Portfolio Managementt

CHAPTER 1
INTRODUCTION
1
INTRODUCTION:
Portfolio management and investment decision as a concept came to be familiar with the
conclusion of second world war when thing can be in the stock market can be liberally ruined the
fortune of individual, companies ,even government ‘s it was then discovered that the investing in
various scripts instead of putting all the money in a single securities yielded weather return with
low risk percentage, it goes to the credit of HARYMERKOWITZ, 1991 noble laurelled to have
pioneered the concept of combining high yielded securities with these low but steady yielding
securities to achieve optimum correlation coefficient of shares.
Portfolio management refers to the management of portfolio’s for others by professional

investment managers it refers to the management of an individual investor’s portfolio by
professionally qualified person ranging from merchant banker to specified portfolio company.
INVESTMENT CHANNEL:
There are a number of investment channels for severs in INDIA. Some of them are
marketable and liquid, while others are non-marketable. Some of them are highly risky while some
others are almost risk less.
Investment channels can be broadly categorized under the following heads

 Corporate securities.
 Equity shares.
 Preference shares.
 Debentures/bonds.
 Derivatives and many more.
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CORPORATE SECURITIES:-
The role and the place of corporate securities as investment medium in household saving and
developing relating to new issues market deserve special attention because of these having
potentials impact on household saving and financing of private corporate sector. Corporate
securities in private sector are issued by Joint Stock Companies. These include Equity shares,
preference shares, and Debentures.
The classification of corporate securities that can be chosen as investment avenues be depicted as
shown below
Equity shares
Preference shares
Bonds
Corporate
Securities
Warrants
Derivatives
IMPORTANCE & NEED OF STUDY
3
Portfolio management or investment helps investors in effective and efficient management
of their investment to achieve this goal. The rapid growth of capital markets in India has opened up
new investment avenues for investors.
The stock markets have become attractive investment options for the common man. But the
need is to be able to effectively and efficiently manage investments in order to keep maximum
returns with minimum risk.
Hence this study on "PORTFOLIO MANAGEMENT” to examine the role process and
merits of effective investment management and decision.
⇒ This study covers the morkowitz model.
⇒ The study covers the calculation of correlation between the securities in order to find out at
what percentage funds should be invested among thee companies in the portfolio.
⇒ The study includes the calculation of individual standard of securities and ends at the
calculation of weights of individual securities involved in the portfolio. These percentages
helps in allocating the funds available for investment based on risky portfolio.
• It also considers difference\t combinations of securities along with risk associated with it.
OBJECTIVES:
• To study the investment decision process.
• To analysis the risk return characteristics of sample scripts. Ascertain portfolio weights.
• To give the optimum returns to the investor. To give maximum return in less risk.
• To construct an effective portfolio which offers the maximum return for minimum risk.
• To see whether the portfolio risk is less than individual risk on whose basis the portfolio
are constituted.
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RESEARCH:
 Primary data collected from internet and books.

 Secondary data taken from the company.
 The analysis done by calculations like standard deviations, returns, correlation of
variance, weights, risk.
 All the calculation part done in MS-Excel.
SOURCE OF THE DATA:
Primary data:-
The primary data information is gathered from "HSE" finapolis interviewing "HSE" excutive. The
lectures given by the staff were used as the basis of the project.
Secondary data:-
The secondary data is collected from various financial books, magazines and from stock lists of
various newspapers as part of the training class undertaken for project.
Selection of companies:-
Companies selected for analysis are-
 ICICI
 HDFC
 WIPRO
 ITC
 COLGATE&PALMOLIVE
 CIPLA
 RANBAXY
 MAHENDRA&MAHENDRA
 BAJAJ AUTO
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LIMITATION:
• No profile is optimum as some other investor would come up with better thing as it is
perspective driven.
• The study is confined to a period of one year followed by the procedure of the current
trading system in India stock exchange and the issues confined to it are very brief.
• The study consists of Markowitz model which restricts the construction of portfolio only to
two companies.
• Data collection is strictly constricted only to secondary data and no constant primary data is
associated with the project.
• The detailed analysis and study of the topic was not possible as there was a time
constriction of 45 days.
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CHAPTER – II
PROFILE
OF
ANGELBROKING LTD.
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INTRODUCTION
Mr. Dinesh thakkar is the man behind the successful building of angel broking as
India’s leading retail stock broking house with his vision, devotion, dedication, keen
foresight and zeal to excel. He is among the first generation stockbroker who is
credited for conceptualizing and the subsequently promoting angel group in 1987.
He was attracted towards the stock market due to its prospects of fast growth. He
proved his skill and abilities through efficient trading of stocks by using advanced
and innovation tools of technical analysis. He started his operations as a sub-broker
from a small office at dalal street with a client base of just around 25 clients and
total staff strength of 3 employees. With his 100% focus on the retail clientele
coupled with his expertise in investment advisory services, he has scaled much
greater height as is evident from our network strength and nation wide presence
today. The Angel Group has emerged as one of the top 5 retail stock broking houses
in India, having memberships on BSE, NSE and the two leading commodity
exchanges in the country i.e. NCDEX and MCX. Angel Broking Ltd is also
registered as a depository participant with CDSL. It is the only 100% retail stock
broking house offering a gamut of retail centric services like Research, Investment
Advisory, and Wealth Management Services, E Broking& Commodities to
individual investor.
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ANGEL’S LOGO
9
VISION
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BUSINESS PHILOSOPHY
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ETHICAL PRACTICES & TRANSPARENCY IN ALL
OUR DEALINGS
CUSTOMER INTEREST ABOVE OUR OWN
ALWAYS DELIVER WHAT WE PROMISE
EFFECTIVE COST MANAGEMENT
VALUES
• INTEGRITY
• TEAMWORK
• QUALITY MINDSET
• ENTREPRENEURSHIP
• SERVICE ORIENTATION
• PASSION & COMMITMENT
ABOUT ANGEL
• We have a Pan India presence with more than 8000+ intermediaries.
We offer services like:
OUR ORGANIZATIONAL STRUCTURE

Products of Angel Broking
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1. Online Trading 8. Personal loans
2. Commodities 9. Quality assurance
3. DP Services
4. PMS (Portfolio Management Services)
5. Insurance
6. IPO Advisory
7. Mutual Fund
Equity Broking
Commodities
Depository
Research
E-broking
Advisory
Portfolio Management Services
Mutual Fund Distribution
• A client base of 8, 50,000 + active Investors is serviced by our strong team of 4600 + employees
across branches.
• The above distribution makes our client servicing levels one of the highest in the industry.
• 55 member research team doing technical, fundamental,
derivative and commodity analysis, one of the largest in the
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industry.
• First broking house to start 100% retail focus research in the industry.
ANGEL GROUP COMPANIES:
Milestones
Awarded with 'Broking House with Largest Distribution Network' and 'Best Retail Broking House'
at Dun & Bred street Equity Broking Awards 2009.
August, 2008 Crossed 600000 trading accounts:-
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● November, 2007 ‘Major Volume Driver’ for 2007
● December, 2006 Created 2500 business associates
● October, 2006 ‘Major Volume Driver’ award for 2006
● September, 2006 Launched Mutual Fund and IPO business
● July, 2006 Launched the PMS function
● October, 2005 ‘Major Volume Driver’ award for 2005
● September, 2004 Launched Online Trading Platform
● April, 2004 Initiated Commodities Broking division
● April, 2003 First published research report
● November, 2002 Angel’s first investor seminar
● March, 2002 Developed web-enabled back office software
● November, 1998 Angel Capital and Debt Market Ltd. Incorporated
● December, 1997 Angel Broking Ltd. Incorporated
TIE UP BANK’S:-
HDFC
ICICI
AXIS
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CORPORATION
ORIENTAL BANK OF COMMERCE
KARNATAKA
YES
Investment Advisory Services
To derive optimum returns from equity as an asset class requires professional guidance and advice.
Professional assistance will always be beneficial in wealth creation. Investment decisions without
expert advice would be like treating ailment without the help of a doctor.
Expert Advice:
Their expert investment advisors are based at various branches across India to provide assistance
in designing and monitoring portfolios
Timely Entry & Exit: Their advisors will regularly monitor customers investments and
guide customers to book timely profits. They will also guide them in adopting switching
techniques from one stock to another during various market conditions.
De-Risking Portfolio: A diversified portfolio of stocks is always better than

concentration in a single stock. Based on their research, They diversify the portfolio in growth
oriented sectors and stocks to minimize the risk and optimize the returns.
Commodities: A commodity is a basic good representing a monetary value. Commodities

are most often used as a inputs in the production of other goods or services. With the advent of
new online exchange, commodities can now be traded in futures markets. When they are traded on
an exchange, Commodities must also meet specified minimum standards known as a basic grade.
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Depositary Participant Services
Angel Broking Ltd. Is a DP services provider though CDSL. We offer depository services to create
a seamless transaction platform to execute trades through Angel group of companies and settle
these transactions through Angel Depository services.
Wide branch coverage
Personalized/attentive services of trained a dedicated staff
Centralized billing & accounting
Acceptance & execution of instruction on fax
Daily statement of transaction & holdings statement on email.
No charges for extra transaction statement & holdings statement.
Portfolio Management Services

