This study aims to measure the investors' perception and attitude towards Indian stock market with reference to the investors in Tamilnadu. This research is descriptive research study in nature. It is going to measure the variables which influencing the investors' perception and attitude towards Indian stock market. So, this descriptive research is applicable for this. Convenient sampling technique was adopted. Universe of this study was infinite in nature. So, it is appropriate to apply non-probability sampling. Trail survey was used to select the sample size (SD of population is .359) of 200 , measuring internal and construct validity and reliability of the instrument being tested. Based on the pilot study, researcher infers that the standard deviation of the population is low. Major findings of this study include, Income has significant impact on frequency of trading in stock market, selection of mode of trading and selection of market segments. Age and income has significant impact on taking exposure. Forty six functional variables are used in this study to measure investors' perception and attitude. These variables have explained 72% influence on measuring investor perception and attitude.
Key words: investor perception, Exposure, market segments
1. Introduction
Stock market is the place for buying and selling securities which are already issued. Indian stock market has well organized stock exchanges. 23 stock exchanges are proceeds the functions of stock market. Out of which National Stock Exchange and Bombay Stock exchange are having majority in operations. Regional stock exchanges are doing the functions of NSE and BSE. Both NSE and BSE stock exchanges are using advanced technology in e-trade access, clearing and settlement.
The Indian Stock market is divided in two parts Primary market - where the share is first issued in the form of IPO (Initial Public offering) and after issuing the share it is listed on exchange and share is traded on exchange where share can be bought and sold this is secondary market. In India mainly there are two exchanges- BSE (Bombay stock exchange) NSE (National stock exchange). The BSE is the oldest exchange in India started 1875. NSE stared operation on 1994. Before 2000 shares was held in physical form but the main difficulty with physical shares is method of transaction which is open outcry system and process is not transparent to investor also Physical shares were prone to duplication and find. So in 2000 NSE introduced the electronic screen based trading system further the introduction of Dematerialization (conversion of physical share in to electronic form) and depository (where the electronic form of share is kept) revolutionized the Indian Stock market. Currently there are mainly two Depository (DP)- NSDL and CDSL and these DP are like bank of share. Individual/ firm can deal through Broker (who is registered and having membership in Exchanges and depository) for buying and selling securities. Stock market serves the company by proving company the finance for long term needs and for investor an opportunity to park their savings in corporate world and in turn give their hand in Nation's development so stock exchange have a very vital role in country's economic development.
Investment in stock market also has significant changes in over the year. Due to the advanced technology, research capacity of the stock brokers for providing suggestion to the investors, investor awareness and market movement also inducing factors to the investors to make investment decision in stock market.
Investment made in stock market also boost up to the growth of economy. It provides the better platform to the investors also to earn risk adjusted return over the years of investment. Stock exchanges are classified its stock into large cap, mid cap, small cap, blue chip shares like that. This classification has attracted the investors to make investment based on his/her own investment decision.
This study has an attempt to evaluate the investors' perception towards the Indian stock market and their attitude of selecting investment avenues. Number of variables in perception and attitude has selected base on existing literature for this research study.
2. Statement of the problem
Indian stock market has strong witness of growth only after the implementation of new economic policy in the year 1991. This new economic policy facilitates the economy to grow in diversified fields. This new economic policy provides the benefits of liberalisation, privatisation and globalisation. It induces the vertical growth of Indian economy. Overall growth of Indian economy measured in various ways. Stock market is the key measure for measuring the growth of economy. Investor both foreign institutional investors and domestic investors also play a vital role for its development.
So, this current study would like to measure the perception and attitude of the retail individual investors epically in Tamilnadu. Tamilnadu is one among the top state in India.
3. Review of the literature
Both conceptual and empirical literatures used in this study. Conceptual literatures were collected from the text and reference books. Empirical literatures were collected from referred journals. For this research purpose researcher collect eight literatures from books and twenty seven literatures from journals. Few important literatures were discussed below:
Shanmngasundaram V (2011) illustrates the impact of perception and behaviour of investors in Capital market and found that investor decisions are influenced by psychological factors as well as behavioural factors and this psychological effect is created by threats of volatile in stock market, decline in stock indices without any evidence, greed and lack of confidence about their decision making capability.
Singh, Sandhu and Kundu (2010) illustrates the perception of the investors and their awareness on various options available in stock market and measured the interest showed on internet stock trading as against to traditional system. The study evaluated the quality of online stock broking services and various financial services offered by the companies. A sample of 100 investors has been taken from the twin cities of Hyderabad and Secunderabad. The result of findings showed 75% Net traders were using online stock trading requiring strong technology base whereas Traditional traders (over the phone) felt online trading not an acute process of stock trading and they didn't participate in net trading due to risk of a system failure. The study opined that with the advent of Information and Communication Technological online stock trading services have gained impetus.
