1

CHAPTER I

INTRODUCTION

1.1 INTRODUCTION TO RISK

The definition of risk includes the following meanings “Possibility of loss

or injury…the degree or probability of such loss”. Investors commonly identify six
kinds of hazards to which their investments are exposed they are;

 Business Risk
 Financial Risk
 Purchasing power Risk
 Market risk
 Interest Rate Risk
 Social or Regulatory Risk

Risk Elements

Risk can be of Systematic and unsystematic. Systematic refers to that

portion of total variability of the return caused by common factors affecting the
prices of all securities alike through economical, political, social factors.
Unsystematic refers to that portion of the return caused due to unique factors relating
to that firm or industry. For example Business Risk, Financial Risk, and Management
Risk.

Measure Of Risk

S.D = It is defined as the square root of the mean of the standard

deviation, where deviation is measured by the difference of the outcome and
expected mean value of all value
 2

Factors Affecting Share Price

 Demand and supply

 Money Flow
 EPS
 Right Issue
 Prospects of expansion
 Political Changes
 International Scenario
 Intrinsic Value Of Share

Portfolio Risk

The portfolio Risk can be estimated under the consideration of a

portfolio, the covariance, and correlation co-efficient, of each asset with each of the
other asset.

Return

Return is measured by taking the income plus the price change. Income is
divided by interest and price change of the security is the capital gain or loss.

Example

Debenture=Rs 100 face value 12.5% coupon rate issued at Rs 95/-

Return=12.5/905=13.15%
Total Return=(Income received Price Change)/(Purchase Price Of asset)

Calculation Of Average Return

 Arithmetic Average

X= X/n.
 3

X=Summation of Returns over the given number of years.

n=number of years
 Geometric Average
G=[(1+R1)(1+R2)….(1+Rn)

Asset has two returns

 Risk Free Return-return for more waiting
 Risk Premium-Which is return for risk taking.

PORTFOLIO

A portfolio is a collection of securities. Since it is rarely desirable to invest

the entire funds of an individual or an institution in a single security, it is essential
that every security be viewed in a portfolio context.

PORTFOLIO ANALYSIS

Analysis of securities in the combined form is portfolio analysis. Group of

securities when held together behave in a different manner and give interest and
dividend also which are different to the analysis of individual securities.

 When diversification does not help

Positively correlated return of two securities will not provide risk

reducing but only risk averaging.

Rb

Ra
 4

 When diversification can eliminate risk

Perfectly negatively correlated

Rb

Ra

 Insurance principle
Diversification provide substantial risk reduction if the components of
a portfolio are uncorrelated

Rb

Ra

PORTFOLIO SELECTION

It assesses the best option of the portfolios. There are three kinds of
investors

 Who wishes to take more return and less risk

 More return with comparatively higher risk
 High return and high risk.

Optimal Portfolio

• Simple Markowitz portfolio optimization Utility is the

(Expected return-risk penalty)
 5

Risk penalty = variance/ Risk tolerance

Ex Risk penalty = 225.5 = 4.5%
Utility = 13-4.5=8.5%
Optimal portfolio for an investor would be the one from frontier that
maximizes utility.

Simple Sharpe Portfolio

The question is whether our portfolio has performed well when compared
to other managed funds such as closed end funds open ended money market
funds……….

Management performance evaluation

It is measured by comparing the yield of managed portfolio with the

market index (or) with a random portfolio.

Yield = (NAVt- Dt/NAV t-1) – 1

Dt = total of all distribution both income-gains
When managed fund yield > Unmanaged fund

Sharpe’s performance measure

St=Rt-r^0/
St= Sharpe index
Rt=Average return of portfolio
=SD
r^0= Risk free return

Treyners index

Tn=Rn-r^0-Bn
Tn=Treyner index
Rn=Average return of portfolio
r^0= Risk free return
 6

Bn=Beta of portfolio, if Tn is higher, performance is better

Jensen model

Rjt-Rft=
Rjt=Average return on portfolio
Rft=Risk free return for period t
Rmt=Average return of a market portfolio for period t

PORTFOLIO INVESTMENT PROCESS

Basic Principles

 It is the portfolio that matters

 Larger expected portfolio returns come only with larger portfolio risk
 The risk associated with a security type depends on when the
investment will be liquidated
 Diversification works
 Each portfolio should be tailored to the particular need of its owner
 Competition for abnormal return is extensive

Portfolio management process involves three stages. They are as follows;

Planning
1.Investor condition
2.Market condition
3.Investment/Speculative policies
4.Statement of investment policy
5.Strategic asset allocation

Implementation
1.Rebalancing strategic asset allocation
2.Tactic Asset Allocation
3.Security selection

Monitoring
1.Evaluate Statement of investment policy
2.Evaluate investment performance
 7

Portfolio Revision

After selection, continuous review is required over a period of time and then
the further review depends on the objectives of the investors

Timing of revision is found out by the user formula plans. The formula plans
are predetermined with the distinctive objectives and rigidity of rules. Main aspects
of theses formula plans is to have a set of rigid and ground rules which are apart from
any emotional feelings of the person who is making the investments.

