Dynamics of Perception of Potential Investors in Visakhapatnam, India

Transcription

1 Dynamics of Perception of Potential Investors in Visakhapatnam, India Kameswara Rao Poranki Professor in Department of Marketing, FAFS, Al Baha University, Saudi Arabia (KSA) & Abstract In the present globalized economic scenario of India, there is private corporate investment with emphasis on the implications of the policy reforms. The researcher has made an attempt to elucidate the dynamics of perceptions of investors with a selected city of Visakhapatnam, India. This research has the potential to garner the perceptions of investors in their habits of savings to earn fair return on their investments. The results suggest that the net impact of the globalization on investors perception is tremendous. There are some positive effects of investments in shares of corporate sector in this era as it is offering better return on investments made by the general public based on their intelligent assessments in this economic boom prevailing in India due to encouragement by the Government of India. Keywords: Perception, Investment, Risk and Return and Investor s preference etc. Originality/value: The researchers have conducted the survey at Visakhapatnam to assess the Dynamics of Perception of Potential Investors to get the desired results. Paper Type: Research Paper Introduction It is believed that the financial market offers a wide variety of investments, which differ from one another with respect to the return, risk and the waiting period and an investor has to be aware of the merits and limitations with respect to each investment channel to decide a course of investment plan. As and when the financial literacy level increases, the investors may take an informed decision about his investment portfolio, which will benefit both the country as well as the individual investor (S. Prakash & C. Sundar, 2013). In today's globalized economic scenario it is increasingly activist investor environment which is important that management know how investors view their company. However, the level of understanding of the investment proposition will impact the rating of the shares. It is prudent to aware the opinions and views of investors assists companies to improve their communication with the market and to ensure the investment proposition is properly understood and is reflected in the valuation of the shares, which in turn will influence its cost of capital ( This in turn, savers and investors are not constrained by their individual abilities, but facilitated by the economy scalability to invest and save, which inevitably enhances savings and investment in the economy. Review of Literature Another author said that expectations of the investors influenced by their perception and generally humans relate perception to action and the study revealed that the most preferred vehicle is bank deposit with mutual funds and equity on fourth and sixth respectively. Finally, the survey also revealed that the investment decision is made by investors on their own, and other sources influencing their selection decision are newspapers, magazine, brokers, television and friends or relatives (Rajeswari, T. R. and Moorthy, V. E. R.,2005). G. N. Bajpai (2006) showed that continuously monitors performance through movements of share prices in the market and the threats of takeover improves efficiency of resource utilization and thereby significantly increases returns on investment. The author in their research believes that the Investor s behavior refers to the selection, purchase and consumption of > RJSSM: Volume: 05, Number: 2, June 2015 Page 165

2 goods and services for the satisfaction of their wants is similar in case of investments also but the investor behavior tries to find what securities he would like to consume, then he selects only those security that promise greater utility. Thus, after selecting the security, the investor makes an estimate of the available money which he can spend and finally investor analyzes the prevailing prices of security and takes the decision about the security he should consume (Anitha & D.Phani Bhargavi (2014). Therefore, the author Kameswara Rao Poranki (2014) has advocated in his research paper on 'Preferences towards male deodorants consumers and retailers in Saudi Arabia' that there is a need for understanding the Perception by the marketers before understanding the 'Consumer Perception' because there is a significant impact on consumer behaviour as the behaviour of consumers are directly proportional to their perceptions based on previous experiences and judgments upon the products or services they had used. The Author Kameswara Rao Poranki (2015) in a research paper stressed that Perception by the marketers before understanding the 'Consumer Perception' because there is a significant impact on consumer behaviour. Objectives 1. To find out the investment pattern of people in Visakhapatnam. 2. The objective involves in measuring the awareness level of capital market investments. 3. To find out what factors held back people from investing in secondary market. Hypothesis H-0: There is no significant relation between occupation and the type of investment the investor chooses. H-1: There is no significant relationship between age of the investor and investing in capital market. H-2: There is no significant relationship between fixed return and Investment Avenue. Investment options available to investors: Short-term financial options available for investment Savings Bank Account is often the first banking product people use, which offers low interest (4%- 5% p.a.), making them only marginally better than fixed deposits. Money Market or Liquid Funds are a specialized form of mutual funds that invest in extremely shortterm fixed income instruments and thereby provide easy liquidity. Fixed Deposits with Banks are also referred to as term deposits and minimum investment period for bank FDs is 30 days. Fixed Deposits with banks are for investors with low risk appetite, and may be considered for 6-12 months investment period as normally interest on less than 6 months bank FDs is likely to be lower than money market fund returns. Long-term financial options available for investment Stock: This is a type of security that signifies ownership in a corporation and represents a claim on part of the corporation's assets and earnings. Bond: It is a fixed income (debt) 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. Debenture: This is a type of debt instrument that is not secured by physical asset or collateral. Debentures are backed only by the general creditworthiness and reputation of the issuer. Mutual fund: These are funds operated by an investment company which raises money from the public and invests in a group of assets (shares, debentures etc.), in accordance with a stated set of objectives. Real estate: Land plus anything permanently fixed to it, including buildings, sheds and other items attached to the structure. Unlike other investments, real estate is dramatically affected by the condition > RJSSM: Volume: 05, Number: 2, June 2015 Page 166

