A COMPARATIVE STUDY ON

INVESTMENT PATTERN OF INVESTOR TOWARDS BANKING AND SHARE

MARKET WITH SPECIAL REFERENCE TO INDORE REGION
(INCOME RANGE 3 TO 10 LACS)

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1) INTRODUCTION

Investment is the employment of funds on assets with the aim of earning income or
capital appreciation. Investment means putting your money to work to earn more money
or simply speaking it is sacrificing of money today for future return.

Investment! One of the most successful way to make financial provisions for the future,
where most of the conditions are uncertain and unpredictable. With well planned
investment one can get the satisfaction of safety and surety in life. We are familiar with
investment from very early days of civilization. Initially the term saving was more
popular, and was considered as safest way of making money stable.

Investment may be said as keeping a sum of money aside from the present savings with
the view of earning returns on it. It is done on the cost of sacrifice of present consumption
of that part of money.

The dictionary meaning of investment is to commit money in order to earn financial

return or to make use of the money for future benefits or advantages. People commit
money to investments with an expectation to increase their future wealth by investing
money to spend in future years.

All investments have some risk, whether in stock, capital market, banking, financial
sector, real estate, bullion, gold etc. The degree of risk however varies on the basis of the
features of the assets, investments instrument, the mode of investment, time frame or the
issuer of the security etc.

Investment benefits both economy and the society. It is an outgrowth of economic

development and the maturation of modern capitalism. For the economy as a whole,
aggregate investment sanctioned in the current period is a major factor in determining
aggregate demand and, hence, the level of employment.

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Elements of Investment

 Reward
 Risk and Return
 Time

Why Should we Investment?

Financial reasons Other Reasons

1. To generate on your idle resources 1. Tax Savings

2. To earn returns. 2. Income
3. To protect and increase capital. 3. Ease of Withdrawal
4. To have money for important events.
5. Make a provision for future uncertainties.

Investing is not a game but a serious subject that can have a major impact on investor's
future wellbeing. Virtually everyone makes investments. Even if the individual does not
select specific assets such as stock, investments are still made through participation in
pension plan, and employee saving programme or through purchase of life insurance or a
home or by some other mode of investment like investing in Real Estate (Property) or in
Banks or in saving schemes of post offices. Each of this investment has common
characteristics such as potential return and the risk you must bear. The future is uncertain,
and you must determine how much risk you are willing to bear since higher return is
associated with accepting more risk. (Lopes, 1987) The individual should start by
specifying investment goals. Once these goals are established, the individual should be
aware of the mechanics of investing and the environment in which investment decisions
are made.

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Today the field of investment is even more dynamic than it was only a decade ago. World
event rapidly events that alter the values of specific assets the individual has so many
assets to choose from, and the amount of information available to the investors is
staggering and continually growing. The key to a successful financial plan is to keep
apart a larger amount of savings and invest it intelligently, by using a longer period of
time. The turnover rate in investments should exceed the inflation rate and cover
taxes as well as allow you to earn an amount that compensates the risks taken. Savings
accounts, money at low interest rates and market accounts do not contribute significantly
to future rate accumulation. While the highest rate come from stocks, bonds and other
types of investments in assets such as real estate. Nevertheless, these investments are not
totally safe from risks, so one should try to understand what kind of risks are related to
them before taking action. The lack of understanding as how stocks work makes the

Furthermore, inflation has served to increased awareness of the importance of financial

planning and wise investing. More Inflation is a worry for each and every individual. Due
to Inflation, value of your money in future will decrease. To Cope up this, Investors
wants to invest their money and earn certain rate of return which is more then rate of
Inflation. Having clear reasons or purposes for investing is critical to investing
successfully

TYPES OF INVESTORS:

 Individual investors: (including trusts on behalf of individuals, and umbrella

companies formed for two or more to pool investment funds)
 Collectors of art, antiques, and other things of value
 Angel investors, either individually or in groups
 Venture capital funds which serve as investment collectives on behalf
of individuals, companies, pension plans, insurance reserves, or other funds.

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  Investment bank
 Investment trusts and
 Real estate investment trusts

 Where one can invest?

Securities Market:

 Money Market
 Bond Market
 Mortgage Market
 Stock Market
 Foreign Exchange Market
 Derivatives Securities Market

Depository Institutions:

 Commercial Banks
Other Financial Institutions:

 Insurance Companies
 Securities firms and investment banks
 Mutual funds
 Finance companies
 Pension funds
Investment Decisions are majorly affected by following factors.

