejected. There is significant association between
the type of family of the respondents and the Securities market products namely
Futures and options and Gold BEes. It can be concluded that majority of the
respondents are living in joint family and their financial commitments make them
to prefer investing in Cash Market.
4.3.3 Investment Profile and the Securities market Products Preferred
The association between the investment profile variables such as

Investment objectives, Time Horizon, Investment mechanism, Mode preferred by
the respondents, Portfolio allocation and Portfolio alteration by the respondents
and the Securities market products preferred by them are analysed using ANOVA
analysis.
4.3.3.1 Investment objectives and the Securities market products

preferred
The participants of securities market invest with certain investment

objectives and the association between the investment objectives and their
preference towards Securities market products are tested and tabulated in 4.18.
Ho10: Investment objectives do not determine the Securities market products

168
TABLE 4.18
Investment Objectives and the Securities market products preferred
Securities Investment Objectives
F p
market Result
Dividends Quick Capital Capital Tax value Value
products
/ Interest Returns appreciatio Security benefits
n
3.93 4.09 4.21 4.22 4.33
(1.295) (0.945) (1.198) (1.340) (0.767)
Futures & 2.93 3.62 3.63 3.33 2.50

Options (1.504) (1.046) (1.419) (1.359) (0.985)
2.57 3.64 3.21 3.00 2.83

(1.364) (1.023) (1.482) (1.359) (1.249)
2.43 3.53 2.67 3.11 2.50

Mutual fund 8.640 0.000 Significant
(1.417) (1.290) (1.501) (1.625) (0.786)
3.21 3.49 3.71 3.67 4.00

Gold BeEs 1.711 0.148 Not significant
(1.335) (1.223) (1.283) (1.441) (1.188)

The table 4.18 unfolds the fact that there is significant relationship
between the investment objectives of the respondents and the Securities market
products namely Futures & Options (p = 0.000), Commodities (p = 0.000) and
Mutual fund (p = 0.000), as the ‘p’ value is less than 0.0. The null hypothesis
framed is rejected whereas in case of Cash market (p= 0.588) and Gold BeEs
(p = 0.148) as the ‘p’ value is greater than 0.05. Hence the hypothesis framed is
accepted and there is significant association between the investment objectives of
the respondents in their preference towards Cash market and Gold BEes.
4.3.3.2 Investment Mechanism and the Securities market products

preferred
The relation between the investment mechanism namely investor, trader

or both and the various Securities market products preferred is studied as it plays
a vital role in deciding the selection of Securities market products. Hence the
investment mechanism of the respondents and their preference towards the
Securities market products is analysed and revealed in table 4.19.
169
Ho12: Investment mechanism does not determine the Securities market products
TABLE 4.19
Investment Mechanism and the Securities market products preferred
Securities market Investment Mechanism
F Value p value Result
products Investor Trader Both
4.41 3.70 4.10

(0.828) (0.788) (1.283)
Futures & 2.75 3.95 3.67
Options (1.353) (0.872) (1.183)
2.94 3.85 3.27
(1.398) (0.971) (1.258)
3.22 3.35 2.85 0.038
Mutual Fund 3.317 Significant
(1.460) (1.325) (1.448)
3.28 3.95 3.56 0.006
Gold BEes 5.212 Significant
(1.262) (1.213) (1.278)

