INTERCONTINENTAL JOURNAL OF FINANCE RESEARCH … · INTERCONTINENTAL JOURNAL OF FINANCE RESEARCH ... ATTITUDE OF INVESTORS TOWARDS ... P.Shakuntala Mani11 in her research study titled

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Volume 2, Issue 8 (August, 2014)

INTERCONTINENTAL JOURNAL OF FINANCE RESEARCH REVIEW

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ATTITUDE OF INVESTORS TOWARDS INVESTMENTS AND KNOWLEDGE: A

STUDY PERTAINING TO NON-INSTITUTIONAL INVESTORS IN THOOTHUKUDI

M.JULIAS CEASAR1 S. JULIAN DANIEL

2

1Dean, Assistant Professor & Research Supervisor, Research Department of Commerce,

St. Xavier’s College (Autonomous) Palayamkottai 2Research Scholar, Research Department of Commerce, St. Xavier’s College (Autonomous)

Palayamkottai

ABSTRACT

Investment is utilizing the excess surplus fund / money towards the purchase of an asset with the

expectation of capital appreciation, dividends, and / or interest earnings. All most or all forms of

investment involve some forms of risk, such as investment in equities, property and even fixed interest

securities which are subject, among other things, to inflation risk. Thus, risk in investment avenues cannot

be anticipated or even could not be avoided. It is indispensable for project investors to identify and

manage the risks related to the investment. The new projects or companies are struggling to raise the

initial capital especially in the developing market like India where the big investors like venture capitalist

are very few. The small non institutional investors play a vital role in the Indian capital market. For well

established companies’ project, the investors are ready to invest but for the new companies it is more

difficult to induce the people to invest. Thus the study on the non institutional investors’ attitude about the

investment gets important in the Indian capital market. Many non-institutional investors are less educated

and unaware of the international and Indian market and the fluctuations and possibilities of profit or loss

in the market. It is very danger to invest blindly in stock market. The blindness leads to the investor’s loss

and in many times it damages the smooth running of the market. Thus it is important to make the people

aware of the capital market and the duties and responsibilities of the investor in the country to lead the

country to sustainable development of the capital market.

Keywords: investment, institutional investors, non-institutional investors.

Introduction

The Indian capital market is in the upward trend as there is huge possibility for investors to invest and

earn more and more profit. Today almost all the salaried classes are investors in one form or the other to

have a close and frequent contact with the investment companies. The other appreciable dimension on

the investment avenue is that the banks and insurance companies have started playing the role of

investment agent which establishes convenience to the investors to invest comfortably well. Investment

is utilizing the excess surplus fund / money towards the purchase of an asset with the expectation of

capital appreciation, dividends, and / or interest earnings. All most or all forms of investment involve

some forms of risk, such as investment in equities, property, and even fixed interest securities which are

subject, among other things, to inflation risk. Thus, risk in investment avenues cannot be anticipated or

even could not be avoided. It is indispensable for project investors to identify and manage the risks

related to the investment. The new projects or companies are struggling to raise the initial capital

especially in the developing market like India where the big investors like venture capitalist are very few.

The small non institutional investors play a vital role in the Indian capital market. For well established

IMPACT FACTOR VALUE: 0.604 ISSN: 2321-0354-Online ISSN: 2347-1654- Print

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companies’ project, the investors are ready to invest but for the new companies it is more difficult to

induce the people to invest. Thus the study on the non institutional investors’ attitude about the

investment gets important in the Indian capital market.

Statement of Problem:

The economic prosperity of a nation is based on the consistent growth of the medium scale and large scale

business. The medium and large scale businesses desperately need finance to its capital expenditure and

some extent to revenue expenditure. In the country like India where the large investors like venture

capitalists are few, the new companies get struggled to raise funds for their investments, the small

investors’ investment take an important place while the opening up of new company. The non-

institutional investors’ attitude is depending upon the personal factors which influence them to take

decision, whether to go for high risk and high return or low risk and low return. The investees should

issue the investment schemes which are preferred by the investors. Thus, it is essential to study the

attitude of the non-institutional investors to raise funds for the initial stage companies.

