7

A

STUDY ON

ATTITUDE OF RETAIL INVESTOR TOWARDS INVESTMENT AND DIVERSE INVESTMENT STRATAGIES

IN

BONANZA PORTFOLIO LTD

SUBMITTED BY: GUIDANCE BY

DHIMANT PATEL NETRA AKOLKAR

ROLL NO. 83 (LECTURER)

SWAMI SAHAJANAND COLLEGE OF COMMERCE AND MANAGEMENT,

BHAVNAGAR UNIVERSITY,

BHAVNAGAR

BATCH-2007-10

7

A

STUDY ON

ATTITUDE OF RETAIL INVESTOR TOWARDS INVESTMENT AND DIVERSE INVESTMENT STRATAGIES

IN

BONANZA PORTFOLIO LTD

A PROJECT REPORT SUBMITTED IN PARTIAL FULFILLMENT

FOR THE THE DEGREE OF

BACHELORE OF BUSINESS ADMINISTRATION

TO

BHAVNAGAR UNIVERSITY, BHAVNAGAR

SUBMITTED BY: GUIDANCE BY

DHIMANT PATEL NETRA AKOLKAR

ROLL NO. 83 (LECTURER)

SWAMI SAHAJANAND COLLEGE OF COMMERCE AND MANAGEMENT,

BHAVNAGAR UNIVERSITY,

BHAVNAGAR

BATCH-2007-10

7

DECLARATION

I, DHIMANT PATEL, student of SWAMI SAHJANAND COLLEGE OF COMMRCE AND

MANAGEMENT hereby declare that I have completed this project on ATTITUDE OF

RETAIL INVESTOR TOWARDS INVESTMENT AND DIVERSE INVESTMENT

STRATAGIES and the information submitted is true and original to the best of

knowledge.

Signature of student

DHIMANT D. PATEL

7

ACKNOWLEDGEMENT

The most pleasant part of any project is to express gratitude and bestow honor

towards all those who directly or indirectly contributed to the smooth flow of the

project work and this being the good opportunity; I don’t want to miss it.

I would l ike to thank my Faculty. NETRA MAM for his valuable inputs in

the research and spending so much of valuable time and effort in helping with

my topic.

I also wish to express sincere gratitude to al l the respondents of the project

without the kind of co-operation of whom this work would not have been possible.

7

PREFACE

Bachelor of business administration is a unique course, which aims at

developing human recourse assuming responsibility as manager and executives at

senior levels of management in business under-takings.

Final project at this year curriculum is a step to bridge up the gap between

the practical applications. A person aspiring to enter in management profession must

have practical knowledge of the speculated subject.

BONANZA SHARES AND FINANCE LIMITED is an organization engaged

in providing the financial services in a retail market. I have a great pleasure in presenting

the report of such organization. I have a closer look view of practical aspects. I need to

undergo 15 days for project studies.

Theoretical knowledge together with a blend of practical knowledge is

provided to us in B.B.A. I am glad to present my report on practical training. At the same

time I have also express that, “PROJECT TRANING” with research is a great opportunity

which has provided me great satisfaction when I had a chance to do something to the

practical, is view to fundamental aspects of theory. All these could not have been

achieved without sound practical approach.

CONTENTS

Sr no Contents Page no

7

INTRODUCTION ABOUT COMPANY

1 BONANZA’S COMPANY PROFILE 092 HISTORY OF BONANZA 103 MISION 114 MEMBERSHIP 125 BONANZA’S ACHIEVEMENT 136 OFFERING AN ARRAY OF FINANCIAL

SERVICES14

7 PROGRESSIVE FINANCIAL PLANNING 15TOPIC DESCRIPTION

8 INRODUCTION 179 BEHAVIOUR OF HOUSEHOLD 18

10 INVESTMENT 1911 RETAIL INVESTOR 2212 INVESTOR STRETEGY 2313 TYPES OF INVESTMENT 2414 FEACTURE OF DIFFERENT TYPE OF

INVESTMENT25

RESEARCH METHODOLOGY

15 INTRODUCTION OF RESEARCH 3816 OBJECTIVE RESEARCH 4017 PROCESS OF RESEARCH 4218 TYPES OF RESEARCH 4419 RESEARCH DESIGN 46

7

DATA ANALYSIS AND INTREPRTATION 47

FINDINGS 63

RECOMMANDATION 64

CONCLUSION 65

BIBLIOGRAPHY 66

APPENDIX 67

7

INTRODUCTION

ABOUT

COMPANY

7

BONANZA’S COMPANY PROFILE

NAME OF THE COMPANY : Bonanza Portfolio Ltd

ADDRESS OF THE COMPANY : 5, Trade Center,

Second floor,

Kalanala, Bhavnagar - 364001

Tel No: - 0278 3004381

FORM OF ORGANIZATION : Pvt Ltd

HEAD OFFICE : 2/2 – A, First Floor, Lakshmi Insurance

Building, Asaf Ali Road,

New Delhi - 110002

Tel No: - + 91-11-30181291 to 94

ESTABLISHMENT YEAR : 1944

TYPE OF DEALINGS : Shares, Commodity, Depository

MAIN DEALING IN : Demat A/C

7

History of Bonanza

Bonanza an leading financial services and brokerages house working

diligently since1994 can be described in a single word as a “financial

powerhouse” with acknowledged industry leadership in execution and

clearing services on exchange traded derivatives and cash market

products. Bonanza has spread its wings all over India more than 1050

outlets across 350 cities.

Being ranked as one of the top brokerage house in India, bonanza

provides an extensive line of brokerage services in equity, commodities,

derivatives, wealth management, distribution of third party products and

more. Bonanza has adopted an integrated and innovative use of

technology, to ensure maximum outputs in a minimum time –frame.

Bonanza is a leading financial services and brokerages house. With

more than 150000 clients comprising of financial institute & Investors,

Corporate, Mutual funds, High net worth individual and retail investors

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Mission

Our core Mission is clients’ wealth generation through professional advice backed

by through research and in –depth analysis, we offer a singe point access to the vast

word of a financial finance services. Our strength includes a diverse products range,

state –of-art technology & vast network across India.

Bonanza has wide reach through its branches /offices in more than 750 locations

spread over 300 cities. Our consistent endeavor is to provide strategic advice and high

quality services to clients.

