1

CHAPTER – 1

INTRODUCTION

1.1 INTRODUCTION TO THE STUDY:

Investment is parting with one’s fund, to be used by another party,

user of fund, for productive activity. It can mean giving an advance or loan or
contributing to the equity (ownership capital) or debt capital of a corporate or
non-corporate business unit.

Generalized, investment means conversion of cash or money into

a monetary asset or a claim on future money for a return. This return is for
saving, parting with saving or liquidity and lastly for taking a risk involving the
uncertainty about the actual return, time of waiting and cost of getting back
funds, safety of funds, and risk of the variability of the return.

The cornerstone of any investment strategy is to maximize the

return while maintaining a tolerable risk. The process of allocating assets
among several investment categories is a way of achieving the goal.
Younger people can assume greater risk than one who is retired; a highly
paid executive will be less dependent on current portfolio income than will a
disabled person on workmen’s compensation and so forth.

The goal of an individual may be current income, capital

appreciation or an acceptable balance. If the investor decides on capital
appreciation, the investors should have the personality to ride out major
 2

decline in the market . These are decisions that only the investor can make
after careful consideration.

1.1.1 CHARACTERISTICS OF INVESTMENT:

1. Risk:

The risk depends of maturity, creditworthiness, nature of

instrument, tax liability, variability of returns, etc

2. Return:

A major factor influencing the pattern of investment is its return,

which is the yield plus capital appreciation.

3. Safety:

The safety of capital is the certainty of return of capital without

loss of money or time involved.

4. Liquidity:

If a capital asset is easily realizable, saleable or marketable,

then it is said to be liquid.
An investor generally prefers liquidity for his investments, safety
of his funds, a good return with a minimum risk and maximization of return.
 3

1.1.2 CLASSIFICATION OF INVESTORS

Investors can be classified into different groups depending on

their attitude towards risk, expectation etc., Each investor also has an
indifference point at which his own expectation of return matches with the risk
that he can take.

The investor should also be able to assess his own behavior

pattern before he aims at a particular goal, which he wishes to attain. In
some cases, most of the investors are willing to sacrifice some expected
income or return if the income is certain. The higher the income group of an
investor the greater will be his desire for purchasing assets which will give
him a favorable tax treatment.

TABLE 1.1

Classification of Investors

RISK
TYPE TYPE OF INVESTMENT BEHAVIOR
ACCEPTABLE

RISK LIFE INSURANCE ,UNIT WILL PAY LESS FOR

LOW RISK
AVERTERS CERTIFICATES, GOVT AN UNCERTAIN
CERTIFICATES. RETURN

RISK MEDIUM RISK

LIFE POLICIES, FIXED
NEUTRALS WILL PAY EQUAL TO
DEPOSITS ,MUTUAL FUNDS
EXPECTED RETURN

RISK WILL PAY MORE

COMMON STOCKS, BONDS,
TAKERS HIGH RISK THAN EXPECTED
CONVERTIBLE SECURITIES
RETURN.
 4

1.1.3 PSYCHOLOGICAL ASPECTS OF INVESTING:

It is relatively easy to gain a theoretical understanding of market

movements up and down. Beating the market on paper is not that difficult,
but actually putting that knowledge to work in the market place on a day-to-
day basis is a more difficult task.

Common sense dictates that periodic monitoring of portfolio

performance is a necessary part of the investment process, but if we get too
close to the market, the tendency is to respond to the events and prices
instead of carefully laid criteria. The asset allocation approach as described
here makes a valuable contribution to this on going psychological battles that
investors have to face. First, the very adoption of the principles of allocation
implies that establishment of reasonable investment goals and the
employment of a plan. If the investor can make a plan and stick to it, he is far
less likely be side tracked by the latest news and investment fashion.

INVESTMENT AVENUES

1.2.1 FIXED DEPOSIT

The term "fixed" in fixed deposits denotes the period of maturity

or tenor. Fixed Deposits, therefore, presupposes a certain length of time for
which the depositor decides to keep the money with the bank and the rate of
interest payable to the depositor is decided by this tenor. The rate of interest
differs from bank to bank and is generally higher for private sector and
foreign banks. This, however, does not mean that the depositor loses all his
rights over the money for the duration of the tenor decided. The deposits can
be withdrawn before the period is over. However, the amount of interest
payable to the depositor, in such cases goes down (usually 1% to 2% less
than the original rate).
 5

BENEFITS OF FIXED DEPOSIT:

Fixed deposits remain the most popular instrument for financial

savings in India. They are the middle path investments with adequate returns
and sufficient liquidity. There are basically three avenues for parking savings
in the form of fixed deposits. The most common are bank deposits for
nationalized banks, the yield is generally low with a maximum interest of 8 to
8.5% per annum for a period of three years or more.

As opposed to that, NBFCs and company deposits are more

attractive. The idea is to select the right company to minimize the risk.
Company deposits as a saving instrument have declined in popularity over
the last three years.

1.2.2 POST OFFICE SAVING SCHEMES:

Post office is a very safe and secure investment avenue. The

money is used in the development of the society as a whole, while it provides
steady returns. The biggest advantage of investing in post office schemes is
the tax benefit that they provide. Thus a lot of savings go through this
channel to dual advantage- tax benefits and steady returns.

There are many schemes available in post office savings

schemes. The schemes are
1. National saving schemes.
2. Kisan vikas patra.
3. Monthly income schemes.
4. Recurring deposit.
5. Post office savings deposit.
 6

1.2.3 LIFE INSURANCE:

A contract of insurance can be defined as a co-operative device to

spread the loss caused by a particular risk over a number of persons who are
exposed to it and who agree to ensure themselves against that risk, Risk is
uncertainty of a financial loss. Every risk involves of the loss of one kind or
other. The object of the insurance is to spread the loss over a large number
of the insurance is to spread the losses over a large number of persons who
are agreed to co-operative each other at the time of loss. Though the risk
cannot be averted yet the loss occurring due to a certain risk can be
Distributed among the agreed persons. Such persons agree to share the
loss because the chances of loss i.e., The time and amount to a persons are
not known.

Benefits of Insurance:
1. Risk is covered.
2. Capital Appreciation of funds.
3. Guaranteed benefits, etc

1.2.4 MUTUAL FUNDS

A Mutual Fund is a trust that pools the savings of a number of

investors who share a common financial goal. The money thus collected is
then invested in capital market instruments such as shares, debentures and
other securities

The income earned through these investments and the capital appreciations
realized are shared by its unit holders in proportion to the number of units owned by
them.