It is interesting to note from the table 4.20, that the null hypothesis is
rejected in for all the Securities market products as the ‘p’ value is less than 0.05
and there is significant relationship between the investment mechanism and the
Securities market products preferred by the respondents. From the above table, it
is evident that based on the respondents' role in the market as investor or trader
plays a dominant role in deciding the choice of the investment avenue suitable for
them. Hence the result depicted for all the Securities market products are against
the hypothesis framed.
4.3.3.3 Mode Preferred and the Securities market products preferred
Investment modes namely self online trading or dial and trade influences
the Securities market products preferred is analysed as the researcher feels that
the mode of investment or trading is also a key factor in deciding the investment
avenue and it is revealed in table 4.20.
170
Ho13: Mode preferred does not determine the Securities market products
TABLE 4.20
Mode preferred and the Securities market products preferred
Mode
Securities
Self on F
market Dial and p value Result
line Both Value
products trade
trading
4.19 3.97 4.25
(1.114) (1.172) (.604)
Futures & 3.02 3.89 3.83
Options (1.412) (0.998) (0.697)
2.98 3.72 3.25
(1.412) (1.101) (0.841)
2.94 3.06 3.67
(1.529) (1.274) (1.394)
3.38 3.56 4.25
(1.351) (1.241) (0.732)

Table 4.20, pictures that the p value is less than 0.05 for all the investment
products except Cash Market (p = 0.000). The null hypothesis is accepted for the
avenue named Cash market. The mode of conducting transaction in Securities
market vary among the Securities market products such as Futures & Options
(p = 0.000), Commodities (p = 0.000), Mutual fund (p = 0.024) and Gold BeEs
(p = 0.001) as the p value is less than the significant value of 0.05 and the null
hypothesis is rejected and concluded that traders prefer online trading as it is the
best and fast suitable mode for traders.
4.3.3.4 Adoption of SIP and the Securities market products preferred
Adopting SIP method of investment by the respondents may determine

the Securities market products because while adopting SIP they have to allot a
fixed amount for investment every month and their preference may vary
depending upon the amount they are able to allot and hence it is studied and
revealed in table 4.21.
171
Ho14: Adopting SIP method does not determine the Securities market products
TABLE 4.21
Adoption of SIP and the Securities market products preferred
Securities market Adopt SIP
t value p value Result
products Yes No
4.33 3.92
(0.901) (1.210)
3.38 3.48
Futures & Options 0.534 0.466 Not significant
(1.273) (1.282)
3.21 3.35
(1.311) (1.273)
3.29 2.87
(1.532) (1.320)
3.71 3.40
(1.211) (1.324)

From the table 4.21, it is evident that the hypothesis framed is accepted
in case of Futures & Options (0.466) and Commodities (0.544) where in the
results obtained are not significant as the ‘p’ value is greater than 0.05. The null
hypothesis framed is rejected in case of Cash Market, Mutual Fund and Gold
BeEs as the ‘p’ value is less than 0.05. Further it can be concluded that the
sample respondents are aware of SIP method of investing and they prefer SIP
method for Cash Market, Mutual fund and Gold BeEs to reap huge profit.
4.3.3.5 Portfolio Allocation and the Securities market products preferred
Portfolio allocation or bucketing of stocks is one of the investment

profiles that depend on the investors’ preference towards the Securities market
products and hence the relation between the portfolio allocation and the
Securities market products preferred is analysed and depicted in table 4.22.
Ho15: Portfolio allocation does not determine the Securities market products
172
TABLE 4.22
Portfolio allocation and the Securities market products preferred
Portfolio allocation
Securities
F p
market Blue Small Mixture Result
Mid cap Value value
products chip cap of all
4.29 3.85 4.36 4.21

(0.901) (1.120) (1.168) (1.085)
Futures & 3.35 3.56 3.27 3.39

0.601 0.615 Not significant
Options (1.197) (1.223) (1.376) (1.334)
3.47 3.53 3.09 3.03
(1.206) (1.149) (1.331) (1.392)
3.06 3.41 2.55 2.92
(1.271) (1.505) (1.460) (1.390)
3.41 3.79 3.55 3.39
Gold BEes 2.021 0.111 Not significant
(1.203) (1.330) (1.523) (1.165)

