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OBJECTIVES OF STUDY

The most important objective of the dissertation report is to partial fulfillment the Master of Business Administration (MBA) and to gain practice knowledge of the subject through experience of making a project report. Other objectives of the study are: To study stock holding pattern across different time frames. To study stock holding pattern across different sectors. To know the investors perception about risk and return. To know the influencing factors of the retail investor To study investors objectives behind investment To know medium of information of the investors To study investment alternatives and portfolio of the retail investor

SCOPES OF STUDY
The study was done on the topic RETAIL INVESTOR STOCK HOLDING PATTERN: A STUDY IN NCR REGION. The scopes of study are following: Helping to know companys stocks holding pattern of retail investors Helping to know medium of information of the investor Distinguish between retail investor and institutional investor Describes the managerial aspects of the investment Helping to know influence factors of different investors Helping to know perception of the retail investors towards return and risk

RESEARCH METHODOLOGY Descriptive Research: The research methodology adopted to complete this project
was descriptive research, which depend upon survey technique.

Data collection: Secondary Data: Secondary data was collected from different Books, Magazines, and
Websites and from CMIE. The collected secondary data was sufficient, relevant, and reliable for information.

Primary Data Collection: The primary data collected through survey technique by
questionnaire. The survey looks upon 100 respondents (retail investors) in NCR region. The respondents were given the name all the major sectors, different time frames, objectives behind investment, and factors influencing the investment decisions. They were asked to choose the option which according to them is the best in the given options.

THE CHOICE OF SURVEY DATA


The data required for the research have required the following characters: Accuracy Relevance Sufficiency Availability Cost Effectiveness Time Effectiveness For the above reasons the way of data collection was survey data collection method.

It is the systematic gathering in of information from respondents for the purpose of understanding some aspects of the behavior of the population of the interest.

The survey method was divided into four phases: i) ii) iii) iv) Sampling Questionnaire Design Questionnaire Administration Data Analysis

Sample Size: 100 Retail Investors

USES OF STUDY
1. Report can be used to know most preferred sector of the retail investors in NCR region. 2. Report can be used in formulation of strategy about launching an investment alternative of stocks in NCR region. 3. Report can be used to know the most affecting factor of the retail investor of the NCR region. 4. You can know for what duration retail investors like to hold a companys stocks. 5. It can be used in formulation and implementation of strategy about informing and educated to the retail investors. 6. Report can be used to know major objectives of the retail investors in NCR region. 7. It can be used to know perception of the retail investor in NCR region. 8. For investors points of view the report can be used to know: Investment Alternatives Speculation and Investment Investment management

INTRODUCTION
Investing is parting with ones funds to be used by another party, uses of fund, for productive activity. It can mean giving an advance or loan or contributing to the equity or debt capital of a corporate or non corporate business unit. Generalized, investment means conversion of cash or money into a monetary asset or a claim on future money for a return. In the present scenario financial markets, investment has become complicated and is both art and science. One makes investments for a return higher than what he can get by keeping the money in a Commercial or Cooperative Bank or even in a Investment Bank. In finance field, it is common knowledge that money is scarce and investors try to maximize their return. But the return is higher if the risk is also higher. Return and risk go together and they have a trade off. The art of investment is to see that the return is maximized with the minimum of risk. If the investor keeps this money in a Bank in saving account, he takes the least risk as the money is safe and he will get back when he wants it but he runs the risk that the return in real terms, adjusted for inflation is negative or small and even if positive it may not come up to his expectations or needs.

INDIVIDUAL INVESTORS
The savings of the individuals are ultimate source of investment in corporate securities. The various individual investors of securities may be classified under three broad categories: i) ii) iii) Real Investors Speculators Individuals who are affiliated with the issuing company.

i)

Real Investors: They are the individuals who have surplus of income or
past accumulated wealth and which they wise to invest for making future income. Such investors who are not affiliated with the issuing company either as existing shareholders or as creditors or customers of the company, etc. are termed as real investors.

ii)

Speculative Investors: There are certain investors who purchase


securities with speculative motives. They are not real investors. Their aim is to sell the securities and make capital gains through wide fluctuations in the value of securities. There are two types of speculators, namely a) bulls, and b) bears.

iii)

Individuals Affiliated with the issuing company: The existing


companies usually prefer to sell their fresh issues to its customers, employees, creditors, and existing shareholders etc. This category of individuals investing in securities includes those persons who are affiliated with the issuing company in one way or the other. There are many advantages of selling securities to this category of investors.

So individual investor is who has surplus of income or past accumulated wealth and he/she wants to invest in company's stock for a time period.

Savings:
The fundamental building block to personal prosperity is learning to live below your means. In other words, SAVING! That's it! That's the big secret to becoming prosperous. Granted, there's the question of what to do with the money once you have it saved; but if you can't adjust your living expenses so that you create and maintain a regular saving plan, there's no need discussing the rest. Living below your means can apply to all income levels. Look at it this way: unless you know you're going to die within weeks (and who ever really does), you should be planning for your future. Part of that planning might as well be setting aside at least 10% of your total income to create wealth. This method takes time (years) so you must be patient; but, given enough time, it's a sure thing to make you wealthy. Hopefully, the sensationalist-sounding start to this page hasn't scared off those of you that (like me) are skeptical of such stuff. The above two paragraphs are true, don't get me wrong; but there are definitely other benefits to living below your means. They all come under the heading: gaining financial control of your life. In our day-to-day lives, there are no true guarantees; so, if you hold life dear, anything you can do to improve your chances for a better life should be considered.

Saving: Some Specific Examples:


As hinted at above, once you are living below your means and building up a savings; there's the question of what to do with the money to create wealth. Below is a table containing three possible accounts to put that savings into? You will notice that each account has a percent annual return associated with it. The returns are averages of what you may expect to get in todays marketplace. The figure for Stock Mutual Funds (10%)

is a figure that has proven to hold over the last 60 years or so (averaged); though there are no guarantees this will always be the case. Still, for most people, a good Stock (Equity).

