PROJECT REPORT

(Submitted for the Degree of B.Com Honours in Accounting & Finance under
the University of Calcutta)

TITLE OF THE PROJECT:

“ A STUDY OF INDIVIDUAL INVESTOR IN CAPITAL MARKET”

SUBMITTED BY

Name of the Candidate : KISHAN KUMAR GUPTA

Name of the College: THE BHAWANIPUR EDUCATION SOCIETY
COLLEGE
Registration Number: 017-1111-3670-22
CU exam Roll Number: 221017-21-1802
College UID: 0103223209

SUPERVISED BY

Name of the Supervisor: PROF. DEBDUTT SEN

Name of the College: THE BHAWANIPUR EDUCATION SOCIETY COLLEGE

MONTH & YEAR OF SUBMISSION:

JUNE, 2025
Annexure-IA

SUPERVISOR'S CERTIFICATE

This is to certify that Mrs Mriga Rakshit a student of B.Com. Honours in

Accounting & Finance of THE BHAWANIPUR EDUCATION SOCIETY
COLLEGE, under the University of Calcutta has worked under my supervision
and guidance for his Project Work and prepared a Project Report with the title “A
STUDY OF INDIVIDUAL INVESTOR IN CAPITAL MARKET” which she is submitting,
is his genuine and original work to the best of my knowledge.

Signature:

Name: PROF. DEBDUTT SEN

Designation: LECTURER

Name of the College: THE BHAWANIPUR EDUCATION SOCIETY COLLEGE

Place: Kolkata
Date:

2
 Annexure-IB

STUDENT DECLARATION

I hereby declare that the Project Work with the title “A STUDY OF INDIVIDUAL
INVESTOR IN CAPITAL MARKET” submitted by me for the partial fulfilment of
the degree of B.Com. Honours in Accounting & Finance under the University
of Calcutta is my original work and has not been submitted earlier to any
other University/Institution for the fulfilment of the requirement for any
course of study.
I also declare that no chapter of this manuscript in whole or in part has been
incorporated in this report from any earlier work done by others or by me.
However, extracts of any literature which has been used for this report has
been duly acknowledged providing details of such literature in the
references.

Signature:

Name: KISHAN KUMAR GUPTA

Address:

Registration Number: 017-1111-3670-22

Place: Kolkata
Date

3
 ACKNOWLEDGEMENT

This dissertation examines the “A STUDY OF INDIVIDUAL INVESTOR IN CAPITAL

MARKET”, the report has been written as a part of the course program for
BACHELORS IN COMMERCE. I am thankful to the UNIVERSITY OF CALCUTTA,
for incorporating such an exercise into the course since it has presented me
with an excellent opportunity to explore and enjoy my analytical and report-
writing skills, consequently preparing me for my corporate future.

In addition, I would also like to thank my supervisor – Prof. DEBDUTT SEN

for his generous support and guidance.

I would like to express my gratitude towards my friends and family for

supporting me throughout.

KISHAN KUMAR GUPTA

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 TABLE OF CONTENTS:

Chapter Title Page No.

CHAPTER 1 INTRODUCTION 06 - 11
1.1 Background 07 - 07
1.2 Need of Study 07 - 08
1.3 Literature Review 08 - 09
1.4 Objective of Study 09 - 09
1.5 Research Methodology 10 - 10
1.6 Limitations of Study 11 – 11
1.7 Chapter Planning 11 – 11
CHAPTER 2 CONCEPTUAL 12 -20
FRAMEWORK
2.1 Concept 13 – 13
2.2 Features 14 – 14
2.3 Advantages 14 – 14
2.4 Disadvantages 15 – 15
2.5 National Scenario 15 – 19
2.6 International Scenario 20 – 20
CHAPTER 3 PRESENTATION OF 21 -42
DATA ANALYSIS &
FINDINGS
CHAPTER 4 CONCLUSION & 43 -45
RECOMMENDATIO
NS
4.1 Conclusion 44 – 44
4.2 Recommendations 45 – 45
BIBLIOGRAPHY 46 – 46
QUESTIONNAIRE 47 – 50

