Kunthinath C M Portfolio Project Final

KARVY STOCK BROKING LTD BIJAPUR
I. EXECUTIVE SUMMERY
The Karvy group was formed in 1983 at Hyderabad, India. Karvy ranks
among the top player in almost all the fields it operates. Karvy Computershare Limited is
India’s largest Registrar and Transfer Agent with a client base of nearly 500 blue chip
corporate, managing over 2 crore accounts. Karvy Stock Brokers Limited, member of
National Stock Exchange of India and the Bombay Stock Exchange, ranks among the top
5 stock brokers in India. With over 6, 00,000 active accounts, it ranks among the top 5
Depositary Participant in India, registered with NSDL and CDSL.
I have undertaken the project at Karvy Stock Broking Ltd. at Bijapur city.
This project mainly deals with providing advisory services to investors. In this report I
have taken 5 clients portfolio out of 8 provided by the company. The selection is based on
total amount invested in entire portfolio and their location, and finally the manager of the
Bijapur branch agreed to carry my research work on this client’s portfolio. And as per the
instruction of the manager clients details are not disclosed in this project because of safety
of clients.
All together 5 clients are invested total Rs. 6,71,90,040.79 in 66 companies
in to different sector. Here I have analyzed all 66 companies first as part of my research
work. Firstly, I have calculated monthly returns, beta, alpha, variance, standard deviation,
co-efficient correlation, co-efficient determination and total risk for each scrip’s. Then I
moved to market return, market S.D and market variance. After that I applied the various
portfolio theories like Sharpe Index, Treynor Index, Jensen performance index and
CAPM model to decide which client has the best portfolio.
So among 5 clients, client no 3 and 4 very good because of they have well
diversified portfolios along with volatility(risk) factor of 14.23 and 8.09 respectively but
portfolio rate of return is higher as compared to other clients & market return. And client
no 5 is worst performing for given level of risk criteria standard deviation of 12.97, he has
negative rate of return -2.22% & he has invested in only few company, so it is not good
because that is more risky one. So clients are advised that they need to diversify their
portfolio to reduce risk level.
While investing investors should consider the market scenario also their
earnings depends on the market favorable conditions. If market expected to move up in
A.S.PATIL COLLEGE OF COMMERCE, MBA PROGRAMME BIJAPUR Page 1

future, that time investor should aggressive. They can choose scrip’s which has higher
beta, high standard deviation and high co-efficient determination; otherwise they can go
for defensive scrip’s.
TITLE OF PROJECT
“A Study on Performance Evaluation of Portfolio Investors With
Reference To Karvy Stock Broking Ltd In Bijapur City.”
OBJECTIVE OF STUDY:
This study is undertaken at the KARVY Stock Broking Ltd, at Bijapur
city. And it has following objectives.
Main objectives:
 To study the advisory services and help to provide suggestions regarding
construction of optimal portfolio to the investors.
 Construction and evaluation of optimal portfolio using NSE Nifty Index

Constituent scrip’s.
 To know how best investors are getting returns by investing in various securities.
Sub-objectives:
 To characterize the equity share by calculating average return and standard
deviation (S.D) of the return for each of the shares.
 To characterize the NSE Nifty Index by calculating average return and standard
deviation of the returns.
 To establish correlation coefficient (r), co-efficient determination (r 2), beta (β),
alpha (α), variance (Var) for each of the shares.
 To arrive at systematic risk, unsystematic risk and total risk associated with each
of the share.
 To arrive at the best portfolio management theories are used.

Research Methodology:
Methodology:
Both the primary data and secondary data’s are used in the report.
Primary Data
• Interaction with the Branch Manager and staff of KARVY STOCK BROKING,
BIJAPUR branch.
• Direct interaction with clients of the KARVY.
Secondary Data
From the internet and magazines
SCOPE OF THE STUDY:

 Eight clients’ five portfolios consisting of 66 companies of the NSE Nifty Index
constituent are considered for the study.
 NSE Nifty Index value is considered as a market representative..
 The study and analysis of portfolio is limited to specific 5 clients of karvy stock
broking in bijapur.
 The study is restricted to only 2 years Monthly closing price of stocks & NSE
Nifty Index from 30/04/2007 to 31/03/2009.
LIMITATIONS OF THE STUDY:

 Though the company provided 8 portfolios list of the different clients with
different places and different amount. Out of 8 portfolios only 5 are selected on
the basis of amount invested and number of share held in the portfolio.
 Even though the company also provided the details of the clients like name and
address and other information but safety purpose these details are not disclosed.
 Returns of the securities are calculated excluding dividends.
 Stock splits are not considered.

 No debentures, mutual fund and government bonds are included in the portfolio
analysis.
INTRODUCTION
Economic liberalization has accelerated the pace of development in the

India Securities Market, which has undergone a sea change during the last two decades.
The role of securities market in mobilizing and canalizing private capital for the
economic development of the country has increased over the years and the securities itself
has undergone structural transformation with the introduction of computerized onligne
interconnected market system.
Over the years as investments in securities gathered momentum and the

need for rational analysis arisen. Only recently security analysis and portfolio
management has emerged as a important tool for investors and it is evident that rational
investment activity involves creation of an investment portfolio.
A portfolio is a group of securities held together as an investment. By

constructing a portfolio investors attempt to spread risk by not putting all their eggs in to
one basket.
Each individual security has its own risk and return characteristics which
can be measured and expressed quantitatively. Each portfolio by combining the individual
securities has its own specific risk and return characteristics, which are not just the
aggregate of the individual security characteristic. The return and risk of each portfolio
has to be calculated mathematically and expressed quantitatively. This demands the
process of selecting of optimum portfolio.

II. DESIGN OF THE STUDY
OBJECTIVE OF STUDY:
This study is undertaken at the KARVY Stock Broking Ltd, at Bijapur

city. And it has following objectives.
Main objectives:
 To study the advisory services and help to provide suggestions regarding
construction of optimal portfolio to the investors.
 Construction and evaluation of optimal portfolio using NSE Nifty Index

Constituent scrip’s.
 To know how best investors are getting returns by investing in various securities.
Sub-objectives:
 To characterize the equity share by calculating average return and standard

deviation (S.D) of the return for each of the shares.
 To characterize the NSE Nifty Index by calculating average return and standard
deviation of the returns.
 To establish correlation coefficient (r), co-efficient determination (r 2), beta (β),

alpha (α), variance (Var) for each of the shares.
 To arrive at systematic risk, unsystematic risk and total risk associated with each
of the share.
 To arrive at the best portfolio management theories are used.

TITLE OF PROJECT
“A Study on Performance Evaluation of Portfolio Investors With
Reference To Karvy Stock Broking Ltd In Bijapur City”.
Methodology:
Primary Data
BIJAPUR branch.
Secondary Data
METHODOLOGY:
 Each individual security is characterized by calculating monthly returns and

finally calculating average monthly return and standard deviation of the security
return.
 NSE Nifty Index is characterized by calculating monthly returns and finally

calculating average monthly return and standard deviation of the NSE Nifty
return.
 Correlation co-efficient, co-efficient determination, variance and beta are

calculated by comparing each individual security return with NSE Nifty Index
return.

 Systematic risk, unsystematic risk and total risk are associated with each share are
in the portfolio of the client.
 To rank the portfolio various portfolio management theories are used i.e. Sharpe
 Index Model, Treynors Index Model, CAPM Model and Jensen’s Performance
Model are used.
 All the information regarding all the companies is not available.
 Companies listed with stock exchanges with in the last 6 months are not
considered.
ANALYTICAL TECHNIQUE:
Statistical technique used for calculation of Return, Risk, and Variance of
the Investor by S.D, Alpha, Beta, Corr-Coefficient, and Co-eff Determination.
SCOPE OF THE STUDY:

 Eight clients’ five portfolios consisting of 66 companies of the NSE Nifty Index
constituent are considered for the study.
 NSE Nifty Index value is considered as a market representative.
 Monthly closing shares price and Monthly closing NSE Nifty Index value is
considered for the 24 months (2 years) from 31st JAN 2005 to 31st JAN 2007 as a
time period.
 The study and analysis of portfolio is limited to specific 5 clients of karvy stock
broking in bijapur.

 The study is restricted to only 2 years Monthly closing price of stocks & NSE
Nifty Index from 30/04/2007 to 31/03/2009.
LIMITATIONS OF THE STUDY:
 Though the company provided 8 portfolios list of the different clients with
different places and different amount. Out of 8 portfolios only 5 are selected on
the basis of amount invested and number of share held in the portfolio.
 Even though the company also provided the details of the clients like name and
address and other information but safety purpose these details are not disclosed.
 Returns of the securities are calculated excluding dividends.
 Stock splits are not considered.
 No debentures, mutual fund and government bonds are included in the portfolio
analysis.
 All the calculation is made restricted to 2 years monthly closing price of the shares
and NSE Nifty Index.
 Some assumptions of portfolio theories or portfolio models do not hold well in

practice.
CUT OF DATE:
Cut of date is 31st/April/2007 for all the company share price and market index prices.

III. INDUSTRY PROFILE
SECURITIES MARKET IN INDIA
Introduction:
Capital market is the backbone of any country’s economy. It facilitates

conversion of savings to investments. Capital market can be classified as primary and
secondary market. The fresh issue of securities takes place in primary market and trading
among investors takes place in secondary market. Primary market is also known as new
issues market. Equity investors first enter capital market though investment in primary
market. In India, common investors participating in the equity primary market is massive.
The number of companies offering equity through primary markets increased
continuously in the post independence period till the year 1995. After 1995, there is a
continuous slump experienced by the primary market offering equity. The main reason
for slump is lack of investor confidence in the primary market. So it is important to
understand the causes and measures of revival of investor confidence leading to capital
mobilization and investment in right avenues creating, economic growth in the country.
Globally, there are increased evidences to suggest that investor confidence

has assumed an important role in the economic development of a country. The Economist
(1998) indicated that a lot of issues need to be addressed to make capital markets safer.
Transparency, strengthening financial system and managing crises are the issues, which
cannot be quickly fixed. But they add up to a stronger system.
“The securities market is the market for equity, debt and derivatives”. The
securities market has essentially three categories i.e. the issuer of securities, the investors
in the securities and intermediaries. The issuers are the borrowers or deficit savers, who
issue securities to raise funds. The investors, who are surplus savers, deploy their saving
by subscribing to these securities. The intermediaries ware the agents who match the
needs of users and suppliers of funds for a commission. These intermediaries pack and
unpack securities to help both issuers and investors to achieve their respective goals.

There are a large variety and number of intermediaries providing various services in the
Indian securities market. This process of mobilization of resources is carries out under the
supervision and overview of regulators. The regulators develop fair market practices and
regulate the conduct of issuers of securities and the intermediaries. They are also in
charge of protecting the interest of the investors. The regulator ensures a high service
standard from the intermediaries and supply of quality securities and non manipulated
demand for them in the market.
STRUCTURE OF THE SECURITIES MARKET
Securities Market
Equity Market Debt Market Derivatives Market
Government
Securities
Market Futures Market
Corporate Debt Options Market

Market
Money Market

MARKET PARTICIPANTS IN SECURITIES MARKET

EQUITY CULTURE IN THE INDIAN

FINANCIAL SYSTEM
 The capital market services as a reliable guide to the performance and financial
position of companies, and there by promoters efficiency. It values firms
accurately and ties up manager compensation to stock value and thereby provides
incentives to managers to maximize firm value. It thus helps to align the interests
of the managers and thereby spurs efficient resources allocation and growth.
 A near continuous valuation of companies as reflected in share prices, and the
implied possibility of mergers and takeovers are conducive to financial discipline,
and more efficient allocation of capital.
 Stock market promoters’ growth through the creation of liquidity. Many profitable
investments require long term capital, but investors are often reluctant to
relinquish control over their savings for long periods. Equity market makes
investment less risky, more profitable, and more attractive by making it more
liquid. By facilitating long term and more profitable investment, liquid stock
market improves the allocation of capital and enhances growth. Through these
effects, stock market liquidity can lead to more saving and investment also.
 Historically, many investors had been made much before they became
innovations. Inventions became innovations and ignited industrial revolution
when liquid financial market made it possible to develop projects that require
large capital injections for long periods. The industrial revolution had wait the
financial revolution took place.
 Since high return projects tends to be comparatively risky, stock markets that
facilitates risk diversification through international integration can encourage a
shift to higher return projects and thereby help to promote growth.
 Large active and liquid stock markets induce investors to research and monitor
firm, and the resulting improved information improves resource allocation and
accelerates growth.