Mutual Fund is usually the best vehicle for wealth accumulation. Account and annual return Bank Account @ 1.5% Money Market Fund @ 5.0% Stock Mutual Fund @ 10.0%

5 years

10 years

15 years Rs.927,866

20 years

25 years

Rs.286,396 Rs.595,148 Rs.312,800 Rs.714,288

Rs.1,286,528 Rs.1,673,112

Rs.1,229,488 Rs.1,890,738 Rs.2,739,300

Rs.356,176 Rs.942,264

Rs.1,906,562 Rs.3,493,058 Rs.6,103,418

If you can afford more than Rs.4,600 per month in savings, a fairly good estimate of the future account balance can be found by using the above table. Using Rs.4,600 per month as the base, divide that into the amount you can afford, the result should be a number larger than one. Take that number and multiply it by the figure in the box that corresponds to the type account and length of time you want. As an example, say you can afford Rs.13,800 per month in savings. Dividing Rs.4,600 into Rs.13,800 gives you 3.0. Now, say you want to invest it in a Stock Mutual Fund for 25 years; the figure corresponding with this choice in the above table is: Rs.6,103,418. Take this amount and multiply it by the 3.0 (in this case); the result is: Rs.18,310,254. Not bad, especially when you realize that your contributions (Rs.13,800 per month) only add up to Rs.4,140,000 after 25 years! All the rest is earnings or growth or gravy or whatever the heck you want to call it.

Some Suggestions to Help Start or Continue Your Savings Plan


Listed below are a few items that may help you make a savings plan a reality. In other words, free up money for contribution to your savings in order to create wealth.

Credit cards: Pay off any accumulated balance every month. At about 18% interest,
the credit companies are making from us almost twice what we can ever realistically hope to gain from the Stock Market. You will never get ahead this way. If you are carrying a hefty balance on any credit card accounts, make it top priority to get these paid off before worrying about any savings plan.

Automatic Payments: A great way to have money transferred to investment (or


savings) accounts on a regular monthly basis. Using this technique, you won't have to remember to contribute to your savings plan every month.

Create a Budget: To help you discover where, exactly, all the money is being spent.
Guidelines on setting up or improving a budget can be found on my Budget Basics page. Keep Track of Spending: - write down in a small notebook or pad every time you spend money and what you spend it on. Review the list weekly, did you really need to buy the things you did?

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Retail investor
Investor, who buys securities and commodities futures on his, own behalf not for an organization. Retail investors typically buy shares of stock or commodity positions in much smaller quantities than institutions such as mutual funds, bank trust departments, and pension funds and therefore are usually charged commissions higher than those paid by the institutions. In recent years, market activity has increasingly been dominated by Institutional Investors.

SEBI redefine retail investor


The Securities and Exchange Board of India recently raised the allocation for retail individual investors (RIIs) in book built issue from 25 per cent to 35 per cent and redefined retail investors as one who can apply for shares up to Rs. 1 lakh as against the previous ceiling of Rs. 50,000. Further, when the book-built issues are made pursuant to mandatory 60 per cent allocation to qualified institutional buyers (QIBs), the reservation for retail investors would be 30 per cent, SEBI said.. SEBI has also reduced the maximum bidding period under the book-built issue to three-seven working days from 5-10 days. The existing guidelines provided a maximum bidding period of 10 days extendable by three more days, if there is a revision in price band, it said. The guidelines would be amended to improve content of data and ensure its uniformity in data display, it said. Meanwhile, SEBI has issued notification to extend the deadline for implementation of the revised Clause 49 of the Listing Agreement for Corporate Governance by nine months to December 31, 2005.

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Differences between institutional and non-institutional investors:


1. There are a number of differences between institutional investors and noninstitutional investors. If you are considering an investment in a particular stock that you've seen publicized in the financial press, there's a good chance you don't qualify as an institutional investor. In fact, if you're wondering what an institutional investor is, you're probably not an institutional investor. 2. Institutional investors are the big guys on the block - the elephants. They're the pension funds, mutual funds, money managers, insurance companies, investment banks, commercial trusts, endowment funds, hedge funds, and some hedge fund investors. Institutional investors account for half of the volume of trades on the New York Stock Exchange. They move large blocks of shares and have tremendous influence on the stock market's movements. Because they're considered to be knowledgeable and, therefore, less likely to make uneducated investments, institutional investors are subject to few of the protective regulations that the Securities and Exchange Commission provides to your average, everyday investor. 3. The money that institutional investors use isn't actually money that the institutions have raised themselves. Institutional investors generally invest for other people. If you have a pension plan at work, a mutual fund or insurance, then you are actually benefiting from the expertise of institutional investors.

4. Non-institutional investors are, by definition, any investors that aren't institutional. That's pretty much everyone who buys and sells debt, equity or other investments through a broker, bank, real estate agent and so on. These are the

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people or organizations that manage their own money, usually to plan for retirement or to save for a large purchase.

Investment in Indian market:


India, among the European investors, is believed to be a good investment despite political uncertainty, bureaucratic hassles, and shortages of power and infrastructure deficiencies. India presents a vast potential for overseas investment and is actively encouraging the entrance of foreign players into the market. No companies, of any size, aspiring to be a global player can, for long ignore this country, which is expected to become one of the top three emerging economies.

Success in India
Success in India will depend on the correct estimation of the country's potential; underestimation of its complexity or overestimation of its possibilities can lead to failure. While calculating, due consideration should be given to the factor of the inherent difficulties and uncertainties of functioning in the Indian system. Entering India's marketplace requires a well-designed plan backed by serious thought and careful research. For those who take the time and look to India as an opportunity for long-term growth, not short-term profit- the trip will be well worth the effort.

