INTRODUCTION

Investment in share markets are based on analysis &

reasoning which help to predict market to some extent.
Through the years a number of technical & theories for
analysis have evolved, these combined with modern
technology guides the investor. The big players in the
market, like Foreign Institutional Investors, Mutual
Funds, etc. have the expertise for various analytical tools
& make use of them. The speculator invests for a short
period for instant gains & his investment are based on
market sentiments, inside information, through grapevine,
tips & intuition. The small investors depend on brokers
and brokerage house for his investments.

In recent years a large number of players have entered

into his market. The level of competition is so high that
retaining existing customers or getting new customers by
good word of mouth from existing customers is very
important. This clearly shows the importance of knowing
how satisfied our present customers are.

It is with this backdrop that the study is being initiated.

We are trying to find out how satisfied the existing
customers are and also trying to find out what are the
crucial factors that customers look for. This will help in
improving methods by which the overall performance can
be

improved

and

key

indicators

of

customer

dissatisfaction shall be documented and supported by

objective information.

RESEARCH OBJECTIVES

The study was conducted to find out the investors

preference between direct investment in Indian stock
market and by Portfolio Managers. The research was also
conducted to find and analyze the more preferred
investment instrument direct investment in Indian Stock
Market or PMS on the basis o different parameters such
as-risk, return, cost, etc.
PLACE OF RESEARCH
The study was primarily conducted at Tata Securities Ltd,
Bareilly The market survey was done to have market
perspective whether investors directly invest in stock
market or they invest by portfolio managers.

SAMPLING PLAN

Sample Unit: Retail Investors

Sample Size: 100 Investors.

Sampling Technique: Random Sampling

Research Design: Descriptive studies.

SAMPLE SIZE
The sample size considered in our study is 100

SAMPLE CHARACTERISTICS
The sample considered is a homogenous one, the
characteristics of the respondents were more or less the
same. The people generally belonged to middle class
strata. The results deduced can be projected on the middle
class population on a wider class.

RESEARCH METHODOLOGY

The research was conducted on the availability of

information from Primary and Secondary sources:PRIMARY SOURCE OF DATA
Interaction

with

the

employees

of

various

organization and share broking houses Viz public

and private.
A proper Questionnaire was designed to collect the
primary data, which is attached here with this report
SECONDARY SOURCES OF DATA
Journals, magazines etc
Internet

LIMITATIONS & SUGGESTIONS

Limitations in regards with the Sample Selections

The sample under study is relatively small, limited
to field research for 100 Investors in the Stock
market & conducted only in New Delhi. The
responses are subjected to customer bias.
A more extended geographical sample may show
greater difference in perceptions.
It would be interesting, in further research, to
correlate perceptions of services in terms of
customer satisfaction, or factor analysis on the
various services expected by customers. The Sample
size may be extended to include other services also.
Limited Time for conducting the study.
Respondents were not interested to disclose details.

ABOUT TATA SECURITIES

INTRODUCTION

Tata Securities Limited, a company managed and

controlled by Ranbaxy promoters and presently among
the leading brokerage house of India. It presently has a
strong presence in the NCR region and its always believe
in aggressive marketing.
The primary focus of Tata Securities Limited is to
provide the services in Capital Market Operations to
Institutional Investors and the retail investor. The
growing list of financial institutions with which Tata
Securities Limited is in the market reflects high levels of
services maintained by the Company.

SOME

FACTS

ABOUT

TATA

SECURITIES

LIMITED

1. A SEBI approved Portfolio Manager.

2. Depository Participant with National Securities
Depository
Limited (NSDL) and Central Depository Services
Limited (CDSL).
3. Member of National Stock Exchange of India and
Bombay Stock Exchange of India.

Tata Securities Limited has a very credible team

in its Research & Analysis division, which not only caters
to the need of our Institutional clientele but also gives
their valuable input to Investment Dealers.
Tata Securities Limited in recent past has been
constantly innovating in terms of the product and

services, which it offers, and in this respect it has

started a premium NRI, FIs, HNWIs and Corporate
Servicing group. This group specifically caters to the
growing investment needs of these premium client
categories by taking all their portfolio investment
decisions depending upon their risk / return
parameter.
Tata Securities Limited is also giving in house
depository services to its clientele and it is among
one the leading depository services provide among
country. Presently it manages more than Rs. 3000
Crores worth of shares under its electronic custody.
Tata Securities Limited among capital market
investment fraternity is the most vibrant place in
terms of information and performance and every day
it is consolidating its efforts to provide more
customized services to its clients.

Tata Securities Limited is a wholly owned subsidiary of

Fortis

Financial Services Ltd. (FFSL), a Company promoted by

the late Dr.

Parvinder Singh, Ex-CMD of Ranbaxy Laboratories Ltd.

The primaries focus RSL is cater to services in Capital

Market Operations to Institutional Investors. The
Company is a member of the National Stock Exchange
(NSE) and OTCEI. The growing list of financial
institutions with whom RSL is empanelled, as approved
Broker is a reflection of the high levels of services
maintained by the Company.

BUSINESS & OPERATIONS

BUSINESS

Over a period of time as recorded a healthy growth rate

both in business volumes and profitability as it is one the
major players in this line of business. The business thrust
has been mainly in the development of business from
Financial Institutions, Mutual Funds and Corporate.
OPERATIONS

The operations of the company are broadly organized

along the following functions.

