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In reference to Sharekhan Ltd.


In partial fulfillment for the award of the degree



(Banking & Insurance)





Submitted by: Submitted To:-

Amit Kumar Garg Mrs. Shivani Goel

This is to certify that project titled “PORTFOLIO MANAGEMENT

SERVICES (in reference to Sharekhan Ltd.)” submitted by Amit Kumar
Garg of BBA (B&I), semester 3rd of Ansal Institute of Technology affiliated
to Guru Gobind Singh Indraprastha University, New Delhi has been
examined by the following examiners:

Internal Examiner External Examiner


This is to certify that the project titled “PORTFOLIO MANAGEMENT

SERVICES (in reference to Sharekhan Ltd.)”, submitted by Amit Kumar
Garg, a student of BBA (B&I) of Ansal Institute of Technology, affiliated to
Guru Gobind Singh Indraprastha University, New Delhi is original and
authentic and has been carried out under my supervision & guidance.



This project bears the imprint of many people and without their support it would not have

existed. First of all I would like to express my sincere indebt ness and profound sense of

gratitude to my parents whose support in all manners had made me capable to complete

this project.

I acknowledge my deepest thanks to Mrs. Shivani Goel for all her care and

encouraging words and giving suggestion at different point of times. At the outset I

would like to put on record my sincere gratitude to all of my friends for giving me

valuable ideas throughout my project.

Amit Kumar Garg

BBA (B&I) 3rd Year


Evaluation Certificate 02
Supervisor Certificate 03
Acknowledgement 04
Table of Contents 05
Objective of the Project
Scope of the Study
Introduction to Stock Exchange 09
Sharekhan Profile 13
Portfolio Management Services 16
CHAPTER-3 35-37
Methodology for Data Collection
CHAPTER-4 38-53
CHAPTER-5 54-58
Observation and Findings
CHAPTER-7 61-64

Objectives of the Study

 To know the concept of Portfolio Management Services.

 To know about the awareness in public towards stock brokers and share market.

 To study about the competitive position of Sharekhan Ltd in Competitive Market.

 To study about the effectiveness & efficiency of Sharekhan Ltd in relation to its

Scope of the Study

 In today's complex financial environment, investors have unique needs which are
derived from their risk appetite and financial goals. But regardless of this, every
investor seeks to maximize his returns on investments without capital erosion.
Portfolio Management Services (PMS) recognize this, and manage the
investments professionally to achieve specific investment objectives, and not to
forget, relieving the investors from the day to day hassles which investment

 To look out for new prospective customers who are willing to invest in PMS.

 To find out the Sharekhan, PMS services effectiveness in the current situation.

Literature Review


The emergence of stock market can be traced back to 1830. In Bombay, business passed
in the shares of banks like the commercial bank, the chartered mercantile bank, the
chartered bank, the oriental bank and the old bank of Bombay and shares of cotton
presses. In Calcutta, Englishman reported the quotations of 4%, 5%, and 6% loans of East
India Company as well as the shares of the bank of Bengal in 1836. This list was a further
broadened in 1839 when the Calcutta newspaper printed the quotations of banks like
union bank and Agra bank. It also quoted the prices of business ventures like the Bengal
bonded warehouse, the Docking Company and the storm tug company.

Between 1840 and 1850, only half a dozen brokers existed for the limited business. But
during the share mania of 1860-65, the number of brokers increased considerably. By
1860, the number of brokers was about 60 and during the exciting period of the American
Civil war, their number increased to about 200 to 250. The end of American Civil war
brought disillusionment and many

Failures and the brokers decreased in number and prosperity. It was in those troublesome
times between 1868 and 1875 that brokers organized an informal association and finally
as recited in the Indenture constituting the “Articles of Association of the Exchange”.

On or about 9th day of July,1875, a few native brokers doing brokerage business in
shares and stocks resolved upon forming in Bombay an association for protecting the
character, status and interest of native share and stock brokers and providing a hall or
building for the use of the Members of such association.

As a meeting held in the broker’ Hall on the 5th day of February, 1887, it was resolved to
execute a formal deal of association and to constitute the first managing committee and to
appoint the first trustees. Accordingly, the Articles of Association of the Exchange and
the Stock
Exchange was formally established in Bombay on 3rd day of December, 1887. The
Association is now known as “The Stock Exchange”.

The entrance fee for new member was Re.1 and there were 318 members on the list,
when the exchange was constituted. The numbers of members increased to 333 in 1896,
362 in 1916and 478 in 1920 and the entrance fee was raised to Rs.5 in 1877, Rs.1000 in
1896, Rs.2500 in 1916 and Rs. 48,000 in 1920. At present there are 23 recognized stock
exchanges with about 6000 stock brokers. Organization structure of stock exchange
14 stock exchanges are organized as public limited companies, 6 as companies limited by
guarantee and 3 are non-profit voluntary organization. Of the total of 23, only 9 stock
exchanges have been permanent recognition. Others have to seek recognition on annual
These exchange do not work of its own, rather, these are run by some persons and with
the help of some persons and institution. All these are down as functionaries on stock
exchange. These are:

i. Stockbrokers
ii. Sub-broker
iii. Market makers
iv. Portfolio consultants etc.

1. Stockbrokers:
Stock brokers are the members of stock exchanges. These are the
persons who buy, sell or deal in securities. A certificate of registration from SEBI is
mandatory to act as a broker. SEBI can impose certain conditions while granting the
certificate of registrations. It is obligatory for the person to abide by the rules, regulations
and the buy-law. Stock brokers are commission broker, floor broker, arbitrageur etc.

