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

2014
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Investors Preference towards Stock Market and


Other Investment Options
Prof. Kartikey Koti
Abstract: - A financial market is market in which people and terms of the degree of development, volume of trading
entities can trade financial securities, commodities, and and its tremendous growth potential.
other fungible items of value at low transaction costs and at
prices that reflect supply and demand. Securities include Securities Exchange Board of India (SEBI)
stocks and bonds, and commodities include precious metals SEBI was set up as an autonomous regulatory authority
or agricultural goods. There are both general markets (where by the Government of India in 1988 “To protect the
many commodities are traded) and specialized markets interest of the investors in the securities and to promote
(where only one commodity is traded). Markets work by the development of and to regulate the securities market
placing many interested buyers and sellers, including and the matters connected therewith or incidental
households, firms, and government agencies, in one "place",
thus making it easier for them to find each other. An
thereto”. It is empowered by two acts namely „The SEBI
economy which relies primarily on interactions between Act, 1992 and The Securities Contract (Regulation) Act,
buyers and sellers to allocate resources is known as a market 1956 to perform the function of protecting investors‟
economy in contrast either to a command economy or to rights and regulating the capital markets.
a non-market economy such as a gift economy. The Study II. OBJECTIVES
analysis the investor’s behavior to different investment
option, It also troughs light on investors perception towards 1. To understand the investors preference towards
stock market. investment.
Keywords: Equity Market, Investment options, Stock Market 2. Investor‟s awareness in stock market and their
and Stock Brokers, Investment, Return, Risk, Earning, Assets philosophy
I. INTRODUCTION III. REVIEW OF LITERATURE
The main function of the stock market is to enable trade S. Kathi Brown This survey of 50 to 70 year old
in the shares of public companies, which in turn reflect investors was conducted in order to examine perceptions
the performance of the companies whose shares are of selected securities industry practices, the stock
traded in the stock market. Stock markets are also a vital market, and financial services professionals. The survey
part of an economy or the economic system of a country. illustrates that most investors feel that the cost-related
Today most economies around the world are judged by issues of price per share and fees are more important in
the performance of their stock markets. The stock stock transactions than are other issues such as speed of
markets serve a vital purpose in the growth and transaction. Findings also reveal widespread concerns
development of a company that wants to expand. Such among investors related to dishonesty in the securities
companies with expansion plans and new projects are in industry, lack of ethics, lack of accountability, and lack
need of funding and the stock market serves as the best of consumer protection, suggesting that much remains to
platform from be done to restore investor confidence.
which a company can „sell‟ itself to the discerning public Manoj Kumar Investment is the employment of funds
on the basis of merit among other things. To trade in the on assets with the aim of earning income or capital
stock market a company has to be absolutely transparent appreciation. In the past, investment avenues were
about its vital fundamentals such as revenues, income, limited to real estates, schemes of the post office and
assets, liabilities, infrastructure, etc. as this allows the banks. At present, a wide variety of investment avenues
investing public to make a fair assessment of the said are open to the investors to suit their needs and nature.
company‟s market worth. The required level of return and the risk tolerance level
decide the choice of the investor. It is necessary to know
With over 20 million shareholders, India has the third
that investor prefer which particular investment
largest investor base in the world after the USA and
instrument and why? The main purpose of this research
Japan. Over 9,000 companies are listed on the stock
paper is to find Investors‟ preference for various
exchanges, which are serviced by approximately 7,500
investment alternatives particularly shares and mutual
stockbrokers. The Indian capital market is significant in
funds.
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Indian Journal of Research in Management, Business and Social Sciences (IJRMBSS) 1
IJRMBSS I eISSN: 2321-9874 | ISSN: 2319-6998 I Vol. 2 I Issue 1 I Jan. 2014
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Dr. K. RAVICHANDRAN In the current scenario, Selection of sample: Investors who have invested their
investing in stock markets is a major challenge ever for funds in various Investment Avenue. A sample of 100
professionals. Derivatives acts as a major tool for investors were interviewed through questionnaire
reducing the risk involved in investing in stock markets Conceptual frame work: Statistical tools, MS Excel.
for getting the best results out of it. The investors should
Scope for Further Research: Due to time constrain and
be aware of the various hedging and speculation
financial restriction only Hubli District is taken into
strategies, which can be used for reducing their risk.
consideration. The study can be widening to the state as
Awareness about the various uses of derivatives can help
well as the Indian country, so that the inference drawn
investors to reduce risk and increase profits. Though the
can be more accurate.