Research & Analysis

This group is focused on doing daily stock picks and

periodical scrip \ segment specific research. They provide

the best of analysis in the industry and are valued by both

our Institutional and Retail clientele.
Marketing

This group is focused on tracking potential business

opportunities

and

converting

them

into

business

relationships. Evaluating the needs of the clients and

tailoring products to meet their specific requirements
helps the company to build lasting relationships.
Dealing

Enabling the clients to procure the best rates on their

transactions is the core function of this group.
Back Office

This group ensures timely deliveries of securities traded,

liaison with stock exchange authorities on operational

matters, statutory compliance, handling tasks like pay-in,

pay-out, etc. This section is fully automated to enable the
staff to focus on the technicalities of securities trading
and is manned by professionals having long experience in
the field.

INFRASTRUCTURE

Offices

The company has offices located at prime locations in

Mumbai, New Delhi, Kolkata and Chennai. The offices
are centrally located to cater to the requirements of
institutional and corporate clients and retails clients, and
for ease of operations due to proximity to stock
exchanges and banks. Today we have more than 200
branches all over India.

Communications

The company has its disposal, an efficient network of

advance communication system and intends to install
CRM facility; besides this it is implementing interactive
client information dissemination system which enables
clients to view their latest client information on web. It
has an installed multiple WAN to interconnect the
branches to communicate on real time basis.
The company is equipped with most advanced systems to
facilitate smooth functioning of operations. It has
installed its major application on IBM machines and uses
latest state of art financial software.

MANAGEMENT

Mr. Sunil Godhwani is Chief Executive Officer and

Managing Director of RSL. He is also the CEO & MD of
the parent company Fortis Financial Services Limited and
is managing the entire operations of both the companies.
CEO is supported by various HODs who are creditable
professional of their respective fields and they are further
working with team of professionals consisting of
Chartered Accountants, MBAs with varied experience in
financial services and stock broking functions.
The Board of Directors consists of Mr. Harpal Singh as
Chairman and Mr. V.K. Kaul, Mr. Malvinder Mohan
Singh, Mr. Shivinder Mohan Singh as Directors.

Mission and Vision

Mission:
To be India's first Multinational company providing
complete financial services solution across the globe.
Hence the company has opened its offices in the cities of
U.K.
Vision:
Providing integrated financial care to the client driven by
the relationship of trust and confidence. This is clear from
the logo that the company uses.

PRODUCTS AND SERVICES

Equity Trading
Derivative Trading
Commodity Trading
Depository Services
Margin Financing
NRI Desk Management
Research & Technical Analysis
Portfolio Management Services
International Equity & Commodity
Institutional Business
Investing Banking
Internet Trading ( RACE & RALLY )

PORTFOLIO MANAGEMENT SERVICES

Portfolio Management Optimizes cash flows across a
portfolio of assets, and provides risk management
expertise. Risks are assessed, mitigated and managed
daily through rigorous and strictly enforced processes
that operate independently from the transactions they
monitor.

Portfolio Management is a vital contributor to a

successful deregulated market.Reduces price and volume
fluctuations and increases buyer and seller certainty.
Delivers lower costs by managing risk on behalf of
producers and sellers, and by managing supply and
demand imbalances

Portfolio Management provides benefits to wholesale

customers
Seeks to optimize return on invested capital .
Fortis brings out Portfolio Management Service after
obtaining the approval of the Securities and Exchange
Board of India (SEBI). Some advantages of Portfolio
Management are Expertise, Professionalism and integrity,
tailor-made portfolio to match your risk profile, Periodic
interaction and reporting that enables you to track your
portfolio without any delay or difficulties.

DEFINITIONS
Act means the Securities and Exchange Board of
India, Act 1992 (15 of 1992)

Board means the Securities and Exchange Board of

India

Client or Investor means any person who registers

with the portfolio manager for availing services of
portfolio management

Depository Account means any account of the client

or for the client with an entity registered as a depository
participant as per the relevant regulations.

Financial year means the year starting from 1st April

and ending on 31st March of the following year.

Funds means the monies managed by the portfolio

manager on behalf of the client pursuant to this
agreement and includes the monies mentioned in the
application, any further monies placed by the client with
the portfolio manager for being managed pursuant to this
agreement, the proceeds of the sale or other realization of
the portfolio and interest, dividend or other monies
arising from the assets, so long as the same is managed
by the portfolio manager.

Initial Corpus means the value of the funds and the

market value of readily realizable investments brought in
by the client at the time of registering as a client with the

portfolio manager and as accepted by the portfolio

manager.

Portfolio means the securities managed by the

portfolio manager on behalf of the client pursuant to this
agreement and includes any securities mentioned in the
application, any further securities placed by the client
with the portfolio manager for being managed pursuant to
this agreement, securities acquired by the portfolio
manager through investments of funds and bonus and
right shares in respect of securities forming part of the
portfolio, so long as the same is managed by the portfolio
manager.

Portfolio Manager means Fortis Securities Limited, a

company incorporated under the Companies Act, 1956

and having its registered office at 210, Taj Building,

Dr.D.N.Road Fort, Mumbai 400001

Regulations means the Securities and Exchange Board

Of India (Portfolio Managers) Regulations, 1993.

Rules means the Securities and Exchange Board of

India (Portfolio Managers) Rules 1992.

Scheme means any of the current investments schemes

or such schemes that may be introduced at any time in
future by the portfolio manager.

Net Asset Value (NAV) is the market value of assets in

portfolio consisting of equity, debt, cash & cash
equivalents.

