Professional Documents
Culture Documents
Evolution
Indian Stock Markets are one of the oldest in Asia. Its history dates back to nearly 200 years ago. The earliest records of security dealings in India are meager and obscure. The East India Company was the dominant institution in those days and business in its loan securities used to be transacted towards the close of the eighteenth century. By 1830's business on corporate stocks and shares in Bank and Cotton presses took place in Bombay. Though the trading list was broader in 1839, there were only half a dozen brokers recognized by banks and merchants during 1840 and 1850. The 1850's witnessed a rapid development of commercial enterprise and brokerage business attracted many men into the field and by 1860 the number of brokers increased into 60. In 1860-61 the American Civil War broke out and cotton supply from United States of Europe was stopped; thus, the 'Share Mania' in India begun. The number of brokers increased to about 200 to 250. However, at the end of the American Civil War, in 1865, a disastrous slump began (for example, Bank of Bombay Share which had touched Rs 2850 could only be sold at Rs. 87). At the end of the American Civil War, the brokers who thrived out of Civil War in 1874, found a place in a street (now appropriately called as Dalal Street) where they would conveniently assemble and transact business. In 1887, they formally established in Bombay, the "Native Share and Stock Brokers' Association" (which is alternatively known as " The Stock Exchange "). In 1895, the Stock Exchange acquired a premise in the same street and it was inaugurated in 1899. Thus, the Stock Exchange at Bombay was consolidated.
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Post-independence Scenario
Most of the exchanges suffered almost a total eclipse during depression. Lahore Exchange was closed during partition of the country and later migrated to Delhi and merged with Delhi Stock Exchange. Bangalore Stock Exchange Limited was registered in 1957 and recognized in 1963. Most of the other exchanges languished till 1957 when they applied to the Central Government for recognition under the Securities Contracts (Regulation) Act, 1956. Only Bombay, Calcutta, Madras, Ahmedabad, Delhi, Hyderabad and Indore, the well established exchanges, were recognized under the Act. Some of the members of the other Associations were required to be admitted by the recognized stock exchanges on a concessional basis, but acting on the principle of unitary control, all these pseudo stock exchanges were refused recognition by the Government of India and they thereupon ceased to function. Thus, during early sixties there were eight recognized stock exchanges in India (mentioned above). The number virtually remained unchanged, for nearly two decades. During eighties, however, many stock exchanges were established: Cochin Stock Exchange (1980), Uttar Pradesh Stock Exchange Association Limited (at Kanpur, 1982), and Pune Stock Exchange Limited (1982), Ludhiana Stock Exchange Association Limited (1983), Gauhati Stock Exchange Limited (1984), Kanara Stock Exchange Limited (at Mangalore, 1985), Magadh Stock Exchange Association (at Patna, 1986), Jaipur Stock Exchange Limited (1989), Bhubaneswar Stock Exchange Association Limited (1989), Saurashtra Kutch Stock Exchange Limited (at Rajkot, 1989), Vadodara Stock Exchange Limited (at Baroda, 1990) and recently established exchanges - Coimbatore and Meerut. Thus, at present, there are totally twenty one recognized stock exchanges in India excluding the Over The Counter Exchange of India Limited (OTCEI) and the National Stock Exchange of India Limited (NSEIL). The Table given below portrays the overall growth pattern of Indian stock markets since independence. It is quite evident from the Table that Indian stock markets have not only grown just in number of exchanges, but also in number of listed companies and in capital of listed companies. The remarkable growth after 1985 can be clearly seen from the Table, and this was due to the favouring government policies towards security market industry.
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20th century YEARS ACTIVITIES 1908 Formation of Calcutta stock exchange. 1939 Formation of Lahore and Madras stock exchange. 1940 Formation of Delhi and U. P. stock exchange. 1956 Securities contract regulation act enacted. 1957 Scam of Haridas mundhra. 1988 Securities and exchange board of India is set up. 1991 Scam of MS shoes. 1992 SEBI given power under SEBI act, 1992. 1993 Formation of National Stock Exchange (NSE). 1995 Harshad Mehta scam. 1995 Sesa Goa scam. 1997 CRB scam. 1998 BPL and Videocon scam.
21st century YEARS ACTIVITIES 2000 Depositories came in to existence (electronic form of shares). 2001 Ketan Parekh scam. 2002 Start of rolling settlement and banning of Badla trading. 2002 Introduction of T + 3 settlement in April. 2003 Introduction of T + 2 settlement in April. 2005 BSE sensex touches all time high of 6954 in January. 2006 BSE sensex touches all time high of 12500, the highest intra day fall is 1100 point. 2007 As a result of heavy buying by investors, the bull roared to reach 19000 mark. It took around 20 months to double from 10,000 mark to 20,000. 2008 It crossed 21000 mark and in July BSE Sensex went below 13000 mark
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CAPITAL MARKET
SEBI
DEPOSITORY
DEPOSITORY PARTICIPANTS
BROKERS
SUB BROKERS
INVESTORS
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Objectives Of SEBI
to protect the interests of investors in securities; to promote the development of Securities Market; to regulate the securities market and For matters connected therewith or incidental thereto.
Since its inception SEBI has been working targeting the securities and is attending to the fulfillment of its objectives with commendable zeal and dexterity. The improvements in the securities markets like capitalization requirements, margining, establishment of clearing corporations etc. reduced the risk of credit and also reduced the market. SEBI has introduced the comprehensive regulatory measures, prescribed registration norms, the eligibility criteria, the code of obligations and the code of conduct for different intermediaries like, bankers to issue, merchant bankers, brokers and sub-brokers, registrars, portfolio managers, credit rating agencies, underwriters and others. It has framed bye-laws, risk identification and risk management systems for Clearing houses of stock exchanges, surveillance system etc. which has made dealing in securities both safe and transparent to the end investor Another significant event is the approval of trading in stock indices (like S&P CNX Nifty & Sensex) in 2000. A market Index is a convenient and effective product because of the following reasons:
It acts as a barometer for market behavior; It is used to benchmark portfolio performance; It is used in derivative instruments like index futures and index options; It can be used for passive fund management as in case of Index Funds.
Two broad approaches of SEBI is to integrate the securities market at the national level, and also to diversify the trading products, so that there is an increase in number of traders including banks, financial institutions, insurance companies, mutual funds, primary dealers etc. to transact through the Exchanges. In this context the introduction of derivatives trading through Indian Stock Exchanges permitted by SEBI in 2000 AD is a real landmark. SEBI appointed the L. C. Gupta Committee in 1998 to recommend the regulatory framework for derivatives trading and suggest bye-laws for Regulation and Control of Trading and Settlement of Derivatives Contracts. The Board of SEBI in its meeting held on May 11, 1998 accepted the recommendations of the committee and approved the phased introduction of derivatives trading in India beginning with Stock Index Futures. The Board also approved the "Suggestive Bye-laws" as recommended by the Dr LC Gupta Committee for Regulation and Control of Trading and Settlement of Derivatives Contracts. SEBI then appointed the J. R. Verma Committee to recommend Risk Containment Measures (RCM) in the Indian Stock Index Futures Market. The - 10 -
report
was
submitted
in
november
1998.
However the Securities Contracts (Regulation) Act, 1956 (SCRA) required amendment to include "derivatives" in the definition of securities to enable SEBI to introduce trading in derivatives. The necessary amendment was then carried out by the Government in 1999. The Securities Laws (Amendment) Bill, 1999 was introduced. In December 1999 the new framework was approved. Derivatives have been accorded the status of `Securities'. The ban imposed on trading in derivatives in 1969 under a notification issued by the Central Government was revoked. Thereafter SEBI formulated the necessary regulations/bye-laws and intimated the Stock Exchanges in the year 2000. The derivative trading started in India at NSE in 2000 and BSE started trading in the year 2001.
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DEPOSITORY
Introduction
A depository holds the securities of investors in electronic form just like a bank holds cash of its customers. As in a Bank, investors can deposit/withdraw and transfer securities. The National Securities Depository Limited (NSDL) is the first depository in India. The functions of NSDL are regulated by the Securities and Exchange Board of India (SEBI). The depository system evolved by the National Securities Depositories Limited (NSDL) enables investors to overcome all problems related to handling physical certificates. NSDL is an organization formed to provide electronic depository facilities for securities traded. The securities of investors are held in electronic form through the medium of Depository Participants.
Functions
Dematerialisation: One of the primary functions of depository is to eliminate or minimize the movement of physical securities in the market. This is achieved through dematerialization of securities. Dematerialisation is the process of converting securities held in physical form into holdings in book entry form. Account Transfer: The depository gives effects to all transfers resulting from the settlement of trades and other transactions between various beneficial owners by recording entries in the accounts of such beneficial owners. Transfer and Registration: A transfer is the legal change of ownership of a security in the records of the issuer. For affecting a transfer, certain legal steps have to be taken like endorsement, execution of a transfer instrument and payment of stamp duty. The depository accelerates the transfer process by registering the ownership of entire issue in the name of the depository. Under a depository system, transfer of security occurs merely by passing book entries in the records of the depositories, on the instructions of the beneficial owners.
