ABDUL MAJEEB PASHA SHAIK; DR. T.N. MURTY; … · INVESTMENT OBJECTIVES OF THE RETAIL EQUITY INVESTORS IN ... R.VAMSEE KRISHNA; V.HEMANTHA GOPI KIRAN**** *Professor, …

IRJC

International Journal of Social Science & Interdisciplinary Research

Vol.1 Issue 7, July 2012, ISSN 2277 3630

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INVESTMENT OBJECTIVES OF THE RETAIL EQUITY INVESTORS IN

INDIA

ABDUL MAJEEB PASHA SHAIK*; DR. T.N. MURTY**;

R.VAMSEE KRISHNA***; V.HEMANTHA GOPI KIRAN****

*Professor,

Nimra College of Business Management,

Vijayawada, Andhra Pradesh, India.

**Director,



***Assistant Professor,



****M.B.A.Student,



ABSTRACT

Investment refers to the employment of funds to assets with the aim of achieving additional

income or growth in value over a given period of time. Today investors have various attractive

avenues of investment with different features matching their needs, not only in India even in the

global markets also. But generally the art of investment is to see that the return is maximized

with minimum risk which is inherent in all investments. The funds allocated by the Indian

investors to various investment avenues depend to a large extent on the various investment

objectives perceived by them. Investors differ in their pattern of objectives for investment. The

study examines that the level of importance assumed by the retail equity investors on various

investment objectives based on the socio economic variables and selective investment profile

factors viz., like liquidity, quick gain, capital appreciation, safety and dividends on various

classes of investors based on residence, age, sex, marital status, educational background, size of

family, members of family, market experience Place of Residence,, Monthly family income, type

of investor, category of investor, Type of market operation and etc,. elements has been

examined using Average Scores and the significance of differences in the average scores of the

different classes of investors tested by using Kruskal Wallis H-Test. Researchers found that

Average Score Analysis reveals the investors attach/attract more importance to liquidity, quick

gain, capital appreciation and safety in equity investments compared to others. At the end based

on studies researcher finds today in India the qualities of equity stocks are greatly useful to all

kinds of investors except in risk appetite and sensitivity point of view with rest of the world in

present scenario.

KEYWORDS: Equities, India, Investment objectives, Investors, Liquidity, Safety.

_____________________________________________________________________________

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INTRODUCTION

„Investment‟ refers to the employment of funds to assets with the aim of achieving additional

income or growth in value over a given period of time. Today investors have various attractive

avenues of investment with different features matching their needs. But generally the art of

investment is to see that the return is maximised with minimum risk which is inherent in all

investments. The funds allocated by the investors to various investment avenues depend to a

large extent on the investment pattern, preferences, risk-return perceptions and the various

investment objectives perceived by them. Investors differ in their pattern of investment,

preferences, perceptions and objectives for investment. Behavioural finance is a new approach to

financial markets that has emerged in response to the difficulties faced by traditional paradigm,

and focuses on investor‟s behaviour and decision-making process (Shanmugasudararm V and Dr.

Balakrishnan V,2006)1. This field merges the concept from financial economics and cognitive

psychology in an attempt to construct a more detailed modern human behaviour in the financial

markets. A rational investor, who can control his emotions, can use his hard earned money

based on right investment objectives can identify the right avenue and as one of the investment

avenue by sparing sufficient time for investment decisions to directly taking part in the stock

market operations.

In the present scenario, coming to the dynamic Indian capital market, daily turnover in

Indian stock market is not less than Rs.1,00,000 crores per day (both cash and F&O). So many

investors (institutional and retail) are investing lot of money in short term and long term point

time horizon. Psychological studies have demonstrated that the pain of losing money from

investments is nearly three times greater than the joy of earning. Small corrections in the capital

market have often disintegrated into full-scale crashes fueled by panicked investors, who made

hasty decisions to avoid losing money in short term, rather than focusing on an investment‟s

long-term potential objective. There is growing literature that suggests an individual‟s

(investors‟) investment decisions, which are affected by investment behavioural biases.

Behavioural finance tries to understand how people forget fundamentals and make investments

based on emotions instead of proper objectives. The volume of literature in this filed has grown

notably over long time back.

REVIEW OF LITERATURE

It is commonly reported that behavioural investment psychology drives financial decision-

making and is a strong vehicle to analyze the individual behavioural influences.

Lewellen(1977)1a

found that age, gender, income and education affects investors‟ preferences

and attitudes towards investment decisions based on their investment objectives.

James M. Poterba(2000) 2

, in his article, “Population Age Structure and Asset Returns: An

Empirical Investigation” investigates the association between population age structure ,

particularly, the share of population in the saving years is motivated by the claim that the ageing

of population in the United States is a key factor in explaining the recent rise in asset values. It

also addresses the associated claim that asset prices will declaim when the large cohort reaches

retirement age and begins to reduce its asset holdings

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Rajarajan V3, (2009), conducted a study entitled, “Investors Life Styles and Investment

Characteristics”, with the objective of analyzing the investors life styles and to analyse the

investment size, pattern, preference of individual investors on the basis of their life styles. Data

was collected from 405 investors in Madras using questionnaire method. The investors were

classified into 3 groups viz., active investors, individualists and passive investors. Cluster

Analysis, Correspondence Analysis and Kruskal Wallis Test were used to study the association

between lifestyle groups and the various investment related characteristics. The study revealed

that the level of expenses, earnings and investment were associated with the size of the

household.