Review of Literature:

Some institutions and individuals have conducted varies studies relating to investment pattern. Such

studies have enabled the researcher to get a deep understanding of the concept of the study. The previous

studies in this area have enabled the researcher to identify the variables for her study.

U.K.Somasundaram1 in his dissertation titled,” A study on saving and Investment pattern of salaried class

in Coimbatore District” focused on understanding the behavior of the salaried class investor and

examining the awareness level to understand the attitude of the investor towards savings and investment

practice.

R.Shanmugham2 in his thesis titled, Investment pattern and Decision process of share Investment focused

on the Investment pattern of Investors in shares. The study divided the investors into three categories,

namely, 1.Tax savers, 2.Traditionalities and 3.Risk takers. The study established that the investors are

mainly influenced by their friend’s circle. All investors had a diversified portfolio of shares. No one was

concentrating on a particular share or industry.

“A study of Investment Behaviour of Investors of corporate securities”3 examined the corporate security

investors in Tamil Nadu. The study showed that the market was dominated by gang investors. The

awareness level was capital appreciation compared to dividend earnings. The portfolio of the investors

included partly a fixed income security.

“Investor’s protection: A study on legal aspects”4 attempted to point out varies legal provisions available

for safeguarding the interest of investors in corporate segment. It pointed out that the capital market

emerged as a major source of finance for the Indian corporate sector and also helped the investors to

invest their savings. The study pointed out that irrespective of laws, the investor’s grievance and

complaints were increasing. The study listed major Acts and sections available for investor protection.


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D.L Narayana5 in his thesis titled, Income, Savings and Investment of household sector in Chittoor

District attempted to review the economy. The study examined the asset structure of the household,

classifying the entire range of assets into physical and financial assets. The study stated that the average

investment of a self employed farmer household was greater than that of business people.

Shantilal Sarupria6 in his thesis titled, “Individual Savings in an Undeveloped Economy India: A case

study” disproved the widely held views about individual’s savings and suggested the ways of mobilizing

savings. The study observed that a large percentage of the population held their investment in the form of

gold, silver and other productive assets.

S.B.Ganti Subramanyan Swami and O.P. Chawks7, in their work “Disintermediation in Indian Household

sector Financial Portfolio, 1994” stated that the household savings in bank deposits were gradually

decreasing and other market instruments attracted the savings.

K. Chandrasekar and K.T. Geetha8 in their study, “National Savings and Economic Growth,” highlighted

the fact that increase in savings rate is influenced by the rate of growth of income and vice-versa.

Org Marg9 in his study titled, Investors choices over the Investment Advances revealed that investor’s

preferred fixed deposit in bank, post office and insurance scheme followed by government bonds and

equity shares. The survey took seven parameters which influenced one to choose an investment avenue,

i.e. 1 Capital appreciation 2 Safety 3 Liquidity 4 Rate of return 5 Guaranteed return 6 Manageability and

7 Tax shelter. The result was guaranteed return coupled with capital appreciation was the expectation of

the most of the investors.

E. Meera10

, in her thesis Equity Investment strategy and portfolio selection formulated strategies for

equity investment and portfolio selection and portfolio evaluation.

P.Shakuntala Mani11

in her research study titled performance of mutual funds in India – A study of

selected Mutual Fund schemes detailed the risk and return of mutual fund. This research suggested the

ways for portfolio construction and portfolio evaluation.

Fama12

in her study titled, components of Investment performance, analyzed in investment and he

introduced two terms “selectivity” and “Timing” which were more important compared with risk and

return.

The Agro- Economic Research centre13

, Chennai, conducted studies relating to income, savings and

investment in Thanjavur District during 1971-76. It found that net investment ranged from Rs .2 to

Rs.121 with the monthly income earning group the range of investment was from Rs.226 to 389.

