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SECURITY ANALYSIS AND PORTFOLIO MANAGEMENT Term:IV Credits:3 (20 sessions of 1 hour and 30 Minutes)

Introduction: The course Security Analysis and Portfolio Management (SAPM) also popularly called Investment Analysis and Portfolio Management (IAPM) forms the building block for students of Finance to pursue career in the coveted field of Equity Research, Investment Research and Capital Markets alike. Participants of this course would develop an understanding of various theories and equip themselves with tools and techniques to undertake security analysis successfully. The course is highly rigorous and involves quantitative work. It is only desirable that participants put adequate mount of work to develop sufficient level of understanding in the course to perform well in the course. The course here would focus predominantly on equities as it constitutes the most important part among various classes of assets. The principles acquired from Equities as an asset class may as well be extrapolated for other asset classes. During the progress of the course, discussions will also be held on other asset classes to give a broader perspective. Course Objectives: The course envisages the following broad objectives: a) To develop sound theoretical and practical knowledge on Security Analysis and Portfolio Management; b) To create understanding of various principles involved in analysis of Equities as an asset class; c) To build capabilities to make sound investment decisions based on rational and scientific approach; d) To enable the participants to appreciate both the theoretical as well as practical significance of the theories of Portfolio Management; e) To develop continuing interest in the field of Security Analysis and Portfolio Management by keeping updated with the latest happenings around in this field. Pedagogy: There will be a combination of lectures and demonstrations to drive home some of the most intricate issues involved in the field of Security Analysis and Portfolio Management.

Course Requirements: Participants will need to possess reasonably good computational skills and also revise the basic statistical concepts. It is of paramount interest to undertake consistent reading of newspapers and magazines in the field of business and finance. MODULES Module I: Basic Investment Setting Role and functions of an Equity Analyst & Fund Manager; Brief introduction to Indian Capital Markets; Concepts underlying the framework of Risk & Return Number of Sessions: 2 Module II: Portfolio Management Theories of Portfolio Management (Markowitz theory including asset combinations using statistical tools, Sharpe theory and the CAPM Model, Introduction to APT Model); Portfolio Construction & Analysis; Index Construction; The Efficient Market Theory. Number of Sessions: 4 Module III: Valuation Models Discounted Cash Flow (DCF) Model (Dividend Discount Model using Zero growth, Constant Growth and Multiple Growth approaches & Free Cash Flow Model); Discussions on issues pertaining to determination of Cost of Capital and Cash Flow forecasting; Relative Valuation Models: Price-to-Earnings, Price-to-Book and Price-to-Sales approaches; McKinsey Model on Valuation. Number of Sessions: 5 Module IV: Fundamental & Technical Analysis A. Fundamental Analysis Discussion and demonstration on the Economy-Industry-Company (E-I-C) Framework using both top-bottom and bottom-top approaches; Economy Analysis: Key Macro Economic Indicators and the role of Emerging Markets; Industry Analysis: Industry Identification Process, Industry Life-Cycle and Parameters involved thereof; Company Analysis: Earnings forecast, Analyses and Tools for Financial Statement Analysis.

B. Technical Analysis Rationale and arguments for and against Technical Analysis; Dow Theory; Popular techniques of Technical Analysis: Moving Averages, Relative Strength Index (RSI), Advance-Decline Ration, Heads & Shoulders. Number of Sessions: 5 Module V: SAPM in Practice Discussions on other assets classes (Mutual Funds, Real Estate etc); Techniques of Portfolio Evaluation (Jensen, Sharpe & Treynor approaches); Strategies of the Great Masters (Benjamin Graham, Warrant Buffett & Peter Bernstein) Number of Sessions: 4 Prescribed Text Book: Security Analysis and Portfolio Management: 6th Edition by Donald E. Fisher & Ronald J. Jordan, Pearson Publication. Recommended Text Book: Investment Analysis and Portfolio Management: 3rd Edition by Dr. Prasanna Chandra, CFM-Tata McGraw Hill Publication.