Srivastava Aman(2007),4 in his study, “ An Analysis of Behavior of Investors in India”,

highlights the changes in the Indian business environment since post liberalization and emerging

trends like increase in the number of IPOs, investments by DIIs , FIIs, which lead to the change

in the perception of retail investors in the Indian Stock Market over the last 15 years. This study

also attempts to measure the expectations and confidence of retail investors in the Indian stock

market.

D.S.Chaiubey and Rajat P.Dimri (2009)5 in their research article, “Investment Pattern: A

Psychographic Study of Investors of Garhwal Region of Uttrakhand” identify the investment

perceptions and their behavior for designing effective investment policies. Analysis indicates the

shifting trend of investors from post office and other government investment schemes to

investments in banks, mutual funds and equity etc,.

Based on the above literature we came to know that retail equity investors investment pattern,

investment priority, risk-return perception and their investment objectives could understand little

bit only. In this connection researcher wants to know what are the investment objectives

instigate or motivate the investor to make investment in equity market.

OBJECTIVES OF THE STUDY

The main objectives of the study are:

To know the investment pattern of the Indian retail equity investors in general and

investment preferences, risk-return perceptions to a limited level and;

To analyze the level of importance assumed by the retail equity investors on various

investment objectives based on the socio economic variables and selective investment

profile factors viz., like liquidity, quick gain, capital appreciation, safety and dividends on

various classes of investors based on demographic factors.

To reveal findings, suggestions and give final conclusions based on the analysis.

LIMITATIONS OF THE STUDY

Through the present research paper is aimed to achieve above-mentioned objective in full

earnest and accuracy, there are some limitations:

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The data has taken from primary sources, so findings are true to the extent of

authentication of the data.

The study was conducted targeting the retail equity investors in the Krishna District,

Andhra Pradesh State only, based on the assumption, researchers are implicate the same

psychology in other parts of India.

HYPOTHESES OF THE STUDY

Hyp 1: Investment objectives of investors are influenced by various factors;

Hyp 2: There is significant relation between objectives of investment and demographic

factors;

Hyp 3: Investors behave rationally towards various capital market information.

RESEARCH METHODOLOGY

The design for the proposed study aims at exploring the investors‟ investment objectives related

to making investment based on their needs and tastes. The questionnaire approach was used for

the collection of data. In this study, the primary data was collected from 500 investors in

Krishna District, Andhra Pradesh State. The primary data collected from various respondents

like retail equity investors, stock market dealers, sub-brokers, authoritative people from various

areas of Krishna District, like Vijayawada, Machilipatnam, Gudivada, Ibrahimpatnam,

Jaggaiapet, Nuzvid, Gannavaram, Vuyyuru. The questionnaire has number of parts and points,

only limited points are taken into account for analysis (which is a part of research thesis). The

investment objectives of the retail equity investors have been identified with the help of -

Average Rank Analysis, Average Score Analysis and Kruskal Wallis H-Test. Software Package

for Social Science (SPSS) has been used for the purpose of the analysis.

ANALYSIS AND INTERPRETATION

The researcher examines the investment pattern of the Indian retail equity investors in

general and investment preferences, risk-return perceptions and investment objectives of the

retail equity investors based on the socio economic variables and selective investment profile

factors viz.,

i. Place of Residence

ii. Age

iii. Gender

iv. Marital Status

v. Educational Level

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vi. Occupation

vii. Family Size

viii. No. of Earning Members in the Family

ix. Monthly Family Income

x. Type of Investor

xi. Category of Investor

xii. Type of Market Operated

xiii. Market Experience

The distribution of sample investors based on their Socio–economic and investment

profile are presented in Table .1. It reveals the following aspects:

(I) PLACE OF RESIDENCE

Investors‟ Place of residence has been broadly classified into eight categories such as

Vijayawada town, Machilipatnam, Gudivada, Nuzivid, Gannavaram, Vuyyuru, Nandigama and

Ibrahimpatnam of Krishna District, Andhra Pradesh, India.. Out of 500 sample investors 56.8%

(284) are from Vijayawada town, 8% (40) are from Machilipatnam, 8.8% (44) are from

Gudivada, 10.8% (54) are from Nuzivid, 2% (10) are from Gannavaram, 6.6% (33) are from

Vuyyuru, 1.6% (8) are from Nandigama and 5.4% (27) are from Ibrahimpatnam.

(II) AGE

Investors have been divided into three categories based on their age as „Young‟ (20 – 40

years), „Middle aged‟ (40 – 60 years) and „Old‟ (60 years and above). Out of 500 sample

investors, 68.2% (341) are Young investors, 27.8% (139) are Middle aged investors and

4% (20) are Old investors.

(III) GENDER

Investors have been divided into two groups based on their gender as „Male‟ and

„Female‟. Out of 500 sample investors, 80.2% (401) are Male investors and 19.8% (99) are

Female investors.

