Consumer Behaviour in Equity Market
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ANALYSIS OF CONSUMER BEHAVIOUR IN EQUITY MARKET IN KARVY STOCK BROKING LIMITED
In partial fulfillment in award of PGDM two year full time programme.
Under the guidance of Faculty guide
Mr.Prateek Bhardwaj Submitted by Avneet Kaur
ACKNOWLEDGEMENT "Gratitude is not a thing of expression; it is more than a matter of feeling." There is always a sense of gratitude which one express towards others for their help and supervision in achieving the goals. This formal piece of acknowledgement is an attempt to express the feeling of gratitude towards people who helpful me in successfully completing of my training.
I would like to express my deep gratitude to Mr. Prateek Bhardwaj my training coordinator for their constant co-operation. He was always there with his competent guidance and valuable suggestion throughout the pursuance of this research project.
I would also express my gratitude to Mrs. Rubina Sajid my faculty guide for her help and co-operation, she gave us guidance throughout the pursuance of research project.
Last but not least I would also like to place of appreciation to all the respondents whose responses were of utmost importance for the project.
Above all no words can express my feelings to my parents, friends all those persons who supported me during my project. I am also thankful to all the respondents whose cooperation & support has helped me a lot in collecting necessary information.
I would also like to thank almighty God for his blessings showered on me during the completion of project rep
Certificate from the company
Certificate of Originality
I, Avneet Kaur, d/o Jasveer Singh Chhabra, having Enrollment No. 3620 of Batch 20010-2012, do hereby certify and declare that this research report titled “Analysis of Investors behaviour towards equity market” is the result of my own work. This report contains no materials or information which has been previously submitted
for any other academic diploma or degree,
except where indicated otherwise.
Signature of the Student Avneet Kaur
CERTIFICATE FROM THE FACULTY GUIDE
This report, entitled CONSUMER BEHAVIOUR IN EQUITY MARKET, prepared and submitted by Avneet Kaur, in partial fulfilment of the required for the degree of POST GRADUATION DIPLOMA IN MANAGEMENT is hereby accepted.
Faculty guide Mrs. Rubina Sajid
Accepted as partial fulfillment of the requirement for the 2-Year Full-Time PGDM COURSE.
EXECUTIVE SUMMARY Equity derivatives have been one of the hottest areas of growth in a market environment of rapid financial innovation. A crucial driver of the vast increase in the use of equity derivatives has been the pace of innovation, with numerous diverse structures being developed to suit particular needs of many different types of users. It investigates ach of the widely used equity derivative products. This program is designed to familiarize participants with the structures of the important equity derivatives as well as the analytic tools and techniques used to evaluate and price them. The program begins with a survey of the two basic types of derivative contracts: first futures/forward contracts and then options. These will be explored in greater detail as they are the building blocks of all the more complex derivative instruments. Sessions will address contract structure and terminology, but focus on valuation, risk/return characteristics and trading/risk management applications. The program will then proceed with a similar approach applied to a range of derivative contracts to include: swaps, options, future and forwards etc. The study is based on the information collected from respondent through questionnaire. The data analyzed is presented in the form of graphs and on the basis of that conclusion are made. After analyzing the data it is found that this is the time to make customers aware of Equity and derivatives and also to convince them to invest in the equity market.
Table of content
1. INTRODUCTION TO THE COMPANY
2. INTRODUCTION TO THE PROJECT TOPIC 3. PROJECT PROFILE
11 11 11-12 13
TITLE OF THE STUDY OBJECTIVE OF THE STUDY SCOPE OF THE STUDY RESEARCH METHODOLOGY
4. 5. 6. 7. 8.
