Brief On Investment

INDIVIDUAL INVESTMENT BEHAVIOUR IN
CAPITAL MARKET: A DEMOGRAPHIC STUDY

IN KOLKATA
THESIS
SUBMITTED TO
IMS CENTRE FOR RESEARCH

&
INTERNATIONAL JOURNAL OF TRENDS IN TECHNOLOGY, MANAGEMENT AND
APPLIED SCIENCE
FOR THE AWARD OF THE DEGREE OF
FELLOW RESEARCH PROGRAMME IN MANAGEMENT
SUBMITTED BY
SNIGDHA BASU
UNDER THE SUPERVISION OF
DR. TAPASH RANJAN SAHA

DIRECTOR & PROFESSOR, IMS BUSINESS SCHOOL, KOLKATA
DEPARTMENT OF MANAGEMENT
KOLKATA
MARCH 2017
CERTIFICATE
This is to certify that Snigdha Basu has carried out the research work presented in this thesis
entitled “Individual Investment Behaviour in Capital Market: A Demographic Study in
Kolkata” for the award of Fellow Research Program in Management from IMS Centre for
Research, Kolkata under my supervision. The thesis embodies results of original work, and
studies are carried out by the scholar herself and the contents of the thesis do not form the basis
for the award of any other degree to the candidate from this or any other University/Institution.
Supervisor
Dr. Tapash Ranjan Saha
Director & Professor
Department of Management
DECLARATION
I hereby declare that the research work entitled “Individual Investment Behaviour in Capital
Market: A Demographic Study in Kolkata” submitted herewith to IMS Centre for Research for
the degree of Fellow Research Program in Management under the guidance and supervision of
Dr. Tapash Ranjan Saha, Director & Professor, IMS Business School, Maulana Abul Kalam
Azad University of Technology (Formerly WBUT), Kolkata, is my original work and has not
been submitted for any assessment or degree/diploma or award to any other
University/Institution.
Snigdha Basu
Research Scholar
This is to certify that the above mentioned statement in the candidate’s declaration is correct to
the best of my knowledge.
Supervisor
Dr. Tapash Ranjan Saha
Director & Professor
IMS Business School
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ACKNOWLEDGEMENT
I wish to express my deep sense of gratitude and indebtedness to my supervisor Dr. Tapash Ranjan
Saha, Director & Professor of IMS Business School, Kolkata, for his valuable guidance,
encouragement, continuous inspiration and helpful suggestion throughout my research work. He had
constantly encouraged me to complete the research study. I am heavily indebted to him for imparting
his priceless and meticulous supervision at each and every phase of research work whenever needed.
He inspired me in innumerable ways in accomplishing this research work. Thanks are due to him not
only for the academic guidance but also for the moral support, consistent kindness and never ending
encouragement given by him.
I am highly grateful to Prof. Aparajita Roy, Dean (Faculty of Management), IMS Business School for
her guidance and cooperation, during the entire tenure of my research work. My sincere thanks are
due to Prof. Surajit Das and Prof. Moumita Saha, faculty members of management at Institute of
Management Study, for their co-operation, continuous encouragement and support throughout my
research work.
I also express my thanks to all the faculty members of Institute of Management Study for their
continuous encouragement. Among them, Prof. Rahul Kumar Ghosh deserves special thanks for his
kind co-operation in academic matters during the research work. I am obliged to the Librarian and
staff members of the IMS Centre for Research, for their cooperation and support through the
research work.
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I am privileged to fulfill my parents ambition and greatly indebted to them for providing me moral
support and good wishes in the completion of my research study. I express an appreciation to my
Husband Mr. Arindam Basu for his understanding, patience and sustenance through the ups and
downs inevitable in the completion of a fellow program.
I would like to thank all the respondents, for providing me with full support during my research,
helping me with providing data. Finally, I wish to express my gratitude to all those who have directly
or indirectly assisted me & whose help & cooperation made this research work accomplished.
Snigdha Basu
Research Scholar
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ABSTRACT
The economic liberalization process undertaken by the Indian government during early 1990s
has opened up new dimensions for Indian economy. The Indian capital market especially stock
market has achieved new heights with the implementation of liberalized reforms. Since then the
stock market has grown in leaps and bounds. Stock market helps to channelize household
savings to the corporate sector which in turn utilize for the development of industrial and service
sector. The growth of capital market in India is evident from the rise in the market capitalization
of the leading two stock exchanges in India namely Bombay Stock Exchange and the National
Stock Exchange. One needs to invest to earn a return on available resources plus generate an
identified sum of money for a particular aim in life and make a provision for an uncertain future.
Investors in the capital market may be institutions or Individuals. Most of the retail investors do
not have much investment expertise and most of them have but modest investment portfolios. The
mode of making investment decisions and developing investment portfolios by retail investors are
different in many respects from those by institutional and high wealth investors. It is the latter
category of investors who actually dominate the stock market. But retail investors are also
important and they are also able to play a critical role in the growth of the stock market. So the
role of individual investors cannot be overlooked since household’s savings account for the
lion’s share of the gross savings in the country.
In this context the purpose of this study is to make an assessment of the pattern of individual
participation as investor in the stock market. To be more specific, the researcher seeks to study
the demographic profile of the individual investors of Kolkata and to examine the investment
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pattern of them more over to analysis the association between demographic factors and
investment behaviour of individual investors. The study reveals the finding that the demographic
variables namely gender, age, qualification, occupation etc. of the respondents significantly
influence the behaviour of the investors in the capital market and it is also inferred that annual
income of the investor is an important factor which influences the investor behaviour.
Key words: Retail Investors, Bombay Stock Exchange, National Stock Exchanges, Investment
Behaviour, Portfolio.
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TABLE OF CONTENT
Acknowledgement i
Abstract iv
Table of contents vii
List of Tables ix
SERIAL NO
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1 Chapter I: Introduction No.
1.1 Introduction 1
1.2 Financial Literacy 2
1.3 Investment avenues at a glance 3
1.4 Individual investors in Indian Capital Market 4
1.5 Retail investors in India 5
1.6 Scope of the study 6
1.7 Statement of the problem 7
1.8 Objective of the study 7
1.9 Limitations of the study 8
2 Chapter II: Capital Market in India

2.1 Introduction 8
2.2 Evaluation of the Indian Capital Market 8
2.3 BSE & NSE 10
2.4 Mutual Funds in India 11
3 Chapter III : Concepts & Related Literature
3.1 Studies related to Investment Behaviour 12

3.2 Studies related to Mutual Fund selection Behaviour 15
3.3 Studies related to savings and investment 18
4 Chapter IV : Research Methodology

4.1 Sampling Plan 19
4.2 Variables 20
4.3 Hypothesis 21
4.4 Tools for Data Collection 21
4.5 Types of Data Used for the Research 21
4.6 Reliability of the tool 22
4.7 Reference period of the study 22
4.8 Techniques of Analysis 23
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5 Chapter V : Analysis
5.1 Introduction 24
5.2 Descriptive analysis 24
5.3 Analysis of the Investment Particulars 28
5.4 An Analysis of the Preferences of the Investors based on the Weighted Mean Values 31
5.5 An analysis of Different Behaviour in Investing 34
5.6 Differential Analysis 36
5.7 Association between Savings and Demographic Factors 41
5.8 Association Between Demographic Factors and Investment Characteristics 42
6 Chapter VI: Summary and Conclusion
6.1 Findings related to hypothesis 43

6.2 Finding on the Association between Demographic Factors and various Investment Behaviour 44
6.9 Conclusion 45
Reference 46 - 52
Appendices
Appendix A – Questionnaire
LIST OF TABLES
viii
SERIAL
NO PARTICULARS PAGE NO
1.1 DETAILS OF INDIVIDUAL INVESTORS 24
1.2 MARITAL STATUS & NO. OF DEPENDENTS 25
1.3 ANNUAL INCOME AND ANNUAL SAVINGS IN RUPEES 26
1.4 OWNERSHIP OF ASSETS 27
1.5 DETAILS ABOUT INVESTMENTS 28
1.6 TIME SPENT FOR INVESTING ACTIVITIES 28
1.7 LEVERAGE IN INVESTING 29
1.8 SHARES IN DELISTED COMPANIES 29
1.9 RATE OF RETURN AND EXPERIENCE IN STOCK MARKET 30
1.10 DIVERSIFICATION OF PORTFOLIO 30
1.11 RANKING OF THE OBJECTIVES OF SAVINGS 31
1.12 RANKING OF THE SOURCES OF INVESTMENT INFORMATION 32
1.13 PREFERENCE FOR SHARES 32
1.14 BASIS FOR BUYING SHARES 33
1.15 RANKING OF THE QUALITIES OF FINANCIAL ADVISERS 33
1.16 DIFFERENT BEHAVIOUR IN INVESTING 34
1.17 ONE WAY ANALYSIS OF VARIANCE AMONG AGE GROUPS WITH REGARD TO INVESTMENT BEHAVIOUR 36
1.18 ONE WAY ANALYSIS OF VARIANCE AMONG ACADEMIC QUALIFICATION WITH REGARD TO INVESTMENT BEHAVIOUR 37
1.19 ONE WAY ANALYSIS OF VARIANCE AMONG OCCUPATION WITHREGARD TO INVESTMENT BEHAVIOUR 38
1.20 ONE WAY ANALYSIS OF VARIANCE AMONG ANNUAL INCOME WITH REGARD TO INVESTMENT BEHAVIOUR 39
1.21 ASSOCIATION BETWEEN SAVINGS AND DEMOGRAPHIC FACTORS 41
1.22 ASSOCIATION BETWEEN DEMOGRAPHIC FACTORS INVESTMENT CHARACTERISTICS 42
1.23 ASSOCIATION BETWEEN DEMOGRAPHIC FACTORS INVESTMENT CHARACTERISTICS 42
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CHAPTER – I
INTRODUCTION
1.1 INTRODUCTION
Savings, according to Keynesian economics, comprises of the amount left over when the cost of a
person's consumer expenditure is deducted from the amount of disposable income he earns in a given
period of time. Excess of income over expenditure by any economic unit is called savings. A person
saves money by someway putting it aside for consumption at a later time. When savings is employed
with an aim of achieving additional income or growth in value it is called investment. The important
feature of an investment is that it includes waiting for a reward (Jones P., 2004).
Every investment decision has two important aspects: time in addition to risk. While the sacrifice
happens in the present and is sure, the benefits come in the future as well as are uncertain. The
economic well-being of an individual in the long run relies on how intelligently or unwisely he
invests. One needs to invest to earn a return on idle resources plus generate an identified sum of
money for a particular aim in life and make a provision for an uncertain future. One of the significant
causes why one needs to invest sensibly is to meet the cost of inflation. Inflation is the rate at which
the cost of living upsurges. The cost of living is basically what it cost to buy the goods as well as
services one needs to live. Inflation causes money to lose value as it will not buy the similar amount
of a good or service in the future as it does now or as it did in the past. Savings, when not invested
will slowly lose its value due to inflation or rise in price level. Therefore if a person saves,
investment becomes a compulsion and not a choice.