Securities as defined under the Securities Contracts

(Regulation) Act, 1956 includes shares, stocks, bonds,
warrants, convertible and non convertible debentures,
fixed return investments, equity linked instruments,
negotiable

instruments,

deposits,

money

market

instruments, commercial paper, certificate of deposits,

units issued by the Unit Trust of India and/ or by any
mutual funds, mortgage backed or other asset backed
securities, derivatives, derivatives instruments, options,
futures, foreign currency commitments, hedges, swaps, or
any trust ,any equity, the Central Government, any State
Government or any local or statutory authority and all
money rights or property that may at any time be offered
or accrue (whether by rights, bonus, redemption,
preference,

option

or

otherwise)

and

any

other

instruments or investments as may be permitted by

applicable law from time to time.

Top 10 Group Companies/firms

Name of Entity Main Business

Fortis Financial Financial

Status
Holding

Services Limited Services

Fortis Comdex
Commodity

Company
Group Company

Limited
Fortis Finvest

Trading
Financial

Group Company

Limited

Services

Details of services being offered by the portfolio

manager:

DISCRETIONARY SERVICES
Under these services, the choice as well as the
timings of the investment decisions rest solely with
the portfolio manager. In other words the portfolio
manager shall have the sole and absolute discretion
to invest clients funds in any type of securities and
in any market as he deems fit as per the executed
agreement. The securities invested /disinvested by
the portfolio manager for clients in the same scheme
may differ from

client to client. The portfolio

managers decision in deployment of the client s

account is absolute and final and can never be called
in question or be open to review at any time during
the currency of the agreement or at anytime
thereafter. The right of the portfolio manager shall be
exercised strictly in accordance with the relevant

acts,

rules

and

regulations,

guidelines

notifications in force from time to time.

and

ADVISORY SERVICES
The Portfolio Manager will provide Advisory
Portfolio Management Services, in terms of the SEBI
(Portfolio Manager) Regulations 1993,which shall be
in the nature of investment advisory and shall include
the responsibility of advising on the portfolio
strategy and investment and divestment of individual
securities on the clients portfolio, for an agreed fee
structure, entirely at the Clients risk.

The Portfolio Manager shall be solely acting as an

advisor to the portfolio of the client and shall not be
responsible for the investment /divestment of
securities and /or administrative activities on the
clients portfolio. The Portfolio Manager shall,
provide advisory services in accordance with such
guidelines and / or directives issued by the

regulatory authorities and / or the Client, from time

to time, in this regard.

Currently under the discretionary services, three

schemes are offered to investors:
1. Tortoise
Eye

2. Panther

3. Hawk

SERVICES OFFERED

Tortoise
Tortoise scheme aims to provide a balance between
growth, safety and returns . The fund aims to invest
in the mix of debt and equity, the proportion of
which will depend upon market conditions of
respective segments as well as the availability of
individual investments opportunities. The scheme is
aimed at investors with relatively lesser risk profile
and is expected to generate returns over a longer
period of time.

Panther
Panther scheme is aimed at high return with certain
level of risk appetite. The fund aims to invest in
equity with diversification. The objective of the

scheme is to achieve high return by way of

aggressive

position

depending

upon

market

conditions and will not shy away from taking

exposure with relative caution in mid cap and less
traded stocks at times.

Hawk Eye
The fund is aimed at introducing discipline within
the overall fund management approach. The scrip
for investing will be selected on the basis of existing
fundamental and growth prospects. However to take
care of two most important emotional factors of
stock market greed and fear the fund will follow a
book profit / cut loss strategy. The fund will book
profit in any stock after a set target is reached and
the same will be followed if the price of the stock
goes down and breaches a particular level from the
purchase price.

RISK FACTORS
(i) Investment in Securities are subject to market
risks, which include price fluctuation risks. There is
no assurance or guarantee that the objectives of
any of the schemes will be achieved. The
investment may not be suited to all categories of
investors.

(ii) The post performance of the portfolio manager

does not indicate the future performance of the same
scheme in future or any other future schemes of the
portfolio manager. Investors are not being offered
any guaranteed returns through these schemes.

(iii)The scheme may use derivatives instrumental

like index futures, stock futures and options

contracts, warrants, convertible securities, swap

agreements or any other derivative instruments for
the purpose of hedging and portfolio balancing, as
permitted under the regulations and guidelines. The
use of a derivative requires an understanding not
only of the underlying instrument but of the
derivative itself. Derivatives require the maintenance
of adequate controls to monitor the transactions
entered into, the ability to assess the risk that a
derivative adds to the portfolio and the ability to
forecast price or interest rate movement correctly.
Scheme using derivative / futures and options
products (if any) are affected by risks different form
those those associated with stock and bonds. Such
products are highly leveraged instruments and their
use requires a high degree of skill, diligence and
expertise. Small price movements in the underlying

security may have a large impact on the value of

derivatives / futures and options. Some of risks
relate to mis-pricing or the improper valuation of
derivatives/futures and options and the inability to
correlate the positions with underlying assets, rates
and indices. Also the derivative/ future and options
market is nascent in India.

(iv)The names of the schemes do not in any manner

indicate their prospects or returns. The performance
in the equity schemes may be adversely affected by
the performance of individual companies, changes in
the market place and industry specific and macro
economic factors.

(v)The Portfolio Manager, first time, has launched

schemes in

September, 2004 under portfolio management

services. Disclosure
Document is being submitted to SEBI under its
SEBI(Portfolio
Managers) Regulations,1993.

(vi)The debt investments and other fixed income

securities may be subject to interest rate risk,
liquidity risk, credit risk and reinvestment risk.
Liquidity in these investments may be affected by
trading volumes, settlement periods and transfer
procedures.

(vii)Technology stocks and some of the investments

in niche sectors run the risk of

volatility, high

valuation, obsolescence and low liquidity.