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Corporate Actions: A depository may handle corporate actions in two ways. In the first case, it merely provides information to the issuer about the persons entitled to receive corporate benefits. In the other case, depository itself takes the responsibility of distribution of corporate benefits. Pledge and Hypothecation: Depositories allow the securities placed with them to be used as collateral to secure loans and other credits. In a manual environment, borrowers are required to deliver pledged securities in physical form to the lender or its custodian. These securities are verified for authenticity and often need to be transferred in the name of lender. This has a time and money cost by way of transfer fees or stamp duty. If the borrower wants to substitute the pledged securities, these steps have to be repeated. Use of depository services for pledging/hypothecating the securities make the process very simple and cost effective. The securities pledged/hypothecated are transferred to a segregated or collateral account through book entries in the records of the depository. Linkages with Clearing System: Whether it is a separate clearing corporation attached to a stock exchange or a clearing house (department) of a stock exchange, the clearing system performs the functions of ascertaining the pay-in (sell) or pay-out (buy) of brokers who have traded on the stock exchange. Actual delivery of securities to the clearing system from the selling brokers and delivery of securities from the clearing system to the buying broker is done by the depository. To achieve this, depositories and the clearing system should be electronically linked.
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DEPOSITORIES
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NSDL is promoted by Industrial Development Bank of India Limited (IDBI) - the largest development bank of India, Unit Trust of India (UTI) - the largest mutual fund in India and National Stock Exchange of India Limited (NSE) - the largest stock exchange in India. Some of the prominent banks in the country have taken a stake in NSDL.
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Promoters
Industrial Development Bank of India Limited Unit Trust of India National Stock Exchange of India Limited
Other Shareholders State Bank of India Oriental Bank of Commerce Citibank NA Standard Chartered Bank HDFC Bank Limited The Hong Kong and Shanghai Banking Corporation Limited Deutsche Bank Dena Bank Canara Bank Union Bank of India
Legal Framework
As a part of its on-going market reforms, the Government of India promulgated the Depositories Ordinance in September 1995. Based on this ordinance, Securities and Exchange Board of India (SEBI) notified its Depositories and Participants Regulations in May 1996. The enactment of the Depositories Act the following August paved the way for the launch of National Securities Depository Ltd. (NSDL) in November 1996. The Depositories Act has provided dematerialization route to book entry based transfer of securities and settlement of securities trade. In exercise of the rights conferred by the Depositories Act, NSDL framed its Byelaws and Rules. The Byelaws are approved by SEBI. While the Byelaws define the scope of the functioning of NSDL and its business partners; the Business Rules outline the operational procedures to be followed by NSDL and its "Business Partners."
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MANAGEMENT
Chairman and managing director
Mr. C.B.Bhave
Executive director(Business Operations)
NAMES
Jayesh sule-EVP T. Koshy-EVP Chandrashekhar TilakSVP Amit Sinha-SVP Tejas Desai-VP Ganesh Subbaram-VP Bhushan Maideo-VP Samar Banwat-VP
NAMES
Mubesh Mistry-SVP Yaten Nerurkar Nityanad Phatarphod SVP Dharmesh Parekh-VP Milind Mungle-Vp
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PROMOTERS
CDSL was promoted by Bombay Stock Exchange Limited (BSE) in association with Bank of India, Bank of Baroda, State Bank of India and HDFC Bank. BSE has been involved with this venture right from the inception and has contributed overwhelmingly to the fruition of the project. The initial capital of the company is Rs.104.50 crores. The list of shareholders is as under. Sr.No. Name of shareholder
1 2 3 4
Bombay Stock Exchange Limited te Bank Of India Bank Of Baroda State Bank Of India
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5 6 7 8 9 10 11 12 13
HDFC Bank Limited Standard Chartered Bank The Centurion Bank Limited Canara Bank Union Bank of India Bank of Maharashtra Jammu and Kashmir Bank Limited The Calcutta Stock Exchange Association Limited Others TOTAL
750.00 750.00 750.00 674.46 200.00 200.00 200.00 100.00 0.08 10,450.00
Board of Directors
POSTS
Managing Director and Chief Executive Officer Chief Operating Officer Vice President. Legal & Company Secretary Vice President. Finance & Accounts Chief Technology Officer Vice President. Business Development(Currently on deputation to CDSL Ventures Ltd. as CEO with effect from 7-122006) Vice President. Operations Asst. Vice President. Business Development Asst. Vice President. Operations & Training Asst. Vice President. Operations Asst. Vice President. Information Technology Asst. Vice President. Information Technology
NAMES
Mr. V V Raut Mr. P S Reddy Mr. Umesh P Maskeri Mr. J B Ram Mr. PramodDeshpande Mr. Cyrus Khambata Mr. Dominic Fernandes Mr. Sunil Alvares Mr. L S Joshi Mr. Krishnamurthy Iyer Mr. T P Ganapathy Mr. Jitendra Chad
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Asst. Vice President. Information Technology Asst. Vice President. Investor Services Asst. Vice President. Finance & Accounts Asst. Vice President. Audit, Inspection & Compliance Asst. Vice President. Operations Asst. Vice President. Legal & Secretarial
Mr. Vishwas Nagle Mr. Suhas Kulkarni Mr. Bharat Sheth Ms. Nayana Ovalekar Mr. Ramkumar K Mr. Satish Budhakar
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Functions
The Depository Participant (DP) is the link between the shareholder, the company and CDSL and provides the following services Account opening : To utilize the services offered by a depository, any person having investment in any security or intending to invest in securities needs to have a demat account with a CDSL-DP. This holder of such demat account is called as "Beneficial Owner (BO)". A BO can maintain a demat account with zero balance in such account. A BO can open more than one account with the same or multiple DPs, in the same name/s and order, if he/she desires so. The investor can approach any DP/s of his/her choice to open a demat account
Dematerialisation
Dematerialisation is a process by which physical certificates (of shares / debentures / other securities) are converted into electronic balances. A BO has to submit the request for dematerialization by submitting the demat request form (DRF) duly completed along with the concerned physical certificates, to his/her DP.
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To settle trades done on a stock exchange (on-market trades) and trades, which are directly settled between two BOs (off-market trades), BOs submit duly completed delivery instructions in the prescribed form to DP. For receipt of securities into his/her account, a BO can give one time "standing instruction" to DP. Once such a standing instruction is given to the DP, there is no need to submit separate instructions for receipt every time the investor buys securities. Account Statement Generally a DP sends to the BO, a statement of his account, monthly, if there is any transaction in the account or every quarter if the account is not operated during that period. Rematerialisation Rematerialisation is the process by which the electronic balances held in the demat account can be converted back into physical certificates. Pledging If the BO decides to pledge any securities in his BO account, he can avail of the same by submitting the pledge creation form duly completed, to his DP. Nomination BO accounts also have a facility for nomination in favor of any person. Transmission of securities CDSL offers a facility for transmission of balances held in BO account/s (to other BO account/s) if so required due to death, lunacy, bankruptcy, insolvency or required due to operation of any law.
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Change in Address A BO who wishes to register his change in address submits his/her request in writing to his/her DP. The changes entered by the DP in the CDSL system will be automatically downloaded to all the companies in which the BO is holding securities. This facility offered by CDSL saves money, time and effort for the BO. Bank Account Details: SEBI has made it mandatory for companies to print details of bank account of the BO on dividend/interest warrants etc. to prevent possibilities of misuse of the warrants. All BOs should submit a request in writing to the DP if they wish to record / change their bank account details.
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STOCK EXCHANGE
Introduction
STOCK EXCHANGE is a platform where buyers and sellers of securities issued by government, financial institution and corporate houses etc. meet and where the trading of these corporate securities takes place. The securities which are traded in the stock exchange are shares, debentures of public limited companies, port trusts, utility undertaking and such other authorities. The securities contracts (resolution) act, 1956 defines stock exchange as
AN ASSOCIATION, ORGANISATIION OR BODY OF INDIVIDIUAL, WHETHER INCORPORATE OR ASSISTING REGULATING AND CONTROLING IN BUYING, SELLING AND DEAKLILNG IN SECURITIES
A stock exchange is a platform for the trade of already issued securities through primary market. It is essential pillar of the private sector and corporate economic. It is the open auction market where buyers and sellers meet and involve a competitive price for the securities. Since buying and selling of different types of securities take place in stock exchange, the price of particular securities reflects their demand and supply. In fact, stock exchange is said to be barometer of economic and financial health. Just like reading on a barometer reflect the atmospheric pressure and changes, stock market quotations of securities prices give an idea about the economic and industrial conditions. It measures of all the pull and pressure of securities in the market. The trade in market is through the authorized members who have duly registered with concerned stock exchange and SEBI. It reflects hopes, aspiration and fear of people regarding the performance of the economy .it exerts a powerful and significant influence as a depressant or stimulant of business activity.