Successful investing in Capital Markets demands ever more time and expertise. Investment
Management is an art and a science in itself. Portfolio Management Services (PMS) is one such
service that is fast gaining eminence as an investment avenue of choice for High Net worth
Investors(HNI). PMS is a sophisticated investment vehicle that offers a range of specialized
investment strategies to capitalize on opportunities in the market. The Portfolio Management
Service combined with competent fund management, dedicated research and technology, ensures a
rewarding experience for its clients .
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Angel PMS brings with it years of experience, expertise, research and the backing of India's
leading stock broking house. At Angel,
experienced portfolio management is the difference. It will advise
you on a suitable product based on factors such as your investment
horizon, return expectations and risk tolerance.
Mutual Fund
1) To enable clients to diversify their investment in the right
direction. Angel Broking has added another product in its range
with mutual funds.
2) Access to in-depth research & proper selection from diversified funds based on your
preferred criteria.
3) Rating and rankings of all mutual funds from our in house expert analysts
4) News and alert for your Mutual fund Portfolio and performance tracking with watch lists
5) Current and historical performance of different funds enabling comparisons.
Benefits
i. No risk of loss, wrong transfer, mutilation or theft of share or

certificates.
ii. Hassle free automated pay-in of your sell obligations by your
clearing members
iii. Reduced paper work.
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iv. Speedier settlement process. Because of faster transfer and
registration of securities in your account, increased liquidity of your
securities.
v. Instant disbursement of non-cash benefits like bonus and rights into
your account.
vi. Efficient pledge mechanism.
vii. Wide branch coverage.
viii. Personalized/attentive services of trained help desk.
ix. ‘Zero’ upfront payment.
No charges for extra transaction statement & holding statement. All in one combined Monthly
‘Bill-cum Transaction-cum-Holding cum-ledger’ statement.
FUNDAMENTAL SERVICES
The Sunday Weekly Report

This weekly report is ace of all the reports. It offers a comprehensive market overview and likely
trends in the week ahead. It also presents top picks based on an in-depth analysis of technical and
fundamental factors. It gives short term and long-term outlook on these scripts,
their price targets and advice trading strategies. Another unique feature of this report is that it
provides an updated view of about 70 prominent stocks on an ongoing basis.
Stock Analysis
Angel’s stock research has performed very well over the past few years and angel model portfolio
has consistently outperformed the benchmark indices. The fundamentals of select scripts are
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thoroughly analyzed and actionable advice is provided along with investment rationale for each
scrip.
Flash News
Key developments and significant news announcement that are likely to have an impact on
market / scripts are flashed live on trading terminals. Flash news keeps the market men updated on
an online basis and helps them to reshuffle their holdings
TECHNICAL SERVICES
Intra-Day Calls
For day traders angel provides intraday calls with entry, exit and stop loss levels during the market
hours and our calls are flashed on our terminals. Our analysts continuously track the calls and
provide the recommendations according to the market movements. Past performance of these calls
in terms of profit/loss is also available to our associates to enable them to judge the success rate.
Posting Trading Calls
Angels “Position Trading Calls” are based on a through analysis of the price movements in
selected scripts and provides calls for taking positions with a 10 - 15 days time span with stop
losses and targets. These calls are also flashed on our terminals during market hours.
Derivative Strategies
Our analyst take a view on the NIFTY and selected scripts based on derivatives and technical tools
and devise suitable “Derivative Strategies”, which are flashed on our terminals and published in
our derivative reports.
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COMMODITIES SERVICES
Agro Tech Speak

Mainly gives the investors insight into and a forecast for agro commodities viz. pulses (urad
channa etc); reports on oil complex (soyabean castor etc.) along with spices with reports on kapas
guar
Commodities Tech Speak

This report mainly equips the investors dealing in MCX segment in commodities like gold, silver,
crude oil, copper etc with the market insight and expert recommendation on the trading strategies.
COMPETITORS
About Anand Rathi

Anand Rathi (AR) is a leading full service securities firm providing the entire gamut of financial
services. The firm, founded in 1994 by Mr. Anand Rathi, today has a pan India presence as well as
an international presence rough offices in Dubai and Bangkok. AR provides a breadth of financial
and advisory services including wealth management, investment banking, corporate advisory,
Brokerage & distribution of equities, commodities, mutual funds and insurance - all of which are
supported by powerful research teams. The firm's philosophy is entirely client centric, with a clear
focus on providing long term value addition to clients, while maintaining the highest standards of
excellence, ethics and professionalism. The entire firm activities are divided across distinct client
groups: Individuals, Private Clients, Corporate and Institutions.
About Indiabulls
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Indiabulls is India’s leading Financial Services and Real Estate company having over 640 branches
all over India. Indiabulls serves the financial needs of more than 4,50,000 customers with its wide
range of financial services and products from securities, derivative trading, depositary services,
research & advisory services, consumer secured & unsecured credit, loan against shares and
mortgage & housing finance. With around 4000 Relationship Managers, Indiabulls helps its clients
to satisfy their customized financial goals. Indiabulls through its group companies has entered
Indian Real Estate business in 2005. It is currently evaluating several large-scale projects worth
several hundred million dollars. “Indiabulls Financial Services Ltd is listed on the National Stock
Exchange, Bombay Stock Exchange and Luxembourg Stock Exchange. The market capitalization
of Indiabulls is around USD6,300 million (31st December, 2007). Consolidated net worth of the
group is around USD 905 million (31st December, 2007).Indiabulls and its group companies have
attracted more than USD800 million of equity capital in Foreign Direct Investment (FDI)since
March 2000. Some of the large shareholders of Indiabulls are the largest financial institutions of
the world such as FidelityFunds, Goldman Sachs, Merrill Lynch, Morgan Stanley and Farallon
Capital.
Business of the company has grown in leaps and bounds since its inception. Revenue of the
company grew at a CAGR of 159% fromFY03 to FY07. During the same period, profits of the
company grew at a CAGR of 184%.Indiabulls became the first company to bring FDI in Indian
Real Estate through a JV with Farallon Capital Management LLC, are respected US based
investment firm. Indiabulls has demonstrated deep understanding and commitment to Indian Real
Estate market by winning competitive bids for landmark properties in Mumbai and Delhi.”
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Religare Securities Limited (RSL):-
It is a leading equity and securities firm in India. The company currently handles sizeable volumes
traded on NSE and in the realm of online trading and investments it currently holds a reasonable
share of the market. The major activities and offerings of the company today are Equity broking,
Depository -Participant Services, Portfolio Management Services, Institutional Brokerage &
Research, Investment Banking and Corporate Finance. To broaden the gamut of services offered to
its investors, the company has also recently unveiled a new avatar of it's online investment portal
armed with a host of revolutionary feature. RSL is a member of the National Stock Exchange of
India, Bombay Stock Exchange of India, Depository Participant with National Securities
Depository Limited and Central Depository Services (I) Limited, and SEBI approved Portfolio
Manager.
Religare has been constantly innovating in terms of product and services and to offer such incisive
services to specific user segments it has also started the NRI, FII, HNI and Corporate Servicing
groups. These groups take all the portfolio investment decisions depending upon a client’s risk /
return parameter
Religare has a very credible Research and Analysis division, which not only caters to the need of
our Institutional clientele, but also gives their valuable inputs to investment dealers.
Religare is also providing in-house Depository services to its clientele and is one of the leading
depository service providers in the country.
STUDENT CONTRIBUTION TO THE
ORGANIZATION
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The contribution towards the organization is adding values in order
to bring business to the organization realizing the responsibilities,
bringing potential clients to the organization.
Furthermore I had to also manage various direct marketing
activities such as
• Tele-calling to clients regarding pre- meetings.
• Mailing to potential customers of the company regarding products and services.
• The new customers who want software demonstration, we provide live demonstration to
those clients.
• Taking feedback of the services, which we were providing because it’s a key factor for our
company growth and making long term relationships with customers.
• Bringing potential client to the organization, not only for the purpose of trading but also
for wealth management services (wms), which includes portfolio management services,
mutual funds, IPO, angel gold was my major contribution to the company.
ACHIVEMENTS
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In this span of 2 months I came to know the real realm of markets and clients. This tenure with
ANGEL BROKING was an eye opener for me because every pitching every client in different way
to get him with us was really a daunting task.
Some of achievements include:
• Opening of six accounts for Angel broking which includes 5 BSE accounts and 1
Commodity account.
• I closed the 2 PMS deals of 500000 Rs each
• Training of new summer interns and made them capable to meet the clients and to convert
the deals
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CHAPTER – III
CONCEPTUAL FRAME
WORK OF
PORTFOLIO
MANAGEMENT
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REVIEW OF LITERATURE
PORTFOLIO:
A portfolio is a collection of securities since it is really desirable to invest the entire funds
of an individual or an institution or a single security, it is essential that every security be viewed in
a portfolio context. Thus it seems logical that the expected return of the portfolio. Portfolio
analysis considers the determine of future risk and return in holding various blends of individual
securities
Portfolio expected return is a weighted average of the expected return of the individual
securities but portfolio variance, in short contrast, can be something reduced portfolio risk is
because risk depends greatly on the co-variance among returns of individual securities. Portfolios,
which are combination of securities, may or may not take on the aggregate characteristics of their
individual parts.
Since portfolios expected return is a weighted average of the expected return of its
securities, the contribution of each security the portfolio’s expected returns depends on its
expected returns and its proportionate share of the initial portfolio’s market value. It follows that
an investor who simply wants the greatest possible expected return should hold one security; the
one which is considered to have a greatest expected return. Very few investors do this, and very
few investment advisors would counsel such and extreme policy instead, investors should
diversify, meaning that their portfolio should include more than one security.
 Programmes and projects can be scrutinized and monitored to ensure ongoing alignment
with strategic objectives and business imperatives.
 Thee broad allocation of skilled Programme & project resources can be optimized.
Commitments.
 Programme and project demands on operational business can be managed and coordinated
at a corporate level.
 New requirements can be evaluated against current commitments.
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OBJECTIVES OF PORTFOLIO MANAGEMENT:
The main objective of investment portfolio management is to maximize the returns from
the investment and to minimize the risk involved in investment. Moreover, risk in price or inflation
erodes the value of money and hence investment must provide a protection against inflation.
Secondary objectives:
The following are the other ancillary objectives:
• Regular return.
• Stable income.
• Appreciation of capital.
• More liquidity.
• Safety of investment.
• Tax benefits.
Portfolio management services helps investors to make a wise choice between alternative
investments with pit any post trading hassle’s this service renders optimum returns to the investors
by proper selection of continuous change of one plan to another plane with in the same scheme,
any portfolio management must specify the objectives like maximum return’s, and risk capital
appreciation, safety etc in their offer.
Return From the angle of securities can be fixed income securities such as:
(a) Debentures –partly convertibles and non-convertibles debentures debt with tradable
Warrants.
(b) Preference shares
(c) Government securities and bonds
(d) Other debt instruments
(2) Variable income securities
(a) Equity shares
(b) Money market securities like treasury bills commercial papers etc.
Portfolio managers has to decide up on the mix of securities on the basis of contract with
the client and objectives of portfolio.
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NEED FOR PORTFOLIO MANAGEMENT:
Portfolio management is a process encompassing many activities of investment in assets and
securities. It is a dynamic and flexible concept and involves regular and systematic analysis,
judgment and action. The objective of this service is to help the unknown and investors with the
expertise of professionals in investment portfolio management. It involves construction of a
portfolio based upon the investor’s objectives, constraints, preferences for risk and returns and tax
liability. The portfolio is reviewed and adjusted from time to time in tune with the market
conditions. The evaluation of portfolio is to be done in terms of targets set for risk and returns. The
changes in the portfolio are to be effected to meet the changing condition.
Portfolio construction refers to the allocation of surplus funds in hand among a variety of
financial assets open for investment. Portfolio theory concerns itself with the principles governing
such allocation. The modern view of investment is oriented more go towards the assembly of
proper combination of individual securities to form investment portfolio.
A combination of securities held together will give a beneficial result if they grouped in a
manner to secure higher returns after taking into consideration the risk elements.
The modern theory is the view that by diversification risk can be reduced. Diversification
can be made by the investor either by having a large number of shares of companies in different
regions, in different industries or those producing different types of product lines. Modern theory
believes in the perspective of combination of securities under constraints of risk and returns
scope of portfolio management:

Portfolio management is a continuous process. It is dynamic activity. The following are
the basis operations of the portfolio management.
 Monitoring the performance of portfolio by incorporating the latest market conditions.
 Identification of the investor’s objective, constrains and preferences.
 Making revision in the portfolio.
 Implementation of strategies in tune with investment objectives.
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Functions of portfolio management:
 To frame the investment strategy and select an investor select an investment mix to achieve
the desired investment objectives.
 To provide a balanced portfolio this not only can hedge against the inflation but can also
optimize returns with the associated degree of risk.
 To make timely buying and selling of secrities.
 To maximize after tax return by in various taxes saving investments.
Schematic diagram of stages in portfolio management:-
Specification
And
Qualification
Of investor Monitoring
objectives investor
related input
factors
Portfolio
policies and
strategies Portfolio Attainment
construction of investor
and revision objectives
asset performance
allocation, measurment
portfolio
optimization,
Capital security
market selection,
expectations implementati
on and
Monitoring
economic
Relevant and market
economic, input
social,
political 30
sector and
PORTFOLIO MANAGEMENT PROCESS:-
The portfolio program and asset management program both follow a disciplined process to
established and monitor an optimal investment mix. This six-stage process helps ensure that the
investments match investor’s unique needs, both now and in the future.
Identify goals and objectives:-

When will you need the money from your investments? What are you saving your money for?
With the assistance of financial advisor, the investment profile questionnaire will guide through a
series of questions to help identify the goals and objectives for the investment.
Determine optimal investment mix:-
Once the investment profile questionnaire is completed, investor’s optimal investment mix or asset
allocation will be determined. An asset allocation represents the mix of investments that match
individual risk and return needs.
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CREATE CUSTOMIZED INVESTMENT POLICY STATEMENT:-
When the optimal investment mix is determined, the next step is to formalize our goals and
objectives in order to utilize them as a benchmark to monitor progress and future updates.
Select investments:-
The customized portfolio is created using an allocation of selection of select QFM Funds. Each
QFM Funds is designed to satisfy the requirements of a specific asset class, and is selected in the
necessary proportion to match the optimal investment mix.
Monitor progress:-
Building an optimal investment mix is only part of the process. It is equity important to maintain
the optimal mix when varying market conditions cause investment mix to drift away from its
target. To ensure that mix o asset lasses stays in line with investor’s unique needs, the portfolio
will be monitored and rebalanced back to the optimal investment mix.
Reassess needs and goals:-
Just as markets shift, so do the goals and objectives of investors. With the flexibility of the
portfolio program and asset management program, when the investor’s needs or other life.
Investment management is a complex activity which may be broken down into the
following steps:
1. Specification of investment objectives and constraints:
The typical objectives sought by investors are current income, capital appreciation, and
safety of principle. The relative importance of these objectives should be specified further the
constraints arising from liquidity, time horizon, tax and special circumstances must be identified.
2. choice of the asset mix :
The most important decision in portfolio management is the asset mix decision very
broadly; this is concerned with the proportions of ‘stocks’ (equity shares and units/shares of
equity-oriented mutual funds) and ‘bonds’ in the portfolio.
The appropriate ‘stock-bond’ mix depends mainly on the risk tolerance and investment
horizon of the investor.
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ELEMENTS OF PORTFOLIO MANAGEMENT:
Portfolio management is on-going process involving the following basic tasks:
• Identification of the investor’s objectives, constraints and preferences.
• Strategies are to be developed and implemented in tune with investment policy formulated.
• Review and monitoring of the performance of the portfolio.
• Finally the evaluation of the portfolio.
Return:-
Return-yield or return differs from the nature of instruments, maturity period and the creditor or
debtors nature of the instrument and a host of other factors. The most important actor influencing
return is risk return is measured by taking the price income plus the price change.
Risk:-
Risk is uncertainty of the income /capital appreciation or loss or both. All investments are
risky. The higher the risk taken, the higher is the return. But proper management of risk involves
the right choice of investments whose risks are compensating. The total risks of two companies
may be different and even lower than the risk of a group of two companies if their companies are
offset by each other.
Return-risk relationship:-
The risk/return relationship is a fundamental concept in only financial analysis, but in every aspect
of life. If decisions are to lead to benefits maximization, it is necessary that individuals/institutions
consider the combination influence on expected return or benefit as well as on risk/cost. The
requirement that expected return/benefit be commensurate with risk/costs known as the
“Risk/return trade-off” in finance. All investment have some risks. An investment in shares o
companies has its own risks or uncertainty. These risks arises out o variability of returns or
companies has its own risks or uncertainty. These risks arises out of variability of returns or yield
and uncertainty o appreciation or depreciation o share prices, loss o liquidity etc, and the overtime
can be represented by the variance o the returns. Normally, higher the risk that the investors take,
the higher is the return.
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Y E(r)
RETURN
R(f)
X
RISK
Risk is measured along the horizontal axis from the left to right.
Expected rate o return is measured on the vertical axis and rises from bottom to top.
1. The line from 0 to R (f) is called “RATE O RETURN” or risk less investments commonly
associated with the yield on government securities.
2. the diagonal line from R (f) to E(r) illustrates the expected rate of return increasing as level
of risk increases.
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SOURCES OF INVESTMENT RISK:-
Business risk:-
As a holder of corporate securities (equity shares or debentures), you are exposed to the
risk of poor business performance. This may be caused by a variety of factors like heightened
competition, emergence of new technologies, development of substitute products, shifts in
consumer preferences, inadequate supply of essential inputs, changes in governmental policies,
and so on
Interest rate risk:

The changes in interest rate have a bearing on the welfare on investors. As the interest rate
goes up, the market price of existing firmed income securities falls, and vice versa. This happens
because the buyer of a fixed income security would not buy it at its par value of face value o its
fixed interest rate is lower than the prevailing interest rate on a similar security. For example, a
debenture that has a face value of RS. 100 and a fixed rate of 12% will sell a discount if the
interest rate moves up from, say 12% to 14%.while the chances in interest rate have a direct
bearing on the prices of fixed income securities, they affect equity prices too, albeit some what
indirectly.
The two major types of risks are:

 Systematic or market related risk.
 Unsystematic or company related risks.
Systematic risks affected from the entire market are (the problems, raw material availability, tax
policy or government policy, inflation risk, interest risk and financial risk). It is managed by the
use of Beta of different company shares.
The unsystematic risks are mismanagement, increasing inventory, wrong financial policy,
defective marketing etc. this is diversifiable or avoidable because it is possible to eliminate or
diversify away this component of risk to a considerable extent by investing in a large portfolio of
securities. The unsystematic risk stems from inefficiency magnitude of those factors different form
one company to another.
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RETURNS ON PORTFOLIO:
Each security in a portfolio contributes return in the proportion of its investments in
security. Thus the portfolio expected return is the weighted average of the expected return, from
each of the securities, with weights representing the proportions share of the security in the total
investment. Why does an investor have so many securities in his portfolio? If the security ABC
gives the maximum return why not he invests in that security all his funds and thus maximize
return? The answer to this questions lie in the investor’s perception of risk attached to investments,
his objectives of income, safety, appreciation, liquidity and hedge against loss of value of money
etc. this pattern of investment in different asset categories, types of investment, etc., would all be
described under the caption of diversification, which aims at the reduction or even elimination of
non-systematic risks and achieve the specific objectives of investors
RISK ON PORTFOLIO :
The expected returns from individual securities carry some degree of risk. Risk on the
portfolio is different from the risk on individual securities. The risk is reflected in the variability of
the returns from zero to infinity. Risk of the individual assets or a portfolio is measured by the
variance of its return. The expected return depends on the probability of the returns and their
weighted contribution to the risk of the portfolio. These are two measures of risk in this context
one is the absolute deviation and other standard deviation.
Most investors invest in a portfolio of assets, because as to spread risk by not putting all
eggs in one basket. Hence, what really matters to them is not the risk and return of stocks in
isolation, but the risk and return of the portfolio as a whole. Risk is mainly reduced by
Diversification.
RISK RETURN ANALYSIS:

All investment has some risk. Investment in shares of companies has its own risk or
uncertainty; these risks arise out of variability of yields and uncertainty of appreciation or
depreciation of share prices, losses of liquidity etc
The risk over time can be represented by the variance of the returns. While the return over time is
capital appreciation plus payout, divided by the purchase price of the share.
36
Normally, the higher the risk that the investor takes, the higher is the return. There is, how
ever, a risk less return on capital of about 12% which is the bank, rate charged by the R.B.I or long
term, yielded on government securities at around 13% to 14%. This risk less return refers to lack of
variability of return and no uncertainty in the repayment or capital. But other risks such as loss of
liquidity due to parting with money etc., may however remain, but are rewarded by the total return
on the capital. Risk-return is subject to variation and the objectives of the portfolio manager are to
reduce that variability and thus reduce the risky by choosing an appropriate portfolio.
Traditional approach advocates that one security holds the better, it is according to the
modern approach diversification should not be quantity that should be related to the quality of
scripts which leads to quality of portfolio.
Experience has shown that beyond the certain securities by adding more securities expensive.
Simple diversification reduces:

An asset’s total risk can be divided into systematic plus unsystematic risk, as shown
below:
Systematic risk (Undiversifiable risk) + unsystematic risk (diversified risk) =Total
risk =Var (r).
Unsystematic risk is that portion of the risk that is unique to the firm (for example, risk due
to strikes and management errors.) Unsystematic risk can be reduced to zero by simple
diversification.
Simple diversification is the random selection of securities that are to be added to a portfolio.
As the number of randomly selected securities added to a portfolio is increased, the level of
unsystematic risk approaches zero. However market related systematic risk cannot be reduced by
simple diversification. This risk is common to all securities.
37
Persons involved in portfolio management:
Investor:
Are the people who are interested in investing their funds?
Portfolio managers:
Is a person who is in the wake of a contract agreement with a client, advices or directs or
undertakes on behalf of the clients, the management or distribution or management of the funds of
the client as the case may be.
Discretionary portfolio manager:
Means a manager who exercise under a contract relating to a portfolio management
exercise any degree of discretion as to the investment or management of portfolio or securities or
funds of clients as the case may be.
The relation ship between an investor and portfolio manager is of a highly interactive nature
The portfolio manager carries out all the transactions pertaining to the investor under the
power of attorney during the last two decades, and increasing complexity was witnessed in the
capital market and its trading procedures in this context a key (uninformed) investor formed )
investor found him self in a tricky situation , to keep track of market movement ,update his
knowledge, yet stay in the capital market and make money , there fore in looked forward to
resuming help from portfolio manager to do the job for him .The portfolio management seeks to
strike a balance between risk’s and return.
The generally rule in that greater risk more of the profits but S.E.B.I. in its guidelines
prohibits portfolio managers to promise any return to investor.
Portfolio management is not a substitute to the inherent risk’s associated with equity investment.
Functions of portfolio managers:

• Advisory role: advice new investments, review the existing ones, identification of
objectives, recommending high yield securities etc.
• Conducting market and economic service: this is essential for recommending good
yielding securities they have to study the current fiscal policy, budget proposal; individual
policies etc further portfolio manager should take in to account the credit policy, industrial
growth, foreign exchange possible change in corporate law’s etc.
38
• Financial analysis: he should evaluate the financial statement of company in order to
understand, their net worth future earnings, prospectus and strength.
• Study of stock market : he should observe the trends at various stock exchange and
analysis scripts so that he is able to identify the right securities for investment
• Study of industry: he should study the industry to know its future prospects, technical
changes etc, required for investment proposal he should also see the problem’s of the
industry.
• Decide the type of port folio: keeping in mind the objectives of portfolio a portfolio
manager has to decide weather the portfolio should comprise equity preference shares,
debentures, convertibles, non-convertibles or partly convertibles, money market, securities
etc or a mix of more than one type of proper mix ensures higher safety, yield and liquidity
coupled with balanced risk techniques of portfolio management.
A portfolio manager in the Indian context has been Brokers (Big brokers) who on the basis
of their experience, market trends, Insider trader, helps the limited knowledge persons.
Registered merchant bankers can act’s as portfolio manager’s

Investor’s must look forward, for qualification and performance and ability and research base of
the portfolio manager’s
.Technique’s of portfolio management:
As of now the under noted technique of portfolio management: are in vogue in our country
1. equity portfolio: is influenced by internal and external factors the internal factors effect
the inner working of the company’s growth plan’s are analyzed with referenced to Balance
sheet, profit & loss a/c (account) of the company.
Among the external factor are changes in the government policies, Trade cycle’s, Political stability
etc.
39
2. equity stock analysis: under this method the probable future value of a share of a company
is determined it can be done by ratio’s of earning per share of the company and price
earning ratio
EPS = PROFIT AFTER TAX

NO: OF EQUITY SHARES
PRICE EARNING RATIO = MARKET PRICE

E.P.S (earning’s per share)
One can estimate trend of earning by EPS, which reflects trends of earning quality of
company, dividend policy, and quality of management. Price earning ratio indicate a confidence of
market about the company future, a high rating is preferable
The following points must be considered by portfolio managers while analyzing the
securities.
1. Nature of the industry and its product: Long term trends of industries, competition with
in, and out side the industry, Technical changes, labour relations, sensitivity, to Trade
cycle.
2. Industrial analysis of prospective earnings, cash flows, working capital, dividends,

etc.
3. Ratio analysis: Ratio such as debt equity ratio’s current ratio’s net worth, profit earning
ratio, return on investment, are worked out to decide the portfolio.
The wise principle of portfolio management suggests that “Buy when the market is low or
BEARISH, and sell when the market is rising or BULLISH”.
Stock market operation can be analyzed by:
a. Fundamental approach :- based on intrinsic value of share’s
40
b. Technical approach:-based on Dowjone’s theory, Random walk theory, etc.
Prices are based upon demand and supply of the market.
i. Traditional approach assumes that

ii. Objectives are maximization of wealth and minimization of risk.
iii. Diversification reduces risk and volatility.
iv. Variable returns, high illiquidity; etc.
Capital Assets pricing approach (CAPM) it pay’s more weight age, to risk or portfolio
diversification of portfolio.
Diversification of portfolio reduces risk but it should be based on certain assessment
such as:
Trend analysis of past share prices. Valuation of intrinsic value of company (trend-marker
moves are known for their Uncertainties they are compared to be high, and low prompts of wave
market trends are constituted by these waves it is a pattern of movement based on past).
The following rules must be studied while cautious portfolio manager before decide to invest their
funds in portfolio’s.
1. Compile the financials of the companies in the immediate past 3 years such as turn over, gross
profit, net profit before tax, compare the profit earning of company with that of the industry
average nature of product manufacture service render and it future demand ,know about the
promoters and their back ground, dividend track record, bonus shares in the past 3 to 5 years
,reflects company’s commitment to share holders the relevant information can be accessed from
the RDC(registrant of companies)published financial results financed quarters, journals and
ledgers.
2. Watch out the high’s and lows of the scripts for the past 2 to 3 years and their timing cyclical
scripts have a tendency to repeat their performance ,this hypothesis can be true of all other
financial .
3. The higher the trading volume higher is liquidity and still higher the chance of speculation, it
is futile to invest in such shares who’s daily movements cannot be kept track, if you want to reap
41
rich returns keep investment over along horizon and it will offset the wild intra day trading
fluctuation’s, the minor movement of scripts may be ignored, we must remember that share market
moves in phases and the span of each phase is 6 months to 5 years.
a. Long term of the market should be the guiding factor to enable you to invest and quit. The
market is now bullish and the trend is likely to continue for some more time.
b. UN tradable shares must find a last place in portfolio apart from return; even capital invested
is eroded with no way of exit with no way of exit with inside.
How at all one should avoid such scripts in future?
(1) Never invest on the basis of an insider trader tip in a company which is not sound (insider
trader is person who gives tip for trading in securities based on prices sensitive up price sensitive
un published information relating to such security).
(2) Never invest in the so called promoter quota of lesser known company
(3) Never invest in a company about which you do not have appropriate knowledge.
(4) Never at all invest in a company which doesn’t have a stringent financial record your portfolio
should not a stagnate
(4) Shuffle the portfolio and replace the slow moving sector with active ones , investors were
shatter when the technology , media, software , stops have taken a down slight.
(5) Never fall to the magic of the scripts don’t confine to the blue chip company‘s, look out for
other portfolio that ensure regular dividends.
(6) In the same way never react to sudden raise or fall in stock market index such fluctuation is
movement minor correction’s in stock market held in consolidation of market their by reading out
a weak player often taste on wait for the dust and dim to settle to make your move” .
PORT FOLIO MANAGEMENT AND DIVESIFICATOIN:

Combinations of securities that have high risk and return features make up a
portfolio. Portfolio’s may or may not take on the aggregate characteristics of individual part,
portfolio analysis takes various components of risk and return for each industry and consider the
effort of combined security.
42
Portfolio selection involves choosing the best portfolio to suit the risk return preferences of
portfolio investor management of portfolio is a dynamic activity of evaluating and revising the
portfolio in terms of portfolios objectives. It may include in cash also, even if one goes bad the
other will provide protection from the loss even cash is subject to inflation the diversification can
be either vertical or horizontal the vertical diversification portfolio can have script of different
company’s with in the same industry.
In horizontal diversification one can have different scripts chosen from different industries.
CEMENT INDUSTRY TEXTILE INDUSTRY
ACC CEMENT RELILANCE INDUSTRIES