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Membership

• National stock exchanges of India ltd.

• The stock exchange , Mumbai(BSE)

• National commodities & depravities exchange (MCX)

• National Multi commodities exchange (NMCE)

• Depository participant foe equity (NSDL/CDSL)

• Depository participant for commodities

• Dubai god & commodities exchange (DGCX)

• SEBI authorized PMS

• Registered distributor with (AMFI)

7

Bonanza’s achievements

• Top equity broking house in term of branch expansion -2008*

• 3rd in terms of number of trading accounts-2008*

• 6th term of trading terminals in for consecutives years 2007 and 2008*

• 9th in terms of sub brokers-2007*

• Awarded by BSE “major volumes driver 04-05. 06-07, 07-08”

• Nominated among top 3 for “best financial advisors awards 08”in the category of

national distributors – retails instituted by CNBC-TV18 and Optimix

• India ‘s 5th largest broking firm in term of no. of offices*

• Hallmark of over 200000 clients (including HNL, corp.& FllS)

Bonanza has been forerunner in dealing of any new financial products and have

launched trading facilities on the currency derivatives segments for its clients, at all the

exchanges namely NSE, BSE & MCX-SX.

Offering an array of financial services and products

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• Share broking

• Commodities broking

• E-broking

• Currency derivatives

• E-mutual funds

• Depository services

• PMS

• FDs distribution

• Mutual funds

• Insurances

• IPO

Progressive financial planning

7

Save: Savings & Deposits to meet short term cash requirements for you.

Invest: Medium to long term investment which provides income & capita growth

Protect: Insurances that provides protection to your life.

Financial planning

Save Invest Protect

7

TOPIC DESCRIPTION

7

INRODUCTION

Savings form an important part of the economy of any nation. With the savings

invested in various options available to the people, the money acts as the driver for

growth of the country. Indian financial scene too presents a plethora of avenues to

the investors. Though certainly not the best or deepest of markets in the world, it has

reasonable options for an ordinary man to invest his savings.

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. In the long term, current

investment determines the economy’s future productive capacity and, ultimately, a

growth in the standard of living. By increasing personal wealth, investing can

contribute to higher overall economic growth and prosperity. The process of investing

helps to create financial markets where companies can raise capital. This too,

contributes to greater economic growth and prosperity. Specific types of investments

provide other benefits to society as well.

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BEHAVIOR OF HOUSEHOLD SAVINGS IN INDIA

Household savings in general and savings in the form of financial assets in

particular exhibited remarkable growth since late eighties. The aggregate

household savings as share to GDP, which was only 1.5 per cent during 1970-71,

went up to 4.9 per cent in 1980-81. It went up sharply to 14.2 per cent in 1990-91

and further to 19.7 per cent in 1994-95 before coming down marginally to 18.5 per

cent in 1998-99. The growth of household savings during the decade of eighties

has been facilitated by a simultaneous increase in physical as well as financial

assets. While household savings in physical assets increased from 3 per cent of

GDP in 1980-81 to 7.8 per cent in 1990-91, savings in the form of financial assets

increased from 2 per cent to 6.4 per cent for the corresponding period. Financial

savings during first half of the nineties registered remarkable growth from 6.4 per

cent of GDP in 1990-9 1 to 11.9 per cent in 1994-95. However, the share of

financial savings to GDP fluctuated since 1995-96.

The Indian financial sector is on a roll. Driven by a strong investor interest and

an expanding market, the industry is also becoming more vibrant, with new types of

products and services being offered to meet the needs of the booming economy.

The buoyancy in the economy is estimated to lead to a four-fold increase in

India's investable wealth from US$ 250 billion in 2007 to US$ 1 trillion by 2012.

Clearly, there is huge potential in this segment. Significantly, wealth management

revenues are expected to account for 32-37 per cent of the total full-service

financial institutions by 2012. The market is also expected to undergo a structural

transformation with organized players increasing their market share. The

attractiveness of India in the global financial market is also reflected in the Indian

cities - Mumbai, New Delhi and Bangalore - finding a place of pride in the list of

the world's top 75 commercial centres, as per the 2008 'Mastercard Worldwide

Centres of Commerce Index

7

INVESTMENTS

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

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. For example, if you invest Rs.

1000 today and earn 10 %over the next year, you will have Rs.1100 one year from

today.

An investment can be described as perfect if it satisfies all the needs of all investors.

So, the starting point in searching for the perfect investment would be to examine

investor needs. If all those needs are met by the investment, then that investment

can be termed the perfect investment. Most investors and advisors spend a great

deal of time understanding the merits of the thousands of investments available in

India. Little time, however, is spent understanding the needs of the investor and

ensuring that the most appropriate investments are selected for him.

THE INVESTMENT NEED OF AN INVESTOR

By and large, most investors have nine common needs from their investments:

1. Security of Original Capital

2. Wealth Accumulation

3. Comfort Factor

4. Tax Efficiency

5. Life Cover

6. Income

7. Simplicity

8. Ease of Withdrawal

9. Communication

7

Security of original capital: The chance of losing some capital has been a primary need.

This is perhaps the strongest need among investors in India, who have suffered regularly

due to failures of the financial system.

Wealth accumulation: This is largely a factor of investment performance, including both

short-term performance of an investment and long-term performance of a portfolio.

Wealth accumulation is the ultimate measure of the success of an investment decision.

Comfort factor: This refers to the peace of mind associated with an investment.

Avoiding discomfort is probably a greater need than receiving comfort. Reputation plays

an important part in delivering the comfort factor.

Tax efficiency: Legitimate reduction in the amount of tax payable is an important part

of the Indian psyche. Every rupee saved in taxes goes towards wealth accumulation.

Life Cover: Many investors look for investments that offer good return with adequate

life cover to manage the situations in case of any eventualities.

Income: This refers to money distributed at intervals by an investment, which are

usually used by the investor for meeting regular expenses. Income needs tend to be

fairly constant because they are related to lifestyle and are well understood by investors.

Simplicity: Investment instruments are complex, but investors need to understand

what is being done with their money. A planner should also deliver simplicity to

investors.

Ease of withdrawal: This refers to the ability to invest long term but withdraw funds

when desired. This is strongly linked to a sense of ownership. It is normally

7

triggered by a need to spend capital, change investments or cater to changes in

other needs. Access to a long-term investment at short notice can only be had at a

substantial cost.