Rules of formula plans

 Useful for making a decision on the timing of investments

 It is strict, rigid and straight forward
 They cannot be used for short period of time
 Formula plan does not eliminate the need for making forecast
 Formula plans work according to a methodology

Formula Plans

 1.Constant rupee value plan

 2.Constant ratio plan
 3.Variable ratio plan
 4.Rupee cost averaging.
 8

1.2 COMPANY PROFILE

KARVY STOCK BROKING LTD

In 1982, a group of Hyderabad – based practicing Chartered Accountants

started Karvy Consultants Limited with a capital of Rs.150000 offering auditing and
taxation services initially. Later, it forayed into the Registrar and Share Transfer
activities and subsequently into financial services.

A decade of commitment, professional integrity and vision helped Karvy

achieve a leadership position in its field when it handled the largest number of issues
ever handled in the history of the Indian stock market in a year. Thereafter, Karvy
made inroads into a host of capital market services, corporate and retail – that proved
to be a sound business synergy.

Today, Karvy has access to millions of Indian shareholders, besides

companies, banks, financial institutions and regulatory agencies. Over the past one
and half decades, Karvy has evolved as a veritable link between industry, finance and
people. In January 1998, Karvy became the first depository participant in Andhra
Pradesh.

An ISO 9002 company, Karvy’s Commitment to quality and retail reach

has made it an integrated financial services company.

KARVY GROUP OF COMPANIES

 Karvy Consultants Limited

 Karvy Stock Broking Ltd
 Karvy Investors Service Ltd
 Karvy Computer Share Pvt Ltd
 Karvy Global Services
 Karvy Commodities Broking Ltd
 Karvy Insurance Broking Private Ltd
 9

FEATURES OF KARVY

 Strategic alliance with American Express Bank for marketing

Amex personal banking products.
 The first financial intermediary to get ISO 9002 certification
in the country.
 Arrangers of funds to the corporate like IDBI, ICICI, AP
State Govt. Undertakings, (SBIMF, LICMF, UTI, Templeton MF,
Prudential ICICI, Alliance, Kothari, Pioneer, Birla etc).
 Wide Network – 67 branches across the country.
 The No.1 registrar to the issues in the country since 91-92.
 The No.1 fund mobilizes from primary market for the year
97-98.
 Depository participant with NSDL.
 Professional investment Advisory services.

Karvy – An integrated financial intermediary offers the following services.

 Depository Accounts (E – Safe & E – Privilege)

 Secondary trading of shares / Debentures
 Mutual fund schemes
 Fixed deposits
 Public issues of Bonds, Debentures and Equity shares.
 RBI 8% relief bonds
 RBI 6.5% tax free relief bonds
 GOI 8% savings bonds
 UTI Schemes
 Savings bank accounts of American Express Bank
 Fixed deposit of American Express Bank
 Car loans / Personal loans from American Express Bank
 10

 Small savings schemes

 Corporate advisory services
 Registrar to the issues
 Merchant banking and underwriting
 Asset financial including short-term debt syndication.
 Bonds (Private Placement)
 ICICI Bonds – 96
 ICICI Bonds – 97 I
 ICICI Bonds – 97 II
 ICICI safety bonds – March 98
 IDBI Bonds 96
 IDBI flexi bonds I
 IDBI flexi bonds II
 IDBI flexi bonds III
 Power finance corporation ltd.

SERVICE HANDLED BY KARVY

It is a kind of personalized financial advisory service.

DEPOSITORY SERVICE

 Registered as DP both with NSDL & CDSL

 Servicing over 6 lac investors
 Online connectivity at Hyderabad, Luck now & Ban galore
 Ranked among the top 5 DPs in the country
 High synergy with registry and broking activities for higher
service levels to the customer
 Web based customer information
 Provision of service in over 75 locations.
 11

PRINCIPAL WINGS

1. Karvy Consultants Limited

 Issue Servicing
 Corporate share holder servicing
 Depository participant services
 Mutual Fund investor services

2. Karvy Securities Limited

 Distribution of financial products
3. Karvy Investor Service Limited
 Investment banking & corporate advisory services
4. Karvy stock broking limited

ADAPTATION OF TECHNOLOGY

 Expertise in integrating technology & finance

 Pool of trained software professionals
 Top of the line technology partners
 Proactive adaptation of changes in technology

FINANCIAL SERVICES

 Strong advisory & syndication strengths

 Wide geographical reach & all India service network
 Retail distribution network for investment products
 Accounting, secretarial & compliance strengths
 Automated retail response management
 House hold brands
 IT enabled service delivery
 Controlled & low cost structure

MAJOR ACHIEVEMENTS
 12

 First ISO 9002 certified registrar in India (Over 500 issues)

 Registrar to public issues – Ranked No.1
 Registrar & Transfer Agent–Ranked No.1 (Amongst the
largest in the world)
 Public issue fund mobiliser – Among top 5
 Category I merchant Banking – No.3 (Apr – June 00)
 Stock Broking – Among top 10
 Medical Transcription – Among top 5
 Depository participant (Ranked by NDSL) No. of investors
serviced – Among top 5.
 Ranked among the top 50 (39th) IT users in India by MIS
South Asia (Dec’ 98 and Dec’ 99)
 Handled largest ever-public issue – IDBI.
 Played the role of major issuers as arrangers, as co-managers,
as registrars to issues.

