Influence of Capital Market Information on Investors Decisions

KARNATAKA UNIVERSITY DHARWAD

GEN Society’s

GLOBAL BUSINESS SCHOOL BHAIRIDEVARAKOPPA

HUBLI.
(Affiliated to Karnataka University, Dharwad & Recognized by AICTE, New Delhi)

PROJECT REPORT ON

“Influence of Capital Market Information on Investment
Decisions”

SUBMITTED BY

Hardeep Singh Hundal
MBA11007028

UNDER THE GUIDANCE OF

Institute Guide: Organization Guide:

Mr. M.N Manik Mr. Sadanand C

G.E.N.Society’s
GLOBAL BUSINESS SCHOOL

BHAIRIDEVARKOPPA, HUBLI – 580025

(Recognized by AICTE, New Delhi & Affiliated to Karnatak University, Dharwad)

CERTIFICATE

This is to certify that Mr. Hardeep Singh Hundal of MBA II Semester,

Exam No.MBA11007028 has successfully completed her
Project work titled, “Influence of Capital Market Information on
Investment Decisions” at Angel Broking Limited, Belgaum”
From 9th July 2012 to 8th September 2012.

Dr. Ramakant Kulkarni Prof. R R Kulkarni Prof. M.N.Manik

Director Dean Academics Internal Guide

DECLARATION

I Hardeep Singh Hundal MBA II semester student of Gen Society‟s, Global
Business School, Hubli, hereby declare that the project entitled “Influence of Capital
Market Information on Investment Decisions” in Angel Broking Belgaum is submitted by
me to Karnataka University, Dharwad in partial fulfillment for the requirements for the award
of the degree of “Master of Business Administration (MBA)”. This project report is a work
prepared by me under the guidance of Mr. M.N. Manik.

Place: Hubli Hardeep Singh Hundal

Date: 15th September 2012 MBA II Semester

ACKNOWLEDGEMENT

It is my privilege to have accomplished this study under the guidance of Mr. M.N
Manik my faculty and guide, for taking keen interest full involvement, dynamic motivation
and valuable guidance extended to me throughout the project.

I express my sincerest gratitude and thanks to honorable Mr. Sadanand.C (Channel
Partner) for whose kindness I had the precious opportunity of attaining Training at Angel
Broking, under this brilliant untiring guidance I could complete the Project being undertaken
on “Influence of Capital Market Information on Investment Decision” successfully in
time. His meticulous attention and valuable suggestions have helped me in simplifying the
problem in the work. I would also like to thank the overwhelming support of all the people
who gave me an opportunity to learn and gain knowledge about the various aspects of the
industry.

I am indebted to all staff members of Angel Broking Limited for their valuable
support and cooperation during the entire tenure of this project.

Not to forget, the faculty members of Global Business School, Hubli who have kept
my spirits surging and helped me in delivering my best and made me reach up to this
platform.

Executive Summary

The Summer Inplant Project at “Angel Broking” has given an exposure into
the investment scenario in India. The project while working at “Angel Broking”
includes advisory services i.e. educating the existing and potential investors about stock
market as an alternative source to investment. This involves catering to the queries of the
investors about the concept of stock market, the various options that an investor can invest
his money into, funds management of investors.

Analyzing the investors‟ behavior includes understanding the concerns a person has
towards Stock Market, his stages in life and wealth cycle, the effect of the investments
made by the peer groups, effect of the profession he/she is in, education qualification,
importance of tax benefits, the most preferred saving tool etc. and this all is analyzed with
the help of a schedule prepared.

Through the systematic investment plan invest a specific amount for a continuous
period, at regular intervals. By doing this, the investor get the advantage of rupee cost
averaging which means that by investing the same amount at regular intervals, the average
cost per unit remains lower than the average market price.

TABLE OF CONTENTS

SL.No Topic Pg.No
1 Industry Profile 1-16
2 Company Profile 17-37
3 Literature Review 38-40
4 Objectives 41
5 Limitations 41
6 Research Methodology 41-44
7 Analysis 45-68
8 Findings 69
9 Conclusion 70
10 Questionnaire 71-73
11 Bibliography 74

Industry Profile

Financial services

Financial services are the economic services provided by the finance industry, which
encompasses a broad range of organizations that manage money, including credit unions,
banks, credit card companies, insurance companies, consumer finance companies, stock
brokerages, investment funds and some government sponsored enterprises.

History of Indian Stock Market

The Indian broking industry is one of the oldest trading industries that have been
around even before the establishment of BSE in 1875. BSE is the oldest stock market in
India. The history of India stock trading starts with 318 persons taking membership in Native
share and Stock Brokers Association, which we know by the name Bombay Stock Exchange
or BSE in short. In 1965, BSE got permanent recognition from the Government of India.
BSE and NSE represent themselves as synonyms of India stock market. The history of India
stock market is almost the same as the history of BSE

The regulations and reforms been laid down in the equity market has resulted in rapid
growth and development .Basically the growth in the equity market is largely due to the
effective intermediaries. The broking houses not only act as an intermediate link for the
equity market but also for the commodity market, the foreign currency exchange market and
many more. The broking houses have also made an impact on foreign investors to invest in
India to certain extent. In the last decade, the Indian brokerage industry has undergone a
dramatic transformation. Large and fixed commissions have been replaced by wafer thin
margins, with competition driving down the brokerage fees, in some cases to a few basis
points. There have also been major changes in the way the business is conducted. The scope
of services have enhanced from being equity products to a wide range of financial services.

Financial Products

The survey also revealed that in the past couple of years, apart from trading, the firms
have started various investment value services. The sustained growth of the economy in past
couple of years has resulted in broking firms offering many diversified services related to
IPO‟s, mutual funds, company research etc. However, the core trading activity is still the

predominant form of business, forming 90% of the firms in the sample. 67% firms are
engaged in offering IPO related services. The broking industry seems to have capitalized on
the growth of the mutual fund industry, which pegged at 40% in 2006. More than 50% of the
sample broking houses deal in mutual fund investment services. The average growth in assets
under management in last two years is almost 48% company research services. Additionally,
a host of other value added services such as fundamental and technical analysis, investment
banking, arbitrage etc are offered by the firms at different levels.

Capital market

Capital market is a market for securities (debt or equity), where business enterprises
(companies) and governments can raise long-term funds. Capital market may be classified as
primary markets and secondary markets. In primary market new stock or bond issues are sold
to investor via a mechanism known as underwriting. In secondary markets, existing securities
are sold and brought among investors or traders, usually on a security exchange, over the
counter or elsewhere. The capital market includes e stock market (equity securities) and
Bond market (debt).

Primary and Secondary Capital Markets

A company cannot easily attract investors to invest in their securities if the investors
cannot subsequently trade these securities at will. In other words, securities cannot have a
good primary market unless it is ensured of an active secondary market.

Primary Market

Securities generally have two stages in their lifespan. The first stage is when the
company initially issues the security directly from its treasury at a predetermined offering
price. Primary market is the market for issue of new securities. It therefore essentially consist
of the companies issuing securities, the public subscribing to these securities, the regulatory
agencies like SEBI and the Government, and the intermediaries such as brokers, merchant
bankers and banks who underwrite the issues and help in collecting subscription money from
the public. It is referred to as Initial Public offer (IPO). Investment dealers frequently buy
initial offering on the primary market and the securities on the secondary market.

Secondary Market

The second stage is when an investor or dealer makes the shares, bought from a
company treasury, available for sale to other investors on the secondary market. Secondary
market is the market for trading in existing securities, after they have been created in the
primary market. It essentially consists of the public who are buyers and sellers of securities,
brokers, mutual funds, and most importantly, the stock exchanges where the trading takes
place, such as the BSE (Bombay Stock Exchange) or NSE (National Stock Exchange).

Indian Stock Exchange

Stock Market

A stock market or equity market is a public entity (a loose network of economic transaction,
not a physical facility or discrete entity) for the trading of company stock (shares) and
derivatives at an agreed price; these are securities listed on a stock exchange as well as those
only traded privately.

Stock exchange
A stock exchange provides services for stock brokers and traders to trade stocks,
bonds and other securities. Stock exchanges also provide facilities for issue and redemption
of securities and other financial instruments and capital events including the payment of
income and dividends. Securities traded on stock exchange include shares issued by
companies, unit trusts, derivatives, pooled investment products and bonds.