Communication: This refers to informing and educating investors about the purpose

and progress of their Investments. Need of communication increases when investments

are threatened.

Security of original capital is more important when performance falls.

Performance is more important when investments are performing well.

Failures engender a desire for an increase in the comfort factor.

Perfect investment would have been achieved if all the above-mentioned needs had

been met to satisfaction. But there is always a trade-off involved in making investments.

As long as the investment strategy matches the needs of investor according to the

priority assigned to them, he should be happy.

The Ideal Investment strategy should be a customized one for each investor depending on

his risk-return profile, his satisfaction level, his income, and his expectations. Accurate

planning gives accurate results. And for that there must be an efficient and trustworthy

roadmap to achieve the ultimate goal of wealth maximization.

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Retail Investor

An individual who purchases securities for their own personal account rather than for an

organization. Retail investors typically trade in much smaller amounts than institutional

investors such as mutual funds, pensions, or university endowments.

How It Works/Example:

Retail investing generally occurs through four channels: individual

investors, retail brokers (who act at the direction of these individuals), managed

accounts (whereby the account manager makes the buy and sell decisions for the

individual), and investment clubs (groups of people who pool their money to make

investments). According to the Investment Company Institute and the Securities Industry

Association, over 50 million U.S. households engage in some type of retail investing.

Why It Matters:

Retail investing activity pales in the shadow of institutional investing activity. Not only do

retail investors make smaller trades, they also tend to trade less frequently than

institutional investors, which account for most of the market's trading volume. However,

the widening use of online trading and better access to financial information has

increased the number of retail investors in recent years.

Retail investors typically exert less influence over corporate decisions than larger,

institutional shareholders. Although there is some controversy over whether a high level

of institutional ownership improves a company's management, there is no disputing the

fact that an institutional shareholder with 10,000 votes usually wields more influence

than an average retail shareholder with just 100 votes.

As opposed to institutional owners, small investors seldom have access to corporate

boardrooms or discussions and rarely have the opportunity to meet personally with a

company's executives. For this reason, many retail investors tend to regard institutional

ownership of a security as a sign of approval and are easily influenced by institutional

trading activity.

7

Investment Strategy

A well-planned investment strategy is essential before having any investment decisions. A

business strategy is generally based upon long run period. Formation of business strategy

largely dependent upon the factors such as long-term goals and risk on the investment.

As the return on investment is not always clear, so the investors prepare the strategy so as to

face the ongoing challenges in investment. A balanced investment strategy is generally

required in the process of investment, which possesses long time period and some risk

tolerance.

In the case, when a strategy is aggressive the chance of attaining a higher goal is higher. An

efficient strategy can be obtained from portfolio theory, which shows good estimates on risk and

return.

Investment Strategy is usually considered to be more of a branch of finance than economics. It

is defined as set of rules, a definite behavior or procedure guiding an investor to choose his

investment portfolio. For example, investing in mutual funds has recently emerged as a very

favorable investment strategy.

An investment strategy is centered on a risk-return tradeoff for a potential investor. High return

investment instruments such as real estate and mutual funds usually have more risks associated

with it than low return-low risk investment opportunities. Return on investment can be calculated

on past or current investment or on the estimated return on future investment.

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TYPES OF INVESTMENTS / VARIOUS INSTRUMENTS OVERVIEW

There are many ways to invest your money. Of course, to decide which investment

vehicles are suitable for you, you need to know their characteristics and why they may

be suitable for a particular investing objective.

•Debt Market

•Public Provident Fund

•Fixed Deposits

•Bonds

•Mutual Funds

•Banks Deposits

•Equity Market

•Initial Public Offer

•Insurance

•Forex

•Cash

•Gold

•Real Estate

FEATURES OF DIFFERENT TYPES OF INVESTMENTS

7

Returns Safety Volatility Liquidity Convenience

Equity High Low High High Moderate

Bonds Low High Moderate Moderate High

Co. Debentures

Moderate Moderate Moderate Low Low

FDs Moderate Low Low Low Moderate

Bank Deposits Low High Low High High

PPF Moderate High Low Moderate High

Life Insurance Low High Low Low Moderate

Gold Moderate High Moderate Moderate Moderate

Real Estate High Moderate High Low Low

Mutual Funds High Moderate Moderate High High

Forex Moderate Moderate Moderate High Moderate

26

1. DEBT INSTRUMENTS

Debt instruments protect your capital, therefore the importance of a solid debt

portfolio. This not only gives stability, but also offers you optimal returns, liquidity

and tax benefits. Debt products, besides safeguarding your capital, can be used to

meet short, medium and long-term financial needs.

SHORT TERM INVESTMENT

They are good for short term goals, you can look at liquid funds, floating rate funds

and short- term bank deposits as options for this category of investments.. However,

liquid funds are better, if your time horizon is less than one-year, say around six

months. This is because the bank deposit rates decrease proportionately with

lower periods, while liquid funds will yield the same annualized returns for any period

of time.

Medium & Long-Term Options:

These options typically offer low or virtually no liquidity. They are, however, largely

useful as income accumulation tools because of the assured interest rates they offer.

These instruments (small savings schemes) should find place in your long-term debt

portfolio.

SMALL SAVING SCHEMES:

Schemes Type InterestRate

Term Min-MaxInvestment

PrematureWithdrawal

TaxBenefit

Public Provident Fund

Recurring 8% pa 15years

Min: Rs.500 Max:Rs.70,000

Yes U/S80C

National Savings Certificate

Growth 8%compounded

half yearly

6 years Min: Rs.100 Max: No upper limit

No U/S80C

Kisan Vikas Patra Growth Amountdoubles in 8years & 7months

8 years& 7

months

Min: Rs.100 Max: No upper limit

Yes Nil

Post Office Time & Recurring Deposit

FixedDeposit

6.25% -7.50% pa

1-5years

Min: Rs.200 Max: No upper limit

Yes Nil

Post Office Monthly Income Scheme

RegularIncome

8% papayablemonthly

6 years Min: Rs.1, 000 Max: Rs.3Lac (Single) Rs.6Lac (Jointly)

Yes Nil

Senior Regular 9% pa 5 Min: Rs.1, 000 Yes Nil

CitizensSavings

Income payablequarterly

years Max: Rs.15Lac

Scheme

28

2. BONDS

It is a fixed income instrument issued for a period of more than one year with the

purpose of raising capital. The central or state government, corporations and

similar institutions sell bonds. A bond is generally a promise to repay the principal

along with a fixed rate of interest on a specified date, called the Maturity Date.