STOCK EXCHANGE IN INDIA
The market for long term securities like bonds, equity stocks, and
preferred stocks are divided in to primary market and secondary market. The primary
market deals with the new issues of securities. Outstanding securities are traded in the
secondary market, which is commonly known as stock market or stock exchange. In the
secondary market, the investors can sell and buy securities. Stock markets predominantly
deal in the equity shares. Debt instruments like bonds and debentures are also traded in
the stock market. Well regulated and active stock market promotes capital formation.
Growth of the primary market depends on the secondary market. The health of the
economy reflected by the growth of the stock market.
The origin of the stock exchange in India can be traced back to the later
half of the 19th century. After the American civil war (1860-61) due to the share mania of
the public, the number of brokers dealing in shares increased. The brokers organized an
informal association in Mumbai named “The native stock and share brokers association”
in 1975. At presently in India there 23 stock exchanges are there and situated in various
part of the country. All the stock exchanges in India are controlled by SEBI.
FUNCTIONS OF STOCK MARKET
 Provides quotations of shares/stock for facilitating trading and marketability

 Extends liquidity to such stock as they are easily marketable and traded
 Provides an orderly regulated market
 Promotes savings and investment in the economy by attracting funds for
investment in corporate shares and securities
 Ensures safe and fair dealing.
 Maintains active trading

NATIONAL STOCK EXCHANGE
The National Stock Exchange (NSE) is India's leading stock exchange

covering various cities and towns across the country. NSE was set up by leading
institutions to provide a modern, fully automated screen-based trading system with
national reach. The Exchange has brought about unparalleled transparency, speed &
efficiency, safety and market integrity. It has set up facilities that serve as a model for the
securities industry in terms of systems, practices and procedures.
NSE has played a catalytic role in reforming the Indian securities market
in terms of microstructure, market practices and trading volumes. The market today uses
state-of-art information technology to provide an efficient and transparent trading,
clearing and settlement mechanism, and has witnessed several innovations in products &
services viz. demutualization of stock exchange governance, screen based trading,
compression of settlement cycles, dematerialization and electronic transfer of securities,
securities lending and borrowing, professionalization of trading members, fine-tuned risk
management systems, emergence of clearing corporations to assume counterparty risks,
market of debt and derivative instruments and intensive use of information technology.
The National Stock Exchange of India Limited has genesis in the report of
the High Powered Study Group on Establishment of New Stock Exchanges, which
recommended promotion of a National Stock Exchange by financial institutions (FIs) to
provide access to investors from all across the country on an equal footing. Based on the
recommendations, NSE was promoted by leading Financial Institutions at the behest of
the Government of India and was incorporated in November 1992 as a tax-paying
company unlike other stock exchanges in the country.
On its recognition as a stock exchange under the Securities Contracts

(Regulation) Act, 1956 in April 1993, NSE commenced operations in the Wholesale Debt
Market (WDM) segment in June 1994. The Capital Market (Equities) segment
commenced operations in November 1994 and operations in Derivatives segment
commenced in June 2000.

NSE Logo
The logo of the NSE symbolises a single nationwide securities trading

facility ensuring equal and fair access to investors, trading members and issuers all over
the country. The initials of the Exchange viz., N, S and E have been etched on the logo
and are distinctly visible. The logo symbolises use of state of the art information
technology and satellite connectivity to bring about the change within the securities
industry. The logo symbolises vibrancy and unleashing of creative energy to constantly
bring about change through innovation.
Promoters
NSE has been promoted by leading financial institutions, banks, insurance

companies and other financial intermediaries:
• Industrial Development Bank of India Limited

• Industrial Finance Corporation of India Limited
• Life Insurance Corporation of India
• State Bank of India
• ICICI Bank Limited
• IL & FS Trust Company Limited
• Stock Holding Corporation of India Limited
• SBI Capital Markets Limited
• Bank of Baroda
• Canara Bank
• General Insurance Corporation of India
• National Insurance Company Limited
• The New India Assurance Company Limited

• The Oriental Insurance Company Limited

• United India Insurance Company Limited
• Punjab National Bank
• Oriental Bank of Commerce
• Indian Bank
• Union Bank of India
• Infrastructure Development Finance Company Ltd.
National Stock Exchange of India became operational in the Capital

Market segment on 3rd, November 1994 in Mumbai. The genesis of the NSE lies in the
recommendations of the Pherwani Committee (1991). Apart from NSE, it had
recommended for the establishment of National Stock Market System also. Committee
pointed out five major defects in the Indian stock market The defects specified.
 Lack of liquidity in most of the markets in terms of depth and breadth.
 Lack of ability to develop markets for debt.
 Lack of infrastructure facilities and outdated trading system.
 Lack of transparency in the operations that effect investors confidence.
 Outdated settlement systems that are inadequate to cater to the growing volume,
leading to delay.
The main objectives of NSE are as follows:-
 To establish a nationwide trading facility for equities, debt instruments and

hybrids.
 To ensure equal access to investors all over the country through appropriate
communication network
 To provide a fair, efficient and transparent securities market to investors using an

electronic communication network

 To enable shorter settlement cycle and book entry settlement system
 To meet current international standards of securities market.
Advantages of NSE:
• Wider accessibility:
The NSE ensure wider accessibility through satellite linked trading
facility. Computer terminals and links with VSAT help the the traders to contact
their counterparts in other parts of the country quickly. The quick trading system
ensures better pricing.
• Screen based trading:

Originally, the basic advantage of NSE is computer based trading.
The back office loads have been reduced as everything is stored in the computer.
At present, BSE and many other stock exchanges have introduced the computer
based trading. The ring based trading is vanishing in the recent days.
• Non disclosure of the trading members identity.

While placing the orders there is no need to disclose the identity of
the member on the screen. It depends upon the wish of the trading members. So
without any fear of influencing the prices, any member can place large size orders.
• Effective settlement of corporate benefit:

All monetary benefits lodged, dividend interest and redemption
amount, claims on company objections, are debited/credited directly in the
clearing account of the clearing members. This reduces the problems faced by the
members in settlement of corporate benefits.

Recent Trends in NSE:
 Expansion:
After establishing its operation in Mumbai, the NSE had expanded
its operation to other cities. NSE has installed 2580 VSATS in 317 cities across
the country. A break up of VSATs across 317 cities is given below.
 Quality:
Apart from the consolidation of the market at national level, the
transaction cost along with the bad deliveries has declined. Dematerialization of
shares has helped in the reduction of the bad deliveries. The effective functioning
of National Securities Clearing Corporation Limited is another reason for it.
 More liquidity:
With its on line systems and quick trading facilities, the NSE has
introduced some liquidity into the capital market. In the last quarter of 1997, the
NSE was more liquid for the 835 scrips that accounted for 97 per cent of the total
trading volume. In number of trades, an indicator of the presence of the retail
investor, the NSE was ahead of the BSE.
 Less brokerage:
Transparency in NSE allows the breaking up of the costs into
brokerage fees, market impact costs and clearing and settlement. The brokerage
fee at the BSE terminals outside Mumbai is 0.5 percent of the value transacted. On
the NSE, it is around 0.1 percent of the value transacted.
 Quick clearing and settlement:

NSE has introduced a full range of clearing house facilities; a pan
of the securities is processed at the regional clearing centers (Delhi, Chennai and
Calcutta). The inter region clearing facility provided at present, reduced that risk
of the members because of not getting timely delivery of shares or loss of shares
in transit. The facility is also expected to boost delivery based trading.

IV. COMPANY PROFILE
About KARVY
The Karvy group was formed in 1983 at Hyderabad, India. Karvy ranks
among the top player in almost all the fields it operates. Karvy Computer share Limited is
India’s largest Registrar and Transfer Agent with a client base of nearly 500 blue chips
corporate, managing over 2 core accounts. Karvy Stock Brokers Limited, member of
National Stock Exchange of India and the Bombay Stock Exchange, ranks among the top
5 stock brokers in India. With over 6, 00,000 active accounts, it ranks among the top 5
Depositary Participant in India, registered with NSDL and CDSL. Karvy COM trade,
Member of NCDEX and MCX ranks among the top 3 commodity brokers in the country.
Karvy Insurance Brokers is registered as a Broker with IRDA and ranks among the top 5
insurance agent in the country. Registered with AMFI as a corporate Agent, Karvy is also
among the top Mutual Fund mobilize with over Rs. 5,000 cores under management.
Karvy Realty Services, which started in 2006, has quickly established itself as a broker
who adds value, in the realty sector. Karvy Global offers niche off shoring services to
clients in the US.
Karvy has 575 offices over 375 locations across India and overseas at
Dubai and New York. Over 9,000 highly qualified people staff Karvy.
Karvy – Early Days

Karvy the name comes from the names of the directors:
K - Mr. V. Kutumba Rao
A - Mr. K Ajay Kumar
R - Mr. M S Ramakrishna
V - Mr. Vikram Singh
Y - Mr. M Yugandhar

The birth of Karvy was on a modest scale in 1979. It began with the vision
and enterprise of a small group of practicing Chartered Accountants who founded the
flagship company …Karvy Consultants Limited. Karvy started with consulting and
financial accounting automation, and carved inroads into the field of registry and share
accounting by 1985. Since then, Karvy have utilized its experience and superlative
expertise to go from
Strength to strength…to better its services, to provide new ones, to

innovate, diversify and in the process, evolved Karvy as one of India’s premier integrated
financial service enterprise.
GROWTH AND DEVELOPMENT OF KARVY
Over the last 20 years Karvy has traveled the success route, towards
building a reputation as an integrated financial services provider, offering a wide
spectrum of services. And Karvy have made this journey by taking the route of quality
service, path breaking innovations in service, versatility in service and finally…totality in
service. Karvy’s highly qualified manpower, cutting-edge technology, comprehensive
infrastructure and total customer-focus has secured for Karvy the position of an emerging
financial services giant enjoying the confidence and support of an enviable clientele
across diverse fields in the financial world.
AT PRESENT STATUS OF KARVY
Presently Karvy is a member of National Stock Exchange (NSE), the

Bombay Stock Exchange (BSE), and The Hyderabad Stock Exchange (HSE). Market
analysis and market predictions are done by professional management team.
KARVY is covering the entire spectrum of financial services such as

Stock Broking Services, Advisory Services, Stock broking, Depository Participants,
Distribution of financial products - mutual funds, bonds, fixed deposit, equities, Insurance
Broking, Commodities Broking, Personal Finance Advisory Services, Merchant Banking
& Corporate Finance, placement of equity, IPOs, among others.

It is the largest mobilized of funds as per PRIME DATABASE. It is

among the top 5 stock brokers in India (4% of NSE volumes). India's No. 1 Registrar &
Securities Transfer Agents (Ranked as “The Most Admired Registrar" by MARG).
Among the top 3 Depository Participants. Largest Network of Branches & Business
Associates. First ISO - 9002 Certified Registrar in India. Among top 10 Investment
bankers. Largest Distributor of Financial Products are --
The Finapolis, monthly magazine & Karvy Bazaar Baatein, a weekly

report cover stock market analysis and other financial matters. Every 50th Indian is
serviced by KARVY Every 20th trade in stock market is done through KARVY. KARVY
India's No.1 Registrars and Transfer agent: KARVY Every 10th Demat Account is held at
KARVY.
Vision of Karvy:
To achieve & sustain market leadership, Karvy shall aim for complete
customer satisfaction, by combining its human and technological resources, to provide
world class quality services. In the process Karvy shall strive to meet and exceed
customer's satisfaction and set industry standards.
Mission statement of karvy
“ Our mission is to be a leading and preferred service provider to our

customers, and we aim to achieve this leadership position by building an innovative,
enterprising, and technology driven organization which will set the highest standards of
service and business ethics ”.