1.3 SECONDARY DATA

Portfolio Management

The investors should be able to specify and quantify investor objectives,

constraints, and preferences in terms of return requirements and risk tolerances, and
develop an appropriate investment policy statement; document approved investment
policies; develop expected returns and risks for asset classes and individual assets
based on macro- and microexpectational factors; recommend an appropriate asset
allocation based on return and risk expectational factors and investment policy;
develop strategies for managing portfolios of domestic and foreign debt securities,
including passive, semi-active, and active management techniques; develop
strategies for incorporating alternative assets (real estate, venture capital, other
assets) in multi-asset portfolios; develop strategies for managing portfolios of
domestic and foreign equity securities, including passive, semi-active, and active
management techniques that incorporate different management styles (e.g.,
 13

capitalization, growth versus value); manage portfolio risk through such techniques
as Value at Risk, stress testing, and the evaluation of credit, liquidity, operational,
and legal risks; adjust risk exposure and, if possible, enhance expected return by
using futures contracts, options, swaps, and other derivative securities; implement
strategies through cost-effective, timely trades; monitor the portfolio and reevaluate
portfolio strategy, market expectation factors, and investor needs todetermine
whether rebalancing is appropriate; evaluate portfolio and manager performance
relative to investment objectives and appropriate benchmarks; and present results in a
manner consistent with the CFA Institute Global Investment Performance Standards
(GIPS® standards).

1. A. “The Portfolio Management Process and the Investment Policy Statement”

The investors should be able to

a. Justify the importance of the portfolio perspective;
b. Formulate the steps of the portfolio management process
c. Compare and contrast the types of investment objectives;
d. Contrast the types of investment constraints;
e. Justify the central role of the investment policy statement in the portfolio
management process;
f. Review the elements of an investment policy statement and distinguish
among the components within 1) the risk objective, 2) the return
objective, and 3) the time horizon constraint;
g. Compare and contrast passive, active, and semi active approaches to
investing;
h. Discuss the role of capital market expectations in the portfolio
management process;
i. Discuss the role of strategic asset allocation in the portfolio management
process;
j. Discuss the roles of portfolio selection/composition and portfolio
implementation in the portfolio management process;
k. Contrast the elements of performance evaluation;
 14

l. Explain the purpose of monitoring and rebalancing;

m. Formulate the elements of portfolio management as an ongoing process;
n. Formulate and justify a risk objective for an investor;
o. Formulate and justify a return objective for an investor;
p. Determine the liquidity requirement of an investor and evaluate the
effects of a liquidity requirement on portfolio choice;
q. Contrast the types of time horizons, determine the time horizon for an
Investor, and evaluate the effects of the investor’s time horizon on
portfolio choice;
r. Determine the tax concerns, legal and regulatory factors, and unique
circumstances for an investor and evaluate their effects on portfolio
choice;
s. Justify ethical conduct as a requirement for managing investment
portfolios.

B. “Managing Individual Investor Portfolios”

The Investors should be able to

a. Review situational profiling for individual investors and discuss
source of wealth, measure of wealth, and stage of life as approaches to
situational profiling;
b. Prepare an elementary situational profile for an individual investor;
c. Discuss the role of psychological profiling in understanding
individual investor behavior;
d. Formulate the basic principles of the behavioral finance investment
framework;
e. Discuss the influence of investor psychology on risk tolerance and
investment choices;
f. Discuss the use of a personality typing questionnaire for identifying
an investor’s personality type;
g. Formulate the relationship between risk attitudes and decision-making
styles and individual investor personality types;
 15

h. Discuss the potential benefits for both clients and investment

managers of having a formal investment policy statement;
i. Review the process involved in creating an investment policy
statement for a client;
j. Discuss each of the major objectives that are part of an individual
investor’s investment policy statement;
k. Distinguish between an individual investor’s ability to take risk and
willingness to take risk;
l. Discuss the setting of risk and return objectives for individual investor
portfolios;
m. Discuss each of the major constraints that are part of an individual
investor’s investment policy statement;
n. Formulate and justify an investment policy statement for an individual
investor;
o. Demonstrate the use of a process of elimination to arrive at an
appropriate strategic asset allocation for an individual investor;
p. Determine the strategic asset allocation that is most appropriate given
an individual investor’s investment objectives and constraints;
q. Compare and contrast traditional deterministic versus Monte Carlo
approaches in the context of retirement planning;
r. Discuss the advantages of the Monte Carlo approach to retirement
planning.

F. “Forming Portfolios”

The investors should be able to

a. Explain how mental accounting may lead both individual and institutional
investors to misperceive risk;
b. Discuss how the concept of correlation is generally not implemented
when investors affected by mental accounting build portfolios;
 16

c. Explain how mental accounting can result in naive diversification as

compared to the efficient diversification that results from implementing
MPT.
 17

G. Learning Outcomes

1. “Managing Institutional Investor Portfolios”

The investors should be able to

a. Contrast a defined-benefit plan to a defined-contribution plan from the
perspectives of both the employee and employer;
b. Discuss investment objectives and constraints for defined-benefit plans;
c. Evaluate pension fund risk tolerance when risk is considered from the
perspective of the (1) plan surplus, (2) sponsor financial status and
profitability, (3) sponsor and pension fund common risk exposures, (4)
plan features, and (5) workforce Characteristics;
d. Formulate an investment policy statement for a defined-benefit plan;
e. Evaluate the risk management considerations in investing pension plan
assets;
f. Formulate an investment policy statement for a defined-contribution plan;
g. Discuss hybrid pension plans (e.g., cash balance plans) and employee
stock ownership plans;
h. Distinguish among the types of foundations with respect to their
description, purpose, source of funds, and annual spending requirements;
i. discuss investment objectives and constraints for foundations,
endowments, insurance companies, and banks;
j. Formulate an investment policy statement for a foundation, an
endowment, an insurance company, and a bank;
k. Contrast investment companies, commodity pools, and hedge funds to
other types of institutional investors;
l. Evaluate the factors that affect the investment policies of pension funds,
foundations, endowments, life and non-life insurance companies, and
banks;
m. Distinguish among the return objectives, risk tolerances, liquidity
requirements, time horizons, tax considerations, legal and regulatory
environment, and unique
 18

n. Compare and contrast the asset/liability management needs of pension

funds, foundations, endowments, insurance companies, and banks;
o. Compare and contrast the investment objectives and constraints of
institutional investors given relevant data such as descriptions of their
financial circumstances and attitudes toward risk.
 19