1. Amount available for investment

2. Available time period for investment.
3. Return Expected
4.Investors risk bearing Capacity.

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Investment in Banking

Banking in India originated in the last decades of the 18th century. Investment in banking
is most popular way of investment in India. Majority of the Indian invest their money in
banks. It is safest but not risk free mode of investment and provide us moderate return
from our investment. Maximum wealth of the Indians is deposited in banks due to the
less risk appetite of investor. They are not willing to take risk to invest in share market or
other financial instrument apart from banking.

Advantages:
 Safest Mode of Investment
 Easy liquidity.
 Fixed Return
 Less Risky
 No expertise is needed to investment in banks

Disadvantages:

 Lower rate of returns.

 Narrow range of options available to the Investors.

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Investment in Stock market
Stock markets refer to a market place where investors can buy and sell stocks. The price
at which each buying and selling transaction takes is determined by the market forces.

In earlier times, buyers and sellers used to assemble at stock exchanges to make a
transaction but now with the dawn of IT, most of the operations are done electronically
and the stock markets have become almost paperless. Now investor’s don’t have to gather
at the Exchanges, and can trade freely from their home or office over the phone or
through Internet.

People have earned fortunes from the stock markets, but there are people who have lost
everything due to incorrect timings or selection of fundamentally weak companies

 A stock market/share market is a public market (a loose network of economic

transactions not a physical facility or discrete entity) for the trading of company
stock and derivatives at an agreed price; these are securities listed on a stock
exchange as well as those only traded privately.
 A place where shares, stocks and bonds are bought and sold.
 A market in which shares of different companies are bought and sold. Technical
Analysis: Anticipating future price movements using historical prices. Trading
volume, open interest, and other trading data to study price patterns.

Advantages:
 High rate of returns.
 Wide range of options available to the Investors.
 Easy liquidity.
 Help of brokers is easily available.
 Speculations can be fruitful sometimes.

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Disadvantages:

 Lack of expertise can cause huge losses.

 Investors must have complete knowledge of the market.
 No protection against miss happenings.

REGULATORY BODY OF INDIAN BANKS AND SHARE MARKET

India has a financial system that is regulated by independent regulators in the sectors of
banking, insurance, capital markets and various service sectors. The Indian Financial
system is regulated by two governing agencies under the Ministry of Finance.

1. Reserve Bank of India

The RBI was set up in 1935 and is the central bank of India. It regulates the financial and
banking system. It formulates monetary policies and prescribes exchange control norms.
The current Governor of RBI is Mr. Duvvuri Subbarao.

2. The Securities Exchange Board of India (SEBI)

The Securities and Exchange Board of India (frequently abbreviated SEBI) is the
regulator for the securities market in India. It was formed officially by the Government of
India in 1992 with SEBI Act 1992 being passed by the Indian Parliament. Mr. Upendra
Kumar Sinha is the current chairmen of SEBI.

The capital markets division of the Department of Economic Affairs regulates capital
markets and securities transactions. The capital markets division has been entrusted with
the responsibility of assisting the Government in framing suitable policies for the orderly
growth and development of the securities markets with the SEBI, RBI and other agencies.
It is also responsible for the functioning of the Unit Trust of India (UTI) and Securities
and Exchange Board of India (SEBI).

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 Investment Alternatives
The problem of surplus gives rise to the question of where to invest in the past,
investment options were limited to real assets, banks and schemes of the post office. At
present a wide variety of investment avenues are open in the investors to suit their needs
and nature.

(A). Negotiable Securities

The negotiable securities are financial securities are transferable. The negotiable
securities may yield variable income of fixed income. Securities like equity share are
variable income securities. Bonds, debenture, Derivatives, Indra Vikas Patra, Kisan Vikas
Patras, Govt.Securities, and money market securities yield a fixed income.

1. Equity Share :
An equity investment generally refers to the buying and holding of shares
of stock on a stock market by individuals and firms in anticipation of income from
dividends and capital gains, as the value of the stock rises. Typically equity holders
receive voting rights, meaning that they can vote on candidates for the board of
directors as well as certain major transactions, and residual rights, meaning that they
share the company's profits, as well as recover some of the company's assets in the
event that it folds, although they generally have the lowest priority in recovering their
investment. It may also refer to the acquisition of equity (ownership) participation in a
private (unlisted) company or a startup company. When the investment is in infant
companies, it is referred to as venture capital investing and is generally regarded as a
higher risk than investment in listed going-concern situations.

