INTERNATIONAL JOURNAL OF LATEST TECHNOLOGY IN ENGINEERING,
MANAGEMENT & APPLIED SCIENCE (IJLTEMAS)
ISSN 2278-2540 | DOI: 10.51583/IJLTEMAS | Volume XIV, Issue I, January 2025
www.ijltemas.in Page 140
Perception of Retail Investors towards Capital Market – A Study
Dr. Devananda H M
1
, Dr. Krishna M.M
2
, Dr. Vinith H P
3
1,3
Associate Professor, Dept. of MBA, Adichunchanagiri Institute of Technology, Chikkmagaluru – 577102.
2
Principal, Parivarthana Business School, Mysuru – 16.
DOI : https://doi.org/10.51583/IJLTEMAS.2025.1401015
Received: 28 January 2025; Accepted: 31 January 2025; Published: 07 February 2025
Abstract: Market facilitates the trade of goods and services. Similarly, financial market facilitates the sale and purchase of
financial assets/instruments. And the financial market comprises two major markets viz., capital market and money market.
Capital market is important for mobilizing funds for capital formation and investments, and forms a very vital link for
economic development of any country. It (i.e., capital market) provides ways for issuers to mobilize capital from investor.
The primary objective of the study is to assess and analyse the level of awareness among the respondents about capital market
operations and different investment avenues. The study is based on the data/material collected from both primary and
secondary sources. Random sampling method is used to select the respondents. And the sample size is 100 selected from
different categories of investors and investment advisors. The major findings of the study are majority of the respondents
prefer life insurance policies and bank deposit schemes for their investment. Real estate, gold, government bond and co-
operative societies (shares) are also preferred investment avenues. Majority of the respondents are investing for medium (1 –
3 years) to long term (3 years and more). And the remaining is investing for less-than one-year period. Finally the outcome of
the research is concluded as follows The retail investors from Shivamogga city have certain problems as can be seen other
parts of the state/country. In spite of these problems, investment in capital market is slowly picking up. While knowledgeable
investors have remained in the market for long, others forget it and exit. This situation has to improve.
Keywords: Capital Market, Investments, Securities, Financial System, Monetary Policy
I. Introduction
Market facilitates the trade of goods and services. Similarly, financial market facilitates the sale and purchase of financial
assets/instruments. And the financial market comprises two major markets viz., capital market and money market.
Capital market can be segregated into two segments as primary market and secondary market. The primary market is mainly
used by issuers for raising fresh capital from the investors by making Initial Public Offerings (IPOs). The secondary market
provides liquidity to these investments through trading and settlement on stock exchanges.
Capital market is important for mobilizing funds for capital formation and investments, and forms a very vital link for
economic development of any country. It (i.e., capital market) provides ways for issuers to mobilize capital from investors
(who have surplus money available from savings for investment).
The Indian money market is market for short term money/financial assets that are close substitutes for money. And the
maturity period is short of less than one year. The important feature of the money market instruments is that they are liquid
and can be converted quickly into money at low cost.
Money market occupies an important place in modern financial system offering monetary service and credit intermediation in
the “near bank capital market” with maturity period of three months or less. The money market is so named as it enables
participants to acquire cash on short notice or to place excess funds in easily saleable short-term marketable securities.
Indian Capital Market
Trading was at that time limited to a dozen brokers and their trading place was under a banyan tree in front of the Town Hall
in Bombay. These stockbrokers organized an informal association in 1875 called, Native Shares and Stock Brokers
Association. Bombay. The stock exchanges in Calcutta and Ahmedabad, also industrial and trading centers, came up later.
The Bombay Stock Exchange was recognized in May 1927 under the Bombay Securities Contracts Control Act, 1925. It has
been a long journey for the Indian capital market. Now, the capital market is organized, fairly integrated, mature, more global
and modernized. The Indian equity market is one of the bests in the world in terms of technology. Advances in computer and
communications technology coming together on Internet are shattering geographic boundaries and enlarging the investor
class. Internet trading has become a global phenomenon. The Indian stock markets are now getting integrated with global
markets.