CHAPTER II

AIM OF THE PROJECT

2.1 OBJECTIVES OF THE STUDY

 To find out the risk perception of equity investors in a Karvy Stock

Broking Limited.
 To bring out the importance of portfolio management of equity
investors
 To know about the customers knowledge and experience in investing
in equities

2.2 SCOPE OF THE STUDY

 It relates to investment in equities

 Understanding of customer / or investors about the equities
 It also help us to know the port folio management of equity investors

2.3 LIMITATION

 The Study was limited to Tirupur Karvy Only

 The Result may be bias as some of the responses may not be accurate
 20

2.4 REVIEW OF LITERATURE

 A study in portfolio management by Magnus Eðvald Bjorn son on April

20th 1998

All portfolios that lie on the same indifference curve are equally desirable
to the investor (even though they have different expected returns and variance.) An
obvious implication is that indifference curves do not intersect.

An investor will find any portfolio that is lying on an indifference curve

that is "further northwest" to be more desirable than any portfolio lying on an
indifference curve that is "not as far northwest."

Generally it is assumed that investors are risk averse, which means that
the investor will choose the portfolio with the smaller variance given the same return.
Risk averse investors will not want to take fair gambles (where the expected payoff
is zero). These two assumptions of no satiation and risk aversion cause indifference
curves to be positively sloped.

 Portfolio Management Theory By Dr. Sam Vaknin

S.NO STATE OF INVESTORS DESCRIPTION PROPERTY

1. Diminishing Avoidance of Invests more in risky assets Derivative of

absolute risk as his capital grows avoidance of absolute
risk < Æ

2. Constant Avoidance of Doesn't change his Derivative = Æ

absolute risk investment in risky assets
as capital grows

3. Increasing Avoidance of Invests less in risky assets Derivative > Æ

absolute risk as his capital grows
 21

4. Diminishing Avoidance of Percentage invested in Derivative < Æ

relative risk risky assets grows with
capital growth

5. Constant Avoidance of Percentage invested in Derivative = Æ

relative risk risky assets unchanged as
capital grows

6. Increasing avoidance of Percentage invested in Derivative > Æ

relative risk risky assets decreases with
capital growth

Finance Committee
 22

Fund advice.com

The diversified 60/40 portfolios we have described require very little

maintenance, but there is some. Though annual rebalancing is not absolutely
necessary, if it’s neglected, the portfolio’s risk can start creeping up. To maintain the
proper amount of risk, you should keep the portfolio within reasonable distance of its
60/40-target allocation.
 23

CHAPTER III

RESEARCH METHODOLOGY

RESEARCH DESIGN

It is a conceptual structure within which research should be conducted.

Thus the preparation of such a design facilitates research to be as efficient as possible
and will yield maximal information

RESEARCH OBJECTIVES

 To find out the risk perception of equity investors in an Karvy Stock

Broking Limited.
 To bring out the importance of portfolio management of equity
investors
 To know about their knowledge and experience in investing in
equities

SOURCE OF DATA

The task of collecting data begins after a research problem has been
defined and plan is chalked out for this study data is collected from primary and
secondary sources.

PRIMARY DATA

Data are collected for the first time for a specific purpose in mind using
the structured questionnaire, through personal and telephonic interviews.
 24

SECONDARY DATA

The data, which already collected and published, are referred through the
following web sites.

www.Karvy.com.
www.msn.com and from the records of the organization

TYPE OF RESEARCH

Here in order to meet the research objectives, descriptive research design

is used.

DESCRIPTIVE RESEARCH DESIGN

Descriptive research design includes surveys and fact-finding, enquiries

of different kinds. The major purpose of descriptive research is description of the
state of affairs, as it exists at present. In social science and business research, we
quite often use the term ex post facto research for descriptive research studies. The
main characteristics of this method are that the researcher has not control over the
variable; he can only report what has happened or what is happening. Most ex post
facto research projects are used for descriptive studies in which the researcher seeks
to measure such items, for example, frequency of shopping, and preference of the
people over similar item.

INFORMATION REQUIRED

 Collection of name and address of the respondents

 The respondent’s educational qualification and their occupation.
 In financial profile, the respondents annual income, their current
investment portfolio and their percentage of savings from their income.
 Whether the respondents have any portfolio activities.
 25

INSTRUMENT DESIGN

QUESTIONNAIRE DESIGN

Designing and setting the responses for implementing the question is one
of the most interesting and challenging tasks in conducting research and analysis..

QUESTIONNAIRE

This method of data collection is quite popular, particularly in case of big

enquiries.

Research workers, private and public organizations and even by

government. In this method, a questionnaire is administered to the persons concerned
with the request to answer the questions and return the questionnaire. A
questionnaire consists of number of questions printed or typed in a defined order.