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As the income level upsurges in all developing nations the savings of the people also upsurge
steadily. Several studies confirm the fact there is a correlation between rate of savings and
investment (Sinha, 2002).
1.2 FINANCIAL LITERACY
Financial Literacy may be defined as the ability to understand the means by which money works
in the world and take an knowledgeable and judicious decision with regards to all the financial
activities. Financial literacy is the process by which investors improve their understanding of
financial markets, products, concepts and risks. A widely accepted explanation of financial
literacy is one formulated by the U.K. National Foundation for Education Research which
defines financial literacy as “the ability to make informed judgments and take effective decisions
regarding the use and management of money”. Participation in up-to-date finance throws up a
number of questions and choices for investing. A clear understanding of the various avenues of
investments will help an investor to make a wise decision based on his investment goal. The
financial market offers an extensive variety of investments which differ from one another with
respect to the return, risk and the waiting period. An investor has to be aware of the merits and
demerits with respect to each investment channel so as to decide a course of investment plan.
According to a survey conducted by Standard & Poor’s, over 76% Indian adults are poor in
basic financial literacy and there is a lack of understanding in the most basic and main financial
concepts. The survey was based on the interviews conducted on 150,000 adults from 140
countries. The individuals were tested on their knowledge of four simple financial concepts:
numeracy, risk diversification, inflation, and compound interest (savings and debt).
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1.3 INVESTMENT AVENUES AT A GLANCE
Dr. Prasanna Chandra in his book “Investment Game” has rightly classified various investment
avenues into four groups.
a) Financial Securities (b) Non-securitized Financial Assets (c) Mutual Fund Schemes (d) Real
Assets.
Financial Securities: Financial security is comprise of equity shares, preference shares,
convertible debentures, non-convertibles debenture, public sector bonds, savings certificates, etc.
equity shares plus public sector bonds are the most common investment avenues among the
financial securities for the common man.
Non – Securitised Financial Investment: Contrasting to financial security, non – securitized
financial investment is not transferable or negotiable. Post-office Saving Deposits and fixed
deposits like National Saving Certificates, Kisan Vikash Patra, etc. Saving bank accounts plus
fixed deposit in banks, provided fund schemes, fixed deposits in companies, Life Insurance etc.
are a number of the non – securitised financial investment.
Mutual Funds Schemes: Instead of directly buying financial securities, an individual can invest
in mutual funds. Those mutual funds managed by professionals choose where to invest, when to
invest, how much to invest as well as when to disinvest so that the mutual funds scheme would
be able to give a profit to its investors.

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Real Assets: For the majority of the investors the most significant asset in their portfolio is a
residential house. Furthermore a residential house, the more wealthy investors are likely to be
interested in the following types of real estate:
Agricultural land
Semi – urban land
Time share in a holiday resort
1.4 INDIVIDUAL INVESTORS IN INDIAN CAPITAL MARKET
Investors in the capital market may be institutions or Individuals. In the capital market the role of
individual investors cannot be overlooked since household’s savings account for the lion’s share
of the gross savings in the country. Even though Foreign Financial Institutions play a major role
in the Indian capital market, the contribution of Individual investors will be a great boost for the
development of the capital market and for decreasing the volatility in the stock market. The
market rise and fall arise mainly due to the sudden exit or entry of FPIs in the Indian capital
market.
There are many studies relating to the contribution of individual investors in the Indian Capital
Market. A Reserve Bank of India study of ownership of shares in 1978 covered 361 companies
listed on various stock exchanges. The total paid up value of Rs.1390.85 crore of the shares of
these 361 companies were held by 30, 16,000 accounts of which individuals held 99.3 % Value –
wise, individual holdings accounted for 37.58 %, joint stock companies 33.77 %, financial 25.68
%, government and semi – government bodies 1.49 %, and 1.48 % was held by trusts and
charitable institutions (RBI Bulletin, Feb. 1983).

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An Industrial Development Bank of India (IDBI) investigation in the year of 1986 identified the
pattern of equity shares of 575 companies. Overall paid – up capital of the 575 companies was
Rs. 2755.5 crore in terms of value. The fund was owned by 76, 28,598 account holders. The
major numbers of accounts, 99.5 %, were held by individuals. In terms of value their holdings
accounted for 36 % of total equity. Joint stock companies accounted for 25.9 %, financial
institutions 22.6 %, government plus semi – government organizations 14.4 %, and 1.1 %was
held by trusts and charitable institutions (The SE Official Directory).
1.5 RETAIL INVESTORS IN INDIA
An individual who purchases securities for his/her own personal account rather than for an
organisation is known as retail investor. SEBI defines a retail shareholder as presently listed
companies making public issues can make reservation on competitive basis for its existing
shareholders who, as on the record date, are holding shares worth up to Rs. 50,000/-. But, no
limit has been set on the value of the application that can be made by such shareholders. It has
now been decided to define the term “Retail Individual Shareholder” to mean a shareholder (i)
whose shareholding is of value not exceeding Rs. 2, 00,000/- as on the day immediately
preceding the record date, and (ii) who makes application or bids in a public issue for value not
exceeding Rs 2, 00,000/- (www.sebi.org).
Retail investing activity occurs through any of the subsequent channels;
The investor directly invests
He acts through an agent or broker
His accounts are managed by his D/P
He joins an investment group - friends, colleagues, family members etc. (informally)

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When the stock market is experiencing a boom the retail investors can also enter and reap the
rewards provided they don’t fall prey to either fear or greed and behave rationally. Any time is a
good time to enter the market provided we have a long term perspective. The game of investing
like any other game requires certain qualities and virtues on the part of investors. Movements in
the Sensex would then reflect movements in the price of that particular bundle of active shares.
Changes over different periods would capture the gains/losses made over that period by an
investor in such a bundle.
1.6 SCOPE OF THE STUDY
Traditional finance theory assumes that investors view all decisions through an objective lens of
risk and return. It also presumes that people are guided by reason and logic as well as
independent judgment. However the field of behavioural finance recognises and proves that
emotions and herd instincts play a significant role in influencing decision. Unlike institutional
investors, individual investors are prone to such psychological behaviour while making
investment choices. When these psychological biases are coupled with the poor financial literacy
levels, it may create havoc in the game of investing. Therefore the argument of the traditional
financial theory relating to the effectiveness of the stock market is often proved wrong. The
growth of capital market in India is evident from the rise in the market capitalization of the
leading two stock exchanges in India namely Bombay Stock Exchange and the National Stock
Exchange. When the stock market is growing every individual investors too should share in its
growth and profit. But clearly the data revealed by various agencies show that individual
investors especially retail investors are shying away from the capital market. Therefore there is a
need to study individual investors and perceptions in the capital market. The focus of this
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study is on individual investors as buyers of corporate securities such as investing through