3 of the immediate area where the property is located. With the exception of a global recession, real estate is affected primarily by local factors Post Office Savings: Post Office Monthly Income Scheme is a low risk saving instrument, which can be availed through any post office. It provides an interest rate of 8% per annum, which is paid monthly. It has a maturity period of 6 years. Public Provident Fund: A long term savings instrument with a maturity of 15 years and interest payable at 8% per annum compounded annually. Tax benefits can be availed for the amount invested and interest accrued is tax-free. Company Fixed Deposits: These are short-term (six months) to medium-term (three to five years) borrowings by companies at a fixed rate of interest which is payable monthly, quarterly, semi-10 annually or annually. Research Method The survey is done for collecting the primary data among the respondents in Visakhapatnam by using the descriptive nature to analyze the dynamics of perception of the people towards various types of investments. The study design is descriptive in nature. Since the investor population is large, to analyze the investor perception on derivative trading a sample size of 1500 is selected. The customer was selected on the basis of probability sampling technique. Data Analysis Tools a) Percentage Percentage refers to a special kind of ratio. This is used in making comparison between two or more series of data. It is denoted as %. Number of Respondents Percentage of Respondents = X 100 Total Respondents b) Chi Square Test It is applied in statistics to test the goodness of it, verify the distribution of observed data with assumed theoretical distribution. It is a measure to study the divergence of actual and expected frequencies. It has a great use in statistics, especially in sampling studies. χ 2 = (O-E) 2 /E, Where, O = Observed Frequency and E = Expected Frequency. If the computed value of χ 2 is greater than the table value at greater level of significance, then the null hypothesis is rejected. Conclusion The researcher has made an earnest attempt to know the behavioral relationships between members of a group that are assigned connected tasks within the market under study. Dynamics are affected by roles and responsibilities and have a direct result on productivity. But coming to investor dynamics of perception of potential investors in different as there is there is confusion among the investor while selecting better option to get better return on investment. Hence in the current scenario awareness level about the investment in capital market should be increased. It should be noted that there should be diversification in investment. There is a need for investment awareness classes for people belonging to various walks of life towards equity investment. The general outlook of towards riskier instruments like equity investments has changed a lot from the traditional fixed deposit investments. Today more and more People especially younger people are into various investment activities like Speculation/Intra-Day Trading etc. It is directed to future researchers could conduct research on comparative analysis of neighboring countries also would be helpful to protect the interests of retail investors. > RJSSM: Volume: 05, Number: 2, June 2015 Page 167

4 References 1) Anitha & D.Phani Bhargavi (2014) "Investors Perception Towards Investment" in Global Journal of Finance and Management. ISSN Volume 6, Number 2 (2014), pp Research India Publications 2) Bajpai, G. N. (2006). Development of Capital Market in India, 1-9. Retrieved on December 2, 2010 from 3) Kameswara Rao Poranki (2014) & Dr. Abdulbaset Hasouneh, 'Preferences towards male deodorants consumers and retailers in Saudi Arabia'- International Journal of Current Research, Vol. 6, Issue, 04, pp , April, 2014 which is available online at journalcra.com 4) Kameswara Rao Poranki (2015) "The Intricacies of Consumer Perception and Behaviour of Consumers of Cosmetics in India"- Journal of Social Science & Management (RJSSM); Volume: 05, Number: 1, May pp: ) Rajeswari, T. R., & Moorthy, V. E. R. (2005). An Empirical Study on Factors Influencing the Mutual Fund/ Scheme Selection by Retail Investors, Retrieved on January 13, 2013 from 6) S. Prakash & Dr. C. Sundar(2013) "Analysis of investor perception and preferences: investment avenue"- International Journal of Applied Financial Management Perspectives Pezzottaite Journals. Volume 2, Number 3, July September 2013 ISSN (P): , (O): X pp: ) ANNEXURE Table: 01- Respondents by age Age No. Of respondents Percentage Less than 25yrs years years Above 50 years From the above table we can find that the percentage of age classification of respondents Table: 02: Occupation of the Respondents Occupation No. Of respondents Percentage Professional Own business Government employee Private sector employee Full time investor The above table depicts the classification of respondents by their occupation Table: 03: Preferred Investment Avenue of the Respondents Investment avenue No. Of respondents Percentage Shares Mutual fund Government securities Bank deposits > RJSSM: Volume: 05, Number: 2, June 2015 Page 168