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There are mainly three participants in stock exchange i.e. o Issuer of security (company) o Investor of security (individual.HUF) o Intermediaries and products(broker, merchant share,bonds,warrants,derivatives products)
bankers
and
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SR. NO.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23
NAMES
Bombay Stock Exchange Ahmdabad Stock Exchange
YEAR
1875 1897
TYPE
Voluntary non profit organization Voluntary non profit organization Public ltd. company Voluntary non profit organization Company ltd by guarantee Company ltd by guarantee Public ltd. company Pvt. Converted in ton public ltd. company Public ltd. company Public ltd. company Company ltd by guarantee Public ltd. company Public ltd. company Company ltd by guarantee Public ltd. company Company ltd by guarantee Company ltd by guarantee Company By guarantee Pure demutalise N.D. Pure demutalise Company By guarantee N.D.
Calcutta Stock Exchange 1908 Madhya Pradesh Stock 1930 Exchange Madras Stock Exchange 1937 Hyderabad Stock Exchange 1943
Delhi Stock Exchange 1947 association ltd Banglore Stock Exchange 1957 Cochin Stock Exchange U.P. Stock Exchange ltd. Pune Stock Exchange ltd. Ludhiana Stock Exchange Guwahati Stock Exchange Magadh Stock Exchange Association Jaipur Stock Exchange ltd. Bhubaneshwar Stock Exchange Saurashtrakuch Stock Exchange ltd. Vadodara Stock Exchange ltd. National Stock Exchange of India ltd. Coimbatorestock exchange ltd. OTC Stock Exchange of India Mangalore Stock Exchange ltd Interconnected Stock Exchange 1978 1982 1982 1983 1984 1986 1983 1989 1989 1990 1994 1996
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Capital market reforms in India and the launch Of the Securities and Exchange Board of India
NSE
(SEBI) accelerated the incorporation of the second Indian stock exchange called the National Stock Exchange (NSE) in 1992. After a few years of operations, the NSE has become the largest stock exchange in India. Three segments of the NSE trading platform were established one after another. The Wholesale Debt Market (WDM) commenced operations in June 1994 and the Capital Market (CM) segment was opened at the end of 1994. Finally, the Futures and Options segment began operating in 2000. Today the NSE takes the 14th position in the top 40 futures exchanges in the world.
NATIONAL STOCK EXCHANGE In 1996, the National Stock Exchange of India launched S&P CNX Nifty and CNX Junior Indices that make up 100 most liquid stocks in India. CNX Nifty is a diversified index of 50 stocks from 25 different economy sectors. The Indices are owned and managed by India Index Services and Products Ltd (IISL) that has a consulting and licensing agreement with Standard & Poor's. In 1998, the National Stock Exchange of India launched its web-site and was the first exchange in India that started trading stock on the Internet in 2000. The NSE - 29 -
has also proved its leadership in the Indian financial market by gaining many awards such as 'Best IT Usage Award' by Computer Society in India (in 1996 and 1997) and CHIP Web Award by CHIP magazine (1999).
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The National Stock Exchange of India has stringent requirements and criteria for the companies listed on the Exchange. Minimum capital requirements, project appraisal, and company's track record are just a few of the criteria. In addition, listed companies pay variable listing fees based on their corporate capital size. The National Stock Exchange of India Ltd. provides its clients with a single, fully electronic trading platform that is operated through a VSAT network. Unlike most world exchanges, the NSE uses the satellite communication system that connects traders from 345 Indian cities. The advanced technologies enable up to 6 million trades to be operated daily on the NSE trading platform.
The Organization
The National Stock Exchange of India Limited has genesis in the report of the High Powered Study Group on Establishment of New Stock Exchanges, which recommended promotion of a National Stock Exchange by financial institutions (FIs) to provide access to investors from all across the country on an equal footing. Based on the recommendations, NSE was promoted by leading Financial Institutions at the behest of the Government of India and was incorporated in November 1992 as a tax-paying company unlike other stock exchanges in the country. On its recognition as a stock exchange under the Securities Contracts (Regulation) Act, 1956 in April 1993, NSE commenced operations in the Wholesale Debt Market (WDM) segment in June 1994. The Capital Market (Equities) segment commenced operations in November 1994 and operations in Derivatives segment commenced in June 2000.
The Bombay Stock Exchange is known as the oldest exchange in Asia. It traces its history to the 1850s, when stockbrokers would gather under banyan trees in front of Mumbai's Town Hall. The location of these meetings changed many times, as the number of brokers constantly increased. The group eventually moved to Dalal Street in 1874 and in 1875 became an official organization known as 'The Native Share & Stock Brokers Association'. In 1956, the BSE became the first stock exchange to be recognized by the Indian Government under the Securities Contracts Regulation Act. The Bombay Stock Exchange developed the BSE Sensex in 1986, giving the BSE a means to measure overall performance of the exchange. In 2000 the BSE used this index to open its derivatives market, trading Sensex futures contracts. The development of Sensex options along with equity derivatives followed in 2001 and 2002, expanding the BSE's trading platform. Historically an open-cry floor trading exchange, the Bombay Stock Exchange switched to an electronic trading system in 1995. It took the exchange only fifty days to make this transition.
BOMBAY STOCK EXCHANGE As the first stock exchange in India, the Bombay Stock Exchange is considered to have played a very important role in the development of the country's capital markets. The Bombay Stock Exchange is the largest of 23 exchanges in India, with over 6,000 listed companies. It is also the fifth largest exchange in the world, with market capitalization of $466 billion. The Bombay Stock Exchange uses the BSE Sensex, an index of 30 large, developed BSE stocks. This index gives a measure of the overall performance of the Bombay Stock Exchange, and is closely followed around the world. Based on the Sensex, the BSE equity market has grown significantly since 1990.
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In addition to individual stocks, the BSE also has a market in derivatives, which was the first to be established in India. Listed derivatives on the exchange include stock futures and options, index futures and options, and weekly options. The Bombay Stock Exchange is also actively involved with the development of the retail debt market. The debt market in India is considered extremely important, as the country continues to develop and depends on this type of investment for growth. Until recently, the debt market in India was limited to a wholesale market, with banks and financial institutions as the only participants. The Bombay Stock Exchange believes that a retail market will bring great opportunities to individual investors through better diversification.
Logo
The Stock Exchange, Mumbai, is now Bombay Stock Exchange Limited. The Exchange has a new name, and an entirely new perspective. A perspective born out of corporatisation and demutualisation. Bombay Stock Exchange Limited is Asias oldest stock exchange. It carries within itself the depth of knowledge of capital markets acquired since its inception in 1875. Located in Mumbai, the financial capital of India, it has been the backbone of the countrys capital markets. As a corporate entity, our new identity reflects our new perspective. Smoother, seamless, and efficient. Whichever way you look at i
BROKERS
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Introduction
A Stock broker sells or buys stock on behalf of themselves. The stock broker works as an agent matching up stock buyers and sellers. A transaction on a stock exchange must be made between two members of the exchange a typical person may not walk into the New York Stock Exchange (for example), and ask to trade stock. Such an exchange must be done through a broker. In addition to actually trading stocks for their clients, stock brokers may also offer advice to their clients on which stocks, mutual funds, etc. to buy.
i.
ELGIBILITY
ii. He should neither e a bankrupt not compounded with creditors. iii. He should not have been convicted for any offence, fraud. iv. He should not have engaged in any other business other than that of a broker in securities. v. He should not be a defaulter of any stock exchange. vi. He should have completed 12th standard examination. Apart from individuals, corporate and institutional members can also become brokers. Brokers will be selected by the selection committee of the stock exchange on the basis of their qualifications, experience, financial status, their performance in the written test, interview etc.
FUNCTIONS OF BROKERS
The following are the important functions generally performed by all the brokers.
Client registration
First of all, a trading broker has to enter into an agreement in the specified format with his client before accepting any orders on his client s behalf. The said agreement has to be executed on non-judicial stamp paper, duly signed by both the parties on all the pages. In addition to the agreement, the broker shall seek other information about the client in the client registration form. The information may relate to :
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1. Investors financial profile. 2. Investors risk profile and risk taking ability. 3. Investors social profile. 4. Investors identification details. 5. Family, income age and employment details.
Execution of orders
The important function of a broker is to execute his client s orders swiftly and carefully. Hence, he has to obtain clear cut confirmed order instructions from the clients to that the necessary orders may be placed on the system. To execute a trade order for a client, he broker must obtain specific instructions as to:
The name of the company whose securities have to be bought or sold. 2. The precise number of shares required. 3. The limit or market price conditions .
1.
