ABSTRACT

This study looks into investor preferences for trading in futures and options through the sub
brokerage firm Divya Swaroopa Financial Services Pvt Ltd (DSFS). The study investigates
the variables that affect these preferences, such as investor demographics, market dynamics,
and risk tolerance. According to the study, most of the respondents were male and young,
ages 18 to 25. They demonstrated a moderate level of risk aversion and gave long-term
capital growth top priority when making investments. Furthermore, a strong positive
correlation was discovered between investors' comfort level with taking risks in this market
and their understanding of futures and options.

Investor satisfaction with DSFS's brokerage services was also evaluated in the study. The
majority of respondents were happy with the advice and quality of the information they
received, but their opinions of brokerage services as a whole were divided. Platform
dependability was the service element that was most valued. The study concludes by
highlighting the significance of educating investors about the risks involved in trading futures
and options. It also implies that by concentrating on brokerage services rather than just
platform dependability, DSFS might raise customer satisfaction.
A STUDY ON INVESTORS PREFERENCE TOWARDS INVESTMENT
IN FUTURES AND OPTIONS TRADING WITH REFERENCE TO
DIVYA SWAROOPA FINANCIAL SERVICES PVT LTD

CHAPTER 1

1.1 INTRODUCTION

In the fast-paced world of financial markets, as a sub-brokerage company that makes it easier
for investors to buy and sell stocks, Divya Swaroopa Financial Services Pvt Ltd is a
noticeable player in the world of financial markets. Even though Divya Swaroopa isn't
primarily an advisory services company, it does a lot of trading and offers investors
operational support to help them through the complexities of the financial world. As a result,
in order to assess Divya Swaroopa's efficiency in enabling futures and options trading, it is
critical to ascertain investors' satisfaction levels with the services and support provided.

The purpose of this study is to investigate the trading preferences of investors in futures and
options within the context of Divya Swaroopa's sub-brokerage operations. The way in which
the company executes trades and provides operational support influences investors'
experiences and results in the market. the study intends to investigate the connection between
investors' preferences for particular Futures and Options products and their level of risk
appetite. For the purpose of creating profitable trading strategies and optimizing returns, it is
essential to comprehend how investors' risk profiles affect their decisions in the market,
especially when it comes to sub-brokerage services.

The goal is to determine the variables that affect investor preferences for trading in futures
and options. Investor decisions and perceptions regarding trading Futures and Options
through Divya Swaroopa are likely to be influenced by a number of important factors,
including market dynamics, product accessibility, and operational efficiency.

By enlightening these aspects, the study seeks to offer practical insights and suggestions to
improve client satisfaction and successfully accommodate investors' preferences in the
context of Divya Swaroopa's sub-brokerage services for futures and options trading. By
implementing these suggestions, Divya Swaroopa hopes to improve its reputation in the
industry and foster increased confidence and contentment among investors who use its sub-
brokerage platform.

One of the primary objectives of this study is to evaluate the role of Divya Swaroopa
Financial Services Pvt Ltd in providing sub brokerage services for futures and options
trading. Understanding the mechanisms through which Divya Swaroopa facilitates trading
activities for investors is essential in comprehending the broader landscape of financial
services offered in this sector. Another key objective is to identify the factors that influence
investors' preferences towards investment in futures and options trading. Factors such as
market conditions, risk appetite, financial goals, and the quality of services provided by
Divya Swaroopa are crucial determinants that shape investors' decisions in this complex
financial arena.

This study also aims to gauge investors' satisfaction levels with the brokerage services and
support provided by Divya Swaroopa in facilitating futures and options trading. Assessing the
quality of services, responsiveness, and overall customer experience is vital in understanding
how well Divya Swaroopa caters to the needs and expectations of its clientele.

The study seeks to analyze the risk tolerance levels and investment strategies adopted by
investors engaged in futures and options trading. Understanding how investors perceive and
manage risks, as well as the strategies they employ to optimize their investment outcomes,
provides valuable insights into the intricacies of this specialized form of trading.

Futures contracts are agreements to buy or sell an asset at a predetermined price on a future
date. Futures contracts are standardized and exchange-traded, unlike forward contracts which
are customized and over-the-counter. Key features of futures contracts include the quantity of
the underlying asset, quality, delivery date, price quotation units, and minimum price
changes. Common types of futures include stock futures, index futures, commodity futures,
and financial futures.