Market potential
India is the fifth largest economy in the world (ranking above France, Italy, the United Kingdom, and Russia) and has the third largest GDP in the entire continent of Asia. It is also the second largest among emerging nations. (These indicators are based on purchasing power parity.) India is also one of the few markets in the world, which offers high prospects for growth and earning potential in practically all areas of business. Yet, despite the practically unlimited possibilities in India for overseas businesses, the world's most populous democracy has, until fairly recently, failed to get the kind of enthusiastic attention generated by other emerging economies such as China.

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Lack of enthusiasm among investors


The reason being, after independence from Britain 50 years ago, India developed a highly protected, semi-socialist autarkic economy. Structural and bureaucratic impediments were vigorously fostered, along with a distrust of foreign business. Even as today the climate in India has seen a sea change, smashing barriers, and actively seeking foreign investment, many companies still see it as a difficult market. India is rightfully quoted to be an incomparable country and is both frustrating and challenging at the same time. Foreign investors should be prepared to take India as it is with all of its difficulties, contradictions, and challenges. Developing a basic understanding or potential of the Indian market, envisaging and developing a Market Entry Strategy and implementing these strategies when actually entering the market are three basic steps to make a successful entry into India

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Public issue:
Any company or a listed company making a public issue or a rights issue of value of more than Rs 50 lakhs is required to file a draft offer document with SEBI for its observations. The company can proceed further only after getting observations from SEBI. The company has to open its issue within three months from the date of SEBI's observation letter. Through public issues, SEBI has laid down eligibility norms for entities accessing the primary market. The entry norms are only for companies making a public issue (IPO or FPO) and not for listed company making a rights issue.

The entry norms are as follows:


Entry Norm I (EN I): The Company shall meet the following requirements. Net Tangible Assets of at least Rs. 3 crores for 3 full years. Distributable profits in at least three years. Net worth, of at least Rs. 1 crore in three years, If change in name, at least 50% revenue for preceding 1 year should be from the new activity. The issue size does not exceed 5 times the pre- issue net worth. SEBI has provided two other alternative routes to company not satisfying any of the above conditions to provide sufficient flexibility and also to ensure that genuine companies do not suffer on account of rigidity of the parameters, for accessing the primary Market. They are as under Entry Norm II (EN II)

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Issue shall be through book building route, with at least 50% to be mandatory allotted to the Qualified Institutional Buyers (QIBs). The minimum post-issue face value capital shall be Rs. 10 crore or there shall be a compulsory market making for at least 2 years. Or Entry Norm III (EN III) The "project" is appraised and participated to the extent of 15% by FIs/Scheduled Commercial Banks of which at least 10% comes from the appraiser(s). The minimum post-issue face value capital shall be Rs. 10 crore or there shall be a compulsory market making for at least 2 years. Note: - The Company should also satisfy the criteria of having at least 1000 prospective allotees.

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INVESTMENT PORTFOLIO INTRODUTION


It is rare to find investors investing their savings in a single investment avenue. Instead they tend to invest in a group of alternatives. Such a group of alternatives is called a portfolio. In simple words, we can define portfolio as a basket of investment. Creation of a portfolio helps to reduce risk without sacrificing returns. Portfolio management (investment management) deals with the analysis of individual investment alternative as well as the theory and practice of optimally combining such alternatives into portfolios. An investor who understands the fundamental principles and analytical aspects of investment management has better chance of success. Investment management makes use of analytical techniques of analysis of conceptual theories regarding rational allocation of funds. Investment management is a complex process which tries to make investment activity more rewarding and less risk.

INVESTMENT VS. SPECULATION


Investment and speculation are to different terms which are closely related. Both involve purchase of assets. Traditionally investment is distinguished from speculation with respect to three factors. Viz. A. Risk B. Capital gain C. Time period

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Risk It refers to possibility of incurring a loss in a financial transaction. It arises from the variation in return from an investment. Risk is invariably related to return. Higher return is associated with higher risk.

Capital Gains The investors motive is to earn good income through dividend rather than achieving profit through capital gains due to price changes of securities in speculation. Thus speculation associated with buying low and selling high with the hope of making large capital gains. Time period Investment is long term in nature, whereas speculation is short term. An investor commits his funds for longer period and wait for his return. But a speculator is interested in short term trade gains through buying and selling of investment instrument. Analysis of these distinctions helps us to identify the role of the investor and the speculator. Basically, both investment and speculation aim to good returns. The difference is in motive and methods. As a result the distinction between investment and speculation is not very wide. Investment is sometimes described as a well grounded and carefully planned speculation.

FINANCIAL AND ECONOMIC MEANING OF INVESTMENT


In the financial sense, investment is the commitment of a persons fund to drive future income in the form of interest, premiums, and pension benefits or appreciation in the value of capital. Purchasing of shares, debentures, insurance policies are all investment in financial sense. Such investment generates financial assets.

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In the economic sense, investment means the net additions to the economys capital stock, which consist of goods and services. Investment in this sense implies the formulation of new and productive capital in the form of new constructions, plant, and machinery. Such investment generates physical assets. The two types of investment are, however, related and independent. The money invested in financial investments is ultimately converted in to physical assets. Thus all investments results in the acquisition of some assets either financial or physical.

Evolution of investment management


Investment management is essentially method of managing ones investment efficiently. Many factors contributed to the development and growth of this systematic approach to portfolio management also known as investment management. According to J.C.Francis, the development of investment management can be traced chronologically three different phases. The first phase could be characterized as the speculative phase, investment was not a wide spread activity: it was carried only by wealth; moreover it was a speculative nature. Investment management was an art and needed skills. Price manipulation was resorted to the investors. During this time pools and corners were used for manipulation. All these led to the stock exchange crash in 1929. Finally the daring speculation ventures of investors were illegal in the United State by the Securities Act 1934. During the 1930s investment management entered its second phase, A face of professionalism. After the first US regulation governing investment were assed in 1933-44, the investment industry began the process of upgrading its ethics, establishing standard practices and generating a good image. As a result the investment market became safer laces and ordinary people began to invest. Investors began to analyze the securities seriously before undertaking investment. Portfolio management has now entered its third phase, the scientific phase.

