Fundamental and Technical Analysis of Steel Sector in India

MUTUAL FUND VALUATION AND ACCOUNTING
1. INDUSTRY PROFILE
The Indian broking industry is one of the oldest trading industries that have been around even before the establishment of the BSE in 1875. Despite passing through number of changes in the post liberalization period, the industry has found its way onwards sustainable growth. With the purpose of gaining a deeper understanding about the role of the Indian stock broking industry in the countrys economy, we present in this section some of the industry insights gleaned from analysis of data received through primary research. For the broking industry, we started with an initial database of over 1,800 broking firms that were contacted, from which 464 responses were received. The list was further short listed based on the number of terminals and the top 210 were selected for profiling. 394 responses, that provided more than 85% of the information sought have been included for this analysis presented here as insights. All the data for the study was collected through responses received directly from the broking firms. The insights have been arrived at through an analysis on various parameters, pertinent to the equity broking industry, such as region, terminal, market, branches, sub brokers, products and growth areas.
EAST POINT COLLEGE OF HIGHER EDUCATION
Page 1
Some key characteristics of the sample 394 firms are:
On the basis of geographical concentration, the West region has the maximum representation of 52%. Around 24% firms are located in the North, 13% in the South and 10% in the East
3% firms started broking operations before 1950, 65% between 1950-1995 and 32% post 1995. On the basis of terminals, 40% are located at Mumbai, 12% in Delhi, 8% in Ahmadabad, 7% in Kolkata, 4% in Chennai and 29% are from other cities From this study, we find that almost 36% firms trade in cash and derivatives and 27% are into cash markets alone. Around 20% trade in cash, derivatives and commodities
In the cash market, around 34% firms trade at NSE, 14% at BSE and 52% trade at both exchanges. In the derivative segment, 48% trade at NSE, 7% at BSE and 45% at both, whereas in the debt market, 31% trade at NSE, 26% at BSE and 43% at both exchanges
Majority of branches are located in the North, i.e. around 40%. West has 31%, 24% are located in South and 5% in East In terms of sub-brokers, around 55% are located in the South, 29% in West, 11% in North and 4% in East Trading, IPOs and Mutual Funds are the top three products offered with 90% firms offering trading, 67% IPOs and 53% firms offering mutual fund transactions In terms of various areas of growth, 84% firms have expressed interest in expanding their institutional clients, 66% firms intend to increase FII clients and 43% are interested in setting up JV in India and abroad
In terms of IT penetration, 62% firms have provided their website and around 94% firms have email facility
Page 2
2. COMPANY PROFILE
2.1. BACKGROUND AND INCEPTION OF THE COMPANY
India Infoline was originally incorporated by Mr. Nirmal on Jain (Chairman 18, and Managing as Probity Director) October 1995
Research and Services Private Limited at Mumbai under the Companies Act, 1956 with Registration No. 11 93797. as an India Infoline commenced provider of operations independent
information, analysis and research covering Indian businesses, financial markets and economy, to institutional customers. India Infoline became a public limited company on April 28, 2000 and the name of the Company was changed to Probity Research and Services Limited. The name of the Company was changed to India Infoline.com Limited on May 23, 2000 and later to India Infoline Limited on March 23, 2001. In 1999, India Infoline.com identified the potential of the Internet to cater to a mass retail segment and transformed our business model from providing information services to institutional customers to retail customers. Hence India Infoline launched Internet portal, www.indiainfoline.com in May 1999 and started providing news and market information, independent research, interviews with business leaders and other specialized features. In May 2000, the name of India Infoline was changed to India Infoline.com Limited to reflect the transformation of our business. Over a period of time, India Infoline.com has emerged as one of the leading business and financial information services provider in India.
Page 3
MUTUAL FUND VALUATION AND ACCOUNTING In the year 2000, India Infoline leveraged its position as a provider of financial information and analysis by diversifying into transactional services, primarily for online trading in shares and securities and online as well as offline distribution of personal financial products, like mutual funds and RBI Bonds. These activities were carried on by our wholly owned subsidiaries. India Infoline broking services were launched under the brand name of 5paisa.com through our subsidiary. India Infoline Securities Private Limited and www.5paisa.com, the e-broking portal was launched for online trading in July 2000. It combined competitive brokerage rates and research, supported by Internet technology besides investment advice from an experienced team of research analysts. India Infoline also offer real time stock quotes, market news and price charts with multiple tools for technical analysis.
Milestones
1995 Incorporated as an equity research and consulting firm with a client base that included leading FIIs, banks, consulting firms and corporates. 1999 Restructured the business model to embrace the internet; launched
archives.indiainfoline.com mobilized capital from reputed private equity investors. 2000 Commenced the distribution of personal financial products; launched online equity trading; entered life insurance distribution as a corporate agent. Acknowledged by Forbes as Best of the Web and ...must read for investors.
Page 4
MUTUAL FUND VALUATION AND ACCOUNTING 2004 Acquired commodities broking license launched Portfolio Management Service. 2005 Listed on the Indian stock markets. 2006 Acquired membership of DGCX launched investment banking services. 2007 Launched a proprietary trading platform; inducted an institutional equities team; formed a Singapore subsidiary raised over USD 300 million in the group, launched consumer finance business under the Money line brand. 2008 Launched wealth management services under the IIFL Wealth brand set up India Infoline Private Equity fund, received the Insurance broking license from IRDA, Finance Asia, Most Improved received the venture capital license, received in principle approval to sponsor a mutual fund, received Best broker- India award from Brokerage- India award from Asia money. 2009 Received registration for a housing finance company from the National Housing Bank; received Fastest growing Equity Broking House - Large firms in India by Dun & Bradstreet. 2010 IIFL Securities Pvt. Ltd. (Singapore), received in-prnciple approval from the Singapore Stock Exchange, IIFL Securities Ceylon (Pvt.) Ltd. (Srilanka), received in-principle approval for membership of the Colombo Stock Exhange for Stock broking. EAST POINT COLLEGE OF HIGHER EDUCATION Page 5
2.2. NATURE OF THE BUSINESS CARRIED

India Infoline Limited is listed on both the leading stock exchanges in India, viz. the stock Exchange, Mumbai (BSE) and the National Stock Exchange (NSE) and is also a member of both the exchanges. It combined competitive brokerage rates and research, supported by Internet technology besides investment advice from an experienced team of research analysts. India Infoline also offer real time stock quotes, market news and price charts with multiple tools for technical analysis. The India Infoline group, comprising the holding company. India Infoline Ltd and its wholly subsidiaries, straddle the entire financial services space with offerings ranging from Equity research, Equities and Derivatives trading, Commodities trading, Portfolio Management Services, Mutual Funds, Life Insurance, Fixed deposits, Govt. of India bonds and other small savings instruments to loan products and Investment banking. India Infoline also owns and manages the websites www.indiainfoline.com and www.5paisa.com. The company has a network of 976 business locations (branches and sub-brokers) spread across 365 cities and towns. It has more than 800,000 customers.
2.3. VISION, MISSION AND QUALITY POLICY

VISION STATEMENT: India Infoline vision is to be the most respected company in the financial services space. MISSION STATEMENT: To become a full-fledged financial services Company known for its quality of advice, personalized service and cuttingedge technology. QUALITY POLICY:
Page 6
MUTUAL FUND VALUATION AND ACCOUNTING To become a full-fledged financial services Company known for its quality of advice, personalized service and cutting-edge technology.
2.4. PRODUCTS/SERVICE PROFILE