Role of Indian Capital Market
Capital market plays an important role in promoting and sustaining the growth of any economy. It is an important and
efficient conduit to channelize and mobilize funds to enterprises and provide an effective source of investment in the
economy.
(1) Capital Arrangement: The capital market promotes capital formation in the country. Rate of capital formation depends
upon savings in the country. Though the banks mobilize savings, they are not adequate to match the
INTERNATIONAL JOURNAL OF LATEST TECHNOLOGY IN ENGINEERING,
MANAGEMENT & APPLIED SCIENCE (IJLTEMAS)
ISSN 2278-2540 | DOI: 10.51583/IJLTEMAS | Volume XIV, Issue I, January 2025
www.ijltemas.in Page 141
(2) of the industrial sector. The capital market mobilizes savings of households and of the industrial concerns and these
mobilized savings are then invested for productive purposes. Thus, savings and investment lead to capital arrangement /
formation in the country.
(3) Economic Growth: Capital market promotes the progress and growth of industrial sector as well as other sectors of the
economy. The main purpose of the capital market is to transfer resources from masses to the industrial sector. The capital
market makes it possible to lend funds to various projects, both in the private as well as in the public sector.
(4) Development of Backward Area: Capital market provides funds for the projects in industrially backward areas. This
facilitates the economic development of backward areas and promotes backward regional development. Thus, it contributes to
the balanced regional development.
(5) Generates Employment: Capital market generates employment - (i) Direct employment in the capital markets such as
stock markets, financial institutions etc., and (ii) Indirect employment in all sectors of the economy as the funds are provided
for developmental projects which generate employment opportunities.
(6) Long-term Capital to Industrial Sector: Capital market provides a stable long-term capital for the companies. Once the
funds are collected through issues, the money remains with the company. The company is left free with the funds while
investors exchange securities among themselves.
(7) Mobilization of Foreign Capital: Capital market makes it possible to mobilize foreign capital. Indian firms are able to
mobilize capital from overseas markets by way of bounds and other securities. Such foreign exchange funds are vital for the
economic development of the nation.
(8) Developing Role of Financial Institutions: Various agencies of capital market such as Industrial Financial Corporation
of India (IFCI), State Finance Corporations (SFCs), Industrial Development Bank of India (IDBI), Industrial Credit and
Investment Corporation of India (ICICI), Unit Trust of India (UTI), Life Insurance Corporation of India (LIC), etc., have
been rendering useful service to the growth of industries. They have been performing financing, promoting and underwriting
functions of capital market.
II. Literature Review
Many researchers, both individual and institutional researchers, have worked on different dimensions of capital market in the
past. An attempt is made here to review a few important studies with the objectives of obtaining a comprehensive idea about
the subject matter of the present study and also to identify the research gap.
Nagraj (1996) says that Indian capital market witnessed a rapid growth since 1980. It accelerated by the end of the decade.
This is also significant in comparison with other emerging market economies. Increase in nominal interest rates since early
last decade, incentives offered on traded securities and changes in related policies seem responsible for this development.
Anuradha Reddy M. (2011) felt that Capital market is the backbone of any economy. The economic disparities can be
reduced by encouraging the retail investors to invest and participate in the economic activities aimed at economic
development. A survey results reveal that only 12 per cent of the savings amount is coming to capital market. In India,
currently, 19 stock exchanges are operating with a large number of brokers. As the income levels are increasing continuously,
they are now in a position to invest in the assets. If this exercise succeeds in building confidence, India can exceed all other
major capital markets.
Shanmugasundaram (2011) opines that investing may offer explicit benefits like status and feelings of social responsibility
besides utilitarian benefits like low risk in combination with high returns. The investor behaviour is analysed to ascertain
whether they behave rationally or irrationally towards various capital market information like bonus issues, rights issues,
dividend declaration, etc., and the result shows that the investors behave rationally towards specific capital market
information. Investor decisions are influenced by psychological factors and behavioural dimensions in accordance with the
research results shown in other counties.
