IJRMBSS I eISSN: 2321-9874 | ISSN: 2319-6998 I Vol. 2 I Issue 1 I Jan.

2014
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Indian Journal of Research in Management, Business and Social Sciences (IJRMBSS) 1


Investors Preference towards Stock Market and
Other Investment Options
Prof. Kartikey Koti
Abstract: - A financial market is market in which people and
entities can trade financial securities, commodities, and
other fungible items of value at low transaction costs and at
prices that reflect supply and demand. Securities include
stocks and bonds, and commodities include precious metals
or agricultural goods. There are both general markets (where
many commodities are traded) and specialized markets
(where only one commodity is traded). Markets work by
placing many interested buyers and sellers, including
households, firms, and government agencies, in one "place",
thus making it easier for them to find each other. An
economy which relies primarily on interactions between
buyers and sellers to allocate resources is known as a market
economy in contrast either to a command economy or to
a non-market economy such as a gift economy. The Study
analysis the investors behavior to different investment
option, I t also troughs light on investors perception towards
stock market.
Keywords: Equity Market, I nvestment options, Stock Market
and Stock Brokers, I nvestment, Return, Risk, Earning, Assets
I. INTRODUCTION
The main function of the stock market is to enable trade
in the shares of public companies, which in turn reflect
the performance of the companies whose shares are
traded in the stock market. Stock markets are also a vital
part of an economy or the economic system of a country.
Today most economies around the world are judged by
the performance of their stock markets. The stock
markets serve a vital purpose in the growth and
development of a company that wants to expand. Such
companies with expansion plans and new projects are in
need of funding and the stock market serves as the best
platform from
which a company can sell itself to the discerning public
on the basis of merit among other things. To trade in the
stock market a company has to be absolutely transparent
about its vital fundamentals such as revenues, income,
assets, liabilities, infrastructure, etc. as this allows the
investing public to make a fair assessment of the said
companys market worth.
With over 20 million shareholders, India has the third
largest investor base in the world after the USA and
Japan. Over 9,000 companies are listed on the stock
exchanges, which are serviced by approximately 7,500
stockbrokers. The Indian capital market is significant in
terms of the degree of development, volume of trading
and its tremendous growth potential.
Securities Exchange Board of India (SEBI)
SEBI was set up as an autonomous regulatory authority
by the Government of India in 1988 To protect the
interest of the investors in the securities and to promote
the development of and to regulate the securities market
and the matters connected therewith or incidental
thereto. It is empowered by two acts namely The SEBI
Act, 1992 and The Securities Contract (Regulation) Act,
1956 to perform the function of protecting investors
rights and regulating the capital markets.
II. OBJECTIVES
1. To understand the investors preference towards
investment.
2. Investors awareness in stock market and their
philosophy
III. REVIEW OF LITERATURE
S. Kathi Brown This survey of 50 to 70 year old
investors was conducted in order to examine perceptions
of selected securities industry practices, the stock
market, and financial services professionals. The survey
illustrates that most investors feel that the cost-related
issues of price per share and fees are more important in
stock transactions than are other issues such as speed of
transaction. Findings also reveal widespread concerns
among investors related to dishonesty in the securities
industry, lack of ethics, lack of accountability, and lack
of consumer protection, suggesting that much remains to
be done to restore investor confidence.
Manoj Kumar Investment is the employment of funds
on assets with the aim of earning income or capital
appreciation. In the past, investment avenues were
limited to real estates, schemes of the post office and
banks. At present, a wide variety of investment avenues
are open to the investors to suit their needs and nature.
The required level of return and the risk tolerance level
decide the choice of the investor. It is necessary to know
that investor prefer which particular investment
instrument and why? The main purpose of this research
paper is to find Investors preference for various
investment alternatives particularly shares and mutual
funds.
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Indian Journal of Research in Management, Business and Social Sciences (IJRMBSS) 2


Dr. K. RAVICHANDRAN In the current scenario,
investing in stock markets is a major challenge ever for
professionals. Derivatives acts as a major tool for
reducing the risk involved in investing in stock markets
for getting the best results out of it. The investors should
be aware of the various hedging and speculation
strategies, which can be used for reducing their risk.
Awareness about the various uses of derivatives can help
investors to reduce risk and increase profits. Though the
stock market is subjected to high risk, by using
derivatives the loss can be minimized to an extent.
Lilyana Mikova, Johan Olofsson we believe our
analysis shows that investors in segment one clearly
prefer simpler securities over more complex ones, all
else equal, while investors in segment two only take into
consideration return. We believe this could be the basis
for a more extensive survey that sheds additional light on
investor preferences and perceptions about complexity.
Furthermore, our paper demonstrates that the Discrete
Choice Experiment methodology can be successfully
applied to a number of fields outside the realm of
marketing.
Nikola Tarashev, Kostas Tsatsaronis, Dimitrios
Karampato This special feature compares data that can
be extracted from option and cash markets in order to
derive time series of risk aversion indicators. An
encouraging feature of the estimation results is that these
indicators co-move closely across market segments.
Furthermore, we find evidence that financial market
dynamics tend to change systematically with the level of
investors effective risk aversion. In particular,
heightened risk aversion is associated with lower returns
and higher volatility, especially for equity markets, and
weaker co-movement of asset classes. Our findings thus
have a bearing on the interpretation of signals sent by
financial markets. Incorporating changes in risk attitudes
in such an interpretation adds information relevant for
understanding the functioning of financial markets.
Li mi t at i ons
Due to limited time frame, from the entire Hubli
only 100 respondents were considered for the
survey.
The period for the research was not enough to
conduct the study in depth.
IV. RESEARCH METHODOLOGY
Primary data: Interaction with Branch Manager, Survey
with Questionnaire. Secondary data: Different
companys websites, related mizzens, Journals, Experts
views and other related websites.
Selection of sample: Investors who have invested their
funds in various Investment Avenue. A sample of 100
investors were interviewed through questionnaire
Conceptual frame work: Statistical tools, MS Excel.
Scope for Further Research: Due to time constrain and
financial restriction only Hubli District is taken into
consideration. The study can be widening to the state as
well as the Indian country, so that the inference drawn
can be more accurate.
V. ANALYSIS AND INTERPRETATIONS