(viii)In the case of stock lending, risks relate to the

defaults from counter parties with regard

to

securities lent and the corporate benefits act

thereon, inadequacy of the collateral and settlement
risks. The portfolio manager is not responsible or
liable for any loss resulting from operations of the
schemes.

(ix)The performance of the schemes may affected

by changes

in

Government policies,

general levels of interest rates and risks associated

with trading volumes, liquidity and settlement
systems in equity and debt markets.

(x)The Scheme may invest in non-publicly offered

debt securities and unlisted equities. This may
expose the scheme to liquidity risks.

(xi)Engaging in securities lending is subject to

risks related to

fluctuations in collateral value/

settlement/ liquidity/ counter party.

NATURE OF EXPENSES
Basis of charges relating to each of the
following services shall
also be annexed to the Portfolio Managements
Agreements and
the agreements in respect of each of the
services availed at the
time of execution of such agreements.

(i)Investment Management and Advisory Fees

Management fees relate to portfolio management
services offered by the portfolio manager to
clients. The fees may be in the form of a
percentage of the quantum of funds managed or
linked to portfolio returns achieved or a
combination of any of these.

Fixed Charge

Particulars

Fees/Charges

Mode of

Management

2% per annum of

Payment
Payable

Fees

the average daily

quarterly

value of portfolio

On Portfolio Return

Particulars

Fees/Charges

Mode of

Management

0.75% per annum

Payment
50% payable at

Fees(Fixed)

of Investment

the time of

Amount.

investment and
balance at the
time of
redemption or
at the expiry of
12months
which ever is
earlier.

Management

Return on Portfolio Payable at the

Fees

Profit Sharing

(Portfolio

Up to 12% Return - realization #@

return)

Nil
Fr 12%-18%
-10% of Total
Profit
Fr 18%-24%
-15%

of Total Profit
Above 24%
-20% of Total
Profit

time of profit

# Re-investment of profit would be eligible for

management fees.

SECURITIES MARKET IN INDIA OVERVIEW

There were a lot of reforms & other market

development in Securities Market in India-Overview
during 2000-2001 & April-June 2001. The originating of
the Indian securities market may be traced back to 1875,
when 22 enterprising brokers under a Banyan tree
established the Bombay Stock Exchange(BSE).Over the
last 125 years, the Indian securities market has evolved
continuously to become one of the most dynamic,
modern and efficient securities markets in Asia. Today,
Indian markets conform to international standards both in
terms of structure and in terms of operating efficiency.

Securities markets provide a channel for allocation

of savings to those who have a productive need for them.
As a result, the savers and investors are not constrained
by their individual abilities, but by the economys
abilities to invest and save respectively, which inevitably
enhances savings and investment in the economy.

MARKET SEGMENTS

The securities market has two interdependent and

inseparable segments: the primary and the secondary
market. The primary market provides the channel for
creation of new securities through issuance of financial
instruments by public companies as well as Governments
and Government agencies and bodies whereas the
secondary market helps the holders of these financial
instruments to sale for exiting from the investment.
The price signals, which subsume all information
about the issuer and his business including associated
risk, generated in the secondary market, help the primary
market in allocation of funds. The primary market
issuance is done either through issues or private
placement. A public issue does not limit any entity in
investing while in private placement, the issuance is done

to select people. In terms of the Companies Act, 1956, an

issue becomes public if it results in allotment to more
than 50 persons. This means an issue resulting in
allotment to less than 50 persons is private placement.
There are two major types of issuers who issue
securities. The corporate entities issue mainly debt and
equity instruments (share, debentures, etc.), while the
governments (central and state governments) issue debt
securities (dated securities, treasury bills). The secondary
market enables participants who hold securities to adjust
their holdings in response to changes in their assessment
of risk and return. They also sell securities for cash to
meet their liquidity needs. The exchanges do not provide
facility for spot trades in a strict sense. Closest to spot
market is the cash market in exchanges where settlement
takes place after some time. Trades taking place over a
trading cycle (one day under rolling settlement) are

settled together after a certain time. All the 23 stock

exchanges in the country provide facilities for trading of
corporate securities. Trades executed on NSE only are
cleared and settled by a clearing corporation which
provides novation and settlement guarantee. Nearly 100%
of the trades in capital market segment are settled through
demat delivery.

NSE also provides a formal trading platform for

trading of a wide range of debt securities including
government securities in both retail and wholesale mode.
NSE also provides trading in derivatives of equities,
interest rate as well indices. In derivatives market ( F&O
market segment of NSE), standardized contracts are
traded for future settlement. These futures can be on a
basket of securities like an index or an individual
security. In case of options, securities are traded for

conditional future delivery. There are two types of

options a put option permits the owner to sell a security
to the writer of options at a predetermined price while a
call option permits the owner to purchase a security from
the writer of the option at a predetermined price. These
options can be on individual stocks or basket of stocks
like index. Two exchanges, namely NSE and the Stock
Exchange, Mumbai (BSE) provide trading of derivatives
of securities. Today the market participants have the
flexibility of choosing from a basket of products like:
Equities
Bonds issued by both Government and
Companies.
Futures on benchmark indices as well as stocks
Options on benchmark indices as well as stocks

 Futures on interest rate products like Notional

91-day T-Bills, 10 year notional zero-coupon
bond and 6% notional 10 year bond.

The past decade in many ways has been remarkable

for securities market in India. It has grown exponentially
as measured in terms of amount raised from the market,
number of stock exchanges and other intermediaries, the
number of listed stocks, market capitalization, trading
volumes and turnover on stock exchanges and investor
population. Along with this growth, the profiles of the
investors, issuers and intermediaries have changed
significantly.

