TABLE OF CONTENTS

A

PROJECT REPORT

ON

THE INVESTORS PREFERENCES IN THE SHARE MARKET

IN

INDIA INFO LINE HYDERABAD

ABSTRACTThe value of shares certificate representing one unit of ownership line a corporation, mutual fund, or ltd partnership.

The shares place a vital role in stock exchange where each share contains a special value of different companies by the process of purchase and sale through the brokers.

This share transaction are been done to know the value of each share in the each company whether the share value is less or more.

The role in the effective management of the funds of the organization and thus lead to the achievement of the goal of financial management of more return on investment than the cost of acquiring the funds for investment.

People purchase and sell shares for many reasons. Some purchase shares as investment of surplus money which can be easily converted into cash whenever the need arises. Some purchase shares as a source of income in the form of dividends. There is one more category of persons which purchase and sell shares for speculation purpose all categories of person are interested in knowing the value share purchased or sold by them the term value or Yield value the face value or Market value intrinsic value or Yield value the fare value of a share is the value assigned to it by promoters of the company and this value of a share is the value share certificate the market value is the value is based on the worth of the company yield value of share of a company is ascertained on the basis of its prospective yield or income.

CONTENTSS.NOCONTENTSPAGENO

1CHAPTER-I

INTRODUTION

OBJECTIVES OF THE STUDY

NEEDS OF THE STUDY

SCOPE OF THE STUDY RESEARCH & METHODS

MEANS OF DATA -COLLECTION

1-7

2CHAPTER-II

INDUSTRY PROFILECOMPANY PROFILE

8-55

3CHAPTER-III

REVIEW OF LITERATURE

56-58

4CHAPTER-IV

DATA ANALYSIS & INTERPRETATION

59-71

5CHAPTER-VFINDING

SUGGESTIONS

CONCLUSION

72-74

6CHAPTER-VI

ANNEXUREBIBILOGRAPHYREFRENCES

75-78

CHAPTER-I

INTRODUCTION

OBJECTIVES

NEED OF STUDY

RESEARCH & METHODSMEANS OF DATA -COLLECTION

ANALYZING TECHNIQUE

INTRODUCTION

Investment may be defined as an activity that commits funds in any financial form in the present with an expectation of receiving additional return in the future. The expectations bring with it a probability that the quantum of return may vary from a minimum to a maximum. This possibility of variation in the actual return is known as investment risk. Thus every investment involves a return and risk.

Investment is an activity that is undertaken by those who have savings. Savings can be defined as the excess of income over expenditure. An investor earns/expects to earn additional monetary value from the mode of investment that could be in the form of financial assets.

The three important characteristics of any financial asset are:

Return-the potential return possible from an asset.

Risk-the variability in returns of the asset form the chances of its value going down/up.

Liquidity-the ease with which an asset can be converted into cash.Investors tend to look at these three characteristics while deciding on their individual preference pattern of investments. Each financial asset will have a certain level of each of these characteristics.

INVESTORS PROFILE

An investor normally prioritizes his investment needs before undertaking an investment. So different goals will be allocated to different proportions of the total disposable amount. Investments for specific goals normally find their way into the debt market as risk reduction is of prime importance, this is the area for the risk-averse investors and here, Investors preferences are generally the best option. One can avail of the benefits of better returns with added benefits of anytime liquidity by investing in open-ended debt funds at lower risk, this risk of default by any company that one has chosen to invest in, can be minimized by investing in share market as the fund managers analyze the companies financials more minutely than an individual can do as they have the expertise to do so.

Moving up the risk spectrum, there are people who would like to take some risk and invest in equity funds/capital market. However, since their appetite for risk is also limited, they would rather have some exposure to debt as well. For these investors, balanced funds provide an easy route of investment, armed with expertise of investment techniques, they can invest in equity as well as good quality debt thereby reducing risks and providing the investor with better returns than he could otherwise manage. Since they can reshuffle their portfolio as per market conditions, they are likely to generate moderate returns even in pessimistic market conditions.

Next comes the risk takers, risk takers by their nature, would not be averse to investing in high-risk avenues. Share markets find their fancy more often than not, because they have historically generated better returns than any other avenue, provided the money was judiciously invested. Though the risk associated is generally on the higher side of the spectrum, the return-potential compensates for the risk attached.

OBJECTIVES To find if there is any relationship between income levels and the investment scheme preferred in capital markets.

To rate the areas of their knowledge based on a scale of 1-10- on the capital market instruments.

To analyze if there is a pattern between the occupation and the types of investments of the investors preferences To find out the preferences in the way of trading in stocks (Online/offline trading)

To know the time period for their Investments in the capital markets.

To study the origin, growth, and the regulation of capital markets in India.

NEED OF THE STUDY It is to find out that people want to Invests in which type of Instruments

To analyses Indian capital markets.

SCOPE OF THE STUDY The study mainly focuses on Indian Share market its history and latest development in the country in Share market.

The study also keeps a birds-eye view on global Share market and its development.

The study vastly covered the aspects of Share market trading, clearing and settlement mechanisms in India commodity exchanges.

The scope of the study is limited to Investors preferences share market.

RESEARCH & METHODS Research population: people of Hyderabad and Secunderabad.

Sample Size:200

Techniques used to select the sample: Simple Random Sampling.

Questionnaire is designed in such a manner that it has minimal ambiguity, and the respondents can easily analyze it.

MEANS OF DATA COLLECTION Primary data collections through Questionnaire, Telephonic Interview, meetings.

Secondary data collection through External studies such as articles, newspapers, published journals or books.Analyzing Technique: Chi-square technique and simple percentages.Assumptions:

The assumptions that will be taken into consideration during this study are : The sample of 200 being chosen is a reflection of all the people in Hyderabad and Secunderabad. The factors effecting the decision of the population are limited to those mentioned in the Questionnaire.SAMPLING TECHNIQUE:

As already mentioned above, we have chosen people based on the random sampling technique. Hence, the sampling frame associated here was the population of Hyderabad and Secunderabad. And over here, the sampling technique used, will enable us to use Chi-square technique, which helps us in obtaining valuable information from the data acquired through the research.CHAPTER II

INDUSTRY PROFILE COMPANY PROFILE

BRIEF HISTORY OF INDIAN CAPITAL MARKETS

The origination of the Indian securities market may be traced back to 1875, when 22 enterprising brokers under a Banyan tree established the Bombay Stock Exchange (BSE). Over the last 125 years, the Indian securities market has evolved continuously to become one of the most dynamic, modern and efficient securities Markets in Asia. Today, Indian markets conform to international standards both in Terms of structure and in terms of operating efficiency.

There are 22 stock exchanges in India, the first being the Bombay Stock Exchange (BSE), which began formal trading in 1875, making it one of the oldest in Asia. Over the last few years, there has been a rapid change in the Indian securities market, especially in the secondary market. Advanced technology and online-based transactions have modernized the stock exchanges. In terms of the number of companies listed and total market capitalization, the Indian equity market is considered large relative to the countrys stage of economic development. The number of listed companies increased from 5,968 in March 1990 to about 10,000 by May 1998 and market capitalization has grown almost 11 times during the same period.

The capital market consists of primary and secondary markets. The primary market in which public issue of securities is made through a prospectus is a retail market and there is no physical location. Offer for subscription to securities is made to investing community.

