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Chapter 1: I ntroduction
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WORKING TITLE
Influence of Demographic and Psychological factors on Investment decision
BACKGROUND OF THE STUDY
Beginning in the early 1970`s, the Efficient Market Hypothesis (EMH henceforth) became
dominant in academic circles trying to understand the rules of return in the equity market.
After a long period of successes, faith in this hypothesis was gradually eroded by the discovery
of several anomalies. The last decades showed immense research efforts to find new models
accurately predicting market behavior. These efforts build the foundation for what is called
Behavioral Finance. Behavioral finance began as an attempt to understand why financialmarkets react inefficiently to public information. One stream of behavioral finance examines
how psychological forces induce traders and managers to make suboptimal decisions, and how
these decisions affect market behavior. Another stream examines how economic forces might
keep rational traders from exploiting apparent opportunities for profit. Behavioral finance
remains controversial, but will become more widely accepted if it can predict deviations from
traditional financial models without relying on too many ad hoc assumptions. Different
investors behave differently in different market situation before investing like return, flexibility
and etc, but the markets will face a question mark in knowing the pulse of an investor. So a
study must be made on the demographics and psychographics of the investor such that
the market can know the pulse of an investor and can act upon it. Investor behavior analysisdeals with analyzing the behavior of an investor based on his demographic and psychographic
factors like age, gender and income groups. This states what would be a preferred portfolio of
an investor at a particular age. This will be helpful to the stock brokers and portfolio managers so
that they can offer better portfolios to their investors. This needs better insight, and
understanding of human nature in the existing global perspective, plus development of fine skills
and ability to get best out of investments. In addition, investors have to develop positive vision,
foresight, perseverance and drive. Every investor differ from others in all aspects due to various
demographic factors like socio-economic background, educational attainment level, age, race
and sex. The most crucial challenge faced by the investors is in the area of investment decisions.
An optimum investment decision plays an active role and is a significant consideration. This
analysis will show the mentality of an investor and his preferences clearly and concisely. In order
to study a review of literature was conducted to develop the concept and idea behind the study.
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Chapter 2: Research design
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AIM
To study the influence of Demographic and Psychological factor on Investment decision in
Bangalore.
STATEMENT OF THE PROBLEM
During all this time researchers have identified two major reasons why the EMH fails to deliver
correct results in so many cases. While the first is called Limits to arbitrage and itshows why even well informed, completely rational investors can be limited in their ability to
use market options; the second relates to an application of behavioral psychology on
individual investors, cataloguing the kinds of deviations from full rationality in investment
decisions.
RESEARCH OBJECTIVE
On the basis of the above study we framed the main objectives of our study which are as under:
1. To study the influence of age on the investment pattern.2. To study the impact of income level on investment decisions.3. To study the impact of announcement of annual result on investment pattern.4. To study the impact of declaration of dividend & bonus announcements on investment
pattern.
HYPOTHESIS
H0: There is no association between the age of the investors and their investment behavior.
H1: There is a association between the age of the investors and their investment behavior.
H0:There is no association between the age of the investors and their behavior when dividends
and bonus of listed companies are announced.
H2:There is a association between the age of the investors and their behavior when dividendsand bonus of listed companies are announced.
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RESEARCH METHODOLOGY
The questionnaire was divided into three parts: In the first part, the demographic factors of the
investors were recorded primarily for their classification. The second part of the questionnaire
was related to the investment details of the investor. The various avenues the investor hadinvested in and details regarding investment in capital market viz. primary, secondary or both
were recorded. The final part of the questionnaire was related to the behavioral details, whichrecorded the investors reaction to the various capital market information. ANOVA test has been
used to test the relationship between age and decision making process and between average
income and investment portfolio. CHI SQUARE test was also used for testing the relationship
between age and behavior of investors to the various information announcements.
I Stage- L iterature Research
In order to study the behavior a review of literature was done to develop the concept andunderstand what had been done earlier. Stock markets performance is not simply the result of
intelligible characteristics but also due to the emotions that are still baffling to the analysts.Despite loads of information bombarding from all directions, it is not the cold calculations of
financial wizards, or companys performance or widely accepted criterion of stock performance
but the investors irrational emotions like overconfidence, fear, risk aversion, etc., seem to
decisively drive and dictate the fortunes of the market.