Kaushal A. Bhatt (2013) states that investment is the utilization of resources in order to increase income and output in
future. Investment means putting money to earn more money. Most of the investors are very sensitive about safety of their
investment. But investors who have proper knowledge and willingness to take risk up to some extent are investing in equity
market. Bank interest rate is also decreasing since from last few years and therefore, investors move towards other avenues
like mutual funds, bonds, equity market and others like land, gold, buildings etc. Therefore, the author concludes that
investors in Jamnagar city are investing their money with the balance of safety, reliability and return on investment.
On the lines of the above, many more researchers have worked on different dimensions of capital market. However, studies
on the perception of retail investors towards capital market and its operations are few and no researcher has worked on the
topic of the present study viz., Perception of Retain Investors towards Capital Market. Hence, there is a need for the presented
study.
Statement of the Problem
Investment is expected to yield profit to the investors. Never the less investment is associated with many risks such as market
volatility, change in interest rate, high IPO price, speculation, close of business etc. These are de-motivating factors, yet there
is a desire among public to invest a portion of savings to build sizeable income in course of time. Thus, it can be stated that
INTERNATIONAL JOURNAL OF LATEST TECHNOLOGY IN ENGINEERING,
MANAGEMENT & APPLIED SCIENCE (IJLTEMAS)
ISSN 2278-2540 | DOI: 10.51583/IJLTEMAS | Volume XIV, Issue I, January 2025
www.ijltemas.in Page 142
participation of investors in capital market and volume of investment are dependent on the perception of investors regarding
profitability and risk factors in capital market.
Objectives of Study
The primary objective of the study is to assess and analyse the level of awareness among the respondents about capital market
operations and different investment avenues. In order to achieve this objective, a few more supporting objectives set. They
are presented below.
(1) To assess the level of awareness among respondents (i.e., retail investors) about capital market operations
(2) To examine the investment habit of respondents and the pattern of their investment
(3) To offer suggestions for educating retail investors about capital market operations
III. Methodology
Since the subject matter of this study is the investing public and its perception towards investments, descriptive method is
followed in preparing the research. The study is based on the data/material collected from both primary and secondary
sources. Random sampling method is used to select the respondents. And the sample size is 100 selected from different
categories of investors and investment advisors. Secondary data are also collected from books, journals, business dailies like
Economic Times, Business Line, Business Standard, etc., websites. The analysis is descriptive in nature. Statistical tools such
as Mean, Standard Deviation, Coefficient of Variation, etc., are used to analyse the responses.
Data Analysis
Sources of Information
In order to ascertain the sources from which the retail investors are obtaining the relevant information about the capital
market and profitable avenues available for 34 Perception of Retail Investors towards Capital Market – A Study investment,
the respondents were asked to specify their major sources of information. The responses obtained from them are tabulated
below (Table – 1.1).
Table – 1.1: Major Sources of Information
Sl. No.
Major Sources of Information
Number of
Respondents
%age of
Respondents
(1)
Advertisement in TVs and Newspapers
12
12
(2)
Friends and Relatives
24
24
(3)
Financial Analysts/Advisors
30
30
(4)
Company Sales force
26
26
(5)
Others
8
8
Total
100
100
Source: Field Survey
It can be observed from the above that 30 respondents are getting the necessary information about investment avenues from
the financial analysts and/or advisors. Another 26 respondents are receiving the information from the sales force of
companies concerned and another 24 respondents are receiving the necessary information from their friends and/or relatives.
For another 12 respondents, advertisements in televisions and/or newspapers are major source of information.
Income and Savings
It may be noted here that the amount and rate of savings depends upon the amount of income. In this backdrop, responses
obtained from the respondents about the relative share of their savings out of their income and the same is presented below
(Table – 1.2).
Table – 1.2: Percentage of Income Saved
Sl. No.