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CHAPTER 1
INTRODUCTION

Background

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The capital market serves as a critical engine for economic growth by enabling the efficient
mobilization of long-term funds. It acts as a bridge between savers and entities that require
capital for productive purposes, such as businesses and government bodies. By offering a
structured environment for the trading of financial securities—such as stocks, bonds, and
debentures—the capital market ensures that surplus funds in the economy are channeled into
investment activities that drive industrial expansion, infrastructure development, and overall
economic progress.
Among the various participants in the capital market, individual investors play a foundational
role. These are retail or non-institutional investors who use their personal savings to invest in
capital market instruments. Their investment choices are often driven by goals such as wealth
creation, retirement planning, tax benefits, or financial independence. Though they may
invest smaller amounts compared to institutional investors, their sheer number makes their
collective influence on the market quite significant.
The behavior and preferences of individual investors have a direct impact on market
volatility, liquidity, and overall investor sentiment. For instance, a surge in retail buying can
drive stock prices upward, while panic selling by individuals can contribute to a market
downturn. Moreover, the investment decisions of individuals are closely tied to household
financial health. A sound investment can enhance personal wealth, while poor decisions—
especially those driven by speculation or misinformation—can lead to significant financial
losses.
In recent years, technological advancements and regulatory reforms have significantly
boosted the participation of individual investors in the capital market. Online and mobile
trading platforms have made investing more accessible, especially to younger demographics.
These platforms offer ease of use, real-time data, and lower transaction costs, reducing the
traditional barriers to entry.
Government schemes and reforms—like Demat account simplification, digital KYC (Know
Your Customer), T+1 settlement cycle, and the introduction of new-age investment
instruments (e.g., REITs, ETFs, SIPs in mutual funds)—have further encouraged individuals
to become active market participants.
As a result, the retail investor base in India has expanded rapidly, especially post-2020, when
the COVID-19 pandemic accelerated the adoption of digital platforms and remote financial
services. More individuals, including those from semi-urban and rural areas, are entering the
market, contributing to a broader and more inclusive investment ecosystem.
This evolving landscape makes it crucial to study and understand the behaviour, motivations,
challenges, and impact of individual investors in the capital market. Such a study not only
helps policymakers and regulators craft better financial frameworks but also empowers
investors to make more informed and responsible decisions.

Need of the Study

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Understanding the behaviour, preferences, and challenges faced by individual investors is
crucial for policymakers, financial institutions, and market analysts. This study is needed to:
 Analyse the investment patterns of individuals.
 Identify the key factors influencing their investment decisions.
 Examine the level of awareness and risk appetite among retail investors.
 Provide insights that could lead to better financial planning and policy formulation.

Literature Review

Previous studies have examined various aspects of individual investment behaviour.

 Barnewall (1987) categorized investors based on risk tolerance and control needs.
 Statman (2000) highlighted behavioural biases in investment decisions, such as
overconfidence and herd behaviour.
 Poterba & Samwick (2001) discussed the role of demographics and income levels.
 Recent research indicates a growing trend towards mutual funds, SIPs, and ETFs due to
perceived safety and professional management. This study builds upon existing
literature by focusing specifically on the Indian capital market and the current post-
pandemic investment climate.

Objective of the Study

1. To study the investment behaviour of individual investors in the capital market.

2. To analyse the factors affecting individual investment decisions.
3. To assess the level of risk tolerance among individual investors.
4. To evaluate the influence of demographic factors such as age, income, education, and
occupation on investment preferences.
5. To suggest measures for improving investor awareness and participation.

Research Methodology

 Type of Research: Descriptive and analytical

 Data Collection:
o Primary Data: Collected through structured questionnaires with individual
investors.
o Secondary Data: Sourced from journals, articles, government publications, and

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 reports by SEBI, NSE, and BSE.
 Sampling Method: Convenience sampling
 Sample Size: 30 individual investors
 Tools Used: Charts, graphs, percentage analysis, and statistical tools like chi-square
and correlation analysis.