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TABLE.1 DISTRIBUTION OF INVESTORS’ - SOCIO-ECONOMIC AND

INVESTMENT PROFILE

S.No Factors SUB – factors No of investors Percentage

i Place of Residence

Vijayawada town 284 56.8

Machilipatnam 40 8.0

Gudivada 44 8.8

Nuzivid 54 10.8

Gannavaram 10 2.0

Vuyyuru 33 6.6

Nandigama 8 1.6

Ibrahimpatnam 27 5.4

Total 500 100

ii Age

Young 341 68.2

Middle aged 139 27.8

Old 20 4.0

Total 500 100

iii Gender Male 401 80.2

Female 99 19.8

Total 500 100

iv Marital Status Married 336 67.2

Unmarried 164 32.8

Total 500 100

v Educational Level School

Education 46 9.2

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College Education 272 54.4

Professional 176 35.2

Others 6 1.2

Total 500 100

vi Occupation

Salaried 241 48.2

Professional 62 12.4

Business 164 32.8

Others 33 6.6

Total 500 100

vii Family Size

Small 251 50.2

Medium 229 45.8

Huge 20 4.0

Total 500 100

viii No. of Earning Members

In The Family

1 161 32.2

2 266 53.2

3 & above 73 14.6

Total 500 100

ix Monthly Family Income

Low 195 39

Medium 199 39.8

High 106 21.2

Total 500 100

x Type of Investor

Hereditary investor 97 19.4

New generation

investor 403 80.6

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Total 500 100

xi Category of Investor

Long term investor 204 40.8

Day trader 47 9.4

Both 249 49.8

Total 500 100

xii Type of Market Operated

Primary market 71 14.2

Secondary market 178 35.6

Both 251 50.2

Total 500 100

xiii Market Experience

Low 117 23.4

Moderate 213 42.6

High 170 34

Total 500 100

Source: Survey Data

(IV) MARITAL STATUS

Investors have been placed into two groups based on their marital status as „Married‟ and

„Unmarried‟. Out of 500 sample investors 67.2% (336) are Married investors and 32.8% (164)

are Unmarried investors.

(V) EDUCATIONAL LEVEL

Investors have been classified into four categories based on their educational level as

„School Education‟, „College Education‟, „Professionals‟ and „Others‟. Out of 500 sample

investors, 9.2% (46) are investors with School education, 54.4% (272) are investors with College

education, 35.2% (176) are investors with Professional education and 1.2% (6) investors belong

to the Others category.

(VI) OCCUPATION

Investors have been divided into four groups based on their occupation as „Salaried‟,

„Professionals‟, „Business‟ and „Others‟. Out of 500 sample investors, 48.2% (241) belong to the

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Salaried category, 12.4% (62) belong to the Professional category, 32.8% (164) of the investors

are Businessmen and 6.6% (33) belong to the Others category.

(VII) FAMILY SIZE

Investors have been classified into three categories based on their family size as „Small‟

(less than 4 members), „Medium‟ (4 – 6 members) and „Huge‟ (6 & above members). Out of 500

sample investors, 50.2% (251) belong to Small family, 45.8% (229) belong to Medium family

and 4% (20) belong to Huge family.

(viii) No. Of Earning Members in the family

Investors have been classified into three categories based on the number. of earning

members in their family as „1‟, „2‟, and „3‟ & above‟. Out of 500 sample investors, 32.2% (161)

investors have 1 earning member in their family, 53.2% (266) investors have 2 earning members

in their family and 14.6% (73) investors have 3 & above earning members in their family.

(IX) MONTHLY FAMILY INCOME

Investors have been classified into three categories based on their monthly family income as

„Low‟ (below Rs20,000), „Medium‟ (Rs.20,000 – Rs.40,000) and „High‟ (Rs.40,000 and above).

Out of 500 sample investors, 39% (195) have Low monthly family income, 39.8% (199)

Medium family income and 21.2% (106) have High family income.

(X) TYPE OF INVESTOR

Investors have been classified into two types based on their nature as „Hereditary

Investor‟ and „New Generation Investor‟. Out of 500 sample investors, 19.4% (97) are

Hereditary investors and 80.6% (403) are New generation investors.

(XI) CATEGORY OF INVESTOR

Investors have been classified into three categories based on their period of holding stock

as „Long-term investor‟, „Day trader‟ and „Both‟. Out of 500 sample investors 40.8% (204) are

Long-term investors, 9.4% (47) are Day traders and 49.8% (249) are both long-term investors as

well as day traders.

(XII) TYPE OF MARKET OPERATED

Investors have been divided into three groups based on the type of market operated by

them as operators in „Primary market‟, „Secondary market‟ and „Both‟. Out of 500 sample

investors, 14.2% (71) deal in Primary market alone, 35.6% (178) deal in Secondary market alone

and 50.2% (251) deal in both primary and secondary markets.

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(XIII) MARKET EXPERIENCE

Investors have been classified into three categories based on their market experience as

„Low‟ (less than 1 year) „Moderate‟ (1 – 3 years) and „High‟ (3 years and above). Out of 500

sample investors, 23.4% (117) have Low market experience, 42.6% (213) have Moderate market

experience and 34% (170) have High market experience.

The investment objectives of the retail equity investors have been identified with the help of -

Average Rank Analysis

Average Score Analysis

Test for Paired Differences (Paired „t‟ Test) and

Kruskal Wallis H-Test

Investment objectives refer to the investor‟s purpose of investment. Investment choices or

decisions are found to be the outcome of the three different but related classes of factors namely-

investment preferences, risk-return perceptions and the investment objectives. The funds

allocated by the investor to various investment avenues depend on the level of importance

assumed by him on various investment objectives.