The

market

has

witnessed

several

institutional changes resulting in drastic reduction in

transaction costs and significant improvements in
efficiency, transparency, liquidity and safety. In a short
span of time, Indian derivatives market has got a place in

list of top global exchanges. In single stock futures, the

Futures Industry Association (FIA) placed NSE in second
position in the year 2000.
Reforms in the securities market, particularly the
establishment and empowerment of SEBI, market
determined allocation of resources, screen based nationwide trading, dematerialization and electronic transfer of
securities, rolling settlement and ban on deferral
products, sophisticated risk management and derivatives
trading, have greatly improved the regulatory framework
and efficiency of trading and settlement. Indian market is
now comparable to many developed markets in terms of a
number of qualitative parameters.

DEPENDENCE ON SECURITIES MARKET

Three main sets of entities depend on securities

market. While the corporate and governments raise
resources from the securities market to meet their
obligations, the households invest their savings in the
securities.

Corporate Sector: The 1990s witnessed emergence of the

securities market as a major source of finance for trade
and industry. A growing number of companies are
accessing the securities market rather depending on loans
from FIIs / banks. The corporate sector is increasingly
depending on external sources for meeting its funding
requirements. There appears to be growing preference for

direct financing (equity and debt) to indirect financing

(bank loan) within the external sources.

Accordingly to CMIE data, the share capital market

based instruments in resources raised externally increased
to 53% in 1993-94, but declined thereafter to 33% by
1999-00 and further to 21% in 2005-06. In the sectorwise shareholding pattern of companies listed on NSE, it
is observed that on an average the promoters hold more
than 55% of total shares. Though the non-promoter
holding is about 44%, Indian public held only 17% and
the public float (holding by FIIs, MFs, Indian public) is at
best 25%. There is not much difference in the
shareholding pattern of companies in different sectors.

Strangely, 63% of shares in companies in media and

entertainment sector are held by private corporate bodies
though the requirement of public offer was relaxed to
10% for them. The promoter holding is not strikingly
high in respect of companies in the IT and telecom
sectors where similar relaxation was granted.

Governments: Along with increase in fiscal deficits of

the governments, the dependence on market borrowings
to finance fiscal deficits has increased over the years.
During the year 1990-91, the state governments and the
central governments financed nearly 14% and 18%
respectively of their fiscal deficit by market borrowing. In
percentage terms, dependence of the state governments
on market borrowing did not increase much during the
decade 1991-2001. In case of central governments, it
increased to 77.6% by 2005-06.

Households: According to RBI data, household sector

accounted for 82.4% of gross domestic savings during
2005-06. They invested 38% of financial savings in
deposits, 33% in insurance/ provident funds, 11% on
small

savings,

and

8%

in

securities,

including

government securities and units of mutual funds during

2005-06. Thus the fixed income bearing instruments are
the most preferred assets of the household sector. Their
share in total financial savings of the household sector
witnessed an increasing trend in the recent past and is
estimated at 82.4% in 2005-06. In contrast, the share of
financial savings of the household sector in securities
(share, debentures, public sector bonds and units of UTI
and other mutual funds and government securities) is
estimated to have gone down from 22.9% in 1991-92 to
4.3% in 2000-01, which increased to 8% in 2005-06.

INVESTOR POPULATION

The Society for Capital Market Research and

Development carries out periodical surveys of household
investors to estimate the number of investors. Their first
survey carried out in 1990 placed the total number of
share owners at 90-100 lakh. Their second survey
estimated the number of shareowners at around 140-150
lakh as of mid-1993. Their latest survey estimates the
number of shareowners at around 3crore at 2006 end,
after which it remained stagnant up to the end of 1990s.

Distribution of Investors: The Society for Capital

Market Research & Development estimates that 15% of
urban households and only 0.5-1.0% of semi-urban and
rural household own shares. It is estimated that 4% of all
households own shares. An indirect, but very authentic

source of information about distribution of investors is

the data base of beneficial accounts with the depositories.
By February 2003, there were 3 million beneficial
accounts with the National Securities Depository Limited
(NSDL).

EMPIRICAL ANALYSIS
The Study

was undertaken to understand the

Investor perception about Stock Market, in the context of

satisfaction derived by existing customers and to find out
what are the crucial factors that customers look for from
the Service providers.
Reforms in the Security Market, particularly the
establishment

&

empowerment

of

SEBI,

market

determinant allocation of resources, screen based nationwide trading, dematerialization, electronic transfer of
securities,

rolling

settlement,

sophisticated

risk

management & derivative trading have improved the

regulatory framework & efficiency of trading and
settlement. Indian stock market is now comparable with
any developed market in terms of number of qualitative
parameters. There are around 30 lakhs beneficiary
accounts with the National Stock depositary in India.

In this context, the study was conducted to know

about the perception of investors in the Stock Market.
The reduction in the interest rates in small savings, Fixed
Deposits, sluggish trend in the real estate market etc. may
raise the stock market as an alternative for investments.
The Schedule consisted of the following aspects :

Investment Presently Held:

(Stocks/Bonds/Options/Mutual funds/Bullions/Bank
Deposits)
Trading Preference: Speculation/Investment/Both
Average Investment Period
Appreciation & Loss Expected
Risk Willingness
Investment Decisions

 Rating of Service Satisfaction received from Current

Broker

The Asset Allocation

There are three major asset classes that investor can put
your money into, namely equities, fixed income and
money market instruments. In order to decide how much
of investors money goes into which investment class one
must first consider a few important factors (most of these
will be tackled during investors goal definition phase).