Rajarajan (2000) in his study revealed that there was an association between the lifestyle
clusters and investment related characteristics.
K.Santi Swarup (2003) studied on the decisions taken by the investors while investing in theprimary markets. In her study she indicated that investors give importance to their own analysis
as compared to their brokers advice.
Louhichi Wael (2004) examined the market behavior around the times of annual earnings
announcements made in the Paris Bourse to study both the informational role of accountingnumbers and the intraday speed of adjustment of stock prices to new information.
Yash Pal Davar and Suveera, Gill (2007) in their paper on investment decision making
revealed that the class of investors (undoubtedly) with growing age develop maturity andexperience for making decisions about the usage of their surplus and available funds in the light
of overall economic needs of family.
Szyszka Adam (2008) in his study on efficient market hypothesis to behavioral finance analyzed
how investors psychology changes the vision of financial markets. He found that investors are
not always able to correctly value the utility of decision alternatives, cannot update and estimate
probability and events and do not diversify properly.
Dr. Vanita Tripathi (2008) examines the perceptions, preferences and various investmentstrategies in Indian stock market. Study reveals that investors use both fundamental as well as
technical analysis while investing in
Indian stock market. Most of the respondents strongly agree that various company fundamentals
(such as size, book to market equity, price earnings ratio, leverage etc.) significantly influencestock prices and hence addition of these factors in asset pricing model can better explain cross
sectional variations in equity returns in India.
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Gaurav Kabra, Prashant Kumar, Mishra, Manoj Kumar Dash (2010) from the study
concluded that modern investor is a mature and adequately groomed person. In spite of
phenomenal growth in the security market and quality Initial Public Offerings (IPOs) in themarket, the individual investors prefer investments according to their risk preference. A majority
of investors are found to be using some source and reference groups for taking decisions. Though
they are in the trap of some kind of cognitive illusions such as overconfidence and narrowfarming, they consider multiple factors and seek diversified information before executing somekind of investment transaction.
Syed Tabassum Sultana (2010) concludes that the individual investor still prefers to invest in
financial products which give risk free returns. This confirms that Indian investors even if theyare of high income, well educated, salaried, independent are conservative investors prefer to play
safe. The investment product designers can design products which can cater to the investors who
are low risk tolerant and use TV as a marketing media as they seem to spend long time watching
TVs.
E. Bennet, Dr. M. Selvam, Eva Ebenezer, V. Karpagam, S. Vanitha (2011) concluded that
the average value of the five factors, namely, Return on Equity, Quality of Management, Return
on Investment, Price to EarningsRatio and various ratios of the company influenced the decisionmakers. Further, other five factors, namely, recommendation by analysts, Broker and Research
Reports, Recommended by Friend, Family and Peer,Geographical Location of the Company and
Social Responsibility were given the lowest priority or which had low influence on the stock
selection decision by the retail investors.
Azwadi Ali (2011) in his study showed interest in examining the relationships between
individual investors perceived financial performance of companies and their trading intentions,
and the mediating effect of companies images on the relationships.
Giridhari Mohanta & Dr. Sathya Swaroop Debasish (2011) studied that investors invest in
different investment avenues for fulfilling financial, social and psychological need. While
selecting any financial avenue they also expect other type of benefits like, safety and security,
getting periodic return or dividends, high capital gain, secured future, liquidity, easy purchase,tax benefit, meeting future contingency etc.
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I I Stage- Sample Design
SOURCES OF DATA:
The research design for the study is descriptive in nature. The researchers depended heavily on
primary data. The required data were collected from the retail investors living in Bangalore
through a Structured Questionnaire.
SAMPLING SIZE AND PROCEDURE:
The questionnaire approach was used for the collection of data. In this study, the primary data
was collected from 100 investors in Bangalore city. Questionnaire was distributed through onlineplatform through social networking websites and offline platform through individual brokers.