T.Gomathy14

in her study titled, consumption savings pattern of Teaching Faculty in the women’s

colleges of Madurai city had found out that 60 percent of the respondents had regular saving habits. It was

found in this study that married people spent more and saved less than that of Unmarried respondents.

W. Adeline Getzie15

in her research Investment pattern of professionals – An Empirical study in

Aruppukottai found that factors such as marital status, size of the family, number of dependents, monthly

income and number of earning members have significant influence on the level of investment and age,

sex, type of family and source of funds did not influence the investment level.


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Objectives:

1. To explore the personal information of the investors, the awareness of the investment process and

the preferred avenues of investment of the non-institutional investor.

2. To compare the personal details with the awareness and the preference of the non-institutional

investors

3. To give necessary suggestions to the new companies

Hypothesis of the Study:

1. H0: There is no significant difference between the age of the investors and their goals.

2. H0: There is no significant difference between the educational qualification of the investor and

their goal.

3. H0: There is no significant difference between the educational qualification of the investor and

their awareness on investment.

4. H0: There is no significant difference between the primary source of income of the investors and

their preferred avenues of investment.

5. H0: There is no significant difference between the experience of the investor and their preferred

avenues of investment.

Sampling Design:

The simple random sampling method is used to select the sample. The researcher got list from the stock

market trading brokers and sampling frame is framed using the list. The lottery method of random

sampling is used to select the hundred samples covered for the research. The questionnaire method of data

is used to collect the primary data so the response is poor, only fifty eight respondents return the

questionnaire within the time limit and the forty five from that fifty eight are considered as valid

respondents.

Scope of the Study:

The study has a focus on only the investors in stock market, commodity market, insurance companies and

depositories in term deposit. The study generates ideas, opinions and other related aspects of investments

among the respondents in Thoothukudi Corporation limit.


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Frequency of Investment of Investors:

Demographic factors always affect in all attitudes of a person. In this table the frequency of the investors

is classified according to their demographic factors.

Demographic factors

frequency of investment

few times in a year monthly Frequently Total

Age

below 20 4 0 0

4

20 to 40 5 7 4 16

40 to 60 7 8 3 18

above 60 3 2 2 7

educational qualification

SSLC & HSS 5 4 2 11

UG/ Diploma 7 10 5 22

PG/ MPhil/Phd 7 3 2 12

primary source of income

Salary 9 12 2 23

capital gain 2 0 2 4

business or

profession 7 4 5 16

other income 1 1 0 2

Teen age people have less interest in the investment process and middle age people have good attitude

towards investment but they are not frequent investors. Educated people are interested to invest and they

are the frequent investors. Salaried people are investing monthly or few times in a year, they do not prefer

frequent investment.

\


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Goal of Different Aged Investors

The young investors generally looking to earn high profit in quick session but the aged people are always

looking at safe investments and they have different investment goals.

ANOVA

Sum of

Squares

df Mean

Square

F Sig.

short term liquidity

management

Between Groups 4.544 3 1.515 1.391 .259

Within Groups 44.656 41 1.089

Total 49.200 44

covering unexpected

cost

Between Groups 1.235 3 .412 .367 .777


Total 47.200 44

retirement benefit

Between Groups 9.601 3 3.200 3.425 .026

Within Groups 38.311 41 .934

Total 47.911 44

Housing

Between Groups 3.676 3 1.225 1.171 .332


Total 46.578 44

future of the children

Between Groups 22.548 3 7.516 10.127 <.01


Total 52.978 44

making high profit

Between Groups .799 3 .266 .452 .717


Total 24.978 44

There is significant difference in the age of the investor and the goal of their investment; youngsters do

not mind the retirement benefit and the future of the children. The middle age and old age people prefer

those goals. There is no significant difference in the other goals and the age of the people. All the

investors prefer to have higher profit, short term liquidity and they want to cover the unexpected cost also.


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Goal of Investors with Different Educational Qualification

Education does different in the mindset, culture, life style and other personal factors of a human. It is

necessary to test whether the education made any impact on the investors’ goal.