SERVICE PROFILE OF THEKARVY GROUP OF COMPANIES
Karvy Stock Broking Limited
Member - National Stock Exchange (NSE), the Bombay Stock Exchange (BSE), and the
Hyderabad Stock Exchange (HSE). Karvy Stock Broking Limited, one of the
cornerstones of the Karvy edifice, flows freely towards attaining diverse goals of the
customer through varied services.
Why should investors choose for Karvy?
Excellence is next to nothing….and here at Karvy everybody tries their

best to offer excellent services to its clientele through its offerings maintaining the Karvy
culture which includes:
1. Controlled and low cost service culture: Karvy is there to serve its client at the
minimum possible cost. it controls cost by its various cost- cutting techniques and
minimization of avoidable costs.
2. Large volume processing capability: being the largest financial service provider
in the country, it has the unique distinction of operating its activities on a large
scale which benefits all the parties cordially.
3. Adherence to strict time schedule: Karvy knows that time is money and tries it
best to finish the task within the stipulated time schedule.
4. Expertise in coordinating multi-location responses: Karvy has got a wide
network and hence one can find its branches at most of the places in India. Thus it
enjoys its presence everywhere and coordinates among itself in solving the queries
and in responding to any situation.

5. Expertise in managing independent entities such as banks, post-office etc.:

the work culture of Karvy and the ethics followed inside Karvy makes its
workforce compatible with everybody, so the Karvy people establishes good
coordination with independent entities too.
6. Pooling of group resources: Karvy group consists of eight subsidiaries, so it can
easily pool up its resources for accomplishment of its goals, whenever needed.
The groups can help each other whenever there are peaks and lows, and even in
the case when they have huge targets just as we saw few years back, Tata group
pooling its resources to acquire Corus.
Stock Broking Services
It is an undisputed fact that the stock market is unpredictable and yet

enjoys a high success rate as a wealth management and wealth accumulation option. The
difference between unpredictability and a safety anchor in the market is provided by in-
depth knowledge of market functioning and changing trends, planning with foresight and
choosing one & other options with care. Karvy offer trading on a vast platform; National
Stock Exchange, Bombay Stock Exchange and Hyderabad Stock Exchange. Karvy’s
highly skilled research team, comprising of technical analysts as well as fundamental
specialists, secure result-oriented information on market trends, market analysis and
market predictions. This crucial information is given as a constant feedback to its
customers, through daily reports delivered thrice daily; The Pre-session Report, where
market scenario for the day is predicted, The Mid-session Report, timed to arrive during
lunch break, where the market forecast for the rest of the day is given and The Post-
session Report, the final report for the day, where the market and the report itself is
reviewed. To add to this repository of information, Karvy publish a monthly magazine.
The Finpolis, which analyzes the latest stock market trends and takes a
close look at the various investment options, and products available in the market, while a
weekly report, called Karvy Bazaar Baatein, gives more information on the immediate
trends in the stock market. To empower the investor further Karvy have made serious

efforts to ensure that its research calls are disseminated systematically to all our stock
broking clients through various delivery channels like email, chat, SMS, phone calls etc.
Depository Participants
The onset of the technology revolution in financial services Industry saw

the emergence of Karvy as an electronic custodian registered with National Securities
Depository Ltd (NSDL) and Central Securities Depository Ltd (CSDL) in 1998.
Karvy set standards enabling further comfort to the investor by promoting paperless
trading across the country and emerged as the top 3, Depository Participants in the
country in terms of customer serviced. Offering a wide trading platform with a dual
membership at both NSDL and CDSL, Karvy have established live DPMs, Internet access
to accounts and an easier transaction process in order to offer more convenience to
individual and corporate investors. A team of professional and the latest technological
expertise allocated exclusively to demat division including technological enhancements
like SPEED-e, make response time quick and delivery impeccable. A wide national
network makes its efficiencies accessible to all.
Distribution of Financial Products
The paradigm shift from pure selling to knowledge based selling drives the
business today. With wide portfolio offerings, company occupies all segments in the retail
financial services industry.
A 1600 team of highly qualified and dedicated professionals drawn from

the best of academic and professional backgrounds are committed to maintaining high
levels of client service delivery. This has propelled company to a position among the top
distributors for equity and debt issues with an estimated market share of 15% in terms of
applications mobilized, besides being established as the leading procurer in all public
issues.

Advisory Services
Under its retail brand ‘Karvy – the Finapolis', it delivers advisory

services to a cross-section of customers. The service is backed by a team of dedicated and
expert professionals with varied experience and background in handling investment
portfolios. They are continually engaged in designing the right investment portfolio for
each customer according to individual needs and budget considerations with a
comprehensive support system that focuses on trading customers' portfolios and
providing valuable inputs, monitoring and managing the portfolio through varied
technological initiatives. ‘Karvy - the Finapolis', covers the latest of market news, trends,
investment schemes and research-based opinions from experts in various financial fields.
Mutual Fund Services
Karvy has attained a position of immense strength as a provider of across-

the-board transfer agency services to AMCs, Distributors and Investors. Nearly 40% of
the top-notch AMCs including prestigious clients like Deutsche AMC and UTI swear by
the quality and range of services that Karvy offers. Besides providing the entire back
office processing, Karvy provides the link between various Mutual Funds and the
investor, including services to the distributor, the prime channel in this operation.
Carrying the ‘limitless' ideology forward, Karvy has explored new dimensions in every
aspect of Mutual Fund servicing right from volume management, cost effective pricing,
delivery in the least turnaround time, efficient back-office and front-office operations to
customized service. Karvy has been with the AMCs every step of the way, helping them
serve their investors better by offering them a diverse and customized range of services.
The ‘first to market' approach that is Karvy’s anthem has earned the reputation of an
innovative service provider with a visionary bent of mind. Karvy’s service enhancements
such as ‘Karvy Covers', a full-fledged call center, a top-line website
(www.karvymfs.com), the ‘m-investor' and many more, creating a galaxy of customer
advantages.

Karvy Consultants Limited
As the flagship company of the Karvy Group, Karvy

Consultants Limited has always remained at the helm of organizational affairs, pioneering
business policies, work ethic and channels of progress. Today, Karvy service over 6 lakhs
customer accounts in this business spread across over 250 cities/towns in India and are
ranked amongst the largest Depository Participants in the country. With a growing
secondary market presence, Karvy have transferred this business to Karvy Stock Broking
Limited (KSBL), Karvy’s associate and a member of NSE, BSE and HSE.
Karvy Investor Service
Merchant Banking
Recognized as a leading merchant banker in the country, Karvy registered

with SEBI as a Category I merchant banker. This reputation was built by capitalizing on
opportunities in corporate consolidations, mergers and acquisitions and corporate
restructuring. Karvy’s quality professional team and our work-oriented dedication have
propelled it to offer value-added corporate financial services and act as a professional
navigator for long term growth of its clients, who include leading corporate, State
Governments, foreign institutional investors, public and private sector companies and
banks, in Indian and global markets. Its financial advice and assistance in restructuring,
divestitures, acquisitions, de-mergers, spin-offs, joint ventures, privatization and takeover
defense mechanisms have elevated its relationship with the client to one based on
unshakable trust and confidence.

Karvy Global Services Limited
The specialist Business Process Outsourcing unit of the Karvy Group.

Here Karvy offer several delivery models on the understanding that business needs are
unique and therefore only a customized service could possibly fit the bill. Be it in re-
engineering and managing processes or delivering new efficiencies, Karvy’s service
meets up to the most stringent of international standards. Karvy’s outsourcing models are
designed for the global customer and are backed by sound corporate and operations
philosophies, and domain expertise. Providing productivity improvements, operational
cost control, cost savings, improved accountability and a whole gamut of other
advantages. Karvy’s wide market coverage includes Banking, Financial and Insurance
Services (BFIS), Retail and Merchandising, Leisure and Entertainment, Energy and
Utility and Healthcare.
Karvy Insurance Broking Private Limited
At Karvy Insurance Broking Pvt. Ltd., it provide both life and non-life
insurance products to retail individuals, high net-worth clients and corporate. With the
opening up of the insurance sector and with a large number of private players in the
business, Karvy is in a position to provide tailor made policies for different segments of
customers. With Indian markets seeing a sea change, both in terms of investment pattern
and attitude of investors, insurance is no more seen as only a tax saving product but also
as an investment product. By setting up a separate entity, Karvy would be positioned to
provide the best of the products available in this business to its customers. Karvy’s wide
national network, spanning the length and breadth of India, further supports these
advantages. Further, personalized service is provided here by a dedicated team committed
in giving hassle-free service to the clients.

Karvy Commodities Broking Private Limited
At Karvy Commodities, Karvy is focused on taking commodities trading

to new dimensions of reliability and profitability. Karvy has made commodities trading,
an essentially age-old practice, into a sophisticated and scientific investment option.
Here Karvy enable trade in all goods and products of agricultural and mineral origin that
include lucrative commodities like gold and silver and popular items like oil, pulses and
cotton through a well-systematized trading platform. Regular trading workshops and
seminars are conducted to hone trading strategies to perfection. Karvy’s commitment to
excel in this sector stems from the immense importance that commodity broking has to a
cross-section of investors – farmers, exporters, importers, manufacturers and the
Government of India itself.
Karvy Computershare Pvt. Limited
Karvy have traversed wide spaces to tie up with the world’s largest
transfer agent, the leading Australian company, Computershare Limited. The company
that services more than 75 million shareholders across 7000 corporate clients and makes
its presence felt in over 12 countries across 5 continents has entered into a 50-50 joint
venture with Karvy. Excellence has to be the order of the day when two companies with
such similar ideologies of growth, vision and competence, get together.

Issue Registry
Karvy has emerged as the largest transaction-processing house for the

Indian Corporate sector. With an experience of handling over 700 issues, Karvy today,
has the ability to execute voluminous transactions and hard-core expertise in technology
applications have gained the No.1 slot in the business. Karvy is the first Registry
Company to receive ISO 9002 certification in India that stands testimony to its stature.
It is actively coordinating with both the main depositories to develop

special models to enable the customer to access depository (NSDL, CDSL) services
during an IPO.
Achievements
• Among the top 5 stock brokers in India (4% of NSE

volumes).
• India's No. 1 Registrar & Securities Transfer Agents.
• Among the to top 3 Depository Participants.
• Largest Network of Branches & Business Associates.
• ISO 9002 certified operations by DNV.
• Among top 10 Investment bankers.
• Largest Distributor of Financial Products.
• Adjudged as one of the top 50 IT uses in India by MIS
Asia .
• Full Fledged IT driven operations.

Milestones

Registered Office
"KARVY HOUSE"
46, Avenue 4, Street No.1,
Banjara Hills,
Hyderabad - 500 034,
Andhra Pradesh, India.
Tel : +91-40-23312454
Fax : +91-40-23311968
Email: mailmanager@karvy.com
Middle East - Representative Office
Karvy Stock Broking Limited

503, 5th Floor
Al Musalla Towers
Khalid Bin Waleed Road (Bank Street)
Bur Dubai, UAE
Mobile: 0097150 5526174
Contact Person: Mr Siddhartha Razdan
Email : sid_razdon@karvy.com

V. PORTFOLIO ANALYSIS AND MANAGEMENT
INTRODUCTION TO PORTFOLIO
An INVESTMENT PORTFOLIO refers to the group of asset that is owned

by an investor. A portfolio is nothing but a combination of assets or securities.
It is rare to find investors investing their entire savings in a single security. Because
investors are risk averse, instead they tend to invest in group of securities. Such a group
of securities is called portfolio.
It is hoped that if money is invested in several securities simultaneously

the loss in one will be completed by the gain in others. Thus holding more that one
security at a time is an attempt to spread and minimize risk by not putting all our eggs in
one basket. It is possible to construct a portfolio in such a way that the total risk of the
portfolio is less than the sum of the risk of the individual assets taken together.
The process of creating such a portfolio is called diversification. It is an

attempt to spread and minimize the risk in investment. This is sought to be achieved by
holding different types of securities across different industry groups and may contain
equity capital, bonds, real estate, savings accounts, billion collection and various other
assets.
In the light of the portfolio theory two principles of finance should be kept
in mind Time value of money and safety of money:
A rupee today is worth more than a rupee of tomorrow or a year hence and
as parting with money involves the loss of the present constructions it has to be rewarded
by return commensurate with time of waiting. Secondly, a safe rupee is preferred to an
unsafe at any point of time. Due to risk aversion of investors, they feel risk is
inconvenient and has to be rewarded by a return. The larger the risk taken, the higher
should be the return.