UNIVERSE SAMPLING TECHNIQUE RESEARCH DESIGN LIMITATION OF STUDY
13 13 13 13-14
DATA AND DATA ANALYSIS CONCLUSION SUGGESTION ANNEXURE (ALONG WITH QUESTIONNAIRE) BIBLIOGRAPHY
Introduction to the company The Karvy group was formed in 1983 at Hyderabad, India. Karvy ranks among the top player in almost all the fields it operates. Karvy Computershare Limited is India’s largest Registrar and Transfer Agent with a client base of nearly 500 blue chip corporates, managing over 2 crore accounts. Karvy Stock Brokers Limited, member of National Stock Exchange of India and the Bombay Stock Exchange, ranks among the top 5 stock brokers in India. With over 6,00,000 active accounts, it ranks among the top 5 Depositary Participant in India, registered with NSDL and CDSL. Karvy Comtrade, Member of NCDEX and MCX ranks among the top 3 commodity brokers in the country. Karvy Insurance Brokers is registered as a Broker with IRDA and ranks among the top 5 insurance agent in the country. Registered with AMFI as a corporate Agent, Karvy is also among the top Mutual Fund mobilizer with over Rs. 5,000 crores under management. Karvy Realty Services, which started in 2006, has quickly established itself as a broker who adds value, in the realty sector. Karvy Global offers niche off shoring services to clients in the US. Karvy has 575 offices over 375 locations across India and overseas at Dubai and New York. Over 9,000 highly qualified people staff Karvy. Organization: Karvy was started by a group of five chartered accountants in 1979. The partners decided to offer, other than the audit services, value added services like corporate advisory services to their clients. The first firm in the group, Karvy Consultants Limited was incorporated on 23rd July, 1983. In a very short period, it became the largest Registrar and Transfer Agent in India. This business was spun off to form a separate joint venture with Computershare of Australia, in 2005. Karvy’s foray into stock broking began with marketing IPOs, in 1993. Within a few years, Karvy began topping the IPO procurement league tables and it has consistently maintained its position among the top 5. Karvy was among the first few members of National Stock Exchange, in 1994 and became a member of The Stock Exchange, Mumbai in 2001. Dematerialization of shares gathered pace in mid-90s and Karvy was in the forefront educating investors on the advantages of dematerializing their shares. Today Karvy is among the top 5 Depositary Participant in India. While the registry business is a 50:50 Joint Venture with Computershare of Australia, we have equity participation by ICICI Ventures Limited and Barings Asia Limited, in Karvy Stock Broking Limited. For a snapshot of our organization structure, please click here.
Karvy has always believed in adding value to services it offers to clients. A top-notch research team based in Mumbai and Hyderabad supports its employees to advise clients on their investment needs. With the information overload today, Karvy’s team of analysts help investors make the right calls, be it equities, mf, insurance. On a typical working day Karvy: Has more than 25,000 investors visiting our 575 offices Publishes / broadcasts at least 50 buy / sell calls Attends to 10,000+ telephone calls Mails 25,000 envelopes, containing Annual Reports, dividend cheques / advises, allotment / refund advises Executes 150,000+ trades on NSE / BSE Executes 50,000 debit / credit in the depositary accounts Advises 3,000+ clients on the investments in mutual funds
Investors servicing strengths Controlled and low cost service culture Large volume processing capability Adherence to strict time schedules Expertise in co-ordination multi-location responses Expertise in managing independent intermediaries such as Banks, Post Pooling of group resources for peak –loads and , also for one – time
Offices etc. assignments
Investor Servicing : Capabilities
Professionally managed by qualified and trained manpower Uniquely structured in – house software and hardware department Query handling within 48 hours. Strong secretarial , accounting and audit systems Unique work culture of working 7 days a week in 3 shifts
Largest Independent Distributor for Financial Products Amongst the Top 5 Stock Brokers Among the Top 3 Depository Participants Largest Network of Branches & Business Associates ISO 9002 certified operations by DNV Amongst Top 10 Investment Bankers Adjudged as one of the Top 50 IT Users in India by MIS South Asia Adjudged as one of the Top 50 IT Users in India by MIS South Asia India’s #1 Registrar & Securities Transfer Agent
India’s #1 Registrar & Securities Transfer Agent Player with the full-range of products – Players like Karvy offer a complete range of products n line with their positioning as a ‘one-stop retail financial mall’
Mutual Fund Life Insurance Fixed deposits Non life insurance IPos Derivatives Equity Tradings Page 10
Tax savers Debt Trading Commodities Real Estate
Quality Policy of Karvy “To achieve and Sustain market leadership, Karvy shall aim for complete Customer Satisfaction by combining its human and technological resources to provide world class Quality services. In the process Karvy shall strive to meet and exceed customer’s satisfaction & set Industry standards.”
Mission Statement To be a leading and preferred service provider to our customers, and we aim to achieve this leadership position by building an innovative, enterprising, and technology driven organization which will set the highest standards of service and business ethics.
BOARD OF DIRECTORS
OUR CHAIRMAN Mr. C Parthasarathy, a leader in the financial services industry in India is responsible for building Karvy as one of India's truly integrated Financial Services Provider; he is a fellow member of the Institute of Company Secretaries of India, a Fellow Member of the Institute of Chartered Accountants of India and a graduate in law. As Chairman, he oversees the group's operations and renders vision and business direction. His passion and vision for achieving leadership in the business made KARVY a leading financial intermediary ranking them as number one in the registrar, Share Transfer and IPO Distribution businesses. He also holds directorship in Karvy Stock Broking Limited, Karvy
Investor Services Limited, Karvy Computershare Private Limited, Karvy Comtrade Limited, Karvy Insurance Broking Pvt Ltd.