Limitations of the Study

1. The study is limited to a specific geographical region and may not be representative of
the entire country.
2. Data collected is subject to personal biases and may not be fully reliable.
3. The dynamic nature of the capital market means findings may become outdated over
time.
4. Time and resource constraints restricted the sample size.

Chapter Planning

The report of this study include the following 4 chapters normally:

A) Chapter 1: introduction
This chapter include introduction of various topic which is related to study and it
also Deals with the fundamentals of the field, definition and important concepts.
This chapter Also include a brief literature review and the step wise procedure of
the research methodology Was Adopted to carry out this study and its limitations

B) Chapter 2: conceptual framework

This chapter contains the conceptual framework, benefit, and criticism, national
scenario, International scenario and laws related to it.

C) Chapter 3: presentation & analysis of data

This chapter present the swot analysis, organize in the form of tables, graph and

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Diagrams. The data would be analyzed using appropriate statistical techniques.
And in this Chapter, the inferences are made from the analysis. And presents the
findings during the study.

D) Chapter 4: conclusion & recommendations

This chapter presents the summary of the study, the conclusion of the study and
recommendation to the government and investors.

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 CHAPTER 2

CONCEPTUAL FRAMEWORK
/NATIONAL & INTERNATIONAL SCENARIO

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 CONCEPTUAL FRAMEWORK

The term "individual investor" refers to non-professional market participants who

invest their personal funds in various capital market instruments such as stocks,
bonds, mutual funds, derivatives, and other securities. These investors are distinct
from institutional investors, such as mutual funds, pension funds, insurance
companies, and hedge funds, which trade large volumes and have access to
sophisticated investment tools and research.
Individual investors, also known as retail investors, operate primarily with their
own capital and often have diverse investment goals, including wealth creation,
retirement savings, children's education, tax saving, and emergency funds. Their
investment decisions are influenced by factors such as income levels, risk
appetite, age, financial literacy, market information, and economic conditions.
With growing financial literacy, digital access, and awareness of the importance
of investment, more individuals are participating in the capital market than ever
before. Their role in financial markets is becoming increasingly important,
especially in emerging economies like India, where retail investors contribute
significantly to stock market liquidity and stability.

FEATURES OF INDIVIDUAL INVESTORS

1. Limited Capital: Unlike institutional investors, individual investors usually

operate with a relatively smaller amount of capital.
2. Diversified Goals: Their investment objectives vary widely—ranging from
short-term gains to long-term wealth accumulation.
3. Risk Aversion: Many individual investors exhibit conservative investment
bahaviour and prefer low-risk securities such as fixed deposits, bonds, and
mutual funds, although some are willing to explore equities and derivatives.
4. Influence of Emotions: Investment decisions may be heavily influenced by
emotions like fear, greed, or market rumors, often resulting in impulsive
trading or herd bahaviour.
5. Limited Access to Information: Retail investors may not have access to
premium research tools and insider knowledge that institutional investors
do.

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6. Demographic Diversity: Individual investors range across different age
groups, income levels, educational backgrounds, and professions.
7. Technology Adoption: With the emergence of user-friendly online trading
platforms, more individual investors now manage their portfolios digitally.

Advantages of Individual Investors in the Capital Market

1. Market Depth and Liquidity: A large number of individual investors
increases overall trading volume and liquidity in the capital markets.
2. Democratization of Investment: Participation from individuals across
different segments of society leads to wider distribution of wealth and
inclusion in economic growth.
3. Stability in Volatile Times: When institutional investors exit en masse
during market crashes, retail investors often provide counterbalance through
steady, long-term investment.
4. Encouragement of Savings Culture: Encouraging investment in capital
markets promotes a shift from mere saving to productive investment, which
helps in economic development.
5. Flexibility in Decision Making: Individual investors can make independent
decisions without bureaucratic delays, unlike institutions that require
approvals and layered management structures.
6. Policy Support: Government and regulatory bodies like SEBI, RBI, and
MoF often introduce retail-friendly policies, thus encouraging more retail
participation.