%age of Income Saved
(1)
< 10
(2)
10 - 25
(3)
25 - 50
(4)
50 - 75
(5)
≥ 75
INTERNATIONAL JOURNAL OF LATEST TECHNOLOGY IN ENGINEERING,
MANAGEMENT & APPLIED SCIENCE (IJLTEMAS)
ISSN 2278-2540 | DOI: 10.51583/IJLTEMAS | Volume XIV, Issue I, January 2025
www.ijltemas.in Page 143
Total
Source: Field Survey
It is clear from the above table that 30% of the respondents are saving 10%-25% of their income. Another 26 respondents are
saving 25% - 50% of their periodical income followed by 23 respondents who are saving 50% - 75% of their income.
However, 18 respondents are saving only less-than 10% of their income. The remaining three respondents are saving 75%
and more of their income.
Determinants of Investment
The respondents were requested to provide their response as to what factors influence their investment decisions. The
responses provided by them are presented below (Table 1.3).
Table – 1.3: Determinants of Investment
Sl.
No.
Factors considered while
Investing
Number of
Respondents
%age of
Respondents
(1)
Stable and Regular Return
14
14
(2)
Capital Appreciation
8
8
(3)
Tax Benefits
17
17
(4)
Safety
28
28
(5)
Savings for the Future
26
26
(6)
Liquidity
7
7
Total
100
100
Source: Field Survey
It is obvious from the above that for 28 respondents, safety of their investment fund is the important factor which they
consider while deciding to invest in any financial instrument. For another 26 respondents, it is savings for their future life
which determines the investment decision. In the 17 respondents, tax benefit is the major determinant or influencing factor of
their investment decision. Of the remaining, 14 respondents consider stable and regular return, and another 8 respondents
consider scope for capital appreciation as an important factor, and for the remaining 7 respondents, liquidity is the major
determinant.
Source of Sensex Information
The relevant details about the sources of Sensex information of respondents are collected from the respondents and the same
is tabulated below (Table – 1.4).
Table – 1.4: Source of Sensex Information
Sl.
No.
Sources of Sensex
Information
Number of
Respondents
%age
ofRespondents
(1)
Newspapers
12
12
(2)
Business Dailies
12
12
(3)
Magazines/Journals
24
24
(4)
Electronic Media
18
18
(5)
Online
34
34
(6)
Others
0
0
Total
100
100
Source: Field Survey
Majority of the respondents (34) obtain the Sensex information from website and/or through online. Another 24 respondents
collect the same from magazines and/or journals and another 18 respondents obtain the Sensex information from electronic
media. Of the remaining, 12 respondents collect the Sensex information from newspapers and remaining 12 respondents
obtain the information from business dailies.
Mode of Investment Transaction
The relevant details about the mode of investment transactions are collected from the respondents and the same is tabulated
below (Table – 1.5).
INTERNATIONAL JOURNAL OF LATEST TECHNOLOGY IN ENGINEERING,
MANAGEMENT & APPLIED SCIENCE (IJLTEMAS)
ISSN 2278-2540 | DOI: 10.51583/IJLTEMAS | Volume XIV, Issue I, January 2025
www.ijltemas.in Page 144
Table – 1.5: Mode of Investment transaction
Sl.
No.
Mode of Investment Transaction
Number of
Respondents
%age of
Respondents
(1)
Through Primary Market
15
15
(2)
Through Secondary Market
33
33
(3)
Both Primary and Secondary Markets
52
52
Total
100
100
Source: Field Survey
It can be observed from the above that majority of the respondents (52) invest through both primary and secondary markets.
Of the remaining 48 respondents, 33 respondents invest through secondary market. And the remaining 15 respondents invest
through primary market.
Total Investment made to-date
Details about the amount of investment made so far by the respondents are collected from them. These details are presented
below (Table – 1.6).
Table – 1.6: Total Investment made to-date by Respondents
Sl.
No.