The primary market deals with the issue of new instruments by the corporate sector such as equity shares, preference shares and debt instruments. Central and State governments, various public industrial units (PSUs), statutory and other authorities such as state electricity boards and port trusts also issue bonds/debt instruments.

Since 1991/92, the primary market has grown fast as a result of the removal of investment restrictions in the overall economy and a repeal of the restrictions imposed by the Capital Issues Control Act. In 1991/92, Rs.62.15 billion was raised in the primary market. This figure rose to Rs. 276.21 billion in 1994/95. since 1995/996, however, smaller amounts have been raised due to the overall downtrend in the market and tighter entry barriers introduced by SEBI for investor protection.

The secondary market or stock exchange is a market for trading and settlement of securities that have already been issued. The investors holding securities sell securities through registered brokers/sub-brokers of the stock exchange. Investors who are desirous of buying securities purchase securities through registered brokers/sub-brokers of the stock exchange. It may have a physical location like a stock exchange or a trading floor.

Since 1995, trading in securities is screen-based and Internet-based trading has also made an appearance in India. The secondary market consists of 23 stock exchanges including the National Stock Exchange, over Counter Exchange of India (OTCEI) and Inter Connected Stock Exchange of India Ltd.

The secondary market provides a trading place for the securities already issued, to be bought and sold. It also provides liquidity to the initial buyers in the primary market to re offer the securities to any interested buyer at any price, if mutually accepted. An active secondary market actually promotes the growth of the primary market and capital formation because investors in the primary market are assured of a continues market and they can liquidate their investments.

India has seen a tremendous change in the secondary market for equity. Its equity market will most likely be comparable with the worlds most advanced secondary markets within a year or two. The key ingredients that underlie market quality in Indias equity markets are:

Exchanges based on open electronic limit order book;

Nationwide integrated market with a large number of informed traders and fluency of short or long positions; and

No counter party risk.

Capital Market Participants: there are several major players in the primary market. These include the merchant bankers, mutual funds, financial institutions, foreign institutional investors (FIIs) and individual investors. In the secondary market, there are the stock brokers (who are members of the stock exchanges), the mutual funds, financial institutions, foreign institutional investors (FIIs), and individual investors. Registrars and Transfer Agents, Custodians and Depositories are capital market intermediaries that provide important infrastructure services for both primary and secondary markets.

Market regulation: it is important to ensure smooth working of capital market, as it is the arena where the players in the economic growth of the country. Various laws have been passed from time to time to meet this objective.

The financial market in India was highly segmented until the initiation of reforms in 1992-93 on account of a variety of regulations and administered prices including barriers to entry. The reform process was initiated with the establishment of Securities and Exchange Board of India (SEBI). The legislative framework before SEBI came into being consisted of three major Acts governing.The Capital markets:

The Capital Issues Control Act 1947, which restricted access to the securities market and controlled the pricing of issues.

The Companies Act,1956, which sets out the code of conduct for the corporate sector In relation to issue, allotment and transfer of securities, and disclosures to be made in Public Issues.

The Securities Contracts (Regulation) Act, 1956, which regulates transactions in Securities through control over stock exchanges. In addition, a number of other acts, e.g., the Public Debt Act, 1942, the Income Tax Act, 1961, the Banking Regulation Act, 1949 have substantial bearing on the working of the securities market.

INTRODUCTION TO BOMBAY STOCK EXCHANGE

Bombay Stock Exchange Limited is the oldest stock exchange in Asia with a rich heritage. Popularly known as BSE, it was established as The Native Share & Stock Brokers Association in 1875. It is the first stock exchange in the country to obtain permanent recognition in 1956 from the Government of India under the Securities Contracts (Regulation) Act, 1956.. The Exchanges pivotal and preeminent role in the development of the Indian capital market is widely recognized and its index, SENSEX, is tracked worldwide. Earlier an Association of Persons (AOP), The Exchange is now a demutualised and corporatized entity incorporated under the provisions of the Companies Act, 1956, pursuant to the BSE (Corporatizations and Demutualization) Scheme, 2005 notified by the Securities and Exchange Board of India (SEBI).

In terms of organization structure, the Board formulates larger policy issues and exercises over-all control. The committees constituted by the Board are broad based. The Managing Director and a management team of professionals manage the day-to-day operations of the Exchange.

The Exchange has a nation-wide reach with a presence in 417 cities and towns of India. The systems and processes of the Exchange are designed to safeguard market integrity and enhance transparency in operations. During the year 2004-2005, the trading volumes on the Exchange showed robust growth.

The Exchange provides an efficient the transparent market for trading in equity, debt instruments and derivatives. The BSEs On Line Trading System (BOLT) is a proprietary system for the Exchange and is BS 7799-2-2002 certified. The surveillance and clearing & settlement functions of the Exchange are ISO 9001:2000 certified.

INTRODUCTION TO NATIONAL STOCK EXCHANGE

The National Stock Exchange of India was promoted by leading financial institution at the behest of the government of India, and was incorporated in November 1992 as a tax-paying company. In April 1993 it was recognized as a Stock exchange under the Securities Contracts (Regulations) Act, 1956. NSE commenced operations in the Wholesale Debt Market (WDM) segment in June 1994. The Capital Market (Equities) segment of the NSE commenced operations in November 1994, while operations in the Derivates segment commenced in June 2000.

The National Stock Exchange of India (NSE) is one of the largest and most advanced stock markets in India. The NSE is the worlds third largest stock exchange in terms of transactions. It is located in Mumbai, the financial capital of India. The NSE VSAT has 2791 terminals that cover 334 cities across India.NSE has remained in the forefront of modernization of Indias capital and financial markets and its pioneering efforts include: Setting up the first clearing corporation National Securities Clearing Corporation Ltd. In India. NSCCL was a landmark in providing innovation on all spot equity market (and later, derivatives market) trades in India. Co-promoting and setting up of National Securities Depository Limited, first depository in India. Setting up of S&P CNX Nifty. NSE pioneered commencement of Internet Trading in February 2000, which led to the wide popularization of the NSE in the broker community. Being the first exchange that, in 1996, proposed exchange traded derivatives, particularly on the equity index, in India. After four years of policy and regulatory debate and formulations, the NSE was permitted to start trading equity derivatives three days after the BSE. Being the first exchange to trade ETFs (exchange traded funds) in India.

INTRODUCTION TO SECURITIES AND EXCHANGE BOARD OF INDIA SEBI

In 1988 the Securities and Exchange Board of India (SEBI) was established by Government of India through and 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, statutory and autonomous regulatory boards 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.

The regulatory body for the investment market in India. The purpose of this board is to maintain stable and efficient markets by crating and enforcing regulations in the market place.

The Securities and exchange Board of India is similar to U.S. SEC. the SEBI is relatively new (1992) but is a vital component in improving the quality of the financial markets in India both to attract foreign investors and to protect Indian investors.

Its main functions are providing for Regulating the business in stock exchange and any other securities markets.

Registering and Regulating the working of stock brokers, sub-brokers, share transfer agents, bankers to an issue, trustees of trust deeds, registrars to an issue, merchant bankers, underwriters, portfolio managers, investment advisers and such other intermediaries who may be associated with securities markets in any manner.

Registering and Regulating the working the depositories, participants, custodians of securities, foreign institutional investor, credit rating agencies and such other intermediaries as the Board may, by notification, specify in this behalf.