OUR MANAGING DIRECTOR Mr. M Yugandhar, Managing Director, founder member of Karvy Consultants Limited, has varied experience in the field of financial services spanning over 20 years. He is a Fellow Member of the Institute of Chartered Accountants of India and was involved in the statutory and branch audit of banks for 26 years.
OUR DIRECTOR Mr. M S Ramakrishna, Director, founder member of Karvy Consultants Limited is orchestrator of technology initiatives such as the call center in the service of the customer. Mr. Ramakrishna is a member of the Hyderabad Stock Exchange and is the director of Karvy Stock Broking Limited, Karvy Investor Services Limited, Karvy Computershare Private Limited, Karvy Comtrade Limited, Karvy Insurance Broking Pvt Ltd. He has helped Karvy diversify into the field of medical transcription leveraging on the company's core competency of transaction processing. He has more than 20 years of experience in the financial services arena.
Mr. Prasad V Potluri, Director, is an entrepreneur of repute in the IT professional services arena. In June 1996, he founded "Procon" building the organization into one of the fastest growing IT services players in the US with 225 employees and revenues of $22m in 27 months. He successfully merged the company with RCM for $32m in November 1998. In 2000, he founded ' Albion Orion Company', a roll up in IT services sector in the US. He acquired and restructured two high-end solution providers, Albion International in Atlanta and Orion Consulting in Minneapolis. Subsequently, he led the merger of the consolidated entity to SSI Ltd. for $63.65m in December 2000.
He is the Chairman & Co-founder of Irevna Limited, a leading business information research services organization. He possesses vast experience and expertise of building organizations globally with organic and inorganic grow
Introduction to the project topic Investment in Equity markets are based on analysis & reasoning which help to predict market to some extent. Through the years a number of technicals & theories for analysis have evolved, these combined with modern technology guides the investor. The big players in the market, like Foreign Institutional Investors, Mutual Funds, etc. have the expertise for various analytical tools & make use of them. The speculator invests for a short period for instant gains & his investment are based on market sentiments, inside information, through grapevine, tips & intuition. The small investors depend on brokers and brokerage house for his investments.
In recent years a large number of players have entered into his market. The level of competition is so high that retaining existing customers or getting new customers by good word of mouth from existing customers is very important. This clearly shows the importance of knowing how satisfied our present customers are. It is with this backdrop that the study is being initiated. We are trying to find out how satisfied the existing customers are and also trying to find out what are the crucial factors that customers look for. This will help in improving methods by which the overall performance can be improved and key indicators of customer dissatisfaction shall be documented and supported by objective information.
BACKGROUND OF STOCK EXCHANGE IN INDIA
The emergence of stock market can be traced back to 1830. In Bombay, business passed in the shares of banks like the commercial bank, the chartered mercantile bank, the chartered bank, the oriental bank and the old bank of Bombay and shares of cotton presses. In Calcutta, Englishman reported the quotations of 4%, 5%, and 6% loans of East India Company as well as the shares of the bank of Bengal in
Stock Market Market of “Hope, Discipline & Greed” The term 'the stock market' is a concept for the stocks are listed and traded on stock exchanges the mechanism that enables the trading of company stocks, other securities, and derivatives. The stock market in the India includes the trading of all securities listed on the BSE, NSE, as well as on the many regional exchanges. The stock market is one of the most important sources for companies to raise money. This allows businesses to go public, or raise additional capital for expansion. The liquidity that an exchange provides affords investors the ability to quickly and easily sell securities. This is an attractive feature of investing in stocks, compared to other less liquid investments such as real estate
The stock Exchanges:
India has: 24 Regional Stock Exchanges
2 Leading Exchanges : Bombay Stock Exchange (BSE)
National Stock Exchange of India Ltd. (NSE)
The Indices: – –
BSE : BSE Sensex comprising 30 stocks NSE : S&P NSE 50 Index (Nifty) which consists of 50 stocks
The two leading exchanges are recognition. Others have to seek recognition on annual basis.
A stock market is a market for the trading of company stock, and derivatives of same; both of these are securities listed on a stock exchange as well as those only traded privately.