JK CEMENT GARDEN SILK MILLS
ULTRA TECH NECP TEXTILE
BIRLA CEM BOMBAY DEYING
Horizontal
VISHNU CEM Diversification
GRASIM INDUSTRIES
PRIYA CEM
TISCO MANUFACTURING BORODA RAYON
ACC RAM CO CEM CHESLIND TEXTILE
GARDEN TEXTILE
INFOSYS (SOFTWARE)
BSES LTD (POWER)
ULTRA TECH (CONSTRUCTION)
It should be an adequate diversification looking in to the size of portfolio. Traditional

approach advocates the more security one holds in a portfolio , the better it is according to modern
approach diversification should not be quantified but should be related to the quality of scripts
which leads to the quality and portfolio subsequently experience can show that beyond a certain
number of securities adding more securities become expensive.
43
Investment in a fixed return securities in the current market scenario which is passing through a an
uncertain phase investors are facing the problem of lack of liquidity combined with minimum
returns the important point to both is that the equity market and debt market moves in opposite
direction .where the stock market is booming, equities perform better where as in depressed market
the assured returns related securities market out perform equities.
It is cyclic and is evident in more global market keeping this in mind an investor can shift from
fixed income securities to equities and vise versa along with the changing market scenario , if the
investment are wisely planned they , fetch good returns even when the market is depressed most ,
important the investor must adopt the time bound strategy in differing state of market to achieve
the optimum result when the aim is short term returns it would be wise for the investor to invest in
equities when the market is in boom & it could be reviewed if the same is done.
Maximum of returns can be achieved by following a composite pattern of investment by
having, suitable investment allocation strategy among the available resources.
• Never invest in a single securities your investment can be allocated in th

• e following areas:
1. Equities:-primary and secondary market.

2. Mutual Funds
3. Bank deposits
4. Fixed deposits & bonds and the tax saving schemes.
• The different areas of fixed income are as:-

Fixed deposits in company
Bonds
Mutual funds schemes
with an investment strategy to invest in debt investment in fixed deposit can be made for the
simple reason that assured fixed income of a high of 14-17% per annum can be expected which is
much safer then investing a highly volatile stock market, even in comparison to banks deposit
44
which gives a maximum return of 12% per annum, fixed deposit s in high profile esteemed will
performing companies definitely gives a higher returns.
BETA:
The concept of Beta as a measure of systematic risk is useful in portfolio management. The beta
measures the movement of one script in relation to the market trend*. Thus BETA can be positive
or negative depending on whether the individual scrip moves in the same direction as the market or
in the opposite direction and the extent of variance of one scrip vis-à-vis the market is being
measured by BETA. The BETA is negative if the share price moves contrary to the general trend
and positive if it moves in the same direction. The scrip’s with higher BETA of more than one are
called aggressive, and those with a low BETA of less than one are called defensive.
It is therefore it is necessary, to calculate Betas for all scrip’s and choose those with high
Beta for a portfolio of high returns.
INVESTMENT DECISIONS
Definition of investment:
According to F. AMLING “Investment may be defined as the purchase by an individual or
an Institutional investor of a financial or real asset that produces a return proportional to the risk
assumed over some future investment period”. According to D.E. Fisher and R.J. Jordon,
Investment is a commitment of funds made in the expectation of some positive rate of return. If the
investment is properly undertaken, the return will be commensurate with the risk of the investor
assumes”.
45
Concept of Investment:
Investment will generally be used in its financial sense and as such investment is the
allocation of monetary resources to assets that are expected to yield some gain or positive return
over a given period of time. Investment is a commitment of a person’s funds to derive future
income in the form of interest, dividends, rent, premiums, pension benefits or the appreciation of
the value of his principal capital.
Many types of investment media or channels for making investments are available.
Securities ranging from risk free instruments to highly speculative shares and debentures are
available for alternative investments.
All investments are risky, as the investor parts with his money. An efficient investor with
proper training can reduce the risk and maximize returns. He can avoid pitfalls and protect his
interest.
There are different methods of classifying the investment avenues. A major classification is
physical Investments and Financial Investments. They are physical, if savings are used to acquire
physical assets, useful for consumption or production. Some physical assets like ploughs, tractors
or harvesters are useful in agricultural production. A few useful physical assets like cars, jeeps etc.,
are useful in business.
Many items of physical assets are not useful for further production or goods or create
income as in the case of consumer durables, gold, silver etc. among different types of investment,
some are marketable and transferable and others are not. Examples of marketable assets are shares
and debentures of public limited companies, particularly the listed companies on Stock Exchange,
Bonds of P.S.U., Government securities etc. non-marketable securities or investments in bank
deposits, provident fund and pension funds, insurance certificates, post office deposits, national
savings certificate, company deposits, private limited companies shares etc.
The investment process may be described in the following stages:

Investment policy:
The first stage determines and involves personal financial affairs and objectives before
making investment. It may also be called the preparation of investment policy stage. The investor
has to see that he should be able to create an emergency fund, an element of liquidity and quick
46
convertibility of securities into cash. This stage may, therefore be called the proper time of
identifying investment assets and considering the various features of investments.
Investment analysis:
After arranging a logical order of types of investment preferred, the next step is to analyze
the securities available for investment. The investor must take a comparative analysis of type of
industry, kind of securities etc. the primary concerns at this stage would be to form beliefs
regarding future behavior of prices and stocks, the expected return and associated risks.
Investment valuation:
Investment value, in general is taken to be the present worth to the owners of future benefits
from investments. The investor has to bear in mind the value of these investments. An appropriate
set of weights have to be applied with the use of forecasted benefits to estimate the value of the
investment assets such as stocks, debentures, and bonds and other assets. Comparison of the value
with the current market price of the assets allows a determination of the relative attractiveness of
the asset allows a determination of the relative attractiveness of the asset. Each asset must be value
on its individual merit.
Portfolio construction and feed-back:

Portfolio construction requires knowledge of different aspects of securities in relation to
safety and growth of principal, liquidity of assets etc. In this stage, we study, determination of
diversification level, consideration of investment timing selection of investment assets, allocation
of invest able wealth to different investments, evaluation of portfolio for feed-back.
INVESTMENT DECISIONS- GUIDELINES FOR EQUITY INVESTMENT

Equity shares are characterized by price fluctuations, which can produce substantial
gains or inflict severe losses. Given the volatility and dynamism of the stock market, investor
requires greater competence and skill-along with a touch of good luck too-to invest in equity
shares. Here are some general guidelines to play to equity game, irrespective of weather you
aggressive or conservative.
47
• Adopt a suitable formula plan.
• Establish value anchors.
• Assets market psychology.
• Combination of fundamental and technical analyze.
• Diversify sensibly.
• Periodically review and revise your portfolio.
Requirement of portfolio:
1. Maintain adequate diversification when relative values of various securities in the portfolio
change.
2. Incorporate new information relevant for return investment.
3. Expand or contrast the size of portfolio to absorb funds or with draw funds.
4.Reflect changes in investor risk disposition.
.
Qualities For successful Investing:
• Contrary thinking
• Patience
• Composure
• Flexibility
• Openness
INVESTOR’S PORTFOLIO CHOICE:

An investor tends to choose that portfolio, which yields him maximum return by applying
utility theory. Utility Theory is the foundation for the choice under uncertainty. Cardinal and
ordinal theories are the two alternatives, which is used by economist to determine how people and
societies choose to allocate scare resources and to distribute wealth among one another.
The former theory implies that a consumer is capable of assigning to every commodity or
combination of commodities a number representing the amount of degree of utility associated with
48
it. Were as the latter theory, implies that a consumer needs not be liable to assign numbers that
represents the degree or amount of utility associated with commodity or combination of
commodity. The consumer can only rank and order the amount or degree of utility associated with
commodity.
MARKOWITZ MODEL
THE MEAN-VARIENCE CRITERION
Dr. Harry M. Markowitz is credited with developing the first modern portfolio analysis in
order to arrange for the optimum allocation of assets with in portfolio. To reach this objective,
Markowitz generated portfolios within a reward risk context. In essence, Markowitz’s model is a
theoretical framework for the analysis of risk return choices. Decisions are based on the concept of
efficient portfolios.
A portfolio is efficient when it is expected to yield the highest return for the level of risk
accepted or, alternatively, the smallest portfolio risk for a specified level of expected return. To
build an efficient portfolio an expected return level is chosen, and assets are substituted until the
portfolio combination with the smallest variance at the return level is found. At this process is
repeated for expected returns, set of efficient portfolio is generated.
ASSUMPTIONS:
1. Investors consider each investment alternative as being represented by a probability
distribution of expected returns over some holding period.
2. Investors maximize one period-expected utility and posse’s utility curve, which
demonstrates diminishing marginal utility of wealth.
3. Individuals estimate risk on the risk on the basis of the variability of expected returns.
4. Investors base decisions solely on expected return and variance or returns only.
5. For a given risk level, investors prefer high returns to lower return similarly for a given
level of expected return, Investors prefer risk to more risk.
Under these assumptions, a single asset or portfolio of assets is considered to be “efficient”

if no other asset or portfolio of assets offers higher expected return with the same risk or lower risk
with the same expected return.
49
FORMULA
(Std. b) ^2 – pab (Std. a) (Std. b)
Xa = (Std. a) ^2 + (std. b) ^2 –2pab (Std. a) (Std. b)
Where
Std. b= standard deviation of b
Std. a = standard deviation of a
Pab= correlation co-efficient between A&B
The next step is final step to calculate the portfolio risk (combined risk) ,that shows how
much is the risk is reduced by combining two stocks or scripts by using this formula:
σp= √ X1^2σ1^2+X2^2σ2^2+2(X1)(X2)(X12)σ1σ
Where
X1=proportion of investment in security 1.
X2=proportion of investment in security 2.
σ 1= standard deviation of security 1.
σ 2= standard deviation of security 2.
X12=correlation co-efficient between security 1&2.
σ p=portfolio risk
50
CHAPTER – IV
DATA ANALYSIS
&
INTERPRETATIONS
51
Calculation of return of ICICI
Year Beginning price(Rs) Ending price(Rs) Dividend(Rs)
2006 141.45 295.45 7.50