Equity/Share
Total equity capital of a company is divided into equal units of small denominations,
each called a share. For example, in a company the total equity capital of Rs. 2,00,00,000 is
divided into 20,00,000 units of Rs 10 each. Each such unit of Rs. 10 is called a share. Thus,
the company then is said to have 20, 00,000 equity share of Rs 10 each. The holders of such
shares are members of the company and have voting rights. There are now stock markets in
virtually every developed and most developing economy, with the world‟s biggest being in
the United States, UK, Germany, France, India and Japan.

Market participants
Market participants include individual retail investors, institutional investors such as
mutual funds, banks, insurance companies and hedge funds, and also publically traded
corporations trading in their own shares.

Trading
Participants in the stock market range from small individual stock investors to large
hedge fund traders, who can be based anywhere.

Listing
Listing means admission of securities of an issuer to trading privileges on a stock
exchange through a formal agreement. The prime objective of admission to dealing on the
Exchange is to provide liquidity and marketability to securities.

Securities
A Security gives the holder an ownership interest in the assets of a company. For
example, when a company issues security in the form of stock, they give the purchaser an
interest in the company‟s assets in exchange for money. There are a number of reasons why a
company issues securities: meeting a short – term cash crunch or obtaining money for an
expansion are just two.

WHAT IS SEBI AND WHAT IS ITS ROLE?

In 1988 the Securities and Exchange Board of India (SEBI) was established by the
Government of India through an executive resolution, and was subsequently upgraded as a
fully autonomous body (a statutory Board) in the year 1992 with the passing of the Securities
and Exchange Board of India Act (SEBI Act) on 30th January 1992. In place of Government
Control, a statutory and autonomous regulatory board with defined responsibilities, to cover
both development & regulation of the market, and independent powers have been set up.
Paradoxically this is a positive outcome of the Securities Scam of 1990-91.

OBJECTIVES OF SEBI
 The promulgation of the SEBI ordinance in the parliament gave status to SEBI in
 1992. According to the preamble of the SEBI, the three main objectives are:
 To protect the interests of the investors in securities
 To promote the development of securities market
 To regulate the securities market

FUNCTIONS OF SEBI
 The main functions entrusted with SEBI are:
 Regulating the business in stock exchange and any other securities market
 Registering and regulating the working of stock brokers, share transfer agents,
bankers to the issue, trustees of trust deed, registrars to an issue, merchant bankers,
underwriters, portfolio managers, investment advisers and such other intermediaries
who may be associated with securities market in any manner.
 Registering and regulating the working of collective investment schemes including
mutual funds
 Promoting and regulating self-regulatory organizations
 Prohibiting fraudulent and unfair trade practices in the securities market
 Promoting investors education and training of intermediaries in securities market
 Prohibiting insiders trading in securities
 Regulating substantial acquisition of shares and takeover of companies
 Calling for information, undertaking inspection, conducting enquiries and audits of
the stock exchanges, intermediaries and self-regulatory organizations in the securities
market.

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 report was submitted in

November1998.

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.

Bombay Stock Exchange

Bombay Stock Exchange is the oldest stock exchange in Asia with a rich heritage,
now spanning three centuries in its 133 years of existence. What is now popularly known as
BSE was established as "The Native Share & Stock Brokers' Association" in 1875. BSE is
the first stock exchange in the country which obtained permanent recognition (in 1956) from
the Government of India under the Securities Contracts (Regulation) Act 1956. BSE's pivotal
and pre-eminent role in the development of the Indian capital market is widely recognized. It
migrated from the open outcry system to an online screen-based order driven trading system
in 1995. Earlier an Association of Persons (AOP), BSE is now a corporatized and
demutualised entity incorporated under the provisions of the Companies Act, 1956, pursuant
to the BSE (Corporatization and Demutualization) Scheme, 2005 notified by the Securities
and Exchange Board of India (SEBI). With demutualization, BSE has two of world's best
exchanges, Deutsche Börse and Singapore Exchange, as its strategic partners.

Over the past 133 years, BSE has facilitated the growth of the Indian corporate
sector by providing it with an efficient access to resources. There is perhaps no major
corporate in India which has not sourced BSE's services in raising resources from the capital
market. Today, BSE is the world's number 1 exchange in terms of the number of listed
companies and the world's 5th in transaction numbers. The market capitalization as on
December 31, 2007 stood at USD 1.79 trillion. An investor can choose from more than 4,700
listed companies, which for easy reference, are classified into A, B, S, T and Z groups. The
BSE Index, SENSEX, is India's first stock market index that enjoys an iconic stature, and is

tracked worldwide. It is an index of 30 stocks representing 12 major sectors. The SENSEX is
constructed on a 'free-float' methodology, and is sensitive to market sentiments and market
realities. Apart from the SENSEX, BSE offers 21 indices, including 12 sect oral indices.

BSE has entered into an index cooperation agreement with Deutsche Börse. This
agreement has made SENSEX and other BSE indices available to investors in Europe and
America. Moreover, Barclays Global Investors (BGI), the global leader in ETFs through its
iSharesÂ brand, has created the 'iSharesÂ BSE SENSEX India Tracker' which tracks the
SENSEX.

The ETF enables investors in Hong Kong to take an exposure to the Indian equity
market. The first Exchange Traded Fund (ETF) on SENSEX, called "SPICE" is listed on
BSE. It brings to the investors a trading tool that can be easily used for the purposes of
investment, trading, hedging and arbitrage. SPICE allows small investors to take a long-term
view of the market. BSE provides an efficient and transparent market for trading in equity,
debt instruments and derivatives. It has a nation-wide reach with a presence in more than 359
cities and towns of India. BSE has always been at par with the international standards. The
systems and processes are designed to safeguard market integrity and enhance transparency
in operations.

BSE is the first exchange in India and the second in the world to obtain an ISO
9001:2000 certification. It is also the first exchange in the country and second in the world to
receive Information Security Management System Standard BS 7799-2-2002 certification for
its BSE On-line Trading System (BOLT). BSE continues to innovate. In recent times, it has
become the first national level stock exchange to launch its website in Gujarati and Hindi to
reach out to a larger number of investors. It has successfully launched a reporting platform
for corporate bonds in India christened the ICDM or Indian Corporate Debt Market and a
unique ticker-cum-screen aptly named 'BSE Broadcast' which enables information
dissemination to the common man on the street. In 2006, BSE launched the Directors
Database and ICERS (Indian Corporate Electronic Reporting System) to facilitate
information flow and increase transparency in the Indian capital market. While the Directors
Database provides a single-point access to information on the boards of directors of listed
companies, the ICERS facilitates the corporate in sharing with BSE their corporate
announcements. BSE also has a wide range of services to empower investors and facilitate

smooth transactions: Investor Services: The Department of Investor Services redresses
grievances of investors.

BSE was the first exchange in the country to provide an amount of Rs.1 million
towards the investor protection fund; it is an amount higher than that of any exchange in the
country. BSE launched a nationwide investor awareness programme- 'Safe Investing in the
Stock Market' under which 264 programmes were held in more than 200 cities. The BSE On-
line Trading (BOLT): BSE On-line Trading (BOLT) facilitates on-line screen based trading
in securities. BOLT is currently operating in 25,000 Trader Workstations located across
over 359 cities in India. BSEWEBX.com: In February 2001, BSE introduced the world's first
centralized exchange-based Internet trading system, BSEWEBX.com. This initiative enables
investors anywhere in the world to trade on the BSE platform. Surveillance: BSE's On-Line
Surveillance System (BOSS) monitors on a real-time basis the price movements, volume
positions and members' positions and real-time measurement of default risk, market
reconstruction and generation of cross market alerts. BSE Training Institute: BTI imparts
capital market training and certification, in collaboration with reputed management institutes
and universities.

It offers over 40 courses on various aspects of the capital market and financial sector.
More than 20,000 people have attended the BTI programmes Awards The World Council of
Corporate Governance has awarded the Golden Peacock Global CSR Award for BSE's
initiatives in Corporate Social Responsibility (CSR). The Annual Reports and Accounts of
BSE for the year ended March 31, 2006 and March 31 2007 have been awarded the ICAI
awards for excellence in financial reporting. The Human Resource Management at BSE has
won the Asia - Pacific HRM awards for its efforts in employer branding through talent
management at work, health management at work and excellence in HR through technology
Drawing from its rich past and its equally robust performance in the recent times, BSE will
continue to remain an icon in the Indian capital

National Stock Exchange

The National Stock Exchange of India is a stock Exchange that is located in Mumbai,
Maharashtra. The National Stock Exchange basically function in three market sections, that
is, (CM) the Capital Market Section); F&Q (The Future and Options Market Sections) and
WDM (Wholesale Debt Market Segment). It is important place where the trading of shares,
debt etc takes place.