The share of equity issues in total new equity and debt issues strong predictor of U.S. stock market returns between 1928 and 1997. In particular, firms issue relatively more equity than debt just before period of law market returns. The equity share in new issues has stable predictive power in both halves of the sample period and after controlling for other known predictors results. Instead, the fact that the equity share some times predicts significantly negative market returns suggests inefficiency and that firm’s time the market component of there returns when issuing securities. General terms referring to the organized trading of securities through the various physical and electronic exchange and the over the counter market. The securities involved include common stock, preferred stock, bonds, convertibles, options rights, and warrants. The term may also encompass commodities when used in its most general sense, but more often then not the stock market and the commodities (or futures) market and distinguished. The query “How did the market do today?” is usually answered by a reference to the Dow Jones industrial average, comprised of stock listed on the New York stock exchange.
Ownership interest in a corporation in the form of common stock or preferred stock. It also refers to total assets minus total liabilities, in which case it is also referred to as shareholder's equity or net worth or book value. In real estate, it is the difference between what a property is worth and what the owner owes against that property (i.e. the difference between the house value and the remaining mortgage or loan payments on a house). In the context of a futures trading account, it is the value of the securities in the account, assuming that the account is liquidated at the going price. In the context of a brokerage account, it is the net value of the account, i.e. the value of securities in the account less any margin requirements.
Title of the study –“CONSUMER BEHAVIOUR IN EQUITY MARKET”
Duration of the Project: -
OBJECTIVE OF STUDY To find out:-
Satisfaction level of Investors with respect to their existing broker.
Awareness of competitor’s products among Investors.
Scope and significance of study
This project report will help the organization in assessing the awareness of various occupational segments (Businessmen, Professionals, and Servicemen) about the stock market. This awareness is estimated in form of percentage.
Due to time constraints, more time could not be devoted to individual respondents.
Due to unwillingness of providing any information, the respondents filled the questionnaire casually, which might have effected the conclusions.
In the most questionnaires the open ended questions were remained unfilled.
Marketing Manager being quite busy with his job. He was not able to spend enough time for over proper guidance.
The busy schedule of the customers also makes the collection of information a very difficult one.
The bias and hesitation in the judgments of the customer affect analysis of the survey in a significant manner.
Sample Size: - 50 individual
Method of selecting sample: - Random Sampling
Research Design The research design is analytical in nature. A questionnaire was prepared and distributed to Investors. The investor’s profile is based on the results of a questionnaire that the Investors complete. The Sample consists of 100 investors from various broker’s premises.
LIMITATIONS Limitations in regards with the Sample Selections:
The sample under study is relatively small, limited to field research for 100 Investors in the Stock market & conducted only in Jaipur. The responses are subjected to customer bias. A more extended geographical sample may show greater difference in perceptions. It would be interesting, in further research, to correlate perceptions of services in terms of customer satisfaction, or factor analysis on the various services expected by customers. The Sample size may be extended to include other services also. Limited Time for conducting the study. Respondents were not interested to disclose details.
Data and data analysis
Decision regarding investment in share market. 60 50 40 30
20 10 0 yes
55% people are currently investing in share market with the expectation that market will show a record breaking performance. 35% people are not investing either because they don’t have much knowledge about share market or they prefer mutual funds over trading.10% people have stopped now after suffering heavy losses.
Investment Speculation Both
Figure 4. Trading Preference Trading preference can be classified into Investment and Speculation. Investment refers to a longer time horizon. Buying and selling shares in selected companies to make a profit and is linked to a long time. Speculation on the other hand refers to making quick profits by anticipating the changes in the prices of shares. Speculative transactions are carried out in the stock exchange day in & day out. The preference of trading was found to be 48% in Investment & 10% in speculation. APPROXIMATE TRANSACTION PER DAY:
Less Than 50,000 50,000 - 1 Lakh 1 - 2.5 Lakh
2.5 - 5 Lakh More Than 5 Lakh
Figure 5. Approximate Transaction per Day
The amount of investment in the stock market varies from investor to investor. There are a various reasons, viz. the returns expected from the past investments, the Dividends obtained, the amount availability, etc. A majority of the transaction done was found to be Rs.50, 000 per day (57%) followed by 50,000 to 1 lakh per day (25%).