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The publication of a paper on portfolio selection in the journal of finance in 1952 B Harry Markowitz, market the beginning of its third phase, the foundation of modern portfolio theories were laid by Markowitz. Markowitz attempted to quantify risk. He showed how the risk in investment could be reduced through proper diversification of investment which required the creation of portfolio. This pioneering portfolio approach to portfolio management won him the Nobel prize for economics in 1990. The developments in the field of portfolio management are continuing apace. In fact the last two phases in the development of portfolio management practice, namely professionalism and scientific analysis are currently advancing simultaneously.

OBJECTIVES OF INVESTMENT
An investor has various alternative avenue of investment for his savings of flow to. Savings kept as cash are barren and do not earn anything. Hence savings are invested in assets depending on their risk characteristics. The objective of the investment is to minimize the risk involved in investment. Thus the objectives of an investment can be stated as: Rate of return Risk Liquidity Tax shelter Convenience

PHASES OF INVESTMENT MANAGEMENT


Investment management, also referred to as portfolio management, is a complex process or activity that may be divided into six broad phases: Specification of investment objectives and constraints Choice of asset mix Formulation of portfolio strategy Portfolio execution

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Portfolio evaluation

1. Specification of investment objectives and constraint: The first step in


the portfolio management process is to specify the investment policy which summarizes the objectives, constraints, and preferences of the investor. The investment policy may be expressed as follows: Objectives i) ii) Return requirements Risk tolerance

Constraints and preferences i) ii) iii) iv) Liquidity Investment horizon Taxes Regulations

2. Selection of asset mix: The most important decision in portfolio management is


the asset mix decision. Based on objectives and constraints, investor has to specify ones own asset allocation. The appropriate mix depends mainly of risk tolerance and investment horizon of the investor.

3. Formulation of portfolio strategy:


Once a certain asset mix is chosen, an appropriate portfolio strategy has to be hammered out. Two broad choices are available: an active portfolio strategy and passive portfolio strategy. An active portfolio strategy strives to earn superior risk-adjustment return. A passive portfolio strategy, on the other hand, involves holding a broadly diversified portfolio and maintaining a pre-determined level of risk exposure.

4. Portfolio execution:

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By the time this phase of portfolio management is reached several key issues have been sorted out. Investment objectives and constraints have been specified, asset mix has been chosen, and portfolio strategy has been developed. The next step is to implement the portfolio plan by buying and/or selling specified investment avenues in given amount. This is the phase of portfolio execution which is glossed over in portfolio management literature.

5. Portfolio revision:
Portfolios do not manage themselves. Nor can weather the ages unaltered. With every passing day, portfolios that have been carefully crafted yesterday become very less-then optimal. Over time several things are likely to happen. The asset allocation in the portfolio may have drifted away from its target: the risk and return characteristics of various alternatives have altered: finally, the objectives and preferences of the inventor may have changed. Giving the dynamism development in the market and changes in the investment circumstances, one has to periodically monitor and revise portfolio.

6. Performance evolution: The performance of portfolio should be evaluated


periodically. The key dimensions of portfolio performance evaluation are risk and return and the key exposure. Such a review may provide useful feedback to improve the quality of the portfolio management process on a continuing basis.

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INVESTMEST ALTERNATIVES
There are various alternatives available to an investor for investment, alternatives fall into two broad categories, viz. financial assets and real assets. Financial assets: Financial assets are paper claims on some issuer such as government or a corporate body. The important financial assets are equity shares, corporate debentures, government securities, and deposit with banks, mutual funds, insurance policies, and derivative instruments. Real assets: Real assets are represented as tangible assets like a residential house, a commercial property, gold, precious stones, and art objects.

Investment alternatives may be classified as: 1. Non- marketable financial assets 2. Equity shares 3. Bonds 4. Money market instruments 5. Mutual fund schemes

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6. Life insurance policies 7. Real estate 8. Precious objects 9. Financial derivatives

1. Non-marketable Financial Assets:


Bank deposits, post office deposits, company deposits and provident deposits are the examples of non-marketable financial assets. A distinguishing feature of these assets is that they represent personal transactions between the investor and issuer. i). Bank deposits: Current Account Saving Account Fixed deposit Account ii). Post office deposits: Saving deposits Fixed deposits Recurring deposits up to 5 years Fixed investment in monthly income iii). Pubic provident fund iv). National saving schemes v). Indira Vikas Patra vi). Kisan Vikas Patra Equity Shares:

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Equity capital represents ownership capital. Equity shareholders collectively own the company. The bear the risk and enjoy the rewards of ownership, or all the form of securities, equity shares appear to be the most romantic. While fixed income investment avenues may be more important to most of the investors, equity shares seem to capture their interest the most. The potential reward and penalties associated with equity shares make them an interesting, even exiting, proposition. No wonder, equity investment is a favorite topic of conversation in parties and get-together.

3. Bonds:
Bonds or debentures represents long-term debt instrument. The issuer of a bond promises to pay a stipulated stream of cash flows. This generally comprises periodic interest payment over the life of instrument and principal payment at the time of redemption(s).

4. Money market instrument:


Debt instruments which have a maturity less than one year at the time of issue are called money market instruments. These instruments are highly liquid and have negligible risk. Money market is dominated by the government, financial institutions, Banks, and Corporate. The major money market instruments are: Treasury Bills Commercial Paper Certificates of Deposits

5. Mutual Fund Schemes:


A mutual fund is a collection of stocks and bonds. Instead of buying shares and/or fixed income instruments, one can participate in various schemes floated mutual funds which,

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in turn, invest in equity shares and fixed income securities. There are three broad types of mutual funds schemes: Equity schemes Debt schemes Balanced schemes

6. Life insurance policies: In broad sense, life insurance may be viewed as an


investment. An insurance premium represents the sacrifice, and assured sum, the benefits. The important types insurance policies in India are: Endowment assured policy Money back policy Whole life policy Term assured policy

7. Real Estates: For the bulk of the investors the most important asset in their
portfolio is a residential house. In addition to a residential house, the most effluent investors are likely to be interested in the following types of real estates: Agriculture land Semi-urban land Commercial property

PERFORMANCE EVALUATION
Performance evaluation is the process which is concerned with assessing the performance of the portfolio over a selected period of time in terms of rate and return. It provides a mechanism for identifying weakness in the investment process and for improving these deficient areas. It also provides the necessary feedback for better designing of portfolio the next time around. Performance measurement is basically a good idea. In practice, however, it is not applied properly.