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Review of Literature
1).An ASX Study of share investors in 2004
Investing in the share market is becoming more and more a part of life for average Australians, with 55% now owning shares in one form or another. This is the highest level of ownership ever recorded by ASX, and among the highest recorded levels in the world. 2004 was certainly an interesting time for the market. The benchmark index, the S&P/ASX 200, reached 4,000 points for the . rst time. There was also a large number of new listings and several new trading records in the equities, options and warrants markets. So perhaps it is no coincidence at such a time to see a record level of share ownership. ASX has been researching and publishing information about Australian share owners for many years. This is our ninth study in a series dating back to 1991. Retail investors are those who are investing their own wealth, either directly or via a managed fund or self-managed superannuation fund. They are an important segment of the overall Australian investment landscape, accounting for around 55% of all trades on ASX, and 22% of the value of trades. These studies help provide ASX, and the financial markets as a whole, with a detailed understanding of retail investors why they invest, how they invest and what they think about investing. We note with pleasure that investors believe our markets are well supervised and that they are satisfied with their broker. These factors are extremely important in ensuring that investors remain confident about share investing. Page 3
important portal for the small investors, is also influenced by their financial behaviour. Hence, this study has made an attempt to examine the related aspects of the Shares selection behaviour of individual investors, in the city of Mumbai. From the researchers and academicians point of view, such a study will help in developing and expanding knowledge in this field.
ignore the role of chance, and are under an illusion of control by exaggerating both their own skill and the importance of that skill. This concept is called positive testing, which effectively means that people believe the methods they employed to achieve any positive results are inherently sound. The problem is that they then reject alternate methods that may also work well, if not better.
5). Investors who stick to quality portfolios make the most money
10 Mar 2008, 2220 hrs IST, Tushar Pradhan, The domestic stock market has been witnessing considerable volatility and there are concerns about its future direction. However, news so far about the domestic economy and corporate sector is not really causing concern. Nevertheless, nervousness regarding the unfolding events, post sub prime crisis, continues to impinge on the minds of overseas investors. Though investors do have concerns, which make them think twice before venturing into the market, one must not forget that returns are gained only by undertaking risk. Therefore, what appears to be a bleak situation (under normal circumstances) is the cause of abnormal gains if the bet is called right. In the strictest sense of the theory of efficient markets, no one would make above normal gains otherwise. So, these fluctuations, driven by a mixture of facts and sentiment, are the quagmire that investors have to face on a regular basis. The relentless rise in the market over the past three years had desensitized investors to a large extent. Hence, the above phenomenon seems difficult to understand as of now. Most investors are also in denial at times, which generally (if the market continues to fall) gives rise to despondency and eventual capitulation
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It just means that investors will now have to change their perception about equities. While equities were traditionally bought for capital returns, they could become excellent sources of steady income during bear phases. The lower stock price translates into higher dividend per share, thereby pushing up the dividend yield to attractive levels.
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Introduction to topic
Capital market is a type of market, which can make the houses and which can ruin the houses. In India, thousands and lakhs of people invest their money in the share market and they invest on basis of two main criterias i.e. On the basis of personal analysis of the market. On the basis of the analysis being done by various analysts. Apart from above two main criterias there are various other criterias which influence the investment decision of the investors such as advice by the brokers etc. I am interested in knowing the ratio of the investors i.e. how many are investing on the basis of their personal analysis and how many are investing blindly on the faith of others, I also want to know the thinking of the various investors towards share market and also to analyze above ratios to achieve the objective of my research. There fore I select the topic ANALYSIS OF THE KNOWLEDGE AND PERCEPTION OF THE INVESTORS TOWARDS SHARE MARKET In simple words we can say that this topic covers many little, but very important things under this topic like knowledge, perception, complaints, suggestions, of the investors regarding share market. This is the topic which will provide knowledge database to the reader regarding various classes of the investors i.e. business man, serviceman, student. The reader of this topic will come to know about the perception of various classes of investors i.e. how a serviceman thinks about share market or we can say how a business man thinks about the share market. This topic can also helps to the investors, as it contains questions regarding suggestions and complaints. In this way it is concluded that This topic is very important from investors point of view as well as from share markets point of view.
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OBJECTIVES
THE AIM OR OBJECTIVE OF THE RESEARCH CAN BE DIVIDED INTO TWO CATEGORIES:-
1) SPECIFIC OBJECTIVES
A) To know about the awareness among the public about Share market. b) To know the perception of the various investors regarding share market.
2) GENERAL OBJECTIVES
a) To know various measures to improve share market conditions from getting feed back from the investors. b) To find out the ratio i.e. how many investors invest their money for long term and how many are invest for short term basis. c) To find out the various loop holes of the share market.
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RESEARCH METHODOLOGY
Research methodology is search for knowledge, objective and systemic method of finding solution to a problem in a search .it may be understood as a science to study how research is done scientifically .Every research problem calls for an appropriate methodology .
RESEARCH DESIGN In this case the research is exploratory type. Three lines have been implied here, which - study of secondary sources of information, survey of individuals who are appropriation to have ideas on general subject and analysis of data.
DATA ANALYSIS Data collection can be of two types i. e. Primary and secondary data. The primary data are those, which are collected a fresh and for the first time and thus happen to be original in nature. In this project the primary data will be collected through questionnaires and personal meetings with respondent. The secondary data are those, which have already been collected by someone else .chief sources of the collection of secondary will be internet site and magazines.
SAMPLE SIZE This refers to the number of respondents to be selected from the universe to constitute a sample. an optimum sample is one that fulfills the requirement of efficiency, reliability and flexibility. The sample size of 100 respondents is taken into consideration in this research study. SAMPLING METHOD A sample design is a plan for obtaining a sample from the given population. It refers to the technique or procedure the research would adopt in selecting the sample. The random sampling method will be used for carrying out the research.
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SAMPLING FRAME It covers those areas in which the research is conducted. The sampling frame for my study is only Jalandhar, The total respondents are divided in to three categories i.e. business man , service man and students . The respondents are also divided on the bases of age i.e. 18- 40years and above 40 years.
BUSINE SSMAN
STUDENT SERVICE
T O T A L 70 30 100
29 14 43
21 16 37
20 0 20
Data Analysis Data will be collected, processed and analyzed in accordance with in the
framework of research plan .Technically speaking, processing implies editing , coding, classification and tabulation. Data obtained during the study will be systematically tabulated and the analysis of data is done with help of pie charts and graphs.
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Limitation of Study
1. Lack of Scientific Training: Researchers and even to their guides, is mostly a scissor and paste job without any insight shed on the collated materials, thus a systematic study of research
methodology is urgent necessity. 2. Insufficient interaction: There is insufficient interaction between the university research departments on one side and business establishments, govt departments on the side 3. Lack of Confidence: The concept of secrecy seems to be sacrosanct to business organizations in the country so much so that it proves an impermeable barrier to researchers. 4. Biasness: undertaken Research quite studies for overlapping want of one another are
often
adequate
information.
Information provided is full of biasness. 5. In adequate and Untimely secretarial: Research faces the difficulty of adequate and timely secretarial assistance, including computer assistance. This cause unnecessary completion of research studies. delays in the
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- 50 -
Q1: TICK THE TERMS YOU ARE AWARE OF:A). KNOWLEDGE OF NSDL (NATIONAL SECURITY DEPOSITORY LTD.) AGE(YEARS) 18-40 ABOVE 40 PROFESSION CATEGORY Known Unknown Total BUSIN E SSMAN 16 13 29 STUDE SERVICE 15 6 21 NT 9 11 20 BUSINE SSMAN 12 2 14 SERVICE 9 7 16
(18 - 40)
(ABOVE 40)
13
6 11
2 7
16
15
12 9
20% 0%
S SI N ES BU S SE R VI C E
BU
UNKNOWN KNOWN
Figure 1
UNKNOWN KNOWN
INTERPATION: - From above left side chart it is clear that among the men of 18-40 years 55% businessmen have knowledge about NSDL and 45% are unaware from this.71% servicemen are known about NSDL and 29% are unaware about it, similarly 45% students have knowledge about NSDL. On the other hand chart on the right side shows that among the men of 18-40 years 85% businessmen have knowledge about NSDL and 15% are unaware of it.56.25% servicemen have knowledge about NSDL while 53.75% have not..
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B). KNOWLEDGE OF CDSL (CENTRAL DEPOSITORY SERVICES LTD.) AGE(YEARS) 18-40 ABOVE 40 PROFESSION CATEGORY Known Unknown Total BUSINE SSMAN SERVICE 13 16 29 14 7 21 STUDENT BUSINESSMA N SERVICE 11 9 20 10 4 14 8 8 16
(18 - 40)
(ABOVE 40)
7 16
100%
9
4 8
14 13
11
10 8
BU
UNKNOWN KNOWN
Figure 2
SE
INTERPATION: - From above left side chart it is clear that among the men of 18-40 years 44.8% businessmen have knowledge about CDSL and 55.2% are unaware from this.66.6% servicemen are known about CDSL and 33.3% are unaware about it, similarly 55% students have knowledge about CDSL. On the other hand chart on the right side shows that among the men of 18-40 year71.4% businessmen have knowledge about CDSL and 28.5% are unaware of it. 50% servicemen have knowledge about CDSL while 50% have not.