The main attraction of bonds is their relative safety. As a result, the rate of return

on bonds is generally lower than other securities.

Tax Saving Bonds

These are those bonds that have a special provision that allows the investor to

save on tax. Examples of such bonds are:

a) Infrastructure Bonds

b) Capital Gains Bonds

a.Rural Electrification Corporation (REC) Bonds

b.National Highway Authority of India (NHAI)

c.National Bank for Agriculture & Rural Development

C) RBI Tax Relief Bonds

28

3. MUTUAL FUNDS

A mutual fund is a body corporate registered with SEBI that pools money

from the Individuals/corporate investors and invests the same in a variety of

different financial Instruments or securities such as Equity Shares, Government

Securities, Bonds, Debentures, etc. The income earned through these investments

and the capital appreciations realized are shared by its unit holders in proportion to

the number of units owned by them. Thus a Mutual Fund is the most suitable

investment for the common man as it offers an opportunity to invest in a

diversified, professionally managed basket of securities at a relatively low cost.

Mutual fund units are issued and redeemed by the Asset Management Company

(AMC) based on the fund’s net asset value (NAV), which is determined at the end of

each trading session.

Mutual funds are considered to be the best investments as on one hand it provides

good Returns and on the other hand it gives us safety in comparison to other

investments avenues.

Figure: Below describes broadly the working of a mutual fund:-

28

4. EQUITY

Equities are often regarded as the best performing asset class vis-à-vis its peers over

longer time frames. However equity-oriented investments are also capable of

exposing investors to the highest degree of volatility and risk. There are a number

of factors, which affect the performance of equities ad studying and understanding

all of them on an ongoing basis, can be challenging for most.

Stock markets have always been a draw for investors for their ability to generate

wealth over the long-term. Fear, greed and a short-term investment approach act

as hurdles that frustrate the investor from achieving his/her investment goals. You

need to keep in mind the risk associated with the stocks. You also need to diversify

your equity portfolio i.e., include more stocks and sectors. This helps you diversify

your investment risk, so even if something were to go wrong with a stock/industry in

your portfolio, other stocks/industries should help you shore up your portfolio.

Two important resources that are critical to investing directly in stock markets are

quality stock research and a reliable and inexpensive stock broker. The first one –

research on stocks is the most critical input that investors need to identify before

they begin investing in stock markets. This is because even while you may have

the risk appetite for equities, you still need credible, stock market related research

that can help you make the right investment decision.

28

5. INSURANCE

Life insurance has traditionally been looked upon pre-dominantly as an avenue that

offers tax benefits while also doubling up as a saving instrument. The purpose of

life insurance is to indemnify the nominees in case of an eventuality to the insured. In

other words, life insurance is intended to secure the financial future of the nominees

in the absence of the person insured.

The purpose of buying a life insurance is to protect your dependants from any

financial difficulties in your absence. It helps individuals in providing them with the

twin benefits of insuring themselves while at the same time acting as a compulsory

savings instrument to take care of their future needs. Life insurance can aid your

family on a rainy day, at a time when help from every quarter is welcome and of

course, since some plans also double up as a savings instrument, they assist you

in planning for such future needs like children’s marriage, purchase of various

household items, gold purchases or as seed capital for starting a business.

Traditionally, buying life insurance has always formed an integral part of an

individual’s annual tax planning exercise. While it is important for individuals to

have life cover, it is equally important that they buy insurance keeping both their

long-term financial goals and their tax planning in mind. This note explains the role

of life insurance in an individual’s tax planning exercise while also evaluating the

various options available at one’s disposal.

28

Life is full of dangers, but with insurance, you can at least ensure that you and your

dependents don’t suffer. It’s easier to walk the tightrope if you know there is a safety

net.

You should try and take cover for all insurable risks. If you are aware of the major

risks and buy the right products, you can cover quite a few bases. The major

insurable risks are as follows:

• Life

• Health

• Income

• Professional Hazards

• Assets

• Outliving wealth

• Debt repayment

28

6.GOLD

In India, gold has traditionally played a multi-faceted role. Apart from being used for

adornment purpose, it has also served as an asset of the last resort and a hedge

against inflation and currency depreciation.

India has more than 13,000 tones of hoarded gold, which translates to around Rs.6,

50,000 crores. Gold is an asset class that’s associated with safety.

However, the ups and down that the yellow metal has seen over the last few

months, has made it look similar to other market investment assets. This is due to

an unprecedented demand for gold as an investment avenue since the last couple

of years.

Gold has attracted a high level of attention in last couple of years, with an image

shift from a non-volatile asset to a hot investment avenue. The future outlook for

the metal looks positive given its proven linear relationship with the crude oil and

non-linear with the US dollar. The much-awaited gold exchange-traded funds

would provide a very good vehicle to the investors and a sensible alternative to the

current forms available for investment

28

7.REAL ESTATE

Real estate is a great investment option, as it gives you capital appreciation and

rental income. It’s an investment option since it fights inflation. The fundamentals

for investing in property markets remain strong in India - relatively low interest rates,

strong capital flows, high employment growth, abundant liquidity, attractive

demographics (young population and migration from West), increase in

affordability, and a large supply of stock to keep up with demand and focus on

quality. The price you pay for a property should reflect the future rent/income at

which you let it. As in the stock market, the prices in real estate are also driven by

sentiments. All that is required to reverse a price movement is a change in

sentiment.

Start saving for a home the moment you begin your career. Early acquisition helps

you to repay your home loan well within your working life. Also, the EMI as a

percentage of your salary decreases as your pay increases making the outflows

more affordable. If you lock into the interest rate for the loan, the interest outflow

will be less than the compounding effect of inflation.

You should be very clear about why you want to invest in real estate. It is a very good tool for wealth creation but like all other assets, has its share of risks. Careful planning, however, can minimize the risks.

