CHAPTER - IV INVESTMENT PREFERENCE AND DECISION INTRODUCTION

CHAPTER - IV INVESTMENT PREFERENCE AND DECISION INTRODUCTION This Chapter examines the investment pattern of the retail equity investors in general and investment preferences, risk-return perceptions and investment objectives of the retail equity investors based on the socio-economic variables and selective investment profile factors. An investment in equity shares is one of the welcoming trends in the investment sector. These investments have been found in the primary market, secondary market, changes in project details and financial parameters. The equity share is always dominated by the primary market and secondary market and the investors select one of these to their investment processes and lucrative approach. In this chapter, perception of investors on primary and Details of present values are analysed with respect to their various investment options and procedures. The ideas of financial parameters and changes of project details contribute to the retail investment and their progress. So their elements and consequences in the present scenario are ascertained through the opinions of respondents. Several sophisticated and multivariate tools are exploited to obtain the torrent of results useful for the study. The general impact of financial investments on the equity shares will be analysed with the support of data collected by using appropriate statistical tools, of course with necessary interpretations. As already mentioned though the study related to financial investments and their impact on the equity shares, the main concentration will be on the perception of the investors, who are the part and parcel of the equity shares. Hence, the study of demographic variables regarding the investors is necessary and let us book at them in the following lines. 100

4.2 Age of the Investors Investment factor often goes with age. Age factor distinguishes the investor behaviour. Many investing options have carved out a place in the equity shares by concentrating on a specific age segment. The age of the investors plays a crucial role to identify the investment behaviour. It is considered as a useful demographic variable to segment the investors based on their perception of the investment pattern. The respondents have been divided into four groups, namely, less than 25, 26-40, 41-60 and above 60. Table 4.1 shows the age of frequency distribution of the sample investors. Table - 4.1 Age Frequency of Investors Age Frequency Percentage Below 25 29 5.7 26-40 278 54.9 41-60 169 33.3 Above 60 31 6.2 Total 507 100 The above table clearly indicates that a maximum percentage of 54.9% of investors are in the age group of 26 to 40 followed by the investors in the age group 41 to 60 which is 33.3%. It is also found that a less percent of 6.2% of the investors are in the age group of above 60. 101

Figure 4.1: Age of the Investors 4.3 Gender of the Investors Gender is a useful variable for the equity shares investment because it seems to reflect the attitudes, options and prudential motives of the investors. Gender is an important factor to identify the behaviour of the investors. In general, most of the investors in the equity shares are males. Females are not much exposed to the effectiveness of retail investment and their consequences. Table - 4.2 shows the distribution of male and female investors. Table - 4.2: Gender of the Investors Gender Frequency Percentage Male 468 92.4 Female 39 7.6 Total 507 100 102

From the above table, it is clear that 92.4% of the investors are males and 7.6% are females. This profoundly reveals that males are more enthusiastic than females in equity shares investment. These results are also shown in Figure 4.2. Figure 4.2: Gender of the Investors Percentage 4.4 Marital Status of the Investors Marital status affects the investment pattern of investors. The marital sentiments force them to invest for their future prospects. This state makes the investor to think twice before investment. The martial status is considered to be one of the major determinants for investors. Due to various family commitments, the married investors are not able to concentrate more on investment in the equity shares. Table - 4.3 indicates the marital status of the investors. 103

Table - 4.3: Marital Status of the Investors Marital Status Frequency Percentage Married 407 80.3 Unmarried 93 18.4 Separated 07 1.2 Total 507 100 It is found from the above table that 80.3% investors are married and 18.4% are unmarried and the remaining 1.2% is separated according to martial status. The married investors view these investments for their prudential purpose. The graphic figure 4.3 also supports the above interpretation. Figure 4.3: Marital Status of the Investors Percentage 4.5 Education of the Investors Education completely expresses the values of investment, creates attitudinal changes among investors, more broadly, it reflects a life style with many investment options in the equity shares. Education is a powerful background for the investor s analysis about the pros and cons of investment in equity shares. Table - 4.4 presents education wise distribution of the investors. 104

Table - 4.4: Education of the Investors Education Frequency Percentage School 40 7.9 Diploma 54 10.7 Graduate 247 48.8 Postgraduate 104 20.6 Professional 62 12.0 Total 507 100 It is found that most of the investors are have a good education background. 48.8% of the investors are graduates, 20.6% are post graduates and 12% are professionals. This shows that the educated investors are able to analyze the advantages and disadvantages of investment in equity shares and they also concede that they are able to get transparent information through television and magazines regarding equity shares in India. Figure 4.4: Education of the Investors 60 Education of the investors 50 40 30 Percentage 20 10 0 105