OBJECTIVES OF THE PORTFOLIO
The objectives of a portfolio theory are two folders:

A. To optimize risk for a given level of yield or
B. To optimize return for a given level of risk.
This objective of portfolio management is termed as a search for “efficient

portfolio”. It is useful to clarify what an efficient portfolio. Efficient portfolio is a
portfolio if any (and only if) there is no alternative with:
a. The same return and a lower risk or

b. The same risk and a higher return or
c. A higher return and a low
A portfolio theory is based on two assumptions, other thing remain the same.
1. Investors prefer higher rates of return to a lower rate of return.
2. Investors are averse i.e., not willing to take risk
The traditional portfolio managers diversified their funds over a large

number of securities to strike a balance between risk and return. However this was done
on invitation, without really understanding the magnitude of risk reduction.
The 1950s saw a bid of knowledge being developed which measures the
expected rate of return and risk allocated with combining assets. This study came to be
known as portfolio theory.
These are as follows:
1. Harry M.Markowitz – Mode Portfolio Theory
2. William Sharpe – Sharpe Index
3. Treynor –Treynor Index
4. Jensen – Performance Index

1). SECURITY ANALYSIS
Understanding Volatility Measurements

1. Returns
The gain or loss of an investment over a specified period, expressed as a
percentage increase over the initial investment cost. Gains on investments are considered
to be any income received from the security, plus realized capital gains. The returns can
be calculated for a day, fortnight, and month or for a year.
Security Return = Today Price - Yesterdays Price X 100

Yesterday’s price
Market Return = Today Index - Yesterdays Index X 100

Yesterdays Index
2. Beta
Beta is a measure of the systematic risk of a security that cannot be
avoided through diversification. Beta is a relative measure of risk-the risk of an individual
stock relative to the market portfolio of all stocks. If the security's returns move more
(less) than the market's returns as the latter changes, the security's returns have more
(less) volatility (fluctuations in price) than those of the market. It is important to note that
beta measures a security's volatility, or fluctuations in price, relative to a benchmark, the
market portfolio of all stocks.
A fund with a beta very close to 1 means the fund's performance closely
matches the index or benchmark. A beta greater than 1 indicates greater volatility than the
overall market, and a beta less than 1 indicates less volatility than the benchmark.
EXAMPLE: A security with a beta of 1.5 indicates that, on average, security

returns are 1.5 times as volatile as market returns, both up and down. This would be
considered an aggressive security because when the overall market return rises or falls 10
percent, this security, on average, would rise or fall 15 percent. Stocks having a beta of
less than 1.0 would be considered more conservative investments than the overall market.

Beta = n Σ xy - (Σx) (Σy)

n Σ x 2 – (Σx)2
Where,
n = Number of days or observations

x = Index Return
y = Security Return
Investors expecting the market to be bullish may choose funds exhibiting high
betas, which increase investors' chances of beating the market. If an investor expects the
market to be bearish in the near future, the funds that have betas less than 1 are a good
choice because they would be expected to decline less in value than the index.
3. Alpha
Up to this point, we have learned how to examine figures that measure risk
posed by volatility, but how do we measure the extra return rewarded to you for taking on
risk posed by factors other than market volatility? Enter alpha, which measures how much
if any of this extra risk helped the fund outperform its corresponding benchmark. Using
beta, alpha's computation compares the fund's performance to that of the benchmark's
risk-adjusted returns and establishes if the fund's returns outperformed the market's, given
the same amount of risk.
Alpha = y - β(x)
Where.
y = Mean of security return

x = Mean of Index return
For example, if a fund has an alpha of 1, it means that the fund outperformed the
benchmark by 1%. Negative alphas are bad in that they indicate that the fund
underperformed for the amount of extra, fund-specific risk that the fund's investors
undertook.

4. Variance
The most commonly used measures of the risk in finance are variances or
its square root of standard deviation. A measure of the dispersion of a set of data points
around their mean value. It is a mathematical expectation of the average squared
deviations from the mean.
VARIANCE
= ( Return - E ( R )) 2
n
E ( R) = Average of Security Return
Variance measures the variability (volatility) from an average. Volatility is

a measure of risk, so this statistic can help determine the risk an investor might take on
when purchasing a specific security.
5. Standard Deviation.
As with many statistical measures, the calculation for standard deviation

can be intimidating, but, as the number is extremely useful for those who know how to
use it, there are many free mutual fund screening services that provide the standard
deviations of funds. The standard deviation essentially reports a fund's volatility, which
indicates the tendency of the returns to rise or fall drastically in a short period of time. A
security that is volatile is also considered higher risk because its performance may change
quickly in either direction at any moment. The standard deviation of a fund measures this
risk by measuring the degree to which the fund fluctuates in relation to its mean return,
the average return of a fund over a period of time.
A fund that has a consistent four-year return of 3%, for example, would
have a mean, or average, of 3%. The standard deviation for this fund would then be zero
because the fund's return in any given year does not differ from its four-year mean of 3%.
On the other hand, a fund that in each of the last four years returned -5%, 17%, 2% and

30% will have a mean return of 11%. The fund will also exhibit a high standard deviation
because each year the return of the fund differs from the mean return. This fund is
therefore more risky because it fluctuates widely between negative and positive returns
within a short period.
A note to remember is that, because volatility is only one indicator of the

risk affecting a security, a stable past performance of a fund is not necessarily a guarantee
of future stability. Since unforeseen market factors can influence volatility, a fund that
this year has a standard deviation close or equal to zero may behave differently in the
following year.
To determine how well a fund is maximizing the return received for its
volatility, you can compare the fund to another with a similar investment strategy and
similar returns. The fund with the lower standard deviation would be more optimal
because it is maximizing the return received for the amount of risk acquired. Consider the
following graph:

EXAMPLE:
With the S&P 500 Fund B, the investor would be acquiring a larger amount of
volatility risk than necessary to achieve the same returns as Fund A. Fund A would
provide the investor with the optimal risk/return relationship. Remember that the larger
the standard deviation, the more uncertain the outcome.
Standard Deviation = Variance
6. Correlation Co-efficient ( r )
The correlation co-efficient measures the nature and the extent of

relationship between the stock market index and the stock return in a particular period.
This can vary only in the range –1 to +1. A value of +1 would indicate a perfect Positive
linear relationship between security return and stock market index, meaning the returns
for the two stocks move together in a completely linear manner. A value of –1 indicates a
perfect negative relationship between the two return series such that when one stock’s
rate of return is above its mean, the other stock’s rate of return will be below its mean by
the comparable amount.
Correlation Co-eff = n Σ xy - (Σx) (Σy)

n Σ x 2 – (Σx)2 n Σ y 2 – (Σy)2
Where,
x = Index Return
y = Security Return

7. Coefficient Determination
The square of the correlation co-efficient is the co-efficient determination.

It gives the percentage of variation in the stocks return explained by the variation in the
markets return.
Co-eff of Determination = r 2
8. Systematic risk
An investor can construct a diversified portfolio and eliminate part of the

total risk, the diversifiable or non market part. What is left is the non diversifiable portion
or the market risk. Variability in a security's total returns that is directly associated with
overall movements in the general market or economy is called systematic (market) risk.
Systematic Risk = Variance of the security return X r 2

Or
= β2 X Variance of the market index
Where,
β = Beta
r 2 = Co-eff of Determination
Virtually all securities have some systematic risk, whether bonds or stocks,
because systematic risk directly encompasses interest rate, market, and inflation risks.
The investor cannot escape this part of the risk because no matter how well he or she
diversifies, the risk of the overall market cannot be avoided. If the stock market declines
sharply, most stocks will be adversely affected; if it rises strongly, as in the last 2 years,
most stocks will appreciate in value. These movements occur regardless of what any
single investor does. Clearly, market risk is critical to all investors.

9. Unsystematic Risk
The variability in a security's total returns not related to overall market

variability is called the nonsystematic (non market) risk. This risk is unique to a particular
security and is associated with such factors as business and financial risk as well as
liquidity risk. Although all securities tend to have some nonsystematic risk, it is generally
connected with common stocks.
Unsystematic Risk = Variance of the security X ( 1- r 2)
10. Total Risk:
Total risk of any investment is total variance or volatility of returns on that

investment. It is combination of both systematic risk and unsystematic risk.
Total risk = Systematic risk + Nonsystematic risk
Remember the difference: Systematic (Market) Risk is attributable to

broad macro factors affecting all securities. Nonsystematic (Non-Market) Risk is
attributable to factors unique to a security.

Methodology:
Primary Data
BIJAPUR branch.
Secondary Data
METHODOLOGY:
 Each individual security is characterized by calculating monthly returns and

finally calculating average monthly return and standard deviation of the security
return.
 NSE Nifty Index is characterized by calculating monthly returns and finally

calculating average monthly return and standard deviation of the NSE Nifty
return.
 Correlation co-efficient, co-efficient determination, variance and beta are

calculated by comparing each individual security return with NSE Nifty Index
return.
 Systematic risk, unsystematic risk and total risk are associated with each share are
in the portfolio of the client.

 To rank the portfolio various portfolio management theories are used i.e. Sharpe
 Index Model, Treynors Index Model, CAPM Model and Jensen’s Performance
Model are used.
 All the information regarding all the companies is not available.
 Companies listed with stock exchanges with in the last 6 months are not
considered.
ANALYTICAL TECHNIQUE:
Statistical technique used for calculation of Return, Risk, and Variance of
the Securities by S.D, Alpha, Beta, Corr-Coefficient, and Co-eff Determination.