Other Reference Books: a) Investment Analysis and Portfolio Management: 8th Edition by Reilly/Brown, Cengage Learning Publication. b) Investments: 8th Edition by Bodie, Kane, Marcus & Mohanty, McGraw Hill Publication. c) Investment Analysis and Management: 9th Edition by Charles P. Jones, Wiley India Publication. d) An Introduction to Investments: India Edition by Herbert B. Mayo, Cengage Learning Publication. There are several other excellent titles on Investments and Valuation. Besides the books listed below would help you grasp the contemporary developments in the field of Security Analysis. a) Warren Buffett and the Interpretation of Financial Statements: Mary Buffett & David Clark by Scribner Publication b) Benjamin Graham on Investing: David M. Darst by Tata McGraw Hill Publication c) Everything You Wanted to Know About Investing: A Publication of Kotak & CNBC TV 18.

Recommended Periodicals: Newspapers: The Economic Times/ Business Line/ Business Standard Magazines: Business World/ Business Today/ Outlook Profit Besides these there are host of internet portals including moneycontrol.com/ Bloomberg.com that provide latest happenings in the world of Investments and Finance nationally and internationally respectively. Evaluation Parameters: Parameter Quizzes (2) Mid-Term Assignment I Assignment II End-Term Component 20% 20% 30% 10% 20%

Note: The details of the assignments will be provided in the Reading Material. For all course related queries you may contact prof.ullas@gmail.com

Assignment I (30%) This is a group assignment and must not have more than 5 members. This is an opportunity for you think and act as an Equity Analyst. The assignment will help you to understand the detail and description concerning Equity Research reports which are published regularly by Investment Management Houses, Brokerage Firms etc. You are required to undertake a detailed Fundamental Analysis by using the Economy-IndustryCompany framework (E-I-C). Every group has been assigned a set of three companies representing different industries. You are required to prepare an Equity Research report following the approach. You may follow either Top-Bottom or Bottom-Top approach for the purpose. Using the tools and techniques picked up by you in the course, you are required to prepare the report. For instance, if you are following Top-Bottom approach, starting from the Broad Macro-Economic indicators as relevant for the industry in general and company in particular, the report will then talk briefly about the industry trends, outlook and indicators to be examined. Subsequently, using various techniques, you will be undertaking Company Analysis which will include performance of the stock in recent times and analysis and forecast of the earnings. You will be provided suitable directions for the assignment in due course. There will be a monitoring group providing direction and supervision. GROUP I Hindalco IDFC Tata Motors


GROUP III TCS Unitech Cipla

GROUP IV Infosys Kotak Bank Ranbaxy

GROUP V Tata Steel Suzlon Punjab National Bank

GROUP VI Ambuja Cements Hero Honda HUL

GROUP VII Maruti GAIL Sunpharma

GROUP VIII Reliance Communication Federal Bank Dr.Reddy

GROUP IX Tata Tea Indian Hotel MTNL

GROUP X Bharti Airtel Asian Paints Crompton Greaves


GROUP XII JSW Steel IOB Wipro Assignment II (10%) This is an individual assignment. You are provided a sum of Rs.50 Lakhs. Using this amount, create an equity portfolio consisting of not more than five securities. You are required to use your learning in the course to identify securities. Monitor your portfolio on a daily basis. You are required to use the closing prices for determining the performance of the portfolio. If the portfolio suffers a loss of more than 20% at the end of the day, you may consider revising it partially. Again, it is not your ability to undertake this revision randomly, rather as a security analyst use your judgment to justify your stand. Marks will be awarded not on the basis of generating maximum returns but on the use of securities knowledge to build and monitor the portfolio. Several sources on the web including moneycontrol.com are available which provide the registered user to create and track portfolio. You are required to submit the assignment by the end of the course in soft copy only.