4.6 Occupation of the Investors Many investment companies and stock brokers have found that occupational category can also be used to distinguish the investment pattern. Occupation of the investors paves the way and also induces the investment pattern of the investors. Table - 4.5 depicts the occupation of investors surveyed, among five groups according to their occupation. Table - 4.5: Occupation of the Investors Occupation Frequency Percentage Government 70 13.8 Private 218 43.0 Self-employed 166 32.7 Agriculture 07 1.3 Retired 46 9.2 Total 507 100 In this table, it is identified that most of the investors are working in private concerns or running their own business, that is 43% and 32.7% of investors are employed in private or in their business concerns. The Government employees are not enthusiastic more in equity shares investment and retired people and agriculturalists also show the least interest in investing their surplus in equity shares project details. The above facts have been shown in Figure 4.5 also. 106

Figure 4.5: Occupation of the Investors 4.7 Income of the Investors Income has long been an important variable for distinguishing investment segments. It is known that affluent investors are much enthusiastic in investment and need better returns. The respondents are divided into four income groups according to their annual income. Income is the most important factor for all the investors to allot separate amount for the investment, which will be used for their future purpose. Table - 4.6 explicitly shows the income of the respondents. Table - 4.6: Income of the Investors Income Frequency Percentage Below 1 lakh 135 26.6 1-2 lakhs 198 39.1 2-3 lakhs 116 22.9 Above 3 lakhs 58 11.4 Total 507 100 107

It is found from the table that 39.1% investors belong to the income groups of Rs. 1-2 lakhs and 26.6% investors have the income less then Rs. 1 lakhs, 22.9% are in the income of groups of Rs. 2-3 lakhs. The investors with more than Rs. 3 lakhs income do not show more interest on investments in equity shares. Figure 4.6 also illustrates the above data. Figure 4.6: Income of the Investors 4.8 Nature of Family of the Investors Nature of family is an important factor affecting the regular investment pattern. Family nature is considered as one of the burdens affecting the investment behaviour of investors. Family members of investors are classified into three groups as shown in the table - 4.7. 108

Table - 4.7: Nature of Family of the Investors Nature of family Frequency Percentage Joint 194 38.3 Nuclear 313 61.7 Total 507 100 From the above table, it is clear that the investors in the joint family are not much enthusiastic in investment in the equity shares and the investors of nuclear family are able to invest more amount of their income in equity shares. Figure 4.7 also indicates the above observation. Figure 4.7: Nature of the Family of Investors 4.9 Number of Dependents of the Investors The number of dependents is playing a significant role in deciding the investment amount of the investors and it is presented in table - 4.8. 109

Table - 4.8: Number of Dependents of the Investors Number of Dependents Frequency Percentage No dependents 70 13.8 1 dependent 49 9.7 2 dependents 121 23.9 3 dependents 138 27.2 4 dependents 60 11.9 More than 4 dependents 69 13.5 Total 507 100 When the number of dependents is more in the family, their investment behaviour pattern also changes significantly. The number of dependents and investment are inversely proportional to each other. When the number of dependents is more in the family, they do not have ample money for investment in this present economic situation. Figure 4.8 also indicates the same inference. Figure 4.8: Number of Dependents of the Investors 110

4.10 House Ownership of the Investors Own house and rented house investors behave in a different manner during their investment proceedings. Rented house exploits their income and hampers them from investment. Table - 4.9 indicates two types of investors. Table - 4.9: House Ownership of the Investors House Ownership Frequency Percentage Own 434 85.7 Rented 73 14.3 Total 507 100 It is inferred from the table that most of the investors in equity shares have their own house. If they have their own houses, they divert their income in the form of investment in equity shares. It is also found that 85.7% of the investors have their own houses and 14.3% are in rented house. Figure 4.9 also supports the above facts. Figure 4.9: House Ownership of the Investors 111