Registering and Regulating the working of venture capital funds and collective investment schemes including mutual funds;

Promoting and Regulating self-regulatory organizations;

Prohibiting fraudulent and unfair trade practices relating to securities markets;

Promoting Investors education and training of intermediaries of securities markets;

Prohibiting insider trading in securities;

Regulating substantial acquisition of shares and takeover of companies; Calling for information from, undertaking inspection, conducting inquires and audits of the stock exchanges, mutual funds and other persons associated with the securities market and intermediaries and self-regulatory organizations in the securities market;

Calling for information and record from any bank or any other authority or board or corporation established or constituted by or under any Central, State or Provincial Act in respect of any transaction in securities which is under investigation or inquiry by the Board.

Performing such functions and exercising such powers under the provisions of securities Contracts (Regulation) Act, 1956, as may be delegated to it by the Central Government.

Levying fees or other charges for carrying out the purpose of this section;

Performing such other functions as may be prescribed.

PERSONAL INVESTMENTS PREFERENCES

Before I dive into the definition of financial terms it is important that you have a basic understanding of stocks and bonds. There are certainly more variations of each than I will cover here, but I dont want to confuse you, so I will keep it simple.

Stocks represent shares of ownership I a public company. Examples of public companies include IBM, Microsoft, Ford, Coca-Cola, and General Mills. Stocks are the most common ownership investment traded on the market.

Stock is the capital raised by a corporation, through the issuance and sale of shares. A shareholder is any person or organization which owns one or more shares of a corporations stock. The aggregate value of a corporations issued shares is its market capitalization.

In finance, a bond is a debt security, in which the issuer owes the holders a debt and is obliged to repay the principal and interest (the coupon). Other stipulations may also be attached to the bond issue, such as the obligation for the issuer to provide certain information to the bond holder, or limitations on the behavior of the issuer. Bonds are generally issued for a fixed term (the maturity) longer than one year.A bond is just a loan, but in the form of a security, although terminology used is rather different. The issuer is equivalent to the borrower, the bond holder to the lender and the coupon to the interest. Bonds enable the issuer to finance long-term investments with external funds.There are many other types of investments other than stocks and bonds (including annuities, real estate, and precious metals), but the majority of people invest in stocks and/or bonds.

MUTUAL FUNDS

History:

When three Boston securities executives pooled their money together in 1924 to create the first mutual fund, they had no idea how popular mutual funds would become.

The idea of pooling money together for investing purposes started in Europe in the mid-1800s. The first pooled fund in the U.S. was created in 1893 for the faculty and staff of Harvard University On March 21st,1924 the first official mutual fund was born. It was called the Massachusetts Investors Trust.

The mutual fund industry in India started in 1963 with the information of Unit Trust of India, at the initiative of the Government of India and Reserve Bank the though the growth was slow, but it accelerated from the year 1987 when non-UTI players entered the industry.Definition:

A Mutual Fund is nothing more than a collection of stocks and /or bonds. You can think of a mutual fund as a company that brings together a group of people and invests their money in stocks, bonds, and other securities. Each investor owns shares, which represent a portion of the holdings of the fund.

A mutual fund is simply a financial intermediary that allows a group of investor to pool their money together with predermined investment objective. The mutual fund will have a fund manager who is responsible for investing the pooled money into specific securities (usually stocks or bonds). When you invest in a mutual fund, you are buying shares (or portions) of the mutual fund and become a shareholder of the fund.

Mutual funds are one of the best investments ever created because they are very cost efficient and very easy to invest in (you dont have to figure out which stocks or bonds to buy).

By pooling money together in a mutual fund, investors can purchase stocks or bonds which much lower trading costs then if they tried to do it on their own. But the biggest advantage to mutual funds is diversification.You can make money from a mutual fund in three ways:

1) Income is earned from dividends on stocks and interest on bonds. A fund pays out nearly all of the income it receives over the year to fund owners in the form of distribution.

2) If the fund sells securities that have increased in price, the fund has a capital gain. Most funds also pass on these gains to investor in a distribution.

3) If fund holdings increase in price but are not sold by the fund manager, the funds shares increase in price. You can then sell your mutual fund shares for a profit.Advantages of investing in Mutual Funds:

Professional Management

Investment diversification

Liquidity

Explicit investment goals

Simple reinvestment programsDisadvantages of investing in Mutual Funds:

Many funds charge hefty fees, leading to lower overall returns.

Over time, statistics have shown that most actively managed funds tend to underperform their benchmark averchmark averages.

Mutual funds cannot be bought or sold during regular trading hours, but instead are priced just once per day.EQUITITES:

An instrument that signifies an ownership position (called equity) in a corporation, and represents a claim on its proportional share in the corporations assets and profits.

Ownership in the company is determined by the number of shares a person owns divided by the total number of shares outstanding. For example, if a company has 1000 shares of stock outstanding and a person owns 50 of them, then he/she owns 5% of the company. Most stock also provides voting rights, which give shareholders a proportional vote in certain corporate decisions. Only a certain type of company called a corporation has stock; other types of companies such as sole proprietorships and limited partnerships do not issue stock also called equity or stock or corporate stock.IPO:

IPO-Initial Public Offering is the first sale of stock by a private company to the public. IPO are often smaller, younger companies seeking capital to expand their business.

An Initial Public Offering (IPO) is the first sale of a corporations common shares to public investors. The main purpose of an IPO is to raise capital for the corporation. While IPOs are effective at raising capital, they also impose heavy legal compliance and reporting requirements. The term only refers to the first public issuance of a companys shares; any later public issuance of shares is referred to as a Secondary Market Offering.A companys first sale of stock to the public. Securities offered in an IPO are often, but not always, those of young, small companies seeking outside equity capital and a public market for their stock. Investors purchasing stock in IPOs generally must be prepared to accept very large risks for the possibility of large gains. IPOs by investment companies (closed end funds) usually contain underwriting fees, which represent a load to buyers.

DERIVATIVESIntroduction:

The term Derivative indicates that it has no independent value i.e. its value is entirely derived from the value of the underlying asset. The underlying asset can be securities, commodities, bullion, currency, livestock or anything else. In other words, Derivative means a forward, future, option or any other hybrid contract of pre determined fixed duration, linked for the purpose of contract fulfillment o the value of a specified real or financial asset or to an index of securities.

With Securities Laws (Second Amendment) Act, 1999, Derivatives has been included in the definition of Securities.

The term Derivative has been defined in Securities Contracts (Regulations) Act, as:-A Derivative includes: A security derived from a debt instrument, share, loan, whether secured or unsecured, risk instrument or contract for differences or any other from of security;

A contract which derives its value from the prices, or index of prices, of underlying securities;

INTRODUCTION OF DERIVATIVES IN INDIAThe initial steps to launch derivatives were taken in 1995 with the introduction of the Securities Laws (Amendment) Ordinance, 1995 that withdrew the prohibition on trading in options on securities in the Indian stock market. In November 1996, a 24-member committee was set up by the Securities Exchange Board of India (SEBI) under the chairmanship of LC Gupta to develop an appropriate regulatory framework for derivatives trading. The committee recommended that the regulatory framework applicable to the trading of securities would also govern the trading of derivatives.The plan to introduce derivatives in India was initially mooted by the National Stock Exchange (NSE) in 1995. The main purpose of this plan was to encourage greater participation of foreign institutional investors (FIIs) in the Indian stock exchanges.