stock market is subjected to high risk, by using
derivatives the loss can be minimized to an extent. V. ANALYSIS AND INTERPRETATIONS
Lilyana Mikova, Johan Olofsson we believe our 1. Most of the investors are between the age group of
analysis shows that investors in segment one clearly 20 to 40 as we find there are about 86% of investors
prefer simpler securities over more complex ones, all who are between that age group. This implies that
else equal, while investors in segment two only take into most of the investors are youngsters and middle
consideration return. We believe this could be the basis aged who are between the age groups of 20 to 40.
for a more extensive survey that sheds additional light on
investor preferences and perceptions about complexity. 2. Most of the investors fall into the categories of
Furthermore, our paper demonstrates that the Discrete salaried and business people as we find about 35%
Choice Experiment methodology can be successfully and 26% respectively. This implies that salaried and
applied to a number of fields outside the realm of business persons look for better returns in less time
marketing. and hence go for the investments in different
avenues.
Nikola Tarashev, Kostas Tsatsaronis, Dimitrios
Karampato This special feature compares data that can 3. Most of the people would like to save their earnings
be extracted from option and cash markets in order to keeping health and home purchase as their primary
derive time series of risk aversion indicators. An goals of investment as there are about 46% investors
encouraging feature of the estimation results is that these who prefer those objectives. This implies that most
indicators co-move closely across market segments. of the investors have other plans of arrangements for
Furthermore, we find evidence that financial market other goals like education and marriage as there just
dynamics tend to change systematically with the level of 7% and 12% investors prefer these objectives. 35%
investors‟ effective risk aversion. In particular, of people have other objective.
heightened risk aversion is associated with lower returns Table 1: Savings Objectives
and higher volatility, especially for equity markets, and Frequency Percent Cumulative
weaker co-movement of asset classes. Our findings thus Percent
have a bearing on the interpretation of signals sent by Education 7 7.0 7.0
financial markets. Incorporating changes in risk attitudes Marriage 12 12.0 19.0
in such an interpretation adds information relevant for Home Purchase 23 23.0 42.0
understanding the functioning of financial markets. Health 23 23.0 65.0
Li mi ta tio n s Others 35 35.0 100.0
 Due to limited time frame, from the entire Hubli Total 100 100.0
only 100 respondents were considered for the Source: Sample Survey
survey.
4. 55% investors income is less than 200000 pa, 32%
 The period for the research was not enough to investors income between 250001 to 300000 and
conduct the study in depth. 16% investors income between 300001 to 400000
IV. RESEARCH METHODOLOGY pa. and 2% of people have above 400000 .The
Primary data: Interaction with Branch Manager, Survey survey has shown that most of the people income
with Questionnaire. Secondary data: Different less than 200,000 pa. it influenced the investment
company‟s websites, related mizzens, Journals, Experts pattern of people.
views and other related websites. 5. 39% investors saving level is below 25000pa, 32%
investors saving level between 25001 to 75000 and
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IJRMBSS I eISSN: 2321-9874 | ISSN: 2319-6998 I Vol. 2 I Issue 1 I Jan. 2014
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26% investors saving between 750001 to 200000 pa. to invest below 30% to 50% of their investment in
and 3% of people have between 200001 to 400000. stock market. Nobody interested in more than 50%.
The survey has shown that most of the people 11. Most of the stock market investors of this Hubli
saving below 25000 pa and 25000-75000. region know more about equity market than any
Table 2: Annual saving level per annum other options in stock market. That is about 48% of
stock market investors would like to invest only in
Savings Level Respondents Percentage equities.
less than 25000 39 39% Graph 1: Investment Option of Stock Holder
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 Source: Sample Survey
descending order. It implies that there is a positive
12. Many investors who don‟t like to invest in stock
attitude towards stock market investment. And also
market believe risk (55%) to be the major cause for
they prefer more other option.
their non-investment in stock market. Few others
7. Safety and returns are the major criteria of investors believe lack of safety (24%) and lack of knowledge
for considering an investment as they are with 37% (18%) to be the other reasons for not considering
and 30% respectively. It also implies that very few stock market for their investments.
people just about 13% think risk as a major
13. 45% of the investors would like to invest in stock
consideration.
market in the future. This shows a big number of
8. Investors consider family and friends (26%) to be interested investors who have not been covered by
their effective guide for receiving investment the stock market.
advices. News channels (16%), internet (15%) and
14. Large percentages of investors believe them to be
advisors (15%) stand in the place of next preferred
beginners and moderate in the stock market with
effective advisors. Very few seek investment
38% and 26% respectively. Only a few stock market
advices from certified market professions (10%),
investors consider them to be knowledgeable and
newspapers (8%), books (7%) and magazines (1%).
experienced with 23% and 13% respectively.