Options contracts, on the other hand, give the holder the right, but not the obligation, to buy
(call option) or sell (put option) the underlying asset at a predetermined price on or before a
specific date. Unlike futures, options trading involves paying a premium upfront to acquire
the contract. There are two main types of options - call options which give the right to buy,
and put options which give the right to sell. Options trading provides leverage and can be
used for speculation or hedging purposes. Options on futures contracts, known as "options on
futures", are a type of derivative that combines features of options and futures.

The key differences between futures and options are that futures require the buyer and seller
to transact the underlying asset, while options provide the right but not the obligation to do
so. Futures trading involves unlimited risk on both the long and short side, while options
trading limits the downside risk to the premium paid. Options trading is also more complex
as it involves trading premiums, while futures trading has a single futures price.

Comprehending the motivations behind investors' participation in futures and options trading
is crucial to understanding the workings of this niche type of investing. A number of
variables, including risk tolerance, market dynamics, financial objectives, and the caliber of
brokerage services offered, influence investors' preferences. The complex world of derivative
trading can be better understood by examining investor behaviors, satisfaction levels, and
investment strategies in futures and options trading. The purpose of this research is to explore
the nuances of investors' preferences in futures and options trading, providing insight into the
reasons and processes of decision-making that propel their involvement in this exciting and
rapidly evolving financial market.

Futures and options differ primarily in their contractual obligations. Futures contracts have a
high potential risk because they require both parties to fulfill the terms of the agreement,
which binds them to buy or sell assets at a predetermined price and date. However, options
give the buyer more flexibility and usually lower risk by granting them the right, but not the
obligation, to purchase or sell assets. Options give traders flexibility in their trading, but
futures are less flexible since they demand that a trade be executed at a specific price and
date. Furthermore, because both parties must adhere to the terms of the contract, futures carry
potentially infinite risk, whereas options only carry the risk associated with the option
premium. In the world of financial derivatives trading, futures and options differ
fundamentally in terms of contractual obligations and risk exposure.

RISK TOLERANCE

Risk tolerance is the degree of risk or uncertainty that an individual or organization is willing
to accept in pursuit of their financial goals and objectives. It represents the level of risk an
investor is comfortable taking on in their investments.

Risk Tolerance and Investment Decisions: Risk tolerance is a crucial factor that significantly
influences investment decisions. It has been found that risk tolerance positively impacts
investment decision-making in various financial markets. Investors with higher risk tolerance
may be more inclined to take on riskier investments to potentially achieve higher returns.
Conversely, risk-averse individuals tend to invest less in stocks and opt for safer investments.
Understanding an investor's risk tolerance is essential for aligning investment choices with
their risk appetite and financial goals.

Factors Influencing Risk Tolerance: Risk tolerance is influenced by various factors, including
financial literacy, investor personality traits, overconfidence bias, return expectations,
investment experience, and demographic data. Financial literacy plays a key role in shaping
an individual's risk tolerance, with more financially literate individuals often exhibiting
higher risk tolerance. Additionally, factors like personality traits and overconfidence bias can
impact an investor's willingness to take on risk in their investment decisions.

Relationship Between Risk Tolerance and Investment Decision-Making: Studies have shown
a positive relationship between risk tolerance and investment decision-making. Clients' risk
tolerance is assessed to provide suitable advice that aligns with their investment preferences.
Higher risk tolerance has been linked to more favorable investment decisions, indicating that
investors with a greater risk appetite may be more inclined to engage in riskier investments.
In conclusion, risk tolerance plays a significant role in shaping investment decisions,
especially in the context of social impacts. Investors with varying levels of risk tolerance may
approach investment decisions differently, with those more tolerant of risk potentially
seeking out investments that align with social values while managing financial risks
effectively.

1.2 NEEDS OF THE STUDY:

To analyse the factors influencing investors' decisions in the derivative market, including
risk, return, safety, and liquidity.0
To explor0e investors' perceptions of futures and options investments, their motivations,
investment strategies, and the impact of these financial instruments on their portfolios.
To contribute valuable insights to industry knowledge on investor behavior in derivatives
trading.