The survey also revealed that in the past couple of years, apart from trading, the firms have started offering various investment related value added services. The sustained growth of the economy in the past couple of years has resulted in broking firms offering many diversified services related to IPOs, mutual funds, company research etc. However, the core trading activity is still the predominant form of business, forming 90% of the firms in the sample. 67% firms are engaged in offering IPO related services. The broking industry seems to have capitalized on the growth of the mutual fund industry, which was pegged at 40% in 2006. More than 50% of the sample broking houses deal in mutual fund investment services. The average growth in assets under management in the last two years is almost 48%. Company research is another lucrative area where the broking firms offer their services; more than 33% of the firms are engaged in providing company research services. Additionally, a host of other value added services such as fundamental and technical analysis, investment banking, arbitrage etc are offered by the firms at different levels.
Other Income Financing & Investing Online Media & Content Mutual Equities Funds
Page 7 Life
Insurance
Commodities
OVERVIEW OF PRODUCTS AND SERVICES
Equities: India Infoline provided the prospect of researched investing to
its clients, which was hitherto restricted only to the institutions. Research for the retail investors did not exist prior to India Infoline leveraged technology to bring the convenience of trading to the investors location of preference (residence or office) through computerized access. India Infoline made it possible for clients to view transaction costs and ledger updates in real time.
PMS (Portfolio Management Services):
It is a product wherein an
equity investment portfolio is created to suit the investment objectives of a client. India Infoline invests customer resources into stocks from different sectors, depending on customer risk-return profile. This service is particularly advisable for investors who cannot afford to give time or dont have that expertise for dayto-day management of their equity portfolio.
Research:
Sound
investment
decisions
depend
up
on
reliable
fundamental data and stock selection techniques. India Infoline Equity Research is proud of its reputation. Equity investment professionals routinely use their research and models as integral tools in their network.
Commodities:
India
Infoline
extension
into
commodities
trading
reconciles its strategic intent to emerge as a one stop solutions financial intermediary. Its experience in securities broking has empowered it with requisite skills and technologies. Increased offering: The Companies commodities business provides a contra-cyclical alternative to equities broking. The Company was among the first to offer the facility of commodities trading in Indias young EAST POINT COLLEGE OF HIGHER EDUCATION Page 8
MUTUAL FUND VALUATION AND ACCOUNTING commodities market (the MCX commenced operations only in 2003). Average monthly turnover on the commodity exchanges increased from Rs 0.34 bn to Rs 20.02 billion. The commodities market has several products with different and non-correlated cycles. On the whole, the business is fairly insulated against cyclical gyrations in the business.
INSURANCE: An entry to this segment helped complete the clients
product basket; concurrently, it graduated the company into a one stop retail financial solutions provider. To ensure maximum reach to customers across India, they have employed a multi pronged approach and reach out to customers via their Network, Direct and Affiliate channels. The Companies entry into the insurance sector de-risked the Company from a predominant dependence on broking and equity-linked revenues. The annuity based income generated from insurance intermediation result in solid core revenues across the tenure of the policy.
MOTGAGES: During the year under review, India Infoline acquired a 75%
stake in Mind tree Consultancy Services to mark its foray into the business of mortgages and other loan products distribution. The business is still in the investing phase and at the time of the acquisition was present only in the cities of Mumbai and Pune. The Company brings on board expertise in the loans business coupled with existing relationships across a number of principles in the mortgage and personal loans businesses. Indiainfoline now has plans to roll the business out across its pan-Indian network to provide it with a truly national scale in operations.
MUTUAL FUNDS: India Infoline offers customer a host of mutual fund
choices under one roof, backed by in-depth research and advice from research house and tools configured as investor friendly. EAST POINT COLLEGE OF HIGHER EDUCATION Page 9
WEALTH MANAGEMENT SERVICE: Imagine a financial firm with the
heart and soul of a two-person organization. A world-leading wealth management company that sits down with customer to understand their needs and goals. They offer customer a dedicated group for giving them the most personal attention at every level.
Page 10
NEWSLETTERS: The Daily Market Strategy is the morning dose on the
health of the markets. Five intra-day ideas, unless the markets are really choppy coupled with a brief on the global markets and any other cues, which could impact the market. Occasionally an investment idea from the research team and a crisp round up of the previous day's top stories. That's not all. As a subscriber to the Daily Market Strategy, the customer even gets research reports of India Infoline research team on a priority basis.
2.5. AREA OF OPERATION- GLOBAL/ NATIONAL/ REGIONAL

GLOBAL: China, Brazil, Dubai, Russia, Singapore, UK, USA NATIONAL: Delhi, Andra Pradesh, Karnataka, Assam, Gujarat, Tamil
Nadu
REGIONAL: Bangalore head office:
#31/9, Krimson Square, 2nd floor, Hosur Main Road, Bangalore 560068.
The India Infoline group, comprising the holding company, India Infoline Limited and its wholly-owned subsidiaries, straddle the entire financial services space with offerings ranging from Equity research, Equities and derivatives trading, Commodities trading, Portfolio Management Services, Mutual Funds, Life Insurance, Fixed deposits, GOI bonds and other small savings instruments to loan products and Investment banking. India Infoline also owns and manages the websites www.indiainfoline.com and www.5paisa.com The company has a network
Page 11
MUTUAL FUND VALUATION AND ACCOUNTING of 976 business locations (branches and sub-brokers) spread across 365 cities and towns. It has more than 800,000 customers.
Page 12
MUTUAL FUND VALUATION AND ACCOUNTING 2.6. OWNERSHIP PATTERN: Promoters Share Institutional Investors Share (if any) Foreign institutional investor Share (if any) Share of retail investor (if any) Governments Share (if any) Others Share Holding Pattern Particulars Total Promoter Holdings Total Govt Holding (Promoter + Non Promoter) Total Domestic Institutions (Banks/ FI + MF / UTI) Total Foreign Holdings (FII+NRI holdings) Total Non Promoter Corporate Holdings Total Public & Others (Individuals + HUF + Clearing members) Total No. of Shares(Mn) 91.36 0.00 34.00 104.49 10.06 51.88 291.79 % Holdings 31.3 0.0 11.7 35.8 3.5 17.8 100
Our promoters and promoter group together holds 33.75% of post issue Equity shares. As a result of their shareholding they will have the ability to influence most matters, which require the approval of our shareholders. In addition the collectively have the ability to block any special resolution by shareholders.
Page 13
2.7. COMPETITORS INFORMATION:
KOTAK SECURITIES Kotak Mahindra is one of India's leading banking and financial services
organizations, offering a wide range of financial services that encompass every sphere of life. The group has a net worth of over Rs. 100.6 billion and has a distribution network of branches, franchisees, representative offices and satellite offices across cities and towns in India, and offices in New York, London, San Francisco, Dubai, Mauritius and Singapore servicing around 8 million customer accounts.Kotak Securities has been awarded as the best broker in India by Finance Asia for 2010 and 2009.
KARVY KARVY is a premier integrated financial services provider, and ranked
among the top five in the country in all its business segments, services over 16 million individual investors in various capacities, and provides investor services to over 300 corporate, comprising the who is who of Corporate India. Karvy has a professional management team and ranks among the best in technology, operations and research of various industrial segments. ICICI DIRECT ICICI Web Trade Limited (IWTL) maintains www.icicidirect.com (herein after referred to as the "Website") whereas IWTL is an affiliate of ICICI Bank Limited and the Website is owned by ICICI Bank Limited. IWTL has launched and established an online trading service on the Website.
Page 14
MUTUAL FUND VALUATION AND ACCOUNTING HDFC SECURITY HDFC security is the subsidiary of HDFC (Housing Development Financial Corporation). www.hdfcsec.com would have an exclusive discretion to decide the customers who would be entitled to its online investing services. www.hdfcsec.com also reserves the right to decide on the criteria based on which customers would be chosen to participate in these services .The present web site (www.hdfcsec.com) contains features of services that they offer/propose to offer in due course. The launch of new services is subject to the clearance of the regulators. i.e. SEBI, NSE and BSE. INDIABULLS SECURITIES LIMITED India bulls Securities Limited was incorporated as GPF Securities Private Limited on June 9, 1995. The name of the company was changed to Orbis Securities Private Limited on December 15, 1995 to change the profile of the company and subsequently due to the conversion of the company into a public limited company; the name was further changed to Orbis Securities Limited on January 5, 2004. The name of the company was again changed to India bulls Securities Limited on February 16, 2004 so as to capitalize on the brand image of the term India bulls in the company name. ISL is a corporate member of capital market & derivative segment of The National Stock Exchange of India Ltd. At present, ISL accounts for approximately 3% of the total daily turnover of the Exchange with 32,359 client relationships and 70 branches spread across the country as of April 30, 2004.
Page 15
MUTUAL FUND VALUATION AND ACCOUNTING Results on the Basis of charges: There are the two type of the transaction:1. 2. Intra-day based Delivery based
Comment: - According to the survey HDFC securities charge maximum brokerage as compare to others whereas India Infoline Ltd. charges only 0.20 paisa on maximum investment.
Page 16
MUTUAL FUND VALUATION AND ACCOUNTING 2.8. INFRASTRUCTURAL FACILITIES: Our main offices are located approximately 4,000square feet of office space located in Mumbai, India. India Infoline braches collectively occupy an additional 10,000 square feet of office space located throughout India. The company has a network of 976 business locations (branches and sub-brokers) spread across 365 cities and towns. It has more than 800,000 customers. The Table below shows the changes in the Registered Office of the Company since Incorporation: Previous Address #280-C, Agarwal Market, Vile Pane(East), Mumbai-400057 #1, Snehdeep, Parle(East), Mumbai- 400057 New Address #1, Snehdeep, Gokhale Road, Vile Parle(East), Mumbai- 400057 #24, 1st floor, Nirlon Complex, Express Highway, Goregaon(E), Mumbai-400063 Jan 15, 2001 Requirement of More Floor Space August 6, 1999 Requirement of More Floor Space Date of Change Reason Change for
Gokhale Road, Vile Off Western
Page 17
MUTUAL FUND VALUATION AND ACCOUNTING 2.9. ACHIEVEMENTS/ AWARDS
Incorporated on October 18, 1995 as Probity Research & Services. Launched Internet portal www.indiainfoline.com in May 1999. Commenced distribution of personal financial products like Mutual Funds and RBI Bonds in April 2000.
Launched online trading in shares and securities branded as www.5paisa.com in July 2000.
Standard life insurance agency business in December 2000 as a Corporate Agent of ICICI Prudential Life Insurance.
Became depository participants of NSDL in September 2001. Launched stock messaging service in May 2003. Acquired commodities broking license in March 2004. Launched portfolio management services in August 2004. Listed on NSE and BSE on May 17, 2005. Acquired NBFC license in May 2005. Acquired 75% stake holding in Money tree Consultancy Services, which is a distribution of Mortgages and other Loan products, in October 2005.
Acquired 100% equity of Marchmont Capital Advisors Pvt. Ltd. in December 2005 through which we have ventured in to Merchant Banking.
DSP Merrill Lynch Capital subscribed to convertible bonds aggregating Rs. 80 crores in December 2005.
Page 18
MUTUAL FUND VALUATION AND ACCOUNTING Bennett Coleman & Co Ltd. (BCCL) invested Rs. 20 crores in India Infoline by way of preferential allotment in December 2005. Became a depository participant of CDSL in June 2006. Merger of India Infoline Securities Private Limited with India Infoline in January 2007. Entered into an alliance with Bank of Baroda for Baroda e-trading in February 2007. CLSA Institutional equities team joined us in 2007. Formed Singapore subsidiary IIFL (Asia) Pvt. Ltd. in 2007. Mr. Arun K. Purvar joined as independent director in March 2008. Received Best Broker of India award by Finance Asia in June 2008. Received Venture Capital license from SEBI in September 2008. Received in-principle approval from SEBI for sponsoring Mutual Funds in November 2008. Received Insurance broking license from IRDA in December 2008. Received registration for Housing Finance Company from NHB in February 2009. Entered into a strategic agreement with Interactive Brokers, LLC (USA) to provide our client direct market access to over 80 global exchanges in 18 countries in July 2009.
Page 19
MUTUAL FUND VALUATION AND ACCOUNTING 2.10. WORK FLOW MODEL (End to End) The process to examining how work creates or adds value to the ongoing process in a business. (Discuss the work flow from acquiring raw materials for the production to selling finished product to the consumer. Each step should be explained with a flowchart).
Informatio n CUSTOMERS and advice
INFOLINE LIMITED
Commoditie s Mutual INDIA Funds Insurance
Execution and Service
DEMAT ACCOUNT
Equities
EQUITIES
DERIVATIVES
COMMODITIES
DEPOSITORY PARTICIPANTS
BSE
CUSTOMERS
PLACING ORDERS
NSE
CONFIRMATION