Detail of Registered Brokers

Total no. of registered brokers as on Total no. of sub-broker as on 31.03.09
9000 24,000

2. Sub-broker:
A sub-broker acts as agent of stock broker. He is not a member of a
stock exchange. He assists the investors in buying, selling or dealing in securities through
stockbroker. The broker and sub-broker should enter into an agreement in which
obligations of both should be specified. Sub-broker must be registered SEBI for a dealing
in securities. For getting registered with SEBI, he must fulfill certain rules and regulation.
3. Market Makers:
Market maker is a designated specialist in the specified securities.
They make both bid and offer at the same time. A market maker has to abide by bye-
laws, rules regulations of the concerned stock exchange. He is exempt from the margin
requirements. As per the listing requirements, a company where the paid-up capital is Rs.
3 Crore but not more than Rs. 5 core and having a commercial operation for less than 2
years should appoint a market maker at the time of issue of securities.

4. Portfolio Consultants:
A combination of securities such as stocks, bonds and money
market instruments is collectively called as portfolio. Whereas the portfolio consultants
are the persons, firms or companies who advise, direct or undertake the management or
administration of securities or funds on behalf of their clients.

Traditionally stock trading is done through stock brokers, personally or through

As number of people trading in stock market increase enormously in last few years, some
issues like location constrains, busy phone lines, miss communication etc start growing in
stock broker offices. Information technology (Stock Market Software) helps stock
brokers in solving these problems with Online Stock Trading.

Online Stock Market Trading is an internet based stock trading facility. Investor can trade
shares through a website without any manual intervention from Stock Broker.

There are two different type of trading environments available for online equity trading.

1. Installable software based Stock Trading Terminals

This trading environment requires software to be installed on investor’s computer. This
software is provided by the stock broker. This software requires high speed internet
connection. These kind of trading terminals are used by high volume intraday equity

2.Web (Internet) based trading application

This kind of trading environment doesn't require any additional software installation.
They are like other internet websites which investor can access from around the world
through normal internet connection.
Stock exchanges are like market places, where stockbrokers buy and sell securities for
individuals or institutions. As per the SCRA (Securities Contracts Regulation Act) 1956,
the definition of securities includes shares, bonds, stocks, debentures, government
securities, derivatives of securities, units of collective investment scheme (CIS) etc. The
securities market has two interdependent segments: the primary and secondary market.

The primary market is the channel for creation of new securities issued by public limited
companies or by government agencies. New securities issued in the primary market are
traded in the secondary market.

The secondary market operates through the over-the-counter (OTC) market and the
exchange trade market.

Advantages of Stocks Trading

• Better returns
• Huge Choice
• Familiarity

Disadvantages of Stocks Trading

• Leverage
• Pattern Day Trader Rules
• Uptick Rule on Short Selling
• Need to Borrow Stock to Short
• Costs.

Sharekhan is one of the leading retail brokerage of Citi Venture which is running
successfully since 1922 in the country. Earlier it was the retail broking arm of the
Mumbai-based SSKI Group, which has over eight decades of experience in the stock
broking business. Share khan offers its customers a wide range of equity related services
including trade execution on BSE, NSE, Derivatives, depository services, online trading,
investment advice etc.

Earlier with a legacy of more than 80 years in the stock markets, the SSKI group
ventured into institutional broking and corporate finance 18 years ago. SSKI is one of the
leading players in institutional broking and corporate finance activities. SSKI holds a
sizeable portion of the market in each of these segments. SSKI’s institutional broking arm
accounts for 7% of the market for Foreign Institutional portfolio investment and 5% of all
Domestic Institutional portfolio investment in the country.

It has 60 institutional clients spread over India, Far East, UK and US. Foreign
Institutional Investors generate about 65% of the organization’s revenue, with a daily
turnover of over US$ 2 million. The content-rich and research oriented portal has stood
out among its contemporaries because of its steadfast dedication to offering customers
best-of-breed technology and superior market information. The objective has been to let
customers make informed decisions and to simplify the process of investing in stocks

“To educate and empower the individual investor to make better investment
decisions through
Sharekhan has always believed in investing in technology to build its business. The
company has used some of the best-known names in the IT industry, like Sun
Microsystems, Oracle, Microsoft, Cambridge Technologies, Nexgenix, Vignette,
Verisign Financial Technologies India Ltd, Spider Software Pvt. Ltd. to build its trading
engine and content. The Citi Venture holds a majority stake in the company. HSBC, Intel
& Carlyle are the other investors.

On April 17, 2002 Sharekhan launched Speed Trade and Trade Tiger, are net-based
executable application that emulates the broker terminals along with host of other
information relevant to the Day Traders. This was for the first time that a net-based
trading station of this caliber was offered to the traders. In the last six months SpeedTrade
has become a de facto standard for the Day Trading community over the net. Sharekhan’s
ground network includes over 700+ Share shops in 130+ cities in India.

The firm’s online trading and investment site - was launched on Feb
8, 2000. The site gives access to superior content and transaction facility to retail
customers across the country. Known for its jargon-free, investor friendly language and
high quality research, the site has a registered base of over 3 Lacs customers. The number
of trading members currently stands at over 7 Lacs. While online trading currently
accounts for just over 5 per cent of the daily trading in stocks in India, Sharekhan alone
accounts for 27 per cent of the volumes traded online.

The Corporate Finance section has a list of very prestigious clients and has many ‘firsts’
to its credit, in terms of the size of deal, sector tapped etc. The group has placed over US$
5 billion in private equity deals. Some of the clients include BPL Cellular Holding,
Gujarat Pipavav, Essar, Hutchison, Planetasia, and Shopper’s Stop. Finally, Sharekhan
shifted hands and Citi venture get holds on it.


• Equity Trading Platform (Online/Offline).
• Commodities Trading Platform (Online/Offline).
• Portfolio Management Service.
• Mutual Fund Advisory and Distribution.
• Insurance Distribution.