It was in year 1992 that the National stock Exchange was for the first time
incorporated in India. It was not regarded as a stock exchange at once. Rather, the national
Stock exchange was incorporated as a tax paying company and had got the recognition of a
stock exchange only in year 1993 the recognition was given under the provisions of the
Securities Contracts (Regulation) Act, 1956.

The National Stock exchange is highly active in the field of market capitalization and
thus aiming it the ninth largest stock exchange in the said field. Similarly, the trading of the
stock exchange in equities and derivatives is so high that it has resulted in high turnovers and
thus making it the largest stock exchange in India.

It is the stock exchange wherein there is the facility of electronic exchange offering
investors. This facility is available in almost types of equitable transactions such as equities,
debentures, etc. it is also the largest stock exchange if calculated in the terms of traded
values.

Origin and History of the National Stock Exchange

The National Stock exchange was incorporated for the first time in November, 1992.
The national stock exchange was not incorporated as the national stock exchange; rather, it
had got the recognition of the recognized stock exchange in April, 1993. The National stock
Exchange has increased its trading facilities in June 1994 when the WDM (Wholesale Debt
Market Segment) was gone live. It is basically one of the three market segments in which the
national stock Exchange works. In the same year, 1994 November, the Capital Market (CM)
segment of the stock exchange goes live through VSAT.

The National Stock Exchange has become the first Clearing Corporation in India by
the introduction of NSCCL in April 1995. In the same year, 1995 July, it has introduced the
Investor protection fund which is a very important function introduced by the national Stock
Exchange.

The National stock Exchange had grown with leaps and bounds and had shown
tremendous growth mainly in all the fields and thus making it the largest stock exchange of
India by October, 1995.

The concept of NSCCL was extended by the introduction of clearing and settlement
with the help of NSCCL in year 1996. The National stock Exchange has introduced its Index
for the first time in year April 1996. The index was known as the S&P CNXNifty Index. In
year June 1996, it has introduced the Settlement Guarantee Fund. The National Securities
Depositor Fund was launched by the National Stock exchange in year 1996, November, and
thus making it the first stock exchange who becomes the first depository in India.

Because of the efforts and introduction of new concept in the field of trading, the
National stock Exchange has received the BEST IT USAGE award by the computer Society
of India in the year November, 1996. It has also received an award for the TOP IT USER in
the name of “Dataquest award” in year December, 1996.

The National stock exchange has also introduced another index in year December
1996 in the name of CNX Nifty Junior in year 1996. It had again received an award for the
BEST IT USAGE award by the computer Society of India in the year December, 1996. In
May, 1998 it had launched its first website. Further in October 1999, it had launched the

NSE.IT LTD. Further in year October, 2002, it had launched the Government securities
index.

The growth of the National Stock Exchange has been tremendous in every field. It
had introduced several programmes and has achieved various achievements and awards while
working best in the field in which it is working. The efforts and hard work that is contributed
by the National Stock exchange has been tremendous and thus making an important and
unique stock exchange in India.

Over The Counter Exchange of India (OTCEI)

OTCEI (Over The Counter Exchange of India) was incorporated in 1990 as a Section
25 company under the Companies Act 1956 and is recognized as a stock exchange under
Section 4 of the Securities Contracts Regulation Act, 1956. The Exchange was set up to aid
enterprising promoters in raising finance for new projects in a cost effective manner and to
provide investors with a transparent & efficient mode of trading. Modeled along the lines of
the NASDAQ market of USA, OTCEI introduced many novel concepts to the Indian capital
markets such as screen-based nationwide trading, sponsorship of companies, market making
and scrip less trading. As a measure of success of these efforts, the Exchange today has 115
listings and has assisted in providing capital for enterprises that have gone on to build
successful brands for themselves like VIP Advanta, Sonora Tiles & Brilliant mineral water,
etc.

Trading at OTCEI is done over the centers spread across the country. Securities
traded on the OTCEI are classified into:

 Listed Securities - The shares and debentures of the companies listed on the OTC can
be bought or sold at any OTC counter all over the country and they should not be
listed anywhere else Permitted
 Securities - Certain shares and debentures listed on other exchanges and units of
mutual funds are allowed to be traded.
 Initiated debentures - Any equity holding at least one lakh debentures of a particular
scrip can offer them for trading on the OTC.

OTCEI

 Is the first screen based nationwide stock exchange in India.
 Is the first exchange to introduce Market Making in India.
 Is the first exchange to introduce Sponsorship of companies in India.
 Is the only exchange to allow listing of companies with paid-up below Rs.3 crores.
 Is the only exchange to allow companies with less than 3 year track record to tap
capital market.
 Has shifted trading from counter receipts to share certificates.
 Has introduced Weekly Settlement Cycle.
 Allows short selling.
 Allows De-mat trading through NSDL.
 Has tied-up with NSCCL for Clearing.

DETAILS OF STOCK EXCHANGES

Sr.
No.
Name of the Exchange Valid Upto

1 Ahmedabad Stock Exchange Ltd. PERMANENT

2 Bangalore Stock Exchange Ltd. PERMANENT

3 Bhubaneswar Stock Exchange Ltd. June 04, 2012

4 Bombay Stock Exchange Ltd. PERMANENT

5 Calcutta Stock Exchange Ltd. PERMANENT

6 Cochin Stock Exchange Ltd. November 07, 2011

8 Delhi Stock Exchange Ltd. PERMANENT

9 Gauhati Stock Exchange Ltd. April 30, 2012

11 Interconnected Stock Exchange of India Ltd. November 17, 2011

12 Jaipur Stock Exchange Ltd. January 08, 2012

13 Ludhiana Stock Exchange Ltd. April 27, 2012

14 Madhya Pradesh Stock Exchange Ltd PERMANENT

15 Madras Stock Exchange Ltd. PERMANENT

18 MCX Stock Exchange Ltd September 15, 2011

19 National Stock Exchange of India Ltd. PERMANENT

20 OTC Exchange of India August 22, 2012

21 Pune Stock Exchange Ltd. September 01, 2012

23 U.P. Stock Exchange Limited June 02, 2012

24 United Stock Exchange of India Limited March 21, 2012

25 The Vadodara Stock Exchange Ltd. January 03, 2012

COMPANY’S PROFILE

NAME OF THE COMPANY: ANGEL STOCK BROKING LTD.

REGISTERED OFFICE: G-1, Akruti Trade Centre,
Road No. 7, MIDC Marol,
Andheri (E),
Mumbai – 400 093

BRANCH OFFICE: ANGEL STOCK BROKING LTD.
Indraprastha Building, 2nd Floor,
Block No: 228-229
Pancheshwar Tower Road,
Jamnagar- 361001

FORM OF ORGANISATION: Private Sector

PROMOTER: Mr. Dinesh Thakkar

ACCOUNTING YEAR: 1ST April to 31st March

INTRODUCTION AND HISTORY:

“Angel Broking” is the retail broking arm of SSKI, an organization with
more than eight decades of trust & credibility in the stock market. It is India's leading
retail financial Services Company with We have over 250 share shops across 115 cities in
India. While our size and strong balance sheet allow us to provide you with varied
products and services at very attractive prices, our over 750 Client Relationship Managers
are dedicated to serving your unique needs. Angel Broking is lead by a highly regarded
management team that has invested crores of rupees into a world class Infrastructure
that provides our clients with real-time service & 24/7 access to all information and
products. Our flagship Angel Broking Professional Network offers real-time prices,
detailed data and news, intelligent analytics, and electronic trading capabilities,
right at your fingertips. This powerful technology complemented by our knowledgeable
and customer focused Relationship Managers. We are creating a world of Smart Investor.
Angel Broking offers a full range of financial services and products ranging from Equities
to Derivatives enhance your wealth and hence, achieve your financial goals. Angel
Broking' Client Relationship Managers are available to you to help with your financial
planning and investment needs. To provide the highest possible quality of service, Angel
Broking provides full access to all our products and services through multi- channels.

INTRODUCTION TO ANGEL
Angel Broking Limited is one of the leading and professionally managed stock
broking firm involved in quality services and research. Incorporated in December 1997 in
Mumbai, India, Angel Broking provides retail related services encompassing Ebroking,
Investment Advisory, Portfolio Management Services, Wealth Management Services and
Commodities Trading. It is a member of Bombay Stock Exchange and National Stock
Exchange. It is also a registered depository participant with CDSL.