1.2.5 SHARES/DEBENTURES (NEW ISSUE MARKET):

 7

New issue market deals with ‘new’ Securities, i.e., securities which
where not previously available and are offered to the investing public for the
first time. The market, therefore, derives its name from the fact that it makes
available a new block of securities for the public subscription. The stock
market on the other hand, is a market for ‘old securities’ i.e., those, which
have already been issued and have been granted stock exchange listing.

Secondary Market

Stock Exchange is an organized market place where securities are

traded. These securities are issued by the Government, semi-Government
Bodies, Public sector undertakings and companies for borrowing funds and
raising resources. Securities are defined as any monetary claims (promissory
notes or I.E.) and include stock, shares, debentures, bonds etc. if these
securities are marketable as in the case of Government stock; they are
transferable by endorsement and are like movable property. They are
tradable on the stock Exchange.

Benefits of Investment in Shares

1. Investors may be entitled to bonus issue that may be made by the

company out of the free reserves accumulated through retained
earnings over years.
2. Rights: The equity shareholders may be entitled to any further issue of
Capital, either as debentures, fully or partly convertible debentures or
equity shares, as may be made by the company, depending on its
requirements.
3. The equity shareholders being the owners of the company have the
right to get the interim dividend within a period of 42 days from the
date of declaration of dividends.
4. Any investment in shares is wealth of the investor, which is free from
wealth tax.
 8

5. In addition to all the above benefits, the investor in equities enjoys

some unique advantages of safety, liquidity and marketability. The
investor can readily find a market for selling the equity shares in the
Stock Market and encasing the investments at short notice.

1.2.6 GOLD

There are a number of ways of buying gold for investment purposes.

Jewellery is not dealt with in this section, although in many countries it is
purchased with the dual purposes of adornment and saving.

The distinction between the purchase of physical gold and gaining an

exposure to movements in the gold price is not always clear, especially since
physical gold can be purchased in some forms without the owner needing to
take delivery.

1.2.7 REAL ESTATE

Land and house property is called real estate. This investment is taken
by a large number of people for hedging against inflation rate. The investment
in the real estate is also very risky. Although the average rate of return is high
a cautious investor should not think of property because it has very low
liquidity and subject to wide fluctuations in valuation .

1.3. COMPANY PROFILE:

Way2Wealth is a premier Investment Consultancy Firm that has

been launched with the aim of making investing simpler, more
understandable and profitable for the investors.
 9

Way2Wealth brings a wide range of product offerings from Fixed

Income Securities, Life Insurance and Mutual Funds to Equity and
Derivatives (on the National Stock Exchange) for the convenience and
benefit of it customers. Way2Wealth has over 40 easily accessible
Investment Outlets spread across 20 major towns and cities in the country.

Sivan Securities started in 1984, has a long and illustrious track

record of being amongst the premier Financial Intermediaries in the country
as well as being an incubator for IT start-up firms. The Venture Capital
division came to be known as Global Technology Ventures and the Financial
Intermediary Division was spun off as Way2Wealth in the year 2000.

Way2Wealth is promoted by Sivan Securities and Global

Technology Ventures Ltd. Prudential ICICI provides further strength to
Way2Wealth as strategic equity partner. Way2Wealth has a very credible
management team, who has well over 100 man-years of experience amongst
themselves. Way2Wealth has inherited these same values in addition to a
base of 75,000 individual customers, over 300 corporate/institutional clients.

Other companies in the group include Amalgamated Bean Coffee

Trading Company Ltd. (one of the largest Coffee Exporters in India) and Café
Coffee Day, a chain of youth hangout coffee parlors.

Mission:
 10

“To be the pre-eminent destination for personalized financial

solutions helping individuals create wealth”.

Philosophy:

“Our knowledge combined with our investors trust and

involvement will lead to the growth of wealth and make it an exciting
experience”.

Way2wealth Research Desk:

The research cell focuses on providing data and analysis to help

customers make sound investment decisions. The Research cell is managed
by a highly qualified team that is handpicked and trained extensively in the
proprietary Way2Wealth Investment Philosophy centered on finding the best
investment solutions for the customers. Based in the commercial capital
enables the team to have a pulse of the trends allowing dissemination of the
most up-to-date and latest information. The Way2Wealth research cell
measures up to international standards of technology and on-site resources.
 11

CHAPTER – 2

2.1 OBJECTIVES

2.1.1 PRIMARY OBJECTIVES

• To study the investors perception and attitude towards different

investment products
• To assess the awareness of investors with regard to small and
medium capitalization companies.

SECONDARY OBJECTIVES

• To analyze the investing habits of the investor.

• To analyze the factors influencing the investor in choosing the types
of investments.
• To understand the profile of the investors.
• To analyze investors risk and return preferences of the investment.
 12

2.2 SCOPE OF THE STUDY

India is now one of the fastest economically growing nations. With its
vast economy, Indians have a lot of options to invest their savings.

This study undertaken for Way2wealth Securities Pvt Ltd aims to study
the investors’ attitude towards various investment alternatives and to study
the customers’ perception on investing in small and medium capitalization
companies. The study would also analyze the awareness level of investors in
small and medium capitalization companies

The study has been done by preparing a questionnaire which contains

prospective questions put forth to the investors .The responses help in
analyzing the profile and investing habits of the investor and factors
influencing the investor in investing in small and medium capitalization
companies.

All this would help in giving suggestions to Way2wealth Securities (P)

Ltd, in strengthening their marketing efforts and in determining the market
potential for investments in small and medium capitalization companies.
 13

2.3 LIMITATIONS OF THE STUDY

 The area of the study is limited to Thyagaraya Nagar, a part

of Chennai only. Hence the results may not be true for other
geographical locations.

 Validity and Reliability of the data depends on the

truthfulness of the responses from the public.

 Time at the disposal of the researcher is limited.

 The size of the sample compared to the population is very

small and hence it may not represent the whole population.

 A structured questionnaire was the basis for collecting the

data, so it has the usual deficiencies attached to this
technique of data collection.
 14

CHAPTER – 3

RESEARCH METHODOLOGY

Business research is a systematic inquiry that provides information

to guide business decisions and aimed to solve managerial problems.
Business research is of recent origin and is largely supported by business
organizations that hope to achieve competitive advantages.