• Experience
• Technology
• Accessibility
• Knowledge
• Convenience
• Customer Service
• Investment Advice
• Free Depository A/c
• Instant Cash Transfer
• Multiple Bank Option.
• Secure Order by Voice Tool Dial-n-Trade.
• Automated Portfolio to keep track of the value of your actual purchases.
• 24x7 Voice Tool access to your trading account.
• Personalized Price and Account Alerts delivered instantly to your Mobile
Phone & E-mail address.
• Live Chat facility with Relationship Manager on Yahoo Messenger
• Special Personal Inbox for order and trade confirmations.
• On-line Customer Service via Web Chat.
• Enjoy Automated Portfolio.
• Buy or sell even single share
• Anytime Ordering.
Portfolio (finance) means a collection of investments held by an institution or a private
individual. Holding a portfolio is often part of an investment and risk-limiting strategy
called diversification. By owning several assets, certain types of risk (in particular
specific risk) can be reduced. There are also portfolios which are aimed at taking high
risks – these are called concentrated portfolios.

Investment management is the professional management of various securities (shares,

bonds etc) and other assets (e.g. real estate), to meet specified investment goals for the
benefit of the investors. Investors may be institutions (insurance companies, pension
funds, corporations etc.) or private investors (both directly via investment contracts and
more commonly via collective investment schemes e.g. mutual funds).

The term asset management is often used to refer to the investment management of
collective investments, whilst the more generic fund management may refer to all forms
of institutional investment as well as investment management for private investors.
Investment managers who specialize in advisory or discretionary management on behalf
of (normally wealthy) private investors may often refer to their services as wealth
management or portfolio management often within the context of so-called "private

The provision of 'investment management services' includes elements of financial

analysis, asset selection, stock selection, plan implementation and ongoing monitoring of
investments. Outside of the financial industry, the term "investment management" is
often applied to investments other than financial instruments. Investments are often
meant to include projects, brands, patents and many things other than stocks and bonds.
Even in this case, the term implies that rigorous financial and economic analysis methods
are used.

Need of PMS
As in the current scenario the effectiveness of PMS is required. As the PMS gives
investors periodically review their asset allocation across different assets as the portfolio
can get skewed over a period of time. This can be largely due to appreciation /
depreciation in the value of the investments.

As the financial goals are diverse, the investment choices also need to be different to
meet those needs. No single investment is likely to meet all the needs, so one should keep
some money in bank deposits and / liquid funds to meet any urgent need for cash and
keep the balance in other investment products/ schemes that would maximize the return
and minimize the risk. Investment allocation can also change depending on one’s risk-
return profile.

Objective of PMS
There are the following objective which is full filled by Portfolio Management Services.
1. Safety Of Fund: -
The investment should be preserved, not be lost, and should remain in the
returnable position in cash or kind.

2. Marketability: -
The investment made in securities should be marketable that means, the securities
must be listed and traded in stock exchange so as to avoid difficulty in their

3. Liquidity: -
The portfolio must consist of such securities, which could be en-cashed without
any difficulty or involvement of time to meet urgent need for funds. Marketability
ensures liquidity to the portfolio.

4. Reasonable return: -
The investment should earn a reasonable return to upkeep the declining value of
money and be compatible with opportunity cost of the money in terms of current
income in the form of interest or dividend.

5. Appreciation in Capital: -
The money invested in portfolio should grow and result into capital gains.

6. Tax planning: -
Efficient portfolio management is concerned with composite tax planning
covering income tax, capital gain tax, wealth tax and gift tax.

7. Minimize risk: -
Risk avoidance and minimization of risk are important objective of portfolio
management. Portfolio managers achieve these objectives by effective investment
planning and periodical review of market, situation and economic environment
affecting the financial market.
There are two most common myths found about Portfolio Management Services (PMS)
which we found among most of the Investors. They are as follows.
Myth No. 1: “PMS and Mutual Fund are Similar as the
investment option”

As in the Finance Basket both the PMS and Mutual Fund are used for minimizing risk
and maximize the profit of the Investors. The objectives are similar as in both the product
but they are different from each other in certain aspects. They are as follows.
Management Side
In PMS, it’s ongoing personalized access to professional money management services.
Whereas, in Mutual fund gives personalize access to money.
In PMS, Portfolio can be tailored to address each investor's specific needs. Whereas in
Mutual Fund Portfolio structured to meet the fund's stated investment objectives.
In PMS, Investors directly own the individual securities in their portfolio, allowing for
tax management flexibility, whereas in Mutual Fund Shareholders own shares of the fund
and cannot influence buy and sell decisions or control their exposure to incurring tax
In PMS, managers may hold cash; they are not required to hold cash to meet
redemptions, whereas, Mutual funds generally hold some cash to meet redemptions.
PMS generally gives higher minimum investments than mutual funds. Generally,
minimum ranges from: Rs. 1 Crore + for Equity Options Rs. 5 Crore + for Fixed Income
Options Rs. 20 Lacs + for Structured Products, whereas in Mutual Fund Provide ongoing,
personalized access to professional money management services.
PMS is generally more flexible than mutual funds. The Portfolio Manager may move to
100% cash if it required. The Portfolio Manager may take his own time in building up the
portfolio. The Portfolio Manager can also manage a portfolio with disproportionate
allocation to select compelling opportunities whereas, in Mutual Fund comparatively less
Myth No. 2: “PMS is more Risk free than other
Financial Instrument”

In Financial Market Risk factor is common in all the financial products, but yes it is true
that Risk Factor vary from each other due to its nature. All investments involve a certain
amount of risk, including the possible erosion of the principal amount invested, which
varies depending on the security selected. For example, investments in small and mid-
sized companies tend to involve more risk than investments in larger companies.

The Portfolio Construction of Rational investors wish to maximize the returns on their
funds for a given level of risk. All investments possess varying degrees of risk. Returns
come in the form of income, such as interest or dividends, or through growth in capital
values (i.e. capital gains).