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2. Preference Share :
Capital stock which provides a specific dividend that is paid before any dividends are paid to
common stock holders, and which takes precedence over common stock in the event of a
liquidation. Like common stock, preference shares represent partial ownership in a company,
although preferred stock shareholders do not enjoy any of the voting rights of common
stockholders. Also unlike common stock, preference shares pay a fixed dividend that does not
fluctuate, although the company does not have to pay this dividend if it lacks the financial
ability to do so. The main benefit to owning preference shares are that the investor has a
greater claim on the company's assets than common stockholders. Preferred shareholders
always receive their dividends first and, in the event the company goes bankrupt, preferred
shareholders are paid off before common stockholders. In general, there are four different
types of preferred stock: cumulative preferred stock, non-cumulative preferred stock,
participating preferred stock, and convertible preferred stock. also called preferred stock.
3. Debenture:
A debenture is a document that either creates a debt or acknowledges it, and it is a
debt without collateral. In corporate finance, the term is used for a medium- to long-
term debt instrument used by large companies to borrow money. In some countries the
term is used interchangeably with bond, loan stock or note. A debenture is thus like a
certificate of loan or a loan bond evidencing the fact that the company is liable to pay a
specified amount with interest and although the money raised by the debentures
becomes a part of the company's capital structure, it does not become share capital.
Senior debentures get paid before subordinate debentures, and there are varying rates
of risk and payoff for these categories.

Debentures are generally freely transferable by the debenture holder. Debenture

holders have no rights to vote in the company's general meetings of shareholders, but
they may have separate meetings or votes e.g. on changes to the rights attached to the
debentures. The interest paid to them is a charge against profit in the company's
financial statements.

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4. Bond:
A bond is an instrument of indebtedness of the bond issuer to the holders. It is a debt
security, under which the issuer owes the holders a debt and, depending on the terms
of the bond, is obliged to pay them interest (the coupon) and/or to repay the principal
at a later date, termed the maturity. Interest is usually payable at fixed intervals
(semiannual, annual, sometimes monthly). Very often the bond is negotiable, i.e. the
ownership of the instrument can be transferred in the secondary market.
Bonds and stocks are both securities, but the major difference between the two is that
(capital) stockholders have an equity stake in the company (i.e. they are owners),
whereas bondholders have a creditor stake in the company (i.e. they are lenders).
Another difference is that bonds usually have a defined term, or maturity, after which
the bond is redeemed, whereas stocks may be outstanding indefinitely.

5. Commercial Papers
In the global money market, commercial paper is an unsecured promissory note with a
fixed maturity of 1 to 271 days. Commercial paper is a money-market security issued
(sold) by large corporations to get money to meet short term debt obligations (for
example, payroll), and is only backed by an issuing bank or corporation's promise to
pay the face amount on the maturity date specified on the note. Since it is not backed
by collateral, only firms with excellent credit ratings from a recognized rating agency
will be able to sell their commercial paper at a reasonable price. Commercial paper is
usually sold at a discount from face value, and carries higher interest repayment rates
than bonds. Typically, the longer the maturity on a note, the higher the interest rate the
issuing institution must pay. Interest rates fluctuate with market conditions, but are
typically lower than banks' rates.

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 (B). Non Negotiable Securities

1. Bank Deposit : A deposit account is a savings account, current account, or other type
of bank account, at a banking institution that allows money to be deposited and
withdrawn by the account holder. These transactions are recorded on the bank's books,
and the resulting balance is recorded as a liability for the bank, and represent the amount
owed by the bank to the customer. Some banks charge a fee for this service, while others
may pay the customer interest on the funds deposited.

2. Post Office Deposits : Like the banks, post office also provide fixed deposit facility
and recurring deposit facility. It is one of the old and popular way of collect saving of
rural and semi urban people.

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LITERATURE REVIEW

The literature review includes the academic books, journals, internet access, magazines
etc. Various studies on An Study on Awareness of People on Indian Stock Market had
been conducted in Indian context. Depending on the various issues of investment, the
review has been discussed in brief as follows:

Grewal S.S and Navjot Grewall (1984) revealed some basic investment rules and rules
for selling shares. They warned the investors not to buy unlisted shares, as Stock
Exchanges do not permit trading in unlisted shares. Another rule that they specify is not
to buy inactive shares, i.e., shares in which transactions take place rarely. The main
reason why shares are inactive is because there are no buyers for them. They are mostly
shares of companies, which are not doing well. A third rule according to them is not to
buy shares in closely-held companies because these shares tend to be less active than
those of widely held ones since they have a fewer number of shareholders. They caution
not to hold the shares for a long period, expecting a high price, but to sell whenever one
earns a reasonable reward.

Jack Clark Francis (1986) revealed the importance of the rate of return in investments
and reviewed the possibility of default and bankruptcy risk. He opined that in an
uncertain world, investors cannot predict exactly what rate of return an investment will
yield. However he suggested that the investors can formulate a probability distribution of
the possible rates of return. He also opined that an investor who purchases corporate
securities must face the possibility of default and bankruptcy by the issuer. Financial
analysts can foresee bankruptcy. He disclosed some easily observable warnings of a
firm's failure, which could be noticed by the investors to avoid such a risk.