BUY/SELL SHARES
Page 20
Dr. or Cr. TRADING ACCOUNT OF CUSTOMERS
Page 21
MUTUAL FUND VALUATION AND ACCOUNTING 2.11. FUTURE GROWTH AND PROSPECTUS The asset base will continue to grow at an annual rate of about 30 to 35% over the next few years as investors shift their assets from banks and other traditional avenues. Some of the older public and private sector players will either close shop or be taken over. Out of ten public sector players five will sell out, close down or with stronger players in three to four years. In private sector this trend has already started with two mergers and one takeover. Here too some of them will down their shutters in the near future to come.
But this does not mean there is no room for other players. The market will witness a flurry of new players entering the arena. There will be a large number of offers from various asset management companies in the time to come. Some big names like Fidelity, Principal and Old Mutual etc. are looking at Indian market seriously. One important reason for it is that most major players already have presence here and hence these big names would hardly like to get left behind. The mutual fund industry is awaiting the introduction of derivatives in India as this would enable it to hedge risk and this in turn would be reflected in its Net Asset Value (NAV).
SEBI is working out the norms for enabling the existing mutual fund schemes to trade in derivatives. Importantly, many market players have called on the regulator to initiate the process immediately, so that the mutual funds can implement the changes that are required to trade in Derivatives.
Reforms have marked the entry of many of the global insurance measures into the Indian market in the form of joint ventures with Indian companies. Some of the key names are: AIG, New York Life, Alliance, Prudential, Standard Life, Sun Life Canada and Old Mutual. The entry of new player has rejuvenated and monopoly player LIC, which has responded to the competition in an admirable fashion by launching new product and improving service standard.
The ability to successfully implement our growth strategy and expansion plan. Page 22
MUTUAL FUND VALUATION AND ACCOUNTING The ability to respond to technological changes. Changes in laws and regulations relating to the industry in which we operate. Changes in political and social condition in India. The ability to successful launches the new products.
Page 23
MUTUAL FUND VALUATION AND ACCOUNTING 3. MCKINSEY'S 7S framework
McKinseys 7S Model
Mckinsey's 7S framework of the 7 S's the first three that is strategy, Structure and System are considered as the 'Hard S's' and the remaining four i.e. Staff, Style, Skills and Subordinate goals are considered as 'Soft S' s since they are less tangible and more cultural in nature.
1. Structure: Flow Structure A company's structure affects its strategic planning and its ability to change. A company's structure may have a customer or geographical focus. It contains the
Page 24
MUTUAL FUND VALUATION AND ACCOUNTING salient features of the organizational chart and interconnections within the organization.
Nirmal Jain Chairman & managing Director

S. Sriram, Head- Technology
Harshad Apte, Head -Marketing
R.Venkataraman Executive Director
Kalpesh Shah Head-Risk/Compliance
Seshadri Bharathan Head-Distribution & Insurance
Dharmesh Pandya Head Commodities
Mukesh Singh VP- Broking
Anil Mascarenhas Head-News
Sandeep Vig Arora VP-PMS & Institutional Sales
Toral Munshi VP- Research
Upendra Jaiswal Head -Accounts
Sanjay Nayak Head-Back Office Depository service
Komal Parikh Company Secretary
Page 25
Page 26
MUTUAL FUND VALUATION AND ACCOUNTING SOUTH INDIA'S ORGANIZATION STRUCTURE:

K. Sridhar South India Manager
Andhra Pradesh Manager
Karnataka Manager
Tamilnadu Manager
Kerala Manager
Divisional Manager, Bangalore
Rest of Karnataka Manager
Karnataka Head
Territory Manager
Branch Manager Assistant Manager Front Office Executive
Back Office Executive
Page 27