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Capital Market. In the context of a developing economy like India the market for corporate
securities needs to be extended so that the corporate sector can raise long term capital by issuing
securities to the public. Therefore, this study is undertaken to gain an insight to the investor
behaviour.
1.7 STATEMENT OF THE PROBLEM
There is every chance that the interest of the individuals might be affected because of the smaller
size of their holding and the resultant vulnerability. The stock market witnesses instability due to
the entry and sudden exit of Institutional Investors. In this context the researcher is motivated to
study the investing strategies, preferences and perceptions of the individual investors in the
capital market. Moreover, there is a need to analyse the various demographic factors and
psychological factors which influence the decision making process. The study covers the savings
and investment behaviour of the respondents with respect to Capital market instruments.
1.8 OBJECTIVES OF THE STUDY
1. To study the demographic profile of the respondents.
2. To examine the investment pattern of investors.
3. To analyse the association between demographic factors and investment behaviour of
individuals.
1.9 LIMITATIONS OF THE STUDY
1. The study is mainly grounded on the primary data collected from 200 respondents in Kolkata.
The inherent drawbacks of the primary data are applicable to the study.
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2. The unwillingness of the respondents to part with information relating to their income and
investment made the data collection very difficult. Respondents did not want to disclose their
income and savings in entire terms therefore the questionnaire had to be modified to get the data
relating to the income level and savings level.
3. A number of the respondents are uncertain with respect to different investment related queries.
They are not sure of their aims in savings and investments. The responses may not be usable.
4. There are numerous investment avenues in the capital market but the study confines mainly to
the investment in shares and mutual funds.
CHAPTER – II
CAPITAL MARKET IN INDIA
2.1 INTRODUCTION
In the current era of time, the Indian capital market has undergone remarkable changes. As the
mid-eighties, a metamorphic alteration involving multi-dimensional growth has taken place in an
otherwise dormant Indian financial system. The scale of growth could be measured in terms of
massive leaps in funds mobilization, the turnover on the stock exchanges, the amount of market
capitalization, plus the expansion of investor population.
2.2 EVOLUTION OF THE INDIAN CAPITAL MARKET
The stock market in India is nearly 200 years old. The transactions of the loan securities of the
East India Company towards the close of the 18th century were possibly the earliest record of
security dealings. Stock exchange trading got a big enhancement during the First World War and
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Second World War with the incorporation of large number of joint stock companies and coming
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up of new stock exchanges at Chennai, Delhi, Nagpur, Kanpur, Hyderabad and Bangalore. The
developments in the realm of capital market in India could be broadly discussed as follows:
Infrastructure Stage
The period between 1947 and 1973 marked the period of the development of infrastructure for
capital markets. The stage saw the procedure of strengthening of capital market over the
establishment of a network of development financial institutions like IFCI (1948), ICICI (1955),
IDBI and UTI (1964), SFCs (during the fifties and sixties) and SIDCs (during thesixties and
early seventies). A number of significant enactments covering the working of different segments
of capital market were legislated during this period. These include: Capital Issues (Control) Act,
1947, Securities Contracts (Regulation) Act, 1956 and Companies Act, 1956.
New Issues Stage
This stage indicated the enactment of the Foreign Exchange Regulation Act (FERA) between the
period 1973 and 1980. Under this Act, shareholding of foreign firms in joint ventures was
restricted to 40 % if the companies wanted to be known as Indian companies. This period saw
many well – managed multinational companies offering their equities to the public at controlled
low prices. This stimulated a large number of domestic public limited companies to come out
with the proposal of new capital issues for public subscription.
Establishment of SEBI
The Controller of Capital Issues (CCI) which was commonly responsible for regulating the issue
of capital market in instruments and not for post issue regulations and investors’ protection was
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eliminated with effect from May 29, 1992. The Securities and Exchange Board of India (SEBI)
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came in to existence on January 30, 1992 by virtue of an ordinance broadcasted by the President
of India. The goal of establishing SEBI was to protect the interests of investors in securities, to
promote as well as to regulate the development of the securities market. SEBI issued separate set
of rules for different categories of intermediaries such as brokers/sub-brokers, registrars to issue,
under writers to issue, portfolio managers, mutual funds, merchant bankers, debenture trustees,
bankers to issue and venture capital funds/companies. Detailed guidelines were issued by the
SEBI for disclosure and investor protection in respect of new issues and for regulation of insider
trading and prohibition of fraudulent and unfair trade practices. A necessary characteristic of
Indian capital market is that it is developing and creating rapid strides by allowing the
development of new financial institutions to develop. Significant among them include venture
capital firms, mutual firms, credit rating agencies, factoring firms, etc. an inventive feature of the
capital market in India is the introduction, of late, of the new and inventive financial instruments
used by firms for raising capital.
2.3 BSE AND NSE
NSE was ranked fourth and BSE was seventh among the topmost exchanges of the world in
terms of the number of trade in equity shares for the calendar year 2008.In terms of the value of
shares traded NSE was 18th among the top most exchanges of the world (SEBI Annual Report,
2008-09).National Stock Exchange has a total market capitalization of more than US$1.41
trillion, making it the world’s 12th-largest stock exchange as of March 2016. NSE's flagship
index, the NIFTY 50, the 51 stock index (50 companies with 51 securities inclusive of DVR), is
used extensively by investors in India and around the world as a barometer of the Indian capital
markets. The stocks trading at the BSE and NSE account for only around 4% of the Indian
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economy, which derives most of its income related activity from the so called unorganized sector
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and households. The growth in the capital market may be understood from the steady increase in
the rate of market capitalization.
Depository System
Since the beginning of liberalization process in 1991, the size of Indian Capital market expanded
manifold. The traditional system of settlement through physical transfer of securities failed to
cope up with the requirements of growing capital market and hindered further growth of the
market. Physical settlement mechanisms gave rise to inefficiencies and risks of bad deliveries,
delays in transfer and registration, fake certificates and forgeries. National Securities Depository
Ltd. (NSDL) the first and largest depository in India, established in August 1996 and promoted
by institutions of national stature responsible for economic development of the country has since
established a national infrastructure of international standards that handles most of the securities
held and settled in dematerialized form in the Indian capital market. Central Depository Services
(India) Ltd. (CDSL) was promoted by Bombay Stock Exchange (BSE) Limited jointly with
leading banks such as State Bank of India, Bank of India, Bank of Baroda, HDFC Bank,
Standard Chartered Bank, Union Bank of India and Centurion Bank. It commenced its operations
from the year 1999.
2.4 MUTUAL FUNDS IN INDIA
The formation of Unit Trust of India marked the evolution of the Indian mutual fund industry in
the year 1963. The primary objective at that time was to attract the small investors and it was
made thinkable through the collective efforts of the Government of India and the Reserve Bank
of India. Unit Trust of India enjoyed complete monopoly when it was established in the year
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1963 by an act of Parliament. UTI was set up by the Reserve Bank of India and it continued to
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function under the regulatory control of the RBI until the two were de-linked in 1978 and the
entire control was moved in the hands of Industrial Development Bank of India (IDBI). The
Indian mutual fund industry saw a number of public sector players entering the market in the
year 1987. In November 1987, SBI Mutual Fund from the State Bank of India became the first
non-UTI mutual fund in India. SBI Mutual Fund was later followed by Canbank Mutual Fund,
LIC Mutual Fund, Indian Bank Mutual Fund, Bank of India Mutual Fund, GIC Mutual Fund and
PNB Mutual Fund. The authorization given to private sector funds including foreign fund
management companies (most of them entering through joint ventures with Indian promoters) to
enter the mutual fund industry in 1993, provided a wide range of choice to investors and more
competition in the industry. The mutual fund industry observed a robust growth and stricter
regulation from the SEBI after the year 1996. The mobilisation of funds and the number of
players operating in the industry reached new heights as investors started showing more interest
in mutual funds. The industry has also witnessed some mergers and acquisitions recently,
instances of which are acquisition of schemes of Alliance Mutual Fund by Birla Sun Life, Sun
F&C Mutual Fund and PNB Mutual Fund by Principal Mutual Fund.
CHAPTER – III
CONCEPTS AND RELATED LITERATURE
3.1 STUDIES RELATING TO INVESTORS BEHAVIOUR
S. Balaji and R. Kumar Bhaskar (2001) in their paper titled “Investor’s Psychology, A study of
Investment Behavior in the Indian Capital Market” propose that, a) People study by observing as
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well as analyzing the market psychology in addition to use it to achieve results.

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Baker and Nofsinger (2002) in their paper “Psychological Biases of Investors” saw that
difference between traditional plus behavioral finance is a subject of how each discipline is
developed. Traditional finance has developed in a normative way; it concerns the rational
solution to the decision problem by evolving ideas and financial tools for how investors should
behave rather than how actually they do behave. In this respect, behavioral finance is expressive
as it offers clarifications for what actually happens rather than what must happen.
Rajarajan (2003) in his “Investors demographics and risk bearing capacity” classifies that a
strong association is present between demographic characteristics and the risk bearing capacity
of Indian investors. This study confirms the previous findings with regard to the relationship
between age and income and the risk bearing capacity of investors.
Lakshmi C. (2005) in her paper “What influences more on the consumer buying decision
process?” has specified that the reason for not investing one equity shares and equity oriented
securities by Indian investors is the insight that equity investments are risky. She added that
though the investors are conscious of success stories of equity investment, as they perceive that
they do not understand many risk minimization methods, they feel it is better to stay away from
equity investment.
Chopra V.K. (2006) says Indian corporate mostly raises funds through capital market. Two
types of capital are basically raised viz., Equity and Debt. Equity forms part of the Net worth and
the Debt forms part of the outside liability of the firm. The capital raised through equity is
superior to that of debt capital for both the firm and the investor. Equity improves the borrowing
power of the firm from banks and financial institutions. In India, looking at the 8 years
Compounded Annual Growth Rate (CAGR), equity returns has beaten debt to the tune of 15.8 %.
Santi Swarup (2008), in his survey entitled, “Measures for Improving Common Investor
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Confidence in Indian Primary Market: A Survey”, analyzed the decisions taken by the investors
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at the time of investing in primary markets in the first part: secondly the factors affecting primary
market situation in India was analyzed and to conclude the survey assesses various revival
measures existing for enlightening investor confidence. The survey was conducted in 10 cities in
India by mailing questionnaire methods. The survey results of 367 investors discovered that the
investors give importance to own analysis and market price as compared to broker’s guidance.
Issue price, information availability, market price after listing and liquidity emerge as significant
factors affecting primary market situation in India.
Shobana V.K. and Jayalakshmi J (2009), in their study entitled, “Investor Awareness and
Preferences”, studied the investors’ preferences, the level of investor alertness and the factors
influencing investor awareness of 100 respondents in Salem District. The study reveals that real
estate, bank deposits and jewelry were the preferred investments. Investors above 50 years of
age, post graduates and professionals had high level of consciousness. Age and education do not
have any important influence over investor consciousness but occupational status leads to
difference in the consciousness level of people.
Koundinya C. (2010) “Risk perception of Indian Investors” determined in his research that the
perception of risk associated with equity investment made a number of Indian investors believe
that equity investment is not appropriate to them, particularly after Indian stock market crash due
to the global economic recession of 2007-08.
Srivastava.V (2012) “Attitude of Indian Investors” study conducted on investment attitude of
Indian equity investors, it is found that Indian equity investors have a secure belief that in the
long run equity investments will certainly offers higher return than other investment options and
as a result, in spite of the Indian stock market crash in 2007, several new equity investors have
made investments in subsequent years.