1. Most of the investors are between the age group of
20 to 40 as we find there are about 86% of investors
who are between that age group. This implies that
most of the investors are youngsters and middle
aged who are between the age groups of 20 to 40.
2. Most of the investors fall into the categories of
salaried and business people as we find about 35%
and 26% respectively. This implies that salaried and
business persons look for better returns in less time
and hence go for the investments in different
avenues.
3. Most of the people would like to save their earnings
keeping health and home purchase as their primary
goals of investment as there are about 46% investors
who prefer those objectives. This implies that most
of the investors have other plans of arrangements for
other goals like education and marriage as there just
7% and 12% investors prefer these objectives. 35%
of people have other objective.
Table 1: Savings Objectives
Frequency Percent Cumulative
Percent
Education 7 7.0 7.0
Marriage 12 12.0 19.0
Home Purchase 23 23.0 42.0
Health 23 23.0 65.0
Others 35 35.0 100.0
Total 100 100.0
Source: Sample Survey
4. 55% investors income is less than 200000 pa, 32%
investors income between 250001 to 300000 and
16% investors income between 300001 to 400000
pa. and 2% of people have above 400000 .The
survey has shown that most of the people income
less than 200,000 pa. it influenced the investment
pattern of people.
5. 39% investors saving level is below 25000pa, 32%
investors saving level between 25001 to 75000 and
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Indian Journal of Research in Management, Business and Social Sciences (IJRMBSS) 3


26% investors saving between 750001 to 200000 pa.
and 3% of people have between 200001 to 400000.
The survey has shown that most of the people
saving below 25000 pa and 25000-75000.
Table 2: Annual saving level per annum
Savings Level Respondents Percentage
less than 25000 39 39%
25001-75000 32 32%
75001-200000 26 26%
200000-400000 3 3%
400001 above 0 0%
Total 100 100%
Source: Sample Survey
6. Investors prefer bank deposits, stock market, other
(real estate and insurance etc) and gold and silver
with 29%, 23%, 23% and 14% respectively in
descending order. It implies that there is a positive
attitude towards stock market investment. And also
they prefer more other option.
7. Safety and returns are the major criteria of investors
for considering an investment as they are with 37%
and 30% respectively. It also implies that very few
people just about 13% think risk as a major
consideration.
8. Investors consider family and friends (26%) to be
their effective guide for receiving investment
advices. News channels (16%), internet (15%) and
advisors (15%) stand in the place of next preferred
effective advisors. Very few seek investment
advices from certified market professions (10%),
newspapers (8%), books (7%) and magazines (1%).
9. 62% of the investors revealed their willingness to
invest into the stock market and 38% of them non-
willingness. This implies that implies that quite a
good number of people are aware about stock
market.

10. There are quite a good number of investors in the
stock market, yet their percentage of investment in
stock market is very less. That is 56% of investors
would like to invest less than 15% of their
investment in stock market and 34% of investors
like to invest between 15% to 30% of their
investment and remaining 10% of them would like
to invest below 30% to 50% of their investment in
stock market. Nobody interested in more than 50%.
11. Most of the stock market investors of this Hubli
region know more about equity market than any
other options in stock market. That is about 48% of
stock market investors would like to invest only in
equities.
Graph 1: Investment Option of Stock Holder

Source: Sample Survey
12. Many investors who dont like to invest in stock
market believe risk (55%) to be the major cause for
their non-investment in stock market. Few others
believe lack of safety (24%) and lack of knowledge
(18%) to be the other reasons for not considering
stock market for their investments.
13. 45% of the investors would like to invest in stock
market in the future. This shows a big number of
interested investors who have not been covered by
the stock market.
14. Large percentages of investors believe them to be
beginners and moderate in the stock market with
38% and 26% respectively. Only a few stock market
investors consider them to be knowledgeable and
experienced with 23% and 13% respectively.
15. It was also found that different investors react in
different ways to market fluctuations. Most of the
respondents think that when stock market will be
down they need to wait for market correction and
sell their stock when market goes up. Very few
think that they need to withdraw money when
market starts falling before they incur still more
loss.
16. In salaried group people have more innovative
investment like any new policy introduced by
government or any financial companies scheme etc.
In this group people had stock market experience so
some people are lost money some are earned.