2. Skill: Interpersonal Skill
The skill is closely related to staff are the distinctive abilities and talents that a company possesses. Skills may range from ability of a staff to speak Spanish to an understanding of the statistics to computer literacy etc. Their management team has hands on experience in financial services, especially targeted at retail sales and relationship management. They have a strong technical team comprising of qualified engineers and trained personnel. The in house team has been responsible for developing several MIS software and requirements. They believe that they have put in place a working environment that brings out their people's entrepreneurial energy. 3. Style : Organizational Culture The Culture or Style is the aggregate of behaviors, thoughts, beliefs and symbols that is conveyed to the people throughout an organization over time. Since it is very hard to change a company's ingrained culture, it is important to bear in mind when developing a new strategy. They have developed a team of Customer Relationship Managers across India to handle key customer accounts. These people are experienced in financial services and have undergone in-house training. This allows them to offer unbiased advice on not only equities but also on other investment products like mutual funds ensure that the customer has a single point contact with us. 4. Strategy : Business strategy Strategy refers to those actions that a company plans in response to or in anticipation of changes in its external environment, its customers and its competitors. It is a plan or course of action leading to the allocations of an organization's finite resources to reach identified goals.
Page 28
MUTUAL FUND VALUATION AND ACCOUNTING Our business plan is to become the leading investment advisor and intermediary for financial services in India. The key driver is to increase our customer base in all our products, give them a platform of choice to transact and support them with quality research. The elements of our strategy include: One Stop Shop from advice to transactions. We have emerged as one of India's leading financial information Internet portal in India. We distribute mutual funds and life insurance products through our branches as well as directly through our sales team. These factors allow us to provide our customers with an integrated online as well as offline solution to fulfill all their financial information and transaction needs. We believe that our ability to offer multiple products across broking to insurance to mutual funds to commodities to small savings differentiates us from our competition. This also offers significant cross selling opportunities which will help in improving margins as incremental revenue will entail lower customer acquisition and promotion costs. Multi channel delivery model We intend providing a single convenient and reliable platform from which our users can obtain information, trade online or purchase offline a wide range of personal financial products. Our branches have been opened in cities after a detailed study of demographics and investment patterns in different cities. Expand our retail network We have a retail branch network of 976 branches at 365 locations across India to provide an alternative channel for our customers to transact with us and to support our online services. It has more than 8,00,000 customers. These branches allow our customers the opportunity to purchase personal financial products and trade at such branches with the assistance of our staff. We propose to set up additional 25 branches in 14 cities across India to have a network of 1000 branches strengthen our geographic reach. EAST POINT COLLEGE OF HIGHER EDUCATION Page 29
MUTUAL FUND VALUATION AND ACCOUNTING Leverage our content advantage for value added offerings We believe that the key to successful investment is research. We have invested considerable resource in building our research domain skills. Our top management has hands on experience in equity research. We will continue to expand the breadth and depth of research and content on Indian business and finance. This research advantage will enable us to acquire customers in high value added product offerings especially PMS. Continuous investments in technology platform We have leveraged the power for technology to offer an integrated platform to the customer to transact. We will continue to invest in such technologies that could enhance customer experience while interacting with us. We have facilitated integrated trading and depositary accounts for the customer, payment gateways with multiple banks, online Internet enabled back office and MIS. We believe that our technology investments will be key driver in scaling of the business. Acquisition and Takeover We strongly believe that to become a market leader in the investment advisory and intermediation space, we have to expand our business. In our endeavor to do so and as per our business strategy we may pursue inorganic growth.
Page 30
MUTUAL FUND VALUATION AND ACCOUNTING 5. System: Open System The procedures both formal and informal, by which an organization operates and gathers information constitutes the system of the company. This model is concerned with the systems that allocate the control money and materials as well as gather information. They manage the risk associated with their broking operations through use of internally developed credit algorithms implemented through fully automated risk management software and selective direct monitoring of certain operating parameters. Their automated risk management procedures rely primarily on internally developed risk management system and system provided by their vendors. They have developed a team of customer Relationship Managers across India to handle key customer account. These people are experienced in financial services and have undergone in-house training. This allows them to offer unbiased advice on not only equities but also on other investment products like mutual funds and insurance. Apart from advice, they are trained to customer queries as they ensure that the customer has a single point contact with us. They intend providing a single convenient and reliable platform from which their can obtain information, trade online or purchase offline a wide range of personal financial products. Their branches have been opened in cities after a detailed study of demographics and investment patterns. Their offline network today increased by 45.9% to Rs 13,947 crore from the level of Rs 9,559 crore. account for trading in the NSE cash market as on December 2009 and The average monthly derivative trading in terms of value, on the NSE has increased by 86.6% to Rs 72,618 crore in December 2009 from Rs 38,906 crore recorded in January 2009.
Page 31

6. Staff: Knowledge staff
Staff means the human resource systems which include appraisal, training, wages and the intangibles such as employee motivation, morale and attitude. With a motivation workforce companies are able to adapt well and compete. Their Human Resource Policy on the philosophy of Owner Mindset. They believe that the key to their continued growth lied in unleashing the entrepreneurial energy of their employees. They encourage all employees to behave more as owners of their departments rather than employees. Their people are highly driven and work towards increasing India Info lines brand and market share across product lines. They have developed extensive in-house training modules. In addition, various Asset Companies and ICICI PRUDENTIAL LIFE INSURANCE COMPANY LIMITED train their staff. They lay emphasis on on the job training where an experienced and senior person mentors a junior executive. In addition to salary, their employees get performance-based incentives on a quarterly basis. They have also implemented an employee stock option plan. India Infoline Ltd has informed BSE that the Compensation/ Remuneration Committee of the Board at its meeting on December 10, granted 10,45,000 Employee Stock Options to the identified employees under the ESOP Scheme, 2008 of the company through circular resolution. As on December 31, 2009 the total employee strength of the company and their subsidiaries was 15,600.
Page 32
MUTUAL FUND VALUATION AND ACCOUNTING 7. Shared Values: Vision: To be the most respected financial services company in India. Mission: One stop shop for all financial requirements. India Infoline believes in building an entrepreneurial workforce and wants to inculcate the essentials of an entrepreneur in all team members. 5 essentials of an entrepreneur are: Energy, Execution, Efforts, Ethics, and Excellence
Page 33
MUTUAL FUND VALUATION AND ACCOUNTING 4. SWOT ANALYSIS STRENGTHS Original Research Integrated Technology Platform One Stop Shop Pan- India Distribution Network India Infoline and 5paisa.com have developed into Brands
WEAKNESSES Lack of Banking arm to complete the bank broker-depository chain Insignificant presence in institutional segment
OPPORTUNITIES Changing demographics with higher disposable income and
increasingly complex financial instruments will drive demand for investment advisory services Rapid penetration of internet and computers means that technology enabled financial services will gain market share
THREATS Economic Slowdown
Page 34
MUTUAL FUND VALUATION AND ACCOUNTING Volatile movement in indices and events like May 17, 2004 Stock Markets falls will have a cascading effect on our mutual fund mobilization Increase/decrease in interest rates can affect our debt/income fund mobilizations Future changes in personal taxation rules can impact insurance sales Increasing competition from large and particularly foreign players.
ANALYSIS OF FINANCIAL STATEMENT Balance Sheet as at March 31, 2010

As at 31.03.2010 SOURCES OF FUNDS Shareholders' funds Share Capital Share Application Money Reserves and Surplus Equity Share Warrants Minority Interest Loan Funds Secured Loans Unsecured Loans Total APPLICATION FUNDS Goodwill(On Consolidation) As at 31.03.2009
570,429,550 4,021,350 15,474,528,88 4 16,048,979,78 4 182,150,290
566,800,000 14,766,666,18 4 113,700,000 15,447,166,18 4 3,124,594,226
3,621,096,151 11,555,829,40 9
17,044,854 15,176,925,56 0 31,408,055,634 501,031,242 518,076,096 19,089,836,506
OF 1,388,970 1,388,970
Page 35