From the table 4.22, it is found that the hypothesis framed is accepted in
case of Futures & Options (0.615) and Gold BeEs (0.111) where in the results
obtained are not significant as the ‘p’ value is greater than 0.05. The null
hypothesis framed is rejected in case of Cash Market (p = 0.019), Commodities
(p = 0.018) and Mutual Fund (p = 0.009) as the ‘p’ value is less than 0.05. Hence
it is concluded that the respondents construct a portfolio by investing in Cash
Market, Commodities and Mutual Fund and they are reluctant to do Futures &
Options.
4.3.3.6 Portfolio Alteration and the Securities market products preferred
Portfolio alteration is essential to reap huge profit hence it also an

important investment profile which needs to be analysed and the researcher is
eager to analyse whether portfolio alteration determines the investors preference
towards Securities market products The results of the analysis are depicted in
table 4.23.
Ho16: Portfolio alteration does not determine the Securities market products
preferred by the respondents
173
TABLE 4.23
Portfolio alteration and the Securities market products preferred
Portfolio alteration
Securities market F
p value Result
products Value
Often Rarely Never
4.05 4.04 4.31

(1.288) (1.077) (0.956)
3.37 3.33 3.66
Futures & Options 1.939 0.146 Not significant
(1.472) (1.256) (1.160)
3.32 3.33 3.17
(1.466) (1.256) (1.241)
3.11 3.15 2.90
(1.496) (1.383) (1.502)
2.95 3.75 3.59
(1.444) (1.145) (1.281)

From the table 4.24, it is found that the null hypothesis framed is
accepted in case of Cash Market (0.154), Futures & Options (0.146),
Commodities (0.654) and Mutual fund (0.403) as the results obtained are not
significant as the ‘p’ value is greater than 0.05. The null hypothesis framed is
rejected in case of Gold BeEs (p = 0.000) alone as the ‘p’ value is less than 0.05.
Hence it can be concluded that as the majority of the respondents are investors,
they are not aware of the portfolio alteration. They invest and forget.
4.3.3.7 Risk Taking Attitude and the Securities market products preferred
Risk taking attitude is one of the important investment profiles based on

which the investment avenue is preferred and hence the association between the
risk taking attitude of the respondents and their preference towards the Securities
market products is analysed and depicted in table 4.24.
Ho17: Risk taking attitude does not determine the Securities market products
preferred by the respondents
174
TABLE 4.24
Risk Taking Attitude and the Securities market products preferred
Risk taking attitude
Securities
F p
market Result
High Medium Low Risk Value value
products
risk risk risk averse
4.08 4.29 3.95 4.04 Not

(1.209) (1.151) (1.159) significant
(0.907)
Futures & 3.59 2.99 3.38 2.59
Options (1.299) (11.211) (1.237) (1.405)
3.46 3.55 3.13 2.66

(1.414) (1.195) (1.129) (1.240)
2.76 3.66 2.84 2.61

(1.380) (1.291) (1.411) (1.485)
3.79 3.72 3.09 3.34

(1.260) (1.191) (1.066) (1.517)

From the table 4.25, it is interesting to note that the null hypothesis
framed is accepted in case of Cash Market (0.154) alone as the ‘p’ values is
greater than 0.05. The null hypothesis framed is rejected in case of Futures &
Options (p = 0.000), Commodities (p = 0.000), Mutual Fund (p = 0.000) and
Gold BeEs (p = 0.000) as the ‘p’ value is less than 0.05. It is crystal clear that the
majority of the respondents are investors and they are hesitating to take huge risk
by doing Futures & Options.
In a nutshell, the association between the investment profile variables and