The membership of the company with The Stock Exchange Mumbai was originally
in the name of Mukesh R. Gandhi, which was eventually turned into a corporate membership
in the name of Angel Broking Limited. Angel Broking Limited is managed by Mr. Dinesh
Thakkar and he is well supported by Mr. Mukesh Gandhi, a fifteen years veteran in the
market. The group is well supported by a professional and qualified research team and
efficient operations and back office team, which comprises of highly dedicated and qualified
individuals. Angel has an in-house, state of art research department. Angel believes in
reaching out to the customer at the farthest end rather than by reaching out to them. The
company in its endeavor to give its client the best has opened up several branches all over
Mumbai, which are efficiently integrated with the Head Office.

Angel Broking Limited is primarily into retail stock broking, with a customer base of
retail investors, which has been increasing at a compounded growth rate of 100% every year.
The company has huge network sub-brokers in Mumbai and other places outside Mumbai,
registered with SEBI, who act as channel partners for the company. The company presently
has total staff strength of around 150 employees who are spread accordingly across the head
office and all the branches. Angel has empowered its physical presence throughout India
through various strategies which it has been adopting efficiently and effectively over a period
of time, like opening up of branches at various places, tie-ups with various agencies and sales
agents, buy-outs of smaller regional outfits and appointment of sub-brokers and franchisees.
Moreover Angel has been tapping and including high net-worth and self-employed
individuals it its vast array of clients.

Mission:
To be India‟s First Multinational providing complete financial services solution across
the Globe.

Vision
To provide best value for money to investors through innovative products,
trading/investments strategies, state of the art technology and personalized service.

Motto
To have complete harmony between quality-in-process and continuous improvement
to deliver exceptional service that will delight our Customers and Clients.

Business Philosophy
 Ethical practices & transparency in all our dealings
 Customers interest above our own
 Always deliver what we promise
 Effective cost management

CRM Policy: Customer is King
“A Customer is the most Important Visitor on our premises. He is not dependent on
us, but we are dependent on him. He is not an interruption in our work. He is the purpose of
it. He is not an outsider in our business. He is part of it. We are not doing him a favor by
serving him. He is doing us a favor by giving us an opportunity to do so.”
-Mahatma Gandhi

Quality Assurance Policy
We are committed to providing world-class products and services which exceed
the expectations of our customers, achieved by teamwork and a process of
continuous improvement.

History & Milestones
Angel Broking's tryst with excellence in customer relations began in 1987. Today,
Angel has emerged as one of the most respected Stock-Broking and Wealth Management
Companies in India. With its unique retail-focused stock trading business model, Angel is
committed to providing „Real Value for Money‟ to all its clients. The Angel Group is a
member of the Bombay Stock Exchange (BSE), National Stock Exchange (NSE) and the two
leading Commodity Exchanges in the country: NCDEX & MCX. Angel is also registered as a
Depository Participant with CDSL.

Awarded with 'Broking House with Largest Distribution Network' and 'Best Retail
Broking House' at Dun & Bred street Equity Broking Awards 2009· August, 2008 Crossed
500000 trading accounts

 October 2011, Angel Broking bagged the Dun & Bradstreet Equity Broking Awards
2011 for 'Best Retail Broking House' and 'Fastest Growing Equity Broking House'
(Large Firms) at Dun & Bradstreet Equity Broking Awards 2011.

 March 2011, Angel Broking was awarded with 'Best in Contribution Investor
Education & Category Enhancement of the year' and 'Best Commodity Research of
the year'

 November 2010, Angel Broking bags the coveted „Major Volume Driver‟ Award by
BSE for 2009-10

 October 2009, Angel Broking bags the coveted „Major Volume Driver‟ Award by
BSE for 2008-09

 May 2009, Angel Broking wins two prestigious awards for 'Broking House with
Largest Distribution Network' and 'Best Retail Broking House' at Dun & Bradstreet
Equity Broking Awards.

 November 2008, Angel Broking wins the esteemed „Major Volume Driver‟ Award by
BSE for 2007-2008

 August 2008, Angel Broking crosses 5,00,000 mark in unique trading accounts

 November 2007, Angel Broking augments its business with introduction of Insurance
Distribution in alliance with Birla Sun Life

 November, 2007 „Major Volume Driver‟ for 2007

 March2007, Angel Broking crosses the benchmark of 2, 00,000 unique trading
accounts

 December, 2006 Created 2500 business associates

 September, 2006 Launched Mutual Fund and IPO business

 July, 2006 launched the PMS function

 October, 2005 „Major Volume Driver‟ award for 2005

 September, 2004 Launched Online Trading Platform

 April, 2004 Initiated Commodities Broking division

 April, 2003 first published research report

 November, 2002 Angel‟s first investor seminar

 March, 2002 developed web-enabled back office software

 November, 1998 Angel Capital and Debt Market Ltd. Incorporated

 December, 1997 Angel Broking Ltd. Incorporated

Angel’s Presence:

 Nation- wide network of 21 regional hubs.

 Presence in 124 cities.

 6800 + sub brokers & business associates.

 5.9 lakh + clients.

Angel Group Companies
Angel Broking Ltd. Member on the BSE and Depository
Participant with CDSL
Angel Capital & Debt Market Ltd Membership on the NSE Cash and Futures &
Options Segment
Angel Commodities Broking Ltd. Member on the NCDEX & MCX

Angel Securities Ltd. Member on the BSE.

Management Team
Mr.Dinesh Thakkar Chairman and MD
Mr.Lalit Thakkar Director – Research
Mr.Amit Majumdar ED - Operations & Finance
Mr.Rajiv Phadke ED - Human Resources & Corporate Communications
Mr.Vinay Agrawal ED - Equities Broking
Mr.Nikhil Daxini ED - Sales and Marketing
Mr.Hitungshu Debnath ED - Distribution & Wealth Management
Mr.Ketan Shah Associate Director - Information Technology
Ms.Pinky Kothari Associate Director - Sales And Marketing

PRODUCTS & SERVICES:

 Equity Trading
 Depository services
 Commodity Trading
 Mutual Funds services
 Margin Financing
 Corporate Advisory Group
 Portfolio Management System

Equity Trading:
For the first time Angel Broking investing commodity the power to be associated with
the elite dealing rooms and freedom to execute trade on there own. That is one may trade
from their branches or trade own over the net and with that expertise and assistance.

Depository Services:
Angel Broking is among the few major Depository Participants holding securities
worth more than Rs.6000 crore under its management .RSL provides depository services
investors as a depository participant with NSDL and CDSL.

Commodity Trading:
Commodities are a word originated from the French word „commodity‟ means benefit
profit. Angel commodity Limited is a member of both the exchange (MCX & NCDEX) that
allows trading in all the commodities traded at both the exchange. At present, trading in
commodities is restricted to futures contracts only.

Benefits of Commodity Trading:
To investors: investors always look for alternative investments avenues where they
can diversify their funds to achieve their financial goals. In financial market, commodities

have rapidly emerged as a major investment tool as they help in diversifying investments and
to hedge against inflation, greatest threat to any investor.

Mutual Funds Services:
Angel Broking is also promoting mutual funds of all companies. The service
spectrum spans treasury-related as well as general investment requirements. A dedicated
mutual fund research desk is constantly monitoring the environment for new opportunities.
Allocation across sectors and maturities are actively managed for the client base. Fund
performance is constantly monitored to optimize returns for the customers taking into account
the risk/reward profile of the client.

Corporate Advisory Group:
Corporate advisory group provides various solutions to corporate banks and FIs on the
management of debit, equity and investments. The service extends from advising client to
earn maximum profit by investing through selected papers like MF/PMF etc.

Portfolio Management System:
Angel offers discretionary PMS to investors in order to assist them in
managing their funds amidst continuous changing market dynamics and increasing
complexities of investing. Investing in equity market requires in depth knowledge and
thorough analysis coupled with clear understanding of domestic and international economies.
Investors need the services of an expert to manage their funds and deliver good returns in
diverse market conditions. Continuous wealth creation with an emphasis on capital
preservation is essential in today‟s complex markets.
In order to systematically diversify the holdings of clients across varied sectors and
with and intention to give them handsome returns, Angel devised the concept of the Model
Portfolio: Angel came out with its first Model Portfolio in August 2002. Since then it has
come out with Model Portfolios which have consistently outperformed the Sensex. In fact the
latest model portfolio by Angel has successfully outperformed the Sensex by a whopping
80% Angel‟s Portfolio Advisory Team had a successful track record of assisting its clients in
managing their portfolios for over 4 years.
The Portfolio Management Process starts with understanding each investor‟s risk
appetite and return expectations. The Portfolio Management Team not only draws support

from Angel‟s in-house research team for new investment ideas but also has its own stocks
picking by adopting bottom up research.