Return expected on investment.

Amount one is able to save (present as well as

future)

Cash outflows that might have at certain points of

time in the future

Risk appetite

Amount require for investors retirement

Liquidity

Investors Age

Hence due to the variable nature of the investors

finances and requirements there are no set strategies used
by financial consultants. But there are broad strategies
that investor can adapt to meet their own needs.
But first please take a look at the chart below to see
which category you broadly fall into. Investment
protection leads to safer interest generating asset
allocations where as Investment Growth leads to higher
volatility assets that may tend to grow over a period of
time.
Investment Risk Pyramid

Fig: 1

Investment

Protection

Investment Growth
Investor
Investment
Characteristic
Time Horizon

(Risk

Investment

Growth
Protection
Short-term Long-term
Steady / High Variable

Future Income
Requirements
Volatility Limit

V/s.

Low

Low

High

Averseness)
Inflation

Low

High

Protection

Protection

Protection

Needed
Investor take on Mostly

Needed
Mostly

Equity Market

Bullish

Bearish

If investor is a person who broadly falls into

the Investment Growth category he might be
interested

in

looking

at

an

Aggressive

portfolio. On the other hand if he are leaning

towards an interest income with minimal risk
investments he might look at a Conservative
asset allocation. Someone who wants a bit of
steady income as well as asset growth might
go in for a moderate or a balanced asset
allocation.

Asset Allocation and Model Portfolio

Aggressive Portfolio

Moderate Portfolio

Conservative Portfolio

Fig: 2

Another way to ascertain the right asset allocation is by

looking at your life cycle. The basis of this theory lies in
the simple maxim that younger people with secure jobs
will normally opt for higher returns and take higher risks
compared to older retired people. One must remember
that these are only indicative strategies and will probably
have to be fine-tuned to meet your individual needs.
The following are the premises where interview was
conducted;
India Bulls
India Info line
UTI Securities
IL & FS
Motilal Securities
Karvy
Alankrit

 Geojit & Others

Expectations of Annual Income & Expense over next 3

to 5 Years:
A view of the present income & expense level to
their projections determines the amount of investment.
The various aspects to be considered are,
Percentage of his income to be invested in share
market
Quality & Return Investments
Profitability
Growth of Capital & Earnings

Annual Income:

87.01

Respondents
%
11.03
Remain
Same

1.94
Decrease

100
90
80
70
60
50
40
30
20
10
0

Increase

% of Respondents

Income

Figure 1. Income Expectations of

Investors

Annual Income:

Respondents %

Average Change %

Increase

87.01

Decrease

1.94

28.33
Remain Same

Annual Expense:

11.03

54.13

86.2

Respondents
%
9.65
Remain
Same

4.13
Decrease

100
90
80
70
60
50
40
30
20
10
0

Increase

% of Respondents

Expenses

Figure 2. Expense Expectations of

Investors

Annual Expense:

Respondents %

Average Change %

Increase

86.2

34.19

Decrease

4.13

Remain Same

9.65

Investment Avenues:

Investment Avenues
15%
2%

22%
2%
1%

4%

3%
51%

Bank Deposits
Govt. Securities
Bullion
Mutual Funds
Real Estate
Options
Bonds
Stocks

Figure 3. Investment Avenues

Diversification reduces risk by combining asset

classes with low correlation. Diversification is a portfolio
strategy designed to reduce exposure to risk by
combining a variety of investments, such as stocks,

bonds, and real estate, which are unlikely to all move in

the same direction.

The goal of diversification is to reduce the risk by

investing in different asset classes that have a low degree
of correlation with each other. With proper diversification
volatility is reduced by the fact that not all asset classes,
industries or individual companies move up and down in
value at the same time or at same rate
The data putout by RBI and the SEBI-NCAER
(National Council Of Applied Economics) Survey of
Indian investors points out the low share of equity
investments compared to alternatives like real estate,
bank deposits etc. It was found that a major of the
investment was in Real estate, Bank Deposits followed
by Stocks with 15% of the investments.

Trading Preference:

Trading Preference

Both
42%

Investment
48%

Investment
Speculation
Both

Speculatio
n
10%

Figure 4. Trading Preference

Trading preference can be classified into Investment

and Speculation. Investment refers to a longer time
horizon. Buying and selling shares in selected companies
to make a profit and is linked to a long time. Speculation
on the other hand refers to making quick profits by
anticipating the changes in the prices of shares.
Speculative transactions are carried out in the stock
exchange day in & day out. The preference of trading was
found to be 48% in Investment & 10% in speculation.

Approximate Transaction per day:

Transaction Per Day

Less Than
50,000
50,000 - 1 Lakh

6% 4%
8%

1 - 2.5 Lakh
25%

57%

2.5 - 5 Lakh
More Than 5
Lakh

Figure 5. Approximate Transaction Per

Day

The amount of investment in the stock market varies

from investor to investor. There are a various reasons,
viz. the returns expected from the past investments, the
Dividends obtained, the amount availability, etc. A
majority of the transaction done was found to be
Rs.50,000 per day (57%) followed by 50,000 to 1 lakh
per day (25%).

Average Investment Period:

Average Investment Period

16%

28%

Less Than 3
Months
3 - 6 Months
6 Months - 1 Year

22%
34%

More Than 1 Year

Figure 6. Average Investment Period

The investment period refers to the period within

which the security/share is bought and sold. It relates to
the investor behavior towards his expectations & reaction
to the change in prices of the share. It was found that
34% of the investor preferred a category of 3 to 6 months.