The portfolio construction process can be broadly characterized as comprising the

following steps:

1. Setting objectives.

The first step in building a portfolio is to determine the main objectives of the fund given
the constraints (i.e. tax and liquidity requirements) that may apply. Each investor has
different objectives, time horizons and attitude towards risk. Pension funds have long-
term obligations and, as a result, invest for the long term. Their objective may be to
maximize total returns in excess of the inflation rate. A charity might wish to generate the
highest level of income whilst maintaining the value of its capital received from bequests.
An individual may have certain liabilities and wish to match them at a future date.
Assessing a client’s risk tolerance can be difficult. The concepts of efficient portfolios
and diversification must also be considered when setting up the investment objectives.

2. Defining Policy.

Once the objectives have been set, a suitable investment policy must be established. The
standard procedure is for the money manager to ask clients to select their preferred mix
of assets, for example equities and bonds, to provide an idea of the normal mix desired.
Clients are then asked to specify limits or maximum and minimum amounts they will
allow to be invested in the different assets available. The main asset classes are cash,
equities, gilts/bonds and other debt instruments, derivatives, property and overseas assets.
Alternative investments, such as private equity, are also growing in popularity, and will
be discussed in a later chapter. Attaining the optimal asset mix over time is one of the key
factors of successful investing.

3. Applying portfolio strategy.

At either end of the portfolio management spectrum of strategies are active and passive
strategies. An active strategy involves predicting trends and changing expectations about
the likely future performance of the various asset classes and actively dealing in and out
of investments to seek a better performance. For example, if the manager expects interest
rates to rise, bond prices are likely to fall and so bonds should be sold, unless this
expectation is already
factored into bond prices. At this stage, the active fund manager should also determine
the style of the portfolio. For example, will the fund invest primarily in companies with
large market capitalizations, in shares of companies expected to generate high growth
rates, or in companies whose valuations are low? A passive strategy usually involves
buying securities to match a preselected market index. Alternatively, a portfolio can be
set up to match the investor’s choice of tailor-made index. Passive strategies rely on
diversification to reduce risk. Outperformance versus the chosen index is not expected.
This strategy requires minimum input from the portfolio manager. In practice, many
active funds are managed somewhere between the active and passive extremes, the core
holdings of the fund being passively managed and the balance being actively managed.

4. Asset selections.

Once the strategy is decided, the fund manager must select individual assets in which to
invest. Usually a systematic procedure known as an investment process is established,
which sets guidelines or criteria for asset selection. Active strategies require that the fund
managers apply analytical skills and judgment for asset selection in order to identify
undervalued assets and to try to generate superior performance.

5. Performance assessments

In order to assess the success of the fund manager, the performance of the fund is
periodically measured against a pre-agreed benchmark – perhaps a suitable stock
exchange index or against a group of similar portfolios (peer group comparison). The
portfolio construction process is continuously iterative, reflecting changes internally and
externally. For example, expected movements in exchange rates may make overseas
investment more attractive, leading to changes in asset allocation. Or, if many large-scale
investors simultaneously decide to switch from passive to more active strategies, pressure
will be put on the fund managers to offer more active funds. Poor performance of a fund
may lead to modifications in individual asset holdings or, as an extreme measure; the
manager of the fund may be changed altogether.
Steps to Stock Selection Process

Types of Assets
The structure of a portfolio will depend ultimately on the investor’s objectives and on the
asset selection decision reached. The portfolio structure takes into account a range of
factors, including the investor’s time horizon, attitude to risk, liquidity requirements, tax
position and availability of investments. The main asset classes are cash, bonds and other
fixed income securities, equities, derivatives, property and overseas assets.

• Cash and cash instruments

Cash can be invested over any desired period, to generate interest income, in a range of
highly liquid or easily redeemable instruments, from simple bank deposits, negotiable
certificates of deposits, commercial paper (short term corporate debt) and Treasury bills
(short term government debt) to money market funds, which actively manage cash
resources across a range of domestic and foreign markets. Cash is normally held over the
short term pending use elsewhere (perhaps for paying claims by a non-life insurance
company or for paying pensions), but may be held over the longer term as well. Returns
on cash are driven by the general demand for funds in an economy, interest rates, and the
expected rate of inflation. A portfolio will normally maintain at least a small proportion
of its funds in cash in order to take advantage of buying opportunities.

• Bonds

Bonds are debt instruments on which the issuer (the borrower) agrees to make interest
payments at periodic intervals over the life of the bond – this can be for two to thirty
years or, sometimes, in perpetuity. Interest payments can be fixed or variable, the latter
being linked to prevailing levels of interest rates. Bond markets are international and have
grown rapidly over recent years. The bond markets are highly liquid, with many issuers
of similar standing, including governments (sovereigns) and state-guaranteed
organizations. Corporate bonds are bonds that are issued by companies. To assist
investors and to help in the efficient pricing of bond issues, many bond issues are given
ratings by specialist agencies such as Standard & Poor’s and Moody’s. The highest
investment grade is AAA, going all the way down to D, which is graded as in default.
Depending on expected movements in future interest rates, the capital values of bonds
fluctuate daily, providing investors with the potential for capital gains or losses. Future
interest rates are driven by the likely demand/ supply of money in an economy, future
inflation rates, political events and interest rates elsewhere in world markets. Investors
with short-term horizons and liquidity requirements may choose to invest in bonds
because of their relatively higher return than cash and their prospects for possible capital
appreciation. Long-term investors, such as pension funds, may acquire bonds for the
higher income and may hold them until redemption – for perhaps seven or fifteen years.
Because of the greater risk, long bonds (over ten years to maturity) tend to be more
volatile in price than medium- and short-term bonds, and have a higher yield.