Amount of Investment made to-
date (₹)
Number of
Respondents
%age of
Respondents
(1)
< 50,000
12
12
(2)
50,000 – 1,00,000
28
28
(3)
1,00,000 – 5,00,000
32
32
(4)
5,00,000 – 10,00,000
26
26
(5)
≥ 10,00,000
12
12
Total
100
100
Source: Field Survey
It can be observed from the above that 32 respondents have invested ₹1 lakh – ₹5 lakh each till now (March 2019, survey
period). Another 28 respondents have invested ₹50,000 to ₹1 lakh each. Further, 26 respondents have invested ₹5 lakh to ₹10
lakh each. Of the remaining 24 respondents, 12 each have invested less-than ₹50,000 and ₹10 lakh or more each.
Portion of Saving Invested in Securities
The relevant details about the portion of savings invested in shares/securities by the respondents are collected from them and
the same are tabulated below (Table – 1.7).
Table – 1.7: Portion of Savings is Invested in Securities
Sl.
No.
Portion of Savings Invested in
Securities (%)
Number of
Respondents
%age of
Respondents
(1)
< 10
12
12
(2)
10 – 25
26
26
(3)
25 – 50
24
24
(4)
50 – 75
17
17
(5)
≥ 75
21
21
Total
100
100
Source: Field Survey
It is obvious from the above that 12 respondents are investing less-than 10% of their savings on financial instruments such as
shares, debentures, etc. On the other hand, 21 respondents have invested 75% or more of their savings in securities. 26
respondents are using 10 – 25% of their savings for the purpose of purchasing financial instruments. Of the remaining, 24
respondents are using 25 – 50% of their savings for investment purpose. And the remaining 17 respondents have invested 50
– 75% of their savings in financial instruments.
INTERNATIONAL JOURNAL OF LATEST TECHNOLOGY IN ENGINEERING,
MANAGEMENT & APPLIED SCIENCE (IJLTEMAS)
ISSN 2278-2540 | DOI: 10.51583/IJLTEMAS | Volume XIV, Issue I, January 2025
www.ijltemas.in Page 145
Preference for Investment
The relevant details about the preference for investment by the respondents are collected from them and the same are
tabulated below (Table – 1.8).
Table – 1.8: Preference for investment
Sl.
No.
Preference for Investment
Number of
Respondents
%age of
Respondents
(1)
Real Estate
7
7
(2)
Gold
12
12
(3)
Government Bonds
9
9
(4)
Co-operative Society
14
14
(5)
Bank Deposit Schemes
26
26
(6)
Insurance Schemes/Policies
32
32
Total
100
100
Source: Field Survey
It can be seen from the above that for majority of respondents (32), the most preferred avenue for investment is taking
insurance policies. For another 26 respondents, deposit schemes offered by the banking companies are the preferred scheme
for parking their savings. Another 14 respondents prefer to keep their savings in co-operative societies. Of the remaining, 12
respondents prefer to invest in gold, 9 respondents in government bonds and 7 respondents wish to invest in real estate.
Duration of Investment
The respondents were requested to provide the information about the duration for which they normally prefer to invest their
money. And the responses provided by them are summarized in the following table (Table – 1.9) followed by a brief analysis
of the same.
Table – 1.9: Duration of Investment
Sl.
No.
Duration of Investment
Number of
Respondents
%age of
Respondents
(1)
Short-term, less-than 6 months
7
7
(2)
Short-term, 6 months to 1 year
16
16
(3)
Medium-term, 1 - 3 years
21
21
(4)
Long-term, 3 - 5 years
20
20
(5)
Long-term, more than 5 years
36
36
Total
100
100
Source: Field Survey
A careful observation of content of the above table reveals that 36 respondents are investing their money for longer period of
more than five years. Another 20 respondents are investing for 3 – 5 years. In the case of 21 respondents, investment is for a
medium-term of 1 – 3 years. Further, 16 respondents are investing their money for short-term of six months to one year. And
the reaming 7 respondents are investing for less-than six months. That means, majority of respondents (56%) are keeping
their investment for a period of three years or more.
IV. Findings of the study
The findings of the study relating to core area of the study are presented below;
For majority of the respondents (80%), financial analysts and/or advisors (30%), company sales force (26%) and friends and
relatives (24%) are major sources of information about the investment avenues. For other, advertisements in television and
newspapers are sources of information.