5 Gold Real estate The above table depicts the classification of respondents by their preferred investment avenue Table: 04: Preferred Period of Investments of Respondents Period of investment No. Of respondents Percentage Less than 1 year to 3 years More than 3 years The above table depicts the classification of respondents by their preferred period of investment Table: 05: Investment Interval of the respondents Interval at which investments are made No. Of respondents Percentage Monthly Quarterly Half yearly Yearly Whenever opportunity arises The above table depicts the classification of respondents by their investment interval Table: 06: Fixed returns preferred by respondents Fixed returns No. Of respondents Percentage Highly undesirable Undesirable Neither desirable nor desirable Desirable Highly desirable The above table depicts the classification of respondents by their preferred fixed returns Table:07: Preference of Capital Gain Capital gain No. Of respondents Percentage Highly undesirable Undesirable Neither desirable nor desirable Desirable Highly desirable The above table depicts the classification of respondents by their preference of Capital Gain Table: 08: Preference for Safety Safety No. Of respondents Percentage Highly undesirable Undesirable Neither desirable nor undesirable Desirable > RJSSM: Volume: 05, Number: 2, June 2015 Page 169

6 Highly desirable The above table depicts the preference of Safety by respondents Table: 09: Preference towards Liquidity Liquidity No. Of respondents Percentage Highly undesirable Undesirable Neither desirable nor undesirable 60 4 Desirable Highly desirable The above table depicts the preference towards Liquidity by respondents Table:10: Preference towards Tax Benefits Tax benefits No. Of respondents Percentage Highly undesirable Undesirable Neither desirable nor desirable 0 0 Desirable Highly desirable The above table depicts the preference towards Tax benefits by respondents Table: 11: Guidance for Investment Guidance for investment No. Of respondents Percentage Parents Friends Self decision Broker Based on magazine/newspaper Based on TV programmes Analysis reports Web portal Investment advisors The above table depicts the seeking of Guidance for investment Table: 12: Factors influencing for investing in Capital Market Factors that influence in capital market investments Yes Percentage No Percentage Dividend announcement Earnings from share Price movements Annual report Recommendation by portals Recent developments in the company Suggestion from brokers Technical analysis tools The above table, the factors influencing the respondents for investing in capital Market > RJSSM: Volume: 05, Number: 2, June 2015 Page 170

7 Table: 13: The feeling of Uncertainty of Return Uncertainty of return Count Percentage Highly undesirable Undesirable Neither desirable nor desirable Desirable Highly desirable The above table depicts the feeling of Uncertainty of Return by Investors. Table: 14: Uncertainty of Market Movements Uncertainty of market movements Count Percentage Highly undesirable Undesirable Neither desirable nor desirable Desirable Highly desirable The above table depicts the feeling of Uncertainty of Market Movements by Investors Table:15: Lack of Expertise in Investing Lack of Expertise in Investing Count Percentage Highly undesirable Undesirable Neither desirable nor desirable Desirable Highly desirable The above table depicts the feeling of lack of expertise in investing by investors Table: 16: Not safe in investing in stock markets Not safe Count Percentage Highly undesirable Undesirable Neither desirable nor desirable Desirable Highly desirable The above table depicts the feeling of not safe in investing in stock markets by investors Table: 17: Fear of Frequent Frauds Frequent frauds Count Percentage Highly undesirable Undesirable Neither desirable nor desirable > RJSSM: Volume: 05, Number: 2, June 2015 Page 171

8 Desirable Highly desirable The above table shows the Fear of Frequent Frauds investing in stock markets by investors Table: 18: Lack of Awareness about investments Not aware of such investments Count Percentage Highly undesirable Undesirable Neither desirable nor desirable Desirable Highly desirable The above table shows the Lack of Awareness about investments in stock markets by investors Table: 19: Relationship between investment avenue preferred and occupation of investors Occupation INVESTMENT AVENUE PREFERRED Shares Mutual fund Government securities Bank deposits Gold Real estate Professional Own business Government employee Private sector employee Full time investor Ho: There is no significant relation between occupation and the type of investment the investor chooses. H 1 : There is a significant relation between occupation and the type of investment the investor chooses. The result of χ 2 test is: Calculated value = ; Df = 20; Sign level=.847; Table value = Calculated value is less than table value. Hence the hypothesis is accepted. Hence, there is no significant relation between occupation and the type of investment the investor chooses. Table: 20: Relationship between age and investment in capital markets Investment avenue preferred Shares Mutual fund Governmen t securities Bank deposits Gold Real estate Less than 25yrs Age years years Above 50 years Ho: There is no significant relationship between age of the investor and investing in capital market. H 1 : There is a significant relationship between age of the investor and investing in capital market. The result of χ 2 test is: Calculated value = 10.28; Df = 15; Sign level=.802; Table value = 25 Calculated value is less than table value. Hence the hypothesis is accepted. Hence, there is no significant relationship between age of the investor and investing in capital market. > RJSSM: Volume: 05, Number: 2, June 2015 Page 172

9 Table:21: Relationship between investment avenue and fixed returns FIXED RETURNS Neither Investment avenue Highly undesirable Undesirable Desirable Nor undesirable Desirable Highly desirable Shares Mutual fund Government securities Bank deposits Gold Real estate Total Ho: There is no significant relationship between fixed return and Investment Avenue. H 1 : There is significant relationship between fixed return and Investment Avenue. The result of χ 2 test is: Calculated value = ; Df = 20; Sign level=.252; Table value = Calculated value is less than table value. Hence the hypothesis is accepted Hence, there is no significant relationship between Investment Avenue and fixed returns. > RJSSM: Volume: 05, Number: 2, June 2015 Page 173