The researcher has used questionnaire for the following purposes

 For analyzing the objective of investment.

 To study about the interest of investments among people.
 To know about the different types of sectors respondents are
interested to invest.

RESEARCH PLAN

Data Source Primary and Secondary Data

Research Approach Survey Method
Research Instrument Questionnaire
Contact Method Direct-Personal
Sample Size 200
Sampling Technique Simple Random Sampling
 26

SAMPLE DESIGN

A sample plan is a definite plan for obtaining a sample from a given

population. It refers to the technique or the procedure the researcher would adopt in
selecting items for the sample.

After deciding the research approach and instrument, the next stage is to
design a sampling plan. The selected respondents from the total population constitute
what is technically called a “Sample” and the selection process is called “Sampling
technique”. The sampling plan calls for the following decisions such as –

1. Population
2. Sampling Technique
3. Sampling unit
4. Sample size

POPULATION

The first step in the sampling process is the definition of the population,
which can be defined in terms of elements, sampling units, extent and time. For the
present study undertaken the population was salaried persons, self-employed and
professionals in Tirupur.

SAMPLING TECHNIQUE

Simple Random Sampling.

SAMPLING UNIT

It goes ahead with “who is to be surveyed”. Here the sampling unit is

salaried people, self-employed and professionals.

SAMPLE SIZE

The sample size selected for the survey is 200.

 27

CHAPTER IV

DATA ANALYSIS AND INTERPRETATION

TABLE NO. 4.1

AGE GROUP OF THE RESPONDENTS

Sl.
Age Group No. Of Respondents Percentage
No
1 Below 30 Years 58 29.00

2 30 Years to 60 Years 97 48.50

3 Above 60 Years 45 22.50

Total 200 100.00

From the above table, it is clear that 48.5% of the respondents belong to
the age between 30 years to 60 years, 29% of the respondents are below 30 Years
and 22.50% of the respondents are above 60 years.

FIGURE 4.1 - A

60.00

50.00

40.00
GE
 28

TABLE NO. 4.2

GENDER OF THE RESPONDENTS

Sl.
Gender No. Of Respondents Percentage
No
1 Male 119 59.50

2 Female 81 40.50

Total 200 100.00

From the above table shows that 59.5% of the respondents are male and
40.5% of the respondents are female.

FIGURE 4.2

70.00

59.50
60.00

50.00
PERCENTAGE

40.00

30.00
 29

TABLE NO. 4.3

INCOME LEVEL OF THE RESPONDENTS

Sl.
Income No. Of Respondents Percentage
No
1 Below Rs.5000 44 22.00

2 Rs.5000 to Rs.6000 39 19.50

3 Rs.6000 to Rs.7000 45 22.50

4 Rs.7000 to Rs.8000 37 18.50

5 Above Rs.8000 35 17.50

Total 200 100.00

The above table, shows that 22.5% of the respondents income is between
Rs.6000 to Rs.7000, 22% of the respondents income is below Rs.5000, 19.5% of the
respondents income is between Rs.5000 to Rs.6000, 18.5% of the respondents
income is between Rs.7000 to Rs.8000 and 17.5% of the respondents income is
above Rs.8000.

FIGURE 4.3 - IN

25.00
22.00

19.
20.00
AGE

15.00
 30

TABLE NO. 4.4

RESPONDENT EXPERIENCE IN STOCK MARKET

Sl.
Experienced No. Of Respondents Percentage
No
1 Yes 90 45.00

2 No 110 55.00

Total 200 100.00

From the above table, it is found that 55% of the respondents are not
having experience in the stock market and 45% of the respondents have experience
in the stock market.

FIGURE 4.4 RESPO

No
55%
 31

TABLE NO. 4.5

TYPE OF INVESTMENT PREFERRED BY THE RESPONDENTS

Sl.
Type of Investment No. Of Respondents Percentage
No
1 Bonds 51 25.50

2 Equities 91 45.50

3 Bank Deposits 58 29.00

4 T-Bills 0 0.00

Total 200 100.00

From the above table, it shows that 45.5% of the respondents preferred
Equity type of investments, 29% of the respondents preferred Bank Deposits and
25.5% of the respondents preferred bonds type of investment. No one prefer T Bills

FIGURE 4.5 - TYPE OF INV

50.00

45.00

40.00

35.00
CENTAGE

30.00
25.50
25.00
 32

TABLE NO. 4.6

TIME TAKEN FOR EVALUATION OF PERFORMANCE OF

INVESTMENT

Sl.
Period of Time No. Of Respondents Percentage
No
1 Monthly 71 35.50

2 Quarterly 42 21.00

3 Annually 50 25.00

4 Over 5 Years 37 18.50

Total 200 100.00

From the above table, it is clear that 35.5% of the respondents judge the
performance of investment in a month, 25% of the respondents judge the
performance of investment, 21% of the respondents judge the performance of
investment Quarterly and 18.5% of the respondents take over 5 years to judge the
performance of the investment.

FIGURE 4.6 - TIME TAK

40.00
35.50
35.00

30.00
GE

25.00
33
 34

TABLE NO. 4.7

PERFORMANCE ABOUT THEIR FINANCIAL FUTURE

Sl.
Financial Future No. Of Respondents Percentage
No
1 Very optimistic 45 22.50

2 Positive 68 34.00

3 Unsure 58 29.00

4 Pessimistic 29 14.50

Total 200 100.00

From the above table, it shows that 34% of the respondents are positive
about their financial future, 29% of the respondents are unsure, 22.5% of the
respondents are very optimistic about their financial future and 14.5% of the
respondents are Pessimistic.