Fixed Assets (Including Intangibles) Gross Block Less : Accumulated depreciation and amortization Net Block Capital Work-InProgress Investments Deferred Tax Assets Less: Deferred Tax Liabilities Current Assets, Loans and Advances Sundry Debtors Cash and Bank Balances Stock on Hand Loans and Advances
5,029,023,414 (997,809,442) 4,031,213,972 340,870,546 157,650,915 (771,568) 156,879,347 4,372,084,518 4,819,628,047
3,509,285,055 (728,867,502) 2,780,417,553 71,118,197 119,662,342 (401,340) 119,261,002 2,851,535,750 3,149,730,892
6,097,719,596 8,056,914,669 692,388,323 23,129,632,33 7 37,976,654,92 5
1,141,660,097 6,269,219,758 1,337,237,279 13,617,942,88 4 22,366,060,01 8
Less: Current Liabilities & Provisions Current Liabilities Provisions
12,881,965,85 6 3,036,614,317 15,918,580,17 3 22,058,074,75 2 31,408,055,634
7,429,958,258 1,968,310,424 9,398,268,682 12,967,791,33 6 128,556 19,089,836,506
Net Current Assets Miscellaneous Expenditure (to the extent not written off) Total
Page 36
Key Ratios
Years Debt-Equity Ratio = Total Liabilities / Total Capital Current Ratio = Current Assets / Current Liabilities P/E Ratio = Price per Share / Earnings per Share Dividend Yield = Dividend per Share / Current Share Price Mar-10 0.2 1.0 23.7 2.6 Mar-09 0.1 1.1 18.0 4.8
Page 37
5. LEARNING EXPERIENCE
The following are the areas where I have got the experience like:
Marketing: Its me who has got the experience in India Infoline about marketing that how to sell Equities, Commodities and Insurance policies.
Human Resource Management: Its me who has learnt that how employees are recruited for various departments.
Finance: Its me who learnt about shareholders, insurance, loan and credit facilities.
Research and Development: They have introduced performance appraisal system and payment of incentives for development of employees.
Page 38
CHAPTER-1 INTRODUCTION
PORFOLIO CONSTRUCTION ON MARKOWITZ MODEL
Portfolio is a combination of securities such as stocks, bonds and money market instruments. The process of blending together the broad asset classes so as to obtain optimum return with minimum risk is called Portfolio Construction. Diversification of investments helps to spread risk over many assets. A diversification of securities gives the assurance of obtaining the anticipated return o the portfolio. In a diversified portfolio, some securities may not perform as expected, but others may exceed the expectation and making the actual return of the portfolio reasonably close to the anticipated one. Keeping a portfolio of single security may lead to a greater likelihood of the actual return somewhat different from that of the expected return. Hence, it is a common practice to diversify securities in the portfolio.
APPROACHES IN PORTFOLIO CONSTRUCTION

Commonly, there are two approaches in the construction of the portfolio of securities viz. traditional approach and Markowitz efficient frontier approach. In the traditional approach, investors needs in terms of income and capital appreciation are evaluated and appropriate securities are selected to meet the needs of the investor. The common practice in the traditional approach is to evaluate the entire financial plan of the individual. In the modern approach, portfolios are constructed to maximize the expected return for a given level of risk. It views portfolio construction in terms of the expected return and the risk associated with obtaining the expected return.
Page 39
MUTUAL FUND VALUATION AND ACCOUNTING 1. TRADITIONAL APPROACH The traditional approach basically deals with two major decisions. They are: a) Determining the objectives of the portfolio. b) Selection of securities to be included in the portfolio. Normally, this is carried out in four to six steps. Before formulating the objectives, the constraints of the investor should be analyzed. Within the given frame work of constraints, objectives are formulated. Then based on the objectives, securities are selected. After that, the risk and return of the securities should be studied. The investor has to assess the major risk categories that he or she is trying to minimize. Compromise on risk and non-risk factors has to be carried out. Finally relative portfolio weights are assigned to securities like bonds, stocks and debentures and then diversification is carried out.
Page 40
MUTUAL FUND VALUATION AND ACCOUNTING STEPS IN TRADITIONAL APPROACH
Analysis of Constraints
Determination of Objectives
Selection of Portfolio
Bond and Common stock
Bond
Common stock
Assessment of risk and return
Diversification
Page 41
MUTUAL FUND VALUATION AND ACCOUNTING 1. Analysis of constraints: The constraints normally discussed are: income needs, liquidity, time horizon, safety, tax considerations and the temperament.
Income needs: The income needs depend on the need for income in
constant rupees and current rupees. At the same time inflation may erode the purchasing power, the investor may like to offset the effect of the inflation and so, needs income in constant rupees.
Liquidity: Liquidity need of the investment is highly individualistic of the
investor. If the investor prefers to have high liquidity, then funds should be invested in high quality short term debt maturity issues such as money market funds, commercial papers and shares that are widely traded.
Safety of the principal: Another serious constraint to be considered by the
investor is the safety of the principal value at the time of liquidation. Investing in bonds and debentures is safer than investing in the stocks. Even among the stocks, the money should be invested in regularly traded companies of longstanding. Investing money in the unregistered finance companies may not provide adequate safety.
Time Horizon: Time horizon is the investment-planning period of the
individuals. This varies from individual to individual. Individuals risk and return preferences are often described in terms of his life cycle. The stages of life cycle determine the nature of investment.
Tax consideration: Investors in the income tax paying group consider the
tax concession s they could get from their investments. For all practical purpose, they would like to reduce the taxes.
Temperament: The temperament of the investor himself poses a
constraint in framing his investment objectives. Some investors are risk lovers or takers who would like to take up higher risk even for low returns. EAST POINT COLLEGE OF HIGHER EDUCATION Page 42
MUTUAL FUND VALUATION AND ACCOUNTING While some investors are risk averse, who may not be willing to undertake higher level of risk even for higher level of return?
2. Determination of Objectives: Portfolios have the common objective of financing present and future present and future expenditures from a large pool of assets. The return that the investor requires and the degree of risk he is willing to take depend upon the constraints. The objectives of portfolio range from income to capital appreciation. The common objectives are stated below: Current income Growth in income Capital appreciation Preservation of capital The investor in general would like to achieve all the four objectives; nobody would like to lose his investment. But, it is not possible to achieve all the four objectives simultaneously. If the investor aims at capital appreciation, he should include risky securities where there is an equal likelihood of losing the capital. Thus, there is a conflict among the objectives. 3. Selection of Portfolio: The selection of the portfolio depends on the various objectives of the investor. The selection of portfolio under different objectives is dealt subsequently.
Objectives and asset mix: If the main objective is getting adequate amount
of current income, 60% of the investment is made on Debts and 40% on EAST POINT COLLEGE OF HIGHER EDUCATION Page 43
MUTUAL FUND VALUATION AND ACCOUNTING equities. The proportions of investments on debt and equity differ according to the individuals preferences. Money is invested in short term debt and fixed income securities.
Growth of income and asset mix: here the investor requires a certain
percentage of growth in the income received from his investment. The investors portfolio may consist of 60 to 100 percent equities and 0 to 40 percent debt instrument. The debt portion of the portfolio may consist of concession regarding tax exemption.
Capital appreciation and asset mix: Capital appreciation means that the
value of the original investment increases over the years. Investment in real estates like land and house may provide a faster rate of capital appreciation but they lack liquidity. In the capital market, the values of the shares are much higher than their original issue prices.
Safety of principal and asset mix: usually, the risk averse investors are
very particular about the stability of principal. According to the life cycle theory, people in the third stage of life also give more importance to the safety of the principal. All the investors have this objective in their mind. No one likes to lose his money invested in different assets. But, the degree may differ.
4. Risk and return analysis:
The traditional approach to portfolio building has some basic assumptions. First, the individual prefers larger to smaller returns from securities. To achieve this goal, the investor has to take more risk. The ability to achieve higher returns is dependent upon his ability to judge risk and his ability to take specific risks. The investor analyses the varying degrees of risk and constructs the portfolio. At first, he establishes the minimum income that he must have to avoid hardships under most adverse economic condition and the he decides risk of loss of income that can be tolerated. The investor makes a series of compromises on risk and nonEAST POINT COLLEGE OF HIGHER EDUCATION Page 44
MUTUAL FUND VALUATION AND ACCOUNTING risk factors like taxation and marketability after he has assessed the major risk categories which he is trying to minimize. 5. Diversification: Once the asset mix is determined and the risk and returns are analyzed, the final step is the diversification of portfolio. Financial risk can be minimized by commitments to top quality bonds, but these securities offer poor resistance to inflation. Stocks provide better inflation protection than bonds but are more vulnerable to financial risks. Good quality convertibles may balance the financial risk and purchasing power risk. According to the investors need for income and risk tolerance level portfolio is diversified. In the bond portfolio, the investor has to strike a balance between the short term and long term bonds. Short term fixed income securities offer more risk to income and long term fixed income securities offer more risk to principal.
2. MODERN APPROACH The traditional approach is a comprehensive financial plan for the individual. It takes into account the individual needs such as housing, life insurance and pension plans. But these types of financial planning approaches are not done in the Markowitz approach. Markowitz gives more attention to the process of selecting the portfolio. His planning can be applied more in the selection of common stocks portfolio than the bond portfolio. The stocks are not selected on the basis of need for income or appreciation. But the selection is based on the risk and return analysis. Return includes the market return and dividend. The investor needs return and it may be either in the form of market return or dividend. They are assumed to the indifferent towards the form of return. In the modern approach, the final step is asset allocation process that is to choose the portfolio that meets the requirement of the investor. The risk taker i.e., who are willing to accept a higher probability of risk for getting the expected return would EAST POINT COLLEGE OF HIGHER EDUCATION Page 45
MUTUAL FUND VALUATION AND ACCOUNTING choose high risk portfolio. Investor with lower tolerance for risk would choose low level risk portfolio. The risk neutral investor would choose the medium level risk portfolio. PORTFOLIO-MARKOWITZ MODEL Harry Markowitz opened new vistas to modern portfolio selection by publishing an article in the journal of finance in March 1952. His publication indicated the importance of correlation among the different stocks returns in the construction of a stock portfolio. Markowitz also showed that for a given level of expected return in a group of securities, one security dominates the other. To find out this, the knowledge of the correlation coefficients between all possible securities combinations is required. THE MARKOWITZ MODEL Most people agree that holding two stocks is less risky than holding one stock. For example, holding stocks from textile, banking and electronic companies is better than investing all the money on the textile companys stock. But building up the optimal portfolio is very difficult. Markowitz provides an answer to it with the help of risk and return relationship. ASSUMPTIONS i. ii. The individual investor estimates risk on the basis of variability of returns. Investors decision is solely based on the expected return and variance of returns only. iii. For a given level of risk, investor prefers higher return to lower return. Likewise, for a given level of return investor prefers lower risk than higher risk.
CONCEPT
Page 46
MUTUAL FUND VALUATION AND ACCOUNTING In developing his model, Markowitz had given up the single stock portfolio and introduced diversification. The single security portfolio would be preferable if the investor is perfectly certain that his expectation of highest return would turn out to be real. In the world of uncertainty, most of the risk averse investors would like to join Markowitz rather than keeping a single stock, because diversification reduces the risk.
CHAPTER-2 RESEARCH DESIGN