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ROLE OF INVESTMENT MANAGEMENT


There was a time when investment management was an exotic term, an elite practice beyond the reach of ordinary people, in India. The scenario has changed drastically. Investment management is now a familiar term and is widely practiced in India. The theories and concepts relating to investment management now find their way to the front pages of financial news papers and the cover pages of investment journals in India. In the beginning of the nineties India embarked on a programme of economic liberalisation and globalisation. This reform process has made the Indian capital markets active. The Indian stock market are steadily moving toward higher efficiency, with rapid computerization, increasing market transparency, better infrastructure, better customer service, closer integration and higher volumes. The markets are dominated by large institutional investors with their diversified portfolios. A large number of mutual funds have been set up in the country since 1987. With this development, investment in securities has gained considerable momentum. Along with the spread of securities investment among ordinary investors the acceptance of quantitative techniques by the investment community changed the investment scenario

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in India. Professional investment management, backed competent research, began to be practiced mutual funds, investment consultants, and big brokers. The Securities and Exchange Board of India (SEBI), the stock market regulatory body in India, is supervising the whole process with a view to making investment management a responsible professional service to rendered b expert in this field. Another significant development in the field of investment management is the introduction of derivative securities such as options and futures. The trading in derivative securities, their valuation, etc. has broadened the scope of investment. Investment is no longer a simple process. It requires scientific knowledge, a systematic approach, and also professional practice. Investment management which combines these entire elements is the method of achieving efficiency in investment.

COMMON ERRORS IN INVESTMENT MANAGEMENT


Investors appear to be prone to the following errors in managing their investment: Inadequate comprehension of return and risk Vaguely formulated investment policy Nave extrapolation of the past Cursory decision making Simultaneous switching Misplaced love for cheap stocks Over-diversification and under-diversification Buying shares of familiar companies Wrong attitude towards losses and profits Tendency to speculate

QUALITIES OF SUCCESSFUL INVESTORS


The game of investment as any other game requires certain qualities and virtues on the art of the investors, to be successful in long run. What are these qualities? While the list 28

prescribed by various commentators tends to vary, the following qualities are found on most of the lists. Contrary thinking Patience Composure Flexibility

ANALYSIS OF DATA Introduction


The survey is done to find out the stocks holding pattern of retail investors, across different sectors, across different time frames, investment objectives, and factors which effect the investment decisions of the retail investors in NCR region. The questionnaire was prepared and administrated to the investor to collect the views and opinion for the research. The respondent were given the name all the major sectors, different time frames, objectives behind investment, and factors influencing the investment decision. They were asked to choose the option which according to them is the best in options.

The survey data is collected based on three categories:


1. Age group. a.) 25-35

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b.) 35-50 c.) 50 onwards 2. Profession a.) Business b.) Employee 3. Income a.) Up to 1.5 Lakhs b.) 1.5-3.0 Lakhs c.) 3.0-5.0 Lakhs d.) 5.0 onwards

IN THIS REPORT, AGE GROUP IS CONSIDERED FOR ANALYSIS. NUMBER OF RESPONDENT


In this report, the no of respondent 100 has been considered for survey on the basis of three age groups. Exhibit 1 shows respondents, falling in different Age group.

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NO OF RESPONDENT

>50 20%

25-35 25% 25-35 35-50 >50

35-50 55%

Exhibit 1: shows respondents, basis on different Age group.

AGE GROUP VS PROFESSION:


The survey look at the representative, sample of 100 people in three key age groups of 25-35, 35-50, and 50 onwards. The exhibit 1 shows the classification of respondents based on profession (business and employee) respectively.

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AGE VS PROFESSION NO. OF RESPONDENT 35 30 25 20 15 10 5 0 25-35 35-50 AGE GROUP business employee >50 16 9 12 8 29

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Exhibit 2: Classification of respondents on the basis of profession.

AGE GROUP VS INCOME:


The survey looks at the representative, sample of 100 people in the key Age group 25-35, 35-50, and 50 onwards. The exhibit 3 shows the classification of respondents based on income (up to 1.5 lakhs, 1.5-3.0 lakhs, 3.0-5.0 lakhs, and 5.0 onwards) respectively.

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AGE VS INCOME
25 20 15 10 5 0 1 2 AGE GROUP
Income up to 1.5 lakhs 3.0-5.0 lakhs 1.5-3.0 lakhs >5.0 lakhs

NO.OF RESPONDENT

20 15 10 6 4 5 8 3 12 7 6 4

Exhibit 3: classification of respondent on the basis of income.

ANALYSIS AGE GROUP-I (25-35)


The survey looks at the representative sample of 25 people in first age group.

1. INVESTMENT IN DIFFERENT SECTORS:

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Investment in different sectors 6% 2%

7% 11% 12%

25%

18% IT TELECOM STEEL AUTO FMCG BANKING

19%

PHRMACEUTICAL OTHERS

It has been found that people in this age group mostly prefer IT sector 20%, FMCG 15%, and Telecom sector 15%. Among different sectors their next preference is, Banking sector 10%, Steel 9%, Pharmaceutical sector 6%, Auto 5%, and others 2%. This is mostly because people in this age group no dependent and they pursue growth aggressively as risk taking ability is high at this stage.