Questionnaires were hand delivered to many investors while personal interviews have also been
taken to ensure a degree of objectivity in the survey data, selected investors were personallyinterviewed to verify the accuracy of the self-reported data.
I I I Stage- Approaches to Research Design
1. Research DesignDescriptive Research
2. Data Collection-Primary data.
This data is collected from Questionnaire.
3. Statistical tools-
CHI-SQUARE test4. Data Analysis-
Tabulation CHI-SQUARE test Analysis
I V Stage- Scope of the study
The scope of the study is limited to Bangalore area only.
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Chapter 3: Prof il e of the industry
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I nvestment I ndustry in I ndia
The investment industry in India has been riding high since the last few years. India's equity market has
doubled since March 2009, with ADRs like Dr. Reddy's Laboratories and Tata Motors only gettingdoubled and tripled. So, do we say that the Indian investment industry is overheated at the moment or
may we infer that the stocks are fairly valued?
Warren Buffett has always mentioned that investment in India should always be a long-term story - as
the industry has been growing from an emerging market to a developed one. The next 10 years in India
will surely give good returns.
India's GDP growth was around 7 percent in 2010. The sustainable growth rate of India would however
hover around 7%. Before becoming a mature economy, India has another 20 to 40 years to spare.
The overall contribution made by the financial services sector in India in the year 2009 was 15 per centtowards the GDP of the country.
Types of I nvestment i n I ndia
The investment industry is huge; therefore the types of investments are also varied. Different types of
investments are:
Cash investments:Cash investments are generally risky and offer a low rate of interest. Some of the important types of
Cash investments are; certificates of deposit (CDs) and treasury bills and savings bank accounts.
Debt securities:This type of investment gives returns in the form of fixed periodic payments and the fixed capital
appreciates at maturity. This is safe bait for the investors in the investment industry and has always
proved to be the risk free investment tool. Though, it is generally low in risks, the returns are also lower
than the other peer securities.
Stocks:
Investors can also buy stocks (equities) from the secondary markets and be a part of any business
corporates that are listed in the stock exchanges. By this way, one can become a part of the profits that
the company generates. But one thing that should be kept in mind is that stocks are generally more
volatile and carries more risk than bonds.
Mutual funds:
They are usually a collection of stocks and bonds that a fund manager selects for an investor such that
the returns are maximum. The investor does not have to track the investment, be it a bond, stock- or
index-based mutual funds.
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Derivatives:
Derivatives are financial contracts, whose value is derived from the value of the underlying assets like
equities, commodities and bonds. They can take the form of futures, options and swaps. Investors
choose derivatives as they are used to minimize the risk of loss that result from variations in the
underlying asset values.
Commodities:
The items that are traded on the commodities market are agricultural and industrial commodities and
they need to be standardized. Commodities trading have always been giving high returns and thus they
are the riskiest of all investment options. One, who trades in commodities, requires specialized
knowledge and analytical capabilities.
Real estate:
Investing in real estate has to be a long term affair. Funds get hooked into the real estate sector for a
considerable time period.Comparison of investment options in I ndia
Top Investment
Area
Investment
RestrictionsReturn on Investment Risk of Loss
Gold No limit Offers high returns as gold prices are on a rise Low
Bank Deposit ---Offers upto 8.5 percent annual return depending
on the bank and periodLow
Mutual Funds No limit Equity Based: High
Equity
Based:
High
National Saving
Certificate (NSC)No limit Offers upto 8 interest calculated biannually No risk
Real Estate No limit
Capital gains guaranteed for specified avenues also
tax exemption are available on long term
investments
Low
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Advantages of I nvesting in I ndia
According to The World Fact Book, India is among the world's youngest nationswith a median
age of 25 years as compared to 43 in Japan and 36 in USA. Of the BRICBrazil, Russia, India
and China countries, India is projected to stay the youngest with its working-age populationestimated to rise to 70% of the total demographic by 2030 - the largest in the world. India will
see 70 mn new entrants to its workforce over the next 5 years.