Derivatives were introduced in a phased manner. Initially, trading was restricted to index futures contracts based on the S&P CNX Nifty Index and BSE-30 (Sensex) Index. Later, trading was extended to index options (based on the same indices) in June 2009, and options on individual securities in July 2009. SEBI also permitted the launch of futures contracts on individual stocks in November 2009

On June 9, 2009, the Bombay Stock Exchange (BSE) introduced Indias first derivative instrument- the BSE- 30 (Sensex) index futures. It was introduced with three month trading cycle-the near month (one), the next month (two) and the far month (three). The National Stock Exchange (NSE) followed a few days later, by launching the S&P CNX Nifty index futures on June 12, 2009.

In spite of these encouraging developments. Industry analysts felt that the derivatives market had not yet realized its full potential. Analysts pointed out that the equity derivative markets on the BSE and NSE had been limited to only four products- index futures, index options and individual stock futures and options which were limited to certain certain select stocks.PARTICIPANTS IN DERIVATIVES MARKET

Hedgers:

Hedgers are those who protect themselves from the risk associated with the price of an asset by using derivatives. A person keeps a close watch upon the prices discovered in trading and when the comfortable price is reflected according to his wants, he sells futures contracts. In this way be gets an assured fixed price of his produce.

In general, hedgers use futures for protection against adverse future price movements in the underlying cash commodity. Hedgers are often businesses, or individuals, who at one point or another deal in the underlying cash commodity.Speculators:

Speculators are somewhat like a middleman. They are never interested in actual owing the commodity. They will just buy from one end and sell it to the other in anticipation of future price movements. They actually bet on the future movement in the price of an asset. They are the second major group of future players. These participants include independent floor traders and investors. They handle trades for their personal clients or brokerage firms.

Buying a futures contract in anticipation of price increases is known as going long. Selling a futures contract in anticipation of a price decrease is known as going long. Selling a futures contract in anticipation in futures trading has increased with the availability of alternative methods of participation.

Arbitrators:

According to dictionary definition, a person who has been officially chosen to make a decision between two people or groups who do not agree is known as Arbitrator. In commodity market Arbitrators are the people who take the advantage of a discrepancy between prices in two different markets. If he finds future prices of a commodity edging out with the cash price, he will take offsetting positions in both the markets to lock in a profit. Moreover the commodity futures investor is not charged interest on the difference between margin and the full contract value.What is the Structure of Derivative Markets in India?

Derivative trading in India takes one place either place either on separate and independent Derivative Exchange or on a separate segment of an existing Stock Exchange. Derivative Exchange/Segment function as a Self-Regulatory Organization (SRO) and SEBI acts as the oversight regulator. The clearing & settlement of all trades on the Derivative Exchange/Segment would have to be through a Clearing Corporation/House, which is independent in governance and membership from the Derivative Exchange/Segment.What is a Futures Contract?

Futures Contract means a legally binding agreement to buy or sell the underlying security on a future date. Future contracts are the organized/standardized contracts in terms of quantity, quality (in case of commodities), delivery time and pace for settlement on any date in future. The contract expires on a pre-specified date which is called the expiry date of the contract. On expiry, futures can be settled by delivery of the underlying asset or cash.. Cash settlement enables the settlement of obligations arising out of the future/option contract in cash.What is an Option Contract?

Options Contract is a type of Derivatives Contract, which gives the buyer/holder of the contract the right (but not the obligation) to buy/sell the underlying asset at a predetermined price within or at end of a specified period. The buyer/holder of the option purchases the right from the seller/writer for a consideration which is called the premium. The seller/writer of an option is obligated to settle the option as per the terms of the contract when the buyer/holder exercises his right. The underlying asset could include securities, an index of prices of securities etc.What are Index Futures and Index Option Contracts?Futures contra cat based on an index i.e. the underlying asset is the index, are known as index Futures contracts. For example, futures contract on NIFTY Index and BSE-30 Index. These contracts derive their value from the value of the underlying index.Similarly, the options contracts, which are based on some index, are known as Index options contract. However, unlike Index Futures, the buyer of Index Option Contracts has only the right but not the obligation to buy/sell the underlying index on expiry. Index Option Contracts are generally European Style options i.e. they can be exercised/assigned only on the expiry date.

An Index in turn derives its value from the prices of securities that constitute the index and is created to represent the sentiments of the market as a whole or of a particular sector of the economy. Indices that represent the whole market are broad based indices and those that represent a particular sector are sect oral indices. In the beginning futures and options were permitted only on S&P Nifty and BSE Sensex. Subsequently, sect oral indices were also permitted for derivatives trading subject to fulfilling the eligibility criteria. Derivative contracts may be permitted on an index if 80% of the index constituents are individually eligible for derivative trading. However, no single ineligible stock in the index shall have a weight age of more than 5% in the index. The index is required to fulfill the eligibility criteria even after derivatives trading on the index have begun. If the index does not fulfill the criteria for 3 consecutive months, then derivative contracts on such index would be discontinued.

By its very nature, index cannot be delivered on maturity of the Index future or Index option contracts therefore, these contracts are essentially cash settled on Expiry.What is the regulatory framework of Derivatives markets in India?

With the amendment in the definition of securities under SC(R) A (to include derivatives contracts in the definition of securities), derivatives trading takes place under the provisions of the Securities Contracts (Regulation) Act, 1956 and the Securities and Exchange Board of India Act, 1992.

Dr.L.C Gupta Committee constituted by SEBI had laid down the regulatory framework for derivative trading in India. SEBI has also framed suggestive byelaw for Derivatives Exchanges/Segments and their Clearing Corporation/House, which lays down the provisions for trading and settlement of derivative contracts. The Rules, Bye-laws & Regulations of the Derivatives Segment of the Exchanges and their Clearing Corporation/House have to be framed in line with the suggestive Bye-laws. SEBI has also laid the eligibility conditions for Derivative Exchange/Segment and its Clearing Corporations/House. The eligibility conditions have been framed to ensure that Derivatives Exchange/Segment & Clearing Corporation/House provide transparent trading environment, safety & integrity and provide facilities for redressal of investor grievances. Some of the important eligibility conditions are:-

Derivatives trading to take place through on on-line screen based Trading System.

The Derivatives Exchange/Segment shall on-line surveillance capability to monitor positions, prices, and volumes on a real time basis so as to deter market manipulation.

The Derivatives Exchange/Segment should have arrangements for dissemination of information about trades, quantities and quotes on a real time basis through at least two information-vending networks, which are easily accessible to investors across the country.

The Derivatives Exchange/Segment should have arbitration and investor grievances redressal mechanism operative from all the four areas/regions of the country.

The Derivatives Exchange/Segment should have satisfactory system of monitoring investor complaints and preventing irregularities in trading.

The Derivative Segment of the Exchange would have a separate Investor Protection Fund.

The Clearing Corporation/House shall perform full innovation, i.e., the Clearing Corporation/House shall interpose itself between both legs of every trade, becoming the legal counterparty to both or alternatively should provide an unconditional guarantee for settlement of all trades.

The Clearing Corporation/House shall have the capacity to monitor the overall position of Members across both derivatives market and the underlying securities market for those Members who are participating in both.

The level of initial margin on Index Futures Contracts shall be related to the risk of loss on the position. The concept of value-at-risk shall be used in calculating required level of initial margins. The initial margins should be large enough to cover the one-day loss that can be encountered on the position on 99% of the days.

The Clearing Corporation/House shall establish facilities for electronic funds transfer (EFT) for swift movement of margin payments.