4.11 Type of Investors There are two types of investors in share market of India. The hereditary investors develop the investment habit as their character and some investors are induced by the liberalization and transparency of share market investment. The following Frequency Distribution Table 4.10 reveals the response of investors about their type towards share market investment: Table -4.10: Type of investors Type Frequency Percentage Valid Percentage Cumulative Percentage Options New generation 428 84.4 84.4 84.4 Hereditary 79 15.6 15.6 100.0 Total 507 100.0 100.0 From the above table it is found that 84.4% of the respondents in Chennai are new generation investors who know about the risk and return in equities, whereas, 15.6% of them are hereditary investors. This implies that maximum number of investors is new generation and induced by policies of liberalization and transparency in Indian capital market. 4.12 Category of investors The investors differ in their category based on their long term investment pattern and daily trading approach in Indian share market. The following frequency distribution Table 4.11 presents two different categories of investors 112

Table 4.11: Category of Investors Category Frequency Valid Percent Cumulative Percent Both 365 72 72 Daily traders 64 12.6 84.6 Long term 78 15.4 100 Total 507 100 From the above table it is found that 72% of the respondents establish themselves as both long term investors and daily traders and 12.6%of them operate equity investment daily. It is also found that 15.4% of the investors have the habit of long term investment in equities. From the above analysis it is inferred that maximum number of respondents are interested towards long term investment and daily trading of shares. 4.13 Number of Years of Dealing with Securities Markets Investment Behaviour of the investor can be easily analyzed through the number of years of dealing with securities markets. In fact, the experience makes a man perfect by dealing in the securities markets so that the investor may come to know the changes in securities markets. It is believed that wisdom comes only form ones own experience. In this study four classification have been considered namely below 5 years, 6 10 years, 11-15 years and above 15 years. The following frequency distribution Table 4.12 expresses the distribution of the samples according to the number of years dealing with securities markets. 113

Table-4.12: Frequency Distribution of Number of Years of Dealing with Securities Markets years Frequency Valid Percent Cumulative Percent Valid Below 5 years 277 54.7 54.7 6 10 years 130 25.6 80.2 11 15 years 89 17.6 97.8 Above 15 years 11 2.2 100.0 Total 507 100.0 Source: Primary data From the above table it is revealed that a maximum of 54.7% of investors are dealing less then 5 years of experience in the securities market followed by 25.6% of investors are having the experience in the securities market for 6 to 10 years, 17.6% of the investors have been dealing for the period of more than 11 years but less than 15 years of experience and only 2.2% of the investors are dealing in the securities market with the experience of more than 15 years of experience with securities market. So the percentage analysis revealed that most of the investors are having the experience in the securities market just below 5 years which shows that young investors and educated person are now entering into the securities markets. 4.14 Number of companies invested. People have several means to get to know about the available investment schemes in different companies in different sectors and these sources are motivating the potential investors to make investments in particular companies. The following Frequency Distribution Table 4.13 reveals the response of investors pertaining to number of companies invested: 114

Table-4.13: Number of companies invested Number of companies Frequency Percent Valid Percent Cumulative Percent Response Less than 10 376 74.1 74.1 74.1 More than 10 131 25.9 25.9 100.0 Total 507 100.0 100.0 From the above table it is found that 74.1% of the respondents in Chennai invested in less than 10 companies and remaining 25.9% of them are attracted towards more than 10 companies share market investment. This denotes that maximum number of customers possess the updated knowledge about less than 10 companies for their investment. 4.15 Size of Investment The size of investment has an important bearing on the share market investment of the individuals. The investment habits of the individuals will be highly influenced by the size of investment in their hands. The following frequency distribution Table 4.14 expresses the distribution of the samples according Size of investment dealing with securities markets. Table-4.14 Distribution of Samples on the Basis of size of investment Size of Investment Frequency Valid Percent Cumulative Percent Less than Rs. 1,00,000 54 10.7 10.7 Rs. 1,00,000- Rs. 2,00,000 180 35.4 46.1 115

Rs. 2,00,000-Rs. 3,00,000 119 23.5 69.6 Rs. 3,00,000 and above 154 30.4 100.0 Total 507 100.0 From the above table it is found that 10.7 % of the respondents have an investment of less than Rs. 1, 00,000. The investment level of 35.4 % of the respondents is between Rs. 1, 00,000 and Rs. 2, 00,000. 23.5 % of them have an investment size which ranges from Rs.2, 00,000 to Rs. 3, 00,000. The annual size of 30.4 % of the sample ranges above Rs.3, 00,000. From the above analysis it is clear that large number of respondents have an annual income ranging between Rs. 1, 00,000 and Rs.2, 00,000. 4.16 Source of Investment. The investors enthusiastically invest their own funds or borrowed funds to derive maximum return with in the short span of time. The following Frequency Distribution Table 4.15 reveals the response of investors about their source of funds to invest in equities: Table-4.15 Source of Investment Internet Banking Frequency Percent Valid Percent Cumulative Percent Response Own funds 489 90.6 90.6 90.6 Borrowed funds 51 9.4 9.4 100.0 Total 540 100.0 100.0 116