FIGURE 4.7 - PERFO

40.00

35.00

30.00
NTAGE

25.00 22.50

20.00
 35

TABLE NO. 4.8

AGE FROM WHICH THE RESPONDENTS ARE INVESTING

Sl.
Age of Investing No. Of Respondents Percentage
No
1 Age 80 and Over 35 17.50

2 Age 70 to 79 46 23.00

3 Age 60 to 69 52 26.00

4 Age 50 to 59 59 29.50

5 Age under 40 8 4.00

Total 200 100.00

From the above table, it is found that 29.5% of the respondents have
invested in age between 50 to 59 years, 26% of the respondents have invested in the
age between 60 to 69 years, 23% of the respondents have invested in the age between
70 to 79 years, 17.5% of the respondents have invested in the age 80 and above. It is
revealing that people under 40 years only 4% have been investing.

FIGURE 4.8 - AGE FROM

35.00

30.00

25.00 23.
AGE

20.00
 36

TABLE NO. 4.9

UNDERSTANDING AND COMFORT LEVEL IN INVESTING IN STOCK

Sl. Understanding and

No. Of Respondents Percentage
No Comfort level
No Experience in Stock
1 59 29.50
Market
No Experience, but some
2 40 20.00
level of comfort
Some Experience &
3 33 16.50
Interest
4 Reasonable Experience 45 22.50
Extensive Background
5 23 11.50
and good comfort
Total 200 100.00

From the above table, shows that 29.5% of the respondents have no
experience in stock market, 22.5% of the respondents have reasonable experience,
20% of the respondents have no experience but some level of comfort, 16.5% of the
respondents have some experience and interest and 11.5% of the respondents are
have extensive background and good comfort.

FIGURE 4.9 UNDERSTA

35.00

29.50
30.00

25.00
GE

20.
 37

TABLE NO. 4.10

INVESTORS PERCEPTION OF THEMSELVES

Sl.
Best Statement No. Of Respondents Percentage
No
1 Some Current Income 54 27.00

2 High Current Income 15 7.50

3 High Total Return 82 41.00

4 Substantial Return 49 24.50

Total 200 100.00

From the above table, it is found that 41% of the respondents perceive
high total return as the best statement, 27% of the respondents perceive some current
income and are very safe, 24.5% of the respondents are perceive substantial return.

FIGURE 4.10 INVE

45.00

40.00

35.00

30.00
27.00
ENTAGE

25.00
 38

TABLE NO. 4.11

ATTITUDE ABOUT FINANCIAL RISK

Sl. No. Of
Attitude about Financial risk Percentage
No Respondents
1 Diversified investment portfolio 51 25.50
I Only invested with extra money I
2 36 18.00
can afford to loss
3 Associated with playing in the stock 82 41.00
The Higher the investment yield or
4 31 15.50
rate of return the greater the risk
Total 200 100.00

From the above table, it is clear that 41% of the respondents are
associated with playing in the stock market, 25.5% of the respondents have
diversified investment portfolio, 18% of the respondents afford to loss, 15.5% of the
respondents has an attitude that The Higher the investment yield or rate of return the
greater the risk.

FIGURE 4.11

45.00

40.00

35.00

30.00
NTAGE

25.50
25.00
 39

TABLE NO. 4.12

PORTFOLIO ACTIVITIES BY THE RESPONDENTS

Sl.
Any Portfolio Activities No. Of Respondents Percentage
No
1 Yes 99 49.50

2 No 101 50.50

Total 200 100.00

From the above table, shows that 50.5% of the respondents do not have
any portfolio activities and 49.5% of the respondents are having portfolio activities.

FIGURE 4.12 - PORT

No
50.50%
 40

TABLE NO. 4.13

RISK TOLERANCE SINCE THE TIME OF INVESTMENT

Sl.
Risk Tolerance No. Of Respondents Percentage
No
1 More Willingness 0 0.00

2 Less Willingness 69 34.50

Risk factors has no
3 72 36.00
influence
4 No Idea 59 29.50

Total 200 100.00

From the above table, it shows that for 36% of the respondents risk factor
has no influence since the time of first investment, 34.5% of the respondents have
less willingness to take on risk, 29.5% of the respondents have no idea about risk

FIGURE 4.13 - RISK TO

40.00

35.00

30.00
ENTAGE

25.00

20.00
 41

TABLE NO. 4.14

RESPONSE TO MARKET DECLINE

Sl.
Liquidation process No. Of Respondents Percentage
No
1 Immediately 56 28.00

2 At 90000 18 9.00

3 At 75000 45 22.50
Would Wait for Market
4 81 40.50
turnaround
Total 200 100.00

From the above table, it is inferred that 40.5% of the respondents would
wait for market turnaround, 28% of the respondents would immediately liquidate and
move to a more stable investment, 22.5% of the respondents will move at 75000 for
stable investment and 9% of the respondents will move at 90000 for stable
investment

FIGURE 4.14

45.00

40.00

35.00

30.00 28.00
TAGE

25.00
 42

TABLE NO. 4.15

TIME HORIZON FOR WITHDRAWALS

Sl. Time Horizon for

No. Of Respondents Percentage
No withdrawals
1 Currently 65 32.50

2 Less than 3 Years 36 18.00

3 Between 6 to 15 Years 70 35.00

4 After 15 Years 29 14.50

Total 200 100.00

From the above table, it is found that 35% of the respondents will make
withdrawals between 6 to 15 years, 32.5% of the respondents currently need to make
withdrawals, 18% of the respondents will withdraw in less than 3 years and 14.5% of
the respondents will withdraw after 15 years.

