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IJRMBSS I eISSN: 2321-9874 | ISSN: 2319-6998 I Vol. 2 I Issue 1 I Jan. 2014 ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ 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 investor’s behavior to different investment

option, It also troughs light on investors perception towards

stock market.

Keywords: Equity Market, Investment options, Stock Market

and Stock Brokers, Investment, 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

company‟s 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. Investor‟s 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.



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.

Limitat ions

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

company‟s 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



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%


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


12. Many investors who don‟t 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.



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%


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 women‟s 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 don‟t

like to invest in stock market believe risk to be the



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

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