PROJECT PROPOSAL ON

A STUDY ON INVESTORS BEHAVIOUR IN INDIAN STOCK MARKET

(WITH REFERENCE TO BSE EQUITY SHARE )

SUBMITTED BY C.VENGATESAN
(REG.NO: 33220931) M.COM (TRADE & SERVICES)

DEPARTMENT OF COMMERCE UNIVERSITY OF MADRAS JANUARY 2011

INTRODUCTION
STOCK EXCHANGES IN INDIA Stock exchanges provide an organized market for transactions in shares and other securities. As of 2003, there are 23 stock exchanges in the country, 20 of them regional ones with allocated areas of operation. Of the 9855 or so public companies that have listed their shares in stock exchanges, around500 account for 99.6 per cent of the trading turnover, nearly all of which is on the primary exchanges i.e. Bombay stock exchange and National stock exchange. The Bombay stock exchange and National stock exchange together account for nearly 72 per cent of all capital market activity in India. The other major exchanges are the Calcutta, Delhi, and Ahmadabad. The remaining exchanges account for only 4 per cent of the Indian capital market activity. ORIGINS The National Stock Exchange of India was promoted by leading financial institutions at the behest of the Government of India, and was incorporated in November 1992 as a taxpaying company. In April 1993, it was recognized as a stock exchange under the Securities Contracts (Regulation) Act, 1956. NSE commenced operations in the Wholesale Debt Market (WDM) segment in June 1994. The Capital Market (Equities) segment of the NSE commenced operations in November 1994, while operations in the Derivatives segment commenced in June 2000. BSE (Bombay Stock Exchange) The Stock Exchange, Mumbai, popularly known as "BSE" was established in 1875 as "The Native Share and Stock Brokers Association". It is the oldest one in Asia, even older than the Tokyo Stock Exchange, which was established in 1878. It is a voluntary non-profit making Association of Persons (AOP) and is currently engaged in the process of converting itself into demutualised and corporate entity. It has evolved over the years into its present status as the premier Stock Exchange in the country. It is the first Stock Exchange in the Country to have obtained permanent recognition in 1956 from the Govt. of India under the Securities Contracts (Regulation) Act 1956.The Exchange, while providing an efficient and transparent market for trading in securities, debt and derivatives upholds the interests of the investors and ensures redresses of their grievances whether against the companies or its own member -

brokers. It also strives to educate and enlighten the investors by conducting investor education programmers. INVESTORS BEHAVIOUR

It is a well documented empirical fact in the nance literature that there is signicant heterogeneity across individuals in investment behaviours such as the decision to invest in the stock market and the choice of asset allocation. Are individual investors genetically predisposed to certain behaviours and born with a persistent set of abilities and preferences which a ect their decisions in the nancial domain Or is investment behaviour to a signicant extent shaped by environmental factors, such as parenting or individual-specic experiences? These questions are fundamental for our understanding of the behaviour of individual investors, but so far existing research has not o ered much systematic evidence on them. In this paper, we seek to ll this void by estimating the extent to which nature, i.e., genetic variation across individuals, versus nurture or other environmental treatments explainthe observed heterogeneity in investment decisions. To decompose the variance of three important measures of investment behaviour stock market participation, the relative amount invested in equities (share of equities) and portfolio volatility into genetic and environmental components, we examine identical and fraternal twins. The intuition of our identication strategy is right forward: if individuals who are more closely related genetically (e.g., identical twins) tend to be more similar on measures of investment behaviour, then this is Evidence for that behaviour being, at least partially, caused by a genetic factor. Using data on twins Allows us to identify an unobservable genetic component and environmental components that are either common (shared) or non-shared among twins. Our data on 37,504 twins are from the Swedish Twin Registry, which maintains and manages the worlds largest database of twins. Until the abolishment of the wealth tax in Sweden in 2006, the law required all nancial institutions to report information to the Swedish Tax Agency about assets an individual owned as of December 31 of that year. This allows us to compile a matched data set of twins and their complete nancial portfolios.
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REVIEW OF LITERATURE
A study on Individual Investor Behaviour by Hisashi Kaneko Senior Quantitative Analyst Financial Knowledge Research Division Nomura Research Institute (Chartered Member of the ecurity Analysts Association of Japan)

Although institutional aspects in Japan have been improved to encourage the holding of investment trusts by individual investors, it cannot yet be said that investment trusts have permeated the individual investor market. One reason for this is that the improvement of related systems was conducted without sufficient understanding of the reasons behind the investment behaviour of individual investors. By focusing on the buying and selling of investment trusts by individual investors, and examining such behaviour from a behavioural finance perspective, phenomena such as realize profits quickly when in the black, but defer taking losses when in the red and selecting funds based on the level of unit price can be observed. If these characteristics of buying and selling behaviour by individual investors are taken into consideration, it is clear that many investment trusts have room to rethink the way in which they manage their funds. In addition, to promote the holding of long-term positions in investment trusts, purchasing methods such as the dollar-cost averaging method may be effective. This report conducted an analysis focusing on investment trusts. However, other assets including savings deposits and shareholdings must be considered when analyzing individual asset management decisions. Sales methods applied to investment trusts should be considered in the light of the above points, on which subject future debate is also necessary.

NEED AND IMPORTANCE OF THE STUDY

     The need of this study is to know the investor behaviour of stock futures. The study is with the selected equity and derivatives from BSE. The study also covers the investor behaviour changes in selected equity and derivatives. Another reason is the equity and derivatives changes. This study analyses the behaviour the investors behaviour watching on daily basis for 3 year period.

OBJECTIVES OF THE STUDY

The major objectives of the study are:  To study the changes in investors behaviour whether its positive or negative  To analyses the impact of investor behaviour with economic condition in the Indian stock market changes.  To identify impact on Indian stock market changes.  To suggest the investor to invest in future stock market investor behaviour

METHODOLOGY The present study concentrates are 10 companies equity and derivatives. 10 companies securities are studied during the period of 1st January 2008 to 31st December 2010. DATA COLLECTION These 10 companies equity share details are collected from the BSE web site. For each and every company price details to securities and trade volumes and no. of data relates up to. DATA USED FOR ANALYSIS  Opening price  Closing price MAJOR SOURCE All secondary data relating to investors are collected from journals and stock market.