2007 297.90 371.35 7.50
2008 375.00 585.05 8.50
2009 587.70 891.5 8.50
2010 892.00 1238.7 10.00
Return= Dividend+(Ending Price-Beginning price)

Beginning Price
Return(2006) = 7.50+(295.45-141.45) * 100 = 114.17%

141.45
Return(2007) = 7.50+(371.35-297.90) * 100 = 27.17%
297.90
Return(2008) = 8.50+(585.05-375) * 100 =58.28%
375
Return(2009) = 8.50+(891.5-587.70) * 100 =53.13%
587.70
Return(2010) = 10.00+(1238.7-892) * 100 =39.98
892
52
Calculation of return of HDFC
Year Beginning Ending price Dividend

Price
2006 358.5 645.55 3
2007 645.9 769.05 3.50
2008 771 1207 4.50
2009 1195 1626.9 5.50
2010 1630 2877.75 7.00
Return = Dividend+(Ending Price-Beginning price)
Beginning Price
Return(2006) = 3+(645.55-358.5) *100 =80.9%
358.5
Return(2007) = 3.50+(769.05-645.9) * 100 =19.60%
645.9
Return(2008) = 4.50+(1207-771) * 100 =57.13%
771
Return(2009) = 5.00+(1626.9-1195) * 100 =36.6%
1195.9
Return(2010) = 7.00+(2877.75-1630) * 100 =76.97%
1630
Calculation of return of WIPRO
53
2006 1630.60 1736.05 1.00

2007 1752.00 748.8 29.00
2008 755.00 463.35 5.00
2009 462.00 605.9 5.00
2010 603.00 525.65 8.00

Beginning Price
Return(2006) = 1.00+(1736.05-1630.60) * 100 = 8.184%
1630.60
Return(2007) = 29.00+(748.8-1752.00) * 100 = -55.60%
1752.00
Return(2008) = 5.00+(463.35-755.00) * 100 = -37.96%
755.00
Return(2009) = 5.00+(605.9-462.00) * 100 = 32.23%
462.00
Return(2010) = 8.00+(525.65-603.00) * 100 = -11.5%
603.00
Calculation of return of ITC
54
2006 667 983.5 15

2007 990 1310.75 20
2008 1318.95 142.1 31.80
2009 142 176.1 2.65
2010 176.5 209.45 3.10

Beginning Price
Return(2006) = 15+(983.5-667) * 100 = 49.7%

667
Return(2007)= 20+(1310.75-990) * 100 = 34.4%
990
Return(2008) = 31+(142.1-1318.95) * 100 = 86.87%
1318.95
Return(2009) = 2.65+(176.1-142) * 100 =25.8%
142
Return(2010) = 3.10+(209.45-176.5) * 100 = 20.45
176.5
Calculation of return of COLGATE&PALMOLIVE

2006 133.65 159.7 6.75
55
2007 161.5 179.1 6.75
2008 179.2 269.15 7.25
2009 270.5 388.45 6.00
2010 390.9 382.1 11.25
Return=Dividend+(Ending Price-Beginning price)

Beginning Price
Return(2006)= 6.75+(159.7-133.65) * 100 = 24.5%

133.65
Return(2007)=6.75+(179.1-161.5) * 100 = 13.58

161.5
Return(2008)= 7.25+(269.15-179.2) * 100 = 54.2
179.2
Return(2009)= 6.00+(388.45-270.5) * 100 = 45.8
270.5
Return(2010)= 11.25+(382.1-390.9) * 100 = 0.62
390.9
Calculation of return of CIPLA

2006 898.00 1371.05 10.00

2007 1334.00 317.8 3.00
56
2008 320.00 448 3.50
2009 447.95 251.35 2.00
2010 251.5 212.65 2.00

Beginning Price
Return(2006) =10.00+(1375.05-898.00) * 100 = 54.23%
898.00
Return(2007) = 3.00+(317.8-1334.00) * 100 = -75.95%
1334
Return(2008) = 3.50+(448-320.00) * 100 = 41.09%
320
Return(2009) = 2.00+(251.35-447.95) * 100 = -43.44%
447.95
Return(2010) = 2.00+(212.65-251.5) * 100 = -14.65%
251.5
Calculation of return of RANBAXY

2006 598.45 1095.25 15.00

2007 1109.00 1251.15 17.00
2008 1268 362.75 14.50
2009 363 391.8 8.50
57
2010 391 425.5 8.50

Beginning Price
Return(2006) = 15.00+(1095.25-598.45) * 100 = 85.52%
598..45
Return(2007) = 17.00+(1251.15-1109.00) * 100 = 14.35%
1109
Return(2008) = 14.50+(362.75-1268.00) * 100 = -70.24%
1268.00
Return(2009) = 8.50+(391.8-363) *100 = 10.27%
363
Return(2010) = 8.50+(425.5-391.00) * 100 = 10.99%
391.00
Calculation of return of MAHENDRA&MAHENDRA
2006 113.45 388.8 5.50

2007 392.55 545.45 9.00
2008 547.10 511.6 13.00
2009 514.80 908.45 10.00
2010 913.00 861.95 11.50
58
Beginning Price
Return(2006)= 5.50+(388.8-113.45) * 100 = 247.55%

113.45
Return(2007)=9.00+(545.45-392.55) * 100 = 41.24%
392.55
Return(2008)= 13.00+(511.6-547.10) * 100 = -4.11%
547.10
Return(2009)=10.00+(908.45-514.80) * 100 = 78.41%
514.50
Return(2010)=11.50+(861.95-913.00) * 100 = -4.3%
913.00
Calculation of return of BAJAJ AUTO

2006 502 1136.3 14.00

2007 1125.05 1131.2 25.00
2008 1149.00 2001.1 25.00
2009 2016.00 2619.15 40.00
2010 2648.65 2627.9 40.00
Return=Dividend+(Ending Price-Beginning p
59
Beginning Price
Return(2006)= 14.00+(1136.3 -502) * 100 = 129.14%

502
Return(2007)= 25.00+(1131.2-1125.05) * 100 = 2.77%
1125.05
Return(2008) = 25.00+(2001.1-1149.00) * 100 = 76.34%
1149.00
Return(2009) = 40.00+(2619.15-2016.00) * 100 = 31.9%
2016.00
Return(2010) = 40.00+(2627.9-2648.65) * 100 = 0.726%
2648.65
INTERPRETATIONS
COMPANY 2006 2007 2008 2009 2010
ICICI 114.17 27.17 58.28 53.13 39.98

% % % % %
HDFC 80.9% 19.60 57.13 36.6% 76.97

% % %
60
WIPRO 8.184 - - 32.23 -11.5%
% 55.60 37.96 %
% %
ITC 49.7% 34.4% 86.87 25.8% 20.45

% %
COLGATE 24.5% 13.58 54.2% 45.8% 0.62%

%
&
PALMOLIVE
CIPLA 54.23 - 41.09 - -

% 75.95 % 43.44 14.65
% % %
RANBAXY 85.52 14.35 - 10.27 10.99

% % 70.24 % %
%
MAHENDRA
& 247.55 41.24 -4.11% 78.41 -4.3%

% % %
MAHENDRA
BAJAJ AUTO 129.14 2.77% 76.34 31.9% 0.726

% % %
Calculation of standard deviation of ICICI

_ _
Year Return _ ( R-R )2
(R)
R R-R
61
2006 114.7 58.652 56.048 3486.6
2007 27.17 58.652 -31.482 991.11
2008 58.28 58.652 -0.372 0.138384
2009 53.13 58.652 -5.522 30.492
2010 39.98 58.652 -18.672 348.64
293.26 4856.98
Average (R) = R = 293.26 = 58.652

N 5
Variance = 1  (R-R) 2
n-1
Standard Deviation = Variance
= 1 (11905.379)
5-1
= 34.846
Calculation of standard deviation of HDFC

_ _
Return
Year _ ( R-R )2
(R)
R R-R
2006 80.9 54.24 26.66 710.75
2007 19.60 54.24 -34.64 1199.92
2008 57.13 54.24 2.89 8.3521
62
2009 36.6 54.24 -17.64 311.16
2010 76.97 54.24 22.73 516.65
271.2 2476.8
Average (R) =  R = 271.2 = 54.24

N 5
n-1
= 1 (2476.8)
5-1
= 24.88
63
Calculation of standard deviation of WIPRO
_ _
Year Return (R) _ ( R-R )2
R R-R
2006 8.184 -12.93 21.114 445.81
2007 -55.60 -12.93 -42.67 1820.73
2008 -37.96 -12.93 -25.03 626.5
2009 32.23 -12.93 45.16 2039.4
2010 -11.5 -12.93 1.43 2.0449
-64.646 4934.5
Average (R) =  R = -64.646 = -12.93

N 5
Variance = 1/n-1  (R-R)2
= 1 (4934.5)
4
=35.12
Calculation of standard deviation of ITC
64
_ _
Return
Year _ ( R-R )2
(R)
R R-R
2006 49.7 8.686 41.04 1682.14

2007 34.4 8.686 25.714 661.209
2008 -86.87 8.686 -95.556 9130.94
2009 25.8 8.686 17.114 293.88

2010 20.4 8.686 11.714 137.21
43.43 11905.379
Average (R) =  R = 43.43 = 8.686

N 5
N- 1
= 1 (11905.379)
5-1
S.D = 54.5
Calculation of standard deviation of COLGATE&PALMOLIVE
_ _
Return
Year
65
(R) R _ ( R-R )2
R-R
2006 24.5 27.74 -3.24 10.5