Expectations of Annual Income & Expense over next 3 to 5 Years:
A view of the present income & expense level to their projections determines the amount of investment. The various aspects to be considered are, Percentage of his income to be invested in Equity market Quality & Return Investments Profitability Growth of Capital & Earnings ANNUAL INCOME:
Respondents % 100 87.01 90 80 70 60 Figure 1. Income Expectations of Investors 50 Respondents % 40 30 20 11.03 1.94 10 0 Increase Decrease Remain Same
ANNUAL EXPENSE: Respondents %
90 80 70 60 50 40 30 20 10 An 0
Figure 2. Expense Expectations of Investors 9.65 4.13
Remain Same Respondents %
Average Change %
. AVERAGE INVESTMENT PERIOD: Less Than 3 Months
3 - 6 Months 6 Months - 1 Year
More Than 1 Year
Figure 6. Average Investment Period
The investment period refers to the period within which the security/share is bought and sold. It relates to the investor behavior towards his expectations & reaction to the change in prices of the share. It was found that 34% of the investor preferred a category of 3 to 6 months.
Investor’s Importance or Order of preference from Service Providers: STOP LOSS:
promptness in delivery
A certain characteristic of an InvestorSpeed is toof transaction average out the cost of 15% 20% 15% flexibility investment in Stock if the market goes down & price of the stock reduces, courteous behaviour while certain stop their loss to further increaseapproach by selling it at a lesser price than what it was bought, thus incurring a loss. The Below chart gives the investor’s preference towards stop loss.
Yes 27% Yes No Sometimes No 46%
APPRECIATION CAPITAL: Investors look forward towards increasing their return of investments either through the Dividends paid by the company or through the increase in the share value of the shares held. The below chart gives the percentage of returns and investor expects over his/her investments.
Upto 15% 15% - 25% 25% - 35%
More Than 35%
Figure8. Appreciation Expected Loss: Investment in Share market involves risk of loss and the below chart gives the percentage of loss on investments made. The below diagrams represents the loss anticipated by the investors and categorization of risk they are willing to take.
Less Than 5%
5% - 10%
More Than 10%
Figure 9. Expected Loss
17% High Low
Figure no 10: willingness to take risk
Making Risk- adjusted returns comparison. By doing this the investor will know whether the returns generated by the scheme have been adequately compensated for the extra risk undertaken by the scheme.
The investor depending upon his risk appetite and preferences should sub-classify the schemes on the basis of the characteristics of the schemes, which may be defensive or aggressive in nature.
Portfolio objective is also an important factor to be considered. It is always advisable to choose a scheme, which has a well-diversified portfolio rather than a concentrated portfolio, as it carries lesser risk.
Liquidity of the portfolio is also one of the critical parameters.
The fund size of the scheme is also of importance. A large corpus size firstly denotes investor’s confidence in the scheme and its fund manger abilities over the years and, secondly it allows the fund manager to diversify the portfolio, which reduces the overall market risk.
Sub- Brokers are the main part of the company because by the sub-brokers, the customers can get information on time- to- time and take fast decision. So no. of sub-brokers in the company should be increased.
In the stock market derivatives are less aware to the people. Therefore, the less people invest their money in the derivatives. So more awareness programmers should be making for derivatives.
Consumers are unaware of the brokerage plans. So make the brokerage plans according to the customer’s needs.
There are very less service centers in the city. Therefore customers have to face many problems because of lack of proper information. The service centers help to customers to get knowledge about plans on accurate time. So more service centers should be opened.
Trading department is the main department to earn money. This department helps to customers to invest their money and after get the return. Thus trading department should be separate department.
(1) Do you invest in Stock Market? Yes No Earlier, now stopped (2) What is the current brokerage that you are paying? 1ps-2ps
2ps-3ps above 3ps
(3) What is your current trading preference? Speculation Investment Both
(4)What do your Approx Transaction Amount/Day? Below Rs 50,000 Rs 50,000-Rs1lakh Rs 1 lakh-Rs 2.5 lakhs Rs 2.5 lakhs-Rs 5 lakhs
More than Rs 5 lakhs
(5)What is your Average investment period? A. Less than 3 months. B.3 to 6 months. C. 6months to 1 year.
D. More than 1 year.
(6)Please give your Order of Importance ___ A. Realiability ___ B. Promptness in Delivery. ___ C. Speed of transaction ___ D. Approach ___ E. Flexibility ___ F. Courteous Behavior
(7) Have you put any Stop Loss on your Investments? Yes No Sometimes (8) How much appreciation do you expect from your Investments? Up to 15% 15%-25% 25%-35% more than 35%
(9) How much loss are you willing to take? Less Than 5% 5-10% more than 10%
(10) How much risk are you willing to take? High Low Moderate
(11) How many Trading & Demat a/c do you have? Trading __________
Bibliography Page 31
WEBSITES:www.karvy.com www.moneycontrol.com www.nseindia.com www.bseindia.com MAGAZINES:-
Business Today Economic Times Business World
Research methodology: - C.R.Kothari,