In the event of a Member defaulting in meeting its liabilities, the Clearing Corporation/House shall transfer client positions and assets to another solvent Member or close-out all open positions.

The Clearing Corporation/House should have capabilities to segregate initial margins deposited by clearing Members for trades on their own account and on account of his client. The Clearing Corporation/House shall hold the client margin money in trust for the client purposes only and should not allow its diversion for any other purpose.

The Clearing Corporation/House shall have a separate Trade Guarantee Fund for the trades executed on Derivative Exchange/Segment.

Presently, SEBI has permitted Derivative trading on the Derivative Segment of BSE and the F&O Segment of NSE.INTRODUCTION TO COMMODITY MARKETCommodity markets are markets where raw or primary products are exchanged. These raw commodities are traded on regulated exchanges, in which they are bought and sold in standardized Contracts. Commodity markets define and trade contracts for delivery of any product or service that can be characterized in an interchangeable way. They are complex, and include a wide array of instruments to manage risk.History:

Historically, dating from ancient Sumerian use of sheep or goats, or other peoples using pigs, rare seashells, or other items

As commodity money, people have sought ways to standardize and trade contracts in the delivery of such items, to render trade itself more smooth and predictable.

The modern commodity markets have their roots in the trading of agricultural products. While wheat and corn, cattle and pigs, were widely traded using standard instruments in the 19th century in the United Sates, other basic foodstuffs as soybeans were only added quite recently in most markets. For a commodity market to be established there must be very broad consensus on the variations in the product that make it acceptable for one purpose or another.

The economic impact of the development of commodity markets is hard to over-estimate. Though the 19th century the exchanges became effective spokesmen for, and innovators of, improvements in transportation, warehousing, and financing, which paved the way to expanded interstate and international trade.

Overview of commodities exchanges in India.

Forward Markets Commission (FMC) headquartered at Mumbai is a regulatory authority, which is overseen by the Ministry of Consumer Affairs and Public Distribution, Government of India. It is a statutory body set up in 1953 under the Forward Contracts (Regulation) Act, 1952.Introduction to NCDEX-Mumbai

National Commodity & Derivatives Exchange Limited (NCDEX) is a professionally managed online multi commodity exchange promoted by ICICI Bank Limited (ICICI Bank), Life Insurance Corporation of India (LIC), National Bank for Agriculture and Rural Development (NABARD) and National Stock Exchange of India Limited (NSE). Punjab National Bank (PNB), CRISIL Limited (formerly the Credit Rating Information Services of India Limited), Indian Farmers Fertilizer Cooperative Limited (IFFCO) and Canara Bank by subscribing to the equity shares have joined the initial promoters as shareholders of the Exchange. NCDEX is the only commodity exchange in the county promoted by national level institutions. This unique parentage enables it to offer a bouquet of benefits, which are currently in short supply in the commodity markets. The institutional promoters of NCDEX are prominent players in their respective fields and bring with them institutional building experience, trust, nationwide reach, technology and risk management skills.

NCDEX is a public limited company incorporated on April 23,2003 under the Companies Act, 1956. It has commenced its operations on December 15, 2003. NCDEX is a nation-level, technology d driven de-metalized on-line commodity exchange with an independent Board of Directors and professionals not having any vested interest in commodity markets. It is committed to provide a world-class commodity exchange platform for market participants to trade in a wide spectrum of commodity derivatives driven by best global practices, professionalism and transparency.

Forward Market Commission regulates NCDEX in respect of fates trading in commodities. Besides, NCDEX is subjected to various laws of the land like the Companies Act, Stamp Act, Contracts Act, Forward Commission (Regulation) Act and various other legislations, which impinge on its working. NCDE is located in Mumbai and offers facilities to its members in more than 550 NCDEX currently facilitates trading of 48 commodities centers throughout India.Introduction to MCX- MumbaiMCX is an independent and de-mutual zed multi commodity exchange. It was inaugurated on November 10, 2003 by Mr.Mukesh Ambani, Chairman and Managing Director, Reliance Industries, Ltd. And has permanent recognition from the Government of India for facilitating online trading, clearing and settlement operations for commodity futures markets across the country. Headquartered in the financial capital of India, Mumbai, MCX is led by an expert management team with deep domain knowledge of the commodity futures markets. The integration of dedicated resources, robust technology and scalable infrastructure, has helped MCX record many firsts since its inception.Being a nation-wide commodity exchange having a robust infrastructure, offering multiple commodities for trading with wide reach and penetration, MCX is well placed to tap the vast potential poised by the commodities market. MCX offers a wide spectrum of opportunities to a large cross section of participants including Producers/Processors, Traders, Corporate, Regional Trading Centers, Importers, Exporters, Co-operatives and Industry Associations amongst others.Introduction to NMCE-AhmadabadNMCE commenced futures trading in 24 commodities on 26th November, 2002 on a national scale and the basket of commodities has grown substantially since then to include cash crops, food grains, plantations, spices, oil seeds, metals & bullion among others. Research Desk of NMCE is constantly in the process of identifying the hedging needs of the commodity economy and the basket of products is likely to grow even further. NMCE has also made immense contribution in raising awareness about and catalyzing implementation of policy reforms in the commodity sector. NMCE was the first Exchange to take up the issue of differential treatment of speculative loss. It was also the first Exchange to enroll participation of high net-worth corporate securities brokers in commodity derivatives market. It was the first Exchange to complete the contractual groundwork for dematerialization of the warehouse receipts. Innovation is the way of life at NMCE.NMCE facilitates electronic derivatives trading through robust and tested trading platform, Derivative Trading Settlement System (DTSS), provided by CMC. When an order is placed on the exchange, the server at NMCE scans through the orders posted on it from all its trading terminals. It then locates and matches the best counter-offers/bids by maintaining anonymity of the counter-parties. Anonymity helps in eliminating formation of cartels and other unfair practices, thereby protecting the efficiency of price-discovery at the exchange.NMCE was the first commodity exchange to provide trading facility through Internet, through Virtual Private Network (VPN). PORTFOLIO MANGAMENT SERVICESManaging money has always been difficult. You require a great deal of expertise to evaluate various savings and investment plans. You simply dont have the time to do it yourself. Until and unless the investments are large it might also turn out to be expensive trying to set up your won investment wing. It might be prudent asking a professional to manage your funds for a small fee. You are sure your money will be deployed after scientifically analyzing pros and cons.In finance, a portfolio is a collection of investments held by an institution or a private individual. In building up an investment portfolio a financial institution will typically conduct its own investment analysis, whilst a private individual may make use of the services of a financial advisor or a financial institution, which offers portfolio management services. Holding a portfolio is part of an investment and risk-limiting strategy called diversification. By owning several assets, certain types of risk (in particular specific risk) can be reduced. The assets in the portfolio could include stocks, bonds, options, warrants, gold certificates, real estate, futures contracts, production facilities, or any other item that is expected to retain its value. Portfolio Management is the management of selected groupings of investments using integrated strategic planning, integrated architectures, and measures of performance, risk management techniques transition plans, and portfolio investment strategies. Portfolio management involves deciding what assets to include in the portfolio, given the goals of the portfolio owner and changing economic conditions. Selection involves deciding what assets to purchase, how many to purchase, when to purchase them and what assets to divest. These decisions always involve some sort of performance measurement, most typically expected return on the portfolio, and the risk associated with this return (i.e. the standard deviation of the return). Typically the expected returns from portfolios comprised of different asset bundles are compared.The unique goals and circumstances of the investor must also be considered. Some investors are more risk averse than others. Mutual funds have developed particular techniques to optimize their portfolio holdings. See fund management for details. If you own more than one security, you have an investment portfolio. You build the portfolio by buying additional stocks, bonds, mutual funds, or other investment. Your goal is to increase the portfolios value by selecting investments that you believe will go up in price. According to modern portfolio theory, you can reduce your investment risk by creating a diversified portfolio that includes enough different types, or classes, of securities so that at least some of them may produce strong returns in any economy.COMPANY PROFILETHE INDIA INFOLINE LIMITED