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Durga Rao P. V. and Prof. G. V. Chalam (2013) in “Role of Independent Variables on
Investment Decision of Equity Retail Investors” say that investment refers to the engagement of
funds to asset with the goal of achieving additional income or growth in value over a given time
period. Investment may be defined as “a commitment of funds made in the expectation of some
positive rate of return”.
Durga Rao et. al. (2014) in “Investment Pattern of Equity Investors in Indian Capital Market”
finds that trading in stocks is quiet easy which keeps a number of basic knowledge of the
security trading. Investment pattern refers to a regular arrangement of actions followed by the
investment decisions of investor. Understanding the investment pattern of small equity investors
in investment decision making is significant in stock trading.
3.2 STUDIES ON MUTUAL FUND SELECTION BEHAVOIUR
S. Balaji and R. Kumar Bhaskar (2001) in their paper titled “Investor’s Psychology, A study of
Investment Behavior in the Indian Capital Market” propose that, a) People study by observing as
well as analyzing the market psychology in addition to use it to achieve results.
Baker and Nofsinger (2002) in their paper “Psychological Biases of Investors” saw that
difference between traditional plus behavioral finance is a subject of how each discipline is
developed. Traditional finance has developed in a normative way; it concerns the rational
solution to the decision problem by evolving ideas and financial tools for how investors should
behave rather than how actually they do behave. In this respect, behavioral finance is expressive
as it offers clarifications for what actually happens rather than what must happen.
Rajarajan (2003) in his “Investors demographics and risk bearing capacity” classifies that a
strong association is present between demographic characteristics and the risk bearing capacity
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of Indian investors. This study confirms the previous findings with regard to the relationship
between age and income and the risk bearing capacity of investors.
Lakshmi C. (2005) in her paper “What influences more on the consumer buying decision
process?” has specified that the reason for not investing one equity shares and equity oriented
securities by Indian investors is the insight that equity investments are risky. She added that
though the investors are conscious of success stories of equity investment, as they perceive that
they do not understand many risk minimization methods, they feel it is better to stay away from
equity investment.
Chopra V.K. (2006) says Indian corporate mostly raises funds through capital market. Two
types of capital are basically raised viz., Equity and Debt. Equity forms part of the Net worth and
the Debt forms part of the outside liability of the firm. The capital raised through equity is
superior to that of debt capital for both the firm and the investor. Equity improves the borrowing
power of the firm from banks and financial institutions. In India, looking at the 8 years
Compounded Annual Growth Rate (CAGR), equity returns has beaten debt to the tune of 15.8 %.
Santi Swarup (2008), in his survey entitled, “Measures for Improving Common Investor
Confidence in Indian Primary Market: A Survey”, analyzed the decisions taken by the investors
at the time of investing in primary markets in the first part: secondly the factors affecting primary
market situation in India was analyzed and to conclude the survey assesses various revival
measures existing for enlightening investor confidence. The survey was conducted in 10 cities in
India by mailing questionnaire methods. The survey results of 367 investors discovered that the
investors give importance to own analysis and market price as compared to broker’s guidance.
Issue price, information availability, market price after listing and liquidity emerge as significant
factors affecting primary market situation in India.

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Shobana V.K. and Jayalakshmi J (2009), in their study entitled, “Investor Awareness and
Preferences”, studied the investors’ preferences, the level of investor alertness and the factors
influencing investor awareness of 100 respondents in Salem District. The study reveals that real
estate, bank deposits and jewelry were the preferred investments. Investors above 50 years of
age, post graduates and professionals had high level of consciousness. Age and education do not
have any important influence over investor consciousness but occupational status leads to
difference in the consciousness level of people.
Koundinya C. (2010) “Risk perception of Indian Investors” determined in his research that the
perception of risk associated with equity investment made a number of Indian investors believe
that equity investment is not appropriate to them, particularly after Indian stock market crash due
to the global economic recession of 2007-08.
Tabassum Sultana Syed (2010) discussed the characteristics of the Indian individual investors,
and made an effort to discover the association between a dependent variable i.e., Risk Tolerance
level and independent variables such as Age, Gender of an individual investor on the basis of the
survey. Indian investors are high income, well educated, salaried, and independent in making
investment decisions and conservative investors. From the empirical study it was found that
regardless of gender, most of the investors (41%) are found to have low risk tolerance level and
many others (34%) have high risk tolerance level rather than moderate risk tolerance level. It is
also found that there is a strong negative correlation between Age and Risk tolerance level of the
investor. Television is the media that largely influences the investor’s decisions. Therefore, this
study can assist the investment product designers to design products which can cater to the
investors who are low risk tolerant.
Srivastava.V (2012) “Attitude of Indian Investors” study conducted on investment attitude of

17
Indian equity investors, it is found that Indian equity investors have a secure belief that in the
Page
long run equity investments will certainly offers higher return than other investment options and
as a result, in spite of the Indian stock market crash in 2007, several new equity investors have
made investments in subsequent years.
Durga Rao P. V. and Prof. G. V. Chalam (2013) in “Role of Independent Variables on
Investment Decision of Equity Retail Investors” say that investment refers to the engagement of
funds to asset with the goal of achieving additional income or growth in value over a given time
period. Investment may be defined as “a commitment of funds made in the expectation of some
positive rate of return”.
Durga Rao et. al. (2014) in “Investment Pattern of Equity Investors in Indian Capital Market”
finds that trading in stocks is quiet easy which keeps a number of basic knowledge of the
security trading. Investment pattern refers to a regular arrangement of actions followed by the
investment decisions of investor. Understanding the investment pattern of small equity investors
in investment decision making is significant in stock trading.
3.3 STUDIES RELATED TO SAVINGS AND INVESTMENT
Corbin (2001) recognized the significance of controlling for the heterogeneity of countries in a
cross-section analysis of the savings and investment correlation for a group of countries using
panel data. And, concluded that high saving and investment correlation is high due to country
specific effect than to the presence of common factors affecting all the countries in his sample.
Sinha (2002) found that savings and investment rates are co integrated for Myanmar and
Thailand demonstrating the growth of savings rate causes the growth of investment rate.
Remarkably, reverse causality between savings rate and investment rate has been observed for
Hong Kong, Malaysia, Myanmar and Singapore.

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Kasuga (2004) employed cross sectional analysis and concluded that the effect of domestic
savings on investment depended on financial systems and their development. Commonly in
developing countries with bank-based and/or relatively inefficient financial sectors, the lower
saving and investment correlation is not unanticipated.
Gupta, L.C. (2005) in his Household Investors Survey stated that 50 % household investors,
regardless of income or age, have a negative opinion of company managements, and 44 % think
they cannot rely on company auditors to prevent fraud, a survey subscribed by the Investor
Education and Protection Fund managed under the Ministry of Company affairs, finds.
Nicholas M. Odhiambo (2009) takes a fresh look at the direction of causation between savings
and economic growth in South Africa during the period 1950–2005. The study was driven by the
low and declining savings rate currently prevailing in South Africa, on the one hand, and the
dwindling level of economic growth experienced in the country during the 1990s, on the other.
The study recommends that in the short run, South African policies should be geared towards
accomplishing both higher savings and economic growth in order to boost investors’ confidence
and to invite foreign capital inflow. But, in the long run, the country should shift its focus
towards achieving higher economic growth, in order to boost the domestic savings and to sustain
a steady flow of foreign capital investment.
CHAPTER – IV
RESEARCH METHODOLOGY
4.1 SAMPLING PLAN
Since the population of the selected location for the research is very large and all the respondents
could not be interviewed due to practical difficulties, only selected samples have been taken up
19
for the study. The study was conducted in various parts of Kolkata city. Many investors were
Page
reluctant to divulge their financial details especially amount of money invested in different
investment avenues. Hence the data were collected from the respondents who were willing to
divulge the information.
To determine the sample size the researcher distributed 260 questionnaires to different
individuals out of that 200 well-furnished feedback forms have been utilised for the data analysis
purpose. Informational Referral sampling method is used for the study. When the target
population is thinly distributed across a vast area this method of referral sampling is suitable for
data collection. In order to have representation from different demographic groups stratified
sampling is done to select the respondents.
4.2 VARIABLES
The variables which are considered for the study are as follows:
Independent Variables are Dependent Variables
Age Herding Behaviour

Gender Preference for Short Term Gain
Academic Qualification Risk Tolerance
Marital Status Investors’ Perception of the Capital Market
Number of Dependents Investors’ Perception of Corporate Governance
Occupation Investor Awareness
Annual Income Preference for Mutual Funds
Preference for IPOs
Preference for Small Lots of Shares
Preference for Profit Booking with Target
Preference for Gold
Preference for mutual fund
4.3 HYPOTHESES
H1: There is a significant relationship between herding and the gender.