• Equities

Equity consists of shares in a company representing the capital originally provided by

shareholders. An ordinary shareholder owns a proportional share of the company and an
ordinary share carries the residual risk and rewards after all liabilities and costs have been
paid. Ordinary shares carry the right to receive income in the form of dividends (once
declared out of distributable profits) and any residual claim on the company’s assets once
its liabilities have been paid in full. Preference shares are another type of share capital.
They differ from ordinary shares in that the dividend on a preference share is usually
fixed at some amount and does not change. Also, preference shares usually do not carry
voting rights and, in the event of firm failure, preference shareholders are paid before
ordinary shareholders. Returns from investing in equities are generated in the form of
dividend income and capital gain arising from the ultimate sale of the shares. The level of
dividends may vary from year to year, reflecting the changing profitability of a company.
Similarly, the market price of a share will change from day to day to reflect all relevant
available information. Although not guaranteed, equity prices generally rise over time,
reflecting general economic growth, and have been found over the long term to generate
growing levels of income in excess of the rate of inflation. Granted, there may be periods
of time, even years, when equity prices trend downwards – usually during recessionary
times. The overall long-term prospect, however, for capital appreciation makes equities
an attractive investment proposition for major institutional investors.

• Derivatives

Derivative instruments are financial assets that are derived from existing primary assets
as opposed to being issued by a company or government entity. The two most popular
derivatives are futures and options. The extent to which a fund may incorporate
derivatives products in the fund will be specified in the fund rules and, depending on the
type of fund established for the client and depending on the client, may not be allowable
at all.

A futures contract is an agreement in the form of a standardized contract between two

counterparties to exchange an asset at a fixed price and date in the future. The underlying
asset of the futures contract can be a commodity or a financial security. Each contract
specifies the type and amount of the asset to be exchanged, and where it is to be delivered
(usually one of a few approved locations for that particular asset). Futures contracts can
be set up for the delivery of cocoa, steel, oil or coffee. Likewise, financial futures
contracts can specify the delivery of foreign currency or a range of government bonds.
The buyer of a futures contract takes a ‘long position’, and will make a profit if the value
of the contract rises after the purchase. The seller of the futures contract takes a ‘short
position’ and will, in turn, make a profit if the price of the futures contract falls. When the
futures contract expires, the seller of the contract is required to deliver the underlying
asset to the buyer of the contract. Regarding financial futures contracts, however, in the
vast majority of cases no physical delivery of the underlying asset takes place as many
contracts are cash settled or closed out with the offsetting position before the expiry date.

An option contract is an agreement that gives the owner the right, but not obligation, to
buy or sell (depending on the type of option) a certain asset for a specified period of time.
A call option gives the holder the right to buy the asset. A put option gives the holder the
right to sell the asset. European options can be exercised only on the options’ expiry date.
US options can be exercised at any time before the contract’s maturity date. Option
contracts on stocks or stock indices are particularly popular. Buying an option involves
paying a premium; selling an option involves receiving the premium. Options have the
potential for large gains or losses, and are considered to be high-risk instruments.
Sometimes, however, option contracts are used to reduce risk. For example, fund
managers can use a call option to reduce risk when they own an asset. Only very specific
funds are allowed to hold options.

• Property

Property investment can be made either directly by buying properties, or indirectly by

buying shares in listed property companies. Only major institutional investors with long-
term time horizons and no liquidity pressures tend to make direct property investments.
These institutions purchase freehold and leasehold properties as part of a property
portfolio held for the long term, perhaps twenty or more years. Property sectors of
interest would include prime, quality, well-located commercial office and shop
properties, modern industrial warehouses and estates, hotels, farmland and woodland.
Returns are generated from annual rents and any capital gains on realization. These
investments are often highly illiquid. 64
Types of Portfolios

The different types of Portfolio which is carried by any Fund Manager to maximize profit
and minimize losses are different as per their objectives .They are as follows.

• Aggressive Portfolio:

Objective: Growth. This strategy might be appropriate for investors who

seek High growth and who can tolerate wide fluctuations in market values,
over the short term.

• Growth Portfolio:

Objective: Growth. This strategy might be appropriate for investors who

have a preference for growth and who can withstand significant fluctuations
in market value.

• Balanced Portfolio:

Objective: Capital appreciation and income. This strategy might be

appropriate for investors who want the potential for capital appreciation and
some growth, and who can withstand moderate fluctuations in market values

• Conservative Portfolio:

Objective: Income and capital appreciation. This strategy may be

appropriate for investors who want to preserve their capital and minimize
fluctuations in market value.

Various types of portfolio require different techniques to be adopted to achieve the
desired objectives. Some of the techniques followed in India by portfolio managers are
summarized below.

(1). Equity portfolio-

Equity portfolio is affected by internal and external factors:

(a) Internal factors –

Pertain to the inner working of the particular company of which equity shares are held.
These factors generally include:
• Market value of shares
• Book value of shares
• Price earnings ratio (P/E ratio)
• Dividend payout ratio

(b) External factors –

• Government policies
• Norms prescribed by institutions
• (3) Business environment
• (4) Trade cycles

(2). Equity stock analysis –

The basic objective behind the analysis is to determine the probable future – value of the
shares of the concerned company. It is carried out primarily fewer than two ways. :

• Trend of earning: -

 A higher price-earnings ratio discount expected profit growth. Conversely, a

downward trend in earning results in a low price-earnings ratio to discount
anticipated decrease in profits, price and dividend. Rising EPS causes
appreciation in price of shares, which benefits investors in lower tax brackets?
Such investors have not pay tax or to give lower rate tax on capital gains.
 Many institutional investor like stability and growth and support high EPS.

 Growth of EPS is diluted when a company finances internally its expansion

program and offers new stock.
 EPS increase rapidly and result in higher P/E ratio when a company finances its
expansion program from internal sources and borrowings without offering new
• Quality of reported earning: -

Quality of reported earnings affects P/E ratio. The factors that affect the quality of
reported earnings are as under:

 Depreciation allowances: -
Larger (Non Cash) deduction for depreciation provides more funds to
company to finance profitable expansion schemes internally. This builds up
future earning power of company.