The researcher examines the level of importance for investment assumed by the retail

equity investors on various investment objectives focusing more (except other factors investment

preferences and risk-return perceptions for the time being) viz.,

a. Dividends

b. Capital Appreciation

c. Quick Gain

d. Safety

e. Liquidity

f. Tax Benefits

g. Diversification of Asset Holding

h. Rights/Bonus Issue and Stock Splits and

i. Hedge Against Inflation

The responses of the retail equity investors has been obtained and analysed with the help

of -

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Four Point Scaling Technique

Average Score Analysis and

Kruskal Wallis H-Test

The results based on various socio-economic and investment profile factors are presented

in the form of tables and relevant interpretations.

1. PLACE OF RESIDENCE AND INVESTMENT OBJECTIVES

The level of importance assumed by the investors on various investment objectives based

on their Place of residence is presented in Table .2 in terms of Average scores:

TABLE2. AVERAGES SCORES – PLACE OF RESIDENCE AND INVESTMENT

OBJECTIVES

Investment

Objectives

Place of

Residence

Div

iden

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Cap

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Qu

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Safe

ty

Liq

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Tax b

enef

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Div

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Vijayawada 2.81 3.14 3.06 2.99 3.12 2.61 2.69 2.74 2.68

Machilipatnam 3.2 3 3.05 2.95 3.1 2.88 2.9 3.03 2.8

Gudivada 3.02 2.89 2.89 2.82 2.86 2.86 2.91 2.93 2.82

Nuzvid 2.65 2.67 2.83 3.38 2.98 2.81 2.61 2.8 2.96

Gannavaram 2.9 2.7 2.5 3.1 2.7 2.5 3.0 2.7 2.7

Vuyyuru 2.94 2.91 3.06 2.79 3.21 2.55 2.73 2.76 2.7

Nandigama 3.25 3.0 2.88 2.75 2.5 2.5 2.63 2.5 3.13

Ibrahimpatnam 2.85 3 3.11 3.15 3.3 3 3.04 3.04 2.81

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Table .2. reveals that the investors of Vijayawada town attach more importance to capital

appreciation. The investors of Machilipatnam, Gudivada and Nandigama attach more

importance to dividends. The investors of Nuzvid and Gannavaram attach more importance to

safety and the investors of Vuyyuru and Ibrahimpatnam attach more importance to liquidity.

The level of importance assumed by the investors on various investment objectives varies

with their Place of residence but on comparison it is evident that the investors of Nuzvid have

given very high importance to safety (3.38) than others.

Kruskal Wallis H-test has been applied to test the significance of differences in the

Average Scores of the different classes of investors based on their Place of residence.

Hypothesis: There is no significant difference in the level of importance assumed on

various investment objectives between the different classes of investors

based on their Place of residence.

It is proved in Table 3. that Kruskal Wallis Test reveals that the hypothesis is rejected

(Significant) in 3 cases and in all other cases the hypothesis is accepted (Not significant).

It can be concluded that there is a significant difference in the level of importance

assumed on various investment objectives such as dividends, capital appreciation and liquidity

between the different classes of investors based on their Place of residence.

TABLE3. H-VALUES – PLACE OF RESIDENCE AND INVESTMENT OBJECTIVES

S. No Investment objectives H-values P-values Significance

a Dividends 17.604 .014 S

b Capital appreciation 23.028 .002 S

c Quick gain 7.914 .340 NS

d Safety 10.974 .140 NS

e Liquidity 14.573 .042 S

f Tax benefits 11.025 .139 NS

g Diversification 10.552 .59 NS

h Rights/Bonus 9.526 .217 NS

i Hedge against inflation 6.485 .484 NS

S-Significant(P-Value 0.05) NS-Not Significant(P-Value 0.05)

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2. AGE AND INVESTMENT OBJECTIVES


on their Age is presented below in terms of Average scores.

Table .4. reveals that all the investors, irrespective of their age, attach high importance to

liquidity.


with their age but on comparison it is evident that old investors have given very high importance

to liquidity (3.2) than others.


Average Scores of the different classes of investors based on their Age.



based on their Age.

Kruskal Wallis Test reveals in Table. 5. that the hypothesis is accepted (Not significant)

in all the cases.

It can be concluded that there is no significant difference in the level of importance

assumed on various investment objectives between the different classes of investors based on

their Age.

TABLE4.AVERAGE SCORES – AGE AND INVESTMENT OBJECTIVES

Investment

Objectives

Age

Div

iden

ds

Cap

ital

ap

pre

ciati

on

Qu

ick

gain

Saf

ety

Liq

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ity

Tax b

enef

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Div

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Young 2.82 3.05 3.01 2.99 3.06 2.68 2.77 2.81 2.72

Middle Aged 2.98 2.97 3.01 2.99 3.1 2.71 2.65 2.76 2.78

Old 2.8 2.95 3 3.05 3.2 2.55 2.9 2.8 2.95

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TABLE .5.H-VALUES - AGE AND INVESTMENT OBJECTIVES

S.No Investment objectives H-values P-values Significance

a Dividends 3.854 .146 NS

b Capital appreciation 1.657 .437 NS

c Quick gain .142 .932 NS

d Safety .269 .874 NS

e Liquidity 1.170 .557 NS

f Tax benefits .811 .667 NS


h Rights/Bonus .249 .883 NS



3. GENDER AND INVESTMENT OBJECTIVES


on their Gender is presented below in terms of Average scores:

Table .6. reveals the male investors attach more importance to liquidity and female

investors attach more importance to quick gain.


with their gender but on comparison it is evident that female investors have given very high

importance to quick gain (3.5) than others.