the Securities market products provides a picture that the respondents of study
area are reluctant to take huge risk. They are aware of various Securities market
products even then they prefer Cash Market followed by Mutual fund which they
feel to be the safest.
175
4.4 SUMMARY
Indian financial market has been going through a fascinating change and
it has opened up an excellent business and investment opportunities in the
financial sector, much growing financial service sector and the public are more
aware about the financial products. The growth and evolution of the financial
market lead to the development of well structured capital market with an
attractive investment opportunities for the individual investors. The respondents
awareness about the market investment opportunities are amazing due to
technical advancement. Maximum investors are aware of all the investment
options. Investors do not invest in a single avenue. They prefer different
products and the maximum investors prefer to invest in Cash market and Mutual
funds. Maximum investors want their investments grow at fast rate. The
investment decision of the investors is influenced by their own decision and
through friends and relatives. Different factors considered by the investors while
investing are return, risk, tax benefits, capital appreciation and the most
prominent factor is the return on any investment. The degree of risk aversion is
extremely high. With the improvement in market infrastructure, the rate of
investment is increasing at a steady pace.
176

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CHAPTER FOUR

PERCEPTION OF INVESTORS ON PRE- INVESTMENT

The present chapter tries to project the Pre-Investment pattern of the

4.2 AWARENESS OF INVESTORS ABOUT SECURITIES MARKET

In order to achieve the investment objectives, investors develop a variety

4.2.1 Awareness about Stock

There are a large number of investment products available for the

Through Count 90 120 48 27 15 3.81 1.113

4.2.2 Awareness about Sector Affairs

After formulating the investment policy, the securities to be bought have

Thorough Knowledge Count 105 114 48 27 6

Source: Computed from Primary Data

4.2.3 Awareness about Economic Affairs

Count 81 96 54 57 12 3.59 1.186

Interest rates as established by the Reserve Bank of India and the

4.2.4 Awareness about Industrial Affairs

Government Count 60 117 63 51 9

Research and Count 48 108 66 51 27

4.2.5 Awareness about Company Affairs

The purpose of knowing company affairs is to help the investors to make

4.2.6 Awareness about Political and Environmental Affairs

Political affairs, inflation, global market affairs, national and international

Count 114 102 54 21 9

Global market Count 99 117 54 24 6

International Count 93 108 57 42 0

Many indicators about a particular stock analysis are available in the

Dimitrios I. Maditinos, Zeljko Sevic, and Nikolaos G. Theriou( 2007)

Count 123 117 36 21 3

Earnings per Count 75 156 48 15 6

Stock market Count 84 111 60 45 0

Face value of the Count 78 105 75 30 12

4.3PREFERENCE TOWARDS SECURITIES MARKET PRODUCTS

An effective Security market requires qualities like choice, efficiency and

Count 132 120 18 12 18

Source: Computed from Primary Data

4.3.1Demographic Profile and the Securities Market Products Preferred

The preference towards various Securities market product are collected

4.3.1.1 Age group and Securities market products preferred

Age plays a dominant role in taking investment decision, hence it is

Duncan Multiple Range Test (DMRT) reveals that the investment

4.3.1.2 Education and Securities market products preferred

As education plays a vital role in decision making of the respondents and

4.3.1.3 Occupation and Securities market products preferred

Occupation of the respondents may influence the choice of selecting the

3.90 3.86 4.78 4.50 4.04 4.23

Futures & 3.50 3.95 3.67 3.50 3.24 2.62

3.40 3.33 3.44 3.67 3.32 2.46

Mutual fund 3.40 3.10 3.33 3.25 2.88 2.54

3.90 4.19 3.67 3.92 3.12 2.38

Source: Primary Data

4.3.1.4 Monthly Income and Securities market products preferred

Monthly income of the respondents plays a dominant role in selecting the

Futures & 3.81. 3.15 3.73 3.40

3.70 3.26 3.64 4.13

4.3.1.5 Monthly financial requirement and Securities market products

Monthly financial requirement of the respondents and their preference

Source: Primary Data

The table 4.13 depicts that there is significant association between

4.3.1.6 Percentage of savings on the Income and the Securities market

Percentage of savings on the income of the respondents and their preference

Cash 3.95 3.85 4.33 4.31

Futures & 3.59. 3.50 3.43 3.19 Not

3.55 3.42 3.40 2.71

Mutual 3.02 3.15 3.09 2.59