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R VI C E
UNKNOWN KNOWN
C). KNOWLEDGE OF SEBI (SECURITY EXCHANGE BOARD OF INDIA) AGE(YEARS) 18-40 ABOVE 40 PROFESSION CATEGORY Known Unknown Total BUSIN E SSMAN 25 4 29 STUDE SERVICE 18 3 21 NT 15 5 20 BUSINE SSMAN 8 6 14 SERVICE 16 0 16
(18 - 40)
(ABOVE 40)
5
25
18
15
40% 20% 0%
16 8
VI C E
S SI N ES BU S
ST U
SS
SE
BU
UNKNOWN KNOWN
Figure 3
SE
INTERPATION: - From above left side chart it is clear that among the men of 18-40 years 86.2% businessmen have knowledge about SEBI and 13.7% are unaware from this.85.7% servicemen are known about SEBI and 14.2% are unaware about it, similarly 75% students have knowledge about SEBI. On the other hand chart on the right side shows that among the men of 18-40 years 57.14% businessmen have knowledge about SEBI and 42.8% are unaware of it. All servicemen are aware about SEBI.
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R VI C E
ES
IN
EN
UNKNOWN KNOWN
D). KNOWLEDGE OF M & A (MERGER & ACQUISITION) AGE(YEARS) 18-40 PROFESSION CATEGORY Known Unknown Total BUSIN E SSMAN 18 11 29 STUDE SERVICE 14 7 21 NT 19 1 20
ABOVE 40 SERVICE 9 7 16
BUSINE SSMAN 12 2 14
(18 - 40)
(ABOVE 40)
1
11
2 7
19 18 14
12 9
BU
UNKNOWN KNOWN
Figure 4
SE
INTERPATION: - From above left side chart it is clear that among the men of 18-40 years 62.06% businessmen have knowledge about M & A and 37.9% are unaware from this. 66.6% servicemen are known about M & A and 33.33% are unaware about it, similarly 95% students have knowledge about M & A. On the other hand chart on the right side shows that among the men of 18-40 years 85.7% businessmen have knowledge about M & A and 14.3% are unaware of it. 56.25% of the servicemen are aware about M & A and 43.75% are not.
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R VI C E
UNKNOWN KNOWN
E). KNOWLEDGE OF IPO (INTIAL PUBLIC OFFER) AGE(YEARS) 18-40 PROFESSION CATEGORY Known Unknown Total BUSIN E SSMAN 25 4 29 STUDE SERVICE 20 1 21 NT 20 0 20
(18 - 40)
(ABOVE 40)
0
100% 80%
4
25
20
20
VI C E
S SI N ES BU S
ST U
SS
SE
BU
UNKNOWN KNOWN
Figure 5
SE
INTERPATION: - From above left side chart it is clear that among the men of 1840 years 86.2% businessmen have knowledge about IPO and 13.8% are unaware from this. 95.2% servicemen are known about IPO and 4.7% are unaware about it, similarly 100% students have knowledge about IPO. On the other hand chart on the right side shows that among the men of 18-40 years 71.4% businessmen have knowledge about IPO and 28.5% are unaware of it. 87.5% of the servicemen are aware about IPO and 12.5% are not.
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R VI C E
ES
IN
EN
UNKNOWN KNOWN
Q2: From where you get knowledge about above terms? A) Through the ACADEMIC AGE(YEARS) PROFESSION CATEGORY YES NO Total BUSIN E SSMAN 0 29 29 18-40 STUDE SERVICE 3 18 21 NT 6 14 20 ABOVE 40 BUSINE SSMAN 1 13 14 SERVICE 1 15 16
(18 - 40)
(ABOVE 40)
100%
18 14
29
13
15
0
VI C E
3
EN T
ST U
SE
SI N ES
BU
yes
Figure 6
no
BU S
SE
yes
no
INTERPATION: - From above left side chart it is clear that among the men of 18-40 years not even a single businessman are able to know about above term s through the medium of Academic. Only 14.2% servicemen get information about above terms with the medium of Academic. Similarly 30% students get information with the medium of Academic. On the other hand chart on the right side shows that among the men of 18-40 years 7.14% business have knowledge about above terms by the way of Academic and.62.5% servicemen get knowledge through the Academic.
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B) Through the GENERAL AWARENESS AGE(YEARS) 18-40 PROFESSION CATEGORY YES NO Total BUSIN E SSMAN 14 15 29 STUDE SERVICE 14 7 21 NT 13 7 20
(18 - 40)
(ABOVE 40)
15
100%
7
14
14
13
BU
yes
Figure 7
no
SE
R VI C E
yes
no
INTERPATION: - From above left side chart it is clear that among the men of 1840 years 48.7% of businessmen are able to know about above terms through the medium of General awareness. Only 66.6% servicemen get information about above terms with the medium of General awareness. Similarly 65% students get information with the medium of General awareness. On the other hand chart on the right side shows that among the men of 18-40 years 50% business have knowledge about above terms by the way of General awareness and.50% servicemen get knowledge through the General awareness
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C) Through the BROKERS AGE(YEARS) PROFESSION CATEGORY YES NO Total BUSIN E SSMAN 10 19 29
(18 - 40)
(ABOVE 40)
100%
19 12 10
11
10
10
BU
yes
Figure 8
no
SE
R VI C E
yes
no
INTERPATION: - From above left side chart it is clear that among the men of 1840 years 34.4% of businessmen are able to know about above terms through the medium of Brokers. Only 42.8% servicemen get information about above terms with the medium of Brokers. Similarly 50% students get information with the medium of Brokers. On the other hand chart on the right side shows that among the men of 18-40 years 50% business have knowledge about above terms by the way of Brokers and.31.25% servicemen get knowledge through the Brokers.
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D) Through the MAGAZINES & NEWSPAPERS AGE(YEARS) 18-40 PROFESSION CATEGORY YES NO Total BUSIN E SSMAN 14 15 29 STUDE SERVICE 12 9 21 NT 8 12 20
(18 - 40)
(ABOVE 40)
100%
15 9 12
2 6
14
12
10
20% 0%
S SI N ES BU S SE R VI C E
BU
yes
Figure 9
no
yes
no
INTERPATION: - From above left side chart it is clear that among the men of 18-40 years 48.2% of businessmen are able to know about above terms through the medium of Magazines & News papers. Only 57.1% servicemen get information about above terms with the medium of Magazines & News papers. Similarly 40% students get information with the medium of Magazines & News papers. On the other hand chart on the right side shows that among the men of 18-40 years 66.6% business have knowledge about above terms by the way of Magazines & News papers and.62.5% servicemen get knowledge through the Magazines & News papers.
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Q3: What is your main criterion in investing money in the share market? CRITERION LONG TERM SHORT TERM BOTH TOTAL 60 30 10 100 NUMBERS
LONG TERM
SHORT TERM
BOTH
Figure 10
INTERPRETATION: Above diagram shows that out of total sample of 100 investors 60 are invest in shares for long term ,30 are invest in for short term and 10 are invest for both short term as well as long term.
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DESCRIPTION AGE(YEARS) PROFESSION CATEGORY LONG TERM SHORT TERM BOTH TOTAL BUSIN E SSMAN 18 8 3 29
(18 - 40)
(ABOVE 40)
0
2 12 9
18
11
11
VI C E
S SI N ES BU S
ST U
SS
SE
BU
INTERPATION: From above left side chart it is clear that among persons of age 18 40 out of total businessmen 62% are invest In shares on long term basis,27.5% invest on the short term basis and 10.3% invest in long term as well as in short term also. Out of total servicemen 52.3% are invest In shares on long term basis,12.5% invest on the short term basis and 14.2% invest in long term as well as in short term also. Among students 55% invest In shares on long term basis,45%% invest on the short term basis and 0% invest in long term as well as in short term also.
- 61 -
SE
R VI C E
ES
IN
EN
Right side chart revealed that among the persons of age of above 40 out total 40 out of total businessmen 85.7% are invest In shares on long term basis,7.14% invest on the short term basis and 7.14% invest in long term as well as in short term also. Out of total serviceman 56.25% are invest In shares on long term basis,12.5% invest on the short term basis and 31.25% invest in long term as well as in short term also.
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Q4: Given below are some of the decisions taken by the individuals for investing in primary market. Please give marks out of 5 to each decision according to your perception 1 stands for least agree and 2,3,4,5 stands for agree to great extent, agree moderately , some what agree and strongly agree. A) I invest in primary market issues of listed companies with good current market price : MARKS 1 2 3 4 5 TOTAL NUMBERES 15 26 24 18 17 100
18%
17%
5% 0% % age
Figure12
INTERPRETATION : Above diagram states that out of 100 people 15% people least agree (1) to the 1st decision, 26% are agree to great extent(2), 24% agree moderately(3) , 18% are somewhat agree (4)and 17% are least agree (5) to the decision.
