“RETAIL INVESTORS IN INDIA – A STUDY ON EMERGING TRENDS”

Research Design
BY
Mr. G. SURENDAR
Ph. D Scholar

Under The Guidance of

PROF. S. KAMALESHWAR RAO

DEPARTMENT OF COMMERCE & BUSINESS MANAGEMENT

KAKATIYA UNIVERSITY
WARANGAL

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INTRODUCTION
A retail investor is who buys and sells security for their personal
account, and not for any another company or organization. A retail investor is
directly and indirectly playing a pivotal role in mobilizing the funds by
investing their savings in various forms like equity shares, debenture, bonds,
mutual funds, post office savings, pension schemes, insurance schemes, and
NSCs etc. Certainly there is an increase in the number of retail investors who
are coming to the stock market to trade from the day to day. The awareness
about the stock markets has increased in the retail investors. Still stock market
trading as a concept is less understood by the retail investors.
At present Indian capital market is dominated by the QIBs which
include FIIs, FIs and MFs by contributing 50% of share in the total issue in
case of book- building method, where as only 35% of the issue is reserved to
retail investors and remaining 15% to non institutional high net worth
investors. It shows the much more need of increasing participation of retail
investors in the capital market. This will be possible by making them to make
more aware and giving freedom to investment, there are constraints which are
pushing back the retail investors not to invest in the capital market. The SEBI
and Central Government of India have to initiate and make them to increase the
participation of retail investors.
STATEMENT OF PROBLEM:
India has a large reservoir of small investors belonging to the middle
class households. The savings rate in India is fair compared to other developing
countries. Though investors and investor behavior differ, the ultimate goal of
an investor is to attain higher return. Since, last two decades Indian capital
market has been changed rapidly, various new instruments have been
introduced in the capital, changes in mechanism like dematerialization, online
trading, delisting, buy back of shares, corporate governance, and taken various
investor protective measures and conducted various programs on educating the
investors. During this time retail investors has faced many problems and now

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also they are continuing with old as well as new problems and challenges in
understanding the changes taking place in the market.
In this regard, this study will cover the opinion of a Retail Investors in
India on market changes.

NEED AND IMPORTANCE:

The growing popularity of the capital market investment has been
evident from the continuous increase in the number of individual investors.
Investors are in the capital market for high rewards. At the same time, they can
play an important role in the industrial development of a nation. Day by day the
Indian market is getting institutionalized and the role of retail investors is
getting diminished. Hence, this study aimed to know the opinion of the retail
investors about the various things like dematerialization, online trading, IPOs,
buy back of shares, delisting, corporate governance, investors education
programs, problems of retail investors and role of SEBI. To give suggestions
for better understanding the emerging trends, to overcome the problems and to
increase the participation of retail investors in Indian capital market

OBJECTIVES OF THE STUDY:

The study “Retail Investors in India-A Study on Emerging Trends” is
aimed at working on the following objectives:
1. To know the emerging trends of Indian capital market in general
2. To develop the demographic profile of retail investors.
3. To study the opinion of retail investors on emerging trends of Indian
capital market and it impact on them
4. To examine the role of SEBI in the protection of interest of retail
investors

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HYPOTHESES OF THE STUDY

1. There is no significant difference among the sample respondents

2. There is no significance difference among the sample respondents in

understanding the emerging trends of Indian capital market

3. The SEBI is protecting the interests of the retail investors

SCOPE OF THE STUDY:

The study of the “Retail Investors in India – A study on Emerging
Trends” covers, opinion and attitude of the retail investors towards the changes
have been taken place in the capital market, problems of retail investors, the
role of SEBI in protecting the interest of retail investors, providing suggestions
for better understanding of emerging trends, to overcome the problems and to
increase the participation of retail investors in Indian capital market.

RESEARCH METHODOLOGY:

Primary Data:
My methodology of study relies primarily in depth interviews of
investors through structured questionnaires covering a variety of interrelated
aspects such as the investor’s socio-economic and financial position, including
income and types of investment held, past experiences, future investment
intentions, problems being felt with regard to the use of d-mat system, online
trading, IPOs, buy back of shares, delisting, corporate governance, role SEBI,
investor education etc.
A country wide study of this kind is difficult for an individual researcher like
me; hence I selected cities and towns which can represent the all geographical
places of India.
This study treats an individual as the economic unit for our study
purpose. The data will be collected from the individual investors only.