28

8) FOREX

If you read about investing, you've seen the word forex trading. But because forex

doesn't get much publicity in the major publications and websites, many investors

don't know that forex is just short for "foreign exchange". So trading the forex

market is simply trading

When buying and selling in the forex currency trading system market, you'll see

that there are four "currency pairs" that dominate the percentage of trades. Those

four are the Euro vs U.S. Dollar, US Dollar vs Japanese Yen, US Dollar vs Swiss

Franc, and US Dollar vs British Pound.

The goal when investing in currency is to be holding a currency that appreciates in

value in relation to the other currencies. To use an overly simplistic example, if you

bought 50 British Pounds for 100 US Dollars, held the Pounds for 1 week, and in that

period the value of Pounds increased in relation to US Dollars, you could then

convert those Pounds back into dollars for, say, $120.

Unlike the domestic stock markets, the forex currency trading is open for trades 24

hours a day. Much like the phrase "it's always noon somewhere," it's always

business hours at some region of the globe. Since every country trades on the FX

market, and it's open all day, the daily volume is roughly $1.2 trillion, which dwarfs

that of the NYSE. Another comparison to make in order to truly realize the

magnitude of the forex market is with the currency futures market (which has

around 1% of the daily volume).

28

9) FIXED DEPOSITS

The same as a term or time deposit. Money may be placed with a bank, merchant

bank, building society or credit union for a fixed term at a fixed rate of interest which

remains unchanged during the period of the deposit. Depositors may have to

accept an interest penalty if they break the deposit, ie, ask to take the money out

before the agreed period has expired.

Few points which FD investors must consider at the time of investment,

1. Safety

FDs have conventionally been the premier choice for investors with a low risk

appetite; assured returns is the key factor which attracts investors towards

deposits. Stick to FDs of the highest credit rating i.e. those with a “AAA” rating

even if their rates seem modest vis-à-vis those offered by company deposits.

2. Tenure

Short tenured fixed deposits continue to be your best bet. With interest rates on

the ascent, a further hike in rates offered by fixed deposits cannot be ruled out.

Locking your investments in longer tenured instruments may lead to an opportunity

loss.

3. Liquidity

Find out how FD fares on the pre-mature encashment front i.e. how easily can your

investment be liquidated. Also enquire about the penalty clauses, e.g. do you suffer a

loss of interest and/or principal amount. Compare how various FDs rank on this

parameter and pick the best deal; thereby try to minimise the impact of illiquidity

which is typically associated with FDs.

28

4. Additional benefits

Fixed deposits from reputed entities offer additional benefits, e.g. they can be used

as collateral against which loans can be raised. Select a fixed deposit scheme

which scores favourably on such parameters

Any investment portfolio should comprise the right mix of safe, moderate and risky

investments. While mutual funds and stocks are the favorite contenders for

moderate and risky investments, fixed deposits, government bonds etc. are

considered safe investments. Fixed deposits have been particularly popular among a

large section of investors in India as a safe investment option for a long period.

With fixed deposits or FDs as they are popularly known, a person can invest an

amount for a fixed duration. The banks provide interest rates depending on this loan

amount and the tenure of deposit. Here are the benefits, drawbacks of fixed deposits

and precautions one should take while making such investments.

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RESEARCH

METHODOLOGY

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INTRODUCTION OF RESEARCH

Research in common parlance refers to a search for knowledge.

Once can also define research as a scientif ic and systematic search for

pertinent information on a specific topic.

Definition: According to Clifford woody research comprises defining and

redefining problems, formulating, hypothesis or suggested solutions;

collecting and evaluating data; making deductions and researching

conclusions; and at last careful ly testing the conclusions to determine

whether they fi t the formulating hypothesis.

Meaning:

“A careful investigation or inquiry especially through search for new

facts in any branch of knowledge”

Some people consider research as a movement, a movement from

the known to the unknown. It is actually a voyage of discovery. We all

possess the vital instinct of inquisit iveness for, when the unknown

confronts us, we wonder and our inquisit iveness makes us probe and

attain ful l and ful ler understanding of the unknown. This inquisit iveness is

the mother of knowledge of the method, which man employs for obtaining

the knowledge of whatever the unknown, can be termed as research.

In short, the search for knowledge through objective and systematic

method of f inding solution to a problem is research.

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Research methodology:

Research methodology is a way to solve the research problem. It is

necessary for the researcher to know not only the research method but

also the methodology.

Researcher not only need to know how to develop certain test, how

to calculate the mean, median and mode and how to apply the particular

research techniques, but they also need to know which of the methods are

relevant and what would they indicate and why.

Researcher needs to understand the assumptions underlying various

techniques and them to know the criteria by which they can decide certain

techniques which wil l be applicable to solve the problems.

Meanwhile he has to take certain decisions before they are implemented.

The scope of researcher, methodology is wider the questions that arrives

in minds of researcher are,

• Why a research study has been formulated?

• Which data has to be collected?

• Which technique should be used?

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OBJECTIVES OF RESEARCH METHODOLOGY

The purpose of research is to discover answers to questions through

the application of scientif ic procedures. The main aim of research is to

f ind out the truth which is hidden and which has not been discovered as

yet.

Through each research study has its own specific purpose, we may

think of research objectives as fall ing into a number of fol lowing broad

groupings:

To gain famil iarity with a phenomenon or to achieve new

insights in to i t (studies with of object in view are termed as

exploratory or formulate research studies)

To portray accurately the characteristics of a particular

individual, situation or a group (studies with this object in view

are no one as descriptive research studies)

To determine frequency with which something occurs or with

which it is associated with something else(studies with this

object in view are no one as diagnostic research studies)

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To test a hypothesis of a causal relationship between

variables(such studies are known as hypothesis-testing

research studies)

RESEARCH PROCESS

FORMULATING THE RESEARCH PROBLEM

EXTENSIVE LITERATURE SURVEY

DEVELOPMENT OF WORKING HYPOTHESES

DETERMINING SAMPLE DESIGN

PREPARING THE RESEARCH DESIGN

COLLECTING THE DATA

HYPOTHESIS OF DATA

ANALYSIS OF DATA

EXECUTION OF THE PROJECT

GENERALIZATION AND INTERPRETATION

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PROCESS OF THE RESEARCH

1Formulating the research problem:-

There are two types of research problem those, which relate to states of nature and those, which relate to relation ship..