From the above table it is found that 90.6% of the respondents in Chennai are able to invest own funds in equities whereas, 9.4% of them borrow funds to invest in equities. This indicates that maximum number of investors invest own funds to obtain better returns. 4.17 Percentage of Savings Invested In Securities Markets The Behaviour of investors can be easily analyzed through the percentage of savings invested in the securities markets. In fact the surplus income induces the investors to participate in the securities market in order to earn high returns. Propensity to invest can be defined as the percentage of current income invested; it s known that investments are made out of surplus income. If the proportion of investment to income is higher, then the propensity is said to be higher. In this study four classifications have been considered namely below 25%, 26 50%, 51 75%, and 76 100 % of savings invested in to the securities markets. The following frequency distribution Table 4.16 expresses the distribution of the sample according to the percentage of savings invested in the securities markets. Table-4.16 Frequency Distribution of Percentage of Savings Invested In Securities Markets Percentage of savings Frequency Valid Percent Cumulative Percent Valid Below 25% 528 64.0 64.0 26% - 50% 188 22.8 86.8 51% 75% 104 12.6 99.4 76% - 100% 5 0.6 100.0 Total 507 100.0 Source: Primary data 117

From the above table it is ascertained that a maximum of 64% of sample size are investing their fund out of their savings below 25%, followed by 22.8% of sample size are participating in the securities market out of their savings between 26 50%, on sample size of 12.6% of the investors are investing their fund out of their saving between 51 75% and only 0.6% of the sample size are investing their saving between 76 100%. So the percentage analysis revealed that most of the investor are invest their money out of their saving below 25% of the surplus money that they had. 4.18 Sources of Information A successful investor in securities market must keep himself abreast of the latest information, all the required information especially the one relating to specific companies / industries is not available at one place, so investors are able to get transparent information about their dealings in securities market through various avenues like News Paper, Journals and Magazines, Television Channels, Stock Brokers, Investment Consultancy, Web sites and friends and Relatives. The following table 4.17 presents the combined frequency distribution of various avenues of information. Table 4.17 : Sources of Information Sources Of Information No. Of Responded Percentage News Papers Television Channels Stock Brokers Journals & Magazines Friends & Relatives Investment Consultant Web Sites Source: Primary data 400 336 286 256 203 200 179 77.6 66.4 56.5 50.8 40 39.4 35.3 118

From the above combined frequency distribution table it is ascertained that a maximum of 77.6% of investors get the information about the securities market through news papers followed by 66.4% of investors get the information through television media, 56.5% of investors receive the information through the stock brokers, 50.8%, 40%, 39.4% and 35.3% of the investors obtain the information about the securities through journals and magazines, friends and relatives, investment consultant and web sites respectively. So the combined frequency distribution analysis revealed that a major percentage of the investors are getting the information through news papers television and stock brokers. 4.19 Criteria for Investments Table 4.18: Criteria for Investments Criteria Frequency Valid Percent Cumulative Percent Sector based 253 49.9 50.2 Financial performance 252 49.6 99.5 other 2 0.5 100 Total 507 100.0 Source: Primary data From the above table 4.18 it is found that a maximum of 49.9 percent of investors investing their investment after a careful analysis of company based on their sector in which it belongs. Some 49.6 percent of investors are investing their money after analyzing the financial performance of the companies and only 0.5 percent of investors are considering some other factors like present market condition and new production strategies. So it is highlighted from the above table that most of the investors are channalised their investment after a careful analysis of the sector considered in which the company belonging. 119

4.20 Member of investors forum Investors awareness about criteria, forum, malpractices of intermediaries, and mode of trading financial sector reforms are highlighted in the following discussion. Table 4.19: Member of investors forum Frequency Valid Percent Cumulative Percent Yes 435 85.8 85.8 No 72 14.2 100.0 Total 507 100.0 Source: Primary data From the above table 4.19 it is ascertained that a maximum of 85.8 percent of investor are possessing experience in dealing their investment forums followed by 14.2 percent of investor doesn t have any experience with the forum of investors So the percentage analysis table reveals that most of the investors in securities market are having much experience with forum of investors in dealing their investment affairs. 4.21 Awareness of Malpractice of Intermediaries Table 4.20: Awareness of Malpractice of Intermediaries Frequency Valid Percent Cumulative Percent Yes 416 82.1 82.1 No 91 17.9 100.0 Total 507 100.0 Source: Primary data 120