India has the second largest area of arable land in the world, making it one of the world's
largest food producers - over 200 mn tones of food grains are produced annually. India is theworld's largest producer of milk (100 mn tones p.a), sugarcane (315 mn tones p.a) and tea (930
mn kg p.a) and the second largest producer of rice, fruit and vegetables.
With the largest number of listed companies - 10,000 across 23 stock exchanges, India has thethird largest investor base in the world.
According to a study by the McKinsey Global Institute (MGI), India's consumer market will be
the world's fifth largest (from twelfth) in the world by 2025 and India's middle class will swell byover ten times from its current size of 50 million to 583 million people by 2025.
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Chapter 4: Analysis & in terpretation
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AGE DISTRIBUTION OF THE RESPONDENTS:
From the questionnaire it was observed that maximum number of respondents fall in between 25-
35 years category. The next highest number of respondents falls in the 35-45 years category.Thus around 72% (72) of the respondents are between 25-45 years of age and are relatively
working group.
TABLE 1: SHOWING THE AGE DISTRIBUTION OF THE RESPONDENTS
AGE GROUP NO. OF RESPONDENTS % NO. OF RESPONDENTS
BELOW 25 12 12
25-35 48 48
35-45 24 24
45-55 9 9
ABOVE 55 7 7
TOTAL 100 100
CHART 1: SHOWING THE AGE DISTRIBUTION OF THE RESPONDENTS
NO. OF RESPONDENTS
BELOW 25
25-35
35-45
45-55
ABOVE 55
TOTAL
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SEX DISTRIBUTION OF THE RESPONDENTS:
From the questionnaire it was observed that maximum number of respondents was in male
category about 70%.
TABLE 2: SHOWING THE SEX DISTRIBUTION OF THE RESPONDENTS
SEX NO. OF RESPONDENTS % NO. OF RESPONDENTS
MALE 70 70
FEMALE 30 30
TOTAL 100 100
CHART 2: SHOWING THE SEX DISTRIBUTION OF THE RESPONDENTS
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INCOME DISTRIBUTION OF THE RESPONDENTS:
Most of the investors fall under the income level below Rs 3,00,000 - 4,50,000. From this we can
say that this is probably because most of the investors i.e. around 72% (72) of the respondents
fell under the age group of between 25-45 years.
TABLE 3: SHOWING THE INCOME DISTRIBUTION OF THE RESPONDENTS
INCOME LEVELS NO. OF RESPONDENTS % NO. OF RESPONDENTS
BELOW 1,50,000 24 24
150000-300000 16 16
300000-450000 29 29
450000-600000 14 14
ABOVE 600000 16 16
TOTAL 100 100
CHART 3: SHOWING THE INCOME DISTRIBUTION OF THE RESPONDENTS
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OCCUPATION DISTRIBUTION OF RESPONDENTS:
From the questionnaire it was disclosed that most of respondents are of service and business
class. Thus around 32% (32) of Respondents are of service and business class who falls between
the age group of between 25-45 years with income 3,00,000 - 4,50,000. (So, we can say thatbecause of then fixed income source they could take high risk and could invest in a number of
Investment avenues). Next to service is Professional class that is 24% (24) which shows because
of uneven income. They will be less aggressive in investing in different investment avenues.
TABLE 4: SHOWING THE OCCUPATION DISTRIBUTION OF THE RESPONDENTS
OCCUPATION NO. OF RESPONDENTS % NO. OF RESPONDENTS
SERVICES 32 32
BUSINESS 32 32
STUDENTS 12 12
PROFESSIONALS 24 24
OTHERS 0 0
TOTAL 100 100
CHART 4: SHOWING THE OCCUPATION DISTRIBUTION OF THE RESPONDENTS
NO. OF RESPONDENTS
BELOW 25
25-35
35-45
45-55
ABOVE 55
TOTAL
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RISK APPETITE OF THE RESPONDENTS:
From the questionnaire it was observed that maximum number of respondents was medium risk
takers about 68%.