2Extensive literature survey:-

Once the problem is formulated a brief summary of it should be written down. A good library will be a great help to the researcher at this stage.

3Development of working hypothesis:-

After extensive literature survey, researcher should state in clear terms the working hypothesis.

4Preparing the research design:-

The research having been formulated in clear-cut terms, the researcher will be required to prepare a research design.

5. Determining sample design:-

All the items under Consideration in any field of inquiry constitute a “population”. A complete enumeration of all the items in the ‘population’ is known as a census inquiry.

6. Collecting the data:-

There are several ways of collecting the appropriate data which differ considerably in context of money costs, time and other researchers at the disposal of the researcher.

7. Execution of the project:-

Execution of the project is a very important step in the research process.

8. Analysis of data:-

After the data have been collected the researcher turns to the task of

PREPARATION OF THE REPORT OR THE THESIS

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analyzing them. Thus researcher should classify the raw data into same purposeful & usable categories

.

9. Hypothesis testing:-

After analyzing the data as stated above the researcher is in a position to test the hypothesis.

10.Generalization and interpretation:-

Is a hypothesis is tested and upheld several times, it may be possible for the researcher to arrival at generalization. If researcher had no hypothesis to start with,

11.Preparation of the report or the thesis:-

Finally the researcher has to prepare the report of what has been done by him writing the report must be done with great care keeping in view the following.

The main text of the report should have the following parts.

• Introduction• Summary of findings• Main report• conclusion

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TYPES OF RESEARCH

The basic types of research are as follows:

1. Descriptive vs. Analytical

2. Applied vs. Fundamental

3. Quantitative vs. Qualitative

4. Conceptual vs. Empirical

5. Some other types of research

Lets us understand briefly,

1. Descriptive vs. Analytical

Descriptive research includes survey and fact-f inding enquiries of

different kinds. The major purpose of descriptive research is

description of the state of affairs as it exists at present.

The main characteristics of this method are that the research has

no control over the variables; he can only report what has happened

or what is happening.

The methods of research util ized in descriptive research are

survey methods of al l kinds, including comparative and correlational

methods.

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In analytical research on the other hand, the researcher has to

use facts or information already available, and analyze these two

make a crit ical evaluation of the material.

2. Applied vs. fundamental

Research can either be applied research or fundamental

research. Applied research aims at f inding a solution for an

immediate problem facing society or an industrial/business

organization, whereas fundamental research is mainly concerned

with generalizations and with the formulation of a theory.

Research concerning some natural phenomenon or relating to

pure mathematics are examples of fundamental research. Similarly,

research studies concerning human behavior carried on with a view

to make generalizations about human behavior, are also examples of

fundamental research.

3. Quantitative vs. Qualitative

Quantitative research is based on the measurement of quantity or

amount. It is applicable to phenomena that can be expressed in

terms of quantity.

Qualitative research, on the other, is concerned with Qualitative

phenomenon i.e. phenomena relating to or involving quality or kind.

4. Conceptual vs. Empirical

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Conceptual research is that related to some abstract idea or

theory. It is generally used by philosophers and thinkers to develop

new concepts or to reinterpret existing once.

On the other hand, Empirical research rel ies on experience or

observation alone, often without due regard for system or theory.

5. Some other types of research

There are various other types of research such as,

One time research or longitudinal

Field setting research or laboratory

Clinical or diagnostics

Exploratory

RESEARCH DESIGN:

A research design is simply and purely the framework of plan for a study that guides the

collection and analysis of data. The study is intended to find investors preference

towards various investment avenues. The study design is descriptive in nature.

TYPE OF RESEARCH:

Descriptive Research

Descriptive research is fact finding investigation with adequate interpretation. It is the

simplest type of research and is more specified.

Mainly designed to gather descriptive information and provides information for more

sophisticated studies.

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SAMPLING DESIGN:

Selection of study area: The study of area is in Bhavnagar

Sample size: 100

SAMPLING METHODS:

Convenience method of sampling is used to collect the data from the respondent.

DATA COLLECTION:

Primary data: Collected through structured questionnaires.

Secondary data: Earlier records from journals, magazines and other sources.

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DATA ANALYSIS

AND

INTERPRETATION

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PERSONAL DETAILS

Age:

Age 20-30 31-40 41-50 51 and aboveNo of

respondent 36 27 20 17

Out of the respondents I surveyed maximum were between the age group of 20 to 30.

Out of 100 respondents 36 respondents belong to age group between 20 years to 30

years i.e. 36% and the least no of respondents were from the age group of 51 years and

above.

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Educational qualification:

Qualification No of respondentHigh school 7

Graduate 63Post graduate 30

Phd 0others 0

Most of the respondents surveyed were Graduate i.e. out of 100 respondents 63

respondents i.e. 63% respondents qualification was up to graduation level and 30%

i.e.30 respondents were post graduate there were no respondents whose qualification

was PHD.

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Occupation:

Occupation No of respondentProfession 7

Businessman 46Govt servant 7

Employee 30Student 10Others 0

Out of the respondents surveyed about 46% i.e. 46 respondents are businessman, 30%

i.e.30 respondents are employee, 7 respondents are professionals and 7 are Govt

servant.

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Annual Income:

Income group No of respondentbelow 1 lakh 10

1-5 lakh 635-10 lakh 7

Above 10 lakh 20

group above 10 lakh generally they are businessman.

10% of the respondents i.e. 10 belong to the income group below 1 lakh it consists of

Out of the sample surveyed about 63% of respondents i.e. 63 respondents belong to the

Income group between 1 lakh to 5 lakh.

20% of the sample size i.e. 20 respondents belong to the income students pursing post

graduation.

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SURVEY QUESTIONS

Q1) what is your Annual savings?

Annual savings No of respondent10% to 20% 3320% to 30% 6730% to 40% 0

more than 40% 0

Savings play an important role in the economy of any nation and in India generally

people are of conservative approach and believe in savings in my survey I found that

nearly 67% of the respondents i.e. 67 respondents annual savings is between 20% to

30% which they invest in various investment instruments for future growth and also to

generate handsome returns from those opportunities available to them.

33% of the respondents i.e. 33 respondents’ annual savings is between 10% to 20%

generally they come into the age group between 20 years to 30 years and are students

and many are employee.

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Q2) which type of Instrument do you prefer for your Investment?