Investors Importance or Order of preference from

Service Providers:

The various aspects considered by an investor, in the

order of their importance are;

1.

Reliability

2.

Promptness in delivery

3.

Speed of Transaction

4.

Flexibility

5.

Courteous Behavior

6.

Approach

Stop Loss:

A certain characteristic of an Investor is to

average out the cost of investment in Stock if the market
goes down & price of the stock reduces, while certain
stop their loss to further increase by selling it at a lesser
price than what it was bought, thus incurring a loss. The
Below chart gives the investors preference towards stop
loss.

% of Respondents

Stop Loss
50%
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%

Series1

46%
27%

Yes

27%

No

Sometimes

Figure 7. Stop Loss

Appreciation of Capital:

Investors look forward towards increasing their

return of investments either through the Dividends paid
by the company or through the increase in the share value
of the shares held. The below chart gives the percentage
of returns an investor expects over his/her investments.

Appreciation

18%

27%

17%

38%

Upto 15%
15% - 25%
25% - 35%
More Than 35%

Figure8. Appreciation Expected

Loss:
Investment in Share market involves risk of loss and the
below chart gives the percentage of loss on investments
made. The below diagrams represents the loss anticipated
by the investors and categorization of risk they are
willing to take.

Loss

20%

34%

Less Than 5%
5% - 10%
More Than 10%

46%

Figure 9. Expected Loss

Risk
17%

57%

26%

High
Low
Moderate

Figure 10. Willingness to Risk

Investment Decisions:

Investments Decisions
1%
18%

15%

10%

Advice from
Brokers
Advice from
Friends
Current News
Self Evaluation

34%

22%

Financial
magazines
Others

Figure 11. Investments Decisions

The source of information related to the Economy,

Industry & the company are a plenty. Investors look into
various aspects as P/E multiple, Market Capitalization,
Intrinsic value etc., of the companies before investing.
The investment decisions made accounted to 34% in Self
Evaluation, 22% in Current News, 18% in Financial
Magazines and so on.

Average Cost:

It refers to averaging the price of the brought shares

of a company if the market value reduces. It was found
that 43% of the investors averaged their cost.

% of Respondents

Average Cost
60%
50%
40%
30%
20%

57%
43%
Series1

10%
0%
Yes

No

Figure 12. Average Cost

The amount of averaging varies from investor to

investor. About 36% of the investors averaged by 50% of
the purchased value.

Subscription to Financial Magazines:

% of Respondents

Magazines
70%
60%
50%
40%
30%
20%
10%
0%

61%
39%
Series1

Yes

No

Figure 13. Subscription to Magazines

Magazines provide the actual status & various

information of the company. Around 39% of the investors
subscribed to financial magazines.

Value Added Services:

% of Respondents

Value Added Services

80%
70%
60%
50%
40%
30%
20%
10%
0%

72%

28%

Yes

Series1

No

Figure 14. Value Added Services

The

increase

in

the

investor

population

has

simultaneously increased the number of player providing

services. There is a tough competition among the players
in the market. It was found that 72% of the players
provided Value added services.

Rating of Satisfaction:

42%
35%

13%

Series1
8%

Excellent

Very Good

Good

2%
Satisfactory

45%
40%
35%
30%
25%
20%
15%
10%
5%
0%

Poor

% of Respondents

Satisfaction

Figure 15. Satisfaction Rating

The Satisfaction investors obtained from the service

offered were rated on a 5 point scale representing the
following:

Poor

2%

Satisfactory

42%

Good

35%

Very Good

13%

Excellent

8%

Expectation of Investors:

Expectations
5%
32%

63%

Somewhat
Definitely
not at all

Figure 16. Service Expectations

Over 32% of the Investors were found to be provided by

the services they expected.

Awareness of Portfolio Management Service(PMS)

Service Providers

Bonanza

1.35

Tata Securities Ltd.

1.33

Anand Rathi

1.33

Capstocks

1.33

Franklin Templeton

2.70

India Infoline

4.05

UTI Securities

4.05

IL & FS

5.41

Motilal Securities

14.86

10

Kotak Securities

16.22

11

Geojit Financial Services

12

Share Khan

22.97
24.32

FINDINGS & RECOMMENDATIONS

48% of the investors prefer Investment with respect

to 10% Speculation, Approximate transaction per
day below Rs 50,000 is 57% with a 34% of average
investment period in 3 to 6 months.

An appropriate strategy can be developed to suggest

investment ideas considering the above mentioned
aspects.

Order of importance of the investors being

Reliability, Promptness in Delivery and Speed of

transaction indicates the preference, which would

assist in meeting the expectations of the customers.

Investment Decisions made is 34% in Self

Evaluation, which indicates that even if the investor
is given an investment tip, the investor evaluates
before Investment.

72% of the investors are provided with Value added

services,

which

aids

in

building

customer

relationship.

Portfolio Management Service- Only 1.33% of the

investor aware of PMS offered by Fortis. The

awareness among investors to be increased by

advertisements, investment campaigns etc.

CONCLUSION
The investment are influenced by a whole gamut of
events, public policy changes, market condition, policies
and performance of companies and so on. So, data have
to be gathered on economic and market events, national
and international events, public and corporate policies,
and performance facts.

Further, investors can gather various types of data from

various types of agencies. There are a number of trade
journals, periodicals, official documents, advisory reports
published by the investment brokers and counselors that
can be valuable sources of information for investment
decision-making.