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(18 - 40)
(ABOVE 40)
5 4
6 7 4
2 5
2 0 3
2 2 4
4 6 5 2
R VI C E
8 4
VI C E
3 2
EN D T
5 2
R SE
ST U
BU
SE
1 4
Figure 13
2 5
1 4
2 5
INTERPRETATION: The left side chart shows that among the persons of 18 40 years 13.7% businessmen least agree( 1 mark) with the decision, 27.5% agree to the great extent (2), 13.7% agree moderately(3) , 24.1% somewhat agree(4) and 20.6% strongly agree(5) with the statement.
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Among servicemen 9.52% Servicemen least agree (1 mark) with the decision, 14.2% agree to the great extent (2), 42.8% agree moderately (3), 23.8% somewhat agree (4) and 9.52% strongly agree (5) with the statement. Among students 10% Students least agree (1 mark) with the decision, 25% agree to the great extent (2), 20% agree moderately (3), 20% somewhat agree (4) and 25% strongly agree (5) with the statement.
Right side chart revealed that among the persons of above 40 age 35.7% businessmen least agree( 1 mark) with the decision, 28.5% agree to the great extent (2), 21.4% agree moderately(3) , 0% somewhat agree(4) and 14.2% strongly agree(5) with the statement. 12.5% Servicemen least agree (1 mark) with the decision, 42.8% agree to the great extent (2), 25% agree moderately (3), 12.5% somewhat agree (4) and 12.5% strongly agree (5) with the statement.
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MARKS 1 2 3 4 5 TOTAL
NUMBERES 27 24 17 17 15 100
INTERPRETATION: Above diagram states that out of 100 people 27% people least agree (1) to the 1st decision, 24% are agree to great extent(2), 17% agree moderately(3) , 17% are somewhat agree (4)and 14% are least agree (5) to the decision. DESCRIPTION - 66 -
T O T A L 27 24 17 17 15 100
(18 - 40)
(ABOVE 40)
2 3 4
6 6 6
5 4 1
2 2 4
0 2 2
3 8
6 5
T
7 4
VI C E
4 2
R VI C E
EN
ST U
SE
SI N ES BU S
BU
SE
1 4
Figure 15
2 5
1 4
2 5
INTERPRETATION: The left side chart shows that among the persons of 18 40 years 13.7% businessmen least agree( 1 mark) with the decision, 24.1% agree to the great extent (2), 20.6% agree moderately(3) , 20.6% somewhat agree(4) and 20.6% strongly agree(5) with the statement.
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Among servicemen 38% Servicemen least agree (1 mark) with the decision, 14.28% agree to the great extent (2), 4.76% agree moderately (3), 19.04% somewhat agree (4) and 23.08% strongly agree (5) with the statement. Among students 25% Students least agree (1 mark) with the decision, 30% agree to the great extent (2), 20% agree moderately (3), 15% somewhat agree (4) and 10% strongly agree (5) with the statement.
Right side chart revealed that among the persons of above 40 age 14.2% businessmen least agree( 1 mark) with the decision, 14.2% agree to the great extent (2), 28.5% agree moderately(3) , 18.6% somewhat agree(4) and 14.2% strongly agree(5) with the statement. 50% Servicemen least agree (1 mark) with the decision, 25% agree to the great extent (2), 12.5% agree moderately (3), 12.5% somewhat agree (4) and 0% strongly agree (5) with the statement.
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MARKS 1 2 3 4 5 TOTAL
NUMBERES 8 11 16 17 48 100
48%
INTERPRETATION: Above diagram states that out of 100 people 8% people least agree (1) to the 1 st decision, 11% are agree to great extent(2), 16% agree moderately(3) , 17% are somewhat agree (4)and 48% are least agree (5) to the decision. DESCRIPTION - 69 -
T O T A L 8 11 16 17 48 100
(18 - 40)
(ABOVE 40)
5 6
40% 20% 0%
S SI N ES BU S
4 2
VI C E
1 2
T EN
2 1
3 1
R VI C E
1 2
R SE
ST U
BU
SE
1 4
Figure 17
2 5
1 4
2 5
INTERPRETATION: The left side chart shows that among the persons of 18 40 years 6.8% businessmen least agree( 1 mark) with the decision, 13.7% agree to the great extent (2), 20.6% agree moderately(3) , 17.2% somewhat agree(4) and 41.37% strongly agree(5) with the statement.
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Among servicemen 9.5% Servicemen least agree (1 mark) with the decision, 4.7% agree to the great extent (2), 14.2% agree moderately (3), 33.33% somewhat agree (4) and 38% strongly agree (5) with the statement. Among students 5% Students least agree (1 mark) with the decision, 10% agree to the great extent (2), 15% agree moderately (3), 15% somewhat agree (4) and 55% strongly agree (5) with the statement.
Right side chart revealed that among the persons of above 40 age 7.14% businessmen least agree( 1 mark) with the decision, 21.42% agree to the great extent (2), 14.28% agree moderately(3) , 14.28% somewhat agree(4) and 42.8% strongly agree(5) with the statement. 12.5% Servicemen least agree (1 mark) with the decision, 6.25% agree to the great extent (2), 12.5% agree moderately (3), 0% somewhat agree (4) and 68.75% strongly agree (5) with the statement.
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MARKS 1 2 3 4 5 TOTAL
NUMBERES 37 13 24 10 16 100
37%
24%
16%
13% 10%
INTERPRETATION: Above diagram states that out of 100 people 37% people least agree (1) to the 1st decision, 13% are agree to great extent(2), 24% agree moderately(3) , 10% are somewhat agree (4)and 16% are least agree (5) to the decision. DESCRIPTION - 72 -
T O T A L 37 13 24 10 16 100
(18 - 40)
(ABOVE 40)
4 1 5
4 4 6
2 1 5
3 1 4
3 3 4
4 11
6 7
1 9
1 5
1 5
VI C E
ST U
SS
SE
SI N ES BU S
BU
SE
R VI C E
ES
IN
EN
1 4
Figure 19
2 5
1 4
2 5
INTERPRETATION: The left side chart shows that among the persons of 18 40 years 37.9% businessmen least agree( 1 mark) with the decision, 13.79% agree to the great extent (2), 20.68% agree moderately(3) , 13.7% somewhat agree(4) and 13.7% strongly agree(5) with the statement.
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Among servicemen 33.33% Servicemen least agree (1 mark) with the decision, 28.5% agree to the great extent (2), 23.8% agree moderately (3), 23.8% somewhat agree (4) and 4.7% strongly agree (5) with the statement. Among students 45% Students least agree (1 mark) with the decision, 5% agree to the great extent (2), 25% agree moderately (3), 5% somewhat agree (4) and 25% strongly agree (5) with the statement.
Right side chart revealed that among the persons of above 40 age 35.7% businessmen least agree( 1 mark) with the decision, 7.14% agree to the great extent (2), 28.57% agree moderately(3) , 7.14% somewhat agree(4) and 21.42% strongly agree(5) with the statement. 31.25% Servicemen least agree (1 mark) with the decision, 6.25% agree to the great extent (2), 25% agree moderately (3), 18.75% somewhat agree (4) and 18.75% strongly agree (5) with the statement.
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MARKS 1 2 3 4 5 TOTAL
NUMBERES 18 27 21 24 10 100
10%
INTERPRETATION: Above diagram states that out of 100 people 18% people least agree (1) to the 1st decision, 27% are agree to great extent(2), 21% agree moderately(3) , 24% are somewhat agree (4)and 10% are least agree (5) to the decision. DESCRIPTION - 75 -
T O T A L 18 27 21 24 10 100
(18 - 40)
(ABOVE 40)
2 6
3 10 3
1 2 7
2 2 3
2 4 1
6 7
VI C E
6 5
T
5 2
R VI C E
6 3
4 1
EN
ES
IN
R SE
ST U
SS
BU
SE
1 4
Figure 21
2 5
1 4
2 5
INTERPRETATION: The left side chart shows that among the persons of 18 40 years 24.1% businessmen least agree( 1 mark) with the decision, 30.68% agree to the great extent (2), 10.34% agree moderately(3) , 34.48% somewhat agree(4) and 10.34% strongly agree(5) with the statement.
- 76 -
Among servicemen 23.8% Servicemen least agree (1 mark) with the decision, 28.5% agree to the great extent (2), 33.3% agree moderately (3), 9.52% somewhat agree (4) and 4.76% strongly agree (5) with the statement. Among students 5% Students least agree (1 mark) with the decision, 20% agree to the great extent (2), 35% agree moderately (3), 30% somewhat agree (4) and 10% strongly agree (5) with the statement.
