A

PROJECT REPORT

On

“Preference of Salaried Class on

VariousInvestment
OptionsAvailableToThem”

In Partial Fulfillment of DEGREE OF

...................................................................................................

Submitted By:
..........................................................
..........................................
Roll No. -------

Under the Guidance of

Faculty Guide:
....................................
.................................
 DECLARATION

This is to declare that I “.....................” have carried out this project work
myself in part fulfillment of the ............................................................
Program of ...................................university.

The work is original, has not been copied from anywhere else and has not
been submitted to any other University/Institute for an award of any
degree/diploma.

Date: NAME:

Signature: REG NO
 CERTIFICATE

This is to certify that the work incorporated in this Project Report on

“Challenges faced by consumer while ordering or cancelling from the Big

Bazaar app” submitted by ........................................is his/her original work

and completed under my supervision. Material obtained from other sources

has been duly acknowledged in the Project Report.

Date: Signature of

Guide
 ACKNOWLEDGMENT

I would like to acknowledge that my assignment has been completed and I

am ensuring that this was done by me and not copied.

In this accomplishment, I would like to express my special gratitude to all

my teachers and most importantly my mentor Mr./Mrs. ____________ of

.................................. university, without their guidance and feedback it is

not possible to complete this assignment.

Finally, I would like to thank my parents and friends who helped me a lot in

finishing this assignment.

Your nameSignature
 TABLEOFCONTENT
Sr.No. Topic Pagen
o.
1. Introduction 1-26

2. LiteratureReview 27-31

3. IndustryProfile 32-53

4. ScopeoftheStudy 54-56

5. Objectivesofthestudy 57-58

6. ResearchMethodology 59-64

7. LimitationsoftheStudy 65-66

8. DataAnalysis&Interpretation 67-84

9. Findings 85-87

10. Recommendation 88-89

11. Conclusion 90-91

12. Bibliography 92
INTRODUCTION

1
 INTRODUCTION

To make investment choices in India today, investors must contend with a slow-
moving economy, significant market drops triggered by diminishing revenues, and
disturbing news of scandals ranging from unlawful corporate accounting methods such
as those at Satyam to insider trading. The stock market's success is not just determined
by observable attributes, but also by emotions that continue to confound observers.
Despite the deluge of information coming from all directions, it appears as though it is
not the financial wizards' calculations, or the company's performance, or widely
accepted criterion of stock performance, but the investor's irrational emotions such as
overconfidence, fear, risk aversion, and so on, that decisively drive and dictate the
market's fortunes.

The market is very volatile, and as a result, its behaviour is unpredictable. In the last
few of years, share prices have defied all logic and reached astonishingly low and high
peaks. These skyrocketing share prices obliterate the idea of fundamental value and
sensible investing behaviour. While conventional finance theories presuppose rational
investors, they fall short of fully explaining the stock market's behaviour and price.
Numerous research studies have shown a link between a dependent variable, such as an
investor's risk tolerance level, and an independent variable, such as an investor's
demographic traits. The majority of Indian investors are high-income earners, highly
educated, salaried, and self-sufficient in making investment choices; historical patterns
also indicate that they are conservative by nature. Television is the primary medium
via which investors make their selections. Thus, the purpose of this research report is
to examine the link between risk tolerance and demographic features of Indian
investors.

2
 INTRODUCTIONTOINVESTMENT

The money one makes is spent in part and the remainder is saved for future costs;
rather than leaving funds idle, one may choose to invest them in order to gain future
returns; this is referred to as investment. In economic terms, an investment is the
acquisition of things that are not used immediately but will be utilised to generate
value in the future. In finance, an investment is a monetary asset acquired with the
expectation that it will provide income or grow in value and be sold at a better price in
the future. Earning money alone will not protect one's future, which is why investing is
critical. One of the primary reasons for investing prudently is to offset the impact of
inflation. Inflation is the rate of growth in the expense of living. The cost of life is
simply the price of the commodities and services necessary for survival. Money loses
value as a result of inflation since it will no longer purchase the same quantity of goods
or services in the future as it does today or in the past. The sooner an individual begins
investing, the better. By investing early, one gives one's assets more time to develop,
and the notion of compounding raises one's income year after year by increasing the
capital and interest or dividends generated on it.
The dictionary definition of investment is "to make a financial commitment in order to
gain a profit or to utilise the money for future benefits or advantages." Individuals
invest with the hope of increasing their future wealth by saving money to spend in
future years. For instance, if you invest Rs. 1000 now and earn 10% annually, you
would have Rs. 1100 a year from now.
A perfect investment is one that meets all of the investors' requirements. Thus, the first
step in locating the ideal investment would be to ascertain investor requirements. If an
investment satisfies all of above criteria, it may be described as the ideal investment.
The majority of investors and advisers devote a significant amount of time totime
evaluating the merits of the tens of thousands of investment opportunities accessible in
India. However, little effort is spent studying the investor's requirements and ensuring