 Research and development outlets: -

There is higher P/E ratio for a company, which carries R&D programs. R&D
enhances profit earning strength of the company through increased future sales.

 Inventory and other non-recurring type of profit: -

Low cost inventory may be sold at higher price due to inflationary conditions
among profit but such profit may not always occur and hence low P/E ratio.

(C) Dividend policy: -

Dividend policy is significant in affecting P/E ratio. With higher dividend ratio, equity
price goes up and thus raises P/E ratio. Dividend rates are raised to push in share prices
up. Dividend cover is calculated to find out the time the dividend is protected, In terms of
earnings. It is calculated as under:

Dividend Cover = EPS / Dividend per Share

(D) Investors demand: -
Demand from institutional investors for equity also enhances the P/E ratio.
Sharekhan Portfolio Management Services


Pro Pro Tech

Pro Prime Arbitrage
• Pro Prime

Product Approach
Investment will be keeping in mind 3 investment tenets.
• Consistent, steady and sustainable returns.
• Margin of Safety
• Low Volatility

Product Offering
Pro Prime is the ideal for investors looking at steady and superior with low and medium
risk appetite.
The portfolio consists of a blend of quality blue chip and growth stocks ensuring a
balanced portfolio with relatively medium risk profile.
The portfolio constitutes of relatively large capitalization stocks, based on sector and
themes which have medium to long term growth potential.
Product Characteristics
• Bottom up stock selection

• In depth ,independent fundamental research

• High quality companies with relatively large capitalization

• Disciplined valuation approach applying multiple valuation measure.

• Medium to long term vision, resulting in low portfolio turnover.

How to invest?
• Minimum Investment : 10 Lacs
• Lock in : 6 months
• Reporting: Access to website showing clients holding .Monthly reporting of
portfolio holding /transaction.
• Charges: 2.5% pa AMC (Annual Maintenances Charges) fees charged every
quarter ,0.5% brokerage ,20% profit sharing after 15% hurdle is crossed
chargeable at the end of fiscal year.

• Pro Arbitrage

Product Approach
An opportunity lies in basis which is the difference between cash and future. Whenever
basis is high we buy the stocks and sell the future to lock in difference .The difference is
bound to be zero at expiry.

Product Offered
Cash –future arbitrage:
The product intends to spot low risk opportunities which will yield more than the normal
low risk product .Whenever such opportunity is spotted stocks will be bought and to lock
in the basis, future will be sold .This position will be liquated in the expiry or before that
if the basis vanishes early .Similarly the scheme will move on from opportunity to

Product Characteristics
Low –Risk: This is relatively low risk product which can be compared with liquid
funds issued by mutual funds.
High return: Compared with other low risk products, this products offers an indicative
post tax return of 8 to 10% plus.

Product Details
• Minimum Investment:Rs.1 Crore
• Lock in :6 months
• Reporting: Fortnightly for portfolio Net worth, Monthly reporting pf
portfolio Holding /transaction.
• Charges: 0.035% brokerage for future ,0.07% for delivery
• Pro Tech

Protech using the knowledge of technique analysis and the power of depravities markets
to identify trading opportunities in the market .The protech line of the product is designed
around various risk /reward /volatility profiles for the different kind of investment needs.

Product Approach
Better performance is possible from superior market timing and from picking stocks
before inflation points in their trading cycles .Linear return are possible from having
hedged/ sell market positions in downtrends .Absolute return are targeted by focusing on
finding trading opportunities & not out performance of an index.
Product offered
1. Nifty Thirty :

Nifty futures will be bought and sold on the basis of an automated trading
system generated calls to go long/short. The exposure will never exceed the value
of portfolio i.e. no leveraging; but allows us to be short /hedged in Nifty in falling
market therefore allowing the client to earn irrespective of the market direction.

2. Beta Portfolio :

Positional trading opportunities are identified in the future segment based on

technical analysis .Inflection points in the momentum cycles are identified to go
long /short on stock/index futures with 1-2 months time horizon .The idea is to
generate the best possible return in the medium term irrespective of the direction
of the market without really leveraging beyond the portfolio value. Risk
protection is done based on stop losses on daily closing prices.

3. Star Nifty:

Swing trading technique and Dow theory is used to identify short –term
reversal levels for Nifty futures and ride with trend both on the long and short side
.This return can be earned in bull and bear market .Stop and reverse means to
reverse ones position from long to short or vice a versa at the reversal levels
simultaneously .The exposure never exceeds value of portfolio i.e. there is no

4. Trailing Stops.
Momentum trading techniques are used to spot short –term momentum of 5-
10 days in stocks and stocks /index futures .Trailing stop loss method of risk
management or profit protection is used to lower the portfolio volatility and
maximize return .Trading opportunities are exposed both on the long side and the
short side as the market demands to get the best of both upward and downward

Product Characteristics
• Using swing based index –trading systems stop and reverse .trend following and
momentum trading technique.
• Nifty based products for low impact cost and low product volatility
• Both long and short strategies to earn returns even in falling market.
• Trading in future market to allow for active risk protection using trailing stop

How to invest?
• Minimum : Rs.10 Lacs
• Lock in : 6 months
• Reporting: Fortnightly reporting of portfolio Net Worth,
monthly reporting of portfolio Holding /Transaction.
Charges: 0% AMC (Annual Maintenance Charges), 0.05% brokerage for
derivatives, 20% profit sharing on booked profit quarterly basis.


This report is based on primary as well secondary data, however primary data collection
was given more importance since it is overhearing factor in attitude studies. One of the
most important users of research methodology is that it helps in identifying the problem,
collecting, analyzing the required information data and providing an alternative solution
to the problem .It also helps in collecting the vital information that is required by the top
management to assist them for the better decision making both day to day decision and
critical ones.

The study consists of analysis about Investors Perception about the Portfolio
Management Services offered by Sharekhan Limited. For the purpose of the study 100
customers were picked up at random and their views solicited on different parameters.