Average Scores of the different classes of investors based on their Gender.



based on their Gender.

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Kruskal Wallis Test reveals in Table .7. that the hypothesis is rejected (Significant) in 3

cases and in all other cases the hypothesis is accepted (Not Significant).


assumed on various investment objectives such as dividends, tax benefits, rights/bonus issues

and stock splits between the different classes of investors based on their Gender.

TABLE6. AVERAGE SCORES – GENDER AND INVESTMENT OBJECTIVES

Investment

Objectives

Gender

Div

iden

ds

Cap

ital

ap

pre

ciati

on

Qu

ick

gain

Safe

ty

Liq

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ity

Tax b

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Div

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Male 2.82 3.03 2.98 2.96 3.06 2.63 .2.72 2.75 2.72

Female 3.02 2.98 3.15 3.12 3.13 2.92 2.85 2.98 2.86

TABLE7. H-VALUES - GENDER AND INVESTMENT OBJECTIVES



b Capital appreciation .253 .615 NS


d Safety 2.585 .108 NS


f Tax benefits 8.097 .004 S


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h Rights/Bonus 5.122 .024 S



4. MARITAL STATUS AND INVESTMENT OBJECTIVES


on their Marital Status is presented in Table .8. in terms of Average scores:

Table 3.58 reveals that married investors attach more importance to liquidity and

unmarried investors attach more importance to quick gain.

The level of importance assumed by investors on various investment objectives varies

with their marital status but on comparison it is evident that unmarried investors have given very

high importance to quick gain (3.12) than others.


Average Scores of the different classes of investors based on their Marital Status.



based on their Marital Status.

Kruskal Wallis Test reveals in Table .9. that the hypothesis is accepted (Not significant)

in all the cases.



their Marital Status

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TABLE.8. AVERAGE SCORES – MARITAL STATUS AND INVESTMENT

OBJECTIVES

Investment

Objectives

Marital

Status

Div

iden

ds

Cap

ital

ap

pre

ciati

on

Qu

ick

gain

Safe

ty

Liq

uid

ity

Tax b

enef

its

Div

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Rig

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on

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Married 2.9 3.03 2.96 3.02 3.07 2.72 2.76 2.79 2.77

Unmarried 2.79 3.01 3.12 2.94 3.08 2.62 2.7 2.82 2.71

TABLE9. H-VALUES – MARITAL STATUS AND INVESTMENT OBJECTIVES






e Liquidity .014 .906 NS


g Diversification .543 .461 NS


i Hedge against inflation .715 .398 NS

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5.EDUCATIONAL LEVEL AND INVESTMENT OBJECTIVES


on their Educational level is presented in Table 3.60 in terms of Average scores:

Table .10. reveals that the investors with school education, college education and

professionals attach more importance to liquidity. But others attach more importance to quick

gain.


with their educational level but on comparison it is evident that the other category investors have

given very high importance to capital appreciation (3.54) than others.


Average Scores of the different classes of investors based on their Educational level.



based on their Educational level


cases and in all other cases the hypothesis is accepted (Not significant).


assumed on various investment objectives such as dividends and capital appreciation between the

different classes of investors based on their Educational level.

TABLE10. AVERAGE SCORES - EDUCATIONAL LEVEL AND INVESTMENT

OBJECTIVES

Investment

Objectives

Educational

Level

Div

iden

ds

Cap

ital

ap

pre

ciati

on

Qu

ick

gain

Safe

ty

Liq

uid

ity

Tax b

enef

its

Div

ersi

fica

tion

Rig

hts

/ b

on

us

Hed

ge

again

st i

nfl

ati

on

School Education 2.96 2.78 2.91 2.96 3.11 2.61 2.83 2.98 2.87

College

Education 2.88 3 3.01 2.93 3.03 2.65 2.68 2.8 2.71

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Professional

Education 2.84 3.1 3.04 3.1 3.12 2.76 2.82 2.76 2.8

Others 1.83 3.54 2.83 3.0 3.5 2.67 2.67 2.5 2.33

TABLE11. H-VALUES-EDUCATIONAL LEVEL AND INVESTMENT

OBJECTIVES












6. OCCUPATION AND INVESTMENT OBJECTIVES


on their Occupation is presented in Table.12. in terms of Average scores.

The investors of salaried class attach more importance to capital appreciation.

Businessmen attach more importance to quick gain. Professionals and other investors attach

more importance to liquidity.


with their occupation but on comparison it is evident that businessmen have given very high

importance to quick gain (3.17) than others.

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Average Scores of the different classes of investors based on their Occupation.



based on their Occupation.


in all the cases.



their Occupation there is no significant difference between the investors Occupation and the

level of importance assumed by the investors on various investment objectives.