Origin:

India info line was founded in 1995 by a group of professional with impeccable educational qualifications and professional credentials. Its institutional investors include Intel Capital (world's) leading technology company, CDC (promoted by UK government), ICICI, TDA and Reeshanar. India info line group offers the in tire gamut of investment products including stock broking, Commodities broking, Mutual Funds, Fixed Deposits, GOI Relief bonds, Post office savings and life Insurance. India Info line is the leading corporate agent of icici Prudential Life Insurance Company, which is India' No. Private sector life insurance Company.www.indiainfoline. Com has been the only India Website to have been listed by none other than Forbes in it's 'Best of the Web' survey of global website, not just once but three times in a row and counting... a must read for investors in south Asia is how they choose to describe India info line. It has been rated as No.l the category of Business News in Asia by Alexia rating.Stock and Commodities broking is offered under the trade name 5paisa. India Infoline Commodities pvt Ltd., a wholly owned subsidiary of India Info line Ltd., holds membership of MCX and NCDEX.Main Objects Of The Company

Main objects as contained in its Memorandum or Association are: To engage or undertake software and internet based services, data processing IT enabled services, software development services, selling advertisement space on the site, web consulting and related services including web designing and web maintenance, software product development and marketing, software supply services, computer consultancy services, E-Commerce of all types including electronic financial intermediation business and E-broking, market research, business and management consultancy.

To undertake, conduct, study, carry on, help, promote any kind of research, probe, investigation, survey, developmental work on economy, industries, corporate business houses, agricultural and mineral, financial institutions, foreign financial institutions, capital market on matters related to investment decisions primary equity market, secondary equity market, debentures, bond, ventures, capital funding proposals, competitive analysis, preparations of corporate / industry profile etc. and trade / invest in researched securities.

Products: the India Info line pvt ltd offers the following products

A. E-broking.

B. Distribution

C. InsuranceA.E-Broking:

It refers to Electronic Broking of Equities, Derivatives and Commodities under the brand name of 5paisa

Equities

Derivatives

CommoditiesB.Distribution:

1.Mutual funds

2.Govt. of India bonds.

3.Fixed depositsC. Insurance:

1. Life insurance policies

2. Corporate sector of icici

3. Prudential life insurance.THE CORPORATE STRUCTURE

The India Info line group comprises the holding company, India Info line Ltd, which has 5 wholly-owned subsidiaries, engaged in engaged in distinct yet complementary businesses which together offer a whole bouquet of products and services to make your money grow.The corporate structure has evolved to comply with oddities of the regulatory framework but still beautifully help attain synergy and allow flexibility to adapt to dynamics of different businesses.The parent company, India Info line Ltd owns and managers the web properties www. India info line, Com and www.5paisa.com. it also undertakes research. Customized and off-the-shelf.Indian Info line Securities Pvt. Ltd. is a member of BSE, NSE and DP with NSDL. Its business encompasses securities broking Portfolio Management services.

India Infoline.com Distribution Co. Ltd. Mobilizes Mutual Funds and other personal investment products such as bonds, fixed deposits, etc.India Info line Insurance Services Ltd. Is the corporate agent of ICICI Prudential Life Insurance, engaged in selling Life Insurance products.India Info line Commodities Pvt. Ltd. is a registered commodities broker MCX and offers futures trading in commodities.

India Info line Ltd.

Research and Online Media Property

India Info line Securities Pvt. Ltd.

Secondary market securities trading and

Portfolio Management Services

India Infoline.com Distribution Co. Ltd.

Mobilization of Mutual Funds and other

Personal investment Products

India Infoline Insurance Services Ltd.

Corporate agent for ICICI Prudential Life Insurance Company

India Infoline Commodities Pvt.Ltd.

Commodities trading

India Infoline Investment Services Pty.Ltd

Margin Funding

IN CAPABLE HANDS

India Infoline is a professionally Managed Company. The promoters who run the company/s day-to-day affairs as executive directors have impeccable academic professional track records.

Nirmal Jain, chairman and Managing/ director, is a Chartered Accountant, (All India Rank 2); Cost Account, (All India Rank l) and has a post-graduate management degree from IIM Ahmedabad. He had a successful career with Hindustan Lever, where he inter alia handled Commodities trading and export business. Later he was CEO of an equity research organization.

R. Venkataraman, Director, is armed with a post- graduate management degree from IIM Bangalore, and an Electronics Engineering degree from IIT, Kharagpur. He spent eight fruitful years in equity research sales and private equity with the cream of financial houses such as ICICI group, Barclays de Zoette and G.E. Capital.The non-executive directors on the board bring a wealth of experience and expertise.

Satpal khattar -Reeshanar investments, Singapore the key management team comprises seasoned and qualified professionals.

Mukesh Sing-

Director, India Infoline Securities Pvt Ltd.

Seshadri Bharathan- Director, India Infoline. Com Distribution Co Ltd

S Sriram-

Vice President, Technology

Sandeepa Vig Arora-Vice President, Portfolio Management services

Dharmesh Pandya- Vice President, Alternate Channel

Toral Munshi-

Vice President, Research

Anil Mascarenhas- Chief EditorINDIA INFOLINE COMMODITIES PVT.LTD (IICPL)II was incorporated on March 29, 2005 as a private limited company under the company under the companies Act, 1956. IICPL is a member of National Commodities and Derivatives Exchange Limited (NCDEX) and the Multi Commodity Exchange of India Limited (MCX) and offers commodities derivatives trading facility to its customers.

The Board Of Directors Of IICPL Comprises:

Mr. Nirmal Jain

-Non-Executive Director

Mr. R. Venkataraman

-Non-Executive Director

Mr. Dharmesh Pandya

-Executive Director

The Shareholding pattern of IICPL as on the date of filling of this Red Herrinj Prospectus is as follows