ANOVA

Sum of

Squares

Df Mean

Square

F Sig.

short term liquidity

management

Between Groups 3.495 2 1.748 1.606 .213


Total 49.200 44

covering unexpected

cost

Between Groups 2.056 2 1.028 .956 .392


Total 47.200 44

retirement benefit

Between Groups 21.866 2 10.933 17.630 <.01


Total 47.911 44

Housing

Between Groups 10.388 2 5.194 6.028 .005


Total 46.578 44

future of the children

Between Groups 1.720 2 .860 .705 .500


Total 52.978 44

making high profit

Between Groups 5.334 2 2.667 5.702 .006


Total 24.978 44

Covering unexpected cost, liquidity management and future of the children are important goals in the

Indian culture; expectedly those goals are preferred by all the investors. The retirement benefit, housing

and making high profit are influenced by the education of the investors. The educated people prefer those

three goals where the less educated people do not mind in the time of investment.


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Awareness of Investors with Different Educational Qualification:

A person who has through knowledge in a particular topic may not have the adequate educational

qualification. In some cases the interest will give the thirst to getting knowledge of the interested topic but

the interest of getting knowledge or awareness is only induced by the education.

ANOVA

Sum of Squares Df Mean Square F Sig.

world financial market

Between Groups 35.846 2 17.923 17.671 <.01


Total 78.444 44

Indian financial market

Between Groups 10.364 2 5.182 6.673 .003


Total 42.978 44

avenues of investment

Between Groups 5.288 2 2.644 4.688 .015


Total 28.978 44

risk/ return in the

investment

Between Groups 2.902 2 1.451 .922 .406


Total 68.978 44

Portfolio

Between Groups .755 2 .378 .167 .847


Total 95.778 44

All investors are aware about Risk/ return in the investment and portfolio of the investment, there is no

significant difference between those two factors and the education of the investors. World financial

market, Indian financial market and avenues of investment are only known by the educated people.


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Avenues of Investment Preferred by Investors with Different Income Source:

The source of income decides the mode and term of the receipt of income. The people who receive

regular income are differing from the people who earn inadequate receipt of income while they invest.

The avenues of the investment also change according to the primary source of income.

ANOVA

Sum of

Squares

Df Mean

Square

F Sig.

Shares

Between Groups 2.405 3 .802 .933 .434


Total 37.644 44

Commodities

Between Groups 2.923 3 .974 1.262 .300


Total 34.578 44

Bonds

Between Groups .568 3 .189 .132 .940


Total 59.244 44

real estate

Between Groups 2.971 3 .990 .982 .410


Total 44.311 44

LIC/RD/post-office

certificates

Between Groups 4.839 3 1.613 1.278 .295


Total 56.578 44

term deposit/ other

deposit

Between Groups 3.154 3 1.051 1.076 .370


Total 43.200 44

There is no significant difference between the primary source of the income and the avenues of the

investment. All investors prefer all the avenues of investment, their primary source of income do not play

any role in the selection of the avenue of investment.


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Avenues of Investment Prefer By Different Experienced Investors:

The experience makes a man perfect and the experience of the investor will lead to profitable investment.

The avenues of the investment and the quantum of investment in each avenue also decide the profit. The

experienced investors will invest in better avenues is a general assumption.

ANOVA

Sum of

Squares

Df Mean Square F Sig.

Shares

Between Groups 1.122 3 .374 .420 .740


Total 37.644 44

Commodities

Between Groups 1.847 3 .616 .771 .517


Total 34.578 44

Bonds

Between Groups 9.547 3 3.182 2.625 .063


Total 59.244 44

real estate

Between Groups 13.330 3 4.443 5.880 .002


Total 44.311 44

LIC/RD/post-office

certificates

Between Groups 11.388 3 3.796 3.444 .025


Total 56.578 44

term deposit/ other

deposit

Between Groups 5.780 3 1.927 2.111 .114


Total 43.200 44

Real estate and LIC/RD/post office certificates are the major avenues which significantly differ from the

experience of the investors. Thus experienced investors avoid the most fluctuated, very less profitable

investments and those give very late return also. Other avenues are preferred by all investors, the

experience does not induce to differ in the other avenues of investment.