TABLE12. AVERAGE SCORES - OCCUPATION AND INVESTMENT OBJECTIVES

Investment

Objectives

Occupation

Div

iden

ds

Ca

pit

al

ap

pre

ciati

on

Qu

ick

gain

Safe

ty

Liq

uid

ity

Tax b

enef

its

Div

ersi

fica

tion

Rig

hts

/ b

on

us

Hed

ge

again

st

infl

ati

on

Salaried 2.85 3.07 3 3.01 3.05 2.68 2.7 2.76 2.72

Professional 2.85 2.95 2.92 3.05 3.16 2.56 2.89 2.84 2.74

Business 2.9 2.98 3.17 2.95 3.05 2.79 2.69 2.77 2.79

Others 2.73 3 2.97 2.97 3.14 2.42 3.03 3.12 2.79

TABLE13. H-VALUES –OCCUPATION AND INVESTMENT OBJECTIVES





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7. FAMILY SIZE AND INVESTMENT OBJECTIVES


on their Family size is presented in Table .14 . in terms of Average scores.

Table3.64 reveals that the investors belonging to the small and medium size families

attach more importance to liquidity, whereas the investors of huge family attach more

importance to safety.


with their family size but on comparison it is evident that investors of huge family have given

very high importance to safety (3.15) than others.


Average Scores of the different classes of investors based on their Family size.



based on their Family size.

Kruskal Wallis Test reveals in Table .15. that the hypothesis is rejected (Significant) in

one case and in all other cases the hypothesis is accepted (Not significant).


assumed on the investment objective namely tax benefits between the different classes of

investors based on their Family size.

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TABLE14. AVERAGE SCORES –FAMILY SIZE AND INVESTMENT OBJECTIVES

Investment

Objectives

Family Size

Div

iden

ds

Cap

ital

ap

pre

ciati

on

Qu

ick

gain

Safe

ty

Liq

uid

ity

Tax b

enef

its

Div

ersi

fica

tion

Rig

hts

/ b

on

us

Hed

ge

again

st

infl

ati

on

Small 2.88 3.02 3 2.97 3.06 2.8 2.82 2.86 2.79

Medium 2.83 3.03 3.02 3 3.09 2.55 2.66 2.7 2.69

Huge 2.9 2.9 3.10 3.15 3.05 2.9 2.8 3 2.8

TABLE.15. H-VALUES- FAMILY SIZE AND INVESTMENT OBJECTIVES


a Dividends .506 .777 NS










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8. NO. OF EARNING MEMBERS IN THE FAMILY AND INVESTMENT OBJECTIVES


on the No. of earning members in their family is presented in Table 3.66 in terms of Average

scores:

Table. 16. reveals that the investors with one or two earning members in the family attach

more importance to liquidity whereas the investors with 3 or more earning members in the

family attach more importance to capital appreciation.


with the No. of earning members in the family but on comparison it is evident that the investors

with one or two earning members in their family give very high importance to liquidity (3.09)

than others.


Average Scores of the different classes of investors based on the No. of earning members in their

family.



based on the No. of earning members in their family.


in all the cases. It can be concluded that there is no significant difference in the level of

importance assumed on various investment objectives between the different classes of investors

based on the No. of earning members in their family.

TABLE 16. AVERAGE SCORE – NO. OF EARNING MEMBERS AND INVESTMENT

OBJECTIVES

Investment

Objectives

No of

Earning

Members

Div

iden

ds

Cap

ital

ap

pre

ciati

on

Qu

ick

gain

Safe

ty

Liq

uid

ity

Tax b

enef

its

Div

ersi

fica

tion

Rig

hts

/ b

on

us

Hed

ge

again

st i

nfl

ati

on

One 2.88 3.01 3.01 2.91 3.09 2.62 2.78 2.8 2.75

Two 2.82 3.02 3 3.05 3.09 2.7 2.72 2.79 2.74

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Three &

Above 3 3.08 3.07 2.97 3.01 2.79 2.74 2.81 2.79

TABLE17. H-VALUES-NO OF EARNING MEMBERS AND INVESTMENT

OBJECTIVES












9. MONTHLY FAMILY INCOME AND INVESTMENT OBJECTIVES


on their Monthly family income is presented in Table 3.68 in terms of Average scores:

Table .18. eveals that the investors with low monthly family income attach more

importance to quick gain, whereas the investors with medium and high monthly family income

attach more importance to liquidity.


with their monthly family income but on comparison it is evident that the investors with medium

family income have given very high importance to liquidity (3.15) than others.


Average Scores of the different classes of investors based on their Monthly family income.

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based on their Monthly family income.


cases and accepted (Not significant) in all others cases. It can be concluded that there is a

significant difference in the level of importance assumed on various investment objectives such

as safety, liquidity and tax benefits between the different classes of investors based on their

Monthly family income.

TABLE 18. AVERAGE SCORES – MONTHLY FAMILY INCOME AND

INVESTMENT OBJECTIVES

Investment

Objectives

Monthly

Family

Income

Div

iden

ds

Cap

ital

ap

pre

ciati

on

Qu

ick

gain

Safe

ty

Liq

uid

ity

Tax b

enef

its

Div

ersi

fica

tion

Rig

hts

/ b

on

us

Hed

ge

again

st i

nfl

ati

on

Low 2.9 2.96 3.01 2.84 2.97 2.53 2.72 2.88 2.71

Medium 2.9 3.08 2.99 3.12 3.15 2.75 2.69 2.75 2.75

High 2.72 3.03 3.06 3.06 3.14 2.85 2.87 2.73 2.8

TABLE 19. H-VALUES- MONTHLY FAMILY INCOME AND INVESTMENT

OBJECTIVES





d Safety 9.651 .008 S

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10. TYPE OF INVESTOR AND INVESTMENT OBJECTIVES


on the Type of Investor is presented in Table .20. in terms of Average scores:

Table 3.70 reveals the hereditary investors attach more importance to safety and liquidity

whereas new generation investors attach more importance to liquidity only.


with the type of investor but on comparison it is evident that hereditary investors have given very

high importance to safety (3.15) and liquidity (3.15) than others.