The methodology adopted includes

 Questionnaire
 Random sample survey of customers
 Discussions with the concerned


 Primary data: Questionnaire

 Secondary data: Published materials of Sharekhan Limited. Such as periodicals,

journals, news papers, and website.

Duration of Study

The Study was carried out for the period of one and half months from 01st June to 31st
July, 2010.


 Sampling:

Since Sharekhan Limited has many segments I selected Portfolio Management Services
(PMS) segment as per my profile to do market research. 100% coverage was difficult
within the limited period of time. Hence sampling survey method was adopted for the
purpose of the study.

 Population:
(Universe) customers & non consumers of Sharekhan limited

 Sampling size:

A sample of five hundred was chosen for the purpose of the study. Sample consisted of
Investor as based on their Income and Profession as well as Educational Background.

 Sampling Methods:

Probability sampling requires complete knowledge about all sampling units in the
universe. Due to time constraint non-probability sampling was chosen for the study.

 Sampling procedure:
From large number of customers & non consumers sample lot were randomly picked up
by me.

Field Study:

Directly approached respondents by the following strategies

 Tele-calling
 Personal Visits
 Clients References
 Promotional Activities
 Database provided by the Sharekhan Limited.

1. Do you know about the Investment Option available?

As the above table shows the knowledge of Investor out of 100 respondent
carried throughout the Hyderabad Area is only 85%. The remaining 15%
take his/her residential property as an investment. According to law purpose
this is not an investment because of it is not create any profit for the owner.
The main problem is that in this time from year 2008-2009 , the recession
and the Inflation make the investor think before investing a even a Rs.
100.So , it also create the problem for the Investor to not take interest in
Investment option.

2. What is the basic purpose of your Investments?


As with the above analysis, it is found 75% people are interested in liquidity,
returns and tax benefits. And remaining 25% are interested in capital
appreciations, risk covering, and others. In the entire respondent it is
common that this time everyone is looking for minimizing the risk and
maximizing their profit with the short time of period.

As explaining them About the Portfolio Management Services of Sharekhan,

they were quite interested in Protech Services.
3. What is the most important factor you consider at the time of

As the above analysis gives the clear idea that most of the Investors
considered the market factor as around 12% for Risk and 23% Return, but
most important common things in all are that they are even ready for taking
both Risk and Return in around 65% investor.
Moreover, the Market is fluctuating now days, so as it also getting
improvement. So, Investor are looking for Investment in long term and

4. From which option you will get the best returns?

Most of the respondents say they will get more returns in Share Market.
Since Share Market is said to be the best place to invest to get more returns.
The risk in the investment is also high.

Similarly, the Investor are more Interested in Investing their money in

Mutual Fund Schemes as that is also very important financial product due to
its nature of minimizing risk and maximizing the profit. As the
commodities market is doing well from last few months so Investor also
prefer to invest their money in Commodities Market basically in GOLD
Moreover, even who don’t want to take Risk they are looking for investing
in Fixed Deposit for long period of time.
5. “Investing in PMS is far safer than Investing in Mutual Fund”. Do
you agree?

In the above graphs it’s clear that 24% of respondent out of hundred feel that
investing their money in Mutual Fund Scheme are far safer than Investing in
PMS. this is because of lack of proper information about the Portfolio
management services. As the basis is same for the mutual fund and PMS but
the investment pattern is totally different from each other and which depends
upon different risk factor available in both the Financial Products.

6. How much you carry the expectation in Rise of your Income from

The optimism is shown in the attitude of the respondents. The confidence
was appreciable with which they are looking forward to a rise in their
investments. Major part of the sample feels that the rise would be of around
15%. Only 8% of the respondents were confident enough to expect a rise of
upto 35%.
As all the respondents were considering the Risk factor also before filling
the questionnaire and they were asking about the performance report of all
the PMS services offered by Sharekhan limited.

7. If you invested in Share Market, what has been your experience?


20% of the respondents have invested in Share market and received

satisfactory returns, 40% of the respondents have not at all invested in Share
Market. Some of the investors face problems due to less knowledge about
the market. Some of the respondents don’t have complete overview of the
happenings and invest their money in wrong shares which result in Loss.
This is the reason most of the respondents prefer Portfolio Management
Services to trade now a days, which gives the Investor the clear idea when is
the right time to buy and right time to sell the shares which is recommended
by their Fund Manger.

8. How do you trade in Share Market?

As we know that Share market is totally based on psychological parameters
of Investors, which changed as per the market condition, but at the same
time the around 45% investor trade on the basis of speculation and 31%
depend upon Investment option Bonds, Mutual Funds etc.
Moreover, the now a day’s Hedging is most common derivatives tools which
is used by the Investor to get more return from the Market ,this is mostly
used in the Commodities Market.

9. How do you manage your Portfolio?

About 57% of the respondents say they themselves manage their portfolio
and 43% of the respondents say they depends on the security company for
portfolio Management. 43% of the respondents prefer PMS of the company
because they don’t have to keep a close eye on their investment; they get all
the information time to time from their Fund Manager.

Moreover, talking about the Sharekhan PMS services they are far satisfied
with the Protech and Prop rime Performance during last year. They are
satisfied with the quick and active services of Sharekhan customer services
where, they get the updated knowledge about the scrip detail everyday from
their Fund Manager.
10. If you trade with Sharekhan limited then why?

As the above research shows the reasons and the parameters on which
investor lie on Sharekhan and they do the trade.
Among hundred respondents 35% respondents do the trade with the
company due to its research Report, 28% based on Brokerage Rate whereas
22 % are happy with its Services.
Last but not the least, 15% respondents are depends upon the tips of
Sharekhan which gives them idea where to invest and when to invest.
At the time of research what I found is that still Sharekhan need to make the
clients more knowledge about their PMS product.