FIGURE 4.15 -

40.00

35.00 32.50

30.00
NTAGE

25.00

20.00
 43

TABLE NO. 4.16

GROWTH EXPECTED OF INVESTMENT IN 5 YEARS

Sl.
Growth Expected No. Of Respondents Percentage
No
1 0 to 15% 52 26.00

2 15% to 30% 45 22.50

3 30% to 50% 57 28.50

4 Above 50% 46 23.00

Total 200 100.00

From the above table, it is clear that 28.5% of the respondents expect
their investment to grow from 30% to 50%, 26% of the respondents expect their
investment to grow from 0 to 15%, 23% of the respondents expect a growth above
50% and 22.5% of the respondents expect a growth from15% to 30%.

FIGURE 4.17 - GROW

30.00

26.00
25.00

20.00
NTAGE

15.00
 44

TABLE NO. 4.17

SHARING INFORMATION ABOUT RISK WITH CONSULTANT

Sl.
Feel Free No. Of Respondents Percentage
No
1 Yes 127 63.50

2 No 73 36.50

Total 200 100.00

From the above table, it is found that 63.5% of the respondents feel free
to share information on risk with consultant and 36.5% the respondents do not feel
free to share information with the consultant.

FIGURE 4.17 - SHARING I

No
37%
 45

TABLE NO. 4.18

LEARNING FROM RISK

Sl.
Learn From Risk No. Of Respondents Percentage
No
1 Yes 71 35.50

2 No 129 64.50

Total 200 100.00

From the above table, it is found that 64.5% of the respondents do not
learn from their risk, and 35.5% of the respondents learn from their risk.

FIGURE
 46

TABLE NO. 4.19

MEASURE TO CONTROL RISK

Sl. Measure to Control

No. Of Respondents Percentage
No Risk
1 Avoidance 89 44.50

2 Modification 111 55.50

Total 200 100.00

From the above table, it is found that 55.5% of respondents control the
risk by modification and 44.5% of the respondents avoid risk.

FIGURE 4.1
 47

TABLE NO. 4.20

CHI – SQUARE ANALYSIS FOR INCOME LEVEL AND AGE OF

INVESTING

Age of investing
From 25 From From 45 Above Grand
to 35 35 to 45 to 55 55 Total
Income Level
Rs.5000 8 14 14 8 44
Rs.5000 to Rs.6000 13 14 9 3 39
Rs.6000 to Rs.7000 11 13 13 8 45
Rs.7000 to Rs.8000 7 16 9 5 37
Above Rs.8000 6 11 13 5 35
Grand Total 45 68 58 29 200

Null Hypothesis (H0) : No Significant relationship between

Income and Age of investing.

Alternate Hypothesis (H1) : There is a Close Significant relationship

Income and Age of investing.

CALCULATED
TABLE DEGREE OF
FACTOR CHI-SQUARE REMARKS
VALUE FREEDOM
VALUE
Not
Income Level 8.267 21.026 12
Significant

It is noted from the above table that the calculated Chi-square value is less
than the table value. So, there is Close relationship between Age group and Age of
investing.
 48

F IG U R E 4

18

16
1 41 4 14
14 13
 49

TABLE NO. 4.21

CHI – SQUARE ANALYSIS FOR INCOME LEVEL AND

PERFORMANCE OF INVESTMENT

Performance of
Investment Over 5 Grand
Monthly Quarterly Annually
Years Total
Income Level
Below Rs.5000 15 9 15 5 44
Rs.5000 to Rs.6000 16 9 6 8 39
Rs.6000 to Rs.7000 15 10 9 11 45
Rs.7000 to Rs.8000 14 7 9 7 37
Above Rs.8000 11 7 11 6 35
Grand Total 71 42 50 37 200

Null Hypothesis (H0) : No Significant relationship between

Income level and Performance of investments.

Alternate Hypothesis (H1) : There is Close Significant relationship

between Income level and Performance of
investments.

CALCULATED
TABLE DEGREE OF
FACTOR CHI-SQUARE REMARKS
VALUE FREEDOM
VALUE
Not
Income Level 6.978 21.026 12
Significant

It is noted from the above table that the calculated Chi-square value is
less than the table value. So, there is Close relationship between Income level and
Performance of investments.
 50

F IG U R E 4 .

18
16
16 15 15

14
 51

TABLE NO. 4.22

CHI – SQUARE ANALYSIS FOR INCOME LEVEL AND

FINANCIAL FUTURE

Financial
Very
Future Grand
Optimisti Positive Unsure Pessimistic
Total
c
Income Level
Below Rs.5000 8 14 14 8 44
Rs.5000 to Rs.6000 13 14 9 3 39
Rs.6000 to Rs.7000 11 13 13 8 45
Rs.7000 to Rs.8000 7 16 9 5 37
Above Rs.8000 6 11 13 5 35
Grand Total 45 68 58 29 200

Null Hypothesis (H0) : No Significant relationship between

Income level and Financial Future.

Alternate Hypothesis (H1) : There is Close Significant relationship

between Income level and Financial Future.