20
H2: Herd behaviour varies significant among the age groups.

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H3: Herd behaviour has a significant relationship with the qualification of the respondents.
H4: Risk tolerance varies between the genders.
H5: Risk tolerance varies significantly with age.
H6: The risk tolerance level of the investors varies significantly among different annual income
group.
H7: Investor awareness level varies between the genders.
H8: Investor awareness varies significantly among respondents belonging to different academic
levels.
H9: The average rate of return from the investment has a significant relationship with the
experience of the investment.
H10: There is a significant relationship between academic qualification and savings.
H11: Preference for gold varies significantly with demographic factors.
H12: Preference for mutual funds varies significantly with demographic factors.
H13: There is a significant relationship between diversification and demographic factors.
4.4 TOOLS FOR DATA COLLECTION
A structured questionnaire was used as a tool for collecting the data for the study.
4.5 TYPES OF DATA USED FOR THE RESEARCH
Both primary and secondary data have been used for this research.
i) Primary Data – The research focuses on the investment behaviour of investors in the selected
locations. Hence collection of first-hand information from the target group is crucial for the study.
The target group selected for the study is the Individual Investors. in the Capital market. Survey
method has been used to collect the primary data from the respondents in Kolkata. Primary data were
collected mainly from the work places of different companies, Government offices (State, Central
21
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and Public sector), and small and medium business establishments. Some of the respondents were
interviewed in the stock broking offices as well for the collection of primary data.
ii) Secondary Data – The secondary data have been collected from different sources like journals,
research reports etc. The data pertaining to the existing savings and investments behaviour in India
are collected from the Annual Reports of SEBI, Indian Economic Survey released by the Ministry of
Finance and the data released by the stock exchanges and also from the official websites of
Association of Mutual Funds in India, Securities and Exchange Board of India, National Council for
Applied Economic Research and Reserve Bank of India.
4.6 RELIABILITY OF THE TOOL
Reliability analysis method was used in the present study to test the reliability of the tool because
this method is considered to be one of the best methods through which the data for computing
reliability are obtained by one testing. Employing the cronbach alpha method, the internal
consistency was measured, to find out how closely the set of items as a group are related.
Reliability co-efficient of the test is 0.786.
4.7 REFERENCE PERIOD FOR THE STUDY
The researcher used survey method to collect the primary data. The target respondents were
briefed about the research and mode of filling up questionnaire. The researcher made no attempt
to influence or bias the opinion or feelings of the target respondents. The reference period for the
data collection is from April 2015 to Nov. 2015 and the reference period for the full study is
from April 2015 to March 2017.

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4.8 TECHNIQUES OF ANALYSIS
The primary data collected from the potential respondent’s from different areas of Kolkata city
been properly sorted, classified, edited, tabulated in a proper format and analysed by deploying
appropriate statistical tools. The researcher used Windows Excel Spread sheet for recording and
classification of 200 samples. Statistical Packages for Social Sciences (SPSS), a computer aided
software package of statistical tools for deploying different basic and advanced statistical tools in
the research in order to check the accuracy of procured data were used by the researcher. The
following statistical tools were used for analysing the data procured from the respondents from
different locations selected for the study.
I. Simple percentage - This is one of the basic statistical instruments which is widely used in
analysis and interpretation of primary data.
II. Chi-square Analysis – This analytical tool is used in the study extensively to assess the
association between demographic variables and different investment behaviour.
III. F Test ANOVA - One-Way Analysis of Variance is a technique to test the equality of three
or more means at one time by using variances. The technique used to analyse the variables in the
study for analysing the influence of age, academic qualification, occupation and annual income
on the various investment behaviour and perceptions of the investors.
IV. The weighted mean is a mean -If there is some variation in the relative contribution of
individual data values to the mean. Each data value (Xi) has a weight assigned (Wi) to it. Data
values with larger weights put in more to the weighted mean and data values with smaller
weights contribute less to the weighted mean.

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CHAPTER – V
ANALYSIS
5.1 NTRODUCTION
In this research the investigator assessed the respondents by their demographic characteristics,
investments owned, investment features, returns, diversifications of the portfolio, time spent for
investing activity, leveraging in investment and experience in stock market. The percentages
were found and the analysis was done as under –
5.2 Following are the tables provided for analysis of demographics:
TABLE – 1.1
DETAILS OF INDIVIDUAL INVESTORS
NUMBER
S.NO. INVESTOR PARTICULARS %AGE
OFRESPONDENTS
Male 121 60.3

1 Gender
Female 79 39.7
Less than 30 18 8.7
30-45 70 35.0
2 Age
45-60 85 42.3
Above 60 27 14.0
School final 15 7.3
Graduate 83 41.3
Academic
3
Qualification
Post graduate 54 27.0
24
Professional 48 24.3
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Self employed 50 24.7
Employed in
19 9.3
government
4 Occupation
Employed in
89 44.3
private
Retired 42 21.7
The above table 1.1 shows that 121 of the respondents are men and the rest are women. When
it comes to age, it is found that only 18 investors (8.7%) belong to the age group of less than
30. Therefore it can be interpreted that the younger generation do not think of savings and
investments in their early phase of employment or business. Investors in the age group of 30-45
are 70 in number constituting 35%. Similarly investors in the age group of 45 to 60 also save
and invest. An interesting finding is that 14% of investors are above the age of 60. Among the
respondents, 15 respondents (7.3%) are investors with a Matriculation diploma, whereas the
majority of the investors are graduates having the maximum number of representation (41.3%)
followed by Post graduates and Professionals constituting 27% and 24.3 % respectively. As
regards occupation, 44.3% of the investors are employed in the private sector; 24.7% are self-
employed; 9.3% are employed in Government and the rest of the 21.7% are retired. Even
retired people invest in shares and mutual fund.
TABLE – 1.2
Marital Status and Number of Dependents
S.NO. INVESTOR PARTICULARS NUMBER OFRESPONDENTS %AGE

25
1 Marital Status Married 178 89.0

Page
Unmarried 22 11.0
2 and below 102 51.7

2 Number of dependents
3and above 98 48.3
A majority of the respondents are married. Married investors constitute 89 % and unmarried
investors constitute 11 %. As regards number of dependents, 51.7% of them have 2 or less than 2
dependents and 48.3 % of the respondents have more than 2 dependents.
TABLE – 1.3
ANNUAL INCOME AND ANNUAL SAVINGS IN RUPEES
NUMBER
OFRESPONDENTS
Below 2 lakhs 52 26.7
2-4 Lakhs 80 40.3

1 Annual Income
4-6 Lakhs 20 9.7
6 Lakhs and above 48 23.3
Less than Rs.

43 21.7
25000/-
Rs. 25,000 – Rs.

40 20.3
50,000
2 Annual Savings
Rs. 50,000 – 1 lakh 38 18.7
1 lakh and above 79 39.3

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As regards annual income a majority of the respondents (40.3%) have income ranging from 2 to
4 lakhs followed by 52 (26.7%) respondents in the income group of below 2 lakhs. 23.3 % of the
investors earn above 6 lakhs per annum. Those who earn 4 to 6 lakhs constitute 9.7 %. An
interesting feature is that investors earning less than 2 lakhs too have investments in capital
market. The investors who save 1 lakh and above per annum are 79 (39.3%) followed by
investors who save less than Rs. 25,000 per annum numbering 43 (21.7%). Those who save
between Rs. 25,000 – Rs. 50,000/- per annum are 40, constituting 20.3 % and 38 respondents
save between Rs. 50000/- – Rs. 1,00,000/- per annum.
TABLE – 1.4
OWNERSHIP OF ASSETS
NUMBER OF
RESPONDENTS
Yes 169 84.3
1 Ownership of residential house
No 31 15.7
Yes 52 26.0
2 Have Mortgage Loan
No 148 74.0
Ownership of Assets - Yes 156 78.0
3
Bank deposit No 44 22.0
4
Postal savings No 140 70.0

5
Insurance Policies No 89 44.7
A majority of the investors have houses of their own. 84.3 % of the investors have house
property and 15.7 % do not own a house. From the above data it is clear that ownership of
residential house property is a preferred investment for a majority of the investors. Bank deposits
are a preferred form of investment for 78 % of the investors. Postal Savings are preferred by 60
investors constituting 70 % of the sample investors. Insurance policies are taken by 55.3 % of the
27
investors.
Page
TABLE – 1.5
DETAILS ABOUT INVESTMENTS
NUMBER OF
S.NO. INVESTMENT %AGE
RESPONDENTS
All in De-mat form 150 75.3
Form of Mostly in De-mat form 33 16.7
1
Investments All in Physical form 14 7.0
Mostly in Physical form 3 1.0
Trading through Broker 121 60.3
Mode of
2 Using Internet 76 37.7
transaction
Others 3 2.0
From the above table 1.5 it is clear that 75.3 % of the respondents have all the investments in
dematerialised form and 7 % of the respondents have all their investments in physical form. 16.7
% of the investors have most of their investments in dematerialised form and 1 % of the investors
have most of their investments in dematerialised form. It is inferred from the above table that
majority of the investors have shifted to electronic form of securities and the remaining investors
are also in the process of converting to the electronic form.
The most preferred method of trading by the investors is through brokers (60.3%) followed by
internet trading (37.7%) and other methods of trading constitute 2 %. From the above it is clear
that broker-dependence is very high among the investors for trading even though internet trading
facility is available
TABLE – 1.6
TIME SPENT FOR INVESTING ACTIVITIES
NUMBER OF
RESPONDENTS
2-5 hours per week 38 19.0
Times spend
2-5 hours per month 56 27.7
28
1 for investing
2-5 hours per year 4 1.7
activities
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Most of my spare 14 7.0

time
Every day at least
88 44.7
some time
The above table 1.6 shows that 19 % of the investors spend 2-5 hours per week for investment
activities; 27.7 % spend 2-5 hours per month and 1.7 % spend 2-5 hours per year and a majority
of the investors spend some time every day for investment related activities. It is a positive aspect
of the investors since the time spent for knowing the different types of investments and other
details will help increase the financial literacy of the respondents.
TABLE – 1.7
LEVERAGE IN INVESTING
NUMBER OF
S.NO. LEVERAGE IN INVESTING %AGE
RESPONDENTS
Borrow and invest in Yes 16 8.0
1
stock market No 184 92.0
Using leverage in investing is a method for increasing the profit. But it involves risks as well.
From the above table it is understood that only 8 % of the respondents borrow and invest in stock
market. Hence majority of the investors are conservative.
TABLE – 1.8
SHARES IN DELISTED COMPANIES
NUMBER OF
S.NO. DELISTED COMPANIES %AGE
RESPONDENTS
Yes 39 19.3
1 Have Shares in Delisted companies
No 161 80.7
The above table 1.8 shows that 19.3 % of the investors have shares in delisted companies.
Having shares in delisted companies (delisted by stock exchanges for default) puts the
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shareholders in difficulty. From the above table we understand that the problem of delisted
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companies still exists in spite of the regulatory measures.