2. DURATION OF HOLDING COMPANYS STOCKS:

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TIME FRAME OF STOCKS HOLDING Six months or more 13%

Intra day 16% Few days 20% One month 21%

Three months 30%

Intra day Three months

Few days Six months or more

One month

From the above graph, we find that most preferences to hold the companys stocks is three months 30%, and one month 22%. Few days, and intraday are the next preference are 20%, and 18% respectively, six months or more only preferences by 11%. This is because people of this age group want to enjoy inflation benefits.

3. RANKING OF INVESTMENT OBJECTIVES:


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RANKING OF INVESTMENT OBJECTIVES

All the above 12% Liquidiry 24% Rate of return 44%

Tax shelter 8%

Security 12%

Rate of return

Security

Tax shelter

Liquidiry

All the above

The above graph shows that rate of return 44% is top priority among people in this age group followed by liquidity 24%. People of this age group are more aggressive so that they do not take much care on security factor i.e. 12% because they high returns and are ready to take risk. 8% people of this age group take their investment decision keeping tax benefits in mind.

4.1 RANKING OF INFLUENCING FACTOR, IN INVESTMENT DECISION:

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RANKING OF INFLUENCING FACTOR, IN INVESTMENT DECISION Your own decision 30%

Financial expert 40%

Attractive advertisement 10% Financial expert

Friends & Relatives 20% Friends & Relatives Your own decision

Attractive advertisement

The graph shows that investment decision in this age group is mostly influenced by financial expert 40% followed by their own decision 30%. After that, friends and relatives 20% influence them, and they are very little 10% influenced by attractive advertisement.

4.2 RETURN VS RISK:


INFLUENCING FACT ORS

Risk 35%

Return 65%

Return

Risk

5. INVESTMENT ALSO IN OTHER ALTERNATIVES:

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INVESTMENT VS ALTERNATIVES % OF RESPONDENTS 100 80 60 40 20 0


FD ut ua lf un R ds ea le st at es ce In su ra nc e A ny ot he r os to ffi on ds B

OTHER ALTERNATIVES

As the above graph shows that the people in this age group also invest in other alternative of investment besides companys stocks. Most preferable alternative is insurance 90% and mutual funds 40%, followed by real estate 20%. People in this age group also invest as listed, bonds 15%, post office 10%, FD 10%, and any other 25% (based on multi choice options).

ANALYSIS OF AGE GROUP-II (35-50):


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The survey looks at the representative sample of 55 people in second Age group.

1. INVESTMENT IN DIFFERENT SECTORS:


INVESTMENT IN DIFFERENT SECTORS ANY OTHER 10% STEEL 16% BANKING 10% TELECOM 8% IT AUTO STEEL AUTO 12% FMCG TELECOM ANY OTHER

IT 10%

FMCG 14%

PHARMACEUTI CAL 20% PHARMACEUTICAL BANKING

From the above graph, we find that pharmaceutical 20% and steel 16% are the first choice among people in this age group followed by FMCG 14%. Auto 12%, banking sector 10%, telecom 8%, and IT 10% are the other alternative sectors. This shows that people in this age group start lowering risk in investment by moving funds to safe points.

2. DURATION OF HOLDING COMPANYS STOCKS:


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TIME FRAME OF COMPANY'S STOCKS HOLDING

Intra day 15% One month 15% Few days/weeks 20%

Three months 30%

Six months or more 20%

Three months One month

Six months or more Intra day

Few days/weeks

The above graph shows that mort people in this age group prefer three months 30% and six months or more 20%, followed by few days and weeks 20%. 15% people prefer to one month and other 15% to intraday. This is because people in this age group are equally like return and risk. They are moderate risk taker.

3. RANKING OF INVESTMENT OBJECTIVES:

40

RANKING OF INVESTMENT OBJECTIVES

All the above 18%

Security 28%

Rate of return 18% Liquidity 12% Tax shelter 24%

Security

Tax shelter

Liquidity

Rate of return

All the above

The above graph shows that security 28% is top priority among people in this age group followed by tax shelter 24%. In this stage, their earnings are now balanced that is why they are giving near equal preference to all the objectives. That is why liquidity 18%, rate of return, and all the above options (both 18%) are not very too much.

4.

RANKING

OF

INLUENCING

FACTOR,

IN

INVESTMENT

DECISION:
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RANKING OF INFLU ENCING FACTOR, IN INVESTMENT DECISION Atteractive advertiseme nt 4% Own decision 25%

Financial expert 18%

Friends & Relatives 53% Own decision Financial expert Friends & Relatives Atteractive advertisement

The above graph shows that investment decision in this age group are mostly influenced by friends and relatives 53% followed by their own decision 25%. After that, financial expert 18% influence them, and they are very little 4% influenced by attractive advertisements.

5. INVESTMENT VS ALTERNATIVES:

42

INVESTMENT VS OTHER ALTERNATIVES


% OF RESPONDENTS 90 80 70 60 50 40 30 20 10 0
FD ds ce ce ds Bo n un ffi su ra n sta t Po st o ot An y he r es le

ut ua

lf

Re a

ALTERNATIVES

In the above graph we see, that people also invest in other alternatives. The most respondents prefer Insurance 80% and mutual funds 50%, followed by FMCG 45%. Other investment alternatives are real estates 30%, post office 20%, and any others 5%. This is because people in this age group also look towards risk.

In

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ANALYSIS OF AGE GROUP-III (50 ONWARDS):


The survey looks at the representative sample of 20 people in third age group.

1. INVESTMENT IN DIFFERENT SECTORS:


INVESTMENT IN DIFFERENT SECTORS

ANY OTHER 10% STEEL 10% BANKING 10% TELECOM 5% AUTO 15%

IT 10%

FMCG 15%

PHARMACEUTI CAL 25%

IT AUTO STEEL

FMCG TELECOM ANY OTHER

PHARMACEUTICAL BANKING

As we see, in above graph that most of all people in this age group prefer to invest in pharmaceutical 25%, followed by the auto 15% and FMCG sector 15%. And other sectors IT 10%, banking 10%, steel 10%, telecom 5%, and any other 10% are equally preferred except telecom.