Type of Instrument No of respondentsPPF 0

Fixed deposits 17Mutual funds 6equity shares 36

IPOS 7Gold 7

Real estate 7Insurance 20

Bonds 0

From the survey I came to know that about 36% of the respondents i.e. 36

respondents prefer equity shares as a preferred investment option because equity

shares are highly liquid in nature and may provide good returns over long term.

Generally young people between the age group of 20 to 30 years and risk takers

prefer equity shares as an investment option.

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Q3) what is the purpose of the Investment?

Purpose of investment No of respondentssafety 30returns 50

retirement planning 7tax benefits 13

beating inflation 0beating inflation 0

Investing is a conscious decision to set money aside for a long enough periods in

an avenue that suits your risk profile. The questionnaire asked the respondents to

reveal their objective behind Investments, majority of the respondents disclosed

growth of capital/ returns as their prime objective while safety of capital stands

secondary. This response reflects the investor willingness to take calculated risks

for growth of their capital.

50% of the respondents i.e. 50 respondents purpose from Investments is returns

and 30% of the respondents’ purpose is safety while investing in any financial

instrument and 13% respondents’ purpose for Investments is getting tax benefits.

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Q4) On what basis you will Invest in any particular Financial Instrument?

Basis of Investment No of respondentspast performance 20

portfolio 27fund manager 13

technical analysis 23market sentiment 17

The respondents were mostly of the opinion that portfolio is the most important factor before

Investing and then fundamental analysis done by them or by the financial advisor and

then the other factors

27% of the respondents i.e.27 people will invest in any financial instrument as a portfolio and

23% respondents i.e. 23 people invest in any instrument after doing fundamental technical

analysis, 20% of the respondents see to past performance of the instrument before investing

and rest of them look at the market sentiment on the basis of which they decide to Invest in a

certain Instrument

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Q5) Where do you prefer for Investment?

Preference for Investment No of respondentsGovt banks 20

Private banks 7NBFC'S 0

Public sector 23Private sector 50

50% of the respondents prefer private sector for their investment as they think they

are specialize in their work of giving advice, and they knows very well about

various investment opportunities available in market. Respondents who prefer Govt

and private banks are only 20% and 7% respectively they think government bank

gives reliable news.

But generally they prefer private banks if someone is their known to them or if

there is any good relationship, which is made by giving those services at the time

of their current and savings accounts.

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Q6) How do you take Financial Decisions?

How do you take financial decision No of respondentsIndependently 50

advice from friends/relatives 20advice from banks 0NBFC'S advisors 7

Financial advisors 23

On enquiring from the respondents about how they take their financial decisions,

majority of the respondents take their financial decisions independently which depicts

they are not taking any advisory services from financial experts. There are majority

of respondents who feel that they can handle their portfolio on their own and

hence make their own decisions regarding Investments.

50% of the respondents take the financial decisions independently, 20% of the

respondents take the advice of the friends and relatives while taking their

investment decision and 23% of the respondents take the help of financial advisors

while taking financial decision.

This opens up the door for various financial advisors who can target these investors

and can give advisory services.

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Q7) If Independently, then what do you see while Investing?

What factor do u see while investing independently No of respondents

Risk factor 7Fixed returns 33

History of instrument 13Future Growth 47

Trend of other investors 0

Analyzing the response of investors every investor keep in mind the future growth of

investment instrument, is that instrument can give the good growth or returns on

their invested money. Generally they make assumption of future growth on the basis

of history of instrument and invest accordingly. 7% investors also keep Risk Factor

at time of investment in their mind, as they want to invest in safer instrument as

they said no one wants to lose their money. They also accept investment in equity

is more risky but it adds higher returns.

33% investors don’t want to take risk of volatility they think of fixed returns by

investing in fixed deposits also they invests in insurance and gold.

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Q8) Which Tendency do you prefer the most?

Which tendency do you prefer No of respondentsLow risk, low return 30

Moderate risk, moderate return 26High risk, high return 18Low risk, high return 27

Respondents response shows 17% people like the tendency high risk high return, as

they believe unless and until we would not take risk how can we earn or get return

more. That tendency is generally prefer by business and servicemen whose income

level is more than 10 lakh.

The income level of 5 to 10 lac generally prefer moderate risk or low risk to invest in

insurance, mutual fund, gold .The age level also influence the tendency the age

level between 20 –30 likes to take risks but above 45 they prefer low risk low return.

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Q9) What is the Investment horizon you prefer?

Investment Horizon No of respondentsless than 6 months 106 month to 1 year 37

I year to 3 year 20more than 3 year 33

Out of the 100 respondents 37 respondents were of the view that they invested there for

a money at least for a period of 6 month to 1year they are those respondents which

invests in equity shares

20% of the respondents i.e. 20 respondents invests for the period for a 1year to 3 year

generally they invest in fixed deposits, gold, mutual funds, and equity shares for long

term.33% of the respondents i.e. 33 invest for more than 3 year horizon to get steady

and fixed returns generally they are those which invest their savings in insurance, real

estate, gold etc.

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Q10) How much return you expect from any Financial Instrument?

Returns expected No of respondents10% to 20% 4020% to 30% 3030% to 50% 23

More than 50% 7

40% of the Respondents responses showed that they expect 10% to 20% returns which can beat inflation and those respondents generally invest in fixed deposits, insurance, gold etc.

30% of the respondents i.e.30 respondents expects 20 % to 30% returns which they generally get through investing in real estate, mutual funds, equity shares etc.

Generally young people expect more returns because of their aggressive nature and they tend to take risk so they invests in equity shares and IPOs which can sometimes due to market sentiment can provide good returns to investors.

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Q11) Are you satisfied with your investment decision, Please rate?

Are you satisfied with your investment decision No of respondents

Highly satisfied 20Satisfied 60

Less satisfied 20Not satisfied 0

Respondents response showed that about 60% of the respondents i.e. 60

respondents are satisfied with their Investment decision and mostly they

belong to the age group between 30 years to 40 years and are employee

as an occupation, generally they Invest in fixed deposit and insurance

which are safer Investment instruments and can generate steady and

future returns.

Nearly 20% of the respondents are highly satisfied because they take

advice from the friends and relatives and financial advisors before taking

any financial decision this helps them to take rational and correct

decision.