TABLE – 1.9
RATE OF RETURN AND EXPERIENCE IN STOCK MARKET
RATE OF RETURN AND EXPERIENCE IN NUMBER OF
S.NO. %AGE
STOCK MARKET RESPONDENTS
Below 10 % 21 10.7
Average rate
10 – 20 % 60 29.7
1 of return
Above 20 % 78 39.0
(Past 5 years)
Net Loss 41 20.7
Less than 5 yrs 65 32.3
Experience in
2 5 – 10 yrs 44 22.0
stock market
Above 10 yrs 91 45.7
The above table 1.9 shows that 39 % of the investors earn an average rate of return of above 20
%; 29.7 % earns an average rate of return of 10-20 %; 10.7 % earn below 10 % and 20.7 % have
incurred losses. As the level of risk is high in equity investing a layman is not inclined to invest
in stock market in India. The incurring of loss by nearly 20 % of the investors may be a reason
for the low level of retail participation in Indian Stock market.
TABLE – 1.10
DIVERSIFICATION OF PORTFOLIO
NUMBER OF
S.NO. DIVERSIFICATION OF PORTFOLIO %AGE
RESPONDENTS
5 and below 48 24.0
Number of companies in the
1 6 – 15 92 45.7
portfolio
16 and Above 60 30.3
Number of 2 and below 53 26.3
2 sectors in the 3–5 58 29.0
portfolio 6and Above 89 44.7
The number of companies in the portfolio represents the diversification of the portfolio. The
above table 1.10 shows that there is a greater degree of diversification compared to what is
suggested by Investment Gurus. Warren Buffet says that the ideal portfolio should contain no
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more than 10 good stocks. But the above table shows that 30.3 % of the investors have stocks in
Page
more than 16 companies and 45.7 % of the investors have stocks in 6-15 companies. And 24 %
have shares in less than 5 companies. When the portfolio involves a large number of stocks it
becomes difficult for the investor to keep track of the prospects.
The diversification in respect of the sector shows that 44.7 % of the investors have shares in 7 or
more sectors; 29 % have shares in 4-6 sectors and 26.3 % has shares in 3 and less than 3 sectors.
This also shows that there is a greater degree of diversification with respect to sectors as well.
5.4 AN ANALYSIS OF THE PREFERENCES OF THE INVESTORS BASED ON THE
WEIGHTED MEAN VALUES
i) OBJECTIVES OF SAVINGS
TABLE – 1.11
RANKING OF THE OBJECTIVES OF SAVINGS
Objectives of Savings WMV RANK
I save for my children’s education. 3.9 I
I save for my daughter’s marriage. 3.5 II
I save to provide for my retirement. 3.5 II
I save to purchase a house. 3.2 IV
I save for tax benefits. 3.2 IV
I save for contingencies. 2.1 VI
The objectives of savings are ranked in the above table using weighted mean values of the
responses given by the investors in the questionnaire.
Saving for children’s education takes the lead with the W.M.V. of 3.9. This is followed by the
other two objectives namely daughter’s marriage and providing for retirement scoring the
W.M.V of 3.5 each as the second rank; Saving for tax benefits and purchasing a house are ranked
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as the IV objective and saving for contingencies is the last objective Hence it is proved that
children’s education is the prime motive behind saving.
ii) SOURCES OF INVESTMENT INFORMATION
TABLE – 1.12
RANKING OF THE SOURCES OF INVESTMENT INFORMATION
Sources WMV RANK
Professional Advisers 4.5 I
Business News Channels like CNBC,NDTV

3.6 II
Profit
Family and Friends 3.4 III
Magazine or Newspapers 3.3 IV
Investment websites 3 V
Books 2.2 VI
Among the different sources of investment information Professional Advisers are ranked first
scoring a W.M.V value of 4.5. Business News Channels like CNBC, NDTV Profit are getting the
Second place. The family and Friends of the Investors occupy the third place followed by the
others. From the above it is clear that most of the investors are dependent on the Professional
Advisers.
iii) PREFERENCE FOR VARIOUS TYPES OF SHARES
TABLE – 1.13
PREFERENCE FOR SHARES
Types WMV RANK
Blue chip companies 4.5 I
Growth companies 4.2 II
Familiar Companies 3.5 III

32
As per the weighted mean Value Blue Chips are the most preferred than the other types of shares.
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Growth shares are the second preferred type of shares followed by shares of familiar companies.
Investing in blue chip companies shows that investors do not want to take risk with a new
company.
iv) BASIS FOR BUYING SHARES
TABLE – 1.14
BASIS FOR BUYING SHARES
Basis WMV RANK
Fundamental analysis 4.4 I
Earnings announcements 3.8 II
Technical analysis 3.7 III
The basis of buying on the fundamentals is ranked first followed by buying after the
announcements regarding bonus, rights, and dividends in order to get the benefits quickly.
Technical analysis is not mostly favoured. It shows that the investor values the fundamental
analysis much more than technical analysis.
v) QUALITIES EXPECTED OF FINANCIAL ADVISERS
TABLE – 1.15
RANKING OF THE QUALITIES OF FINANCIAL ADVISERS
WMV RANK
Qualifies of financial Adviser
Maximizing return 4.8 I
Fee structure 4.4 II
Trust and Confidentiality 4.3 III
Handling problems 3.5 IV
Protecting Capital 3.5 IV
Experience 3.5 IV
Brand name of the adviser 2.9 VII
Among the qualities expected of the financial advisers, maximising returns, Reasonable fee
structure and trust and confidentiality are ranked as the first, second and third respectively. It is
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very interesting to note that the brand name of the financial adviser is rated as the last rank. It is
very much evident from the fact that there are a large number of brokers operating in the selected
cities who are relatively new to the business but still have the capacity to compete with corporate
who are in the business.
5.5 AN ANALYSIS OF DIFFERENT BEHAVIOUR IN INVESTING
The investment behaviour and preferences of the investors are analysed using the responses
given by the investors in the five point Likert’s Rating Scale. The respondents’ views are
assigned weights and the cumulative scores are considered for the purpose of analysis. The
specific traits that are analysed and rated are given below. Questions which test the same traits or
behaviour are grouped together and cumulative scores of the responses are used for assessing the
different kinds of behaviour. Based on the scores, respondents are divided into different levels as
high, medium and low.
TABLE NO: 1.16

DIFFERENT BEHAVIOUR IN INVESTING
HERD BEHAVIOUR
S.No Level Frequency %
1 Low 57 28.7
2 Medium 64 32
3 High 79 39.3
Total 200 100
PREFERENCE FOR SHORT TERM GAINS
1 Low 63 31.3
2 Medium 83 41.3
3 High 54 27.3
Total 200 100
RISK TOLERANCE
1 Low 61 30.7
2 Medium 74 37
34
3 High 65 32.3
Total 200 100
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PERCEPTION ABOUT INDIAN CAPITAL MARKET

1 Unfavourable 80 40
2 Favourable 120 60
Total 200 100
PERCEPTION ABOUT CAPITAL MARKET REGULATION
1 Unfavourable 35 17.3
2 Favourable 165 82.7
Total 200 100
INVESTOR AWARENESS
1 Low 35 17.4
2 Medium 83 41.3
3 High 82 41.3
Total 200 100
PREFERENCE FOR IPOS
1 Low 58 29
2 Medium 57 28.3
3 High 85 42.7
Total 200 100
PREFERENCE FOR SMALL LOTS
1 Low 69 34.3
2 Medium 22 11.3
3 High 109 54.4
Total 200 100
TENDENCY FOR PROFIT BOOKING
1 Low 11 5.7
2 Medium 58 29
3 High 131 65.3
Total 200 100
PREFERENCE FOR MUTUAL FUND TO SHARES
1 Low 70 35
2 Medium 81 40.3
3 High 49 24.7
Total 200 100
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5.6 DIFFERENTIAL ANALYSIS
In this part of the analysis the relationship between the demographic factors and various
investment behaviours are examined. Suitable hypotheses are set and tested with the help of the
appropriate statistical tools and the variables are analysed.
TABLE NO 1.17
ONE WAY ANALYSIS OF VARIANCE AMONG AGE GROUPS WITH REGARD TO
INVESTMENT BEHAVIOUR
Investment Sum of Mean Statistical
S.No. Df Mean
Behaviour squares Square Inference
1. Herd Behaviour G1=8.5785

F = 8.002
G2=5.8242
Between Groups 112.288 3 38.043
P<0.001
G3=6.8527
Within Groups 1428.948 197 4.660
Significant
G4=6.4752
2. Preference for G1=23.6548

F = 12.427
short term gain G2=16.7486
P<0.001
Between Groups 716.076 3 275.352 G3=18.1786
Significant
Within Groups 6340.871 197 20.388 G4=19.5170
3. Risk tolerance G1=30.6138

F = 12.078
G2=22.7098
Between Groups 1340.324 3 470.118
P<0.001
G3=25.0089
Within Groups 11795.796 197 37.783
Significant
G4=26.2152
4. Perception of G1=46.7856
F = 3.145
capital market G2=47.5498
P<0.05
Between Groups 147.719 3 47.903 G3=46.6479
Significant
Within Groups 4456.527 197 16.394 G4=48.7171
36
Capital Market F = 2.983
Page
Regulation G2=12.0075 P<0.05

Between Groups 26.218 3 8.770 G3=12.3632
Significant
Within Groups 813.111 197 2.980 G4=12.4861
6. Investor G1=32.7078
F = 7.187
Awareness G2=30.5119
P<0.001
Between Groups 444.341 3 151.447 G3=33.0002
Significant
Within Groups 6314.004 197 21.365 G4=33.4758
G1 = Less than 30 G2 = 30-45 G3 = 45-60 G4 = Above 60
The analysis of the above variables with the age groups confirm the fact that respondents in the
age group of less than 30 differ from other groups with respect to herd behaviour, preference for
short term gain, risk tolerance. Investors in the age group of less 30 show a higher level of herd
behaviour, risk tolerance and preference for short gain. The respondents in the age group of 30-
45 differ from the rest of the age groups with respect to investor awareness.
TABLE NO 1.18
ONE WAY ANALYSIS OF VARIANCE AMONG ACADEMIC QUALIFICATION
WITH REGARD TO INVESTMENT BEHAVIOUR