FUNDAMENTAL RESEARCH SERVICES

The Sunday Weekly Report:
This weekly report is the ace of all reports. It offers a comprehensive market overview
and likely trends in the week ahead. It also presents few top picks based on an in-depth
analysis of technical and fundamental factors. It gives short term and long term outlook on
these scrips, their price targets and trading strategies. Another unique feature of this report is
that it provides an updated view of about 70 prominent stocks on an ongoing basis.

The Industry Watch:
This report provides an in-depth analysis of specific industries which are likely to
outperform others in the economy. It analyzes their strengths and weaknesses and ascertains
their future outlook. The final view is arrived at after thorough interaction with industry
experts. Also comparative performances of various companies in the sector are evaluated and
top picks are recommended.

Stock Analysis:
Angel‟s stock research has performed very well over the past few years and the Angel
Model Portfolio has consistently outperformed the benchmark indices. The fundamentals of
select scrip‟s are thoroughly analyzed and an actionable advice is provided along with
investment rationale for each scrip.

Flash News:
Key developments and significant news announcements that are likely to have an
impact on markets / scrip‟s are flashed live on trading terminals. Flash news keeps the market
participants updated on an online basis and helps them to reshuffle on their holdings

TECHNICAL RESEARCH SERVICE

Nifty Tracker:
Nifty Futures is the most traded instrument with highest volumes in F & O and
excellent liquidity. The team tracks the Nifty Future and generates calls based on unique
trading system which is a result of their focused research over the past few years. The
objective is to generate positive returns for traders who are looking for a high risk / high
reward product.

Online Chart:
An online forum to help clients, specifically day traders in judging the directions of
the market and stocks which are in the limelight.

Intraday Calls:
For day traders, Angel provides intra-day calls with entry, exit and stop loss levels
during market hours. These calls are flashed on their terminals. Their analysts continuously
track the calls and provide recommendations according to the market movements.

Position Calls:
Angel‟s “Position Trading Calls” are based on thorough analysis of the price
movement in select scrip‟s. These calls are for a 10-15 day time span with stop loss and target
levels. These calls are flashed on their terminals during market hours.

Derivative Strategies:
Their analysts take view on the Nifty and select stocks based on the derivatives data
and technical tools. Suitable “Derivative Strategies” are devised, which are flashed on their
terminals and published in their reports.

Futures Calls:
A customized product for HNIs to help them trade with leveraged position; wherein
clients are advised on the stocks with entry, exit and stop loss level for short term benefits.
Over and above this, financial status of the calls is monitored at all times.

INVESTMENT ADVISORY DESK
At Angel, they have a dedicated Investment Advisory Desk:
 To help manage client‟s equity portfolio and create wealth
 To help client understand their risk profile and define investment goals realistically
 To minimize client‟s risk and maximize their returns
 To help client decide what to buy / sell and when to buy / sell
 To help client‟s understand macro-economic trends and sectoral / company
developments
 To help client restructure their portfolio based on sound research

SWOT Analysis
A SWOT analysis focuses on the internal and external environments, examining
strengths and weaknesses in the internal environment and opportunities and threats in the
external Environment

Strength
 Service
 Distribution network
 Marketing
 Products

Weakness
 Customer Satisfaction
 Branding
 Competition from Banks

Opportunities
 Ever increasing market
 Improving technology
 Unfulfilled needs of Customers
 Education level

Threats
 New competitors
 Technology based business

COMPETITORS DETAILS

 STOCK HOLDING CORPORATION OF INDIA LIMITED
 ICICI direct.com
 SHARE KHAN
 UTI SECURITIES
 MARWADI GROUP
 HDFC SECURITIES
 KARVY STOCK BROKING LIMITED
 KOTAK SECURITIES
 RELIANCE MONEY
 ANAGRAM SECURITIES

SHCIL (STOCK HOLDING CORPORATION OF INDIA LIMITED)

Stock Holding Corporation of India Limited (SHCIL) was promoted by public
financial institutions and insurance majors like IDBI, UTI, ICICI, LIC, GIC and its
subsidiaries, IFCI and IIBI. SHCIL was incorporated as a public limited company on July 28,
1986. SHCIL provides depository, post trading, custodial services, securities lending to
institutional investors and retail investors. Other auxiliary services provided by SHCIL
include derivatives clearing, PF fund accounting, SGL constituent account services, mutual
funds and other capital market instruments distribution.

ICICI direct.com

ICICI Bank is India's second-largest bank with total assets of about Rs.1,67,659
crores at March 31, 2005 and profit after tax of Rs. 2,005 crores for the year ended March 31,
2005 (Rs. 1,637 crores in fiscal 2004). ICICI Bank has a network of about 560 branches and
extension counters and over 1,900 ATMs. ICICI Bank offers a wide range of banking
products and financial services to corporate and retail customers through a variety of delivery
channels and through its specialized subsidiaries and affiliates in the areas of investment
banking, life and non-life insurance, venture capital and asset management.
ICICI Bank set up its international banking group in fiscal 2002 to cater to the cross
border needs of clients and leverage on its domestic banking strengths to offer products
internationally. ICICI Bank currently has subsidiaries in the United Kingdom, Canada and
Russia, branches in Singapore and Bahrain and representative offices in the United States,
China, United Arab Emirates, Bangladesh and South Africa.

SHAREKHAN

Sharekhan is an equities focused organization tracing its lineage to SSKI, a veteran
equities solutions company with over 8 decades of experience in the Indian stock markets. In
the stock markets Sharekhan does not claim expertise in too many things. Sharekhan's
expertise lies in stocks and that's what he talks about with authority. So when he says that
investing in stocks should not be confused with trading in stocks or a portfolio-based strategy
is better than betting on a single horse, it is something that is spoken with years of focused
learning and Experience Sharekhan brings a user- friendly online trading facility, coupled
with a wealth of content that will help investors stalk the right shares.

UTI SECURITIES

UTI Bank is a registered member (Depository Participant) of NSDL. India‟s first
depository. We can avail all of the depository-related services by just opening an account
with NSDL through UTI Bank. UTI Bank provides services like dematerialization of shares,
rematerilialization, pledge-Hypothecation, freezing/ locking Of Accounts, transfer of shares
and settlements, receipt of corporate benefits, holdings & transaction statements on email,
tele depository services.

MARWADI SHARES AND FINANCE PRIVATE LIMITED

Marwadi Shares and Finance Pvt. Ltd. Was incorporated in 1992.Marwadi Group
servicing more than 75000 clients, more than 554 pin codes. The company ranked among top
50 broking houses. It has 250 franchisee / sub-brokers and authorized person‟s network.

HDFC SECURITIES

HDFC Securities, a trusted financial service provider promoted by HDFC Bank and
JP Morgan Partners and their associates, is a leading stock broking company in the country,
serving a diverse customer base of institutional and retail investors. HDFCsec.com provides
investors a robust platform to trade in Equities in NSE and BSE , and derivatives in NSE. Our
website will support you with the highest standards of service, convenience and hassle-free
trading tools. Our research team tracks the economy, industries and companies to provide you
the latest information and analysis. Our content offers financial information, analysis,
investment guidance, news & views, and is designed to meet the requirements of everyone
from a beginner to a savvy and well-informed trader.

KARVY STOCKBROKING LIMITED

Karvy offers a full range of financial services and products ranging from Equities to
Research to enhance your wealth and hence achieve your financial goals.

KOTAK SECURITIES

Kotak Securities, an affiliate of Kotak Mahindra Bank, is the stock-broking and
distribution arm of the Kotak Mahindra Group. The institutional business division, which
brings you AKSESS, primarily covers secondary market broking. It caters to the needs of
foreign and Indian institutional investors in Indian equities (both local shares and GDRs,
Global Depository Receipts). The division also has a comprehensive research cell with
sectorial analysts covering all the major areas of the Indian economy. The group a net worth
of over Rs.1, 550 crores and employs over 3,000 employees in its various businesses. With a
presence in 59 cities in India and offices in New York, London, Dubai and Mauritius, it
services a customer base of over 5, 00,000.
Kotak Mahindra has partnerships with Goldman Sachs (one of the world's largest
investment banks and brokerage firms), Ford Credit (one of the world's largest dedicated
automobile financiers) and Old Mutual (a large insurance, banking and asset management
conglomerate).