3
that the most suitable assets are chosen for him.
Prior to making any investment, it is necessary to guarantee the following:
• Obtain documented confirmation of the investment.
• Ability to read and comprehend such papers
• Confirm the investment's validity
• Determine the investment's expenses and benefits.
• Evaluate the investment's risk-reward profile
• Be familiar with the investment's liquidity and safety characteristics.
• Determine if it is acceptable for your unique objectives
• Contrast these features with those of other accessible investment alternatives.
• Determine if it is compatible with other investments you are planning or have
previously made
• Obtain all necessary explanations about the middleman and the investment.
• Consider your choices in the event that anything goes wrong, and then, if
satisfied, proceed with the investment.

INVESTMENTNEEDS OFANINVESTOR
Investing money is a first step in managing one's spending patterns and planning for
future needs. The majority of individuals understand the need of saving money for
future events or situations. Individuals invest to manage their own finances; some
invest to save for retirement, while others invest to build wealth. Each of them has a
unique need and each of them anticipates receiving something from their money in the
future.
By and large, the majority of investors share eight similar investing objectives:
i. Protection of initial capital
ii. Amassment of wealth
iii. Tax Benefits
iv. Life insurance
v. Income
4
 TYPESOFINVESTMENTAVENUES

Figure1.1:Variousinvestmentalternatives

Source: Investmentanalysisandportfoliomanagement

Author:PrasannaChandra

The figure 1.1 illustrates several investing choices, which are discussed in further
detail below. One may invest in a variety of various investment tools. Financial or non-
financial instruments may be used. Numerous elements influence an investor's
investing decision. Millions of Indians invest in fixed deposits, post office savings
certificates, equities, bonds, and mutual funds, as well as gold and silver. They are all
investing for a cause. Certain individuals want to augment their retirement income after
they reach the age of 60, while others wish to become billionaires prior to the age of
5
40. Before we examine the many aspects that influence our choice of an investment
opportunity, let us first review the fundamentals of some common investment routes.

NON-MARKETABLE FINANCIAL ASSETS:

Non-marketable financial assets account for a significant share of financial assets.

These may be broadly classed as follows:

• Bank Deposits: The simplest kind of investing, a bank deposit is made by creating a
bank account and placing money into it. Bank accounts are classified into three types:
current accounts, savings accounts, and fixed deposit accounts. Fixed deposit interest
rates vary according to the period of the deposit. In general, it is lower for shorter-term
fixed deposits and greater for longer-term fixed deposits. Bank deposits have an
unusually high liquidity level.

• Post Office Savings Account: Similar to a savings bank account, a post office
savings account is maintained by the post office. The annual interest rate is 6%.

• Post Office Time Deposits (POTDs): Similar to commercial bank fixed deposits,
POTDs may be placed in multiples of 50. POTDs often provide somewhat greater
interest rates than bank deposits. Interest is computed and paid semi-annually.

• Monthly Income Plan of the Post Office (MISPO): A popular post office scheme,
the MISPO is designed to give depositors with a regular monthly income. The
initiative will last for six years. The minimum investment amount is 1,000. The
maximum investment in a single account is $3,000; in a joint account, the maximum
investment is $6,000. Interest is compounded monthly at an annual rate of 8.0 percent.
On maturity, a ten percent bonus is awarded.