Preethi Singh (1986) disclosed the basic rules for selecting the company to invest in. She
opined that understanding and measuring return and risk is fundamental to the investment
process. According to her, most investors are 'risk averse'. To have a higher return the

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investor has to face greater risks. She concludes that risk is fundamental to the process of
investment. Every investor should have an understanding of the various pitfalls of
investments. The investor should carefully analyze the financial statements with special
reference to solvency, profitability, EPS, and efficiency of the company

Carter Randal (1992) offered to investors the underlying Principals of winning on the
stock market. He emphasized on long-term vision and a plan to reach the goals. He
advised the investors that to be successful, they should never be pessimists. He revealed
that though there has been a major economic crisis almost every year, it remains true that
patient investors have consistently made money in the equities market. He concluded that
investing in the stock market should be an un-emotional Endeavour and suggested that
investors should own a stock if they believe it would perform well.

Donald E Fischer and Ronald J. Jordan12 (1994) analyzed the relation between risk,
investor preferences and investor behavior. The risk return measures on portfolios are the
main determinants of an investor's attitude towards them. Most investors seek more
return for additional risk assumed. The conservative investor requires large increase in
return for assuming small increases in risk. The more aggressive investor will accept
smaller increases in return for large increases in risk. They concluded that the psychology
of the stock market is based on how investors form judgments about uncertain future
events and how they react to these judgments.

S. Rajagopal (1996) commented on risk management in relation to banks. He opined that

good risk management is good banking. A professional approach to Risk Management
will safeguard the interests of the banking institution in the long run. He described risk
identification as an art of combining intuition with formal information. And risk
measurement is the estimation of the size, probability and timing of a potential loss under
various scenarios.

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CRISIL Report on Risk Management (2000) stated that the loss potential from market
risk will increase in the absence of strong risk management tools. The banks which adopt
a pro-active approach to upgrading risk management skills which are currently
unsophisticated as compared to internationally best practices, would have a competitive
edge in future. The report commented that in the increasingly deregulated and
competitive environment, the risk management strategies of banks would hold the key to
differentiation in their credit worthiness.

Raghavan R.S. (2000) reviewed the need for a risk management system, which should
be a daily practice in banks. He opined that bank management should take upon in
serious terms, risk management systems, which should be a daily practice in their
operations. He is very much sure that the task is of very high magnitude, the commitment
to the exercise should be visible, failure may be suicidal as we are exposed to market
risks at international level, which is not under our control as it was in the insulated
economy till sometime back.

Shrotriya (2003) conducted a survey on investor preferences in which he depicted the

linkage of investment with the factor so considered while making investment. He says
“There are various factors and their linkage also. These factors help us how to ensure
safety, liquidity, capital appreciation and tax benefits along with returns.”

Financial Management by ‘I .M. Pandey’- The information regarding nature

of financial management, portfolio management, risk-return relationship, options,
derivatives and valuation of shares have been understood from this book.

Bhardwaj (2003) has stated the literature on globalization He found the pervasiveness of
the west’s perception of the world affect on Indian investors that affects the trends in
investor’s choice. They are hugely affected by the west’s views and so changes in Indian
trends occur.

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Ranganathan (2003) has stated the investor behavior from the marketing world and
financial economics has brought together to the surface an exciting area for study and
research: behavioral finance. The realization that this is a serious subject is, however,
barely dawning. Analysts seem to treat financial markets as an aggregate of statistical
observations, technical and fundamental analysis. A rich view of research waits this
sophisticated understanding of how financial markets are also affected by the ‘financial
behavior’ of investors. With the reforms of industrial policy, public sector, financial
sector and the many developments in the Indian money market and capital market,
mutual funds that has become an important portal for the small investors, is also
influenced by their financial behavior. Hence, this study has made an attempt to examine
the related aspects of the fund selection behavior of individual investors towards Mutual
funds, in the city of Mumbai. From the researchers and academicians point of view, such
a study will help in developing and expanding knowledge in this field.

From the above reviews it can be concluded that many researches had been conducted
before relating to the investment patterns and the few researchers studied the literature
only on the basis of returns. Analysts treated financial markets as an aggregate of
statistical observations, technical and fundamental analysis but no researches had been
conducted on Investment pattern of investor towards banking and share market. This gap
had been identified so that in this respect present study had been conducted and the
investors are guided towards the positive direction.

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RATIONALE OF STUDY:

The rational of the study is to analyze the various causes of lowered investment ratio
between banking and share market. In India only 2% (approx) people are invest in
share market and rest of the deposit their money in banks.

The project aimed at studying the investor preference towards banking and share market.
For this reason investor opinions were collected and common view was found out. This
was done with the help of questionnaire.