RELIANCE MONEY

Reliance Money is an endeavour to change the way India trades in financial markets
and avails of various financial services. Reliance Money ensures maximum security with a
unique security token to keep your online account safe.

ANAGRAM SECURITIES

Anagram Securities is the part of the Rs. 2000 crores Lalbhai Group. It was found in
1993 and is a member of the National Stock Exchange. Last year their trading crossed Rs.
17000 crores with around 5000 people making. They are dealing only in Stock Market and
nothing else. Though they are doing good research work regarding companies and market
which will be the beneficial to the investors. Gujarat state is one of the most important fields
of their business.
And they have about 30 branches throughout Gujarat

Literature Review
Meleanie Cao and Jason Wei (2004) investigated whether stock market returns are
related to body temperature. Their study suggested that lower temperature leads to aggression
where as higher temperature leads to apathy and aggression. Aggression would lead to more
risk taking activities while apathy could impede risk taking. Apathy dominates aggression
when temperature is high. David Hirshleifer and Itzhak Ben-David (2011) examine how
investor preferences and beliefs affect trading in relation to past gains and losses. Investors
are much more likely to sell big losers than small ones. Their findings provide no clear
indication that realization preference helps explain investor trading behavior.

SC Myers and NS Majluf (1984) consider that a firm must issue common stock in
order to raise money to undertake valuable investment opportunity. Management is assumed
to know more about the firm's value than potential investors and Investors interpret the firm's
actions rationally. An equilibrium model of the issue-invest decision is developed under these
assumptions and the model shows that firms may refuse to issue stock, and therefore may
pass up valuable investment opportunities. Richard W. Sias and David A. Whidbee (2008)
investigate whether insider trading is related to net demand by institutional versus individual
investors. Their tests reveal a strong inverse relation between insider trading and institutional.
First, institutional investors are more likely to provide the liquidity necessary for insiders to
trade. Second, insiders are more likely to buy low valuation and low lag return stocks while
institutions are attracted to the opposite security characteristics. Last, the results are
consistent with the hypothesis that insiders are more likely to view their securities as
overvalued following a period when institutions were net buyers and undervalued following a
period when institutions were net sellers. R Kaniel, G Saar, S Titman (2004) investigated a
unique dataset that enables us to determine the aggregate buy and sell volume of individual
investors for a large cross-section of NYSE stocks. And found that individuals trade as if they
are contrarians, and the stocks that individuals buy exhibit positive excess returns in the
following month.

RON KANIEL, GIDEON SAAR, and SHERIDAN TITMAN (2008) investigates
the dynamic relation between net individual investor trading and short-horizon returns for a
large cross-section of NYSE stocks. The evidence indicates that individuals tend to buy
stocks following declines in the previous month and sell following price increases.

E Boehmer, EK Kelley (2009) used a broad panel of NYSE-listed stocks between
1983 and 2004, and studied the relation between institutional shareholdings and the relative
informational efficiency of prices, measured as deviations from a random walk. Stocks with
greater institutional ownership are priced more efficiently, and showed that variation in
liquidity does not drive this result.

Mark L Mitchell and J Harold Mulhrin (1994) studied the relation between news
announcements reported by Dow Jones & Co and found out that the relation between news
and market activity is not strong. K.Shanti Swarup (2003) in her study indicated that
investors give more importance to their analysis than broker‟s advice while investing in
primary markets. Ning Zhu (2002) investigates individual investors' bias towards nearby
companies. Using data from a large U.S. discount brokerage and found that individual
investors tend to invest in companies closer to them relative to the market portfolio.

Dimitrios I Maditinos, Zejiko Sevic and Nikolas G Theorine (2007) used a
questionnaire to examine the various methods and techniques used by the Greek investors on
terms of stock market forecasting. They found out that the investors rely more on newspapers
and media while professionals rely more on fundamental and technical analysis to make
investment decisions. Balaji S Iyer and R Kumar Bhaskar (2002) studies the investors
psychology and behavior and provides an insight into the working of an investors mind in the
stock markets. Dr.Vanita Tripathi (2008) examines the various investment strategies in
Indian stock market. Her study revealed that investors use both fundamental as well as
technical analysis while investing in Indian stock market. Lewellen (1977) found that age,
gender, income and education affects investor‟s preferences and attitudes towards investment
decisions.

Terrance Odean and Brad M Barber (2008) tested and confirmed the hypothesis
that individual investors are net buyers of attention grabbing stocks (e.g. socks in news).
John.R.Nofsinger (2001) studied the trading behavior of institutional and individual
investors and found out that investors conduct a high degree of trading around news releases
especially earnings and dividend news. Institutions buy and sell on both good and bad news,
individual investors only trade on good news. Michael Graham, Jussi Nikkinen and Petri
Sahlström (2003) investigated the relative importance of U.S macroeconomic news releases

for stock valuation. They study on 11 macroeconomic announcements and found 5 out of 11
announcements have significant influence on stock valuation. Graciela L. Kaminsky and
Sergio L. Schmukler (1999) analysis what type of news moves the market and found out
that the movements are triggered by local and neighboring country news, with news about
agreement with international organization and credit rating agencies have the most weight.
Paul.C.Tetlock (2011) tests whether stock market investors appropriately distinguish
between new and old information about firms and find that investors trade more aggressively
when news is stale.

TITLE OF THE PROJECT:
“Influence of Capital Market Information on Investment Decisions”

Need for the study:
 To know the Investment Decisions of the Investors.
 To study the behavior of Investors on various market announcements.
 To know what kind of Investment Investors prefer.

PURPOSE OF THE STUDY:
The study was undertaken to gather information from the respondents regarding
impact of market information on investment decisions of the investors in Belgaum region.

OBJECTIVES OF THE STUDY
The Objectives of the study are to:
 To study the various factors that influence the investors decision making process.
 To analyze the investment pattern of investors to various capital market information.
 To examine the relationship between age, income and the investment portfolio of the
investors.

LIMITATIONS OF THE STUDY
The present research paper was aimed to achieve the defined objectives in full earnest and
accuracy, there were certain limitations:
 The study was conducted targeting the investors in Belgaum city only.
 The primary data has been collected through a structured questionnaire to a sample of
100 investors in Belgaum city, which may not reflect the opinion of the entire
population.

HYPOTHESIS OF THE STUDY

H0: Investment decisions of investors are not influence by various factors
H1: Investment decisions of investors are influenced by various factors.

Ho: There is no significant relationship between the age and income of the investors and their
investment portfolio.
H1: There is a significant relationship between the age and income of the investors and their

H0: Investors do not behave rationally towards various capital market information.
H1: Investors behave rationally towards various capital market information.

Research Methodology

Exploratory research
The research is exploratory in nature as the research is to know the behavior of the
Investors and their decision making process to various capital market information.

Data Collection Method

 Primary Data
 Secondary Data

Primary Data
Primary data was collected through a structured questionnaire. The Questionnaire was
distributed in two phases.
 Firstly through online platform by E-mail.
 Secondly in offline Questionnaire‟s were hand delivered mainly through broker‟s
office in the city.

The questionnaire was divided into three parts:
 In the first part, the demographic factors of the investors were recorded primarily for
their classification.
 The second part of the questionnaire was related to the investment details of the
investor.
 The final part of the questionnaire was related to the behavioral details, which
recorded the investor‟s reaction to the various capital market information.

Secondary Data
Under Secondary sources, information was collected from internal & external
sources. We made use of Internet (such as search engine www.google.com,
www.angelbroking.com) miscellaneous sources (such as brochures, pamphlets) under
external sources.

Sampling Design

 Sampling Unit: Belgaum
 Sampling Size: 100
 Sampling Method: Simple Random Sampling

Measurement techniques used

 Software Package for Social Science (SPSS) has been used for the purpose of this
analysis.
 Anova test was used to know whether Investment decisions are influenced by various
factors, and to find out whether there is significant relationship between income of the
investors and their investment portfolio.
 CHI SQUARE test was used for testing the relationship between age and behavior of
investors to the various information announcements.