In the last but not least, it can be said that most of the
times, only financial information of the issuer is not
sufficient. The investors are interested in knowing the
performance of the economy in general, industry and the
specific company.

BIBLOGRAPHY
1. C.R. Kothari, Research Methodolgy Methods &
Techniques, Second Edition, New Age Publications.

2.

V.A. Avadhani, Capital Market Management,

Himalaya Publishing House

3.

Naresh K. Malhotra, Marketing Research an

Applied Orientation, Fourth Edition,
Pearson Education.

4. www.nseindia.com

5. www.fortissecurities.com

6. www.Religare.in

ANNEXURE-SCHEDULE
Name:---------------------------Occupation:------------------------Phone:----------------------------

Over the next 3-5 years, do you expect your annual

income & expenses to?
INCOME
A. Increase by Rs.__ or__%

EXPENSES
A. Increase by

Rs.__ or__%
B. Increase by Rs.__ or __%

B. Decrease by

Rs.__ or__%
C. Remain the same
the same

C. Remain

Investment Presently Held:

Please list the value of the assets in your total investments
portfolio:(Rs.)

Stocks: ________

Mutual Funds:

_________
Bonds: ________

Bullion:

_________
Options:________
Govt.Securities:_________
Real Estate:______

Bank Deposits: _________

Do you invest in Stock Market?

Yes

No

Earlier, now stopped

What is your Trading Preference?

Speculation Investment Both

What do your Approx Transaction Amount/Day?

Below Rs 50,000

Rs 50,000-Rs1lakh

Rs 1 lakh-Rs 2.5 lakhs

Rs 2.5 lakhs-Rs 5 lakhs

More than Rs 5

lakhs

What is your Average investment period?

A. Less than 3 months.

B.3 to 6

months.
C. 6months to 1 year.
1 year.

D. More than

Please give your Order of Importance

___ A. Realiability

___ B.

Promptness in Delivery.

___ C. Speed of transaction

___ D. Approach

___ E. Flexibility
___ F. Courteous Behavior

Have you put any Stop Loss on your Investments?

Yes

No

Sometimes

How much Appreciation do you expect from your

Investments?
up to 15%

15%-25%

25%-35%

more than 35%

How much loss are you willing to take?

Less Than 5%

5-10%

more than 10%

How much Risk are you willing to take?

High

Low

Moderate

How do you make investment decisions?

Advice from Broker

Current

Reviews in Financial

news
Magazines

Advice from Friends

Evaluation

Self

Others______________

Do you try to average your cost when market goes

low?

Yes/No

If yes, how much would you average?

By equal Quantity

Almost 50%

Almost 25%

Do you prefer any Investment Advices?

Yes/No

Do you subscribe any equity market Magazines?

Yes/No

If Yes______

Does your current broker provide value added

services?

Yes/No

How much Satisfied you are with your current share

broker?
Highly Satisfied
Neutral
Unsatisfied

Unsatisfied

Satisfied
Highly

How do you rate the service you received today?

1=poor
3=good

2=satisfactory
4=very good

5=excellent

Are the services offered by current service provider

upto your expectation?
1=Not at all

2=Somewhat

3=Definitely

How many Trading & Demat a/c do you have?

Trading __________

Demat __________

Would you prefer your investments to be managed by

Professionals?

Yes/No

Which are the agencies that provide Portfolio

Management Service?
______________________________________________
______________________________________________
______________________________________________
____________________________________

How much would you invest in Portfolio

management?

Rs._____________

How much Return do you expect from Portfolio

Management Service?

 20-30%

30-40%

40-50%

-GLOSSARYActive Stocks:

The shares which are actively traded

in the stock exchange i.e. those for
which highest number of bargains are
recorded.

Asked Price:

The price at which a share is offered

for sale on the floor of the stock
exchange. It is the price at which the
jobber sells for a small difference in
price.

Annuity

A series of periodic cash flows.

Bull Market

A strong or rising market in which a

dealer is more likely to be a buyer
than a seller.

Bottom Line

The net profit or loss figures in an

analysis of a companys performance.

Capital Market

It is a source of long-term capital

raised

for

the

development

of

companies.

Derivatives

Instruments derived from securities

or

physical

markets,

futures and options.

essentially

Jobbers

Members of a stock exchange who

stand ready to buy and sell shares in
which they specialize are called
jobbers.

Market Capitalization

The total market value at the

current prices of the total number of

equity shares issued by a company.

Portfolio

The combined holding of many kinds

of

financial

securities

shares,

debentures, government bonds, Unit

Trust certificates, and other financial
assets. The object of forming a
portfolio

is

to

reduce

risk

by

diversification and maximize gains.

P/E Ratio

An Indicator of how highly a share is

valued in the market. Arrived at by
dividing the price of a share by the
Earnings Per Share (EPS).

Return on Equity

The net income of an organization

expressed as a percentage of its
equity capital.

Risk

The chance of an outcome not

occurring as planned. In addition, risk
may arise from interest rate or foreign
exchange rate changes etc., and many
other causes.

Scrip

This is another term for share or

stock.

Short Sale

A short sale occurs when a person

believing that the prices of shares
23ill fall, sells shares that he does not
own with the intention of purchasing
the shares at a lower price at the time
delivery has to be made. This is also
known as forward sale.

Settlement Period For administrative purposes, stock

exchanges divide the year into a
number of settlement periods which
are usually of two weeks duration.

Unsystematic Risk Risk that can be diversified away.

Volume

The number of contracts executed for

a

given

period

in

any

given

instrument or market.

Volatility

A measurement of the variability rate

of the change in price over a given
time period.