SECUTIRY ANALYSIS PART
CLIENT NO: 01
S. COMPANY QUANTITY AVG AMOUNT PROPORTION

NO PRICE INVESTED
1 APOLLO HOSP 75 507.12 38034 0.00811708
2 BALRAMCHI 250 75.83 18957.5 0.00404584
3 CAMBRIDGE 75 142.16 10662 0.00227544
4 CIPLA LTD 85 196.23 16679.55 0.00355969
5 CORPBANK 15 362.57 5438.55 0.00116068
6 DENABANK 50 67.13 3356.5 0.00071633
7 ESSAROIL 65 294.93 19170.45 0.00409129
8 IDBI 370 105.73 39120.1 0.00834887
9 IFCI LTD 5475 46.23 253109.25 0.05401764
10 INDIABULL FINANCE SER. 1746 753.52 1315645.92 0.28078029
LTD
11 INFOSYSTCH 5 2220.05 11100.25 0.00236897
12 IVRCLINFRA 345 395.4 136413 0.02911276
13 KARNATAKA BANK 50 233.29 11664.5 0.00248939
LIMITED
14 LIT 60 213.78 12826.8 0.00273745
15 MRPL 750 105.17 78877.5 0.01683374
16 NAGARCON 445 191.67 85293.15 0.01820295
17 ONGC 115 1073.52 123454.8 0.02634727
18 PFC 175 188.05 32908.75 0.00702326
19 RANBAXY 20 392.09 7841.8 0.00167357
20 RELIANCE 190 471.9 89661 0.01913512
COMMUNICATION
21 REL. NATURAL 4225 90.19 381052.75 0.08132287
RESOURCES LTD
22 ROLTA 260 477.3 124098 0.02648454
23 RELIANCE PETROLEUM 1185 180.06 213371.1 0.04553687
LTD
24 STATE BANK OF INDIA 60 1241.73 74503.8 0.01590033
25 SESAGOA 60 1647.81 98868.6 0.02110017
26 SIEMENS LTD 205 1194 244770 0.05223791
27 SUZLON 150 1246.44 186966 0.03990159
28 SYNDICATE BANK 150 83.62 12543 0.00267688
29 TATA STEEL LIMITED 15 764.71 11470.65 0.00244802
30 UCO BANK 300 47 14100 0.00300917
31 UNITECH LTD 1866 481.21 897937.86 0.19163458
32 VIJAYA BANK 450 54.27 24421.5 0.00521195
33 YES BANK 50 187.23 9361.5 0.0019979
34 ZEEL 250 327.99 81997.5 0.0174996
TOTAL 19587 4685677.63 1.0000000

MARKET RETURN (%) -0.1062299

RETURN ON PORTFOLIO -1.191386
PORTFOLIO BETA 1.6559225
PORTFOLIO ALPHA -1.0154773
PORTFOLIO VARIENCE 42.422623
PORTFOLIO STANDARD DEVIATION 6.513
RISK FREE RETURN ASSUMED
6% PA SO 0.5% PER MONTH

Continued….
Security β Α S.D σ Security Corr. Co-eff Syst. UnSys Total
Return Beta Alpha Variance Co-eff(r) Detr Risk t Risk
(r)2 Risk
-0.90975 0.256 -0.883 6.559 43.022 0.414 0.171 7.366 35.656 36.48442
3.354011 1.689 3.533 23.86 569.54 0.75 0.563 320.7 248.89 249.3248
4
-1.38653 -0.12 -1.399 14.78 218.5 -0.09 0.007 1.613 216.89 217.8783
0.985156 0.439 1.031 9.372 87.826 0.496 0.246 21.65 66.179 66.93236
8
-0.71042 1.114 -0.592 13.07 170.77 0.904 0.816 139.4 31.338 31.52146
1.295139 1.151 1.417 16.14 260.55 0.756 0.571 148.8 111.72 112.1458
4
14.80915 1.709 14.99 72.7 5285.6 0.249 0.062 328.3 4957.3 4958.25
1
0.492405 1.333 0.634 18.56 344.44 0.762 0.58 199.9 144.55 144.9699
0.954834 1.873 1.153 25.08 629.24 0.792 0.627 394.6 234.61 234.9846
8
-3.39067 1.656 -3.215 22.31 497.56 0.787 0.62 308.4 189.16 189.5391
-0.69252 0.422 -0.648 11 121.08 0.407 0.166 20.06 101.01 101.8489
0.179152 1.567 0.345 23.03 530.33 0.721 0.52 276 254.34 254.8221
6
-1.90901 0.865 -1.817 13.91 193.36 0.66 0.435 84.11 109.26 109.8214
5.696046 2.271 5.937 29.44 866.97 0.818 0.669 579.9 287.09 287.4258
3
3.816534 1.791 4.006 25.58 654.31 0.742 0.551 360.6 293.73 294.1786
8
-1.9762 1.541 -1.812 19.69 387.57 0.83 0.689 267.1 120.5 120.8083
0.655795 1.026 0.764 13.16 173.24 0.826 0.683 118.3 54.919 55.23648
8
2.105185 1.137 2.226 15.92 253.51 0.758 0.574 145.5 108.04 108.4668
-1.4309 0.853 -1.34 17.93 321.44 0.504 0.254 81.78 239.66 240.4011
-1.87488 0.998 -1.769 16.68 278.38 0.893 0.797 221.8 56.572 56.77504
7.713633 1.008 7.820 32.29 1042.9 0.788 0.621 648 394.85 395.226
7
-2.90963 1.479 -2.753 24.86 618.18 0.631 0.398 245.8 372.37 372.9692
3.482612 1.73 3.666 21.54 464.09 0.851 0.725 336.4 127.64 127.9166
4
1.749718 1.099 1.866 15.19 230.59 0.767 0.589 135.7 94.857 95.26863
4
-1.101 1.539 -0.938 27.56 759.63 0.592 0.35 266.2 493.43 494.0786
-6.65183 1.528 -6.49 23.63 558.14 0.687 0.473 263.8 294.34 294.8692
-4.09528 2.399 -3.84 30.36 921.76 0.838 0.702 647 274.77 275.0715
-0.02046 0.914 0.076 14.15 200.16 0.685 0.469 93.92 106.23 106.7643
6
49.73008 3.306 50.08 206.9 42823 0.169 0.029 1229 41594 41595.02
1
2.096977 0.861 2.188 17.69 312.98 0.516 0.266 83.3 229.68 230.4164
4
-3.48293 2.261 -3.243 32.16 1034 0.746 0.556 574.7 459.23 459.6728
-1.38189 0.921 -1.284 15.71 246.7 0.622 0.387 95.4 151.3 151.9149

-0.89358 1.395 -0.745 19.32 373.4 0.765 0.586 218.7 154.68 155.0962
-3.01939 0.641 -2.951 13.36 178.55 0.509 0.259 46.26 132.29 133.0335

ANALYSIS:
Client no-1, in his portfolio he has 19,587 quantity of share worth of Rs:
46,8500/- in to different sector, he has well diversified portfolio consisting of more than
30 companies. In his portfolio if you consider return factor as criteria 27% of shares has
good return status. Total market return is in negative (-0.106%) per month & 53% of
securities are giving negative, but in this portfolio 7 securities are giving more than 3 %
return and 2 are near to it. And beta also good for these company they move along with
market movements. Tata Steel Limited & LIT has highest beta and also they has good
alpha with R2. So in the future, if market gives better return these also gives more than the
market return because R2 is good for company. At the same time if you consider risk
factor, S.D, variance ,Total Risk is very much high in case of Tata Steel Limited, it has
highest S.D of 206.9, total risk 41595.02 and variance 42823 followed by SESAGOA &
UNITECH LTD, so these are considered as more risky share in the portfolio. And one
most important thing is in this fund distribution out of 34 company security 47%
companies are outperformed the market.

CLIENT NO: 02

NO PRICE INVESTED
1 BHART I AIRTEL LIMITED 301 647.81 194990.81 0.041518298
2 CAIRN INDIA LIMITED 75 240.77 18057.75 0.003844935
3 CHAMBAL FERTILIZERS LTD 3075 79.55 244616.25 0.052084764
4 ESSAR OIL LTD 75 267.93 20094.75 0.004278662
5 FCS SOFTWSRE SOLN. LTD 100 104.43 10443 0.002223569
6 GWALIOR CHEM IND LTD 3724 99.11 369085.64 0.078587332
7 IFCI LTD 602 49.34 29702.68 0.006324425
8 INDIABULLS REL ESTATE 8905 283.55 2525012.75 0.537636782
LTD
9 INDIABULLS FIN. SER. LTD 2621 308.00 807268 0.171887041
10 LARSEN & TOUBRO LTD 274 919.11 251836.14 0.053622055
11 MERCATOR LINES LTD 425 106.49 45258.25 0.009636585
12 MRPL 503 64.42 32403.26 0.006899444
13 NAGARJUN CONS. CO. LTD 25 133.92 3348 0.000712871
14 NAGARJUN FERTILIZERS LTD 206 41.04 8454.24 0.001800114
15 NOIDA TOLL BRIDGE CO 251 32.41 8134.91 0.001732121
16 OCL INDIA LTD 150 107.97 16195.5 0.003448417
17 SHREE RENUKA SUGARS LTD 250 117.80 29450 0.006270623
18 SASKEN COMMU TECHNO 225 198.59 44682.75 0.009514047
LTD
19 SESA GOA LTD 175 138.10 24167.5 0.005145850
20 SIEMENS LTD 30 443.36 13300.8 0.002832065
TOTAL 21992 4696502.98 1.000000000


Continued…
Security Beta α S.D(σ) Corr. Co- Syst. UnSyst. TOTAL

Return β Alpha Co- eff Risk Risk RISK
Security eff (r) Detr
Variance (r)2
-0.69438 0.61 -0.629 8.079 65.263 0.809 0.654 42.706 22.557 65.263
6
2.473781 0.98 2.578 14.45 208.92 0.719 0.517 107.96 100.96 208.92
3.666718 1.08 3.782 22.4 501.9 0.516 0.266 133.38 368.51 501.9
9
0.492405 1.33 0.634 72.7 5285.6 0.249 0.062 328.26 4957.3 5285.6
3
-1.12063 1.61 -0.949 26.74 714.9 0.64 0.41 292.93 421.97 714.9
4
1.751678 1.14 1.874 23.47 550.87 0.519 0.269 148.37 402.5 550.87
9
0.954834 1.87 1.154 25.08 629.24 0.792 0.627 394.62 234.61 629.24
3
-1.7395 1.64 -1.564 22.79 519.32 0.767 0.588 305.16 214.16 519.32
7
-3.39067 1.65 -3.215 22.31 497.56 0.787 0.62 308.4 189.16 497.56
6
0.264109 1.80 0.456 21.73 472.28 0.881 0.776 366.33 105.95 472.28
5
2.328505 2.01 2.543 25.08 629.2 0.854 0.729 458.53 170.67 629.2
9
-1.9762 1.54 -1.812 25.58 654.31 0.742 0.551 360.58 293.73 654.31
1
-1.9762 1.54 -1.812 19.69 387.57 0.83 0.689 267.07 120.5 387.57
1
4.192913 1.72 4.376 28.49 811.93 0.64 0.41 333.03 478.9 811.93
1
3.134852 1.65 3.311 25.96 674.18 0.676 0.457 307.8 366.38 674.18
5
-0.59185 1.68 -0.413 24.19 585.03 0.739 0.547 319.72 265.31 585.03
6
1.542243 1.31 1.681 30.11 906.42 0.461 0.213 192.99 713.43 906.42
-4.73725 1.45 -4.583 25.4 644.94 0.608 0.369 238.22 406.72 644.94
6
-6.65183 1.52 -6.49 27.56 759.63 0.592 0.35 266.2 493.43 759.63
8
-4.09528 2.39 -3.84 23.63 558.14 0.687 0.473 263.8 294.34 558.14
9
ANALYSIS:
In this portfolio he invested in above 21,992 equity share amount of Rs 47
lacks. Altogether he has invested in 20 companies with various sectors, so it has well
diversified portfolio. Out of 20 companies 10 companies are giving negative returns &
remaining are giving positive returns this is very good sign for the investor. And Beta for
the almost all companies are more than one remaining are near to market movements.

According me he is Risk taking client because whatever he has invested in these

companies has high S.D and Total Risk i.e. Essar Oil Ltd, SESA Goa Ltd, Shree Renuka
Sugars Ltd & Nagarjun Fertilizers Ltd. In this portfolio 5 securities are giving more than
2% return and they also have good beta along with alpha & R2, if market gives more
return these companies also give more return to him. And one more important thing is in
this fund distribution out of 20 company security 50% companies are outperformed the
market, but his portfolio return in negative and lower than market return.