2. DURATION OF HOLDING COMPANYS STOCKS:

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DURATION OF INVESTMENT
Few days/weeks 10% One month 10% Six months ao more 55% Three months 20%

Intraday 5%

Intraday Three months

Few days/weeks Six months ao more

One month

In the above graph we see that people in this age group mostly prefer to hold the companys stocks more then six months 55%, followed by three months 20%. And other prefers to hold for one month 10%, few days 10%, and intraday 5% only. This is because people in this age group want to earn stable income and do not take risk.

3. RANKING OF INVESTMENT OBJECTIVES:

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RANKING OF INVESTMENT OBJECTIVES


All the above 4% Liquidity 7% Rate of return 9% Security 51%

Tax shelter 29%

Security

Tax shelter

Rate of return

Liquidity

All the above

The above graph shows that security 51% is the top priority among people in this age group followed by tax shelter 29%, They are very less interested towards liquidity 4%, as they want fixed return with minimum risk as they are concentrating more on security so they do not expecting high rate of return i.e. 9%.

4. RANKING OF INFLUENCE FACTOR, IN INVESTMENT DECISION:


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RANKING OF INFLUENCING FACTOR Attractive advertisement 0%

Financial expert 20%

friends and Relatives 30%

Own decision 50%

Own decision Financial expert

friends and Relatives Attractive advertisement

The above graph shows that investment decision in this age group are made by investor themselves i.e. 50%, after that friends and relatives 30% come into the picture. After that financial expert 20% influence them, and they are not at all influenced by attractive advertisements.

5. INVESTMENT VS OTHER ALERNATIVES:


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INVEST M ENT VS OTHER ALT ERNAT IVES


% OF RESPONDENTS 80 70 60 50 40 30 20 10 0
ds Bo nd s an ce FD fic e te s es ta ua lf of In su r ot he An y un r

Re al

M ut

ALTERNATIVES

The above graph shows that most of all people of this age group also invest in other alternatives. Top priority in this group is mutual funds 75% followed by post office 50%. After that they prefer to real estates 25%, bonds 15%, insurance 10%, FD 5%, and any other 10%.This is due to low risk perception of the investors in this age.

ANALYSIS OF COMPANYS STOCKS: The survey looks at the


representative sample of 100 people in the NCR region. And the final results are given below.

Po st

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1. Investment vs. Sector:


SECTOR TI PHARMACEUTICAL AUTO TELECOM BANKING STEEL FMCG ANY OTHER NO OF RESPONDENT 13 17 11 9 10 12 14 14

INVESTMENT VS SECTORS 18 16 14 12 10 8 6 4 2 0 17 13 11 9 10 14 14 12 IT PHRAMACEUTICAL AUTO TELECOM BANKING STEEL FMCG ANY OTHER

NO OF RESPONDENT

From the above table it can be seen that Pharmaceutical sector (17%) has an upper edge investment followed by FMCG (14).

2. Reason for choosing the sector?


REASON MARKETING TRENT PROFITABLITY RECOMMENDED BY NDTV BRAND NAME OTHERS NO. OF RESPONDENT 21 37 18 16 8

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REASON FOR CHOOSING THE SECTOR


40 35 30 25 20 15 10 5 0 NO OF RESPONDENTS 8 21 18 16 RECOMMENDED BY NDTV BRAND NAME OTHERS 37 MARKETING TRENT PROFITABLITY

From the above table it is quite clear that mostly respondent choose a particular sector due to profitability (37%) and marketing trend (21).

3. What the most preferred period of investment?


TIME PERIOD INTRADAY FEW DAYS/WEEKS ONE MONTH THREE MONTHS SIX MONTHS & MORE NO. OF RESPONDENT 13 17 15 29 26

50

TIME PERIOD FOR INVESTMENT


30 25 20 15 10 5 0 NO.OF RESPONDENT 13 17 Intra day Few days/weeks One month Three months Six months or more 29 26

15

From the above table it quite clear that the mostly respondents interested their money for three months (29%) followed by six months or more (26).

4. What is your objective of investment in companys stocks?


OBJECTIVE RATE OF RETURN SECURITY TAX SHELTER LIQUIDITY ALL THE ABOVE NO. OF RESPONDENT 24 32 20 14 10

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OBJECTIVES OF THE INVESTMENT


35 30 25 20 15 10 5 0 NO.OF RESPONDENT 14 10 24 20 Rate of return Security Tax shelter Liquidity All the above 32

From the above table we can conclude that mostly people consider about security (32%) at the time of investment followed by rate of return (24%).

5. Who influence your investment decision the most?


INFLUENCING FACTOR FINANCIAL EXPERT FRIENDS AND RELATIVES ATTRATIVE ADVERTISEMENT YOUR OWN DECISION NO.OF RESPONDENT 19 42 4 35

52

INFLUENCING FACTORS OF YOUR INVESTMENT


45 40 35 30 25 20 15 10 5 0 NO.OF RESPONDENT 4 19 42 35 Financial expert Friends Attractive advertisement Your own decision

From the above table it is clear that mostly retail investors influenced by their friends (42) followed by their own decision (35%).

6. Awareness towards investment in companys stocks through:


MEDIUM TV & NEWS PAPER MAGAZINES FRIENDS & RELATIVES FINANCIAL ADVISER OTHER NO. OF RESPONDENT 21 22 18 27 12

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CAME TO KNOW ABOUT INVESTMENT IN COMPANY'S STOCKS


30 25 20 15 10 5 0 NO.OF RESPONDENT 21 22 18 12 Magazines Friends and relatives Financial adviser Other 27

TV & News paper

From the above table and graph it can be seen that Financial Adviser (27%) has an upper edge awareness of the companys stocks followed by magazines (22%).