2.1 TITLE OF THE STUDY: CONSTRUCTION OF A PORTFOLIO USING FIVE STOCKS (2009-11) BY EMPLOYMENT OF MARKOWITZ MODEL. 2.2 STATEMENT OF THE PROBLEM Portfolios are the advantage of reduction of risk and also of returns. This was found out by Prof. Harry Markowitz a Nobel winner. The best beneficial effects of portfolio will be felt when stock returns are negatively correlated and when diversification is across different 15 industries. In this project risk reduction diversification effect is examined by selecting 5 Stocks of selected CompaniesEAST POINT COLLEGE OF HIGHER EDUCATION Page 47
MUTUAL FUND VALUATION AND ACCOUNTING 1. Tata Steel 2. Bajaj Auto Finance 3. Ultra tech Cement 4. Tata Chemicals 5. Taj GVK Belonging into different Sectors namely1. Steel 2. Automobiles 3. Cement 4. Chemicals 5. Hotels Over a period of 25 months by employing the Financial Markowitz Model. 2.3 RESEARCH METHODOLOGY This Consisted of the following Steps: a) Random sampling of 5 companies in 5 different sectors.
b) Conversion of the Closing Prices of 5 different companies into Returns.
c) Determine Average Returns, Standard Deviation of the Returns, Variance of the Returns and the co-variance between each pair of the Co.s. d) Assumption of equal distribution of wealth and differential distribution in subsequent stages.
Page 48
MUTUAL FUND VALUATION AND ACCOUNTING e) Quantification of the average returns of the portfolio and Risk of the Portfolio with each distribution of wealth. 2.4 SCOPE OF THE STUDY Scope of the study is to examine, is there any advantage in combining Securities in different proportion and effect of such combination on portfolio output namely Standard Deviation of the portfolio(Risk) and Returns of the portfolio(weighted average returns). This will be of great help to any investor in highlighting that instead of a focused investment, a diversified investment is always better. 2.5 OBJECTIVES OF THE STUDY Specific Objectives for the study are:a) Selection of Co.s (Tata Steel, Bajaj Auto Finance, Ultra tech cement, Tata Chemicals, Taj GVK) and Industries (Steel, Auto, Cement, Chemicals, Hotels).
b) Selection of the study Period (2009-11). c) Identification of returns of each Co., Variability of returns of each Co., Variability
of returns when 2 Co.s are taken together (, cov). d) Identification of portfolio output when wealth is distributed among these Co.s. e) Final Conclusions. 2.6 LIMITATIONS a) As per original Markowitz Studies a Maximum of 50 different Industries are required for proper Diversification but due to Constraints of time period and data availability the Researcher has selected 5 Co.s belonging to different Industries. b) A Monthly data base is employed fro analysis whereas the accuracy may be improved with Weekly data base is employed. EAST POINT COLLEGE OF HIGHER EDUCATION Page 49
MUTUAL FUND VALUATION AND ACCOUNTING c) A sampling Scale of 3% was considered sufficient. d) Sharpes Single Index Model is not attempted. e) This research is only for academic interest.
2.7 METHODOLOGICAL ASSUMPTION

a) The Industries selected are assumed to represent Indian Economy.
b) Companies selected in each Industry are assumed to represent the industry in full. c) A Monthly Database is considered sufficient for this purpose.
2.8 EXPECTED CONTRIBUTION Specific Monetary Contribution from a Study of this nature cannot be done however qualitatively this study is enlightening an ordinary Investor regarding the benefits of Diversification.
2.9 SAMPLING PLAN Assuming 300days were Active Trading days for each Co. there were 900 trading days out of which Systematic Sampling as resulted in Selection of 25 trading days. This means:EAST POINT COLLEGE OF HIGHER EDUCATION Page 50

a) Selection of Companies from different Sectors of the economy.
b) Recording of Closing Prices of Equity Shares of the Co. on a monthly basis.

c) Sampling Methodology is Systematic Sampling- every 30th day was selected.
d) Sampling Scale is 25/900 = approximately 3%.
2.10 FIELDWORKS AND RESEARCH This analysis is extremely an In-house research activity did not involve in any field work in the form of Customer introduce, recording or Visual observation. Similarly No research Instrument such as questionnaire or Interview Scheduled recordings of any help were employed at any stage.
2.11 TOOLS OF DATA COLLECTION No Specific data collections Instrument such as Voice recorder or Photographic device or Questionnaire or Interview Schedules were employed at any stage.
2.12 DEFINITION OF CONCEPTS

a) Arithmetic average returns () =
Where, x = Periodical Returns in % EAST POINT COLLEGE OF HIGHER EDUCATION Page 51
MUTUAL FUND VALUATION AND ACCOUNTING n = No. of Readings
b) Standard Deviation()=
This is described as the square root of the differences or deviations of mean from individual values.
c) Covariance of Two Combination: Covariance reflects the degree to which the returns of the two securities vary or change together. A positive Covariance means that the returns of the two securities move in the same directions whereas a negative covariance implies that the returns of the two securities move in the opposite direction. The covariance between the returns of any two securities 1 and 2 is calculated as follows: Cov12=
d) Rate of Return The rate of return on an asset for a given period (usually a period of one year) is defined as follows: Return= Where, P1= Price at the end of the year P0= Price at the beginning of the year
Page 52

e) Portfolio Risk()
Combination of two securities reduces the risk factor if less degree of positive correlation between them. The portfolio risk is nil if the securities are related negatively. This indicates that the risk can be eliminated if the securities are perfectively negatively correlated. The standard deviation of the portfolio is sensitive to 1) the proportions of funds devoted to each stock 2) the standard deviation of each security 3) Co-variance between two stocks. The change in portfolio proportions can change the portfolio risk. = W1212+W2222+ W3232+2W1W2 1 212+2W1W3 1 313+2W2W3 2 323
Page 53
CHAPTER-3 ANALYSIS OF DATA TABLE-1: Closing Prices of 5 different Sectors