Research methodology is a way to systematically solve the

research problems. It may be understood as a science of studying how
research is done scientifically. It includes the overall research design, the
sampling procedure, data collection method and analysis procedure.

3.1 RESEARCH DESIGN

Research design stands for advance planning of the methods to

be adopted for collecting the relevant data and the techniques to be used in
analysis, keeping in view the objectives of the research and availability of
time.

Descriptive research includes surveys and fact-finding enquiries

of different kinds. The major purpose of this research is description of state of
affairs as it exits at present.

In this survey the design used is descriptive in nature. The

information is collected from the individuals and analyzed with the help of
 15

different statistical tools, for describing the relationship between various types
of variables, pertaining to different investment options. Moreover Cross table
Analysis has been done for processing the data and information is derived to
meet the objectives of the study.

3.2 DATA

3.2.1 Nature of Data

Under the study Primary data was collected by using

Questionnaire.

3.2.2 Source of Data

The Primary data was collected from the individuals residing in

Chennai City, with the help of the questionnaire, which was prepared after
getting inputs from the experts and executives in Way 2 wealth .Secondary
data are sourced from Magazines, Books, Pamphlets, Periodical Surveys,
and Websites etc.

3.3 METHOD OF DATA COLLECTION

Structured Questionnaire method is used as an instrument for

collecting information from the individuals. A Pilot study was conducted
based on which a few changes were made in the Questionnaire.

3.4 SAMPLING

Since the populations of consumers of Investments are large in

number, researcher was unable to collect information from all individuals due
to limitation of time. So part of the population is taken for analyzing and
generating the findings, which may be applicable for total market.
 16

3.4.1 Sampling Unit

The number of items selected from the population constitutes the

sample size. The respondents of the study are present and future investors.

3.4.2 Sample Size

The sample size is calculated at 95% confidence level with

+5% error level

N = (z2* p*q )/e2 (4.1)

Where N =Sample size, p= population proportion, q=1-p, e= error
rate, z= confidence level at 95%(2)
The sample size for the study is 410.

3.4.3 Sampling Method

Sampling design is to clearly define set of objects, technically

called the universe to be studied. This research has finite set of universe and
the sampling design used in the study is probability sampling.

Cluster Simple Random sampling method is used for the collection

of data.

3.5 TOOLS USED

The data has been mainly analyzed by using the following

methods and tests. Cross Tabulation and Percentage method supplemented
by appropriate charts.
1. Percentage Analysis
2. Ranking Method
3. Chi – Square Test
 17

CHAPTER – 4

ANALYSIS AND INTERPRETATION

Analysis is the process of placing the data in the ordered form,

combining them with the existing information and extracting the meaning
from them. In other words, analysis is an answer to the question “what
message is conveyed by each group of data “. Data, which are otherwise raw
facts and are unable to give a meaningful information. The raw data become
information only when they are analyzed and when put in a meaningful form.

Interpretation is the process of relating various bits of information to

other existing information. Interpretation attempts to answer “what
relationship exists between the findings to the research objectives and
hypothesis framed for the study in the beginning”.

STATISTICAL TOOLS

4.1 PERCENTAGE ANALYSIS

Percentage refers to a special kind of ratio in making comparison

between two or more data and to describe relationships. Percentage can
also be used to compare the relation terms the distribution of two or more
sources of data.
Percentage of Respondents = Number of Respondents *100 (5.1)
Total Respondents

Column chart is used in showing the comparison diagrammatically.

Column charts shows the number of respondents in Y-axis and their
feedback in X-axis.
 18

TABLE – 4.1

Age Group of the Respondents

No. of
Age Group Percentage
S.No. Respondents
1 Below 25 Years 70 17.1

2 26-32 years 160 39.0

3 33-39 years 92 22.4

4 40-46 years 26 6.3

5 Above 46 years 62 15.1

Total 410 100.0

INFERENCE:

From the above table, it can be inferred that,

• 17.1% of the respondents are in the age group less than 25 years.
• 39.0 % of the respondents are in the age group between 26 to 32
years.
• 22.4% of the respondents are between 33 to 39 years.
• 6.3% of the respondents are between 40 to 46 years.
• 15.1% of the respondents are above 46 years.
 19

FIGURE - 4.1

Age Group of the Respondents

No. of Respondents

180

160
 20

TABLE – 4.2

Education Profile of the Respondents

S.No. Education No. of Respondents Percentage

1 HSC 40 9.8

2 UG 244 59.5

3 PG 113 27.6

4 Others 13 3.2

Total 410 100.0

INFERENCE:

From the above table, it can be viewed that among the 410 respondents,
• 9.8% of the respondents have completed their HSC.
• 59.5% of the respondents have completed their Under
Graduation.
• 27.6% of the respondents have completed their Post
Graduation.
• 3.2% of the respondents are in the category others which
include CA, ICWA, Doctors, etc.
 21

FIGURE – 4.2

Education Profile of the Respondents

No. of Respondents
 22

TABLE – 4.3

Occupation of the Respondents

NO. OF
S.NO OCCUPATION PERCENTAGE
RESPONDENTS
1 Salaried 301 73.4

2 Self-Employed 30 7.3

3 Business 44 10.7

4 Retired 29 7.1

5 Others 6 1.5

Total 410 100.0

INFERENCE:

From the above table, it is inferred that,

• About 73.4% of the respondents belong to salaried class,

 23

• 7.3% of the respondents are self-employed.

• 10.7% of the respondents are doing business.
• 7.1% of the respondents are retired peoples and
• 1.5% of the respondents belong to other categories.

FIGURE - 4.3

Occupation of the Respondents

 24

No. of Respondents

TABLE – 4.4

Income Level of the Respondents

 25

S.No Income/Annum No. of Respondents Percentage

1 Below 1 lakh 96 23.4

2 1lakh - 2 lakhs 141 34.4

3 2 lakhs - 3 lakhs 86 21.0

4 3 lakhs - 4 lakhs 51 12.4

5 Above 4 lakhs 36 8.8

Total 410 100.0

INFERENCE:

From the above table, it is viewed that

• 23.4% of the respondents belong to the

income level of below 1 lakh.
• 34.4% of the respondents are in the income
level between 1 lakh to 2lakhs.
• 21% of the respondents are between 2 lakhs to 3lakhs.
• 12.4% of the respondents are between 3lakhs to 4 lakhs.
• 8.8% of the respondents are above 4 lakhs.
 26

FIGURE – 4.4

Income Level of the Respondents

No. of Respondents

Income Per Annum

27
 28

TABLE – 4.5

Tax Percentage of the Respondents

S.No. Tax Percentage No. of Respondents Percentage

1 0 PERCENT 108 26.3

2 10 PERCENT 134 32.7

3 20 PERCENT 94 22.9

4 30 PERCENT 74 18.0

Total 410 100.0

INFERENCE:

From the above table, it is inferred that,

• 26.3% of the respondents are in the tax level of 0%.