2007 13.58 27.74 -14.16 200.5
2008 54.2 27.74 26.46 700.13
2009 45.8 27.74 18.06 326.16
2010 0.62 27.74 -27.12 735.5
138.7 27.74 1972.79
Average R = R
N
= 138.7 = 27.74
5
variance = 1  (R-R )2
n-1
= 1 (1972.79 )
4
= 22.2
Calculation of standard deviation of CIPLA

_ _
Return
Year _ ( R-R )2
(R)
66
R R-R
2006 54.23 -7.744 61.974 3840

2007 -75.95 -7.744 -68.206 4652
2008 41.09 -7.744 48.834 2384
2009 -43.44 -7.744 -35.696 1274
2010 -14.65 -7.744 -6.906 47.692
-38.72 12197.692
Average (R) = R = -38.72 = -7.744

N 5
Variance = 1/n-1 (R-R)2
Standard Deviation = Variance = 1 (12197.692)

4
=55.22
Calculation of standard deviation of RANBAXY

_ _
Year Return R _ ( R-R )2
(R) R-R
2006 85.52 10.18 75.34 5676
2007 14.35 10.18 4.17 17.39
67
2008 -70.24 10.18 -80.42 6467
2009 10.27 10.18 0.09 0.0081
2010 10.99 10.18 0.81 0.6561
50.89 12161
Average (R) =  R = 50.89 = 10.18

N 5
n-1
= 1 (12161)
= 55.13
Calculation of standard deviation of MAHENDRA&MAHENDRA
_ _
Return
Year _ ( R-R )2
(R)
R R-R
2006 247.45 71.758 175.79 30902.8
2007 41.24 71.758 -30.52 931.47
2008 -4.11 71.758 -75.868 5755.95
68
2009 78.41 71.758 6.652 44.25
2010 -4.3 71.758 -76.058 5784.82
358.79 43419.3
Average R = R
n
= 358.79 =71.758
5
Variance = 1  (R-R )2
n-1
= 1 (43419.3 )
4
= 104.186
Calculation of standard deviation of BAJAJ AUTO

_ _
Return (R)
Year _ ( R-R )2
R R-R
2006 129.14 48.175 80.965 6555.3
2007 2.77 48.175 -45.405 2061.6
2008 76.34 48.175 28.165 793.3
2009 31.9 48.175 -16.275 264.9
2010 0.726 48.175 -47.449 2251.4
69
240.876 11926.5
COMPANY STANDARED DEVIATION Average R =

ITC 54.55
COL-PAL 22.21
 R
BAJAJ 54.60
M&M 104.186 N
HDFC 24.88
ICICI 34.846
= 240.876 = 48.175
RANBAXY 55.13
WIPRO 35.123
CIPLA 55.22
5
N-1
= 1 (11926.5 )
4
=54.6
STANDARD DEVIATION
70
The above analysis reveal that there is standard deviation on different
companies from 2006 to 2010 and as follows
Correlation between ITC&COLGATE –PALMOLIVE

DEVIATIONOF DEVIATION OF COLGATE- COMBINED DEVIATION
Year ITC PALMOLIVE

__ ___ ___
___ RB-RB (RA-RA ) (RB-RB)
RA-RA
2006 41.04 -3.24 -132.97
71
2007 25.714 -14.16 -364.1
2008 -95.556 26.46 -2528.4
2009 17.114 18.06 309.07
2010 11.714 -27.12 -317.68
-3034.08
Co-variance(COVAB )=1/n ∑ (RA-RA) (RB-RB)

t=1
Co-variance(COVAB )=1/5 (-3034.08)

=-606.816
Correlation – Coefficient (PAB) = COV AB
(Std. A) (Std. B)
= - 606.816
(54.55) (22.21)
= - 0.5008
Correlation between CIPLA & RANBAXI

DEVIATION 0F DEVIATION OF RANBAXI COMBINED DEVIATION
CIPLA __
Year
___ RB-RB ___ ___
RA-RA (RA-RA ) (RB-RB)
2006 61.974 75.34 4669.12
2007 -68.206 4.17 -284.42
2008 48.834 -80.42 -3927.23
2009 -35.696 0.09 -3.213
72
2010 -6.906 0.81 -5.59
448.667
n

t=1
Co-variance(COVAB )=1/5 448.667

= 89.7334
(Std. A) (Std. B)
= 89.7334
(55.22)(55.13)
=0.0295
Correlation between BAJAJ AUTO &MAHENDRA

DEVIATIONOF DEVIATION OF M&M COMBINED DEVIATION
BAJAJ ___
Year
___ RB-RB ___ ___
2006 80.965 175.79 14232.84
2007 -45.405 -30.52 1385.76
2008 28.165 -75.868 -1909.22
2009 -16.275 6.652 -108.26
2010 -47.449 -76.058 3608.87
73
17210

t=1
Co-variance(COVAB )=1/5 (17210)

=3442
(Std. A) (Std. B)
= 3442
(54.60) (104.586)
= 0.605
Correlation betwee HDFC&WIPRO

DEVIATION OF DEVIATION OF WIPRO COMBINED DEVIATION
HDFC __
Year
___ RB-RB ___ ___
2006 26.06 21.114 550.23
2007 -34.64 -42.67 1478.1
2008 2.89 -25.03 -72.34
2009 -17.64 45.16 -796.6
2010 22.73 1.43 32.50
1191.89
74
t=1
Co-variance(COVAB )=1/5 (1191.89)

=238.38
Correlation – Coefficient (PAB)= COVAB
(Std. A) (Std. B)
= 238.38
(24.88) (35.123)
=0.273
Correlation between BAJAJ& ITC

DEVIATION OF DEVIATION OF ITC COMBINED DEVIATION
BAJAJ __
Year
___ RB-RB ___ ___
2006 80.965 41.04 3322.80
2007 -45.405 25.714 -1167.54
2008 28.165 -95.556 -2691.33
2009 -16.275 17.114 -278.53
2010 -47.449 11.714 -555.82
-1370.42
t-1
75
Co-variance(COVAB )=1/5 (-1370.42)
=-274.08
(Std. A) (Std. B)
= - 274.08
(54.60) (54.55)
=-0.092
Correlation between CIPLA& HDFC

DEVIATION OF DEVIATION OF HDFC COMBINED DEVIATION
CIPLA __
Year
___ RB-RB ___ ___
2006 61.974 26.06 1615.04
2007 -68.206 -34.64 2362.66
2008 48.834 2.89 141.13
2009 -35.696 -17.64 629.68
2010 -6.906 22.73 -156.97
4591.54

t=1

=918.31
76
(Std. A) (Std. B)
= 918.31
(55.22) (24.88)
=0.0668
Correlation between RANBAXY&WIPRO

DEVIATION OF DEVIATION OF WIPRO COMBINED DEVIATION
RANBAXY __
Year
___ RB-RB ___ ___
2006 75.34 21.114 1590.73
2007 4.17 -42.67 -177.93
2008 -80.42 -25.03 2012.91
2009 0.09 45.16 4.0644
2010 0.81 1.43 1.158
3430.93

t=1

=686.19
Correlation – Coefficient (PAB)= COVAB
(Std. A) (Std. B)
77
= 686.19
(55.13)(35.123)
= 0.354
Correlation between CIPLA&BAJAJ

DEVIATION OF DEVIATION OF COMBINED DEVIATION
CIPLA BAJAJ
Year
___ __ ___ ___
RA-RA RB-RB (RA-RA ) (RB-RB)
2006 61.974 80.965 5017.72
2007 -68.206 -45.405 3096.90
2008 48.834 28.165 1375.41
2009 -35.696 -16.275 580.95
2010 -6.906 -47.449 327.68
10398.70

t=1

=2079.74
Correlation – Coefficient (PAB) = COVAB
(Std. A) (Std. B)
= 2079.74
( 55.22)(54.60)
= 0.690
78
= 0.690
CORRELATION COEFFICIENT
COMPANY R
HDFC&ICICI 0.5206
ITC&COLGATE 0.5008
BAJAJAUTO&MAHINDRA 0.605
CIPLA&RANBAXY 0.0295
HDFC&WIPRO 0.0273
COLGATE&SATYAM 0.30
BAJAJ&ITC -0.09
CIPLA&HDFC 0.668
RANBAXY&WIPRO 0.354
CIPLA&BAJAJ 0.690
AVERAGE
COMPANY AVERAGE
ITC 8.686
COLGATE&PALMOLIVE 27.74
BAJAJ 48.175
M&M 71.758
HDFC 54.24
ICICI 58.652
RANBAXY 10.18
WIPRO -12.93
CIPLA -7.744
PORTFOLIO WEIGHTS
HDFC&ICICI
Formula:
79
Xa = (Std.b) 2 – p ab (std.a )(std.b)
(std.a) 2 + (std.b) 2 -2 pab (std.a) (std.b)
Xb = 1–Xa
Where X a = HDFC
X b = ICICI
Std.a = 24.88
Std.b = 34.85
p ab = 0.5206
Xa = (34.85) 2 – (0.5206) (24.88 )(34.85)

(24.88) 2 + (34.85) 2 - 2 (0.5206) (24.88) (34.85)
Xb = 1–X a
Xa = 0.8199
Xb = 0.1801
PORTFOLIO WEIGHTS
Formula:
80
Xb = 1–Xa
Where X a = WIPRO
Xa = (34.846) 2 – (0.586) (35.123 )(34.846)

(35.123) 2 + (34.846) 2 - 2 (0.586) (35.123) (34.846)
Xb = 1–X a
Xa = 0.4905
Xb = 0.5095
PORTFOLIO WEIGHTS
ITC&COLGATE:
81
Formula:

Xb = 1–Xa
Where X a = ITC
X b = COLGATE
Std.a = 54.55
Std.b = 22.21
p ab = 0.5008
Xa = (22.21) 2 – (0.5008) (54.55 )(22.21)