6
• Kisan Vikas Patra (KVP): A post office initiative that requires a minimum
investment of 1,000. There is no upper limit. In eight years and seven months, the
investment doubles. As a result, the compound interest rate equals8.4%. After two and
a half years, there is a withdrawal option.

• National Savings Certificates: These certificates are available at post offices in

denominations of 100, 500, 1,000, 5,000, and 10,000. It is valid for six years. Rs. 100
becomes Rs. 160.1 throughout this time. As a result, the compound rate of return is
8.16 percent.

• Company Deposits: Numerous businesses, big and small, seek public fixed deposits.
The Company Law Board regulates fixed deposits made by manufacturing firms,
whereas the Reserve Bank of India regulates fixed deposits made by finance
companies (more accurately, non-banking finance companies). While firm deposits
provide better interest rates than bank fixed deposits, they also carry a larger risk.

• Employee Provident Fund Scheme: A significant savings vehicle for salaried

workers, in which each employee has a separate provident fund account to which both
the company and employee are obliged to pay a minimum monthly sum.

• Public Provident Fund Scheme: One of the most enticing investing opportunities in
India. This plan is open to both individuals and HUFs. A PPF account may be
established at any branch of the State Bank of India or one of its subsidiaries, as well
as at certain branches of other public sector banks. A PPF account subscriber is obliged
to make a minimum annual deposit of 100. The maximum annual deposit is 70,000.
PPF deposits now receive a compound annual interest rate of 8.0 percent, which is tax-
free.

7
BONDS:Bonds are long-term investments that are used to raise money. The national
or state government and other government organisations, as well as private businesses,
utilise this vehicle to raise money. Bonds issued by the government are the safest, but
they also have the potential to repay a reasonable amount of money. Bonds are popular
among investors hoping to increase the interest they get on their money or reduce their
tax bill. Risk-averse investors tend to favour bonds as a less volatile investment
alternative. Because of this, the value of bonds may fluctuate. Classifications of bonds
may be found as follows:
 Government securities: Debt securities issued by the central government
stategovernment and quasi government agencies are referred as gilt edge
securities. Ithas maturities ranging from 3-20 years and carry interest rate that
usually varybetween7 to 10 percent.
 Debentures of private sector companies: Debentures are viewed as a mixture
ofhaving a shareholding and a fixed interest loan. Debenture holders are
normallyentitled to a return equivalent to a fixed percentage of their initial
investment. Thesecurityinherent in debentures makes themasaferinvestment
thanshares.
 Preference shares: Investing in shares is safer and dividends are assured
everyyear.
 Savingsbonds

MUTUAL FUNDS:A mutual fund allows a group of people to pool their

moneytogetherandhaveitprofessionallymanaged,inkeepingwithapredeterminedinvest
mentobjective.Thisinvestmentavenueispopularbecauseofitscost-efficiency, risk-
diversification, professional management and sound regulation.
Therearethreebroadtypesofmutualfundschemesclassifiedonbasisofinvestmentobjectiv
e.

8
 EQUITY SCHEMES: The aim of growth funds is to provide capital
appreciationover the medium to long- term. Such schemes normally invest a
major part of theircorpus in equities. Such funds have comparatively high
risks. These schemes
providedifferentoptionstotheinvestorslikedividendoption,capitalappreciation,e
tc.andthe investors may choose an option depending on their preferences.
Growth schemesare good for investors having a long-term outlook seeking
appreciation over a periodoftime.
 DEBT SCHEMES:The aim of income funds is to provide regular and
steadyincome to investors. Such schemes generally invest in fixed income
securities such asbonds, corporate debentures, Government securities and
money market instruments.Such funds are less risky compared to equity
schemes. These funds are not
affectedbecauseoffluctuationsinequitymarkets.However,opportunitiesofcapital
appreciation are also limited in such funds. The NAVs of such funds are
affectedbecause of change in interest rates in the country. If the interest rates
fall, NAVs ofsuch funds are likely to increase in the short run and vice versa.
However, long terminvestorsmaynot botherabout thesefluctuations.
 BALANCED SCHEMES: The aim of balanced funds is to provide both
growthandregularincomeassuchschemesinvestbothinequitiesandfixedincomes
ecuritiesintheproportionindicatedintheirofferdocuments.Theseareappropriatef
orinvestorslookingformoderategrowth.Theygenerallyinvest40-
60%inequityand debt instruments. These funds are also affected because of
fluctuations in shareprices in the stock markets. However, NAVs of such
funds are likely to belessvolatilecompared to pureequityfunds.