Sandhu and Singh (2004) made an attempt to study the perceptions of adopters and non- adopters towards internet as a medium of trading. The study was based on structured primary data. The survey was conducted during October and November 2002. The sample of 50 adopters and 50 non-adopters from the universe comprising the city of Amritsar was selected. The study analyzed in case of adopters that transparency, safety, convenience and economy judged as an important feature of internet trading followed by market quality and liquidity whereas in case of non-adopters economy and convenience were the important features followed by the other factors like market quality, safety and liquidity. Despite these factors, they were not yet adopters of internet as a medium of trading due to various reasons like lack of knowledge, more costly, lack of human touch, relatively being more complex etc. The study suggested that online trading might aid brokers and policymakers in devising more effective strategies to encourage stock trading.
Shapiro (2001) illustrates the online trading practices of the older online investors in Washington based on a web based survey of online investors. This study measured the investors' opinion and improvement required for effective operations. Interviews were conducted from June 16 through July 2000. In the study, the response rate for 995 investors was 40%. The results of the survey revealed that two-third of older online investors were satisfied or very satisfied with their online investing experience. Problems related to this involve difficulty in placing orders, inability to access the broker's website and excessive delay in processing orders. Sixty percent were very concerned or somewhat concerned about the issues relating to online investor's privacy. Nearly one-fourth of those surveyed made more than five trades in the previous six months, and nearly one-third traded more often after beginning to trade online. The study also found that nearly two-third of investors always researched products before they traded online, with a majority turning to internet for the information.
Rajarajan V (1998, 2000 and 2003) classified investors on the basis of their demographics and psychographic. He found the investors' characteristics on the basis of their investment size and the percentage of risky assets to total financial investments had declined as the investor moves up through various stages in life cycle. Further, he noted investors' lifestyles based characteristics.
Loh and Ong (1998) based on 151 responses, examined the impact of investors' evaluation and their beliefs and attitudes, as well as their usage behaviour on adoption and acceptance of a new innovation in Singapore. The study revealed that users' concerns, expectations, perceived ease of use, and the real value added of a new system as well as their trading behaviour were crucial determinants to the ultimate adoption of Internet stock trading.
Majer (1997) attempted to explore the concept of internet based stock exchanges by measuring investor's opinion on issues ranging from internet security to their willingness to use an internet based stock exchange in Canada. The sample was based upon 42 respondents during the month of October, 1996. Overall, results seem to suggest a bright future for internet stock exchanges. A number of advantages and features possessed by internet stock exchanges prompted many to suggest that internet exchanges would someday compete directly with the world's largest conventional exchanges. However, security aspect complicates this picture to some extent.
4. Objectives of the study
Researcher decides to solve the problem based on the following objectives:
To assess the factors influencing investors' perception and attitude towards investment in Indian stock market
To assess the influence of demographic factors with functional factors
To provide suggestions for investors to make investment in Indian Stock market.
5. Research design:
A research design is the arrangement of conditions for collection and analysis of data in a manner that aims to combine relevance to the research purpose with economy in procedure. It is the overall pattern or framework of the research that stipulated the information to be collected, from which source and what procedures. A research design might be described as a series of advance decision that taken together from a specific master plan or the model for the conduct of the investigation.
5.1 Type of Research:
Primarily this type of research is classified as descriptive in nature. Descriptive research includes surveys and fact-finding enquiries of different kinds. The major purpose of descriptive research is description of the state of affairs as it exists at present. In social science and business research researcher use the term is called as Ex post facto research for descriptive research studies.
5.2. Sampling design:
Sampling design is the blueprint of data collection and dissemination of data for the research. This research study followed the following steps for sampling design.
5.2.1 Type of universe:
It is finite universe and finite population. This study based on 6000 population in angel broking limited which is located in tirumalai tower at Coimbatore.
5.2.2 Sample unit:
This research study based on angel broking limited located in Tirumalai tower at Coimbatore.
5.2.3 Sample size calculation:
Sampling error can be controlled by selecting adequate size. Researcher specified the precision for that wants in respect of estimation concerning the population parameter. In this case researcher desired precision is ± 5 i.e. the true values mean not less than 95%. Researcher accepts that the acceptable rate of error (e) is equal to 5%. Researcher uses the following formula for deciding the required sample size for this study.
Sampling error can be controlled by selecting adequate size. Researcher specified the precision for that wants in respect of estimation concerning the population parameter. In this case researcher desired precision is ± 5 i.e. the true values mean not less than 95%. Researcher accepts that the acceptable rate of error (e) is equal to 5%.
Researcher uses the following formula for deciding the required sample size for this study.
n= z2 X σ2p /e2
Here,
n= size of the sample
z= the value of standard variate at a given confidence level. Here the confidence level is 95% and assumed to be a normal distribution. So, the table value under normal curve is 1.96.
e= acceptable error
σp= Standard deviation of the population calculated by taking functional variables for measuring stock market perception of the respondents.