1.3 OBJECTIVES OF THE STUDY:

PRIMARY OBJECTIVE:

To study the preference of investors towards investment in futures and options at Divya
Swaroopa financial services (P) ltd

SECONDARY OBJECTIVE:

 To evaluate the role of Divya Swaroopa Financial Services Pvt Ltd in providing sub
brokerage services for futures and options trading.
 To identify the factors influencing investors' preference towards investment in futures
and options trading.
 To identify investors' satisfaction levels with the brokerage services and support
provided by Divya Swaroopa in facilitating futures and options trading.
 To analyse the risk tolerance and investment strategies of investors in futures and
options trading.

1.4 SCOPE OF THE STUDY:

 To understand the risk tolerance of the clients or investors in taking investment

decisions while investing in futures and options trading.
 To know about the investors perception towards Divya Swaroopa financial services
(P) ltd.
 To Analyse factors influencing investors' choices between futures and options trading.

1.5 LIMITATIONS:

 The study primarily focuses on investors using Divya Swaroopa Financial Services
Pvt Ltd.’s sub-brokerage platform, limiting the generalizability of findings to a
broader population of investors in futures and options trading.
 The research relies heavily on self-reported data from survey responses, which may
introduce biases such as social desirability bias or inaccuracies due to respondent
misinterpretation.
1.6 INDUSTRY PROFILE

STOCK MARKET

A stock market, equity market, or share market is the aggregation of buyers and sellers of
stocks (also called shares), which represent ownership claims on businesses; these may
include
securities listed on a public stock exchange, as well as stock that is only traded privately, such
as shares of private companies which are sold to investors through equity crowdfunding
platforms. Investment is usually made with an investment strategy in mind.

FUNCTION AND PURPOSE

The stock market is one of the most important ways for companies to raise money, along with
debt markets which are generally more imposing but do not trade publicly. This allows
businesses to be publicly traded, and raise additional financial capital for expansion by
selling shares of ownership of the company in a public market. The liquidity that an exchange
affords the investors enables their holders to quickly and easily sell securities. This is an
attractive feature of investing in stocks, compared to other less liquid investments such as
property and other immoveable assets.

History has shown that the price of stocks and other assets is an important part of the
dynamics of economic activity, and can influence or be an indicator of social mood. An
economy where the stock market is on the rise is considered to be an up-and-coming
economy. The stock market is often considered the primary indicator of a country's economic
strength and development. Rising share prices, for instance, tend to be associated with
increased business investment and vice versa. Share prices also affect the wealth of
households and their consumption. Therefore, central banks tend to keep an eye on the
control and behavior of the stock market and, in general, on the smooth operation of financial
system functions. Financial stability is the raison d'être of central banks. Exchanges also act
as the clearinghouse for each transaction, meaning that they collect and deliver the shares,
and guarantee payment to the seller of a security. This eliminates the risk to an individual
buyer or seller that the counterparty could default on the transaction. The smooth functioning
of all these activities facilitates economic growth in that lower costs and enterprise risks
promote the production of goods and services as well as possibly employment. In this way
the financial system is assumed to contribute to increased prosperity, although some
controversy exists as to whether the optimal financial system is bank-based or market-based
Recent events such as the Global Financial Crisis have prompted a heightened degree of
scrutiny of the impact of the structure of stock markets (called market microstructure), in
particular to the stability of the financial system and the transmission of systemic risk.
BEHAVIOR OF STOCK PRICES

Changes in stock prices are mostly caused by external factors such as socioeconomic
conditions, inflation, exchange rates. Intellectual capital does not affect a company stock's
current earnings. Intellectual capital contributes to a stock's return growth. The efficient-
market hypothesis (EMH) is a hypothesis in financial economics that states that asset prices
reflect all available information at the current time. The 'hard' efficient-market hypothesis
does not explain the cause of events such as the crash in 1987, when the Dow Jones Industrial
Average plummeted 22.6 percent—the largest-ever one-day fall in the United States. This
event demonstrated that share prices can fall dramatically even though no generally agreed
upon definite cause has been found: a thorough search failed to detect any 'reasonable'
development that might have accounted for the crash. (Note that such events are predicted to
occur strictly by randomness, although very rarely.) It seems also to be true more generally
that many price movements (beyond those which are predicted to occur 'randomly') are not
occasioned by new information; a study of the fifty largest one-day share price movements in
the United States in the post-war period seems to confirm this.