Questionnaire were filled by the investor of Indore city, I visited to Aanand Rathi Share
& Stock Broker Ltd. Indore.

The opinion of the gave us an overall view about the investors opinion towards the
investment in bank & share market.

The data is collected and carefully analyzed then appropriate statically tool is applied.

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OBJECTIVE OF STUDY:

 The main objective of the study is to find out the investment pattern of the
investors towards banking and Stock market.

 To determine what factors influence them while they choose a particular

investment, a particular sector and in which particular scheme they prefer to invest
and to find out whether they are satisfied with their investment decision or not.

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RESEARCH METHODOLOGY:

Research Methodology is a way to systematically solve the research problem. The

Research Methodology includes the various methods and techniques for conducting a
research. Research is an art of scientific investigation. The logic behind taking research
methodology into consideration is that one can have knowledge about the method and
procedure adopted for achievement of objective of the project.

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Research Design: The research will be Descriptive in nature. A population of investor
who invest in banks and share market will be considered for this study. I will try to
explore the investment behaviour of the Investor. Effort will be made to throw light on
most of the factors which have either indirect or direct effect on the behaviour of the
investment.

Since the type of study is descriptive in nature hence the research design will be guided
by following parameters.

1. The Research Problem

The research problem on hand is a to find out investor preference towards the
investment in banking and share market.

2. Procedures and techniques to used for gathering information

A proper and balanced combination of observation, questionnaire and interview of

sample population will be adapted by me for gathering information.

3. The population to be studied

In order to bring our some accurate conclusions, it is decided to contact the
investor

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 VARIABLE TO BE USED
Independent Variable : Income, Age, Education, Gender

Dependant Variable : Investment in Banking & Share Market

Moderate Variable : Economical Environment

Schematic diagram for the theoretical framework including a moderating variable

Income

Age

Education Investment in Banking & Share

Market

Gender
Dependant Variable

Independent Variable Economical

Environment

Moderate Variable

Sampling Design:

Sampling unit – The target population must be defined that has to be sampled. The
sampling unit of research included students and professionals residing in Indore city.

.Sample size – This refers to number of respondents to be selected from the Indore city to
constitute a sample. The sample size of 50 Investors will be taken.

Sampling Technique – In this project, Questionnaire Method will be used for the
collecting the data.

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Tools For Data Collection
In this research two types of data were used
1. Primary data
2. Secondary data

Primary data: Primary data is that data which has been collected especially for the
purpose of this newly taken research. This preliminary data for this research project has
been collected by the means of a questionnaire designed to determine those factor which
are designated by the various investors which were important to them in the decision
making process. These questionnaires were completed by this researcher within the
confines of Indore area. Various Professional/investors/businessmen/student were the
locus of this interviewing/questionnaire filling procedure.

Secondary Data : secondary information was obtained from trade journal, magazines,
Newspaper and from the internet.

Tools For Data Analysis:

Appropriate Statistical tools (like Percentage, charts, etc) have been used for data
analysis.

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 RESEARCH ANALYSIS AND INTERPRETATION OF RESULT
Demographic Profile of investors

Demographics No. of respondents Percentage of

respondents (%)

Age
Less than 20 years 0 0
20-40 20 40
Greater than 40 30 60
Total 50 Total 50
Qualification
Metric 0 0
Graduate 25 50
Post Graduate 25 50
Total 50 Total 100
Occupation
Service 19 38
Profession 6 12
Business 15 30
Student 10 20
Total 50 Total 100
Income (per month)
Less than Rs.20000 10 20
Rs.20000-40000 25 50
Greater than 40000 15 30
Total 50 Total 100

Analysis & Interpretation: It was found that the major population of investors was
greater than 40yrs and 60% was of 20-40 yrs. And 50% respondents were graduate and
50% were post graduate. 35% of respondents were doing service. And majority of
respondents i.e. 50% earn income between Rs.20000-40000 per month. It means majority
of investors was greater than 40 years having income in between Rs 20000-40000

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Q. 1 Result: To know whether respondents know about stock market.

Knowledge decision No. of Respondents Percentage of

Respondents (%)

Yes 50 100

No 0 0

Total 50 100

Yes no

Analysis & Interpretation:

From the survey it was found that 100% respondents know about the stock market and
0% who were unknown. Because share market consists of good instruments of money
investment.

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Q.2 Result: To know whether respondents invest.

Investment Decision No. of Respondents Percentage of

Respondents(%)
Yes 20 40
No 30 60
Total 50 100

Figure No. 4.2 To know whether respondents invest.

No. of Respondents

Yes
40%

No
60%

Analysis & Interpretation:

From the survey it was found that only 40% respondents invest in the stock market and
majorly 60% who were non-investors. Because of its feature of high risk.