Disadvantages and Challenges Faced by Individual Investors

1. Lack of Financial Literacy: Many individual investors do not possess

adequate knowledge of financial products, leading to poor investment
decisions.
2. Behavioural Biases: Cognitive and emotional biases such as overconfidence,
loss aversion, anchoring, and herd mentality frequently influence investment
behaviour.
3. Insufficient Risk Assessment: Retail investors often fail to assess the
inherent risks associated with certain investments, especially in volatile

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 markets.
4. Short-Term Focus: A significant portion of individual investors seeks quick
gains, leading to speculative trading and unnecessary market volatility.
5. Susceptibility to Fraud and Mis-selling: Retail investors may fall prey to
unregulated financial advisors, Ponzi schemes, and mis-selling by brokers
and intermediaries.
6. Limited Portfolio Diversification: Due to lack of knowledge or limited
funds, many retail investors do not diversify their portfolios, increasing
exposure to specific risks.

NATIONAL SCENARIO (INDIA)

The participation of individual investors in India’s capital market has witnessed

significant growth in recent years. This is largely attributed to the rise of financial
literacy initiatives, improved internet access, mobile trading apps, and increased
awareness of equity investment as a viable tool for wealth creation.
Trends and Statistics
 As of 2024, over 12 crore Demat accounts were registered in India, showing
a sharp rise post-2020 pandemic lockdowns.
 Platforms like Zerodha, Groww, Upstox, and Angel One have simplified
trading, especially for millennials and Gen Z investors.
 The average age of retail investors has dropped, with a surge in participation
from the 20–35 age group.
 Investment in Systematic Investment Plans (SIPs) of mutual funds continues
to hit new highs, with monthly inflows crossing ₹15,000 crores.
 SEBI’s regulations mandating disclosures and investor education programs
have helped build investor confidence.
Investor Bahaviour
 Preference for equity mutual funds, blue-chip stocks, and IPOs.
 Increased use of social media, YouTube, Telegram channels, and influencer
advice (sometimes unverified).
 Participation in derivative markets is increasing, although this poses higher
risks.
Government and SEBI Initiatives

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  Investor awareness programs through SEBI and stock exchanges.
 T+1 settlement cycle introduced for faster transaction processing.
 Stringent checks on algo trading, insider trading, and unregistered advisors.
 Introduction of SaaS platforms for easy tracking of portfolios.

INTERNATIONAL SCENARIO

Globally, the participation of individual investors in capital markets has evolved

substantially. The trend of retail investing, once considered secondary to
institutional investment, has now gained significant traction—particularly since
the pandemic.
United States
 The U.S. boasts the largest base of retail investors, with over 50% of
households owning stocks, either directly or through retirement accounts.
 Platforms like Robinhood democratized investing by removing commission
fees and popularizing the “zero brokerage” model.
 The GameStop short squeeze (2021) demonstrated the power of coordinated
retail investors using platforms like Reddit (r/WallStreetBets).
 Retail investors now influence major market movements and IPOs.
Europe
 In the UK and Germany, retail participation is on the rise with increased use
of robo-advisors and ETFs.
 MiFID II regulations have enhanced transparency and investor protection.
 Many investors use dividend-yielding instruments and long-term pensions.
Asia-Pacific
 In countries like Japan and South Korea, retail trading is a well-established
norm, with high engagement in equity and derivative markets.
 China has seen a boom in stock market activity among individual investors,
though it is closely monitored and regulated.
 In Singapore and Australia, financial literacy is high, and retirement-linked
investment plans (like superannuation funds) are popular among retail
investors.

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 CHAPTER 3

PRESENTATION OF
DATA, ANALYSIS
&
FINDING
S

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17
 CHAPTER 4

CONCLUSION
&
RECOMMENDATIO
N

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CONCLUSION

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RECOMMENDATION

20
BIBLIOGRAPHY

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