Name of shareholdersNumber of Equity shares

Mr. Nirmal Jain as nominee of IIL56000

Mr. R.Venkatraman as nominee of IIL54000

IIL1,99,000

Total209,000

1. Including an allotment of 11,39,000 shares on February 11, 2010CHAPTER -IIIREVIEW LITERATUREREVIEW LITERATUREGeoffrey Soutar, Marilyn Clark-Murphy presents in their article individual investor Preferences: A Segmentation Analysis (Journal of Behavior of Finance 2008) Individuals are being the encouraged to take responsibility for their retirement income. Despite the importance of individual investment decisions, we know very little about what factors influence them. Having identified characteristics that are important to individual investors in shares using a conjoint analysis approach, this study uses cluster analysis and discriminate analysis to look for subgroups with differing attitudes and approaches to investment alternatives, results suggest that four significant subgroups exist within the investor sample, each with different investment preferences and goals. The results have implications for providers of financial services and for those involved in educating individual investors.Julie R. Agnew presents in his article Asset Allocation and Information Overload: The Influence of Information Display, Asset Choice, and Investor Experience. This paper examines whether information overload might partially explain why defined contribution plan participants tend to follow the path of least resistance In two experiments, we test how three common differences among defined contribution plans (the number of investment choices) lead to varying degrees of information overload and the probability of opting for the default. Notably, we control for the financial aptitude of each individual. The findings suggest that the success of certain plan features depends strongly on the financial background of the participant. We find that low-knowledge individuals opt for the default allocation more often than high-knowledge individuals (experiment 1:20% versus 2%). The results emphasizethe importance of plan design, especially the selection of plan defaults, and the need to improve the financial literacy of participants.Enrico Rubaltelli presents in his article Numerical Information Format and Investment Decisions: Implications for the Disposition Effect and the Status Quo Bias. Investment decisions are very difficult because they involve money and can impact our quality of life. According to the axioms of rationality, different but equivalent information formats should not affect investment strategies. The authors perform two experiments here, and find evidence of a strong absolute magnitude effect on investment decisions. In Experiment 1, participants (students) chose to sell a losing fund more often when returns were expressed as a percentage of variation between the buying value and the actual value (e.g., 24%) than when they were expressed as a monetary difference between the buying price and the actual price (e.g., $0.24). In the context of the experiment, the percentage format decreased the disposition effect significantly. Furthermore, describing the stock returns as ratios (e.g., ) increased the tendency toward the status quo bias. In Experiment 2, the authors showed that the absolute magnitude of the numbers shaped participants satisfaction with fund returns, and was responsible for the different choices of investment strategies.Alexander Anderson presents in his article Limit Order Trading Behavior and Individual Investor Performance. Using highly detailed data from a major Australian online broker, we investigate individual investor limit order behavior and performance. We examine relative performance categorized by number and size of limit order placed, and by proportion of orders that execute. We find that individuals who place the most orders and have the highest number of transactions. The best performers have the highest proportion of orders execute and place smaller orders than the worst performers. These findings are robust after controlling for stock characteristics with the Fama and French [1992] factor model.CHAPTER IVDATA ANALYSIS AND INTERPRETATION

DATA INTERPRETATIONTABLE 1 AGE WISE CLASIFICATION

AGE

NO. OF PEOPLE

19-2578

26-3567

36-4534

>4521

ANALYSIS:

Most of the Investors are in the age group of 19-25

It can be inferred that most of the people are in the age were they are mostly towards investing in capital markets.

This may be because as they see earnings opportunity in Indian capital markets which is growing.

TABLE2- OCCUPATION WISE CLASSIFICATION

OCCUPATION

NO.OF PEOPLE

BUSINESS74

SERVICE87

STUDENTS28

OTHERS11

OCCUPATION

ANALYSIS:

In the sample size of 200, most of the people (43%) are there from the service class.

We can infer from this that most of the service class people invest in IPO and equity as it gives risk less and easy returns to the investors.

Sample size consists of less no students. As they dont have practical exposure in capital markets.

TABEL3- INCOME WISE CLASSIFICATIONINCOMENO. OF PEOPLE

5000-1500028

15000-2500091

25000-3500046

>3500035

ANALYSIS:

Sample size consists of most of the people in income group of 15000-25000.

It can be inferred from this that people in this Income group are more toward investing in capital markets.

TABLE4- INTRESTED IN TRADING/INVESTING:

NO. OF PEOPLE INTRESTED IN TRADING

YES117

NO83

ANALYSIS:

42% of the people gave a negative response on the capital markets.

It may because of speculation and fluctuations in India securities market.

58% of people prefer/interested in Indian capital markets as they see opportunity to earn or to make profits in fluctuating markets.TABLE5- MAIN REASON BEHIND TRADING/INVESTINGREASONS

NO.OF PEOPLE

FUTURE PLANNING43

EARNINGS136

EXEMPTION IN TAX21

ANALYSIS:

it can be interpreted that most of the people wants to book profits in the bullish market.

Future planning has been preferred by less no of people, as people want to earn in the emerging market like India.

People dont in capital markets to get an exemption in taxes, as there is no long-term capital gain in the securities market.

TABLE 6 - INVESTMENT PREFERNCESINVESTMENSTSNO. OF PEOPLE

MUTUAL FUNDS25

EQUITY57

IPO78

COMMODTY7

DERIVATIVES27

PMS6

ANALYSIS:

Most of people Invest in Initial Public Offer as it offer higher return and less risk to investors.

Inspite of high risk and volatile markets investors still prefer secondary markets for investing in equities.

TABLE-7 KNOWLEDGE LEVEL OF THE INVESTORS IN PERCENTAGESINVESTMENTSPERCENTAGES

MUTUAL FUNDS63.9

EQUITY65.8

IPO83.33

COMMODITY15.4

DERIVATIVES30.3

PMS35.7

ANALYSIS:

When collected the data on knowledge level of respondents on a scale of 1-10 83.3% people were comfortable while investing in IPOs.

Knowledge level on commodity and derivatives is very less as it is new to Indian markets and the investors should be educated.

Portfolio management services is also very less as most of the investors are self-investors.TABLE8 - TIME PERIOD OF THE INVESTMENT DONETIME PERIODNO. OF PEOPLE

SHORT TERM39

MEDIUM TERM113

LONG TERM48

TIME PERIOD OF INVESTMENTS

ANALYSIS:

Most of he investors are medium term (1-3 months) as they make profits whenever available to them in the markets.

Short-term investors are the people who do intraday trading i.e., invest for a week or so in the markets. These are the people who are extremely intelligent and have a high knowledge based on capital markets instruments.

TABLE 9 WAY OF TRADING IN STOCK MARKETSWAY OF TRADING

NO. OF PEOPLE

ONLINE

113

OFFLINE

87

ANALYSIS:

Majority of the respondents prefer online trading accounts as it is easy and fast and it does not require any paperwork.

Service class and the students mostly preferred online trading as it easy for them. Because they can invest in markets at any point of time.

Respondents who prefer accounts is because of less brokerage and the people are not IT savvy.

ANLYSIS: USING CHI-SQUARE TECHNIQUE

Null Hypothesis (H0): there is no relationship between the occupation of people and the investment option chosen.

Alternate Hypothesis (H1): there is a relationship between the occupation of people and the investment option chosen.

Contingency Table of Income Levels and Investment preferred.

INVESTMENTS

OCCUPATIONMUTUAL FUNDSEQUITYIPODERIVATIVESTOTAL

BUSINESS1218281068

SERVICE626371281

STUDENT5107527

TOTAL23547227176

Degree of Freedom: (no. of rows-1)* (no. of columns-1)

= (3-1)*(4-1) =6

Significance Level ( )=0.05

Chi-Square Critical (2c)=1.64

Expected Cell Frequency Table:

INVESTMENTSMUTUAL FUNDEQUITYIPODERIVATIVES

BUSINESS8.8820.8627.8110.43

SERVICE10.5824.8533.1312.42

STUDENT3.52848.2811.0454.14

Chi-Square (2) = [(Fi-ei)2/ei]

2=6.640597

It is seen that Chi-Square value for this contingency table is 6.640597 and the critical Chi-Square value for a significance level of 0.05 and degrees of freedom: 6 is 1.64. Hence, the null hypothesis is rejected.

There is a relationship between the OCCUPATION and the INVESTMENTS preferred.Similarly, the relation between the Age group and the Investments preferred.