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Q. 3 Result: The percentage of income that respondent invest annually in share market

Annual Income No. of Respondents Percentage of

Invested Respondents(%)
0 to 10% 40 14
10-20% 6 22
20-40% 4 40
More than 40% 0 24
Total 50 100

The percentage of income that respondent invest annually in share market

Chart Title

0 to 10%
40%
Total
50%

10-20%
More than 40% 20-40% 6%
0% 4%

Analysis & Interpretation:

From the above table & chart, it was found that 40% respondents invest 0-10% of their
annual income, 6% respondents invest 10-20% of their annual income, 4% respondents
invest 20-40% of their income and majority 40% respondents not invest in share market.

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Q. 4 Result: The percentage of income that respondent invest annually in bank

Annual Income No. of Respondents Percentage of

Invested Respondents(%)

0 to 10% 7 14
10-20% 6 12
20-40% 30 60
More than 40% 7 14
Total 50 100

The percentage of income that respondent invest annually in bank

Chart Title
0 to 10% 10-20% 20-40% More than 40% Total

7%
6%

50%
30%

7%

Analysis & Interpretation:

From the above table & chart, it was found that 7% respondents invest 0-10% of their
annual income, 6% respondents invest 10-20% of their annual income, 30% respondents
invest 20-40% of their income and 7% respondents invest more than 40% in share
market.

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Q. 5 Result: while investing in share market respondent are mostly concerned about

Investment Factors No. of Respondents Percentage of

Respondents

Safety of Principal 14 28

Risk 11 22

Return on investment 20 40

Tax benefits 5 10

Total 50 100

The Factors That Were Considered While Investing in share market

Chart Title
Safety of Principal Risk Return on investment Tax benefits Total

14%

11%
50%

20%

5%

Analysis & Interpretation:

From the survey it was found that the maximum respondents 20% considered return on
investment was most important factor, 14% respondents considered Safety of principal as
an important factor and 11% respondents considered risk as an important factor. It can be
stated that majority of investors were consider return as an important factor while
investing.

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Q. 6 Result: while investing in bank respondent are mostly concerned about

Investment Factors No. of Respondents Percentage of

Respondents

Liquidity 4 8

Safety of Principal 25 50

Return on investment 14 28

Tax benefits 7 14

Total 50 100

The Factors That Were Considered While Investing in bank

Chart Title
Liquidity Safety of Principal Return on investment Tax benefits

14% 8%

28%
50%

Analysis & Interpretation:

From the survey it was found that the maximum respondents 50% considered Safety of
principal was most important factor, 28% respondents considered return on investment as
an important factor and 14% respondents considered Tax benefit as an important factor. It
can be stated that majority of investors were consider safety of principal s an important
factor while investing in bank.

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Q. 7 Result: why respondent prefer bank for investment over share market

Investment Factors No. of Respondents Percentage of

Respondents
Low risk appetite 8 16
Convenient 16 32
Safety of principal 21 42
Tax benefits 5 10
Total 50 100

The Factors That Were Considered While Investing

Chart Title

Tax
benefits Low risk
10% appetite
16%

Safety of
principal Convenient
42% 32%

Analysis & Interpretation:

From the survey it was found that the maximum respondents 42% considered Safety of
principal was most important factor, 32% respondents considered convenient as an
important factor and 16% respondents considered Low risk appetites an important factor.
It can be stated that majority of investors were consider safety of principal s an important
factor while investing in bank.

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Q. 8 Result: why respondent don’t prefer share market for investment

Investment Factors No. of Respondents Percentage of

Respondents

High Risk 20 40

Not convenient 11 22

Brokerage & Fraud 10 20

Lack of awareness 9 18

Total 50 100

The Factors That Were Considered While Investing in share market

Chart Title
High Risk Not convenient Brokerage & Fraud Lack of awareness

18%

40%

20%

22%

Analysis & Interpretation:

From the survey it was found that the maximum respondents 40% considered high risk
was most important factor, 22% respondents considered not convenient as an important
factor and 20% respondents considered Brokerage & fraud an important factor. It can be
stated that majority of investors were consider High Risk an important factor while
investing in share market.

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Q.9 Result: To know whether respondents know the procedure to invest in share market

Investment Decision No. of Respondents Percentage of

Respondents (%)
Yes 20 40
No 30 60
Total 50 100

Figure No. 4.2 To know whether respondents invest.

No. of Respondents

Yes
40%

No
60%

Analysis & Interpretation:

From the survey it was found that only 40% respondents knows the procedure to invest in
the share market and majorly 60% don’t know the procedure due to lack of awareness

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Q. 10: Rate the satisfaction with the factors that was considered while investing

Particulars Highly Dissatisfied Neutral Satisfied Highly Summated

Dissatisfied (2) (3) (4) Satisfied Score
(1) (5)
Banks 10 6 14 30 40 384
Share 40 32 25 15 11 262
market

Range:
Max. Score=100*5=500 (Highly Satisfied)
Avg. Score=100*3=300 (Neutral)
Min. Score=100*1=100 (Highly Dissatisfied)

Analysis & Interpretation:

Most of the respondents have given the highest summated score to investment in bank.