S.No. Df Mean
F = 2.842
Between Groups 42.944 3 14.312 G2=7.0001
P<0.05
Within Groups 1580.272 197 5.002 G3=6.1772
Significant
G4=6.1470

F = 2.724
short term gain G2=18.9042
P<0.05
Between Groups 191.521 3 63.844 G3=18.0737
Significant
Within Groups 6924.356 197 23.420 G4=17.0941
37

Page
Between Groups 392.037 3 131.685 G1=23.2363 F = 3.024

P<0.05
Within Groups 12623.074 197 43.465 G3=25.3744
Significant
G4=23.2182
F = 4.192
P<0.01
Between Groups 191.71 3 63.857 G3=46.9743
Significant
Within Groups 4411.386 197 15.261 G4=47.3873
Capital Market
Regulations F = 1.102
G2=12.6871
governance
P>0.05
Between Groups 12.623 3 3.807 G3=12.7921
Not Significant
Within Groups 817.648 197 2.279 G4=12.4748
F = 1.142
P>0.05
Between Groups 104.368 3 34.789 G3=30.7863
Not Significant
Within Groups 6673.979 197 22.547 G4=31.1287
G1 = School final G2 = Graduate G3 = Post graduate G4 = Professional
TABLE NO 1.19
ONE WAY ANALYSIS OF VARIANCE AMONG OCCUPATION WITHREGARD TO

INVESTMENT BEHAVIOUR

S.No. Df Mean
F = 4.396
Between Groups 65.161 3 21.599 G2=6.6986
P<0.01
Within Groups 1179.067 197 4.975 G3=6.1173
Significant
G4=7.3087
38

Page
short term gain G2=17.4814 F = 7.407

P<0.001
Between Groups 417.758 3 167.789 G3=18.4761
Significant
Within Groups 7618.159 197 32.396 G4=20.6414

F = 6.978
Between Groups 868.951 3 279.657 G2=25.2270
P<0.001
Within Groups 11744.173 197 42.714 G3=23.6458
Significant
G4=27.9984
F = 0.164
P>0.05
Between Groups 6.771 3 2.27 G3=47.3799
Not Significant
Within Groups 4396.344 197 15.786 G4=47.1307
Capital Market F = 5.464
G2=13.6074
Regulations
P<0.01
Between Groups 41.048 3 15.726 G3=12.3484
Significant
Within Groups 751.371 197 2.947 G4=12.3449
F = 5.298
P<0.01
Between Groups 357.374 3 11.568 G3=32.5697
Significant
Within Groups 6432.952 197 21.781 G4=32.2576
G1 = Self Employed G2 = Employed in Government G3 = Employed in private G4 =

Retired
TABLE NO 1.20
ONE WAY ANALYSIS OF VARIANCE AMONG ANNUAL INCOME WITH REGARD
TO INVESTMENT BEHAVIOUR
S.No. Df Mean
1. Herd Behaviour G1=7.0012 F = 2.771
39
Between Groups 41.871 3 13.950 G2=6.1955 P<0.05

Within Groups 1171.346 197 5.015 G3=7.1790 Significant
Page
G4=6.6123
2. Preference for G1=19.3897 F = 4.088

short term gain G2=17.7837 P<0.01
Between Groups 273.523 3 94.518 G3=19.6133 Significant
Within Groups 6873.363 197 23.110 G4=18.5672
3. Risk tolerance G1=26.3795 F = 4.227

Between Groups 542.789 3 180.789 G2=23.4553 P<0.01
G4=25.2348
4. Perception of G1=45.4587 F = 1.143

capital market G2=46.6557 P>0.05
Between Groups 53.858 3 17.953 G3=47.8728 Not
5. Perception of G1=13.0235 F = 3.589

Corporate
G2=12.5289 P<0.05
governance
Within Groups 868.758 197 2.789 G4=12.4789
6. Investor G1=29.6258 F = 17.345

Awareness G2=33.2074 P<0.001
Within Groups 5771.356 197 19.365 G4=34.2863
G1 = Below 2 Lakhs G2 = 2-4 Lakhs G3 = 4-6 Lakhs G4 = 6 Lakhs and above
5.7 ASSOCIATION BETWEEN SAVINGS AND DEMOGRAPHIC FACTORS
The association between savings and the different demographic factors namely age, occupation,
annual income, number of dependents and academic qualifications are analysed and the
following tables are provided for this analysis.

40
Page
TABLE NO 1.21
ASSOCIATION BETWEEN AGE AND SAVINGS
Chi-Square Tests
Value df P-Value Statistical
Inference
Pearson Chi-Square 14.265 9 0.210
P>0.05
Not significant
ASSOCIATION BETWEEN OCCUPATION AND SAVINGS
Chi-Square Tests
Statistical
Value df P-value Inference
0.320 P>0.05
Pearson Chi-Square 28.475 9 Not significant
ASSOCIATION BETWEEN ANNUAL INCOME AND SAVINGS
Chi-Square Tests
Statistical
0.013 P< 0.05
Pearson Chi-Square 67.477 9 Significant
ASSOCIATION BETWEEN NUMBER OF DEPENDENTS AND SAVINGS
Chi-Square Tests
Statistical
0.213 P>0.05
Pearson Chi-Square 12.789 3 Not significant
ASSOCIATION BETWEEN ACADEMIC QUALIFICATION AND SAVINGS

Chi-Square Tests
Statistical
0.016 P< 0.05
Pearson Chi-Square 49.784 9 Significant
41
Page
5.8 ASSOCIATION BETWEEN DEMOGRAPHIC FACTORS INVESTMENT
CHARACTERISTICS
BORROW AND INVEST IN STOCK MARKET Vs AGE

Chi-Square Tests
Value df P-value Statistical Inference

P>0.05
Pearson Chi-Square 0.789 3 0.100 Not significant
BORROW AND INVEST IN STOCK MARKET Vs ANNUAL INCOME

Chi-Square Tests
P>0.05
BORROW AND INVEST IN STOCK MARKET Vs OCCUPATION

Chi-Square Tests
P<0.05
Pearson Chi-Square 9.365 3 0.036 Significant
BORROW AND INVEST IN STOCK MARKET Vs ACADEMICQUALIFICATION

Chi-Square Tests
P>0.05
TABLE NO. 1.23
Chi-square tests
P Statistical
Value Df value inference
Association between gender and herd behaviour 2.712 2 0.300 P>0.05
Not significant
association between gender and preference for short term gain 14.58 2 0.010 P<0.05
Significant
Association between gender & risk tolerance 11.458 2 0.026 P<0.05

Significant
Association between gender and investor awareness vs gender 11.684 2 0.013 P<0.05
Significant
42
Page
CHAPTER – 6
SUMMARY AND CONCLUSION
6.1 FINDINGS RELATED TO THE HYPOTHESES
 The study reveals that there is no significant relationship between herding and the gender.
Hence the hypothesis is not proved.
 The statistical analysis proves that the herd behaviour varies significantly among the
different age groups.
 The study reveals that herd behaviour varies significantly among the respondents having
different academic qualifications.
 The study reveals that the risk tolerance varies between the genders.
 The study proves that there is a significant relationship between risk tolerance and age.
 The study proves that there is significant relationship between risk tolerance and annual
income.
 The study proves that the investor awareness level varies between the genders.
 The study proves that the investor awareness level does not vary significantly among
respondents belonging to different academic qualifications.
 The study proves that there is a significant relationship between the average rate of return
and experience of the investors in stock market.
 The study proves that there is a significant relationship between the diversification and
academic qualification.
43
Page
6.2 FINDINGS BASED ON THE ASSOCIATION BETWEEN DEMOGRAPHIC
FACTORS AND VARIOUS INVESTMENT BEHAVIOUR
The analysis of the above variables with the age groups confirm the fact that respondents in the
age group of less than 30 differ from other groups with respect to herd behaviour, preference for
short term gain, risk tolerance, perception about capital market, perception about corporate
governance and investor awareness. The investors in the age group of less than 30 are more risk
tolerant, prefer short term gain but compared to other groups have less investor awareness.
Qualification of the respondents has a significant relationship with all the variables in the study
namely herding, preference for short term gain, risk tolerance, perception about capital market,
perception about corporate governance and investor awareness. Graduates show a marked
difference compared to others in respect of investor behaviour.
The occupation of the investors significantly influences investment behaviour. The investors who
are retired show a different behaviour than the remaining groups of the respondents. The retired
investors show a high level of risk tolerance, preference for short term gain and herd behaviour.
Analysis of the variables among the different groups with respect to annual income reveals the
fact that there is a significant relationship between annual income and the various factor
mentioned above except the perception on capital market. Hence it is inferred that Annual
income of the investor is an important factor which influences the investor behaviour.
The study on investor behaviour in the capital market reveals the finding that the
demographic variables namely gender, age, qualification, occupation and annual income of the
44
respondents significantly influence the behaviour of the investors in the capital market .Among
Page
the different groups of the respondents, two groups of respondents stand apart from others in a
significant way. They are the investors who are less than 30 years and the retired investors.
Investors who are less than 30 show a high level of risk tolerance. Similarly the retired investors
have high level risk tolerance.
The investors are largely influenced by their brokers/ financial advisers. When it comes to
preferences in investments, Blue chips are the most preferred shares and growth funds are the
most preferred funds. A majority of them have a favourable opinion about capital market and
corporate governance in India.
6.9 CONCLUSION
The study based on primary data of selected individual investors was done to gain a deeper
understanding of the investment preferences, behaviour and perceptions of the investors. The
study established the fact that the investment strategies of the investors are largely influenced by
the demographic factors of the investors. The main finding of the study is that majority of the
investors have a short term perspective while investing in stock market. Nearly 20 % of them
have incurred losses over the past five years but a majority of them evinced keen interest in the
game of investing as evident by the time spent by them for investing activities. The current
financial literacy levels are not adequate. The need of the hour is to promote financial literacy at
a very early age in one’s life and help the common man to make his financial plan profitable for
himself as well as for the capital market in India. 45