• 32.7% of the respondents are in the tax slab of 10%.
• 22.9% of the respondents are in the tax level of 20%.
• 18% of the respondents are in the tax level of 30%.
 29

TABLE – 4.6

Frequency of Investment of the Respondents

S.No Frequency of Investment No. of Respondents Percentage

1 Every Month 154 37.6

2 Once in Three Months 109 26.6

3 Once in Six Months 29 7.1

4 Only in the Last Quarter of the Year 118 28.8

Total 410 100.0

INFERENCE:

From the above table, It is inferred that,

• 37.6% of the respondents do their investments every month.

• 26.6% of the respondents invest every 3 months.
• 7.1% of the respondents invest once in six months
• 28.8% of the respondents invest only in the last quarter of the
financial year.
 30

TABLE – 4.7

Investment Portfolio of the Respondents

PERCENTAG
INVESTMENT INVESTE NOT E OF
S.NO
PORTFOLIO D INVESTED INVESTED
PEOPLE
1 Bank Deposits 302 108 73.7
2 Company Deposits 8 402 2.0
3 Small Savings 310 100 75.6
4 Shares 138 272 33.7
5 Mutual Funds 179 231 43.7
Life Insurance
6 331 79 80.7
(For Self)
Life Insurance
7 87 323 21.2
(For others)
8 Real Estate 10 400 2.4

9 Jewellery 14 396 96.6

INFERENCE:

From the above table, it is inferred that among 410 respondents,

• 73.7% of the respondents have invested in Bank Deposits.

• Only 2.0% of the respondents have invested in Company deposits.
• 75.6% of the respondents have invested in Small Savings.
• 33.7% of the respondents have invested in Shares.
• 43.7% of the respondents have invested in Mutual funds.
• 21.2% of the respondents have invested in Life Insurance i.e., for
themselves.
• 21.2% of the respondents have invested in Life Insurance i.e., for their
family members.
• Only 2.4% of the respondents have invested in Real Estate.
• Only 3.4% 0f the respondents have invested in Gold.

TABLE – 4.8
 31

Risk Profile of the Respondents

S.No. Risk Profile No. of Respondents Percentage

1 Low Risk Takers 140 34.1

2 Medium Risk Takers 175 42.7

3 High Risk Takers 95 23.2

Total 410 100.0

INFERENCE:

From the above table, it is inferred that

• 34.1% of the respondents are low risk takers

i.e., they need low returns with minimum risk.

• 42.7% of the respondents are medium risk takers

i.e., they need medium returns with medium risk.

• 23.7% of the respondents are high risk takers

i.e., they need high returns with high risk.
 32

FIGURE – 4.5

Risk Profile of the Respondents

No. of Respondents

200
 33

TABLE – 4.9

Awareness about Small and Medium Capitalization

Companies

Awareness
about Mid &
No. of
S.No Small Percentage
Respondents
Capitalization
Companies

1 Not Aware 247 60.2

2 Aware 163 39.8

Total 410 100.0

INFERENCE:

From the above table, it is inferred that,

• 60.2% of the respondents didn’t know about the small and medium
capitalization companies.

• Only 39.8% of the respondents know about this small and medium
capitalization companies.
 34

TABLE – 4.10

Investor Attitude towards Small and Medium Capitalization

Companies

INTEREST IN
NOT
INVESTMENT IN SMALL
INTERESTED INTERESTE
AND MEDIUM
(88.7%) D
CAPITALIZATION
(11.3%)
COMPANIES
Interest in Mutual Funds
specializing in Small and Interested Not Interested
Medium Capitalization (86.6%) (13.4%)
companies
PUBLIC PRIVATE
SECTOR SECTOR
PREFERENCE OF
COMPANIES COMPANIES
SECTOR
(35.6%) (64.4%)

INFERENCE:

From the above table, it is inferred that among the 151 respondents
who knows about small and medium capitalization companies,
• About 88.7% of the respondents are interested in small and medium
capitalization companies.
• Regarding the investors interest in Mutual Funds specializing in small
and medium capitalization companies, about 86.6% of the
respondents are interested to invest and only 13.4 % are not
interested.
• In preference of sectors, about 35.6% of the respondents are
interested to invest in Public Sector Companies and 64.4% of the
respondents are interested to invest in Private sector companies
 35

TABLE – 4.11

Interest in Learning about Small and Medium Capitalization

Companies

Need knowledge
about small and mid
S.No. No. of Respondents Percentage
cap capitalization
companies
1 Not at all 156 38.0

2 To some extent 191 46.6

3 Very much 63 15.4

Total 410 100.0

INFERENCE:

From the above table, it is inferred that, among the 410

respondents,

• 38.0% did not have an interest to learn about small and

medium capitalization companies.
• 46.6% have some interest to learn about small and
medium capitalization companies.
• 15.4% have very much interest to learn about small and
medium capitalization companies.
 36

TABLE – 4.12

Financial Advisors of the Respondents

S.No. Financial Advisors No. of Respondents Percentage

1 Self 157 38.3

2 Friends 121 29.5

3 Relatives 77 18.8

4 Financial consultants 55 13.4

Total 410 100.0

INFERENCE:

From the above table, it is inferred that

• 38.3% of the respondents are self financial

advisors.
• For 29.5% of the respondents, their friends are
the financial advisors.

• For 18.8% of the respondents, their relatives

are the financial advisors.