1.6.1 COMPANY PROFILE

Divya Swaroopa is an established brand in Chennai since 1991. Renowned for its dedicated
service for all their clients in India & Abroad. This organization offers many services
including investment in shares and Mutual funds, M & A, venture capital funding,
management & project consultancy. Divya Swaroopa Financial Services has been
consistently awarded by Kotak Securities as one of the best performers year after year since
2009 as Star Franchise.

COMPANY SERVICES

Equities:

The Equities are traded in two major exchanges in India, Bombay Stock Exchange (BSE)
and National Stock Exchange (NSE). Kotak Securities are the members of both the
exchanges.

Derivatives:

Derivative means a forward, future, option or any other hybrid contract of predetermined
fixed duration. We provide services for trading Derivatives of all four types.
Commodities:

The Commodities market is set to take the country by storms. The commodity market
facilitates trading in various commodities. In India, there are two commodity exchanges,
MCX & NCDEX.

Other Services:

They provide services for De-Materialization of the physical shares you may have & trading
services for NRIs who want to invest in the stock market back home in India through the
internet.

Let we proceed to observe the Diwya Swaroopa Financial Pvt Ltd, the subsidiary of parent
company Kotak Securities Limited, and its group of companies.

About Kotak Mahindra Group

Established in 1985, Kotak Mahindra Group is one of India's leading financial services
conglomerates. In February 2003, Kotak Mahindra Finance Ltd. (KMFL), the Group's
flagship company, received banking license from the Reserve Bank of India (RBI), becoming
the first non-banking finance company in India to convert into a bank - Kotak Mahindra
Bank Ltd (KMBL).

Kotak Mahindra Group offers a wide range of financial services that encompass every sphere
of life. From commercial banking, to stock broking, mutual funds, life and general insurance
and investment banking, the Group caters to the diverse financial needs of individuals and the
corporate sector. The premise of Kotak Mahindra Group’s business model is concentrated
India, diversified financial services. The bold vision that underscores the Group’s growth is
an inclusive one, with a host of products and services designed to address the needs of the
unbanked and insufficiently banked.

Kotak Mahindra Group has a global presence through its subsidiaries in UK, USA, Gulf
Region, Singapore and Mauritius with offices in London, New York, California, Abu Dhabi,
Mauritius and Singapore respectively. As on 31st December, 2019, Kotak Mahindra Bank Ltd
has a national footprint of 1,539 branches and 2,447 ATMs, and branches in GIFT City and
DIFC (Dubai).

About Kotak Securities

Kotak Securities Limited (KSL), a subsidiary of Kotak Mahindra Bank, is one of India’s
largest full-service stock broking firms catering to retail and institutional investors across all
segments of the capital market.
Through a tie-up with partner brokers, the company also provides direct access to the US
markets. Supported by a strong research team, robust digital trading platform, large branch
network & franchisee base, and referral coordinators spread across Kona Kona of India, KSL
processes lakhs of secondary market trades every day.

KSL provides a wide array of services including investment options in equities, derivatives
(equities, commodities, currency) and mutual funds. It also offers margin trade funding,
depository services and third-party products like insurance.
 36.6 lakh customer accounts
 182 number of Branches
 1265 Franchisees
 we cater to customers from 378 cities across India

We are corporate members with the Bombay Stock Exchange (BSE) and the National Stock
Exchange (NSE). We are also a depository participant with National Securities Depository
Limited (NSDL) and Central Depository Services Limited (CDSL).

Adjudged as the Best Broker by Finance Asia Country Awards, 2019 SERVICES OF KOTAK
SECURITIES

STOCK BROKING SERVICES

In Kotak Securities, customers can choose to trade in the stock market, invest in IPOs, mutual
funds, or currency derivatives using their preferred mode of trading. Whether customers
prefer to trade online, offline, or on a mobile app, the Kotak Securities offers a range of
options for trading at their fingertips. With a focus on user-friendly platforms and
personalized services, customers can confidently manage their investments and work towards
their financial goals.