More specifically the process was organized. The research questionnaire was pre-tested
through pilot survey. In its draft form it went under a pre test with Channel Partner of two
different companies. The second pre-test was conducted after discussion with the experts in
the field.

ANALYSIS OF THE RESULTS

AGE DISTRIBUTION OF THE RESPONDENT
From the questionnaire it was observed that maximum numbers of respondents fall in
31-40 years category. The next highest number of respondents falls in 21-30 years category.
Thus around 65% of the respondents are below 40 years of age and are relatively young.

TABLE 1: SHOWING THE AGE DISTRIBUTION OF THE RESPONDENTS

Age Group No of Respondents
21 -30 Years 22
31 -40 Years 43
41-50 years 17
51 Years and above 18
Total 100

INCOME DISTRIBUTION OF THE RESPONDENTS
Most of the investors fall under the income level of below Rs 2,00,000. From this we
can say that this is probably because most of the investors i.e. around 57% of the respondents
fell under the age group of less than 40years.
TABLE 2: SHOWING THE INCOME DISTRIBUTION OF THE RESPONDENTS

Income Levels No of Respondents
Less than 2 Lakhs 38
Between 2 -4 Lakhs 19
Between 4 -6 Lakhs 22
Above 6 Lakhs 21
Total 100

OCCUPATION DISTRIBUTION OF RESPONDENTS:
It was disclosed that most of respondents are of Business class. Thus around 38% of
respondents are of business class. Next to Business is private employee that is 25% which
shows because of low income they will be less aggressive in investing in different investment
avenues.
TABLE 3: SHOWING THE OCCUPATION DISTRIBUTION OF THE
RESPONDENTS

Occupation No of Respondents
Government Employee 12
Private Employee 25
Business 38
Pensioner 14
Housewife 3
Student 8
Total 100

EXPERIENCE IN INVESTMENT OF THE RESPONDENT
It was disclosed that 33% of the people have experience between 1-3 Years followed
by 30% people have experience of more than 5 Years.

TABLE 4: SHOWING THE OCCUPATION DISTRIBUTION OF THE
RESPONDENT

Experience in Investment No of Respondents
Less than 1 Year 12
Between 1-3 Years 33
Between 3-5 Years 25
More than 5 Years 30
Total 100

INVESTMENT AVENUES OF THE RESPONDENTS
When it is about investment in primary or secondary instrument almost 32% of
respondents invest in equity market. Next to equity is Commodities which is preferred by
almost 16% of respondents. Next to Commodities is Savings Bank and Mutual Fund that is
15% it may be quite because of attraction towards less risky and assure returns & because
high fluctuation behavior in the equity. 12% investors were interested in investing in Real
Estate 10% in Insurance.
TABLE5: SHOWING THE INVESTMENT AVENUES OF THE RESPONDENTS

Investment Avenues No of Respondents
Commodities 16
Savings Bank 15
Mutual Fund 15
Insurance 10
Stock Market 32
Real Estate 12
Total 100

KIND OF INVESTMENT OF THE RESPONDENTS
It was found that 50 % of the respondents opt for Long Term Investment where as
25% Short Term and 21% Medium term Investment.
TABLE 6: SHOWING KIND OF INVESTMENT OF THE RESPODENTS

Kind of Investment No of Respondents
Intraday 4
Short Term 25
Medium Term 21
Long Term 50
Total 100

INVESTORS PREFERENCE ABOUT LARGE AND SMAAL STOCKS
It was found out that 48% of the respondent feel that Large Cap stocks are less risky
than Mid and Small Cap stocks while 31% of the respondent tend to be neutral.

TABLE 7:SHOWING INVESTORS PREFERNCE ABOUT LARGE AND SMALL

Preferance No of Respondents
I Strongly agree 10
I agree 38
Neutral 31
I disagree 8
I Strongly disagree 13
Total 100

INVESTORS REACTION TO THE ANNOUNCEMENT OF GOOD RESULTS:
When the results announced by the company are better than the expectation, 68% of
investors wanted to buy more shares, which shows that for investors if the performance of
company is good the company carries future growth potential which translates into good
returns on stock. 20% of investors preferred to hold the stock with a view that good
performance was already discounted by the market and there is little scope of future
appreciation & 12% of investors preferred to sell the stock with a view to encash the good
result.
TABLE 8: SHOWING INVESTORS REACTION TO THE ANNOUNCEMENT OF
GOOD RESULTS

Result announced Good No of Respondents
Buy 68
Sell 12
Hold 20
Total 100

INVESTORS REACTION TO RESULTS NOT AS PER MARKET EXPECTATION
If the company performance was not as per expectation 14% investors want to buy the
stock and 17% want to hold the stock with a view to get long term return and 69% of
investors preferred to sell the stock.
TABLE 9: SHOWING INVESTORS REACTION TO RESULTS NOT AS PER
MARKET EXPECTATION

Result announced Not Good No of Respondents
Buy 14
Sell 69
Hold 17
Total 100

INVESTORS REACTION TO THE DECLARATION OF DIVIDEND:
It was found that 29% of investors preferred to hold the stock after declaration of
dividend because of long term gain which was expected by the investor as a result of good
performance of company, while 57% investors preferred to buy the stock which shows good
performance of company attracts the investment and only 14 of investors sell the stock after
the dividend declaration with a view to book profits and liquidate their holdings.

TABLE 10: INVESTORS REACTION TO THE DECLARATION OF DIVIDEND

Declaration of Dividends No of Respondents
Buy 57
Sell 14
Hold 29
Total 100

INVESTORS REACTION TO ISSUING OF BONUS SHARES:
In case of bonus declaration 28% of investor‟s favored holding the stock, so that they
could avails the opportunity of better price from the stock in future to gain good return. While
46% of investors wish to buy more stocks when bonus is declared as for them bonus is good
sign for the company and the prospective returns gained by them & only 28% wanted to sell
the stock and book profits as they were cautious of unpredictable market movements.

TABLE 11: INVESTORS REACTION TO THE ISSUING OF BONUS SHARES.

Declaration of Bonus Shares No of Respondents
Buy 46
Sell 26
Hold 28
Total 100

INVESTORS REACTION ON ANNOUNCEMENT OF STOCK SPLIT
It was found that 64% of investors wanted to sell the stocks as they were uncertain
about the company‟s future growth. While 20% of the investors wished to hold on to the
stock and 16% wanted to buy the stock.

TABLE 12: INVESTORS REACTION ON ANNOUNCEMENT OF STOCK SPLIT

Declaration of Stock Split No of Respondents
Buy 16
Sell 64
Hold 20
Total 100

INVESTORS REACTION ON ANNOUNCEMENT OF COMPANY TO ACQUIRE
SIMILAR KIND OF COMPANY.
In case of acquisition 37% of the investors favored buying the stock because of long
term gain which was expected by the investor. While 36% of the investors tend to sell the
stock and 27% of the investors wish to hold on to the stock assuming that the share price will
touch the highs it did before.

TABLE 13: INVESTORS REACTION ON ANNOUNCEMENT OF COMPANY TO
ACQUIRE SIMILAR KIND OF COMPANY.

Declaration of ACQURING No of Respondents
Buy 37
Sell 36
Hold 27
Total 100

INVESTORS REACTION ON ANNOUNCEMENT OF A COMPANY GETTING
DELISTED FOR RESTRUCTURE PURPOSE.
It was disclosed that 85% wished to sell the stock as they didn‟t have faith in the
future of the company or cut their losses and No respondent indicated a willingness to buy
such scrip.

TABLE 14: INVESTORS REACTION ON ANNOUNCEMENT OF A COMPANY
GETTING DELISTED FOR RESTRUCTURE PURPOSE.

Declaration of Restructure Purpose No of Respondents
Buy 0
Sell 85
Hold 15
Total 100

REACTION ON ANNOUNCEMENT OF GOVT INCREASING STT.
In case of increase of STT by the Government 51% tend to sell the stock. While 39%
wish to Hold and 10% buy the Stock.

TABLE 15: INVESTORS REACTION ON ANNOUNCEMENT OF GOVT
INCREASING STT.

Increase in STT No of Respondents
Buy 10
Sell 51
Hold 39
Total 100

TABLE 16: TEST OF SIGNIFICANCE FOR RELATIONSHIP BETWEEN AGE OF
THE INVESTORS AND INVESTMENT DECSIONS.

H0: Investment decisions of investors are not influenced by various factors.
H1: Investment decisions of investors are influenced by various factors.