Right side chart revealed that among the persons of above 40 age 14.2% businessmen least agree( 1 mark) with the decision, 35.7% agree to the great extent (2), 21.42% agree moderately(3) , 14.28% somewhat agree(4) and 14.28% strongly agree(5) with the statement. 18.75% Servicemen least agree (1 mark) with the decision, 37.5% agree to the great extent (2), 6.25% agree moderately (3), 25% somewhat agree (4) and 12.5% strongly agree (5) with the statement.
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Q6: Do you think that share market is a gamble? CATEGORY YES NO TOTAL NUMBERS 41 59 100
41%
59%
YES
NO
Figure 22
INTERPRETATION: Above diagram shows that out of total sample of 100 investors 41 investors think that share market is a gamble and remaining 59 % said that share market is an investment.
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T O T A L 41 59 100
10 11 21
9 11 20
7 9 16
(18 - 40)
(ABOVE 40)
100%
18 11 11
11
10
20% 0%
S SI N ES BU S
4
R VI C E
BU
YES
Figure 23
NO
SE
YES
NO
INTERPATION: - From above left side chart it is clear that among the men of 1840 years 37.9% of businessmen say that share market is a gamble and 62% say that it is investment. 47.36% service men say that it is a gamble and 52.3% say that it is a investment On the other hand chart on the right side shows that among the men of 18-40 years 28.5% businessmen say that share market is a gamble while others consider it as a investment. 43.75 % of servicemen say that share market is gamble, while remaining 56.25% consider it as investment.
- 79 -
Q7: Please rank the following factors in order of decreasing importance in investing money in primary market from 1 highest to the 5 lowest. a) Issue price RANKS 1 2 3 4 5 TOTAL NUMBERES 32 28 18 14 8 100
INTERPRETATION: Above diagram states that out of 100 people 32%% people give rank (1) to the issue price, 28% investors give rank(2) to issue price,18% give rank (3),14% give rank (4) and 8% give rank (5) to the issue price.
- 80 -
T O T A L 32 28 18 14 8 100
(18 - 40)
(ABOVE 40)
2 4 2
3 4 6
2 3 4
1 1 3
0 2 3
2 6 9 3
R VI C E
9 7
VI C E
5 7
6 6
ES
EN
ST U
SS
SE
SI N ES BU S
IN
BU
SE
1 4
Figure 25
2 5
1 4
2 5
INTERPRETATION: Left side chart shows that among men of 18 - 40 years 24.1 businessmen ranked issue price as 1, 31% ranked no.2, 20.6% ranked as no.3, 13.7% ranked as no. 4 and 10.3% ranked issue price as no.5.
- 81 -
Among servicemen 33.33% ranked issue price as no.1, 23.8 % ranked it as no.2,19.4% ranked as no.3, 14.2% ranked as no.4 and 9.5 % servicemen ranked as no.5. Among students 30% students ranked issue price as no.1, 30% ranked as no. 2 , 10% ranked as no. 3, 20% ranked as no. 4 and in last 140% ranked it as no. 5. Right side chart revealed that among investors of age of above 40, 21.4% businessmen ranked issue price as 1, 42.8% ranked it as no. 2, 21.4% ranked it as no. 3, 12.5% ranked it as no. 4 and 7.14 % ranked it as no.5. Among service men, 56.25% servicemen ranked issue price as 1, 12.5% ranked it as no. 2, 18.75% ranked it as no. 3, 12.5% ranked it as no. 4 and 0 % ranked it as no.5.
- 82 -
INTERPRETATION: Above diagram states that out of 100 people 31% people give rank (1) to the Information availability, 18% investors give rank(2) to Information availability,21% give rank (3),20% give rank (4) and 10% give rank (5) to the Information availability.
- 83 -
T O T A L 31 18 21 20 10 100
(18 - 40)
(ABOVE 40)
1 5 2
3 6 5
3 2 6
1 3 4
2 4 4
4 11
3 7
6 6
1 5 4 2
R VI C E
VI C E
ES
EN
ST U
SS
SE
SI N ES BU S
IN
BU
SE
1 4
Figure 27
2 5
1 4
2 5
INTERPRETATION: Left side chart shows that among men of 18 - 40 years 37.9% businessmen ranked Information availability as 1, 13.79% ranked no.2, 17.24% ranked as no.3, 20.68% ranked as no. 4 and 10.34% ranked Information availability as no.5.
- 84 -
Among servicemen 33.33% ranked Information availability as no.1, 14.2 % ranked it as no.2,28.5% ranked as no.3, 9.5% ranked as no.4 and 14.2 % servicemen ranked as no.5. Among students 30% students ranked Information availability as no.1, 30% ranked as no. 2 , 10% ranked as no. 3, 25% ranked as no. 4 and in last 5% ranked it as no. 5. Right side chart revealed that among investors of age of above 40, 35.7% businessmen ranked Information availability as 1 , 7.14% ranked it as no. 2 , 23.52% ranked it as no. 3, 21.42% ranked it as no. 4 and 7.14 % ranked it as no.5. Among service men, 12.5% servicemen ranked Information availability as 1 , 25% ranked it as no. 2 ,25% ranked it as no. 3, 25% ranked it as no. 4 and 12.5% ranked it as no.5.
- 85 -
INTERPRETATION: Above diagram states that out of 100 people18% people give rank (1) to the Market price immediately after listing, 26% investors give rank(2) to Market price immediately after listing,19% give rank (3),20% give rank (4) and 17% give rank (5) to the Market price immediately after listing.
- 86 -
T O T A L 18 26 19 20 17 100
(18 - 40)
(ABOVE 40)
4 7 4
1 5 7 2 4 4
3 1 3
4 3 4
10 4
VI C E
2 6 7 3
T EN
5 3 2
S R VI C E
ST U
SE
SI N ES BU S
BU
SE
1 4
Figure 29
2 5
1 4
2 5
INTERPRETATION: Left side chart shows that among men of 18 - 40 years 13.7% businessmen ranked Market price immediately after listing as 1, 34.48% ranked no.2, 13.7% ranked as no.3, 24.1% ranked as no. 4 and 13.7% ranked Market price immediately after listing as no.5.
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Among servicemen 14.2% ranked Market price immediately after listing as no.1, 28.5 % ranked it as no.2,19% ranked as no.3, 33.3% ranked as no.4 and 4.7 % servicemen ranked as no.5. Among students 35% students ranked Market price immediately after listing as no.1, 10% ranked as no. 2 , 20% ranked as no. 3, 10% ranked as no. 4 and in last 25% ranked it as no. 5. Right side chart revealed that among investors of age of above 40, 14.28% businessmen ranked Market price immediately after listing as 1 , 35.71% ranked it as no. 2 ,21.42% ranked it as no. 3, 7.14% ranked it as no. 4 and 21.42 % ranked it as no.5. Among service men, 12.5% servicemen ranked Market price immediately after listing as 1, 18.75% ranked it as no. 2, 25% ranked it as no. 3, 18.75% ranked it as no. 4 and 25% ranked it as no.5.
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31%
INTERPRETATION: Above diagram states that out of 100 people 13% people give rank (1) to the Secondary market, 12% investors give rank(2) to Secondary market, 20% give rank (3),24% give rank (4) and 31% give rank (5) to the Secondary market.
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T O T A L 13 12 20 24 31 100
(18 - 40)
(ABOVE 40)
100% 80%
4 6 4 2 1
7 1
2 5
VI C E
5 2
T EN
1 4
R VI C E
3 0
1 2
R SE
ST U
BU
SE
1 4
Figure 31
2 5
1 4
2 5
INTERPRETATION: Left side chart shows that among men of 18 - 40 years 17.24% businessmen ranked Secondary market as 1, 6.89% ranked no.2, 24.13% ranked as no.3, 17.24% ranked as no. 4 and 34.44% ranked Secondary market as no.5.
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Among servicemen 9.52% ranked Secondary market as no.1, 23.80 % ranked it as no.2,4.7% ranked as no.3, 33.3% ranked as no.4 and 28.57 % servicemen ranked as no.5. Among students 0% students ranked Secondary market as no.1, 15% ranked as no. 2 , 30% ranked as no. 3, 30% ranked as no. 4 and in last 25% ranked it as no. 5. Right side chart revealed that among investors of age of above 40, 28.5% businessmen ranked Secondary market as 1 , 7.14% ranked it as no. 2 ,7.14% ranked it as no. 3, 14.28% ranked it as no. 4 and 42.8 % ranked it as no.5. Among service men, 12.5% servicemen ranked Secondary market as 1 , 6.25% ranked it as no. 2 ,31.25% ranked it as no. 3, 25%ranked it as no. 4 and 25% ranked it as no.5.
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29%
INTERPRETATION: Above diagram states that out of 100 people 12% people give rank (1) to the Regulatory environment, 11% investors give rank(2) to Regulatory environment, 23% give rank (3),25% give rank (4) and 29% give rank (5) to the Regulatory environment.