Average Scores of the different classes of investors based on the Type of investor.



based on the Type of investor.

Kruskal Wallis Test reveals in Table .21. that the hypothesis it rejected (Significant) in 2

cases and in all other cases the hypothesis is accepted (Not significant). It can be concluded

that there is a significant difference in the level of importance assumed on various investment

objectives such as safety and tax benefits between the different classes of investors based on the

Type of investor.

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TABLE20. AVERAGE SCORES – TYPE OF INVESTOR AND INVESTMENT

OBJECTIVES

Investment

Objectives

Type of

Investor

Div

iden

ds

Cap

ital

ap

pre

ciati

on

Qu

ick

gain

Safe

ty

Liq

uid

ity

Tax b

enef

its

Div

ersi

fica

tion

Rig

hts

/ b

on

us

Hed

ge

again

st

infl

ati

on

Hereditary

Investor 2.85 2.95 2.97 3.15 3.15 2.89 2.85 2.84 2.86

New

Generation

Investor

2.87 3.04 3.02 2.96 3.06 2.64 2.72 2.79 2.72

TABLE 21. H-VALUES-TYPE OF INVESTOR AND INVESTMENT OBJECTIVES


a Dividends .163 .686 NS



d Safety 4.170 .041 S







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11. CATEGORY OF INVESTOR AND INVESTMENT OBJECTIVES


on the Category of investor is presented in Table .22. in terms of Average Scores:

Table 3.72 reveals that the long term investors attach more importance to safety and day

traders attach more importance to quick gain. The investors falling under the category „both‟

attach more importance to liquidity.


with the category of investor but on comparison it is evident that day traders have given very

high importance to quick gain (3.19) than others.


Average Scores of the different classes of investors based on the Category of investor.



based on the Category of investor.


cases and in all other cases the hypothesis is accepted (Not significant).


assumed on various investment objectives such as quick gain, safety, rights / bonus issues and

stock splits between the different classes of investors based on the Category of investor.

TABLE22. AVERAGE SCORES – CATEGORY OF INVESTOR AND INVESTMENT

OBJECTIVES

Investment

Objectives

Category of

Investor

Div

iden

ds

Cap

ital

ap

pre

ciati

on

Qu

ick

gain

Safe

ty

Liq

uid

ity

Tax b

enef

its

Div

ersi

fica

tion

Rig

hts

/ b

on

us

Hed

ge

again

st i

nfl

ati

on

Long-term investor 2.8 3.08 2.92 3.1 3.07 2.67 2.75 2.65 2.76

Day Trader 2.98 2.85 3.19 2.68 2.94 2.66 2.6 2.96 2.79

Both 2.89 3 3.05 2.97 3.1 2.71 2.76 2.89 2.73

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TABLE23. H-VALUES – CATEGORY OF INVESTOR AND INVESTMENT

OBJECTIVES




c Quick gain 5.918 .042 S

d Safety 7.776 .020 S


f Tax benefits .502 .778 NS


h Rights/Bonus 11.531 .003 S



12. TYPE OF MARKET OPERATED AND INVESTMENT OBJECTIVES


on the Type of market operated by them is presented in table 3.74 in terms of Average scores:

Table .24. reveals that the primary market operators attach more importance to capital

appreciation, secondary market operators attach more importance to quick gain and the investors

operating in both the markets attach more importance to liquidity.


with the type of market operated by them but on comparison it is evident that the investors

operating in both the markets have given very high importance to liquidity (3.17) than others.


Average Scores of the different classes of investors based on the Type of market operated by

them.



based on the Type of market operated by them.


cases and in all other cases the hypothesis is accepted (Not significant). It can be concluded that

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there is a significant difference in the level of importance assumed on various investment

objectives such as capital appreciation, safety, liquidity and tax benefits between the different

classes of investors based on the Type of market operated by them.

TABLE.24. AVERAGE SCORES - TYPE OF MARKET OPERATED AND

INVESTMENT OBJECTIVES

Investment

Objectives

Type of

Market Operated

Div

iden

ds

Cap

ital

ap

pre

ciati

on

Qu

ick

gain

Safe

ty

Liq

uid

ity

Tax b

enef

its

Div

ersi

fica

tion

Rig

hts

/ b

on

us

Hed

ge

again

st

infl

ati

on

Primary Market 2.93 3.03 2.97 2.82 2.92 2.48 2.62 2.8 2.68

Secondary Market 2.93 2.9 3.05 2.93 3.01 2.62 2.69 2.7 2.66

Both 2.79 3.1 2.99 3.09 3.17 2.79 2.82 2.86 2.83

TABLE25. H-VALUES–TYPE OF MARKET OPERATED AND INVESTMENT

OBJECTIVES





d Safety 6.069 .048 S


f Tax benefits 7.348 .025` S



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13. MARKET EXPERIENCE AND INVESTMENT OBJECTIVES


on their Market experience is presented in Table .26. in terms of Average scores:

Table 3.76 reveals that the investors with low market experience attach more importance

to safety, the investors with moderate market experience attach more importance to liquidity and

investors with high market experience attach more importance to capital appreciation.


with their market experience but on comparison it is evident that investors with high market

experience have given very high importance to capital appreciation (3.11) than others.