• For 13.4% of the respondents, financial

consultants are financial advisors.
 37

4.2 RANKING ANALYSIS

TABLE: 4.13
Ranking Of Factors Influencing Investments

WEIGHTAGE WEIGHTED
S.No factor RANK
SCORE AVERAGE
1 SAFETY 1915 4.67 1

2 LIQUIDITY 1174 2.86 4

REGULAR
3 1224 2.98 3
INCOME
CAPITAL
4 1307 3.18 2
APPRECIATION
EASE OF
5 530 1.29 5
INVESTMENT

INFERENCE:

From the above table, it is inferred that

 The Respondents have ranked SAFETY as First among the factors

influencing Investments.
 The Respondents have ranked CAPITAL APPRECIATION as
Second among the factors influencing Investments.
 The Respondents have ranked REGULAR INCOME as Third among
the factors influencing Investments.
 The Respondents have ranked LIQUIDITY as Fourth among the
factors influencing Investments.
 The Respondents have ranked EASE OF INVESTMENT as Fifth
among the factors influencing Investments.
 38

TABLE – 4.14

Ranking among Investments

WEIGHTAGE WEIGHTED
S.NO INVESTMENT RANK
SCORE AVERAGE
BANK
1 3326 8.11 2
DEPOSITS
COMPANY
2 1513 3.7 7
DEPOSITS
3 BONDS 1866 4.55 6
SMALL
4 3321 8.1 3
SAVINGS
5 SHARES 2624 6.4 5
MUTUAL
6 3015 7.35 4
FUNDS
LIFE
7 3404 8.3 1
INSURANCE
GENERAL
8 1218 2.97 9
INSURANCE
9 REAL ESTATE 976 2.38 10
10 JEWELLERY 1287 3.13 8
 39

INFERENCE:

From the above table,

 The Respondents have ranked Life Insurance as First in respect to

the best investment avenue,
 The Respondents have ranked Bank Deposits as Second in respect
to the best investment avenue,
 The Respondents have ranked Small savings as Third in respect to
the best investment avenue,
 The Respondents have ranked Mutual Funds as Fourth in respect
to the best investment avenue,
 The Respondents have ranked Shares as Fifth in respect to the best
investment avenue
 The Respondents have ranked Bonds as Sixth in respect to the best
investment avenue.
 The Respondents have ranked Company Deposits as Seventh in
respect to the best investment avenue,
 The Respondents have ranked Jewellery as Eighth in respect to the
best investment avenue,
 The Respondents have ranked General Insurance as Ninth in
respect to the best investment avenue and ,
 The Respondents have ranked Real Estate as Tenth in respect to the
best investment avenue.
 40

TABLE – 4.15

Ranking among factors influencing investment in small and

medium capitalization companies.

weightage weighted
s.no factor rank
score average
1 Higher returns 478 3.3 3
Strong
2
Fundamental
424 2.9 4
Capital
3
Appreciation
492 3.41 2
Growth
4
Prospects
272 1.9 5

5 Safety 494 3.43 1

INFERENCE:

From the above table, it is viewed that

 The Respondents have ranked SAFETY as First among the factors

influencing Investments.
 The Respondents have ranked CAPITAL APPRECIATION as
Second among the factors influencing Investments.
 The Respondents have ranked HIGHER RETURNS as Third among
the factors influencing Investments.
 The Respondents have ranked STRONG FUNDAMENTAL as
Fourth among the factors influencing Investments.
 The Respondents have ranked GROWTH PROSPECTS as Fifth
among the factors influencing Investments.
 41

TABLE – 4.16

Ranking among Sectors for Investing.

WEIGHTAGE WEIGHTED
S.NO SECTOR RANK
SCORE AVERAGE
1 IT SECTOR 1232 8.9 1
TEXTILE
2
SECTOR
784 5.68 4
ENGINEERING
3
SECTOR
706 5.1 6
AUTO
4 ANCILLARIES 564 4.0 9
SECTOR
5 AUTO SECTOR 750 5.43 5
6 FMCG SECTOR 572 4.14 8
CHEMICAL
7
SECTOR
368 2.67 10
PHARMA
8
SECTOR
646 4.68 7
BANKING
9
SECTOR
1024 7.42 2
10 OIL SECTOR 944 6.84 3

INFERENCE:

From the above table,

 The Respondents have ranked IT sector as First in respect to the

best investment avenue,
 The Respondents have ranked BANKING sector as Second in
respect to the best investment avenue,
 The Respondents have ranked OIL sector as Third in respect to the
best investment avenue,
 The Respondents have ranked TEXTILE sector as Fourth in
respect to the best investment avenue,
 42

 The Respondents have ranked AUTO sector as Fifth in respect to the

best investment avenue
 The Respondents have ranked ENGINEERING sector as Sixth in
respect to the best investment avenue.
 The Respondents have ranked PHARMA sector as Seventh in
respect to the best investment avenue,
 The Respondents have ranked FMCG sector as Eighth in respect to
the best investment avenue,
 The Respondents have ranked AUTO Ancillaries sector as Ninth in
respect to the best investment avenue and ,
 The Respondents have ranked CHEMICAL sector as Tenth in
respect to the best investment avenue.
 43

4.3 CHI-SQUARE ANALYSIS

Chi-square is a non-parametric test of statistical significance for

bivariate tabular analysis. A non-parametric test, like chi square, is a rough
estimate of confidence.

Chi-square is used most frequently to test the statistical significance of

results reported in bivariate tables and interpreting bivariate tables is integral
to interpreting the results of a chi-square test.

CHI – SQUARE TEST METHOD

The Chi – square method is the application of testing the significant

difference between observed and expected values.

1. Null Hypothesis (H0):

The hypothesis, or assumption, about a population parameter we

wish to test, usually an assumption of the status quo.

2. Alternative Hypothesis (H1):

The conclusion we accept when the data fail to support the null
hypothesis.

3. Statistical Test:
(Oi – Ei )2
Chi – Square (χ 2)
=
Ei
Where,
 44

Oi = Observed frequency, Ei = Expected Frequency

4. Expected Frequency:
RT * CT
Ei =
N
Where,
RT = Row Total, CT = Column Total
N = Number of Respondents

5. Critical Value:

The value of the standard statistic beyond which we reject the

null hypothesis; the boundary the between the acceptance region and
rejection region.

6. Degrees Of Freedom (df) :

df = (No of Rows – 1 ) * ( No of columns – 1)

7. Level of Significance (α ):

A value indicating the percentage of sample values that is

outside certain limits, assuming the null hypothesis is correct, that is, the
probability of rejecting the null hypothesis when it is true.