From the above frequency table 4.20 it is ascertained that a maximum of 82.1 percent of investors in securities market are aware of the malpractice of intermediaries followed by 17.9 percent of investors are not known the malpractices done by the intermediaries. So the percentage analysis reveals that most of the investors in Indian securities market are having the knowledge about the malpractices done by the intermediaries like share brokers etc. 4.22 Mode of Trading Table 4.21: Mode of trading Frequency Valid Percent Cumulative Percent Online 416 82.1 82.1 Off line 91 17.9 100.0 Total 507 100.0 Source: Primary data From the above frequency table 4.21 it is ascertained that a maximum of 82.1 percent of investors in securities market are aware of the online trading and they buy and sell their equities followed by 17.9 percent of investors deal with offline trading. So the percentage analysis reveals that most of the investors in Indian securities market are having the knowledge about the on line trading conveniently. 4.23 Awareness of Financial Sector Reforms in India Table 4.22: Awareness of Financial Sector Reforms in India 121

Frequency Valid Percent Cumulative Percent Yes 504 99.5 99.5 No 3 0.5 100.0 Total 507 100.0 Source: Primary data From the above table 4.22 it is ascertained that a maximum of 99.5 percent of investors in the Indian securities market are aware of the reforms made in the Indian financial system, followed by only 0.5 percent of investors are don t have the awareness of financial sector reforms in India. So it is inferred by the percentage analysis that majority of the investors in Indian securities market are aware of the financial sector reforms made by the Government of India. 4.24 The Impact of Indices on investors People have several means to get to know about the available investment schemes and these sources are motivating the potential investors to make investments in a particular investment avenue. Investment decision making is the process of identifying various alternatives, evaluating each alternative and choosing the best alternative based on the priorities, expectations and risk tolerance of the investor. Investors could make decision on their own or can rely on the advice of another person. It is very important that the investors do their home work whether they take independent decisions or rely on others. In this study five classifications of indices have been considered namely sensex, CNX nifty, CNX Nifty Junior, CNX midcap and CNX Midcap 200. The following frequency distribution Table 4.23 expresses the distribution of the samples according to the source of index about investment avenues. 122

Table 4.23: Frequency Distribution Of index Influencers Frequency Valid Percent Cumulative Percent Valid Sensex 217 42.9 42.9 CNX Nifty 47 9.2 52.1 CNX Nifty Junior 161 31.9 84.0 CNX Mid cap 62 12.1 96.1 CNX Midcap 200 20 3.9 100.0 Total 507 100.0 Source: Primary data In can be seen that out of the sample size 42.9% of the investment decisions are taken based on sensex index followed by 31.9% of the investors decisions are influenced by the index of Nifty, 12.1% of the investors decisions are influenced by the index of Nifty junior, 9.2% of the sample size of investors decisions are influenced by the index of CNX Midcap and only 3.9% of the investors decisions are influenced by the CNX madcap 200. So the percentage analysis revealed that most of the investor s decisions are influenced and taken by the observations of sensex index. 4.25 Association between Sources of Information and Preference of Industry The non-parametric chi-square test is applied to find the association between source of the information useful for the investors and their ranking preference of their investment industry. Different sources of information stated in the questionnaire are considered for the analysis. a) News papers and Investment in Different Industries The association between information through newspapers and different industry is displayed in table 4.24. 123

Table 4.24: Chi-square Value for Sources of Information with regard to Newspapers Industry Chi-square value Sig Result Banking 27.538 0.001 Association Steel 27.654 0.001 Association Cement 27.087 0.000 Association IT 10.517 0.161 No association Pharma 18.236 0.011 Association Manufacturing 28.220 0.000 Association Textile 16.320 0.022 Association Automobile 29.118 0.000 Association From the above table, it is found that the information through Newspaper plays a crucial role in identifying all the industries except IT industry. b) Journals, Magazines and Investment in Different Industries The association between information through Journals, magazines and different industries is presented in table 4.25. 124