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Q.11 Important Factors That Was Considered While Investing.

Particulars Highly Dissatisfied Neutral Satisfied Highly Summated

Dissatisfied Satisfied Core
Return on 0 0 4 30 66 462
Investment
Tax benefits 0 0 18 48 34 416

Capital 0 0 20 40 40 420
Appreciation

Liquidity 15 15 20 30 20 325

Range:
Max. Score=100*5=500 (Highly Satisfied)
Avg. Score=100*3=300 (Neutral)
Min. Score=100*1=100 (Highly Dissatisfied)

Analysis & Interpretation:

Most of the respondents have given the highest summated score to Return on investment.
And the second most important factor is Capital appreciation which influenced the
decision regarding investment. Other important factor is Tax benefit which has the 416
summated score.

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 FINDINGS

1. Most of the respondents have given the highest summated score to investment in
bank.
2. There is significant difference between the amount of investment in bank and share
market.
3. The awareness level about investment in share market is quite low in the Indore
City among.
4. Approximately 40% of respondent are aware that how to investment in share
market.
5. Approximately 40% of respondent are invest in share market.
6. Majority of respondent 60% don’t invest in share market due to the risk factor.
7. 40% respondents invest 0-10% of their annual income in share market.
8. 30% respondents invest 20-40% of their income in banks.
9. Maximum respondents 50% considered Safety of principal was most important
factor while investing in bank.
10. Maximum respondents 40% considered high risk was most important factor while
investing in share market.
11. Most of the respondents have given the highest summated score to Return on
investment. And the second most important factor is Capital appreciation which
influenced the decision regarding investment.

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News Paper Cutting of Economic Times

Page | 36
 SUGGESTIONS

 There is high potential In share market for respondent of Indore city, but this
market needs to be explored as respondent are still hesitated to invest their money
in Share market.

 In Indore investors have inadequate knowledge about Share market, So proper

Marketing of various schemes is required, broking firm should arranges more and
more seminars on how to invest in share market.

 Most of respondent are not interested in dealing in share market because they
don’t want to expand their services due to lack of time, so company should
provide them knowledge about single window services by which investor can get
all financial services from one place.

 Company should also provide knowledge about the growth rate and the expected
growth rate of investment in share market

 Most of people aware of life insurance, NSC and PPF for tax saving so, company
should market various tax saving schemes through share market and their benefits.

 The interface among the investors and the share market is the broker, so the broker
should have proper knowledge about investment schemes as well as market so that
they can help investors in their investment decisions. The quality of agents
performance and investors trust on them can be improved only if they are
permanent in nature.

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 Conclusion
 Financial Advisor should encourage to investor for investment in share market.

 Share Market has given a new direction to the flow of personal saving and enables
investors in semi urban areas to reap the benefits of the stock market investment.
Indian share market is playing a very important developmental role in allocation of
scares resources in the emerging economy.

 The awareness level of investor is low in advisors are interested in dealing in share
market

 Very less advisors know about services provided by their group.

 The Regulator of share market SEBI should make some efficient policy so that
investor can encourage for investment.

As a Financial advisor’s suggestion to customer for their preferences are follows:

1. Mutual Fund
2 .Tax Bond
3. Equity Shares

As per Advisor reason to Choose these option are as follows:

Because of the return of Mutual Fund (40%).

Tax Benefit (25%)

Safety (Mutual Fund are Safer than Share Market) because investing in a Share
by single person cause loss to him because of his ignorance in share market but in
mutual fund the pool of money of several people is invested in share market with
various research.

As per the advisor poll 60% people is interested in investing in mutual fund but
rest of people (40%) says no reasons are as follows:

High investment
High risk
Uncertain return.

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 54% people are not interested to deal in mutual fund securities because of high
risk & uncertain return environment.

Hence, the research study concludes that financial advisors play and paramour role
to encourage the investor to invest in share market so that Indian Economy can grow
rapidly.

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 QUESTIONNAIRE

Dear Respondent,

I am Prashant Chourasia an MBA student doing my research methodology project on this

topic “A COMPARATIVE STUDY ON INVESTMENT PATTERN OF INVESTOR
TOWARDS BANKING AND SHARE MARKET WITH SPECIAL REFERENCE TO INDORE
REGION (INCOME RANGE 3 TO 10 LACS)”

This questionnaire is a tool for collection of data regarding the project. This information
provided by you will be used for research purpose only and will not be used anywhere
else. You are required to fill up questionnaire.