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 Study has planned to collect the primary data through the well structured
questionnaire which is framed with simple understanding language and
categories into various sections. To collect the data from retail investors I have
planned to take the help of my MBA students and my self and they will go to
the field and collect the data from the investors. We will use the E-mails and
Telephones also to collect the data according the requirements.
Each student (interviewer) is given instructions in the form of
“Guidelines for Interviewers”. Every questionnaire will be scrutinized and the
improperly filled questionnaires will be returned.
We conduct interviews in the selected cities and towns of nation. The
sample covers those who are willing to cooperate in the survey by volunteering
to provide the information required. We believe our method of sampling is
good enough to give a feel of the entire system by covering the main stream of
investors.
Admittedly, the sample does not represent the country’s entire
population but only “the universe of potential investors”.
Those below the poverty line or having little voluntary savings for
financial investments or no ability to understand investments, like shares and
bonds, had to be excludes, because they were irrelevant for the purpose of the
present study.
Secondary Data:
Secondary data will be used to supplement the findings drawn from the
primary data. The primary source of data is retail investors. The secondary
data will be collected from the various sources available like websites,
magazines, journals etc. wherever necessary. The others sources will also be
used for the purpose
Sample Size and Characteristics:
We would like to take 400 individual investors as sample size of our
study. These investors spread over selected major cities in the country. In
every city a good number investors will be contacted personally and data will
be collected through questionnaire.

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Techniques for Analysis
The requirements of analysis in keeping with the frame of objectives
have so necessitated, the sample data will presented in a cross-sectional form,
invariably resulting into r x r contingency tables. Such tables will permit the
application of chi-square (x2) test statistic for examining the association
between age, income and city of dwelling on the demographic and investment
related characteristics of the sample investors.
The opinion of the investors on Likert type statements relating to
various capital market reforms with opinion levels ranging from strongly agree
to strongly disagree. The level of agreement expressed by investors for various
reasons will be analysed. For analysis purposes, while entering the data
strongly agree option was assigned a weight of five and strongly disagree
option will be assigned a weight of one. In between these two extremes other
levels such as agree, neither agree nor disagree and disagree will assigned
weights of four, three and two respectively. Based on the mean value the level
of agreement of investors with the statements will be identified. Thus, the
investor’s opinion on emerging trends will be analyzed using mean values.
Further standard deviation is used to judge the homogeneity of the mean
values.

CHAPTER LAYOUT:
The Thesis work is presented as follows:
Chapter – I : Introduction
(Capital Markets -Retail Investor)
This chapter is devoted to present theoretical aspects of
Capital Markets and its reforms, retail investors meaning
and role in the capital market and impact of capital market
reforms on individual investors. It provides need and
importance of the study, objectives, scope, limitations,
methodology, and period of the study, chapterisation
scheme.

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Chapter – II : Literature Review:
This chapter covers the previous studies on the capital
markets and specially retail investors with reference to
emerging trends and presented the results of their study in
brief.
Chapter – III : Retail Investor’s Demographic Profile
This chapter presents demographic characteristics of the
retail investors like age, sex, income, education,
occupation and city of residence
Chapter – IV : Opinion Survey of Retail Investors
This chapter will study the opinion of retail investors
about the emerging things like dematerialization, online
trading, IPOs, buy back of shares, delisting, corporate
governance etc., and their problems in understanding
these trends
Chapter –V : Retail Investors Vs SEBI
This chapter focuses on objectives of SEBI, powers,
functions, measures taken to protect the interest of the
investors, investors educating programs conducting by
SEBI, need and its awareness among the shareholders.
It will also study the opinion of retail investors on the role
of SEBI.
Chapter – VI: Summery of Findings, Conclusions and Suggestions
This chapter will summarize all the findings, will present
conclusions and try to give the required suggestions to
better understanding of emerging trends and to increase
participation of retail investors in Indian capital market

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LIMITATIONS:

 The study is intended to bring out the importance of the retail investors

in Indian capital market

 The study is confined to retail investors who have been operating for

greater than are equal to two years and still performing during the period

of the study. As such the study may not be extensive.

 The opinion of retail investors on emerging trends will be evaluated

using few performance measures like averages, standard deviation, chi-

square test

 The study is confined to study the opinion of the retail investors in

Indian capital market like, dematerialization, online trading, buy back of
shares, delisting, corporate governance, problems of retail investors,
investor’s education programs, role of SEBI in protecting the interest of
retail investors etc.
 The study is confined to the selected cities India like, Bangalore,
Bombay, Chennai, Hyderabad, Delhi, Calcutta, Warangal.
 The primary data relevant for the study may be much depending upon

the cooperation of the retail investors.

 The secondary data collected through various journals and bulletins may

have impact of price level changes on rupee indicated values.

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