PORTFOLIO MANAGEMENT SERVICES

For individuals struggling to manage their investments or unsure of how to make their
money work for them, DEF Investments offers a Portfolio Management Service with expert
advice. This service provides a consolidated overview of all investments, allowing customers
to make informed decisions. Kotak Securities team of experts offers tailored advice to
optimize investments towards financial goals. With DEF Investments, customers can
confidently manage their investments and watch their money grow.

DUAL BENEFIT: STOCK BROKERS + DEPOSITORY PARTICIPANTS

Kotak Securities Stock Brokers offers more than just stock broking services. The company is
also a participant in depositories such as the NSDL and the CSDL. This means that customers
can now execute transactions using the company's stock broking services and settle trades
using its depository services. With Kotak Securities Stock Brokers, customers have access to
a seamless investment experience that allows for a streamlined and efficient investment
process.
RESEARCH EXPERTISE

Kotak Securities Investments provides customers with access to in-depth stock market
analysis through its dedicated research division. The company publishes various sector-
specific research, company-specific research, macroeconomic studies, fundamental and
technical analysis of stocks that customers can access before investing their hard-earned
money. With Kotak Securities Investments, customers can make informed investment
decisions and benefit from Kotak Securities expertise in the field
 CHAPTER 2

2.1 REVIEW OF LITERATURE

Dr. Ch. Munendar Reddy’s (2023)1 presentation on "Investors Perception Towards

Derivatives Investment" explores a crucial subject for the financial markets. The literature
review probably includes a range of studies that look at investor attitudes, actions, and
perceptions regarding investing in derivatives in various situations. Researchers may have
looked into variables like risk perception, experience with derivatives, market knowledge,
and demographics that affect an investor's decision-making when it comes to derivatives. The
review may also cover how market infrastructure, regulatory frameworks, and educational
programs influence investor attitudes and involvement in derivative markets. It might also
look at how market events, like financial crises or changes in regulations, affect investor
perception of derivatives. In general, it is anticipated that the literature review will offer a
thorough grasp of the current state of research, pointing out any gaps and suggesting areas for
additional investigation to better understand investors' attitudes toward investing in
derivatives.

Abijhit Anand, N. Nithya, and S. Umamaheswari's (2022)2 research aims to determine the
risk, investment, and awareness of investors with regard to trading options and futures in the
Indian stock market. For this study, the literature review probably includes earlier studies on
the behaviour and choices made by investors in financial markets, with a focus on trading in
derivatives. With an emphasis on the significance of shifting market conditions and
investment opportunities, academics have probably studied the evolution of investor
preferences and attitudes toward different investment avenues, such as fixed deposits, mutual
funds, and the stock market. Further research on the variables influencing investors' choices
to switch from safer assets like stocks and bonds to riskier ones like futures and options could
be included in the review. Additionally, it might go over how age, gender, and income level
affect investor behaviour and the likelihood that they will take risks when trading derivatives.
Overall, the literature review is anticipated to lay the groundwork for the empirical analysis
carried out in the study by offering insights into the intricate interplay of factors influencing
investors' decisions and attitudes toward options and futures trading in the Indian stock
market.

Dr. Nilam Panchal, Parth Langhneja, and Jigar Makwana's (2022)3 research aims to
comprehend how investors view the derivatives market within the framework of the Indian
stock market. This study's literature review most likely includes earlier national and
international studies on investor behaviour and derivatives trading. It's likely that academics
have studied the development of the derivatives market, following its rise and importance in
the financial markets over the previous few decades. The review could also cover the
function of derivatives in risk management and improving market efficiency, as well as the
legal and regulatory environment surrounding derivatives trading, especially in India with the
Securities and Exchange Board of India (SEBI). Additionally, the review might look at
research examining how investors feel about derivatives and how they use various trading
strategies, perceive risk, and make decisions. Furthermore, it might delve into the difficulties
and problems that investors in the derivatives market encounter, like mental obstacles, market
fluctuations, and adherence to regulations. In summary, the purpose of the literature review is
to lay the foundation for the empirical analysis that will be conducted in the research paper
by offering insights into the factors that impact investor perception and behavior in the
derivatives market.