REAL ESTATE:Residential real estate is more than just an investment. There

aremore ways than ever before to profit from real estate investment. Real estate

9
is a greatinvestment option. It can generate an ongoing income source. It can
also rise in valueovertime and prove a good investment in the cash value of the
home or land. Manyadvisors warn against borrowing money to purchase
investments. The best way to dothis is to save up and pay cash for the home.One
should be able to afford
thepaymentsonthepropertywhenthepropertyisvacant,otherwisethepropertymayen
dup beingaburden instead of helpingto build wealth.

EQUITY SHARES:Equities are a type of security that represents the

ownershipin a company. Equities are traded (bought and sold) in stock markets.
Alternatively,they can be purchased via the Initial Public Offering (IPO) route,
i.e. directly from thecompany. Investing in equities is a good long-term
investment option as the returns onequities over a long time horizon are
generally higher than most other investmentavenues.However, alongwith
thepossibilityof greater returnscomes greaterrisk.

MONEY MARKET INSTRUMENTS: The money market is the market

inwhich short term funds are borrowed and lent. These instruments can be
broadlyclassifiedas:
 TreasuryBills:Thesearethelowestriskcategoryinstrumentsfortheshortterm.

RBI issues treasury bills [T-bills] at a prefixed day and for a fixed amount.
Thereare 4 types of treasury bills: 14-day T-bill, 91-day T-bill, 182-day T-bill
and 364-dayT-bill.
 CertificatesofDeposits:Aftertreasurybills,thenextlowestriskcategoryinves
tment option is certificate of deposit (CD) issued by banks and
financialInstitution (FI). A CD isanegotiable promissory note, secure and short
10
term, ofup to a year, in nature. Although RBI allows CDs up to one-year
maturity, thematuritymost quoted in the market is for90 days.
 CommercialPapers:Commercial papersare negotiable short-term
unsecuredpromissory notes with fixed maturities, issued by well-rated
organizations. Theseare generally sold on discount basis. Organizations can
issue CPs either directly
orthroughbanksormerchantbanks.Theseinstrumentsarenormally
issuedfor30/45/60/90/120/180/270/364days.
 Commercial Bills: Bills of exchange are negotiable instruments drawn by
theseller or drawer of the goods on the buyer or drawee of the good for the value
ofthe goods delivered. These are called as trade bills and when they are accepted
bycommercial banks they are called as commercial bills. If the bill is payable at
afuture date and the seller needs money during the currency of the bill then
thesellermayapproach thebank for discountingthebill.

LIFE INSURANCE POLICIES: Insurance is a form of risk management

thatis primarily used to hedge the risk of a contingent loss. Insurance is defined
as theequitable transfer of the risk of a loss, from one entity to another, in
exchange for
apremium.Aninsurerisacompanythatsellsinsurance;insuredorthepolicyholderisap
ersonorentitybuyingtheinsurance.Theinsurancerateisafactorthatisusedtodetermin
e theamountwhichistobechargedfora certainamountof insurancecoverage,and is
called thepremium.It can beclassifiedas:
 Money-back Insurance: Money-back Insurance schemes are used as
investmentavenues as they offer partial cash-back at certain intervals. This
money can beutilizedforchildren‘seducation, marriage, etc.
 EndowmentInsurance:Thesearetermpolicies.Investorshavetopaytheprem
iumsfor a particular term, andat maturity theaccruedbonus and
otherbenefitsarereturned tothe policyholder ifhesurvives at maturity.
11
BULLION MARKET:Preciousmetalslike goldand silver hadbeen a safehaven
for Indian investors since ages. Besides jewellery these metals are used
forinvestmentpurposesalso.Sincelast1year,bothGoldandSilverhavehighlyappreci
ated in value both in the domestic as well as the international markets.
Inaddition to its attributes as a store of value, the case for investing in gold
revolvesaroundthe role it can playasaportfolio diversifier.