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Indian Journal of Research in Management, Business and Social Sciences (IJRMBSS) 4


Table 3: Investment through Broking Agency
Savings Level Respondents Percentage
less than 25000 39 39%
25001-75000 32 32%
75001-200000 26 26%
200000-400000 3 3%
400001 above 0 0%
Total 100 100%
Source: Sample Survey
17. In Profession group people have more idea about
different investment option and returns on that. most
of the professionals they prefer more on real estate,
equity , commodity and some people are aware of
bonds , NSC POSS etc Most of the doctors are
prefer insurance and real estate. For secure and high
returns. Some lawyers prefer on BD and commodity
and real estate. In retired group people prefer more
in risk less investment and they invest in the
monthly basis returns.
18. House wives are much interested in buying gold and
house some womens are interested in insurance in
this category I found more below PUC education
level.
19. The most popular or aware of company is karvey
and Angel broking in Hubli area and next place is to
BPL and share khan, India bulls etc
VI. SUGGESTIONS
1. As there are more number of respondents investing
in bank deposits and real estate they can be
influenced and converted into stock market
investors by creating awareness and knowledge
about various products of stock market.
2. Though there are quite a good number of investors
in the stock market, yet their percentage of
investment in stock market is very less. These
investors can be made to invest more money by
giving them more knowledge about high net worth
investors (HNI).
3. As most of the respondents want to invest their
funds only into equity, the broking firm needs to
create awareness about other various products of
stock market which will help the investors to reduce
their risk and get better returns.
4. It was found that 45% of the investors out of 38% of
investors who have not invested into stock market
would like to invest in stock market in the future.
This shows a big number of interested investors who
have not been covered by the stock market. These
customers need to be tapped and made aware of
benefits they will get from stock market.
5. As per my survey, BPL has got word of mouth
which can be utilized to attract more new clients
over their competitors. BPL should expand its
business by setting up of new branches in various
locations to acquire more investors through better
service.
6. Most people are unaware of the mutual fund, bond,
NSC any new scheme of govt in Hubli city. So
these are better business opportunity to exist and
new comers.
7. Investor should follow the regular price movements
of stocks, and should be regularly updated of stock
market that time we can make a reducing the loss.
8. Investor should also follow the source of
investments such as business channels and business
papers for keeping updated himself about stock
market and also in any investment.
9. Investors should not concentrate only on real estate,
bank deposits, and gold. In economy we have lot
different options like NSC, mutual funds, insurance
policies, bonds, etc and also these are very low risk
options.
10. Every investor should keep diversifications in their
investment. For avoiding the more losses.
11. While their investing he should know about in and
out of that investment.
VII. CONCLUSION
Salaried and business persons look for better returns
in less time and hence go for the investments in
different avenues.
Although there are quite a good number of
investors in the stock market, yet their percentage of
investment in stock market is very less.
Most of the people would like to save their earnings
keeping future life(health) and home purchase as
their primary goals of investment. Investors prefer
investment in bank deposits, real estate to
investment in stock market. Investors consider
internet, news channel and papers, family and
friends to be their effective investment source. Most
of the stock market investors of this Hubli region
know more about equity market than any other
options in stock market Many investors who dont
like to invest in stock market believe risk to be the
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Indian Journal of Research in Management, Business and Social Sciences (IJRMBSS) 5


major cause for their non-investment in stock
market. Investment pattern depend on the education
level, income and savings level.
VIII. REFERENCES
[1] Investor Perceptions and Preferences Toward
Selected Stock Market Conditions and Practices:
Data Collected by Knowledge Networks by S.
Kathi Brown
[2] A Study of Customers Preference towards
Investment in Equity Shares and Mutual Funds,
Manoj Kumar International , Journal of Education
and Psychological Research.
[3] A study on Investors Preferences towards various
investment avenues in Capital Market with special
reference to Derivatives. Dr. K.
RAVICHANDRAN, Journal of Contemporary
Research in Management.
[4] Investors attitude towards risk: what can we learn
from options Nikola Tarashev, Kostas Tsatsaronis,
Dimitrios Karampato, BIS Quarterly Review, June
2003.
[5] Bhatia B.S.& Batra G.S., Management of Financial
Services, NewDelhi, Deep & Deep Publications,
1997.
[6] Bhatnagar Vinod K &Srivastava Shiv K,
Investment Behaviour of Businessmen-A Study
with Special reference to Gwalior,Journal of
Banking,Information Technology and management
Jaipur vol.9 No.2, July-december 2012 p 6.
[7] Bhattacharyya D.K. Research Methodology New
Delhi Excel Books 2006 p 60-65
[8] Globe Ronald C., Investment and Financial
Planning:The Complete Picture, Virginia Reston
Publishing Company, 1983
______________________
Author profile
Prof. Kartikey koti
Asst Professor Department of M.com,
JSS College, Dharwad