MONTHLY STEEL(A) AUTO(B) CEMENT( C) CHEMICALS(D) HOTEL (E) Jan-09 184.60 474.75 395.95 153.15 45.15 Feb-09 172.80 535.05 470.10 124.10 42.65 Mar-09 205.90 618.45 551.35 141.55 47.65 Apr-09 238.10 641.65 570.20 171.55 56.25 May-09 405.35 1034.25 717.80 216.35 93.30 Jun-09 390.65 1003.05 689.60 217.35 76.75 Jul-09 462.35 1221.75 799.00 254.15 123.15 Aug-09 424.25 1215.70 761.80 248.20 119.95 Sep-09 509.45 1494.75 799.60 281.35 128.95 Oct-09 471.55 1388.15 767.95 262.85 118.35 Nov-09 579.20 1570.45 836.65 281.15 152.80 Dec-09 614.80 1754.80 914.20 321.85 147.10 Jan-10 569.10 1747.70 930.00 296.85 144.15 Feb-10 574.35 1817.65 1040.05 288.00 153.05 Mar-10 632.05 2014.80 1154.85 328.15 157.70 Apr-10 618.85 2093.35 972.75 353.85 167.35 May-10 500.70 2209.35 921.75 321.55 154.00 Jun-10 485.65 2487.60 879.30 334.30 165.10 Jul-10 537.00 2688.00 863.90 336.80 160.00 Aug-10 522.70 2731.75 902.50 395.40 161.00 Sep-10 651.85 1469.90 1062.60 399.60 157.55 Oct-10 589.40 1510.95 1099.90 390.45 153.05 Nov-10 584.80 1576.60 1137.60 354.85 133.55 Dec-10 680.40 1541.00 1084.25 393.90 133.05 Jan-11 639.70 1245.95 1002.80 350.85 112.85
Page 54
TABLE-2: Conversion of Closing Prices into % returns using Formula

Return= Average Returns () =
MONTHS Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 AVERAGE RETURNS
A 0 -6.39 19.16 15.64 70.24 -3.63 18.35 -8.24 20.08 -7.44 22.83 6.15 -7.43 0.92 10.05 -2.09 -19.09 -3.01 10.57 -2.66 24.71 -9.58 -0.78 16.35 -5.98 = 6.35
B 0 12.70 15.59 3.75 61.19 -3.02 21.80 -0.50 22.95 -7.13 13.13 11.74 -0.40 4.00 10.85 3.90 5.54 12.59 8.06 1.63 -46.19 2.79 4.34 -2.26 -19.15 = 5.52
INDEX RETURNS C 0 18.73 17.28 3.42 25.89 -3.93 15.86 -4.66 4.96 -3.96 8.95 9.27 1.73 11.83 11.04 -15.77 -5.24 -4.61 -1.75 4.47 17.74 3.51 3.43 -4.69 -7.51 = 4.24
D 0 -18.97 14.06 21.19 26.11 0.46 16.93 -2.34 13.36 -6.58 6.96 14.48 -7.77 -2.98 13.94 7.83 -9.13 3.97 0.75 17.40 1.06 -2.29 -9.12 11.00 -10.93 = 3.98
E 0 -5.54 11.72 18.05 65.87 -17.74 60.46 -2.60 7.50 -8.22 29.11 -3.73 -2.01 6.17 3.04 6.12 -7.98 7.21 -3.09 0.63 -2.14 -2.86 -12.74 -0.37 -15.18 = 5.27
Page 55
TABLE-3: Calculation of Standard Deviation A & B

Standard Deviation ()=
n = 25 months n 1 = 24 B -6.35 -12.74 12.81 9.29 63.89 -9.98 12.01 -14.59 13.73 -13.79 16.48 -0.20 -13.78 -5.43 3.70 -8.44 -25.44 -9.35 4.22 -9.01 18.36 -15.93 -7.13 10.00 -12.33 =7674.03 = 17.88 40.31 162.34 164.00 86.30 4082.53 99.51 144.12 212.85 188.61 190.12 271.59 0.04 189.95 29.45 13.67 71.19 647.23 87.51 17.85 81.21 337.06 253.74 50.83 99.97 152.05 0 12.70 15.59 3.75 61.19 -3.02 21.80 -0.50 22.95 -7.13 13.13 11.74 -0.40 4.00 10.85 3.90 5.54 12.59 8.06 1.63 -46.19 2.79 4.34 -2.26 -19.15 = 5.52 -5.52 7.18 10.07 -1.77 55.67 -8.53 16.29 -6.01 17.44 -12.65 7.62 6.22 -5.92 -1.51 5.33 -1.62 0.02 7.08 2.54 -3.89 -51.71 -2.72 -1.17 -7.77 -24.66 = 7711.98 = 17.93 30.43 51.62 101.42 3.12 3099.09 72.82 265.26 36.14 304.06 159.98 58.00 38.71 35.06 2.29 28.41 2.62 0.00 50.09 6.45 15.12 2673.78 7.42 1.37 60.44 608.27
MONTH Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11
A 0 -6.39 19.16 15.64 70.24 -3.63 18.35 -8.24 20.08 -7.44 22.83 6.15 -7.43 0.92 10.05 -2.09 -19.09 -3.01 10.57 -2.66 24.71 -9.58 -0.78 16.35 -5.98 = 6.35
Page 56
TABLE-4: Calculation of Standard Deviation C & D

MONTH Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 C 0 18.73 17.28 3.42 25.89 -3.93 15.86 -4.66 4.96 -3.96 8.95 9.27 1.73 11.83 11.04 -15.77 -5.24 -4.61 -1.75 4.47 17.74 3.51 3.43 -4.69 -7.51 = 4.24 -4.24 14.49 13.04 -0.82 21.65 -8.17 11.62 -8.90 0.72 -8.20 4.71 5.03 -2.51 7.59 6.80 -20.01 -9.48 -8.84 -5.99 0.23 13.50 -0.73 -0.81 -8.93 -11.75 =2379.26 = 9.96
2 2
D 17.97 209.89 170.15 0.67 468.55 66.72 135.13 79.13 0.52 67.20 22.15 25.30 6.31 57.67 46.22 400.31 89.92 78.23 35.89 0.05 182.25 0.53 0.66 79.73 138.10 0 -18.97 14.06 21.19 26.11 0.46 16.93 -2.34 13.36 -6.58 6.96 14.48 -7.77 -2.98 13.94 7.83 -9.13 3.97 0.75 17.40 1.06 -2.29 -9.12 11.00 -10.93 =3.98 -3.98 -22.94 10.08 17.22 22.14 -3.51 12.95 -6.32 9.38 -10.55 2.99 10.50 -11.74 -6.96 9.96 3.86 -13.10 -0.01 -3.23 13.42 -2.91 -6.27 -13.09 7.03 -14.91
15.81 526.46 101.70 296.44 490.11 12.35 167.83 39.91 87.98 111.34 8.91 110.25 137.92 48.41 99.29 14.86 171.73 0.00 10.42 180.17 8.49 39.27 171.46 49.40 222.18 = 3122.69 = 11.41
2
Page 57
TABLE-5: Calculation of Standard Deviation e