FINANCIAL DERIVATIVES:Derivatives are contracts and can be used as

anunderlyingasset. Various types ofDerivativesare:
 Forwards: A forward contract is a customized contract between two

entities,where settlement takes place on a specific date in the future at today‘s

pre-agreedprice.
Futures: A futures contract is an agreement between two parties to buy or sell anasset
at a certain time in the future at a certain price. Futures contracts are specialtypes of
forward contracts in the sense that the former are standardized
exchangetradedcontracts.
 Options: Options are of two types - calls and puts. Calls give the buyer the

rightbut not the obligation to buy a given quantity of the underlying asset, at a
givenprice on or before a given future date. Puts give the buyer the right, but not
theobligation to sell a given quantity of the underlying asset at a given price on
orbefore agiven date.
 Swaps: Swaps are private agreements between two parties to exchange cash

flowsinthefutureaccordingtoaprearrangedformula.Theycanberegardedasportfolio
sof forward contracts.E.g., Currencyswaps,interest swaps .

12
EVALUATIONOFVARIOUSINVESTMENTAVENUES

Table1.1:Summaryevaluation ofvariousinvestmentavenues

Source: Investmentanalysisandportfoliomanagement

Author:PrasannaChandra

Table 1.1 summarises the results of a comparative analysis of several investment

options. There are three so-called "factors" to consider before making an investment:
risk, liquidity, and return. A trade-off must be made between risk and reward. The
more risk you take, the more money you'll make. The less risk you take, the lesser your
return will be. When making a selection about whatever kind of investment to make,
the investor's needs and priorities play a major role.

More risk-averse investors choose to put their money in safe havens like bank deposits

13
and government securities, as well as a variety of post office savings accounts. Because
the money invested in the aforementioned assets seems to be quite safe, this investment
strategy was selected as the recommended one when safety was the primary concern.
Returns are more significant to those who are willing to take a greater risk in order to
obtain a more equitable risk. Equity shares and mutual funds are the most popular
forms of investing in this country. The rewards on these types of investments are
mostly performance-based, which raises the risk component. Investors may be willing
to accept lower returns if the firm does well, but the invested capital may be at risk if
the company does not perform well. Consequently, the returns fluctuate greatly as the
market fluctuates.

Equities are securities that reflect a company's ownership stake. In stock markets,
equities are exchanged (bought and sold). As an alternative, the stock may be acquired
directly from the firm via an Initial Public Offering (IPO). When it comes to long-term
investments, the returns on equity investments are often larger than those of other
investment options. However, there is a bigger risk associated with greater profits.

ATTRIBUTESOFINVESTMENT

Investment can be said to be an art. Many people invest money without knowing
whatthey are doing. Only a few people really understand the art of investing
money. Theyinvest according to certain principles. There are also certain factors
that affect
theinvestmentdecisions.Allthesearedonemainlytoincreasethereturnontheinvestme
nt and also to keep the risk to a minimum. The various factors that affect
theinvestmentdecisions are given below.
Forevaluatinganinvestmentavenue, the followingattributesarerelevant.

a) Rate of Return: The rate of return on an investment for a period (which is

usuallyaperiod ofoneyear)is defined as follows:
14
Rateofreturn =Annualincome+(Endingprice–Beginning

Beginningprice

Yield:Yieldis
theannualrateofreturnforanyinvestmentandisexpressedasapercentage.Withstocks,
yieldcanrefertotherateofincomegeneratedfromastockintheformofregulardividends
.Thisisoftenrepresentedinpercentageform,calculated as the annual dividend
payments divided by the stock's current share price.Currentyield= Annualcash
inflows
Marketprice

CapitalAppreciation:It‘stheriseinthemarketpriceofanasset.Capitalappreciation is
one of two major ways for investors to profit from an investment in
acompany.Theother is through dividend income.

b) Risk:Therisk of investmentrefers to the variabilityof its rate of return.

A simple measure of dispersion is the range of values, which is simply the
differencebetweenthe highest and thelowest values.

Figure1.2:Relationshipbetween ExpectedReturnandRisk

Figure 1.2 shows the relationship between expected return and risk

From this figure itis clear that with higher risk the returns also increases while it
decrease as the riskdecreases. High variance indicates high degree of risk and

15