CALCULATED
TABLE DEGREE OF
FACTOR CHI-SQUARE REMARKS
VALUE FREEDOM
VALUE
Not
Income Level 8.267 21.026 12
Significant

It is noted from the above table that the calculated Chi-square value is
less than the table value. So, there is Close relationship between Income level and
Financial Future.
 52

F IG U R E 4 .2
F

18

16
1 41 4 14
14 13
 53

TABLE NO. 4.23

CHI – SQUARE ANALYSIS FOR INCOME LEVEL AND

ATTITUDE ABOUT FINANCIAL RISK

Financial Invest Associated

Risk Reduces with with Rate of Grand
Risk Extra Playing in Returns Total
Income Level Money the Stock
Below Rs.5000 14 7 19 4 44
Rs.5000 to Rs.6000 15 5 15 4 39
Rs.6000 to Rs.7000 9 11 16 9 45
Rs.7000 to Rs.8000 7 7 17 6 37
Above Rs.8000 6 6 15 8 35
Grand Total 51 36 82 31 200

Null Hypothesis (H0) : No Significant relationship between

Income level and Financial Risk.

Alternate Hypothesis (H1) : There is Close Significant relationship

between Income level and Financial Risk.

CALCULATED
TABLE DEGREE OF
FACTOR CHI-SQUARE REMARKS
VALUE FREEDOM
VALUE
Not
Income Level 11.505 21.026 12
Significant

It is noted from the above table that the calculated Chi-square value is
less than the table value. So, there is Close relationship between Income level and
Financial Risk.
 54

F IG U R E 4 .2
A B

20 19

18

16 15 15
 55

TABLE NO. 4.24

CHI – SQUARE ANALYSIS FOR INCOME LEVEL AND

RISK TOLERANCE

Risk
Tolerance Less Risk Grand
No Idea
Willingness Tolerance Total
Income Level
Below Rs.5000 12 23 9 44
Rs.5000 to Rs.6000 19 7 13 39
Rs.6000 to Rs.7000 16 16 13 45
Rs.7000 to Rs.8000 13 14 10 37
Above Rs.8000 9 12 14 35
Grand Total 69 72 59 200

Null Hypothesis (H0) : No Significant relationship between

Income level and Risk Tolerance.

Alternate Hypothesis (H1) : There is Close Significant relationship

between Income level and Risk Tolerance.

CALCULATED
TABLE DEGREE OF
FACTOR CHI-SQUARE REMARKS
VALUE FREEDOM
VALUE
Not
Income Level 13.391 15.507 8
Significant

It is noted from the above table that the calculated Chi-square value is
less than the table value. So, there is Close relationship between Income level and
Risk Tolerance.
 56

F IG U R E 4 .

25
23

20 19
 57

CHAPTER – V

FINDINGS, SUGGESTIONS & CONCLUSION

FINDINGS

48.5% of the respondents are belongs to the age between 30 years to 60

years old.
59.5% of the respondents are male.
22.5% of the respondent’s income is between Rs.6000 to Rs.7000.
55% of the respondents are not experience in the stock market.
45.5% of the respondents are purchased Equities type of investments.
35.5% of the respondents are performing an investment as monthly.
34% of the respondents are optimistic positive of their financial future.
29.5% of the respondents are invested in age between 50 to 59 years.
29.5% of the respondents are have no experience in stock market.
41% of the respondents are describe high total return as best statement.
41% of the respondents are associated with playing in the stock market.
50.5% of the respondents are not have any portfolio activities.
36% of the respondents are have risk tolerance unchanged singe the time
of first investment.
40.5% of the respondents are not wait for market turnaround.
35% of the respondents are need to make withdrawals between 6 to 15
years.
28.5% of the respondents are expect their growth 30% to 50%.
63.5% of the respondents are feel about organization risk.
64.5% of the respondents are not learn from their risk.
55.5% of respondents are control the risk by modification.
From the Chi-Square Analysis, there is Close relationship between Age
group and Age of investing.
 58

From the Chi-Square Analysis, there is Close relationship between

Income level and Performance of investments.
From the Chi-Square Analysis, there is Close relationship between
Income level and Financial Future.
From the Chi-Square Analysis, there is Close relationship between
Income level and Financial Risk.
From the Chi-Square Analysis, there is Close relationship between
Income level and Risk Tolerance.

SUGGESTIONS

 Most of the respondents are not aware of Portfolio Management. So, proper
guidance can be given to them. This is to create awareness.
 A regular investor friendly seminar can be organized to suit the timings of the
investing public. For instance such seminars can be interactive sessions,
arranged at frequent intervals.
 The newsletters published helps investors. Hence newsletters / bulletins can
be published for guidance.
 Efforts to be taken to popularize Equity through appropriate publicity
measures.
 59

CONCLUSION

The study is made to find out “Risk perception and portfolio management of
equity investors”. The study reveals that the investors in Tirupur Karvy are not aware
of portfolio which would minimize risk and maximize the return. And also it is clear
that the investors in Tirupur Karvy have low level of understanding about risk and
the importance of portfolio management as they are not aware of the portfolio
management proper steps to be taken in order to improve the awareness level in the
minds of the investors.
 60

REFERENCES

1. Statistical Methods- S.P.Gupta

2. Research Methodology-C.R.Kothari
3. Statistics for Management-Levin & Rubin
4. www.karvy.com
5. www.nseindia.com
6. Security Analysis and Portfolio Management-V.K.Bhalla