Table 4.25: Chi-square Value for Sources of Information with regard to Journals and Magazines Industry Chi-square value Sig Result Banking 20.528 0.009 Association Steel 10.748 0.150 No Association Cement 12.742 0.079 No Association IT 11.709 0.111 No association Pharma 8.385 0.300 No Association Manufacturing 24.560 0.001 Association Textile 35.520 0.000 Association Automobile 24.562 0.001 Association From the above table it is found that the information through Journals and magazines is useful for investors to invest in banking, manufacturing, textile and automobile industries. c) TV channels and Investment in Different Industries The association between information through TV channels and different industry is presented in table 4.26. Table 4.26: Chi-square Value for Sources of Information with regard to TV Industry Chi-square value Sig Result Banking 31.851 0.001 Association Steel 22.836 0.002 Association Cement 20.851 0.004 Association 125

IT 10.659 0.154 No association Pharma 8.391 0.299 No Association Manufacturing 7.386 0.390 No Association Textile 6.760 0.454 No Association Automobile 12.086 0.098 No Association From the above table it is inferred that banking, steel and cement industry are concentrated by the investors with the help of information through TV channels. d) Stock Brokers and Investment in Different Industries The association between information through stockbrokers and different industry is presented in the table 4.27. Table 4.27: Chi-square Value for Sources of Information with regard to Stock Brokers Industry Chi-square value Sig Result Banking 35.153 0.000 Association Steel 16.788 0.019 Association Cement 31.592 0.000 Association IT 36.211 0.000 Association Pharma 21.012 0.004 Association Manufacturing 46.884 0.000 Association Textile 34.238 0.000 Association Automobile 46.300 0.000 Association 126

As far as the capital market investment and selection of industry is concerned, the stockbrokers give more information to the investors in selecting the industry. e) Investment Consultants and Investment in Different Industries The association between information through investment consultants and different industries is presented in the table 4.28. Table 4.28: Chi-square Value for Sources of Information with regard to Investment Consultant Industry Chi-square value Sig Result Banking 44.737 0.000 Association Steel 27.701 0.003 Association Cement 12.014 0.100 No Association IT 34.831 0.000 Association Pharma 12.318 0.091 No Association Manufacturing 35.602 0.000 Association Textile 14.770 0.039 Association Automobile 38.860 0.000 Association From the above table, it is ascertained that the investment consultants significantly guide the investors to invest in banking, steel, IT, manufacturing, textile and automobile industries respectively. f) On line Websites and Investment in Different Industries The association between information through on line websites and different industry is presented in table 4.29. 127

Table 4.29: Chi-square Value for Sources of Information with regard to On Line Website Industry Chi-square value Sig Result Banking 22.625 0.004 Association Steel 4.651 0.702 No Association Cement 21.946 0.002 Association IT 28.077 0.000 Association Pharma 22.309 0.002 Association Manufacturing 20.764 0.004 Association Textile 4.928 0.669 No Association Automobile 23.926 0.001 Association From the above table it is found that web sites give profuse source of information for investors about the performance of banking, cement, IT, pharma, manufacturing, and automobile industries. g) Friends, Relatives and Investment in Different Industries The association between information through friends, relatives and different industries is presented in the table 4.30. Table 4.30: Chi-square Value for Sources of Information with regard to Friends and Relatives Industry Chi-square value Sig Result Banking 26.457 0.001 Association Steel 7.682 0.361 No Association Cement 32.744 0.000 Association 128

IT 30.304 0.000 Association Pharma 15.128 0.034 Association Manufacturing 24.861 0.001 Association Textile 9.537 0.216 No Association Automobile 31.877 0.000 Association From the above table it is found that friends and relatives are give more useful information about the performance of banking, cement, IT, pharma, manufacturing, and automobile industries. It is concluded that the different sources of information play the vital role in the investor s behaviour they promote the knowledge of every investor to think prudently about the consequences of their investment. 4.26 Preference of Investments and their Ranks with regard to equity investment The ranking method helps the researcher to identify which investment avenues are most preferred. Table - 4.31 presents the mean, standard deviation and their respective rankings based on the mean. Table - 4.31: Mean and Standard Deviation for Preference of Investments and their Ranks Variable Mean S.D. Rank Shares 1.86 1.42 1 Fixed Deposit 3.72 1.81 2 Real Estates 3.93 1.88 3 Mutual Funds 4.33 1.73 4 Government Bonds 4.40 1.79 5 129