9. 62% of the investors revealed their willingness to
15. It was also found that different investors react in
invest into the stock market and 38% of them non-
different ways to market fluctuations. Most of the
willingness. This implies that implies that quite a
respondents think that when stock market will be
good number of people are aware about stock
down they need to wait for market correction and
market.
sell their stock when market goes up. Very few
think that they need to withdraw money when
10. There are quite a good number of investors in the market starts falling before they incur still more
stock market, yet their percentage of investment in loss.
stock market is very less. That is 56% of investors 16. In salaried group people have more innovative
would like to invest less than 15% of their investment like any new policy introduced by
investment in stock market and 34% of investors government or any financial companies‟ scheme etc.
like to invest between 15% to 30% of their In this group people had stock market experience so
investment and remaining 10% of them would like some people are lost money some are earned.

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Indian Journal of Research in Management, Business and Social Sciences (IJRMBSS) 3
IJRMBSS I eISSN: 2321-9874 | ISSN: 2319-6998 I Vol. 2 I Issue 1 I Jan. 2014
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Table 3: Investment through Broking Agency would like to invest in stock market in the future.
This shows a big number of interested investors who
Savings Level Respondents Percentage have not been covered by the stock market. These
less than 25000 39 39% customers need to be tapped and made aware of
benefits they will get from stock market.
25001-75000 32 32%
5. As per my survey, BPL has got word of mouth
75001-200000 26 26% which can be utilized to attract more new clients
over their competitors. BPL should expand its
200000-400000 3 3% business by setting up of new branches in various
400001 above 0 0% locations to acquire more investors through better
service.
Total 100 100%
6. Most people are unaware of the mutual fund, bond,
Source: Sample Survey NSC any new scheme of govt in Hubli city. So
17. In Profession group people have more idea about these are better business opportunity to exist and
different investment option and returns on that. most new comers.
of the professionals they prefer more on real estate, 7. Investor should follow the regular price movements
equity , commodity and some people are aware of of stocks, and should be regularly updated of stock
bonds , NSC POSS etc Most of the doctors are market that time we can make a reducing the loss.
prefer insurance and real estate. For secure and high 8. Investor should also follow the source of
returns. Some lawyers prefer on BD and commodity investments such as business channels and business
and real estate. In retired group people prefer more papers for keeping updated himself about stock
in risk less investment and they invest in the market and also in any investment.
monthly basis returns.
9. Investors should not concentrate only on real estate,
18. House wives are much interested in buying gold and bank deposits, and gold. In economy we have lot
house some women‟s are interested in insurance in different options like NSC, mutual funds, insurance
this category I found more below PUC education policies, bonds, etc and also these are very low risk
level. options.
19. The most popular or aware of company is karvey 10. Every investor should keep diversifications in their
and Angel broking in Hubli area and next place is to investment. For avoiding the more losses.
BPL and share khan, India bulls etc
11. While their investing he should know about in and
VI. SUGGESTIONS out of that investment.
1. As there are more number of respondents investing VII. CONCLUSION
in bank deposits and real estate they can be
Salaried and business persons look for better returns
influenced and converted into stock market
in less time and hence go for the investments in
investors by creating awareness and knowledge
different avenues.
about various products of stock market.
Although there are quite a good number of
2. Though there are quite a good number of investors
investors in the stock market, yet their percentage of
in the stock market, yet their percentage of
investment in stock market is very less.
investment in stock market is very less. These
investors can be made to invest more money by Most of the people would like to save their earnings
giving them more knowledge about high net worth keeping future life(health) and home purchase as
investors (HNI). their primary goals of investment. Investors prefer
investment in bank deposits, real estate to
3. As most of the respondents want to invest their
investment in stock market. Investors consider
funds only into equity, the broking firm needs to
internet, news channel and papers, family and
create awareness about other various products of
friends to be their effective investment source. Most
stock market which will help the investors to reduce
of the stock market investors of this Hubli region
their risk and get better returns.
know more about equity market than any other
4. It was found that 45% of the investors out of 38% of options in stock market Many investors who don‟t
investors who have not invested into stock market 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) 4
IJRMBSS I eISSN: 2321-9874 | ISSN: 2319-6998 I Vol. 2 I Issue 1 I Jan. 2014
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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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