TABLE 5: SHOWING THE RISK APPETITE OF THE RESPONDENTS
RISK APPETITE NO. OF RESPONDENTS % NO. OF RESPONDENTS
HIGH 13 13
MEDIUM 68 68
LOW 19 19
TOTAL 100 100
CHART 5: SHOWING THE RISK APPETITE OF THE RESPONDENTS
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PERCENTAGE OF INCOME INVESTED BY INVESTORS:
As the higher number of investors falls in the age group of between 25-45 years with income
level 3,00,000 - 4,50,000 taking calculative risk maximum number of respondents invest about10-20% of their income annually.
TABLE 6: SHOWING THE PERCENTAGE OF INCOME INVESTED BY
RESPONDENTS USUALLY
PERCENTAGE OF INCOME INVESTED NO. OF RESPONDENTS % NO. OF RESPONDENTS
LESS THAN 10 30 30
10-20% 30 30
20-30% 28 28
30-40% 10 10
40 AND ABOVE 1 1
TOTAL 100 100
CHART 6: SHOWING THE PERCENTAGE OF INCOME INVESTED BY
RESPONDENTS USUALLY
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INVESTMENT BASIS OF INVESTORS:
When it is about investment in primary or secondary instrument almost 44 of respondents invest
in equity market. Thus we can say that as the 72% of respondents fall under the age group ofbetween 25-45 years they have risk taking ability with average income levels to earn more. Next
to equity is fixed deposit which is preferred by almost 54 of respondents it may be quite becauseof attraction towards less risky and assure returns & because high fluctuation behavior in theequity. Next to fixed deposit is investment in real estate and gold/commodities that is 38 because
of very low risk profile and having long term use. Only 30 investors were interested in investing
in mutual funds because of the lack of awareness towards this instrument and 16 in Post officeSaving Scheme because of availability of more instruments and last only 10 in others Investment
Avenue which includes investment in currency, derivatives, commodities etc. because of very
high risk profile.
TABLE 7: SHOWING THE INVESTMENT AVENUES OF THE RESPONDENTS
INVESTMENT AVENUES NO. OF RESPONDENTS % NO. OF RESPONDENTS
FIXED DEPOSIT 54 28
POST OFFICE SAVINGS 16 8
MUTUAL FUNDS 30 16
EQUITY 44 23
REAL ESTATE 10 5
GOLD 28 15
OTHERS 11 6
CHART 7: SHOWING THE INVESTMENT AVENUES OF THE RESPONDENTS
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REASON FOR INVESTING IN FINANCIAL INSTRUMENTS:
From the questionnaire it was observed that maximum number of respondents invest in financial
markets for returns and savings around 62%.
TABLE 8: SHOWING THE REASON FOR INVESTING IN FINANCIAL
INSTRUMENTS OF THE RESPONDENTS USUALLY
REASONS FOR INVESTING NO. OF RESPONDENTS % NO. OF RESPONDENTS
RETURNS 68 33
SAVINGS 59 29
TAX BENEFITS 34 17
SECURITY 16 8
WEALTH CREATION 28 14
CHART 8: SHOWING THE REASON FOR INVESTING IN FINANCIAL
INSTRUMENTS OF THE RESPONDENTS USUALLY
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HOW OFTEN DO RESPONDENTS TRADE WITH STOCK?
From the questionnaire it was observed that maximum number of respondents trade once in a
year about 35%.
TABLE 9: SHOWING HOW OFTEN DO RESPONDENTS TRADE WITH STOCK
HOW OFTEN DO YOU TRADE
WITH STOCK? NO. OF RESPONDENTS % NO. OF RESPONDENTS
ONCE IN A YEAR 33 35
1-3 TIMES A YEAR 18 19
4-7 TIMES A YEAR 14 15
>7 TIMES A YEAR 29 31
CHART 9: SHOWING HOW OFTEN DO RESPONDENTS TRADE WITH STOCK
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I ANALYZE STOCK MARKET BEFORE TRADING
INVESTMENTS:
From the questionnaire it was observed that maximum number of respondents analyze both
micro and macro factors around 47%.