CLIENT NO: 03

NO PRICE INVESTED
1 APOLLO TYRES LTD 35122 20.64 724918.08 0.01550254
2 ASHOK LEYLAND LTD 4000 29.28 117120.00 0.00250464
3 BHARAT FORGE CO LTD 14173 221.97 3145980.81 0.06727752
4 CIPLA LTD 100 181.64 18164.00 0.00038844
5 GODREJ IND LTD 1249 271.57 339190.93 0.00725368
6 IFCI LTD 500 56.67 28335.00 0.00060595
7 INDIABULLS FIN. SER. LTD 14000 238.55 3339700.00 0.07142025
8 INDIAN OIL CORP LTD 4125 396.24 1634490.00 0.03495394
9 INFOSYS 100 1657.99 165799.00 0.00354565
TECHONOLOGIES LTD
10 ITC LTD 700 168.37 117859.00 0.00252044
11 JINDAL PHOTO LTD 7021 97.14 682019.94 0.01458515
12 KARNATAKA BANK 2025 153.80 311445.00 0.00666032
LIMITED
13 LARSEN & TOUBRO LTD 2456 1756.02 4312785.12 0.0922299
14 MYSORE CEMENTS LTD 15100 37.20 561720.00 0.01201251
15 PIDILITE INDUSTRIES LTD 13453 120.13 1616108.89 0.03456086
16 PUNJAB NATIONAL BANK 490 379.42 185915.80 0.00397585
17 RELIANCE CAPITAL LTD 100 995.45 99545.00 0.00212879
18 RELIANCE 1010 438.89 443278.90 0.00947962
COMMUNICATION LTD
19 RELIANCE INDUSTRIES 600 2234.02 1340412.00 0.02866502
LTD
20 RELIANCE NATURAL 4000 57.04 228160.00 0.00487925
RESOURCES LTD
LIMITED
22 SATYAM COMPUTERS 5229 133.94 700372.26 0.01497762
SERVICES
24 SIEMENS LTD 2650 445.16 1179674.00 0.0252276
25 SYNDICATE BANK 4600 47.46 218316.00 0.00466874
26 TATA CONSULTANCY 3550 569.59 2022044.50 0.04324189
SERVICES
27 TATA TELESERVICES 9500 25.59 243105.00 0.00519886
(MAHARASTRA)
28 TATA INVESTMENT CORP 809 309.89 250701.01 0.0053613
LTD
29 TATA STEEL LIMITED 5973 416.92 2490263.16 0.05325485
30 TVS MOTOR COMPANY 6500 28.35 184275.00 0.00394076
LTD
31 ULTRATECH CEMCO LTD 200 799.87 159974.00 0.00342108
32 UNITECH LTD 95000 123.78 11759100.00 0.25147106
33 VIJAYA BANK 2200 28.14 61908.00 0.00132392
34 WIPRO LTD 600 392.22 235332.00 0.00503263
TOTAL 274305 51561704.15 1.00000000

Continued….

RETURN ON PORTFOLIO 1.5056298
PORTFOLIO ALPHA 1.67685036
PORTFOLIO STANDARD 14.2301
DEVIATION

Continued….
Security Β α S.D Security Corr. Co-eff Syst. UnSyst. TOTAL

Return Beta Alpha (σ) Variance Co-eff Detr Risk Risk RISK
(r) (r)2
-4.28708 1.104 -4.17 24.433 596.984 0.479 0.23 137.063 459.921 596.984
-1.07475 1.055 -0.963 16.644 277.028 0.672 0.451 125.055 151.972 277.028
-2.36445 1.325 -2.224 16.896 285.472 0.831 0.691 197.279 88.1923 285.472
0.985156 0.439 1.0318 9.3715 87.8259 0.496 0.246 21.6471 66.1788 87.8259
0.370311 1.848 0.5666 26.511 702.848 0.739 0.546 383.86 318.988 702.848
0.954834 1.873 1.1538 25.085 629.236 0.792 0.627 394.624 234.612 629.236
-3.39067 1.656 -3.215 22.306 497.556 0.787 0.62 308.397 189.159 497.556
1.571394 0.969 1.6743 17.822 317.629 0.577 0.332 105.583 212.046 317.629
-0.68939 0.421 -0.645 11.033 121.73 0.404 0.163 19.8828 101.848 121.73
0.953235 0.38 0.9936 7.2614 52.7278 0.555 0.308 16.2325 36.4954 52.7278
3.325192 1.516 3.4862 21.92 480.493 0.733 0.538 258.267 222.226 480.493
-1.90901 0.865 -1.817 13.906 193.364 0.66 0.435 84.1073 109.256 193.364
0.264109 1.805 0.4559 21.732 472.28 0.881 0.776 366.332 105.947 472.28
0.269345 1.382 0.4162 19.525 381.218 0.751 0.563 214.793 166.425 381.218
-0.5301 0.914 -0.433 12.231 149.586 0.792 0.627 93.844 55.7421 149.586
0.877104 0.841 0.9665 14.713 216.475 0.606 0.368 79.5818 136.894 216.475
2.055697 2.142 2.2832 26.172 684.969 0.868 0.753 515.792 169.177 684.969
-1.87488 0.998 -1.769 16.685 278.375 0.893 0.797 221.804 56.5718 278.375
1.456698 1.129 1.5766 13.08 171.093 0.915 0.837 143.251 27.8419 171.093
7.713633 1.008 7.8207 32.293 1042.86 0.788 0.621 648.008 394.847 1042.86
3.482612 1.73 3.6664 21.543 464.09 0.851 0.725 336.448 127.642 464.09
-6.56287 0.569 -6.502 19.217 369.289 0.314 0.098 36.3606 332.928 369.289
1.749718 1.099 1.8664 15.185 230.592 0.767 0.589 135.734 94.8573 230.592
-2.57701 1.532 -2.414 23.625 558.144 0.687 0.473 263.802 294.342 558.144
-0.02046 0.914 0.0766 14.148 200.155 0.685 0.469 93.9217 106.234 200.155
-2.36848 0.62 -2.303 10.42 108.567 0.631 0.398 43.214 65.3526 108.567
1.51166 1.313 1.6511 21.077 444.228 0.66 0.436 193.782 250.445 444.228
-0.46009 1.004 -0.353 14.684 215.618 0.725 0.526 113.372 102.246 215.618
49.73008 3.306 50.081 206.94 42823.2 0.169 0.029 1229.12 41594.1 42823.2
-0.67695 1.109 -0.559 20.12 404.817 0.584 0.341 138.215 266.602 404.817
-0.36012 0.931 -0.261 15.509 240.53 0.637 0.405 97.5288 143.001 240.53
-3.48293 2.261 -3.243 32.155 1033.98 0.746 0.556 574.747 459.229 1033.98
-1.38189 0.921 -1.284 15.707 246.7 0.622 0.387 95.3986 151.302 246.7
-1.47071 0.891 -1.376 12.98 168.468 0.728 0.53 89.3415 79.1262 168.468

ANALYSIS:
Client no-3, in his portfolio he has 274305 quantity of share worth more
than Rs. 5 Crores in to different sector, he has well diversified portfolio consisting of
more than 30 companies. In his portfolio if you consider return factor as criteria most all
shares has good return status. Total market return is negative (-0.106%) per month, but in
this portfolio 4 securities are giving more than 3 % return and 4 are near to 2% return.
Tata Steel Limited & Reliance Natural Resources Ltd are giving higher return (49.73% &
7.71%) to him compare to others. Godrej India Ltd, IFCI Ltd, Larsen & Toubro Ltd &
Reliance Capital Ltd has high beta and also they has good alpha with R 2, so in the future,
if market gives better return these also gives more than the market return because R2 is
good for company. At the same time if you consider risk factor, S.D, variance, Total Risk
is very much high in case of Tata Steel Limited, Reliance Natural Resources, Ltd Godrej
India Ltd, IFCI Ltd & Reliance Capital Ltd, so these are considered as more risky share in
the portfolio. Tata Steel Limited has highest S.D of 206.94, total risk 42823.2 and
variance 42823.2. And one most important thing is in this portfolio Unitech Ltd has good
beta along with Alpha & R but return is very low. One more important thing is in out of
34 company security 50% companies are outperformed the market.

CLIENT NO: 04
S. COMPANY QUA AVG INVESTED PROPORTION

NO N PRICE
TITY
1 APOLLO HOSP 75 507.12 38034 0.024315814
2 BALRAMCHI 250 75.83 18957.5 0.012119868
3 CAMBRIDGE 75 142.16 10662 0.006816407
4 CIPLA LTD 85 196.23 16679.55 0.010663534
5 CORPBANK 15 362.57 5438.55 0.003476962
6 DENABANK 50 67.13 3356.5 0.00214587
7 ESSAROIL 65 294.93 19170.45 0.012256011
8 IFCI LTD 602 49.34 29702.68 0.018989453
9 INDIABULLS REL ESTATE 905 283.55 256612.75 0.164057107
LTD
10 INDIABULLS FIN. SER. LTD 621 308 191268 0.122281043
11 REL. NATURAL RESOURCES 4225 90.19 381052.75 0.243613817
LTD
12 TVS MOTOR COMPANY LTD 650 28.35 18427.5 0.011781029
13 ULTRATECH CEMCO LTD 200 799.87 159974 0.102274231
14 UNITECH LTD 950 123.78 117591 0.075178023
15 VIJAYA BANK 2200 28.14 61908 0.039578888
16 WIPRO LTD 600 392.22 235332 0.150451944
TOTAL 11568 1564167.23 1.000000000
MARKET RETURN (%) -

0.106229
9
RETURN ON PORTFOLIO 0.816068
83
58
PORTFOLIO ALPHA 0.949976
37
81
PORTFOLIO STANDARD 8.0867
DEVIATION

Continued….
Security β α Security Corr. Co-eff Syst. UnSyst. TOTAL

Return Beta Alpha S.D Variance Co-eff Detr Risk Risk RISK
(σ) (r) (r)2
-0.91 0.256 -0.883 6.56 43.022 0.4138 0.171 7.365958 35.66 43.022
3.354 1.689 3.533 23.9 569.54 0.7503 0.563 320.6501 248.9 569.54
-1.387 -0.12 -1.399 14.8 218.5 - 0.007 1.61329 216.9 218.5
0.0859
0.9852 0.439 1.032 9.37 87.826 0.4965 0.246 21.64708 66.18 87.826
-0.71 1.114 -0.592 13.1 170.77 0.9036 0.816 139.4275 31.34 170.77
1.2951 1.151 1.417 16.1 260.55 0.7558 0.571 148.8331 111.7 260.55
14.809 1.709 14.99 72.7 5285.6 0.2492 0.062 328.2589 4957 5285.6
0.9548 1.873 1.154 25.1 629.24 0.7919 0.627 394.624 234.6 629.24
-1.74 1.647 -1.564 22.8 519.32 0.7666 0.588 305.1588 214.2 519.32
-3.391 1.656 -3.215 22.3 497.56 0.7873 0.62 308.3972 189.2 497.56
7.7136 1.008 7.821 32.3 1042.9 0.7883 0.621 648.0081 394.8 1042.9
-0.677 1.109 -0.559 20.1 404.82 0.5843 0.341 138.2153 266.6 404.82
-0.36 0.931 -0.261 15.5 240.53 0.6368 0.405 97.52883 143 240.53
-3.483 2.261 -3.243 32.2 1034 0.7456 0.556 574.7466 459.2 1034
-1.382 0.921 -1.284 15.7 246.7 0.6219 0.387 95.39856 151.3 246.7
-1.471 0.891 -1.376 13 168.47 0.7282 0.53 89.3415 79.13 168.47
ANALYSIS:
In this portfolio he has invested in 16 companies amounting Rs 15.64

lacks. In this some are giving extremely good returns i.e. Essaroil, Reliance Natural
Resources Ltd & Balramchi. And other 3 security are giving near 1% return, but
remaining are not giving returns as compared to market return and risk. Essaroil, Reliance
Natural Resources Ltd & Balramchi are having high beta, alpha along with R2, So in the
future, if market gives better return these also gives more than the market return because
R2 is good for company and they also have high risk. Some companies are under
performing i.e. Cambridge, India bulls, Reliance Estate Ltd, Unitech Ltd, Vijaya Bank &
Wipro Ltd. In this portfolio only 3 companies are driving entire portfolio namely Essaroil,
Reliance Natural Resources Ltd & Balramchi, if anything unfair happens to these, it will
lead the worst. So he need tovwell diversify his portfolio.