(AGE GROUP * INVESTMENTS PREFERRED)Null Hypothesis (H0): There is no relationship between the age groups and the investment preferred.

Alternate Hypothesis (H1): There is a relationship between the age groups and the investment preferred.

Contingency table of AGE GROUP and INVESTMENTS preferred.

INVESTMENTS

AGE GROUPMUTUAL FUNDEQUITYIPODERIVATIVESTOTAL

19-2553033775

26-3581629962

36-457511629

>45565521

TOTAL25577827187

Degrees of Freedom: ( no. of rows-1)*(no. of columns-1)

= (4-1)*(4-1) =9

Significance Level () = 0.05

Chi Square Critical (2c)=3.33Expected Cell Frequency Table: INVESTMENTS

AGE GROUPMUTUAL FUNDEQUITYIPODERIVATIVES

19-2510.026722.860931.28310.8288

26-358.28818.898325.8608.9518

36-453.8778.8312.0964.1871

>452.80746.40108.7593.0320

Chi Square (2) = [(Fi-ei)2/ei]

2 = 16.72279

It is seen that Chi Square value for this contingency table is 16.72279 and the critical Chi Square value for a significance level of 0.05 and degrees of freedom: 9 is 3.33. Hence, the null hypothesis is rejected. Here is a relationship between the AGE GROUP and the INVESTMENTS preferred.

CHAPTER V FINDINGS,

SUGGESTIONS

& CONCLUSIONFINDINGSToday the Indian Capital Markets present a vastly different picture from what it was a decade ago.

Lots of checks and balances with efficient and electronic trading, and settlement systems.

A range of players that include mutual funds, FIIs, hedge funds, corporate and other institutions.

Expansion of asset classes.

Some of the major developments in the markets have been in the area of

Primary markets

Extent of Participation of Institutional Players

Introduction and progress of Derivatives

Settlement and monitoring systemsThe Indian capital market has witnessed some significant reforms on the structural, operational and regulatory front over a period of time. The changes such as abolition of controller of capital issues, establishment of market regulator [SEBI], introduction of a nationwide screen-based trading, dematerialization of securities, electronic trading, sophisticated risk-management techniques, derivative trading, rolling settlement, shortening of settlement cycle, ban on deferral products, formation of Clearing Corporation of India and demutualization of stock exchanges have marked a new era in the functioning of the capital market.CONCLUSIONS58% of the people are interested in investing in capital markets as they see a huge growth in Indian financial markets. It can be seen that maximum service class people invest in IPO because of less risk and reasonable returns. Knowledge level on commodity and derivatives trading is very less when compared to equity and IPO. It may be because investors are very cautious on those instruments most of the respondents are medium term investors as they are looking for profit making in markets.

It can be concluded from the chi square test 1 that their exists a relationship between the OCCUPATION and the INVESTMENTS preferred i.e., people with service class prefer IPOs than equity as it offers easy returns. Respondents with business background prefer to invest in equities as they can afford to take risk.

It may be concluded from the chi square test- 2 that exist a relationship between the AGE GROUP and the INVESTMENTS preferred i.e., people with the age above 45 would like to invest in mutual funds and people with the age group 19-25 would like to invest in more IPOs and equities.

SUGGESTIONS

Enhance awareness among Investors preferences who can be play pivotal role in

Share market.

Bring awareness among funds depositors about their respective

Share market. Arranging free seminars in different organizations about mutual fund investment /options on derivatives in mutual funds. An advertisements program in Public places is a good publicity.

More advertisements need to come to explain the various advantages of Investors preferences schemes and even the various commodities available to trade in share market. CHAPTER VI ANNEXURE BIBLIOGRAPHY

REFERENCESAnnexure-I MARKET RESEARCH ON INVESTORS PREFERENCES (CAPITAL MARKETS)

1. Personal Details:

Name:

Address:

Contact No:

E-mail ID:

2. Age:

[ ] 19-25 [ ] 26-35 [ ] 36-45 [ ] Above 45

3. Occupation:

[ ] Business [ ] Service [ ] Student [ ] Others

4. Income:

[ ] Rs.5000-15000 [ ] Rs.15000-25000 [ ] Rs.25000-35000 [ ] Rs.>35000

5. Are you interested in Trading/Investing?

[ ] Yes [ ] No

If no, reason ---------------------------------------------------

6. If provided proper guidance are you interested in Trading /Investing?

[ ] Yes [ ] No

7. What is the main reason behind Trading/Investing?

[ ] Future Planning [ ] Earning [ ] Exemption in Tax [ ] Others8. What type of investment would you prefer?

[ ] Mutual Funds [ ] Equities [ ] Commodities

[ ] PMS [ ] IPO [ ] Derivatives

9. Your investments are usually for

[ ] Short term [ ] Medium term [ ] Long term

10. In a scale of 1-10 rate the areas of your knowledge.

[ ] Mutual Funds [ ] Equities [ ] Commodities

[ ] PMS [ ] IPO [ ] Derivatives

11. Do you have a D-mat Account?

[ ] Yes [ ] No

If yes, where do you have your D-mat Account?12. Do you prefer?

[ ] Online trading/investment [ ] Offline trading/investment

For Official use: 1) Interviewers Opinion.BIBLIOGRAPHY

BOOKS

Investment Analysis and Portfolio Management- Prasanna Chandra

Investment Management

- Preeti Singh

Investment Management

- V.A. Avadhani

Capital Markets (dealers) module workbook - NCFM

WEBSITES

www.indianinfoline.comwww.investopedia.comwww.investwords.comwww.wikipedia.orgwww.sebi.gov.inwww.baseindia.comhttp://finance.indiamart.comwww.answers.comwww.nseindia.comJOURNALS :The Hindu Business times

Deccan chronicle.REFERENCES

1. Eng Tuck Cheah, Wen Li Chan, Corinne Lin Lin Chieng (2007) The Corporate Social Responsibility of Pharmaceutical Product Recalls: An Empirical Examination of U.S. and U.K.Markts. Journal of Business Ethics.

2. Julie R.Agneew- The College of William and Mary Lisa R.Szykman-The College of William and Mary.

3. Enrico Rubaltelli-University of Modena and Reggio EmiliaSandro Rubichi University of Modena and Reggio EmiliaLucia Savadori-University of TrentoMarcello Tedeschi-University of Modena and Reggio EmiliaRiccardo.

4. Alexander Anderson-Deutsche Bank Julia Henker-University of New South Wales Sian Owen-University of New South Wales Ferretti-University of Modena and Reggio Emilia.

EMBED Excel.Chart.8 \s

Equity

Shares

Preference shares

Derivatives

Warrants

Bonds

ELECTRONIC TRADING AND SETTLEMENT SYSTEM

PLAYERS

POLICY AND REGULATION

SEBI, RBI

THE NATIONAL STOCK EXCHANAGE

MFs,FIIs,Eedge, Funds,equity,

investors, Bkg arms of Banks.

PRIVATIVE EQUITY,

DEBT, EQUITIES,

DERIVATIVES

ASSEST

CLASSES

ACCOUNTING

STANDARDS

ICRA, FITCH, CARE, CRISIL

RATING

AGENCIES

_1265568415.xlsChart3

78

67

34

21

no. of people

Age

Age Group

Sheet1

ageno. of people

19-2578

26-3567

36-4534

>4521

Sheet1

no. of people

Age

Age Group

Sheet2

Sheet3