Average Scores of the different classes of investors based on their Market experience.



based on their Market experience.


in all the cases.



their Market experience.

TABLE26. AVERAGE SCORES - MARKET EXPERIENCE AND INVESTMENT

OBJECTIVES

Investment

Objectives

Market

Experience

Div

iden

ds

Cap

ital

ap

pre

ciati

on

Qu

ick

gain

Safe

ty

Liq

uid

ity

Tax b

enef

its

Div

ersi

fica

tion

Rig

hts

/ b

on

us

Hed

ge

again

st i

nfl

ati

on

Low 2.94 3.05 3.06 3.09 3.03 2.82 2.78 2.81 2.77

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Moderate 2.88 2.94 3 2.93 3.08 2.68 2.75 2.8 2.8

High 2.79 3.11 2.99 3 3.1 2.6 2.71 2.78 2.67

TABLE27. H-VALUES - MARKET EXPERIENCE AND INVESTMENT OBJECTIVES












FINDINGS AND CONCLUSION

Based on the above analysis researchers found that the Investment objectives of the retail equity

investors has been identified and summarized as follows:

The level of importance assumed by the retail equity investors on various investment

objectives has been examined using Average Scores and the significance of differences in the

average scores of the different classes of investors has been tested using Kruskal Wallis H-Test.

Average Score Analysis reveals that investors attach more importance to liquidity, quick

gain, capital appreciation and safety compared to others. The level of importance assumed by the

investors on various investment objectives vary with their socio-economic and investment

profile:

The following classes of investors attach more importance to Liquidity:

Investors Residing at Vuyyuru and Ibrahimpatnam

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Investors of all Age groups

Male investors

Married investors

Investors with School, College and Professional education.

Investors who are Professionals and Others.

Investors from Small and Medium family

Investors with One or Two earning members in the family

Investors of Medium and High income group

Hereditary and New generation investors

Both Long term investors and Day traders

Both Primary and Secondary market operators

Investors with moderate market experience.

The following classes of investors attach more importance to Quick gain:

Female investors

Unmarried investors

Investors who are Businessmen

Investors of Low income group

Day traders

Secondary market operators

The following classes of investors attach more importance to Capital appreciation:

Investors of Vijayawada town

Investor who belong to other category in Educational level

Investors who belong to Salaried class

Investors with three and above earning members in the family

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Primary market operator

Investors with high market experience

The following classes of investors attach more importance to safety:

Investors of Nuzvid and Gannavaram

Investors of Huge family

Hereditary investor

Long-term investor

Investors with low Market experience

The following classes of investors attach more importance to dividends

Investors of Machilipatnam, Gudivada and Nandigama.

Kruskal Wallis H-Test reveals that there is a significant difference in the average scores

of different classes of investors with regard to the level of importance assumed by them on

various investment objectives. What are the hypotheses‟ formulated on various points most of

them are true. Based on old and present analysis researchers are in position to understand and

assumed that most of our Indian investors‟ psychological tendencies are same. Now a days so

many tools/sources are available for analysis of equity stocks. Hence, the investors should make

up their mind-set before taking investment decisions. From the above study, retail equity

investors should understand that, they should develop a clear investment objective with long

term investment perspective/orientation, based on fundamental analysis of various equity scrips,

while making their investment. Then only they will enjoy the fruits of their investments and

satisfy their mottos.

BIBLIOGRAPHY

D.S.Chaiubey and Rajat P.Dimri (2009), “Investment Pattern: A Psychographic Study of

Investors of Garhwal Region of Uttrakhand “, RVM Journal of Management Research,

vol 1. Pp36-49.

James M. Poterba, “Population Age Structure and Asset Returns: An Empirical

Investigation”, MIT, Dept. of Economic, ,NBER.

http//papers.ssrm.com/sol3/papers/cfm?abstract_id=138982.

Lewellen W.G., Lease R.C. and Schlarbaum G G(1977),” Pattern of Investment

Strategy and Behaviour among Individual Investors”, Journal of Business, Vol.50, pp

296-333.

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Rajarajan V, (2000), “Investors Life Styles and Investment Characteristics”, Finance

India, Vol.XIV, No.2.pp 465-478.

ShanmugasudararmV and Dr. Balakrishnan V(2006), “Behavirol Finance for developing

winning strategies in investments”, Challenges in Management Education Edited Volume

1 pp 167-172, Excel Books, New Delhi.

Srivastava Aman(2007), “ An Analysis of Behavior of Investors in India”, ICAFI journal

of Finance,‟ Vol.4.No.2,pp43-52.

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Documents

ABDUL MAJEEB PASHA SHAIK*; DR. T.N. MURTY**; … · INVESTMENT OBJECTIVES OF THE RETAIL EQUITY INVESTORS IN ... R.VAMSEE KRISHNA***; V.HEMANTHA GOPI KIRAN**** *Professor, …

ABDUL MAJEEB PASHA SHAIK; DR. T.N. MURTY; … · INVESTMENT OBJECTIVES OF THE RETAIL EQUITY INVESTORS IN ... R.VAMSEE KRISHNA; V.HEMANTHA GOPI KIRAN**** *Professor, …