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T O T A L 12 11 23 25 29 100
(18 - 40)
(ABOVE 40)
3
6 11 9 2 4
4 6
5 5 3 2
3 3
VI C E
1 3
T EN
4 3
2 1
R VI C E
1 2
ST U
SE
SI N ES BU S
BU
SE
1 4
Figure 33
2 5
1 4
2 5
INTERPRETATION: Left side chart shows that among men of 18 - 40 years 10.3% businessmen ranked Regulatory environment as 1, 10.3% ranked no.2, 27.5% ranked as no.3, 31.03% ranked as no. 4 and 20.6% ranked Regulatory environment as no.5.
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Among servicemen 14.28% ranked Regulatory environment as no.1, 4.76 % ranked it as no.2,19.04% ranked as no.3, 9.52% ranked as no.4 and 52.38 % servicemen ranked as no.5. Among students 15% students ranked Regulatory environment as no.1, 20% ranked as no. 2 , 30% ranked as no. 3, 20% ranked as no. 4 and in last 15% ranked it as no. 5. Right side chart revealed that among investors of age of above 40, 7.14% businessmen ranked Regulatory environment as 1 , 14.2% ranked it as no. 2 , 21.4% ranked it as no. 3, 35.7% ranked it as no. 4 and 21.4 % ranked it as no.5. Among service men, 12.5% servicemen ranked Regulatory environment as 1 , 6.5% ranked it as no. 2 ,12.5% ranked it as no. 3, 31.25%ranked it as no. 4 and 37.5% ranked it as no.5.
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FINDINGS:
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There are several new things that are produced or introduced by doing this study, all these new things are named as findings ,these findings are as follow:1) From my research it is found that Out of the total sample (100), 37% investors do not have any knowledge or they dont even aware about NSDL. Among students 55% students are unaware about NSDL. 2) Out of total sample 44% investors are unaware about CDSL. Among the age of 18 40, 55.2% businessmen are not aware about CDSL. 3) About 82% of investors are aware about SEBI, among the age of above 40, 100% servicemen are aware this term.
4) There are 28% of investors, who do not aware about merger and acquisition. Out of 29, 11 businessmen are not having any knowledge about merger and acquisition. 5) Out of total sample there are only 11% investors, who have got knowledge by the way of academic about above terms. Among the age of 18 40 there is neither a single businessman out of 29, who have academic knowledge. 6) A large number of sample got knowledge about above terms from magazines and newspapers as compare to from brokers and academic. 7) Out of total sample 60% are invest in share market on long term basis , 30% on short term basis and 10% on both. 8) 26% of investors are agreeing to great extent to the statement that I invest in primary market issues of listed companies with good current market price and 15% investors strongly agree to the statement. 9) 26% of investors are least agreed to the statement that Investment decision is based on advice of broker and 15% are strongly agree with the statement. 10) 48% of investors are least agree to the statement that I invest in shares based on personal analysis and 8% are least agree to the statement. 11) 37% of investors are least agree to the statement that I sell shares after allotment
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12) It is also revealed that 41% of total sample says that share market is gamble and remaining 59% said that it is an investment. among the age of 18 - 40 37% businessmen says that it is a gamble as compare to the servicemen is 47%. 13) 32% investors out of total sample consider issue price more as compare to other factors, while investing in primary market and for 8% investors have no importance while investing money in share market. Among the age of 18- 40, 24 % consider issue price as an important factor of primary market as compare to 33.33% of serviceman. 14) 17% business up to the age of 40 says that secondary market is an important factor, while investing money in the share market as compare to the business of above 40 age is28% says that it is an important factor. Not even a single student considers secondary market as an important factor. 15) 12% of investors invest their money after study the regulatory environment, but 29% of investors invest their money without study the regulatory environment.
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LIMITATIONS
It is said Nothing is Perfect and if the quite is true, I am sure the there would be few shortcomings in this project also. Sincere efforts have been made to eliminate discrepancies as far as possible but few would have reminded due to limitations of study. These are as given below:-
No response of some surveyed people was the main limitation of study. The universe of the study was limited to people of Jalandhar city only. The time is another limitation of the project. Subjectivity due to personal biasness cannot be ignored.
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SUGGESTIONS
1. The latest information relating to share market should be easily available to the investors. 2. There should be transparency in the share market. 3. Action against analysts and companies for providing wrong information. 4. There should be more powerful regulation or strict regulation to control scandals. 5. Brokerage should be lower, i.e. there should be a government authority that control or lower the brokerage. 6. The number of brokers is to be reduced. 7. Grievance redressal machinery should be more efficient. 8. Reduce political interference in markets. 9. Encourage more multinational companies to get listed on stock exchange. 10. There should be certain steps taken by the share market to protect investors. 11. The tax on investment in shares should be abolished. 12. Issue of shares at par or premium should be through separate agencies. 13. The price of IPOs should be controlled. 14. Sensitive information should be made available to every one at same time. 15. Such type of system should set so that quality companies can came toward for IPO. 16. IPOs should issue to all applicants in the ratio of shares they apply. small
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CONCLUSION
1. From the study it is concluded that mostly well educated people invest in share market. Maximum investments are for the long term period because they want capital appreciation. 2. Maximum investors do not have deep knowledge about various controlling bodies and terms related to share market. Only SEBI is known to them 3. No doubt that millions and billions of people invest in the share market, but still 35% of investors are not aware about NSDL and 44% of investors are not aware about CDSL, these are the investors which do not know that in which depository they have their Demat account, so it is the duty of the share market authorities to advertise or inform investors about this thing. 4. Only 11% investors have academic knowledge regarding share market. Most of the investors are educated about Share market through magazines and newspapers. Magazines and newspapers give only share market data, but in depth knowledge regarding share market can only be gain from academic information. 28% of the total sample of investors does not aware about merger & acquisition, then how can they able to self analyze the market. This is the one reason that the investors consider share market as a gamble, because when investors do not have full knowledge regarding shares or share market. They will invest blindly. 5. Remember that still 41% of investors consider share market as a gamble. Some investors also said that purchasing shares for long term is an investment, but when shares are purchased for short term or day trading purposes, then it is a gamble. The first thing is to improve share market situation is to educate the investor as well as common public about each and every aspect of share market. 6. It is also concluded that the servicemens investment decision is more based on brokers advice as data shows among the age of 18 40 , 20% businessmen invest in shares on the advice of broker ,while on the other side 23% of servicemen invest on the advice of broker. From this it is service man has to depend on brokers because of his busy schedule. 7. It is concluded from my research that the most important factor that affects the primary market is issue price (33%). So issue price of companies should be such that it can be with in the reach of small investors.
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BIBLIOGRAPHY
The various sources of the information, used in study are mainly newspapers, magazines and internet sites. The descriptions of these sources are as follow:-
WEBLIOGRAPHY
MAGAZINES
Business today (March edition, Share market in boom) India today (February edition, Investment in shares) Business world ( March edition, Shares or mutual funds)
NEWSPAPERS
Economic times ( JAN 8, 2008 , Share market on the top) Hindustan times (12 Feb,2008 , Is share market is a gamble )
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QUESTIONNARE ANALYSIS OF THE KNOWLEDGE AND PERCEPTION OF THE INVESTORS REGARDING CAPITAL MARKET
Note: Dear respondent, your valuable time and effort in filling this questionnaire are highly appreciated. Data collected will be kept confidential & will be used only for research purposes.
Personal Information
NAME ADDRESS . . GENDER. OCCUPATION AGE..
NO.
a. b. c. d. e.
TERMS
NSDL (National security depository limited) CDSL (Central depository services limited) SEBI (security exchange board of India) MERGER & ACQUISITIONS IPO (Initial public offer)
TICKS
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3) From where you get knowledge about above terms? Academic Brokers General Awareness Magazines or Newspapers
4) Have you ever invested your money in the share market? YES NO
5) What is your main criterion in investing money in the share market? Long term investment Short term investment
6) Given below are some of the decisions taken by the individuals for investing in primary market. Given below are some of the decisions taken by the individuals for investing in primary market. Please give marks out of 5 to each decision according to your perception 1 stands for least agree and 2,3,4,5 stands for agree to great extent, agree moderately , some what agree and strongly agree.
NO.
a.
INVESTMENT DECISION
I invest in primary market issues of listed companies with good current market price. Investment decision is based on advice from the broker. I invest in shares based on personal analysis I sell shares after allotment I use analysts recommendations either privately circulated or published.
RANK
b. c. d. e.
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7) Do you think that share market is a gamble? Yes 8) If yes, specify why
..
No
9) Please rank the following factors in order of decreasing importance in investing money in primary market from 1 highest to the 5 lowest.
NO.
a. b. c. d. e. Issue price Information availability
FACTORS
RANK
Market price immediately after listing Secondary market situation Regulatory environment
10) What important measures need to be undertaken to strengthen primary market situation? a)... b) c) d)
THA NK YOU
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