Hence, it is found that 0.359 is the value of standard deviation for the choice of toilet soaps.
n= (1.96)2X (.359)2/(.05)2
n= 196
Researcher decided to take over the lower limit of sample size as 200 samples.
5.2.4 Sampling procedure:
Sampling procedure is based on the nature of population. Based on the population how researcher going to access the respondents.
5.2.4.1 Convenient sampling
The most practical way of sampling is to select respondents based on his convenient. Sampling of this type is known as convenient sampling. It is an element of non-probability sampling. When researcher has not able to estimate population or the population is consider as infinite this sapling technique is suitable.
5.3 Method of data collection
The task of data collection begins after research problems have been defined and research design chalked out. Data is the foundation for all marketing research. The researchers can obtain data form primary data and secondary data.
5.3.1 Primary data
Primary data are those, which are collected afresh and for the first time, and thus happens to be original in character. In this study the questionnaires method used for collecting the primary data. This method is quite popular particularly in case of big enquires. It is being adopted by private individuals, research works, private and public organizations and even government. Questionnaire circulated through internet for collecting data. A questionnaire is an assembly of carefully formulated questions, designed to collect facts and options from the respondents. It's an important tool of the research; it is used to generate the raw data on which findings were based. The questionnaire is provided to the customers concerned with a request to answer and return the questionnaire.
5.3.2 Secondary Data
Secondary data on the other hand refers to that statistical material that is not originated by the investigator himself, but which he obtains from someone else's records" Secondary data was collected from various books, internet, journal and company records.
5.4 Tools used in the study
The following tools applied in this study based on the objectives proposed by the researcher.
KMO and Bartlett's test,
Explanatory factor analysis using Principal Component Analysis (PCA)
Varimax extraction,
Chi-square test
ANOVA for internal validity
Cronbach's Alpha test is used for reliability.
5.5 Trial survey
Trail survey used to test the reliability and validity of the instrument being used in this study. Hence is inferred that this instrument having good reliability and having significance in internal validity.
Standard deviation of the population is used to estimate the characteristics of population parameters. This study is having low value in terms of standard deviation. It infers that most of the investors are having common objectives about the investment in stock market.
Construct validity also checked. It infers that all the constructs are significantly influencing the investor perception and attitude towards the Indian stock market.
6. FINDINGS OF THE STUDY
The following are the major findings of this study.
Chi-square finds that income has significant influence with Frequency of trading in stock market (Regular, Occasional, Rarely, whenever required), selection of mode of trading (Intraday, delivery, futures and option) and selection of market segments (Cash market, Futures and option market). Because income has decides the investment frequency.
Age has significant influence with the exposure in cash market and future and option market, size of investment and services of the stock broker. Because age has decides the risk taking capacity.
In this study KMO value is.852. It depicts that good validity for doing factor analysis. Bartlett's Test of Sphericity finds that there is significant relationship among the components and it is good models fit and construct validity for doing factor analysis.
Risk tolerance influenced about 21% to the investor perception and attitude.
Liquidity of the investment influenced about 21% to the investor perception and attitude.
Services given by brokers influenced about 18% to the investor perception and attitude.
Investment attributes influenced about 7% to the investor perception
Attributes. Perception about clearing and settlement influenced about 5% to the investor perception and attitude.
Risk tolerance having .934 i.e. 93.4% of reliability in instrument for measuring and validating investor perception and attitude.
Liquidity of investment has .915 i.e. 91.5% of reliability in instrument for measuring and validating investor perception and attitude.
Services given by broker has .881 i.e. 88.1% of reliability of the instrument for measuring and validating investor perception and attitude.
Investment attributes has .752 i.e. 75.2% of reliability in instrument for measuring and validating investor perception and attitude.
Clearing and settlements has .791 i.e. 79.1% of reliability in instrument for measuring and validating investor perception and attitude.
7. SUGGESTIONS AND RECOMMENDATIONS
The major suggestions are provided to investors and recommendation for brokers for better service to the investors.
Majority (74%) of the respondents were found to be in the age group of 31 to 45 years.
Stock brokers must give special attention to senior citizens for increasing their participation in stock market.
Stock brokers must conduct periodical meeting with their clients for providing updates about new initiatives.
Investors must select the market segment based on their risk attributes
8. CONCLUSION
Based on this research study confers that most of the investors having awareness about the products being dealt by the stock exchanges. Stock brokers are providing periodical update, newsletters and personal contact with clients. Some of the investors are ready to take high risk in the stock market. Investors would like to generate current income as well as capital appreciation through stock market. Brokers are offers valuable research services to their clients. They must make use of opportunities for extracting investment benefits. According to this research infers that investors having positive perception towards stock market and they invest according to the condition of the market.
