Analysis of Investment Behaviour with Reference to Retail Investors of Ranchi in Indian Stock Market

Abstract

Despite the fact that India s GDP has increased 5.5times from $414 billion in 2001 to $2263.52 billion in 2016,the development of the capital market has been bumpy and its penetration has been inadequate.For instance,only 1.7% of Indian population is having Demat Accounts(a measure of direct participation in the stock market)as against 17.7% in USA,16.4% in UK, and 9.4% in China. Although there is a surge in the number of Demant Accounts in India in recent years, the same trend has not been reflected in the number of active Accounts. Also,the total number of active stock exchanges across India has reduced from 16 at the start of the decade to 4 now. Apart from NSE and BSE,the only two stock exchanges that are active are Calcutta Stock Exchange and Uttar Pradesh Exchange. In such context,it wouldn t be difficult to ascertain about the contribution of a city like Ranchi. However,India having one of the highest savings rate in the world, city like Ranchi has potential to increase its contribution in the Indian capital market.However,it is important to study thought processes and perceptions, challenges and bottlenecks i.e.,investing behavior of the investors of this city.The study is confined to the retail investors based at Ranchi(India),mostly trading houses with Depository Participant(DP) accounts along with trading accounts.However,some other organizations like banks too provide DP account facility.Therefore,the study although mostly considers the retail investors trading through trading houses; it has also been extended to include retail investors of Indian stock market who don t trade through trading houses.On the basis of holistic behavior of the investors, risk tolerant score of each investor has been ascertained,clustered in three categories -Investors with High Risk Appetite,Investors with Moderate Risk Appetite and Investors with Low Risk Appetite;and suggestions are given to stretch the depth of investment.The non investors have also been studied to find why they don t go for investing on equity.