4.3.1 TEST OF INDEPENDENCE:

 45

A statistical test of proportion of frequencies to determine

whether membership in categories of one variable is different as a
function of membership in the categories of a second variable.

1. AGE AND RISK PROFILE

Null Hypothesis ( H0 ) : There is no significant relationship

between Age and Risk profile
Alternate Hypothesis ( H1 ) : There is significant relationship between
Age and risk profile.

TABLE – 4.17

Relationship between Age Group and Risk Profile.

RISK PROFILE
AGE OBSERVED FREQUENCY TOTAL
LOW RISK MEDIUM RISK HIGH RISK
Below 25 Years 20 36 14 70
26-32 years 63 60 37 160
33-39 years 26 43 23 92
Above 39 years 31 36 21 88
Total 140 175 95 410

EXPECTED FREQUENCY
Below 25 Years 24 30 16 70
26-32 years 55 68 37 160
33-39 years 31 39 21 92
Above 39 years 30 38 20 88
Total 140 175 95 410

Chi- Square (χ 2) Value = 6.017

Level Of Significance = 0.05
Degrees Of Freedom = 6
Table Value = 12.59

Interpretation:
 46

Calculated χ 2 Value is less than the Table Value. So Null Hypothesis

(H0) is accepted. Therefore, there is no significant relationship between Age
group and Risk Profile.
2. INCOME AND FREQUENCY OF INVESTMENT

Null Hypothesis ( H0 ) : There is no significant association

between Income and Frequency Of Investment
Alternate Hypothesis ( H1 ) : There is significant association between
Income and Frequency Of Investment

TABLE – 4.18
Relationship between Income and Frequency of Investment

FREQUENCY OF INVESTMENT
OBSERVED FREQUENCY
Only in the Last Quarter
INCOME Every Month Once in Three Months of the Year TOTAL
Below 1 lakh 18 23 55 96
1lakh - 2 lakhs 47 40 54 141
2 lakhs - 3 lakhs 48 16 22 86
3 lakhs - 4 lakhs 25 18 8 51
Above 4 lakhs 16 12 8 36
Total 154 109 147 410
EXPECTED FREQUENCY
Below1 lakh 36 26 34 96
1lakh - 2 lakhs 53 37 51 141
2 lakhs - 3 lakhs 32 23 31 86
3 lakhs - 4 lakhs 19 14 18 51
Above 4 lakhs 14 10 13 36
Total 154 109 147 410

Chi- Square (χ 2) Value = 46.85

Level Of Significance = 0.05
Degrees Of Freedom = 6
Table Value = 15.51

Interpretation:
 47

Calculated χ 2 Value is greater than the Table Value. So Null

Hypothesis ( H0 ) is Rejected. Therefore, there is significant relationship
between Income and Frequency of Investment.
 48

3. INCOME AND RISK PROFILE

Null Hypothesis ( H0 ) : There is no relationship between
Income and Risk Profile
Alternate Hypothesis ( H1 ) : There is significant relationship between
Income and Risk Profile
TABLE – 4.19
Relationship between Income and Risk profile

RISK PROFILE
OBSERVED FREQUENCY
INCOME LOW RISK MEDIUM RISK HIGH RISK TOTAL
Below1 lakh 49 33 14 96
1lakh - 2 lakhs 38 66 37 141
2 lakhs - 3 lakhs 27 38 21 86
3 lakhs - 4 lakhs 18 20 13 51
Above 4 lakhs 8 19 9 36
Total 140 176 94 410
EXPECTED FREQUENCY
Below1 lakh 33 41 22 96
1lakh - 2 lakhs 48 61 32 141
2 lakhs - 3 lakhs 29 37 20 86
3 lakhs - 4 lakhs 17 22 12 51
Above 4 lakhs 12 15 8 36
Total 140 176 94 410

Chi- Square (χ 2) Value = 18.9

Level Of Significance = 0.05
Degrees Of Freedom = 8
Table Value @ 5% = 15.50
Table Value @ 1% = 18.09
Interpretation:
Calculated χ 2 Value is greater than the Table Value @ 5% level of
significance. So Null Hypothesis ( H0 ) is Rejected. Therefore, there is close
relationship between Income and Risk Profile. At 1% level of significance,
null hypothesis is accepted. There is no relationship between income and
risk profile.
 49

4. EDUCATION AND RISK PROFILE

Null Hypothesis ( H0 ) : There is no association between

Education and Risk Profile
Alternate Hypothesis ( H1 ) : There is significant association between
Education and Risk Profile

TABLE - 4.20

Relationship between Education and Risk profile

RISK PROFILE
OBSERVED FREQUENCY
EDUCATION LOW RISK MEDIUM RISK HIGH RISK Total
HSC 27 6 7 40
UG 85 96 63 244
PG 28 74 24 126
Total 140 176 94 410
EXPECTED FREQUENCY
HSC 14 17 9 40
UG 83 105 56 244
PG 43 54 29 126
Total 140 176 94 410

Chi- Square (χ 2) Value = 37.24

Level Of Significance = 0.05
Degrees Of Freedom = 4
Table Value = 9.488

Interpretation:

Calculated χ 2 Value is greater than the Table Value. So Null

Hypothesis ( H0 ) is Rejected. Therefore, there is significant relationship
between Education and Risk Profile
 50

5. OCCUPATION AND FREQUENCY OF INVESTMENT

Null Hypothesis ( H0 ) : There is no significant relationship

between Occupation and Frequency Of Investment
Alternate Hypothesis ( H1 ) : There is significant relationship between
Occupation and Frequency Of Investment

TABLE – 4.21
Relationship between Occupation and Frequency of Investment

FREQUENCY OF INVESTMENT
OBSERVED FREQUENCY
Every Once in Six Only in the Last
OCCUPATION Month Months Quarter of the year Total
Salaried 125 94 82 301
Business 6 22 16 44
Self-Employed 8 6 12 36
Retired 15 6 8 29
Total 154 128 118 410
EXPECTED FREQUENCY
Salaried 113 94 87 301
Business 17 14 13 44
Self-Employed 14 11 10 36
Retired 11 9 8 29
Total 154 128 118 410

Chi- Square (χ 2) Value = 17.68

Level Of Significance = 0.05
Degrees Of Freedom = 6
Table Value = 12.59

Interpretation:

Calculated χ 2 Value is greater than the Table Value. So Null

Hypothesis ( H0 ) is Rejected. Therefore, there is significant relationship
between Occupation and Frequency of Investment.
 51