Findings:

1. All the investors prefer high profit specially the youngsters prefer only the high profit and the

middle and old age investor prefer retirement benefit and children’s future as their prime goal.

2. Educational qualification has made a major impact on the goal of the investors to invest in

various avenues of investments.

3. Education play a role in the awareness of international financial market, Indian financial market

and avenues of the investment but the education does not play role in portfolio and risk/ return of

investment.


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4. There is no significant difference between the primary source of the income and the avenues of

the investment.

5. The preference of the experienced investors differs in the case of selecting avenues of investment.

6. Many investors do not have adequate knowledge of the market and this misleads investor to loss,

sometimes, to damage the market and the country’s economy.

Suggestions:

1. The awareness programs especially to new and less educated investors should be given by the

experts and achieved people in the investment field. The main objectives of the program should

be:

a) Indian and international financial markets and the fluctuations in the markets on various

reasons of change in market trends.

b) The ideal goals of the investees and the benefit of the investment to the social welfare is

to be given as prime focus.

c) The duties and responsibilities of an investor in the market and his responsibility to the

country’s sustainable development to be informed effectively well.

d) Possible avenues of investment with high profit and less risk aspects is to taught.

Conclusion:

The investment of the non-institutional investor plays a vital role in the capital market of India. Many

non-institutional investors are less educated and unaware of the international and Indian market and the

fluctuations and possibilities of profit or loss in the market. It is very danger to invest blindly in stock

market. The blindness leads the investor’s to lose their investments and in many times it damages the

smooth running of the market. Thus it is important to make the people aware of the capital market and the

duties and responsibilities of the investor in the country to lead the country to sustainable development

with the help of the functioning of the capital market which is the prime mover of the investment.

Reference

1. Soma sundaram v.k, “A study on savings and Investment pattern of salaried class in Coimbatore

Distric”, Ph.D. thesis submitted to Bharathiar University 1999

2. Shanmugham.R, “Investment pattern and Decision process of share Investment”, Ph.D. thesis

submitted to Bharathiar University

3. A study of Investment Behaviour of Investors of Corporate Securities, Ph.D. thesis submitted to

Alagappa University, Karaikudi, 1995

4. “Investors Protection – A study on legal Aspects”, Ph.D. thesis submitted to Alapappa University,

Karaikudi, 1996

5. Narayana D.L, “Income, savings and Investment of Household sector in Chittoor District”, Ph.D.

thesis submitted to srivenkateswara University, Tirupathi

6. Shantilal Sarupria “Individual Savings in an undeveloped Economy in India – A case study”, The

Economic Weekly, June22, 1963

7. Ganti Subramanyam Swami S.B and O.P Chawks, “Disintermediation in Indians Household

Sector Financial Portfolio”, 1994

8. Chandra Sekar K and K.T.Geetha, “National Savings and Economic Growth”, Southern

Economist, 1996


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9. Org Marg, “Investors choices over the Investment Advances”, Survey Report, 1999.

10. Meera. E, “Equity Investment Strategy and Portfolio Selection”, Ph.D. thesis submitted to

Bharathiar University, 1995.

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3. ZaveriBijal (Dec 2007), “The consequent Consumer Behavior in Cosmetic Industry”, Indian

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4. Agarwal, S. (1994), “Marketing Research”, Global Business Press, pp 67.

5. Fabozzi, Frank J. and F. Modigliani (1992),“Capital Markets”, Prentice-Hall.

6. Gupta L C (1992), Stock Exchange Trading in India: Agenda for Reform, Society for Capital

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INTERCONTINENTAL JOURNAL OF FINANCE RESEARCH … · INTERCONTINENTAL JOURNAL OF FINANCE RESEARCH ... ATTITUDE OF INVESTORS TOWARDS ... P.Shakuntala Mani11 in her research study titled