PERSONAL PROFILE
(A) Name of Respondent :...............................................................

(B) Age:
Less than 20 years
20 – 40 years
Greater than 40 years

(C) Gender:
a) Male
b) Female

(D) Occupation:
a) Service
b) Profession
c) Business
d) Student

(E) Income: (per annum)

Less than Rs 3,00,000/-
Rs 300000 – Rs 5,00,000/-
Greater than Rs 5,00,000/-

(F) Qualification:
a) Metric
b) Graduate
c) Post Graduate

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Q1. Do you know about share market?
a) Yes b) No

Q2. Do you invest in share market?

a) Yes b) No

Q.3 What percentage of your annual income do you invest in share market?
a) 0 to 10% b) 10% to 20% c) 20% to 40 d) More than 40%

Q.4 What percentage of your annual income do you invest in Bank?

a) 0 to 10% b) 10% to 20% c) 20% to 40% d) More than 40%

Q5.While investing in share market you are mostly concerned about?

a) Safety of principal b) Risk c) Return on investment d) Tax benefits

Q6.While investing in Bank you are mostly concerned about?

a) Safety of principal b) Safety c) Return on investment d) Tax benefits

Q7. Why do you prefer bank for your investment

a) Low risk appetite b) convenient c) Safety of Principal d) Tax benefits

Q8. Why you do not prefer share market for your investment
a) High Risk b) not convenient c) Brokerage & Fraud
d) Lack of awareness

Q9. Did you know the procedure how to invest in stock market?
a) Yes b) No

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Q10. Rate the satisfaction with the return generated by your investment option?

Highly Satisfied Neutral Dissatisfied Highly

Satisfied Dissatisfied
(5) (4) (3) (2) (1)
a) Bank ______ ______ ______ _______ _______
b) Share market ______ ______ ______ _______ _______

Q11. Rate the satisfaction with the factors that was considered while investing?
Highly Satisfied Neutral Dissatisfied Highly
Satisfied Dissatisfied
(5) (4) (3) (2) (1)
a) ROI ______ ______ ______ _______ _______
b) Tax Benefits ______ ______ ______ _______ _______
c) Capital Appreciation ______ ______ ______ _______ _______
d) Liquidity ______ ______ ______ _______ _______

THANKS FOR YOUR CO-OPERATION….

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 APPENDIX-B
RESPONSE SHEET

Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8 Q9
R1 A A A C C B A A A
R2 A A A C C B A A A
R3 A A B C A B B A A
R4 A B A C D B A A B
R5 A B A C A D B B B
R6 A A C A D B B B A
R7 A B A C C D B A B
R8 A A A C C B C B A
R9 A A A B C D B A A
R10 A B A C C D C B B
R11 A B A A C D D C B
R12 A B A B B D C C B
R13 A A A C B B B D A
R14 A B A A C B C A B
R15 A B A C B B D D B
R16 A A A C A B C A A
R17 A A B C C B B C A
R18 A A C A B B A C A
R19 A A C A D B C B A
R20 A B A A A B B B B
R21 A B A C D B A A B
R22 A B A D B A A D B

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R23 A A B B A C A C A
R24 A B A C C B D B B
R25 A B A D C D B A B
R26 A A A B C A B A A
R27 A A A C C C B A A

R28 A A A D C B C A A
R29 A B A B C B C B B
R30 A B A C D C C C B
R31 A B A D B A B C B
R32 A B A D B C B C B
R33 A A B C C C B B A
R34 A A A D C C B B A
R35 A B A C C C C A B
R36 A B A C C C C A B
R37 A B A C A A D A B
R38 A B A C A C C A B
R39 A B A C A C C A B
R40 A B A C A C A A B
R41 A B A C A C B B B
R42 A B A C A C C C B
R43 A B A C A C C D B
R44 A B A C A B D D B
R45 A B A C B B C D B
R46 A A B C B B C D A
R47 A A B B A B C A A

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 R48 A B A C B B C C B
R49 A B A D B B C D B
R50 A A C A C B C D A

Where R1-R50 are the respondents and Q1-Q9 are the questions.

Page | 45
12) BIBLIOGRAPHY

Books-
 Research Methods for Business (Uma Sekaran)
Newspaper-
 The Economics Times
Websites-
 Search Engine for Key words: www.google.com,
 http://www.scribd.com/doc/54705439/Investment-Pattern-of-Investors-2#
 http://www.slideshare.net/hemanthcrpatna/a-study-on-nvestment-pattern-of-investors-on-
different-products-conducted-at-asit-c-mehta-investment-intermediates-ltd
 www.moneycotrol.com
 http://www.articlesbase.com

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