6. OCCUPATION AND RISK PROFILE

Null Hypothesis ( H0 ) : There is no significant relationship

between Occupation and Risk Profile
Alternate Hypothesis ( H1 ) : There is significant relationship between
Occupation and Risk Profile

TABLE – 4.22
Relationship between Occupation and Risk profile
RISK PROFILE
OBSERVED FREQUENCY
OCCUPATION LOW RISK MEDIUM RISK HIGH RISK Total
Salaried 108 128 65 301
Business 12 20 12 44
Self-Employed 8 18 10 36
Retired 12 10 7 29
Total 140 176 94 410
EXPECTED FREQUENCY
Salaried 103 129 69 301
Business 15 19 10 44
Self-Employed 12 15 8 36
Retired 10 12 7 29
Total 140 176 94 410

Chi- Square (χ 2) Value = 4.77

Level Of Significance = 0.05
Degrees Of Freedom = 6
Table Value = 12.59

Interpretation:
Calculated χ 2 Value is less than the Table Value. So Null Hypothesis
( H0 ) is Accepted. Therefore, there is no association between Occupation
and Risk Profile
 52

7. INVESTMENT IN SHARES AND MUTUAL FUNDS

Null Hypothesis ( H0 ) : There is no significant relationship

between those who invested in shares and mutual funds.

Alternate Hypothesis ( H1 ) : There is significant relationship between

those who invested in shares and mutual funds.

TABLE – 4.23
Relationship between Investment in Shares and Mutual Funds

Investment in Mutual Funds

OBSERVED FREQUENCY
Investment in Shares Not Invested Invested Total
Not Invested 206 66 272
Invested 25 113 138
Total 231 179 410
EXPECTED FREQUENCY
Not Invested 153 119 272
Invested 78 60 138
Total 231 179 410

Chi- Square (χ 2) Value = 22.355

Level Of Significance = 0.05
Degrees Of Freedom = 1
Table Value = 3.84

Interpretation:

Calculated χ 2 Value is greater than the Table Value. So Null

Hypothesis ( H0 ) is Rejected. Therefore, there is significant relationship
between those who invested in shares and mutual funds.
 53

8. EDUCATION AND AWARENESS ABOUT SMALL AND

MEDIUM CAPITALIZATION COMPANIES

Null Hypothesis ( H0 ) : There is no association between

Education and Awareness about Small and medium Capitalization
Companies.
Alternate Hypothesis ( H1 ) : There is significant relationship between
Education and Awareness about Small and medium Capitalization
Companies.
TABLE – 4.24
Relationship between Education and Awareness about Small and
Medium Capitalization Companies
AWARENESS LEVEL
OBSERVED FREQUENCY
EDUCATION NOT AWARE AWARE TOTAL
HSC 26 14 40
UG 166 78 244
PG 55 71 126
Total 247 163 410
EXPECTED FREQUENCY
HSC 24 16 40
UG 147 97 244
PG 76 50 126
Total 247 163 410

Chi- Square (χ 2) Value = 21.031

Level Of Significance = 0.05
Degrees Of Freedom = 2
Table Value = 5.99

Interpretation:
Calculated χ 2 Value is greater than the Table Value. So Null
Hypothesis ( H0 ) is Rejected. Therefore, there is significant relationship
between Education and Awareness about Small and medium Capitalization
Companies.
 54

9. INVESTMENT IN SHARES AND AWARENESS ABOUT

SMALL AND MEDIUM CAPITALIZATION COMPANIES

Null Hypothesis ( H0 ) : There is no significant relationship

between those who invested in shares and awareness about small and
medium capitalization companies.

Alternate Hypothesis ( H1 ) : There is significant relationship between

those who invested in shares and awareness about small and medium
capitalization companies.
TABLE – 4.25
Relationship between Investment in Shares and Awareness about
Small and Medium Capitalization Companies

AWARENESS LEVEL
OBSERVED FREQUENCY
INVESTMENT IN SHARES Not aware Aware Total
Not Invested 223 49 272
Invested 24 114 138
Total 247 163 410
EXPECTED FREQUENCY
Not Invested 164 108 272
Invested 83 55 138
Total 247 163 410

Chi- Square (χ 2) Value = 23.87

Level Of Significance = 0.05
Degrees Of Freedom = 1
Table Value = 3.04

Interpretation:
Calculated χ 2 Value is greater than the Table Value. So Null
Hypothesis ( H0 ) is Rejected. Therefore, there is significant relationship
between those who have invested in shares and awareness about small and
medium capitalization companies.
 55

10. INTEREST IN SMALL AND MEDIUM CAPITALIZATION COMPANIES

AND MUTUAL FUNDS SPECIALIZING IN SMALL AND MEDIUM
CAPITALIZATION COMPANIES.

Null Hypothesis ( H0 ) : There is no close relationship

between those who are interested in investing in small and medium
capitalization companies and those who interested in investing in mutual
funds specializing in small and medium capitalization companies.
Alternate Hypothesis ( H1 ) : There is significant relationship between
those who are interested in investing in small and medium capitalization
companies and those who interested in investing in mutual funds specializing
in small and medium capitalization companies.
TABLE – 4.26
Relationship between .Interest in small and medium capitalization
companies and mutual funds specializing in small and medium
capitalization companies
INTEREST IN MUTUAL FUNDS
OBSERVED FREQUENCY
Interest in small and mid cap Not Interested Interested Total
Not Interested 8 7 15
Interested 12 120 132
Total 20 127 147
EXPECTED FREQUENCY
Not Interested 2 13 15
Interested 18 114 132
Total 20 127 147
Chi- Square (χ 2) Value = 22.35
Level Of Significance = 0.05
Degrees Of Freedom = 1
Table Value = 3.84
Interpretation:
Calculated χ 2 Value is greater than the Table Value. So Null
Hypothesis ( H0 ) is Rejected. Therefore, there is significant relationship
between those who are interested in investing in small and medium
capitalization companies and those who interested in investing in mutual
funds specializing in small and medium capitalization companies.
 56

11. FACTORS OF INVESTMENT

In Ranking Analysis, Safety got the first rank and Ease of
investment got the least preference. Besides these two, remaining factors
like Capital Appreciation. Liquidity and Regular Income.