TABLE 10: SHOWING RESPONDENTS ANALYSIS BEFORE STOCK MARKET
TRADING INVESTMENTS
I ANALYZE STOCK MARKET BEFORE
TRADING INVESTMENTS NO. OF RESPONDENTS % NO. OF RESPONDENTS
NEVER 5 5
SOMETIMES 27 28
I RESERVE MY REPLY 8 8
I ANALYZE ONLY MICRO FACTORS 11 11I ANALYZE BOTH MICRO AND MACRO 46 47
CHART 10: SHOWING RESPONDENTS ANALYSIS BEFORE STOCK MARKET
TRADING INVESTMENTS
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INVESTORS REACTION TO THE ANNOUNCEMENT OF
ANNUAL RESULTS:
When the results announced by the company are better than the expectation, 56% (40) of
investors wanted to buy more shares, which shows that for investors if the performance ofcompany is good the company carries future growth potential which translates into good returns
on stock. 25% (18) of investors preferred to hold the stock with a view that good performance
was already discounted by the market and there is little scope of future appreciation & 18% (13)of investors preferred to sell the stock with a view to encash the good result.
TABLE 12: SHOWING INVESTORS REACTION TO THE ANNOUNCEMENT OF
ANNUAL RESULTS
TABLE 12(A): SHOWING RESPONSE IF RESULTS ARE ABOVE EXPECTATION
RESPONSE IF RESULTS ARE
ABOVE EXPECTATION NO. OF RESPONDENTS % NO. OF RESPONDENTS
BUY THE STOCK 40 56
HOLD 18 25
SELL 13 18
CHART 12(A): SHOWING INVESTORS REACTION TO THE ANNOUNCEMENT OF
ANNUAL RESULTS
RESPONSE IF RESULTS ARE ABOVE EXPECTATION
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If the company performance was as per expectation 21% (16) investors want to buy the stock and57% (43) want to hold the stock with a view to get long term return and 22% (17) of investors
preferred to sell the stock.
TABLE 12(B): RESPONSE IF RESULTS ARE AS PER EXPECTATION
RESPONSE IF RESULTS AS PER
EXPECTATION NO. OF RESPONDENTS % NO. OF RESPONDENTS
BUY THE STOCK 16 21
HOLD 43 57
SELL 17 22
CHART 12(B): SHOWING RESPONSE IF RESULTS ARE AS PER EXPECTATION
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If the company performance was below expectation than almost 43% (30) of investors preferred
to hold the stock, they could be waiting for the right price to exit, While 40% (28) of investors
sell the stock by booking their losses and to start with new so that their losses could be averaged& only 17% (12) investors preferred to buy the stock with a view that because of poor
performance the stock would be available at a discount which could be an opportunity to encash.
TABLE 12(C): SHOWING RESPONSE IF RESULTS ARE BELOW EXPECTATION
RESPONSE IF RESULTS ARE
BELOW EXPECTATION NO. OF RESPONDENTS % NO. OF RESPONDENTS
BUY THE STOCK 12 17
HOLD 30 43
SELL 28 40
CHART 12(B): SHOWING RESPONSE IF RESULTS ARE BELOW EXPECTATION
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INVESTORS REACTION TO THE DECLARATION OF
DIVIDEND AND BONUS:
It was found that 45% (49) of investors preferred to hold the stock after declaration of dividend
and bonus because of long term gain which was expected by the investor as a result of good
performance of company, while 40% (44) investors preferred to buy the stock which shows good
performance of company attracts the investment and only 15% (17) of investors sell the stockafter the dividend declaration with a view to book profits and liquidate their holdings.