CLIENT NO: 05
S.NO COMPANY QUANTITY AVG INVESTED PROPORTION

PRICE
1 APOLLO TYRES LTD 3512 20.64 72487.68 0.015482241
2 ASHOK LEYLAND LTD 4000 29.28 117120 0.025015011
3 BHARAT FORGE CO LTD 14173 221.97 3145980.8 0.671932586
4 CIPLA LTD 100 181.64 18164 0.003879548
LTD
7 SYNDICATE BANK 150 83.62 12543 0.00267899
8 UCO BANK 300 47 14100 0.003011541
9 UNITECH LTD 1866 481.21 897937.86 0.191785565
10 VIJAYA BANK 450 54.27 24421.5 0.005216053
11 YES BANK 50 187.23 9361.5 0.001999471
12 ZEEL 250 327.99 81997.5 0.017513391
TOTAL 26096 4681988.8 1.000000000


Continued….
Securit β α S.D(σ) Corr. Co-eff Syst. UnSyst. Total

y Beta Alpha Security Co-eff Detr Risk Risk Risk
Return Variance (r) (r)2
-4.287 1.104 -4.17 24.43 596.984 0.479 0.23 137.063 459.921 596.984
3
-1.075 1.055 -0.963 16.64 277.028 0.672 0.451 125.055 151.972 277.028
4
-2.364 1.325 -2.224 16.89 285.472 0.831 0.691 197.279 88.1923 285.472
6
0.9852 0.439 1.031 9.371 87.8259 0.496 0.246 21.6471 66.1788 87.8259
8 5
3.4826 1.73 3.666 21.54 464.09 0.851 0.725 336.448 127.642 127.917
4 3
1.7497 1.099 1.866 15.18 230.592 0.767 0.589 135.734 94.8573 95.2686
4 5
-0.02 0.914 0.076 14.14 200.155 0.685 0.469 93.9217 106.234 106.764
6 8
2.097 0.861 2.188 17.69 312.984 0.516 0.266 83.3019 229.683 230.416
4 1
-3.483 2.261 -3.243 32.15 1033.98 0.746 0.556 574.747 459.229 459.673
5
-1.382 0.921 -1.284 15.70 246.7 0.622 0.387 95.3986 151.302 151.915
7
-0.894 1.395 -0.745 19.32 373.403 0.765 0.586 218.721 154.682 155.096
4
-3.019 0.641 -2.951 13.36 178.553 0.509 0.259 46.2601 132.293 133.034
2
ANALYSIS:
He is a new entrant to the world of share market. He has invested 30% of

his amount in Banking or Finance sector. The problem with this client he has not
diversified his portfolio investment in all sectors. So it is not a good practice for the
investor if they do so risk profile is very high. In this portfolio only 4 securities are giving
positive return with minimum risk i.e. Cipla Ltd, Reliance Petroleum Ltd, State Bank Of
India & UCO Bank & remaining all companies are giving negative return to him. And
risk profile is highest in Apollo Tyres Ltd and lowest in case of State Bank of India with
better return. In case of State Bank of India it has low risk with good return is 1.75 % and
it also has good relationship with market i.e. R2 =0.59. And Reliance Petroleum Ltd &
UCO Bank are having highest return of 3.50% & 2.10&% with total risk of 127.91 &

230.41 respectively. One most import thing is the overall return of portfolio (i.e. -2.22) is
less than market return (-0.11), so this client not diversified his amount in to all sectors.

2) MARKET ANALYSIS
S.No Date Nifty Market X2

Closing Return (X)
Price
1 30/04/2007 4087.9 0 0
2 31/05/2007 4295.8 5.0857408 25.86476
3 29/06/2007 4318.3 0.5237674 0.274332
4 31/07/2007 4528.85 4.8757613 23.77305
5 31/08/2007 4464 -1.4319308 2.050426
6 28/09/2007 5021.35 12.485439 155.8862
7 31/10/2007 5900.65 17.511227 306.6431
8 30/11/2007 5762.75 -2.3370307 5.461712
9 31/12/2007 6138.6 6.5220598 42.53726
10 31/01/2008 5137.45 -16.309093 265.9865
11 29/02/2008 5223.5 1.6749555 2.805476
12 31/03/2008 4734.5 -9.3615392 87.63842
13 30/04/2008 5165.9 9.1118386 83.0256
14 30/05/2008 4870.1 -5.726011 32.7872
15 30/06/2008 4040.55 -17.033531 290.1412
16 31/07/2008 4332.95 7.2366386 52.36894
17 29/08/2008 4360 0.624286 0.389733
18 30/09/2008 3921.2 -10.06422 101.2885
19 31/10/2008 2885.6 -26.410283 697.503
20 28/11/2008 2755.1 -4.5224563 20.45261
21 31/12/2008 2959.15 7.4062647 54.85276
22 30/01/2009 2874.8 -2.8504807 8.12524
23 27/02/2009 2763.65 -3.8663559 14.94871
24 31/03/2009 3020.95 9.3101514 86.67892
25 29/04/2009 3473.95 14.995283 224.8585
-2.5495186 2586.342
2
ΣX ΣX
N 24
MEAN( X ) -0.1062
MARKET RETURN -0.1062

3) PORTFOLIO PERFORMANCE MEASUREMENT
Evaluation of portfolio performance, the bottom line of the investing

process, is an important aspect of interest to all investors and money managers. The
framework for evaluating portfolio performance consists of measuring both the realized
return and the differential risk of the portfolio to use to compare a portfolio’s
performance, and recognizing any constraints that the portfolio manager may face. A 12%
return, by itself, is a fairly meaningless figure. It must be viewed in comparison to the
performance, over the same timeframe, of alternative investments bearing a similar level
of risk.
Remember, one can only measure return in relation to the risk taken.
Investing is always a two-dimensional process based on return and risk. These two factors
are opposite sides of the same coin, and both must be evaluated if intelligent decisions are
to be made. Therefore, if we know nothing about the risk of and investment, there is little
we can say about its performance. Given the risk that all investors face, it is totally
inadequate to consider only the returns from various investment alternatives. Although all
investors prefer higher returns, they are also risk averse. To evaluate portfolio
performance properly, we must determine whether the returns are large enough given the
risk involved. If we are to assess performance carefully, we must evaluate performance
on a risk-adjusted basis.
We must make relative comparisons in performance measurement, and an

important related issue is the benchmark to be used in evaluating the performance of a
portfolio. The essence of performance evaluation in investments is to compare the returns
obtained on some portfolio with the returns that could have been obtained from a
comparable alternative.

SINGLE INDEX MODEL BY WILLIAM SHARPE

The basic ratio undergoing the single index model is that all stocks are
affected by movements in the stock markets. Casuals’ observation of the share price
reveals that when market moves up (as measured by any of the widely used stock marker
indices), prices of the most shares tend to increase. When the market goes down the
prices of most shares tend to decline. This suggests that one reason why security returns
might be correlated and there is co- movement between securities, is because of a
common response to market changes.
William Sharpe has tried to simplify the process of data inputs, data
tabulation and reaching a solution, has developed a simplified variant of the Markowitz
model that reduces substantially its data and computational requirements.
The single index model is based on the assumption that stocks vary
together because of the common movement in the stock market and there are no effects
beyond the market that accounts the stocks co movement. The expected return, standard
deviation and co-variance of the single index model represent the joint movement of the
securities.
1) SHARPE’S PERFORMANCE INDEX
Sharpe performance index gives a single value to be used for the

performance ranking of various funds or portfolios. Sharpe index measures the risk
premium of the portfolio relative to the total amount of risk in the portfolio. This risk
premium is the difference between the portfolio average rate of return and the risk less
rate of return. The standard deviation of the portfolio indicates the risk.
Sharpe Performance Index = Rp–Rf
σp
Where,
Rp = Portfolio Return
Rf = Risk Free Return
σp = Portfolio Standard Deviation

EVALUATION: Sharpe index is a measure of risk premium related to the total risk. The
index assigns the highest values to assets that have best risk adjusted average rate of
return. According to this model which gives highest value is the best performing portfolio
2 ) TREYNOR’S PERFORMANCE INDEX:
To understand the Treynor’s index, an investor should know the concept of

characteristic line.
CHARACTERISTIC LINE: The relationship between a given market
return and the funds return is given by characteristic line. The funds performance is
measured in relation to the market performance. The ideal funds return rises at a faster
rate than the general market performance when the market is moving upwards and its rate
of return declines slowly than the market return, in the decline.
Treynor’s risk premium of the portfolio is the difference between the
average returns and the risk less rate of return. The risk premium depends on the
systematic risk assumed in a portfolio.
Treynor Performance Index = Rp- Rf

βp
where,
Rp = Portfolio Return
βp = Portfolio Beta
EVALUATION:
Treynor’s index measures the funds performance in relation to the market

performance. Fund or portfolio which gives or earns more risk premium per unit of
systematic risk is selected and that is considered as best performing one.

3) JENSEN’S PERFORMANCE INDEX
Like the Treynor measure, the Jensen measure or Jensen’s alpha is based
on the capital asset pricing model. It reflects the difference between the returns actually
earned on portfolio and the return the portfolio was supposed to earn, given its beta as per
the capital assets pricing model
Jensen Performance Index = α + Rf + β (R m ˉ R f )
Where,
α = Alpha
β = Beta
Rm = Market Return
The return of the portfolio varies in the same proportion of beta difference
between the market return and risk less rate of interest. Beta is assumed to reflect the
systematic risk. The funds portfolio beta would be equal to one if it takes a portfolio of all
market securities. The beta would be greater than one if the funds portfolio consists of
securities that are riskier that a portfolio of all market securities.
EVALUATION:
Jensen index compares the actual return of the portfolio with the calculated
or predicted return. Better performance of the fund depends on the predictive ability of
the managerial personnel of the fund. Fund or portfolio which gives or earns more return
is selected and that is considered as best performing portfolio.

4) CAPITAL ASSET PRICING MODEL (CAPM)
The CAPM was developed in mid 1960s by three researchers William

Sharpe, John Linter and Jan Mossin independently. Consequently, the model is often
referred to as Sharpe-Linter-Mossin Capital Asset Pricing Model.
The Capital Asset Pricing Model is really as extension of the portfolio

theory of Markowitz. The portfolio theory is a description of how rational investors
should build efficient portfolio and select the optimal portfolio. The Capital Asset Pricing
Model derives the relationship between the expected return and risk of individual
securities and portfolios in the capital markets if every one behaved in the way portfolio
theory suggested.
CAPM decomposes a portfolio's risk into systematic and specific risk.

Systematic risk is the risk of holding the market portfolio. As the market moves, each
individual asset is more or less affected. To the extent that any asset participates in such
general market moves, that asset entails systematic risk. Specific risk is the risk which is
unique to an individual asset. It represents the component of an asset's return which is
uncorrelated with general market moves.
According to CAPM, the marketplace compensates investors for taking

systematic risk but not for taking specific risk. This is because specific risk can be
diversified away. When an investor holds the market portfolio, each individual asset in
that portfolio entails specific risk, but through diversification, the investor's net exposure
is just the systematic risk of the market portfolio.
Systematic risk can be measured using beta. According to CAPM, the

expected return of a stock equals the risk-free rate plus the portfolio's beta multiplied by
the expected excess return of the market portfolio.

CAPM = Rf + β (R m ˉ R f )
Where,
β = Beta
Rm = Market Return
It states that a stocks (or portfolio's) excess expected return depends on its
beta and not its volatility. Stated another way, excess return depends upon systematic risk
and not on total risk.
We call CAPM a "capital asset pricing model" because, given a beta and
an expected return for an asset, investors will bid its current price up or down, and
adjusting that expected return so that it satisfies formula. Accordingly, the CAPM
predicts the equilibrium price of an asset. This works because the model assumes that all
investors agree on the beta and expected return of any asset. In practice, this assumption
is unreasonable, so the CAPM is largely of theoretical value.
BASIC ASSUMPTIONS:
 Individual are risk averse.

 Individuals seek to maximize the expected utility of their portfolio over a single
period planning horizon.
 Individuals have homogeneous expectations.
 Individuals can borrow and lend freely at a risk less rate of interest.
 The market is perfect
 There are no taxes and no transactions costs.
 Securities are completely divisible and market is competitive.
 The quantity of risky securities in the market is given.