Null Hypothesis ( H0 ) = Capital Appreciation, Liquidity and Regular

Income are equally preferred
Alternate Hypothesis ( H1 ) = There is particular preference between
the factors of Capital Appreciation, Liquidity and Regular Income
TABLE – 4.27

Factors of Investment
OBSERVED EXPECTED
FACTOR
FREQUENCY(fo) FREQUENCY(f1)
LIQUIDITY 1174 1235
CAPITAL
1307 1235
APPRECIATION
REGULAR INCOME 1224 1235

Calculated χ 2 value = 7.308

Degree of freedom = 2
Table value = 5.99
Level of Significance = 0.05

Interpretation:
From the above analysis we find that calculated χ 2
value greater
than the table value, i.e., Null hypothesis rejected. So, there is particular
preference between the factors of Capital Appreciation, Liquidity and Regular
Income .
 57

12. PREFERENCE OF INVESTMENTS

Null Hypothesis ( H0 ) = The investors have no preference among various

investment alternatives.
Alternate Hypothesis ( H1 ) = The investors have particular preference
among investment alternatives.
TABLE - 4.28

PREFERENCE OF INVESTMENTS
investment observed frequency expected frequency
Bank Deposits 3326 2255
Company Deposits 1513 2255
Bonds 1866 2255
Small Saving 3321 2255
Shares 2624 2255
Mutual Funds 3015 2255
Life Insurance 3404 2255
General Insurance 1218 2255
Real Estate 976 2255
Jewellery 1287 2255

Calculated χ 2 value = 3843

Degree of freedom = 9
Table value = 16
Level of Significance = 0.05

Interpretation:
From the above analysis we find that calculated χ 2
value is greater than the
table value, i.e., Null hypothesis rejected. So, the investors have particular
preference among investment alternatives.
 58

13. INVESTMENT AVENUE WHEN SAFETY IS TOP PRIORITY

Null Hypothesis ( H0 ) = All Investments are equally preferred by

Investors.
Alternate Hypothesis ( H1 ) = There is particular preference among
investments by investors

TABLE – 4.29

Investment Avenue When Safety Is Top Priority

investment observed frequency expected frequency

Bank Deposits 298 247
Small Savings 307 247
Shares 132 247
Mutual Funds 174 247
Life Insurance 323 247

Calculated χ 2 value = 123.8

Degree of freedom = 4
Level of Significance = 0.05
Table value = 9.48

Interpretation:

From the above analysis we find that calculated χ 2

values greater
than the table value, i.e., Null hypothesis rejected. So, there is particular
preference among investments by investors.

CHAPTER – 5
 59

FINDINGS

Respondent Profile:

 About 90% of the Respondents are Graduates, PG, etc.

 About 73% of the Respondents are Salaried People.
 About 57.80 % of the Respondents have Annual Income of below
Rs.2 lakhs.
 About 59% of the respondents come under the tax slab of 10%.
 About 36% of the Respondents invest Monthly, 26% invest
Quarterly and 28% invest in the last quarter of the financial year.
 38.3% of the Respondents are their own financial advisors and
48% of the respondents have friends and relatives as their financial
advisors

Investment preferences of Respondents:

 The Respondents choose Safety as First and Capital Appreciation

as their second among factors influencing investment.
 Most of the respondents ranked Life Insurance as first and small
savings and Bank Deposits as next choice.
 Most of the respondents are medium risk takers i.e., they need
medium returns with average risk

Investment Portfolio of Investors:

 About 80% of the respondents have invested in Insurance

 60

 About 75.6% of the respondents have invested in Small savings

 73.7% of the respondents have invested in Bank Deposits.
 Only 2% of the respondents have invested in company deposits
 33.7% of the respondents have invested in shares
 43.7% of the respondents have invested in mutual funds
 Only 21% of the respondents have invested in Life Insurance for
other family members

Awareness about small and medium capitalization

companies:

 .Only 39% of the respondents are aware about small and medium
capitalization companies
 In that 39%, 88% of the respondents are interested to invest in
small and medium capitalization companies
 64% of the respondents preferred private sector companies to
invest
 In this also most of the respondents preferred safety as their first
choice
 IT sector and Banking sector are the top priorities for the
respondents
 About 86% of the respondents who know about small and medium
capitalization companies are interested to invest in mutual funds
specializing in small and medium capitalization companies

Inter-relationship between Investor profile and Investment

Preferences:
 61

From the chi-square analysis,

It is found that there is no relationship between

 Income and Frequency of Investment

 Occupation and risk profile.

It is found that there is significant relationship between

 Age and Risk Profile.

 Income and Risk Profile.
 Occupation and Frequency of Investment.
 Age and Safety in Investment.
 Those who have invested in shares and mutual funds.
 Education and awareness about small and medium capitalization
companies.
 Those who are interested to invest in small and medium
capitalization companies and those who interested to invest in
Mutual funds specializing in small and medium capitalization
companies.

 There is specific preference of factors among capital appreciation,

liquidity and regular income for investments by investors.
 There is particular preference among investment alternatives by
investors.
 Based on safety, the investors have specific preference for
investments.

CHAPTER – 6
 62

SUGGESTIONS

 As majority of the respondents are salaried, this is the core market

segment, which should be concentrated on.
 .Majority of the respondents showed interest in knowing about small
and medium capitalization companies, seminars for investors may be
organized to create awareness and interest.
 Majority of the respondents are salaried people. So, the company
should promote schemes like Systematic Investment Plan.
 Since most of the people showed interest in bank deposits< small
savings the company may promote these products.
 Nearly three-fourth of the respondents are tax payers, tax savings
schemes can be preferred by the company
 Since company deposits are not popular, the company should not
enter the distribution of company deposits
 Majority of the respondents may not seek the advices of Financial
consultants, this provides the great opportunity for the company to
increase their market penetration through promotional activities.

CHAPTER – 7
 63

CONCLUSION

The study was conducted in T.Nagar for Way2Wealth securities,

an investment consultancy company.

The study revealed that the investors have greatest preference for
safety. Most of the respondents have invested in life insurance, bank
deposits and small savings.

The level of awareness about small and medium capitalization

companies can be enhanced through the efforts of the company. Since many
investors expressed their interesting learning more about such companies.

The statistical analysis of data has given insight into investor

demographics and their investment preferences.

Based on the investor profile and investor preferences ,

suggestions have been made for the company to increase its market
penetration.