TABLE 13(A): SHOWING INVESTORS REACTION TO THE DECLARATION OF
DIVIDEND AND BONUS IF RESULTS ARE ABOVE EXPECTATION
RESPONSE IF RESULTS ARE
ABOVE EXPECTATION NO. OF RESPONDENTS % NO. OF RESPONDENTS
BUY THE STOCK 45 63
HOLD 11 15
SELL 15 21
CHART 13(A): SHOWING INVESTORS REACTION TO THE DECLARATION OF
DIVIDEND AND BONUS IF RESULTS ARE ABOVE EXPECTATION
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TABLE 13(B): SHOWING INVESTORS REACTION TO THE DECLARATION OF
DIVIDEND AND BONUS IF RESULTS ARE AS PER EXPECTATION
RESPONSE IF RESULTS ARE AS
PER EXPECTATION NO. OF RESPONDENTS % NO. OF RESPONDENTS
BUY THE STOCK 10 13
HOLD 59 78
SELL 7 9
CHART 13(B): SHOWING INVESTORS REACTION TO THE DECLARATION OF
DIVIDEND AND BONUS IF RESULTS ARE AS PER EXPECTATION
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TABLE 13(C): SHOWING INVESTORS REACTION TO THE DECLARATION OF
DIVIDEND AND BONUS IF RESULTS ARE BELOW EXPECTATION
RESPONSE IF RESULTS ARE AS
PER EXPECTATION NO. OF RESPONDENTS % NO. OF RESPONDENTS
BUY THE STOCK 9 13
HOLD 31 43
SELL 32 44
CHART 13(C): SHOWING INVESTORS REACTION TO THE DECLARATION OF
DIVIDEND AND BONUS IF RESULTS ARE BELOW EXPECTATION
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CHI -SQUARE TEST
HYPOTHESIS
H0: There is no association between the age of the investors and their investment behavior.
H1: There is an association between the age of the investors and their investment behavior.
X2 = 57.7Degree of Freedom = 4, = 0.05, Critical Value = 9.49
X2> CV
Hence Null hypothesis (H0) is Rejected.
H1: There is an association between the age of the investors and their investment behavior.
H0:There is no association between the age of the investors and their behavior when dividends
and bonus of listed companies are announced.
H1:There is an association between the age of the investors and their behavior when dividends
and bonus of listed companies are announced.
E = row total * column total / Grand total
X2
=0.86
Degree of Freedom = 14, = 0.05, Critical Value = 23.69
X2
< CV
Hence Null hypothesis (H0) is Accepted.
H0:There is no association between the age of the investors and their behavior when dividendsand bonus of listed companies are announced.
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CONCLUSION
The research brings out certain characteristics of investors living in Bangalore. The ability tounderstand the judgment criteria like rationality and irrationality in investment pattern and
behavior which enables the investor to be cautious as its consequences affect the lifestyle, asset
value and relationship with others. The present study has shown that investors prefer investing in
both primary and secondary market instruments. Most of the decision are rational and influencedby the various information available in market. It was also found that investors prefer the wait
and watch policy for taking their decision, and are very cautious and their decisions are
influenced by various psychological factors and behavioral dimensions.
LI M I TATIONS OF THE STUDY:
The present research paper was aimed to achieve the defined objectives in full earnest and
accuracy, although there were certain limitations:
The data has been taken from the primary sources, so the findings are true to the extent ofauthentication of the data.
The study was conducted targeting the investors in Bangalore city only.
The primary data has been collected through a structured questionnaire to a sample of 100
investors in Bangalore city, which may not reflect the opinion of the entire population of thecountry.
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ANNEXURE
Influence of demographic & psychological factors on investment
decision
Questionnaire
1. Agea.
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7. Investment avenuesa. Fixed depositb. Post office savingsc. Mutual fundsd. Equitye. Real estatef. Goldg. Others
8. Reason for investing in financial instrumentsa. Returnb. Savingc. Tax benefitd. Securitye. Wealth creation
9. How often do you trade with stocka. Once in a yearb. 1-3 times in a yearc. 4-7 times in a yeard. >7 times in year
10. I analyze stock market before trading investmentsa. Neverb. Sometimesc. I reserve my replyd. I analyze only micro factorse. I analyze both micro and macro factors
11.Preferred mode of stock tradinga. Online tradingb. Offline trading
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12.Response to announcement of annual result1. Above expectation
a. Buy the stockb.
Hold
c. Sell2. As per expectation
a. Buy the stockb. Holdc. Sell
3. Below the expectationa. Buy the stockb. Holdc. Sell
13.Response to bonus and dividend1. Above expectation
d. Buy the stocke. Holdf. Sell
2. As per expectationd. Buy the stocke. Holdf. Sell
3. Below the expectationd. Buy the stocke. Holdf. Sell