Gold 4.81 2.02 6 Debentures 4.99 1.62 7 It is inferred from the above table that the mean is found according to the ranks assigned to the variables by the investors. The most preferred investments are well established and the investors strongly agree that the investment in capital market alone gives more returns with minimum market risk. So they prefer share market as rank 1 followed by fixed deposit, real estate, mutual funds, government bonds, gold and debentures in order. The first preference is due to appreciable returns besides the maximum risk. 4.27 Ranking Analysis for Preference of Investments in Industry The ranking analysis is executed for the different preference of investment in industry such as banking industry, steel industry, cement industry, IT industry, Pharma industry, manufacturing industries, textile industry and automobile industry and the following preferences are arranged in order in table - 4.32. Table - 4.32: Mean and Standard Deviation for Ranking of Industries Variable Mean S.D. Rank Banking Industry 3.17 2.20 1 IT Industry 3.45 2.43 2 Cement Industry 4.51 1.20 3 Pharma Industry 4.81 1.76 4 Automobile Industry 4.87 2.37 5 Manufacturing Industry 4.88 2.17 6 Textile Industry 6.02 2.07 7 From the above table, it is found that according to the rank of preference, the investors invest their money in the above mentioned industries. They invest their money safely in banks in the form of deposits and give second preference to IT industry 130

followed by cement and pharma industry. This also shows that the investors concentrate more on the safety of their investments in banks. 4.28 Reasons for Investments and their Ranks in equity Market. Investments return, tax benefits and liquidity are preferred by investors for different reasons. The result of the sample means, standard deviations and their ranks are established below in table - 4.33. Table - 4.33: Mean and Standard Deviation of Reasons for Investments and their Ranks Variable Mean S.D. Rank Return 1.27.550 1 Liquidity 2.18.678 2 Tax benefits 2.54.616 3 From the above table, it is concluded that the investors give first preference to better returns followed by liquidity and tax benefits. So, it can be concluded that all type of investors demand more returns with no risk. So they prefer share market fabricated with minimal risk. 4.29 Ranking Analysis for Investment Style in equity Market Different style of investments like conservative, calculative, intuitive, impulsive, risk taking are verified to identify the most popular investment style of the investors. Table - 4.34 presents the mean and standard deviation and rank of preference of investment style. 131

Table - 4.34: Mean and Standard Deviation of Preference of Investment Style Variable Mean S.D. Rank Calculative 1.94 1.19 1 Conservative 2.78 1.35 2 Risk taking 2.97 1.43 3 Impulsive 3.45 1.07 4 Intuitive 3.88 1.24 5 From the above table, it is found that the investors adopt the modes of calculative, conservative, risk taking, impulsive and intuitive in the respective order. The investors first notion of investment is the strategic calculation regarding safety, return and liquidity. They also give less importance to conservative and risk taking separately. It also reveals that the investors are very calculative in earning more profit from their investments. 4.30 Ranking Analysis for the Preference of Stock Exchange for Investing in equity market The different stock exchanges like NSE, BSE and MSE are useful for the investors to deal with the capital market. Generally the investors in Tamil Nadu prefer these three stock exchanges for their investment in secondary market. Table - 4.35 presents the rank of preference of investors of secondary market. Table - 4.35: Mean and Standard Deviations for Preference in Choosing Stock Exchanges Variable Mean S.D. Rank NSE 1.44 0.684 1 BSE 2.04 0.689 2 MSE 2.49 0.741 3 132

It is inferred from the above table that the investors investing in secondary market, give their first preference to NSE followed by BSE and MSE respectively. The NSE is the most popular among the investors of capital market. Paired sample t-test is to identify the significant difference in the means among the five factors of the risk and return in equity market. This tool is also useful to identify the most popular factors of risk and return. The mean scores of each factor is presented in the table - 4.36, which is useful to identify the popular factor among the investors Table 4.36: Paired Samples Statistics for the Factors of the risk and return Pair Factors Mean N Std. Deviation Std. Error Mean Pair 1 Shares 4.1576 507.58216.02028 Debentures 4.0445 507.56689.01975 Pair 2 Shares 4.1576 507.58216.02028 Mutual funds 4.1675 507.58990.02055 Pair 3 Shares 4.1576 507.58216.02028 Stock futures 4.2031 507.58191.02027 Pair 4 Shares 4.1576 507.58216.02028 Real estates 3.8706 507.55730.01941 Pair 5 Debentures 4.0445 507.56689.01975 Mutual funds 4.1675 507.58990.02055 Pair 6 Debentures 4.0445 507.56689.01975 Stock futures 4.2031 507.58191.02027 Pair 7 Debentures 4.0445 507.56689.01975 Real estates 3.8706 507.55730.01941 Pair 8 Mutual funds 4.1675 507.58990.02055 Stock futures 4.2031 507.58191.02027 Pair 9 Mutual funds 4.1675 507.58990.02055 133