Page
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QUESTIONNAIRE
Dear Sir/Madam,
I have initiated a Research work on “Individual Investment Behaviour in
Capital Market: A Demographic Study in Kolkata” for my FRPM (Fellow Research
Programme in Management) thesis. In this connection I request you to read the following
questions and answer them. The answers you give will be held confidential and will be used
only for the purpose of research. I thank you for your time and cooperation.
I. PERSONAL DETAILS (Please Tick)
1. Gender : 1) Male 2) Female
2. Age in completed years :……………....... years
3. Academic qualifications : 1) School final 3) Post graduate

2) Graduate 4) Professional
4. Martial status : 1) Married 2) Unmarried
5. No of dependents : …………………….
6. Occupation : 1) Self employed 2) Employed in Government

3) Employed in Private 4) Retired
7. Annual income in Rs. : 1) Below 2 lakhs 3) 4 lakhs to 6 lakhs

2) 2 lakhs to 4 lakhs 4) 6 lakhs and above
8. How much do you save : 1) Less than Rs. 25000 3) Rs. 50000 to 1 lakh
annually (In Rs Approx.) 2) Rs. 25000 to 50000 4) Rs. 1 lakh and above
9. Do you own a house : 1) Yes 2) No
10. Do you have a mortgage loan

on the house property : 1) Yes 2) No
II. DETAILS OF INVESTMENT ORIENTATION
1. I own the following assets (Please tick whichever is applicable)
1) Bank deposits 2) Shares 3) Mutual funds
4) Postal savings 5) Insurance Policies
2. My investments in capital market are
1) All in demat form 2) Mostly in demat form
3) All in physical form 4) Mostly in physical form
3. The number of companies in my portfolio is …………………………
4. The sectors which are represented in my portfolio are (Please tick whichever is applicable)
1) Banking 2) Auto 3) Telecom 4) Steel
5) Oil Gas 6) Pharma 7) Any other (Please specify)
5 I prefer to do the investment transactions
1) Through my broker/financial advisor 2) On my own using internet
3) Any other (Kindly specify)
6. The time I spend for investing activities is
1) 2 to 5 hrs per week 2)2 to 5 hrs per month 3) 2 to 5 hrs per year
4) Most of my spare time 5)Everyday at least some time
7. I borrow and invest in stock market 1) Yes 2) No
8. The average rate of earnings on my investment for the past five years is
1) Below 10 percent 2)10 to 20 percent
3) Above 20 percent 4) Net loss
9. I have shares in delisted companies 1) Yes 2) No
10. My experience in the stock market is

1) Less than 5 years 2) 5 – 10 years 3) Above 10 years
III. OBJECTIVES OF SAVINGS, INVESTMENT PREFERENCES AND
STRATEGIES (Please read the following statements and tick the appropriate
column).
S. No. Item Strongly Agree No Disagree Strongly
Agree Opinion Disagree
I save for my children’s

1. education.
2. I save for contingencies.
3. I save to purchase a house.
4. I save for tax benefits.
I save for my daughter’s

5. marriage.
6. I save to provide for my

retirement.
7. I prefer investing in blue chip

companies.
I prefer investing in new

8. upcoming
companies with good prospects.
I am interested in short term

9. gains
from my investment in shares.
10. Invest in shares mainly for long

term capital gains.
11. Announcements regarding

bonus, rights and dividends
motivate me to buy those
scripts.
12. I hold certain shares for a very

long time for sentimental
reasons.
13. I prefer IPOs than secondary

market instruments.
14. When shares are allotted in an

IPO I sell it immediately on
listing
at profit.
I prefer buying shares( large

15. cap)
in small lots.
16. I prefer buying shares when the

market goes up.
17. I sell shares when there is news

about fall in market.
I am an active investor who

18. trades
often.
19. I prefer investing in familiar

companies.
20. I book profits after I reach the

desired goals.
A majority of my investments
21.
are in gold and real estate
I prefer mutual funds than
22.
shares.
Most of my investments are in
23.
shares.
I buy shares based on the
24.
company’s fundamental
I buy shares based on technical
25.
forecast.
IV. Please rank the INFLUENCE of the following in your FINANCIAL DECISION
S. No. Item Very high High Not Low Very low

sure
1. Business News Channels like
CNBC,NDTV Profit
2. Investment websites
3. Professional Advisers
4. Family and Friends
5. Magazine or Newspapers
6. Books
V. Please rank the importance of the following qualities which you expect from
your Financial Adviser.
S. No. Item Highly Important Not Not Not at all
important sure important important
1. Maximizing return
2. Trust and Confidentiality
3. Handling problems
4. Protecting Capital
5. Experience
6. Fee structure
Brand name of the

7. adviser
INVESTORS PERCEPTIONS ABOUT CAPITAL MARKET

VI.
Please read the following statements and tick the appropriate column.
Item Strongly Agree Not Disagree Strongly
S. No. Agree sure Disagree
1. Price fluctuation in Indian Stock
Market is high.
2. Indian stock markets are well

regulated.
3. Corporate mismanagement and

frauds are my biggest worries in
Indian stock market.
4. The brokers’ services are good.
5. The demat system is convenient

and cheap.
6. Adequate and reliable portfolio
management services are
available for individual
investors.
7. Debentures as an investment
option are favorable.
8. Equities as an investment option

are favorable.
9. Mutual funds as an investment

option are favorable.
10. Government bonds as an

investment option is favorable.
11. Indian company managements

are not honest and sincere
towards their share holder.
12. Shareholders cannot rely on

company auditors in preventing
financial irregularities by
company managements.
13. Indian company managements

are now taking more care of the
shareholders interest.
14. Capital market in India is a safe

haven for investors.
15. Retail shareholders interests are

not protected.
VII. THE LEVEL OF INVESTOR AWARENESS

S. No. Item Yes Not No
sure
1 I know the meaning of technical analysis and
fundamental analysis.
2. Bank Deposits are totally risk free.
3. Mutual Fund Principal and Returns are not guaranteed.

4. Ups and Downs of Stock Market will affect the returns
from Mutual Fund.
5. I know what sensex and nifty are.
6. I have heard about SEBI.
7. An investor can have more than one demat account.
8. I understand the communication I receive from the

companies I invest in.
9. Maintain a systematic record of my investments and

monitor it periodically.
10. I read the offer document of an issue and understand it.
11. I am aware of the credit rating symbols for bonds and

deposits and know the meaning.
12. I can understand the business news analysis.

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INDIVIDUAL INVESTMENT BEHAVIOUR IN

CAPITAL MARKET: A DEMOGRAPHIC STUDY

IMS CENTRE FOR RESEARCH

FOR THE AWARD OF THE DEGREE OF

FELLOW RESEARCH PROGRAMME IN MANAGEMENT

UNDER THE SUPERVISION OF

DR. TAPASH RANJAN SAHA

entitled “Individual Investment Behaviour in Capital Market: A Demographic Study in

Dr. Tapash Ranjan Saha

Director & Professor

been submitted for any assessment or degree/diploma or award to any other

the best of my knowledge.

Dr. Tapash Ranjan Saha

Director & Professor

IMS Business School

encouragement given by him.

downs inevitable in the completion of a fellow program.

lion’s share of the gross savings in the country.

2 Chapter II: Capital Market in India

3 Chapter III : Concepts & Related Literature

3.1 Studies related to Investment Behaviour 12

4 Chapter IV : Research Methodology

6 Chapter VI: Summary and Conclusion

6.1 Findings related to hypothesis 43

investment becomes a compulsion and not a choice.

investment (Sinha, 2002).

1.2 FINANCIAL LITERACY

avenues into four groups.

Financial Securities: Financial security is comprise of equity shares, preference shares,

financial securities for the common man.

Non – Securitised Financial Investment: Contrasting to financial security, non – securitized

are a number of the non – securitised financial investment.

be able to give a profit to its investors.

interested in the following types of real estate:

Semi – urban land

Time share in a holiday resort

1.4 INDIVIDUAL INVESTORS IN INDIAN CAPITAL MARKET

charitable institutions (RBI Bulletin, Feb. 1983).

held by trusts and charitable institutions (The SE Official Directory).

1.5 RETAIL INVESTORS IN INDIA

exceeding Rs 2, 00,000/- (www.sebi.org).

Retail investing activity occurs through any of the subsequent channels;

The investor directly invests

He acts through an agent or broker

His accounts are managed by his D/P

He joins an investment group - friends, colleagues, family members etc. (informally)

investor in such a bundle.

1.6 SCOPE OF THE STUDY

study is on individual investors as buyers of corporate securities such as investing through

1.7 STATEMENT OF THE PROBLEM

1.8 OBJECTIVES OF THE STUDY

1. To study the demographic profile of the respondents.

2. To examine the investment pattern of investors.

3. To analyse the association between demographic factors and investment behaviour of

1.9 LIMITATIONS OF THE STUDY

relating to the income level and savings level.

the investment in shares and mutual funds.

mid-eighties, a metamorphic alteration involving multi-dimensional growth has taken place in an

capitalization, plus the expansion of investor population.

2.2 EVOLUTION OF THE INDIAN CAPITAL MARKET

New Issues Stage

with the proposal of new capital issues for public subscription.

of rules for different categories of intermediaries such as brokers/sub-brokers, registrars to issue,