ANOVA
Sum of Df Mean Square F Sig.
Squares
Between
.880 3 .293 .400 .753
Marketing Groups
Conditions Within Groups 70.430 96 .734
Total 71.310 99
Between
5.350 3 1.783 .657 .581
Groups
Brokers
Within Groups 260.690 96 2.716
Total 266.040 99
Between
13.614 3 4.538 1.213 .309
Self Groups
Analysis Within Groups 359.136 96 3.741
Total 372.750 99
Between
3.106 3 1.035 .469 .705
Professional‟ Groups
s Within Groups 211.894 96 2.207
Total 215.000 99
Between
.661 3 .220 .079 .971
Friends Groups
Advice Within Groups 266.579 96 2.777
Total 267.240 99
Between
.539 3 .180 .099 .961
Intuition Groups
Total 175.310 99

It was hypothesized (Table 16) to know whether there is a significant relationship between
age of the investors and their investment decisions. However, the Anova tests revealed that
age does not have a significant influence on any factors. Hence the null hypothesis is
accepted that there is no significant association between the age of the investors and their
investment decisions.

TABLE 17: TEST OF SIGNIFICANCE BETWEEN INCOME OF THE INVESTORS
AND THEIR INVESTMENT PORTFOLIO
H0: There is no significant relationship between the income of the investors and their
H1: There is a significant relationship between the income of the investors and their

ANOVA
Sum of Df Mean F Sig.
Squares Square
Between
3.389 3 1.130 .730 .537
Commoditie Groups
s Within Groups 148.611 96 1.548
Total 152.000 99
Between
8.018 3 2.673 1.490 .222
Savings Groups
bank Within Groups 172.142 96 1.793
Total 180.160 99
Between
3.684 3 1.228 .749 .525
Mutual Groups
Funds Within Groups 157.276 96 1.638
Total 160.960 99
Between
.321 3 .107 .518 .671
Groups
Insurance
Within Groups 19.839 96 .207
Total 20.160 99
Between
11.538 3 3.846 2.236 .089
Stock Groups
Market Within Groups 165.102 96 1.720
Total 176.640 99
Between
.939 3 .313 .130 .942
Real Estate Groups
Total 233.000 99

It was hypothesized (Table 17) to know whether there is a significant relationship
between income of the investors and their portfolio. However, the anova tests revealed that
income does not have a significant influence on investment portfolio.

H0: Investors do not behave rationally towards various capital market information.
H1: Investors behave rationally towards various capital market information.

Age * Result announced by a company is better than market
expectation.
Cross tabulation

Count Result announced by a company is
better than market expectation.
Buy Sell Hold Total
21-30 15 4 3 22
31-40 27 5 11 43
Age
41-50 10 2 5 17
51 > 16 1 1 18
Total 68 12 20 100

Chi-Square Tests
Value df Asymp. Sig. (2-sided)
Pearson Chi-Square 6.613a 6 .358
Likelihood Ratio 7.251 6 .298
Linear-by-Linear
.991 1 .319
Association
N of Valid Cases 100
a. 6 cells (50.0%) have expected count less than 5. The minimum expected count
is 2.04.

The value of chi-squared statistic is 6.613. The chi-squared statistic has 6 degree of
freedom. The p value (.358) is more than 0.5. Hence there is no significant relationship
between Age and If Company results are good.

Age * Result announced by a company is not as per market
expectation.
Cross tabulation

Count Result announced by a company is not as
per market expectation.
Buy Sell Hold Total
21-30 4 15 3 22
31-40 6 30 7 43
Age
41-50 2 10 5 17
51 > 2 14 2 18
Total 14 69 17 100

Chi-Square Tests
Linear-by-Linear
.298 1 .585
Association
a. 6 cells (50.0%) have expected count less than 5. The minimum expected count is 2.38.

between Age and If Company results are not good.

Age * When company declares Dividends.
Cross tabulation

Count When company declares Total
Dividends.
Buy Sell Hold
21-30 11 3 8 22
31-40 25 6 12 43
Age
41-50 9 3 5 17
51 > 12 2 4 18
Total 57 14 29 100

Chi-Square Tests
Value Df Asymp. Sig. (2-sided)
Linear-by-Linear
.865 1 .352
Association
a. 4 cells (33.3%) have expected count less than 5. The minimum expected count is
2.38.

between Age and If Company announces Dividends.

Age * When company issues bonus shares.
Cross tabulation

Count When company issues bonus
shares. Total
Buy Sell Hold
21-30 7 8 7 22
31-40 23 10 10 43
Age
41-50 7 5 5 17
51 > 9 3 6 18
Total 46 26 28 100

Chi-Square Tests
Linear-by-Linear Association .081 1 .776
a. 3 cells (25.0%) have expected count less than 5. The minimum expected count is 4.42.

between Age and If Company issues bonus shares.

Age * Announcement by your company of acquiring
similar kind of company.
Cross tabulation

Count Announcement by your company
of acquiring similar kind of
company. Total
Buy Sell Hold
21-30 9 8 5 22
31-40 15 16 12 43
Age
41-50 8 5 4 17
51 > 5 7 6 18
Total 37 36 27 100

Chi-Square Tests
a
Pearson Chi-Square 1.792 6 .938
Linear-by-Linear
.403 1 .525
Association
a. 2 cells (16.7%) have expected count less than 5. The minimum expected
count is 4.59.

between Age and If Company acquiring similar kind of company.

Age * Company getting delisted for Restructure
purpose.
Cross tabulation

Company getting delisted
for Restucture purpose.
Sell Hold Total
21-30 17 5 22
31-40 37 6 43
Age
41-50 14 3 17
51 > 17 1 18
Total 85 15 100

Chi-Square Tests
a
Pearson Chi-Square 2.420 3 .490
Linear-by-Linear
1.656 1 .198
Association
2.55.

between Age and Restructure purpose.

Age * If Government increases STT. Cross
tabulation

Count If Government increases
STT. Total
Buy Sell Hold
21-30 3 10 9 22
31-40 4 22 17 43
Age
41-50 2 8 7 17
51 > 1 11 6 18
Total 10 51 39 100

Chi-Square Tests
Linear-by-Linear
.000 1 .999
Association
1.70.

freedom. The p value (.962) is more than 0.5. Hence there is no significant relationship.

Based on the P values of various capital market information. It is concluded that
investors do not behave rationally to capital market information.

FINDINGS

 The research found that 65% of the people were below 40 years of age and were
relatively young.

 When the income profiles of the investors were analyzed, It was found that 57% of
the respondent were under the income level of below Rs 4,00,000/-, Around 38% of
the respondent were under 2, 00,000/-.

 When the results announced by the company were better 68% of the respondent
wanted to buy more shares. 20% of the investors preferred to hold on to their existing
earnings and 12% of the investors preferred to book their profits.

 Unlike a dividend announcement in case of bonus announcement, it was found a
lesser percentage of investors willing to buy more shares. Only 46% of the investors
were willing to buy in case of bonus announcement against 57% of investors who
were willing to buy in the case of dividend announcement. The number of investors
willing to sell the shares is slightly on the higher side with 26% of the investors
willing to book profits on bonus announcement against 14% in case of dividends. The
number of cautious investors is more or less the same with 29% of dividend and 28%
of bonus announcement investors preferred the wait and watch policy.

 It was hypothesized that investors behave rationally towards various capital market
information. Using Chi-square test to find if there is any association between investor
behavior and various capital market information, based on the P values of various
capital market information. It is concluded that investors do not behave rationally to
capital market information.

 Test of significance shows there is no relationship between age of the investors and
their investment decisions.

 Test of significance shows that income of the investors and their portfolio have no
relationship between them.

Conclusion

 The research brings out certain characteristics of investors living in Belgaum. The
ability to understand the judgment criteria like rationality and irrationality in
investment pattern and behavior which enables the investor to be cautious as its
consequences affect the lifestyle, asset value and relationship with others. The present
study has shown that investors prefer investing in both primary and secondary market
instruments.

 Investment decisions are influenced by various information available in the market.
The investors stay invested in certain companies for the long term growth in their
earning capacity.

 Investor‟s decisions are influenced by psychological factors and behavioral in
accordance with the research results shown in other countries. Anyone ambitious of
achieving a threshold of success in the capital market must acquire adequate
knowledge in behavioral finance.

Influence of Capital Market Information on Investors Decisions

Influence of Capital Market Information on Investors Decisions

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