4) EVALUATION OF PORTFOLIOS
NUMBER
S. NAME QUANTITY TOTAL PORTFOLIO
NO OFTHE IN AMOUN IN
CLIENT PORTFOLIO PORTFOLIO Return Beta Alpha Variance S.D
CLIENT
1 NO - 01 19587 4685677.63 -1.191 1.656 -1.02 42.42 6.51
CLIENT
2 NO - 02 21992 4696502.98 -1.252 1.544 -1.09 171.39 13.09
CLIENT
3 NO - 03 274305 51561704.15 1.506 1.612 1.68 202.50 14.23
CLIENT
4 NO - 04 11568 1564167.23 0.816 1.261 0.95 65.40 8.08
CLIENT
5 NO – 05 26096 4681988.8 -2.215 1.489 -2.05 168.33 12.97
MARKET PERFORMANCE
MARKET VARIENCE OF
BETA RETURN MARKET S.D OF MARKET
1 -0.10623 112.4379 10.604

ANALYSIS:
This is the aggregate table for all 5 clients’ portfolio performance along
with their portfolio return, portfolio beta, portfolio alpha, portfolio variance and portfolio
standard deviation. So here am try to analyze all 5 clients performance comparing their
portfolio performance each other. And also these compared with overall market
performance.
From the above table we can conclude that CLIENT NO- 03 earning
highest return 1.506 % per month compared other and as well as market return -0.106%,
with moderate level of risk(S.D= 14.23). In case of risk and volatility CLIENT NO- 03
has highest level of risk and volatility because S.D and Variance is highest in this case
14.23 and 202.50 respectively, but in the same it gives better return than others, and it has
highest beta along with alpha, so if market gives good response it will definitely brings
handful return to this client. But here CLIENT NO-05 is worst performer because he has
high risk but return is less than other & compare to market.
If you take CLIENT 1, 2 and 5 they have similarity in amount invested,

standard deviation & Variance of Client No 1 is less than 2 & 5 client & also client 1 has
high earnings than client 2 & 5. But among these clients no one invested their amount in
to well diversify portfolio, because all return is very low compare to the market return.
If you take consideration of variance & SD client no-01 & 04 are good,
because of their SD & Variance is lower than the market.
And the same if you consider CLIENT NO-3 and 4. CLIENT 3 is taken to
consider, because his portfolio return is high with higher risk along with high beta &
alpha, if market return increases then return of the client also increase. If you take in to
account of all clients CLIENT NO – 3 and 4 has well performing portfolio than others.

5) PORTFOLIO THEORY APPLICATION
S. Name Performance Index and Ranking

No
Sharpe’s Treynor’s Jensen’s CAPM
Ratio Rank Ratio Rank Ratio Rank Ratio Rank
1 Client -1.268 4 -1.49 3 -1.52 3 -0.50 5

No.1
2 Client -1.290 3 -1.58 4 -1.52 4 -0.44 3

No.2
3 Client 1.470 1 1.20 1 1.12 1 -0.48 4

No.3
4 Client 0.754 2 0.42 2 0.69 2 -0.26 1

NO.4
5 Client -2.253 5 -2.55 5 -2.46 5 -0.40 2

No.5
ANALYSIS:
1) SHARPE INDEX :
CLIENT NO-03 ranks top among the total 5 clients because of the higher
return with high volatility in return. Client no-4 ranks second in the list, because of the
low volatility in portfolio. Client no-5 ranks to last because of very low return and high
risk compare to his return and Client 1 & 2 ranks 4 & 3 respectively.

2) TREYNORS INDEX :
According to TREYNORS INDEX theory again client no-03 ranks top

among all because of high return and high market related risk. And Client no-02 has
low risk profile but ranks second because of high risk premium. Here client - 01 rank
in 3rd place & client – 2 ranks 4th place, its low risk premium makes it to lie in 4th
place.
3) JENSEN INDEX: SHARPE INDEX : TREYNORS INDEX
According to this theory alpha takes very important role in ranking the
portfolios, higher the alpha is first chance to rank top. In this also Client no-03 has
takes 1st place, and again client no-04 is had 2nd rank. And client 1, 2 & 5 ranks 3rd, 4th
& 5th because of negative alpha & return.
4) CAPM:
JENSEN model based on alpha factor where as CAPM is based on beta

factor, higher the beta lowers the chance to rank high. So client no 4 and 5 ranks 1 st
and 2nd respectively. And client no-01 & 05 ranked 5th & 4th place respectively.

VI. FINDINGS
About company:
 Through my study, I have found that most of the clients are satisfied with
KARVY services & they prefer KARVY because of its prominent parameters like
safety, client relationship & goodwill.
 KARVY’s DEMAT service is safest & finest system which allows investors to get
prompt services. It was also found that DEMAT process at KARVY is transparent
which does not leave any kind of errors to the investors.
About market and investor
 Since last 1 year market is too volatile, so investor has a fear to invest their money
in share market.
 In India Mutual Fund industry is performing very well, so investors are interested
more in mutual fund because of diversified risk & safety purpose.
 Most of the investors are not rational; they like to get advisory services.
 The present global crisis impacts on the equity market which will continue to
bearish or high volatile mood.
 If we consider IPO then its current performance is not good, so investors do not
prefer current IPOs. Leaders in IPO’s of Portfolio companies (more than 15
portfolio companies have already achieved stock market listing).

About project:
 In my analysis work client no 3 and 4 found good, because their return is higher
than the market return.
 In my analysis client no-01 & 04 SD & variance is low compare to market SD &
Variance (10.60 & 112.44), so their risk is low. And client 2, 3 & 5 their risk is
very high comparing to market SD & Variance.
 In my analysis Beta & Alpha are high for the all client, if market return increases
their return also increase.
 It reveals client 5, 1 & 2 have the very low return than market return (-0.11%).
 Finding out beta, alpha, S.D and systematic risk for each security and portfolio is
a very complicated process.
 Clients can’t believe theories like Sharpe Treynor and CAPM, because they do not
aware about the theories and all.
 Client no-05 & 02 have invested their amount in a few sectors only, so their
portfolio diversification is not good & very risky for them.

VII. SUGGESTIONS
 Most of investors are not rational investor, so they should invest their money by
analyzing the market condition.
 Since last 1 year market is too volatile, so investor has a fearing for invest their
money in share market, in this condition investors must go long term investment
by taking of positive way.
 Client no-05 & 02 have invested their amount in a few sectors only & their
portfolio diversification is not good & very risky for them. So they should modify
their portfolio by considering more companies.
 Client 2, 3 & 5 their risk is very high comparing to market SD & Variance, So
they should reduce their risk with the help of investing some amount in mutual
fund also.
 Karvy should reduce the transaction charges like purchasing and selling
commissions, which can encourage the investors.
 The company should advise the customers, How to reduce their risk with the help
of portfolio investment.

VIII. CONCLUSION
Investing in various types of assets is an interesting activity that attracts

people from all walks of life irrespective of their occupation, economic status, education
and family background. When a person has more money than he requires for current
consumption, he would be coined as a potential investor. The investor who is having extra
cash could invest it in securities or any other assets like gold or real estate or could simply
deposit it in his bank account. While investing, investor should look towards Risk and
Return criteria. To know the risk and return profile investor should be rational, but all
investor are not rational. So the company should advise their genuine investors by
educating them about diversification of good portfolio investments which can reduce their
risk & maximize return.

IX. BIBLIOGRAPHY
BOOKS
1) Investment Analysis and Portfolio Management (3rd Edition)

- By Prasanna Chandra
2) Security Analysis and Portfolio Management
- By Punithavathy Pandian
WEBSITE
• http://www.nse.com
• http://www.moneypore.com
• http://www.icicdirect.com
• http://www.moneycontrol.com
• http://www.bseindia.com
• http://www.thefinapolis.com
• http://www.Karvy.com

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KARVY STOCK BROKING LTD BIJAPUR

A.S.PATIL COLLEGE OF COMMERCE, MBA PROGRAMME BIJAPUR Page 1

“A Study on Performance Evaluation of Portfolio Investors With

Reference To Karvy Stock Broking Ltd In Bijapur City.”

 Construction and evaluation of optimal portfolio using NSE Nifty Index

A.S.PATIL COLLEGE OF COMMERCE, MBA PROGRAMME BIJAPUR Page 2

From the internet and magazines

SCOPE OF THE STUDY:

LIMITATIONS OF THE STUDY:

A.S.PATIL COLLEGE OF COMMERCE, MBA PROGRAMME BIJAPUR Page 3

Economic liberalization has accelerated the pace of development in the

Over the years as investments in securities gathered momentum and the

A portfolio is a group of securities held together as an investment. By

A.S.PATIL COLLEGE OF COMMERCE, MBA PROGRAMME BIJAPUR Page 4

II. DESIGN OF THE STUDY

This study is undertaken at the KARVY Stock Broking Ltd, at Bijapur

 Construction and evaluation of optimal portfolio using NSE Nifty Index

 To characterize the equity share by calculating average return and standard

 To establish correlation coefficient (r), co-efficient determination (r 2), beta (β),

 To arrive at the best portfolio management theories are used.

A.S.PATIL COLLEGE OF COMMERCE, MBA PROGRAMME BIJAPUR Page 5

“A Study on Performance Evaluation of Portfolio Investors With

Reference To Karvy Stock Broking Ltd In Bijapur City”.

From the internet and magazines

 Each individual security is characterized by calculating monthly returns and

 NSE Nifty Index is characterized by calculating monthly returns and finally

 Correlation co-efficient, co-efficient determination, variance and beta are

A.S.PATIL COLLEGE OF COMMERCE, MBA PROGRAMME BIJAPUR Page 6

 All the information regarding all the companies is not available.

Statistical technique used for calculation of Return, Risk, and Variance of

the Investor by S.D, Alpha, Beta, Corr-Coefficient, and Co-eff Determination.

SCOPE OF THE STUDY:

 NSE Nifty Index value is considered as a market representative.

A.S.PATIL COLLEGE OF COMMERCE, MBA PROGRAMME BIJAPUR Page 7

LIMITATIONS OF THE STUDY:

 Returns of the securities are calculated excluding dividends.

 Stock splits are not considered.

 Some assumptions of portfolio theories or portfolio models do not hold well in

A.S.PATIL COLLEGE OF COMMERCE, MBA PROGRAMME BIJAPUR Page 8

III. INDUSTRY PROFILE

SECURITIES MARKET IN INDIA

Capital market is the backbone of any country’s economy. It facilitates

Globally, there are increased evidences to suggest that investor confidence

A.S.PATIL COLLEGE OF COMMERCE, MBA PROGRAMME BIJAPUR Page 9

STRUCTURE OF THE SECURITIES MARKET

Equity Market Debt Market Derivatives Market

Corporate Debt Options Market

A.S.PATIL COLLEGE OF COMMERCE, MBA PROGRAMME BIJAPUR Page 10

MARKET PARTICIPANTS IN SECURITIES MARKET

A.S.PATIL COLLEGE OF COMMERCE, MBA PROGRAMME BIJAPUR Page 11

EQUITY CULTURE IN THE INDIAN

A.S.PATIL COLLEGE OF COMMERCE, MBA PROGRAMME BIJAPUR Page 12

STOCK EXCHANGE IN INDIA

FUNCTIONS OF STOCK MARKET

 Provides quotations of shares/stock for facilitating trading and marketability

A.S.PATIL COLLEGE OF COMMERCE, MBA PROGRAMME BIJAPUR Page 13

NATIONAL STOCK EXCHANGE

The National Stock Exchange (NSE) is India's leading stock exchange

On its recognition as a stock exchange under the Securities Contracts

A.S.PATIL COLLEGE OF COMMERCE, MBA PROGRAMME BIJAPUR Page 14

The logo of the NSE symbolises a single nationwide securities trading

NSE has been promoted by leading financial institutions, banks, insurance