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Findings

• I found this topic as an investment by surveying from people about stocks and

they recommend that they are investing their extra money in stock market.

• Some person also told that they are investing in stocks by online investing

service provided by the broker.

• People want to suggested that they are selecting broker who provides

maximum information at minimum brokerage for investing.

• They also told that they are opening depository account for long term

investment.

• By surveying people’s interest we found that most of people are investing their

extra money in stocks and mutual funds.

• The people also invest their money in systematic plan policy.

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RECOMMENDATIONS

India is seeing as a maturing financial environment. Options to attract savings exist

through a spate of financial products and services that have differing risk/growth

and asset accretion propositions. It is becoming increasingly obvious to people that

their money, in real terms, would fall in value if they were to keep their money in the

bank. And hence the keenness to find out the right avenue that would help grows

their savings or assets.

Financial Planning Should Be Encouraged

‘Financial planning’ is the process of charting out the money course of your life. It’s

like having a financial roadmap that guides your every step till you pass on the

baton to the next generation. In other words, it is a process in which an individual

sets long-term financial goals through investments, tax planning, asset allocation,

risk management, retirement planning and estate planning. Most of us approach our

financial lives like the disorganized traveler who gets to his destination eventually

and perhaps even enjoys the rough ride. We think we have a clear roadmap in

mind, but our financial lives are marked by ad-hoc decisions and capitulation to the

temptations of the flavors of the financial season.

One of the myths regarding financial planning is that only rich individuals and

HNIs can undertake this. This perception exists because most players in the market

target these people, as they are very profitable customers. However, anyone can

use financial planning. In fact, individuals should use effective financial planning to

build their wealth over the years.

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CONCLUSION

• The young people should start investing earlier so that they can reap the benefits

of investing in future

• People should keep their eye open and keep updating themselves about various

investment avenues so that they can get safe returns

• Growth of capital acts as a primary objective behind investments

• Day by day the economy of the country is growing and there are various

investment options available for the people in which they can invest and can get

returns but they should consider various factors such as risk factor, time horizon,

safety, fixed returns, past performance before investing in any such instrument.

• Any investors portfolio should comprise of different investment instruments such

as equity shares, insurance, fixed deposits etc because if the portfolio is

diversified it gives a good returns in long term and contains less risk so ones

portfolio should be diversified.

• There is a great need to provide awareness of various investment opportunities

available so that each and every investor or an ordinary people can take

opportunity and can get benefit of capital appreciation.

• Mostly Investors are taking financial decisions independently, which depicts

that there is a need of financial planners to approach these investors in a

proper manner so as to provide value additions to the saving potential

and portfolio

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BIBLIOGRAPHY

Books:

• Marketing Research by G C Beri- third edition – © 2000, Tata

McGraw- Hill Publishing Company Ltd.

• Investment Management- V.K. Bhalla.

• I.M. Pandey (2003), Financial Management, Tata McGraw Hill.

Websites:

www.google.com

www.nseindia.com

www.bseindia.com

www.ibef.org

wikipedia.org

www.icicidirect.com

www.amfiindia.com

Magazines:

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Business Today

Business India

Capital Markets

Dalal Street

Business & Economy

QUESTIONNAIRE

Hello Sir/Madam, I am pursuing bba from swami Sahjanand College of commerce and

management). In fulfillment of our course curriculum I am required to do a Research

study. The topic which I had selected is ‘attitude of retail investor towards

investment and diverse investment stratagies’ I would appreciate if you could kindly

spend few minutes of your valuable time and help us in filling this questionnaire. The

data collected through this survey is purely for the academic purpose and will be kept

completely confidential.

PERSONAL DETAILS

1. Name: 2. Age:

(a) 20

-30 (b) 31-40 (c) 41-50 (d) 51 & above

3. Gender:

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(a) Male (b) Female

4. Educational qualification:

(a) High School (b) Graduate (c) Post Graduate

(d) PhD. (e) Others

5. Occupation:

(a) Profession (b) Businessman (c) Govt servant (d) Employee

(e) Student (f) Others

6. Annual income:

(a) Below 1, 00,000 (b) 1, 00,000 - 5, 00,000 [ ]

(c) 5, 00,000 - 10, 00,000 (d) Above 10, 00,000

SURVEY QUESTIONS

Q1) what is your Annual savings?

a)10 % to 20 %b)20 % to 30 %c)30 % to 40 %d)More than 40 %

Q2) Which type of Instrument do you prefer for your Investment?

(Tick the most preferred one)

(a) Public provident fund (b) Fixed deposits (c) Mutual funds

(d) Equity shares (e) Post office scheme (f) Gold

(g) Real estate (h) Forex (i) IPO’S

(j) Insurance (k) Govt bonds (l) others

Q3) What is the purpose of the Investment?

(a) Safety (b) Returns (c) Retirement planning

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(d) Tax benefits (e) Beating inflation (f) Liquidity

(g) Others

Q4) On what basis you will Invest in any particular Financial Instrument?

(a) Past Performance (b) Portfolio (c) Fund Manager

(d) Fundamental/Technical Analysis (e) Market Sentiment

(f) If any other please specify………………………………………………

Q5) Where do you prefer for Investment?

(a) Government banks (b) Private banks (c) NBFC’S (d) Public sector (e) Private sector (f) others

Q6) How do you take Financial Decisions?

(a) Independently (b) Advise from Friends/Relatives

(c) Advise from banks (d) NBFC’S advisors

(e) Financial advisor (f) others

Q7) If Independently, then what do you see while Investing?

a)Risk Factorb)Fixed returnsc)History of instrumentd)Future growthe)Trend of other investors

Q8) Which Tendency do you prefer the most?

(a) Low risk, low return (b) Moderate risk, moderate return

(c) High risk, high return (d) Low risk, high return

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Q9) What is the investment horizon you prefer?

(a) Less than 6 months (b) 6 months to 1 year (c) 1 year to 3 year

(d) More than 3 years

Q10) How much return you expect from any Financial Instrument?

(a) 10% to 20 % (b) 20% to 30% (c) 30% to 50% (d) More than 50 %

Q11) Are you satisfied with your investment decision, Please rate?

(a) Highly satisfied (b) Satisfied (c) Less satisfied (d) Not satisfied

THANK YOU