7. Opinion about this sentence, Investment in companys stocks is a food source of income generation.
OPTION AGREE STRONGLY AGREE DISAGREE NO OPIONON NO.OF RESPONDENT 63 12 21 2

54

OPENOIN ABOUT ABOVE SENTENCE


70 60 50 40 30 20 10 0 NO.OF RESPONDENT 12 2 21 Agree Strongly agree Dis agree No openion 63

Above table shows that most of retail investors are agree (63%) with the above given sentence only 21% investors disagree with it.

8. Which is your deciding factor out of these two returns and risk?
FACTOR RETURN RISK NO.OF RESPONDENT 56 44

55

RAN G OF DECIDIN FACTOR KIN G


56 60 50 40 30 20 10 0 NO.OF RESPONDENT 44

RETURN RISK

Mostly retail investors prefer to take risk if there is expected return in a companys stocks.

9. Do you also invest in other alternatives besides companys stocks?


OPTION YES NO NO. OF RESPONDENT 92 8

56

INVESTMENT IN OTHER ALTERNATIVES BESIDES COMPANY'S STOCKS


92 100 80 60 40 20 0 NO.OF RESPONDENT 8 YES NO

From the above table it can be seen that most of retail investors have portfolio in other investment alternatives (92%).

10. Investment vs. alternatives (based on multi-choice options):


ALTERNATIVE FD MUTUAL FUNDS REAL ESTATES BONDS NO.OF RESPONDENT 25 63 27 20 57

POST OFFICE INSURANCE ANY OTHER

35 45 14

INVESTMENT IN OTHER ALTERNATIVES

% OF RESPONDE NT

70 60 50 40 30 20 10 0

FD Mutual funds Real estates Bonds Post office Insurance Any other NO. OF RESPONDENT

From the above table it is clear that mostly retail investors also prefer to invest in Mutual Funds (63%) followed by Insurance (45%).

FINDINGS
1. People who invest in the companys stocks mostly are employees and of age group 30-50. 2. People who invest in stock market most of all have income range more than 1.5 lakhs. 3. Investors prefer to buy 5-10 stocks of a company.

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4. Mostly people prefer to invest for three months or more. 5. Rate of return and security are the most objectives of the investors who invest in a companys stocks. 6. Friends and own decision are influence most of all retail investors. 7. People came to know about investment in companys stocks mostly through TV & News paper, Friends & Relatives, and Magazines. 8. Mostly retail investors assume that, Investment in companys stocks is a good source of income generation. 9. Mostly investors also have portfolios in different alternatives besides companys stocks. 10. People are ready to take risk there is a sufficient return on the investment.

RECOMMENDATIONS
I have surveyed the investment behavior of people in NCR. I interact with them and try to analyze their behavior and the various factors on which the final investment decision depends. Because of improper knowledge, improper guidance and lack of awareness they

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dont get the proper return that can fulfill their opportunity cost, time value of money and inflation requirement. According to market observation, it is time now to translate the knowledge, insight, and perspectives gained so far into specific guidelines for investment decision making. Project leads to approach the recommendation for wrathful investment in two ways: 1. Organizational concern 2. Investors concern Recommendation to Organizational concern: The organizations should only work with defined goals and cannot take up larger objectives that are not well defined. A fund manager should closely follow the objectives stated in the offer document, because financial plans of investors are chosen uses these objectives. The basic of genuine investment advice should be financial planning to suit the investors situation. The organizations should have ability to convert life cycle of investors into need and preference based financial products. Organizations should recommend the appropriate asset allocation and specific investments. Transparency should be maintained regarding investment of funds.

Recommendations to Investor concern:


The investor should rank their priorities for investment. The investor should examine different aspects of the companys stocks.

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They should clear about their risk taking capacity. In the initial stage of their career, they should not take high risk in enthusiasm. They should conceder their opportunity cost and time value of money while deciding their expected return. They should invest in more units when the market is low; less when the markets are high so that average costs of purchase reduces. They should utilize upturn and downturn of the market by hedging techniques (derivatives). They should periodically review and revise their portfolios.

BIBLIOGRAPHY

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Websites:

www.wikipedia.org/wiki/india www.liabrary.ac

Books: Chandra P- Investment Analysis and Portfolio Management Pandian P- Security Analysis and Portfolio Management

APPENDICES

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(QUSTIONNAIRE FOR RETAIL INVESTMENT) NAME Ph. No E-mail I.D 1. Income range (Annually) a) Up to 1.5 lakhs c) 3.0-5.0 lakhs 2. Do you invest in stock market? Yes No 3. How many companys stocks do you have? 4. (a) Which sectors stocks do you have? i) IT sector b) Pharmaceutical c) Auto sector d) Telecom sector e) Banking sector f) Steel sector g) FMCG Company g) Any other (plz specify) (b) Reason for choosing the sector? 5. For what duration would you like to hold stocks? a) Intra-day b) Few days/weeks c) One month d) Three months e) Six months or more 6. Will you sell stocks in near future? If yes, important reason for the same (plz specify). 7. Objective/s of your investment is/are a) Rate of return b) Security c) Tax shelter d) Liquidity 8. Who influence your investment decision the most? a) Financial expert b) Friends c) Attractive advertisement d) Your own decision b) 1.5-3.0 lakhs d) >5.0 lakhs AGE OCCUPATION

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9. Awareness towards investment in companys stocks through a) T.V. & News papers b) Magazines c) Friends and relatives d) Financial adviser e) Others 10. What is your opinion about this sentence? Investment in companys stocks is a good source of income generation. a) Agree b) Strongly agree c) Disagree d) No opinion 11. Which factor affects your investment decision the most? a) Return b) Risk c) Other (plz specify) 12. Do you also invest in other alternatives? Yes No 13. If yes plz specify a) FD c) Real estates e) Post office g) Any other 14. Any other information or suggestion b) Mutual fund d) Bonds f) Insurance

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