Dr. N. Selvaraj’s (2021)4 study explores the role that derivatives play in the financial
markets of India, especially in light of the 1991 economic reforms. The study highlights the
significance of derivatives in controlling volatility in capital and foreign exchange markets by
emphasizing their role in maximizing profits while minimizing risks for traders. Even with
the efforts of regulatory organizations such as the RBI to encourage the use of derivative
instruments, investor awareness is still low. The purpose of the study is to evaluate the
investing public's awareness level and suggest ways to raise it while promoting the use of
derivatives as hedging instruments. The results of the study can help broker houses and
regulatory bodies create programs that increase public knowledge of derivatives. The study
also emphasizes the significance of making safe and well-informed investment decisions,
supporting a wellrounded strategy that blends market monitoring with in-depth stock
knowledge. All things considered, the study advances knowledge about the function of
derivatives in investing strategies and emphasizes the necessity of investor education to
maximize investment returns.

Haritha P.H. and Rashmi Uchil's (2020)5 study attempts to examine the connection
between different elements impacting investor sentiment and investment decision-making
(DM) among
Indian individual investors. The study offers a novel conceptual framework that takes into
account the ways in which investor sentiment and decision-making processes are shaped by
elements like the market effect, herding behaviour, media influence, social interaction, and
advocate recommendations. In order to assess the relationships between these factors and
their influence on investor sentiment and decision-making, the study employs structural
equation modelling through a questionnaire-based survey that includes 875 individual
investors. The results emphasize herding and the market effect as the two main factors
influencing investor sentiment. They also highlight the relative significance of various
awareness sources, including the media, social media, and advocate recommendations.
Increased awareness campaigns to improve investors' comprehension of market conditions
and boost confidence in investment decision-making are recommended by the study, which
offers practical implications for
investors to steer investment decisions effectively.

Preksha Dassani, Vijaya Kittu Manda, Vishnu S Kumar’s (2020)6 study examines the
development and importance of the derivatives market in relation to the Indian stock market,
with a focus on the regulatory frameworks governed by the Securities and Exchange Board of
India (SEBI). This paper presents the growth trajectory of the derivatives market since the
National Stock Exchange of India (NSE) introduced Index Futures in 2000, marking the
beginning of the segment's existence. The study highlights the significance of derivatives as
instruments for individuals and businesses to pursue high-return ventures while reducing
risks, stressing their role in managing risk related to asset price fluctuations. The article also
covers common equity derivatives market instruments like forwards, futures, options, and
swaps.

U M Gopal Krishna, Aliya Sultana, and T. Narayana Reddy's (2019)7 study in Kurnool,
Andhra Pradesh, examines how investors' perceptions of risk and their capacity to take on
risk vary depending on their level of knowledge. This study's literature review probably
includes earlier studies on investor behaviour, risk perception, and investment decision-
making procedures. Researchers that have looked into the relationship between knowledge
and education and investor attitudes toward risk have found that greater financial literacy is
frequently linked to a higher willingness to take on investment risk. Furthermore, research on
the influences on investors' risk perceptions—such as socioeconomic status, personal
experiences, and demographics—may also be covered in the review. The literature review is
anticipated to offer valuable insights into the intricate relationship among knowledge, risk
perception, and investment behavior. These insights will then be utilized to inform the
empirical analysis carried out during the study.

Shailesh Rastogi and Chaitaly Athaley's (2019)8 study looks into how volatility is
integrated into three important financial markets: options, futures, and spot. The study looks
at simultaneous equation modeling of volatility across these markets using the generalized
method of moments (GMM) and testing for structural breaks. The primary conclusion
indicates that there is a correlation between the volatility of the spot and futures markets and
the volatility of the options market, but not between the two. This suggests that investors can
use options as a hedging tool and that policymakers shouldn't be worried about the immediate
impact of options markets on spot markets. By providing fresh perspectives not previously
covered in the body of literature, the study emphasizes how different the options market
behavior is from that of the futures market. In addition to helping to better understand market
dynamics, this research offers investors and policymakers useful information for developing
strategies and regulations pertaining to derivatives markets.