(54.55) 2 + (22.21) 2 - 2 (0.5008) (54.55) (22.21)
Xb = 1–X a
Xa = 0.0503
Xb = 0.9497
PORTFOLIO WEIGHTS
CIPLA&RANBAXY:
Formula:
82
Xb = 1–Xa
Where X a = CIPLA
X b = RANBAXY
Std.a = 55.22
Std.b = 55.13
p ab = 0.0295
Xa = (55.13) 2 – 0.0295 (55.22) (55.13)

(55.22) 2 + (55.13) 2 - 2 (0.0295) (55.22) (55.13)
Xb = 1–X a
Xa = 0.49916
Xb = 0.50084
PORTFOLIO WEIGHTS
BAJAJ AUTO&MAHENDRA:
Formula:

83
Xb = 1–Xa
Where X a = BAJAJ AUTO
X b = MAHENDRA
Std.a = 54.60
Std.b = 104.186
p ab = 0.605
Xa = (104.19) 2 – o.605 (54.60) (104.19)

(54.60) 2 + (104.19) 2 - 2 (0.605) (54.60) (104.19)
Xb = 1–X a
Xa = 1.6206
Xb = -0.6206
Two Portfolios Correlation COMPANY Xa COMPANY Xb PORTFOLIO PORTFOLO

Coefficient RETURN Rp RISKσp
84
ICICI&HDFC 0.5206 0.8199 ..0.1801 114.24 31.14
ITC&COLGA 0.5008 0.0563 0.9497 26.835 22.77
TE
CIPLA&RAN 0.605 0.49916 0.50084 1.2335 49.43
BAXI
M&M 0.0295 1.6206 -0.620 122.61 171.22
&BAJAJ
__ __
PORTFOLIO RETURN ( Rp)= (Ra)(Xa) + (Rb) (Xb)
PORTFOLIO RISK = σp= √ X1^2σ1^2+X2^2σ2^2+2(X1)(X2)(X12)σ1σ2
Portfolio return Rp
ICICI&HDFC 114.24
WIP&RAN 2.143
ITC&COLGATE 26.835
CIPLA&RANBAXI 1.234
85
M&M &BAJAJ 122.61
Portfolio risk
ICICI&HDFC 31.14
WIP&RAN 38.42
ITC&COLGATE 22.77
CIPLA&RANBAXI 49.43
M&M &BAJAJ 171.22
CHAPTER – V
FINDINGS
86
CONCLUSIONS
&
SUGGESTIONS
FINDINGS
• About 85% Respondents knows about the Investment Option, because remaining 15% take
his /her residential property as Investment, but in actual it not an investment philosophy
carries that all the Investment does not create any profit for the owner.
• More than 75% Investors are investing their money for Liquidity, Return and Tax benefits.
• At the time of Investment the Investors basically considered the both Risk and Return in
more %age around 65%.
87
• As among all Investment Option for Investor the most important area to get more return is
share around 22%after that Mutual Fund and other comes into existence.
• As expected return from the Market more than 48% respondents expect the rise in Income
more than 15%, 32% respondents are expecting between 15-25% return.
• As the experience from the Market more than 34% Investor had lose their money during
the concerned year, whereas 20% respondents have got satisfied return.
• About 45% respondents do the Trade in the Market with Derivatives Tools Speculation
compare to 24% through Hedging .And the rest 31% trade their money in Investments.
• Around 57% residents manage their Portfolio through the different company whereas
43%Investor manage their portfolio themselves.
88
CONCLUSIONS
ICICI&HDFC
The combination of ICICI and HDFC gives the proportion of investment is 1.1801 and
0.8199 for ICICI and HDFC, based on the standard deviations The standard deviation for ICICI is
34.846 and for HDFC is 24.88.
Hence the investor should invest their funds more in HDFC when compared to ICICI as the
risk involved in HDFC is less than ICICI as the standard deviation of HDFC is less than that of
ICICI.
ITC & COLGATE PALMOLIVE

The combination of ITC and COLGATE gives the proportion of investment is 0.0563 and
0.50084 for ITC and COLGATE, based on the standard deviations The standard deviation for ITC
is 54.55 and for COLGATE is 22.2.
Hence the investor should invest their funds more in COLGATE when compared to ITC as
the risk involved in COLGATE is less than ITC as the standard deviation of COLGATE is less
than that of ITC.
CIPLA&RANBAXY
The combination of CIPLA and RANBAXY gives the proportion of investment is 0.49916
and 0.50084 for CIPLA and RANBAXY, based on the standard deviations The standard
deviation for CIPLA is 55.22 and for RANBAXY is 55.13. When compared to both the risk is
almost same, hence the risk is same when invested in either of the security.
89
MAHENDRA & BAJAJ AUTO
The combination of M&M and BAJAJ AUTO gives the proportion of investment is
1.6206 and 0.6206 for M&M and BAJAJ AUTO, based on the standard deviations The standard
deviation for M&M is 104. 186 and for BAJAJ AUTO is 54.6.
Hence the investor should invest their funds more in BAJAJ AUTO when compared to
M&M as the risk involved in BAJAJ AUTO is less than M&M as the standard deviation of
BAJAJ AUTO is less than that of M&M.
CONCLUSIONS FOR CORRELATION

In case of perfectly correlated securities or stocks, the risk can be reduced to a minimum
point. In case of negatively correlative securities the risk can be reduced to a zero.(which is
company’s risk) but the market risk prevails the same for the security or stock in the portfolio.
As the study shows the following findings for portfolio construction:
Investor would be able to achieve when the returns of shares and debentures Resultant
portfolio would be known as diversified portfolio. Thus portfolio construction would address itself
to three major via., selectivity, timing and diversification. In case of portfolio management,
negatively correlated assets are most profitable.
Correlation between the BAJAJ & ITC are negatively correlated which means both the
combinations of portfolios are at good position to gain in future.
Investors may invest their money for long run, as both the combinations are most suitable
portfolios. A rational investor would constantly examine his chosen portfolio both for average
return and risk.
90
SUGGESTIONS
• Select your investments on economic grounds. Public knowledge is no advantage.

• Buy stock with a disparity and discrepancy between the situation of the firm and the
expectations and appraisal of the public.
• Buy stocks in companies with potential for surprises.
• Take advantage of volatility before reaching a new equilibrium
• Listen to rumors and tips, check for your self.
• Don’t put your trust in only one investment. It is like “putting all the eggs in one basket”
.this will help lesson the risk in the long term.
• The investor must select the right advisory body which is has sound knowledge about the
product which they are offering.
• Professionalized advisory is the most important feature to the investor. Professionalized
research, analysis which will be helpful for reducing any kind of risk to overcome.
91
BIBLIOGRAPHY
92
BIBLIOGRAPHY
BOOKS
1. DONALDE, FISHER & RONALD J.JODON SECURITIES ANALYSIS AND
PORTFOLIO MANAGEMENT,6TH EDITION
2. V.K.BHALLA INVESTMENTS MANAGEMENT S. CHAND PUBLICATION.
3.V.A.AVADHANI. INVESTMENT MANAGEMENT
Websites:
1. WWW. Investopedia.com
2. www.nseindia.com
3. www.bseindia.com.
4. www.angelbroking.com
Newspapers& magazine
DAILY NEWS PAPERS.
ECONOMIC TIME, FINANCIAL EXPRES.ETC
93

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CHAPTER 1

Portfolio management refers to the management of portfolio’s for others by professional

Investment channels can be broadly categorized under the following heads

IMPORTANCE & NEED OF STUDY

 Primary data collected from internet and books.

CUSTOMER INTEREST ABOVE OUR OWN

ALWAYS DELIVER WHAT WE PROMISE

EFFECTIVE COST MANAGEMENT

• PASSION & COMMITMENT

We offer services like:

OUR ORGANIZATIONAL STRUCTURE

2. Commodities 9. Quality assurance

4. PMS (Portfolio Management Services)

Portfolio Management Services

Mutual Fund Distribution

• 55 member research team doing technical, fundamental,

derivative and commodity analysis, one of the largest in the

ANGEL GROUP COMPANIES:

August, 2008 Crossed 600000 trading accounts:-

● December, 2006 Created 2500 business associates

● October, 2006 ‘Major Volume Driver’ award for 2006

● September, 2006 Launched Mutual Fund and IPO business

● July, 2006 Launched the PMS function

● October, 2005 ‘Major Volume Driver’ award for 2005

● September, 2004 Launched Online Trading Platform

● April, 2004 Initiated Commodities Broking division

● April, 2003 First published research report

● November, 2002 Angel’s first investor seminar

● March, 2002 Developed web-enabled back office software

● November, 1998 Angel Capital and Debt Market Ltd. Incorporated

● December, 1997 Angel Broking Ltd. Incorporated

ORIENTAL BANK OF COMMERCE

Investment Advisory Services

De-Risking Portfolio: A diversified portfolio of stocks is always better than

Commodities: A commodity is a basic good representing a monetary value. Commodities

Wide branch coverage

Personalized/attentive services of trained a dedicated staff

Centralized billing & accounting

Acceptance & execution of instruction on fax

Daily statement of transaction & holdings statement on email.

No charges for extra transaction statement & holdings statement.

Portfolio Management Services

experienced portfolio management is the difference. It will advise

you on a suitable product based on factors such as your investment

horizon, return expectations and risk tolerance.

with mutual funds.

i. No risk of loss, wrong transfer, mutilation or theft of share or

The Sunday Weekly Report

Posting Trading Calls

Agro Tech Speak

Commodities Tech Speak

About Anand Rathi

STUDENT CONTRIBUTION TO THE

to bring business to the organization realizing the responsibilities,

bringing potential clients to the organization.

Furthermore I had to also manage various direct marketing

• Tele-calling to clients regarding pre- meetings.

• Mailing to potential customers of the company regarding products and services.

Some of achievements include:

• I closed the 2 PMS deals of 500000 Rs each

scope of portfolio management:

Schematic diagram of stages in portfolio management:-

Identify goals and objectives:-