Out of total respondents, 79% of the respondents are saving 10 – 75% of their income, and another 18% of the respondents
saving less-than 10% of their income. The remaining 3% of the respondents are saving 75% or more of their income.
For majority of the respondents (71%), safety of their investment (28%), savings for the future (26%) and tax benefits (17%)
are the determinants of their investment decisions. Of the remaining, stable and regular returns, and liquidity are the major
influencing factors for 14% and 7% of the respondents respectively.
INTERNATIONAL JOURNAL OF LATEST TECHNOLOGY IN ENGINEERING,
MANAGEMENT & APPLIED SCIENCE (IJLTEMAS)
ISSN 2278-2540 | DOI: 10.51583/IJLTEMAS | Volume XIV, Issue I, January 2025
www.ijltemas.in Page 146
As far as the sources of Sensex information if concerned, for 76% of the respondents, online/websites (34%),
magazines/journals (24%) and electronic media (18%) are major sources. Newspapers and business dailies are the major
source Sensex information the remaining 24% of the respondents.
From the analysis of the responses, it is found that 52% of the respondents are trading/ investing through both primary and
secondary markets. 33% of the respondents are trading only through secondary market and the remaining 15% only through
primary market.
It is found that 76% of the respondents have invested ₹50,000 to ₹10 lakhs and 24% have invested less-than ₹50,000 or more
than ₹10 lakh (respondents are equally distributed).
Further, 67% of the respondents have invested 10 – 75% of savings in securities and 21% have invested 75% or more of their
savings in securities. The remaining 12% of the respondents have invested less-than 10% of their savings in securities.
Majority of the respondents (58%) prefer life insurance policies (32%) and bank deposit schemes (26%) for their investment.
Real estate, gold, government bond and co-operative societies (shares) are preferred investment avenues for 7%, 12% 9% and
14% of the respondents respectively.
77% of the respondents are investing for medium (1 – 3 years, 21%) to long term (3 years and more, 56%). And the
remaining are investing for less-than one-year period.
V. Conclusion and Suggestions
The retail investors from Shivamogga city have certain problems as can be seen other parts of the state/country. In spite of
these problems, investment in capital market is slowly picking up. While knowledgeable investors have remained in the
market for long, others forget it and exit. This situation has to improve. In this background, the following suggestions are
offered.
It is strongly recommended that investment awareness programmes must be organized periodically in order to develop
savings and investment culture among the mass.
In the light of investment by about one-third of the respondents in the shares of one company, it is suggested that they should
an investment portfolio – comprising securities of more than one entity – so that the investors are able to minimum the degree
of risk and maximize the return.
Keeping in mind the importance of involving larger sections of society in the capital formation process, capital market
authorities should organize promotional programmes – educating the mass and clearing their doubts. Further, it is necessary
to explain the benefits of investing in financial instruments.
References
1. Anuradha Reddy M. (November 2011). RETAIL investor in Indian capital market. Research Journal of Commerce
and Behavioral Science. Vol. 1. Issue 1. pp. 11-8.
2. Durga Rao P. V., Chalam G V & Murty T N. (January 2014). INVESTMENT pattern of equity investors in Indian
capital market. Journal of Research in Commerce and Management. Vol. 3. Issue 2. pp. 19-25.
3. Kaushal A. Bhatt. (May-June 2013). INVESTMENT and trading pattern of individuals dealing in stock market. SIJ
Transactions on Industrial, Financial & Business Management. Vol. 1. Issue 5. pp. 67-74.
4. Nagaraj R. (September 1996). INDIA’s capital market growth. Economic and Political Weekly. Vol. 31. Issue 31.
pp. 2553-6.
5. Shanmugasundaram V. (November 2011). INVESTMENT behaviour towards various capital market information.
Indian Journal of Commerce and Management Studies. Vol. 2. Issue 7. pp. 40-5.
6. Suresh A. S. (May 2013). A study on fundamental and technical analysis. International Journal of Marketing,
Financial Services and Management Research. Vol. 2. Issue 5. pp. 44-59.