Akhil Sebastian’s (2017)9 study on "Awareness and Perception of Mutual Funds Among
Investors" delves into an important facet of investment behavior and financial literacy. The
lack of knowledge and misconceptions surrounding mutual funds have probably been studied
by academics; these include cultural attitudes toward investing, complicated financial jargon,
and low investor education. The review may also cover the difficulties mutual fund
companies have in creating products that specifically address the needs of different investor
groups, including merchants, small business owners, and farmers. It might also stress the
value of investor education programs in raising knowledge and assurance regarding mutual
fund investments, as well as the part regulators and industry players play in supporting
financial literacy campaigns. In an effort to close the gap between investor perception and the
real benefits of mutual fund investments, the review may also go over the possible
advantages of mutual funds in comparison to other investment options. In general, it is
anticipated that the literature review will shed light on how Indian investors currently
understand and perceive mutual funds, pointing out areas that need improvement and
potential directions for future study to advance financial inclusion and investment literacy.

K. Sarathkumar and Dr. SP. Dhandhayuthapani's (2016) 10 study explores investor

attitudes in the Trichy derivatives markets, with an emphasis on comprehending their
investment strategies. The study's literature review probably looks at earlier studies on
investor perceptions of derivatives markets in India and around the world. Many factors, such
as risk perception, market knowledge, prior experiences, and demographic traits, have
probably been studied by academics in relation to how investors behave and think when
trading derivatives. Furthermore, the review could go over the significance of investor
education and awareness campaigns in influencing public perceptions of derivatives markets,
in addition to the function of market infrastructure and regulatory frameworks in promoting
investor trust. Additionally, it might investigate the application of various techniques, like
surveys, interviews, and behavioral experiments, to the analysis of investor attitudes. The
literature review is anticipated to furnish a thorough comprehension of the current research
terrain, pinpointing deficiencies and prospects for additional exploration into investor
sentiments in derivatives markets, specifically in the Trichy area.

Gautam Indu and Kavidayal PC's (2016)11 study explores how market participants in
Uttarakhand, India, view derivative trading. This study's literature review probably looks at
earlier studies on derivative markets and how they affect the larger financial scene. The
development of derivatives and their function in risk management and improving market
efficiency have been thoroughly studied by academics, especially in relation to the Indian
capital markets. The review may also go over research on the connection between spot
markets and derivative trading, as well as the possible impacts of derivative trading on
market liquidity and stability. Overall, it is anticipated that the literature review will set the
stage for the empirical analysis carried out in the study and offer insights into investors'
perspectives and attitudes toward derivative trading, taking into account variables like age
and risk tolerance.
 CHAPTER 3

RESEARCH METHODOLOGY

3.1 INTRODUCTION

Research methodology, as its name suggest is the study of methods, so as to solve the
research problem. It is the science of learning the way research should be performed
systematically. It is the way of studying how research is carried out. In other words, Research
methodology is the specific procedure or techniques used to identify, select, process, and
analyse information about a topic. In a research paper, the methodology section allows the
reader to critically evaluate a study’s overall validity and reliability.

3.2 RESEARCH DESIGN

In order to obtain complete and accurate information, descriptive research is chosen.

Descriptive research includes surveys and fact-finding of various kinds.

3.3 RESEARCH APPROACH

The survey approach offers a structured method to gather quantitative data efficiently and
systematically, enabling insights into the perspectives and behaviours of participants in the
chosen context of Chennai.

3.4 RESEARCH TOOL

The research tool used here in this study is Questionnaire. The questionnaire is prepared and
distributed among the clients of Divya Swaroopa financial service. The main objective of the
survey is to know the investors preference towards investment in futures and options and
their comfortability in taking risks and to know their satisfaction level of the of the company.
3.5 SAMPLING AREA

The chosen sampling area of Chennai offers a rich and diverse population, facilitating
comprehensive data collection and analysis within a dynamic urban setting.

3.6 SAMPLE SIZE

A sample size of 140 respondents was chosen for representative data collection within
practical constraints, ensuring statistical reliability.

3.7 SAMPLING METHOD

Here the sampling method used was simple random sampling.

DATA COLLECTION

PRIMARY DATA

The data collected for the purpose of investigation directly by an investigator is called
primary data collection. Primary data is collected with the questionnaire.

SECONDARY DATA

For the purpose of investigation, the investigator can make use of data which have been
already collected by the other researcher. It is known as Secondary data. Published and
unpublished are the main source of secondary data. The secondary data which was collected
for this research are from Websites, Journals and research Articles.