11. Are you using Portfolio Management services (PMS) of Sharekhan?

As talking about the Investment option, in most of clients it was common
that they know about the Option but as the PMS of Sharekhan have different
Product offering, Product Characteristics and the Investment amount is also
different this makes the clients to think differently.
It is found that 56% of Sharekhan client where using PMS services as for
their Investment Option.

12. Which Portfolio Type you preferred?

The above analysis shows, in which portfolio the investor like to deal more
in PMS.
As 45% investor likes to go for Equity Portfolio and 28% with Balanced
Portfolio, whereas around 27% investor like to, go for Debt Portfolio.

13. How was your experience about Portfolio Management services
(PMS) of Sharekhan Limited?

In the above analysis it is clear that the Investor have the good and the bad
experience both with the Sharekhan PMS services.
In this current scenario 52% of the Investor earned, whereas around 18%
have to suffer losses in the market. Similarly 30% of the Respondents are
there in Breakeven Point (BEP), where no loss and no profit.

14. Does Sharekhan Limited keep it PMS process Transparent?

The above analysis is talking about the Sharekhan Transparency of their
PMS services. In hundred respondents 63% said that they get all the
information about their scrip buying and selling information day by day,
where as 37% of respondents are not satisfied with the PMS information and
Transparency because they don’t get any type of extra services in PMS as
they were saying.

15. Do you recommend Sharekhan PMS to others?

The above analysis shows the Investor perception toward the Sharekhan
PMS as on the basis of their good and bad experience with Sharekhan
limited. Among hundred respondents 86% respondents were agree to
recommend the PMS of Sharekhan to their peers, relatives etc.


• 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

• At the time of Investment the Investors basically considered the both Risk and
Return in more %age around 65%.

• 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.

• More than 76% of Investors feels that PMS is less risky than investing money in
Mutual Funds.

• 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.

• The most important reasons for doing trade with Sharekhan limited is Sharekhan
Research Department than its Brokerage rate Structure.

• Out of hundred respondents 56% respondents are using Sharekhan PMs services.

• Investors preferred more than 45% equity Portfolio, 28%Balanceed Portfolio and
about 27% Debt Portfolio with Sharekhan PMS.

• About 52% Respondents earned through Sharekhan PMS product, whereas 18%
investor faced loses also.

• More than 63% Investor are happy with the Transparency system of Sharekhan

As based on the good and bad experience with Sharekhan limited around 86% are
ready to recommended the PMS of Sharekhan to their peers, relatives etc.

On the basis of the study it is found that Sharekhan Ltd is better services provider than
the other stockbrokers because of their timely research and personalized advice on what
stocks to buy and sell. Sharekhan Ltd. provides the facility of Trade tiger as well as
relationship manager facility for encouragement and protects the interest of the investors.
It also provides the information through the internet and mobile alerts that what IPO’s are
coming in the market and it also provides its research on the future prospect of the IPO.
We can conclude the following with above analysis.

• Sharekhan Ltd has better Portfolio Management services than Other Companies

• It keeps its process more transparent.

• It gives more returns to its investors.

• It charges are less than other portfolio Management Services

• It provides daily updates about the stocks information.

• Investors are looking for those investment options where they get maximum
returns with less returns.

• Market is becoming complex & it means that the individual investor will not have
the time to play stock game on his own.

People are not so much ware aware about the Investment option available in the


• The company should also organize seminars and similar activities to enhance the
knowledge of prospective and existing customers, so that they feel more
comfortable while investing in the stock market.
• Investors must feel safe about their money invested.

• Investor’s accounts must be more transparent as compared to other companies.

• Sharekhan limited must try to promote more its Portfolio Management Services
through Advertisements.
• Sharekhan needs to improve more it’s Customer Services

• There is need to change in lock in period in all three PMS i.e.Protech, Proprime,
Pro Arbitrage.


• As only Gurgaon was dealt in the survey so it does not represent the view of the
total Indian market.
• The sample size was restricted with five hundred respondents.
• There was lack of time on the part of respondents.
• The survey was carried through questionnaire and the questions were based on
• There may be biasness in information by market participant.
• Complete data was not available due to company privacy and secrecy.









• Business Today, Edition March-2010

• Business World, Edition June 2010.

• Outlook India, Edition July 2010.





1. Do you know about the Investments Option available?

a. YES
b. NO

2. What is the basic purpose of your Investments?

a. Liquidity
b. Return
c. Tax Benefits
d. Risk Covering
e. Capital Appreciation
f. Others

3. What is the most important factor you consider at the time of Investment?

a. Risk
b. Return
c. Both

4. From which option you will get the best returns?

a. Mutual Funds
b. Shares
c. Commodities Market
d. Bonds
e. Fixed Deposits
f. Property
g. Others

5. “Investing in PMS is far safer than Investing in Mutual Fund”. Do you

a. Yes
b. No

6. How much you carry the expectation in Rise of your Income from

a. Upto 15%
b. 15-25%
c. 25-35%
d. More than 35%

7. If you invested in Share Market, what has been your experience?

a. Satisfactory Return
b. Burned Finger
c. Unsatisfactory Results
d. No

8. How do you trade in Share Market?

a. Hedging
b. Speculation
c. Investment

9. How do you manage your Portfolio?

a. Self
b. Depends on the company for portfolio

10. If, you trade with Sharekhan limited then why?

a. Research
b. Brokerage
c. Services
d. Investments Tips
11. Are you using Portfolio Management services (PMS) of Sharekhan?

a. Yes
b. No

12. Which Portfolio Type you preferred?

a. Equity
b. Debt
c. Balanced

13. How was your experience about Portfolio Management services (PMS) of
Sharekhan Limited?

a. Earned
b. Faced Loss
c. No profit No loss

14. Does Sharekhan Limited keep it PMS process Transparent?

a. Yes
b. No

15. Do you recommend Sharekhan PMS to others?

a. Yes
b. No