Real estates 3.8706 507.55730.01941 Pair 10 Stock futures 4.2031 507.58191.02027 Real estates 3.8706 507.55730.01941 The above table indicates the mean values of the factors of capital market reforms. It ranges from the minimum mean value of 3.87 for real estates to the maximum of 4.0 for stock futures. The correlation table - 4.37 presents the relationship among all the factors which are inter linked. Table 4.37: Paired Samples Correlations for the Factors of the investment in equity Market Pair Factors N Correlation Sig. Pair 1 Shares & Debentures 507.645.000** Pair 2 Shares & Mutual funds 507.673.000** Pair 3 Shares & Stock futures 507.550.000** Pair 4 Shares & Real estates 507.467.000** Pair 5 Debentures & Mutual funds 507.556.000** Pair 6 Debentures & Stock futures 507.429.000** Pair 7 Debentures & Real estates 507.533.000** Pair 8 Mutual funds & Stock futures 507.514.000** Pair 9 Mutual funds & Real estates 507.449.000** Pair 10 Stock futures & Real estates 507.323.000** ; ** - Significant at 0.01 level As observed from the above table, the five factors constitute the efficient capital market reforms and the correlation co-efficient are highly significant. So, all reforms are 134

inter linked to accrue benefits to the investors. Paired sample t-test and their consequences are established in table - 4.37. Table 4.38: Paired Samples Test Values for the Factors of the Latest Reforms in Capital Market Pair Factors t df Sig. (2- tailed) Pair 1 Shares - Debentures 6.707 506.000** Pair 2 Shares - Mutual funds -.598 506.550 Pair 3 Shares - Stock futures -2.364 506.018* Pair 4 Shares - Real estates 14.000 506.000** Pair 5 Debentures - Mutual funds -6.471 506.000** Pair 6 Debentures - Stock futures -7.415 506.000** Pair 7 Debentures - Real estates 9.189 506.000** Pair 8 Mutual funds - Stock futures -1.769 506.077 Pair 9 Mutual funds - Real estates 14.140 506.000** Pair 10 Stock futures - Real estates 14.390 506.000** ; ** - Significant at 0.01 level; * Significant at 0.05 level The paired sample statistical table 4.38 clearly reveals that the investors are very much attracted towards capital market with mean (4.20), followed by mutual funds (mean = 4.17), shares (mean = 4.16), Debentures (mean = 4.04) and finally real estates (mean = 3.87). Though the means are different, paired sample t-test would check the statistically significant differences among them. It is also found that shares and mutual funds are equally treated (t = 0.598) by the investors for their risk and return. The mutual funds and stock futures are also equally popular among the investors (t = 1.769) for both risk and return. So it is inferred that the investors are very much attracted by capital market after understanding the attractive financial sector reforms. The transparency about the performance of the companies issuing the shares and continuous monitoring of central government and the RBI raises the confidence among the investors besides the market 135

risk. It is also found that the investors are willing to invest their hard earned money to have lucrative returns in the short span of time. 4.31 Rate of return The investors expect different percentage of investment as their returns with safety and security. Both the new companies and the existing ones can raise capital on the new issue market. The prime function of the new issue market is to facilitate the transfer of funds from the willing investors to the entrepreneurs setting up new corporate enterprises or going in for expansion, diversification, growth or modernization. Besides, helping corporate enterprises in securing their funds, the new issue market channelises the savings of individuals and others into investment. In this study four classification have been considered namely below 12%, 12-24%, 24-36%, and 36% and above as the returns. Table 4.39: Frequency Distribution of Percentage of expected return Percentage of investment Frequency Valid Percent Cumulative Percent Valid Below 12% 300 59.2 59.2 12% - 24% 82 16.2 75.4 24% 36% 28 5.6 81.0 36% above 97 19.0 100.0 Total 507 100.0 Source: Primary data From the above table 4.39 it is ascertained that a maximum of 59.2% of the investors expect to get return below 12% of their investments followed by 19% of the 136

investors prefer to invest 36% and above of their investments, 16.2% of the investors prefer only 24 36% of their investments to be returned only 5.6% of the investors prefer to invest between 12 to 24% of their investments as returns. So the percentage analysis revealed that most of the investors expect below 25% of their total investment from equities market. 4.32 SUMMARY In this chapter investment pattern, preferences, risk-return perceptions and investment objectives of the retail equity investors have been identified. 137