MONTH Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 E 0 -5.54 11.72 18.05 65.87 -17.74 60.46 -2.60 7.50 -8.22 29.11 -3.73 -2.01 6.17 3.04 6.12 -7.98 7.21 -3.09 0.63 -2.14 -2.86 -12.74 -0.37 -15.18 = 5.27 -5.27 -10.80 6.46 12.78 60.60 -23.01 55.19 -7.87 2.24 -13.49 23.84 -9.00 -7.27 0.91 -2.23 0.85 -13.24 1.94 -8.36 -4.64 -7.41 -8.12 -18.01 -5.64 -20.45
2 2
27.74 116.73 41.68 163.36 3672.31 529.26 3045.82 61.87 5.00 181.91 568.42 80.95 52.89 0.82 4.97 0.73 175.41 3.77 69.82 21.55 54.91 65.99 324.29 31.83 418.18 = 9720.19 = 20.12
Page 58
TABLE-6: Calculation of Covariance between AB & AC

Cov12=
MONTH Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 COVARIANCE -6.35 -12.74 12.81 9.29 63.89 -9.98 12.00 -14.59 13.73 -13.79 16.48 -0.20 -13.78 -5.43 3.70 -8.44 -25.44 -9.36 4.22 -9.01 18.36 -15.93 -7.13 10.00 -12.33 -5.52 7.18 10.07 -1.77 55.67 -8.54 16.28 -6.02 17.43 -12.65 7.61 6.22 -5.92 -1.52 5.33 -1.62 0.02 7.07 2.54 -3.89 -51.71 -2.73 -1.18 -7.78 -24.67 35.05 -91.51 128.91 -16.43 3556.70 85.17 195.47 87.76 239.41 174.46 125.45 -1.27 81.66 8.24 19.69 13.68 -0.54 -66.18 10.71 35.08 -949.34 43.45 8.38 -77.76 304.18 AB = 164.60 -4.24 14.49 13.04 -0.82 21.65 -8.17 11.62 -8.90 0.72 -8.20 4.71 5.03 -2.51 7.59 6.80 -20.01 -9.48 -8.85 -5.99 0.23 13.50 -0.73 -0.81 -8.93 -11.75 26.92 -184.60 167.02 -7.63 1383.02 81.49 139.54 129.79 9.91 113.05 77.55 -1.02 34.62 -41.21 25.13 168.84 241.26 82.76 -25.30 -2.06 247.83 11.63 5.79 -89.27 144.92 AC = 114.17
Page 59
TABLE-7: Calculation of Covariance between AD & AE

MONTH Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 COVARIANCE -6.35 -12.74 12.81 9.29 63.89 -9.98 12.00 -14.59 13.73 -13.79 16.48 -0.20 -13.78 -5.43 3.70 -8.44 -25.44 -9.36 4.22 -9.01 18.36 -15.93 -7.13 10.00 -12.33 -3.98 -22.95 10.08 17.21 22.13 -3.52 12.95 -6.32 9.38 -10.56 2.98 10.50 -11.75 -6.96 9.96 3.85 -13.11 -0.01 -3.23 13.42 -2.92 -6.27 -13.10 7.02 -14.91 25.27 292.41 129.09 159.89 1414.27 35.10 155.47 92.23 128.76 145.55 49.14 -2.14 161.92 37.78 36.82 -32.50 333.50 0.14 -13.65 -120.95 -53.57 99.88 93.39 70.23 183.86 AD = 142.58 -5.27 -10.81 6.45 12.78 60.60 -23.01 55.19 -7.87 2.23 -13.49 23.84 -9.00 -7.28 0.90 -2.23 0.85 -13.25 1.94 -8.36 -4.65 -7.41 -8.13 -18.01 -5.64 -20.45 33.46 137.71 82.64 118.69 3871.74 229.54 662.45 114.80 30.67 186.02 392.84 1.83 100.28 -4.91 -8.25 -7.17 337.04 -18.13 -35.30 41.87 -136.09 129.45 128.43 -56.43 252.21 AE = 274.39
Page 60
TABLE-8: Calculation of Covariance between BC & BD

MONTH Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 COVARIANCE -5.52 7.18 10.07 -1.77 55.67 -8.54 16.28 -6.02 17.43 -12.65 7.61 6.22 -5.92 -1.52 5.33 -1.62 0.02 7.07 2.54 -3.89 -51.71 -2.73 -1.18 -7.78 -24.67 -4.24 14.49 13.04 -0.82 21.65 -8.17 11.62 -8.90 0.72 -8.20 4.71 5.03 -2.51 7.59 6.80 -20.01 -9.48 -8.85 -5.99 0.23 13.50 -0.73 -0.81 -8.93 -11.75 23.40 104.04 131.31 1.45 1204.93 69.73 189.28 53.51 12.59 103.72 35.82 31.27 14.88 -11.52 36.21 32.44 -0.20 -62.57 -15.19 -0.89 -698.09 1.99 0.95 69.46 289.89 BC = 67.43 -3.98 -22.95 10.08 17.21 22.13 -3.52 12.95 -6.32 9.38 -10.56 2.98 10.50 -11.75 -6.96 9.96 3.85 -13.11 -0.01 -3.23 13.42 -2.92 -6.27 -13.10 7.02 -14.91 21.97 -164.80 101.49 -30.45 1232.16 30.03 210.89 38.02 163.46 133.54 22.70 65.27 69.60 10.56 53.06 -6.25 -0.28 -0.10 -8.20 -52.23 150.88 17.10 15.39 -54.64 367.76 BD = 99.46
Page 61
TABLE-9: Calculation of Covariance between BE & CE

MONTH Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 COVARIANCE -5.52 7.18 10.07 -1.77 55.67 -8.54 16.28 -6.02 17.43 -12.65 7.61 6.22 -5.92 -1.52 5.33 -1.62 0.02 7.07 2.54 -3.89 -51.71 -2.73 -1.18 -7.78 -24.67 -5.27 -10.81 6.45 12.78 60.60 -23.01 55.19 -7.87 2.23 -13.49 23.84 -9.00 -7.28 0.90 -2.23 0.85 -13.25 1.94 -8.36 -4.65 -7.41 -8.13 -18.01 -5.64 -20.45 29.09 -77.61 64.97 -22.60 3373.17 196.42 898.62 47.33 38.93 170.67 181.47 -55.97 43.10 -1.37 -11.89 -1.38 -0.28 13.71 -21.20 18.08 383.33 22.16 21.16 43.90 504.49 BE = 244.10 -4.24 14.49 13.04 -0.82 21.65 -8.17 11.62 -8.90 0.72 -8.20 4.71 5.03 -2.51 7.59 6.80 -20.01 -9.48 -8.85 -5.99 0.23 13.50 -0.73 -0.81 -8.93 -11.75 23.40 104.04 131.31 1.45 1204.93 69.73 189.28 53.51 12.59 103.72 35.82 31.27 14.88 -11.52 36.21 32.44 -0.20 -62.57 -15.19 -0.89 -698.09 1.99 0.95 69.46 289.89 CE = 67.43
Page 62
TABLE-10: Calculation of Covariance between CD & DE

MONTH Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 COVARIANCE -4.24 14.49 13.04 -0.82 21.65 -8.17 11.62 -8.90 0.72 -8.20 4.71 5.03 -2.51 7.59 6.80 -20.01 -9.48 -8.85 -5.99 0.23 13.50 -0.73 -0.81 -8.93 -11.75 -3.98 -22.95 10.08 17.21 22.13 -3.52 12.95 -6.32 9.38 -10.56 2.98 10.50 -11.75 -6.96 9.96 3.85 -13.11 -0.01 -3.23 13.42 -2.92 -6.27 -13.10 7.02 -14.91 16.88 -332.46 131.50 -14.13 479.12 28.74 150.55 56.23 6.77 86.54 14.03 52.79 29.51 -52.86 67.71 -77.07 124.30 0.13 19.37 3.06 -39.39 4.58 10.64 -62.73 175.21 CD = 36.63 -5.27 -10.81 6.45 12.78 60.60 -23.01 55.19 -7.87 2.23 -13.49 23.84 -9.00 -7.28 0.90 -2.23 0.85 -13.25 1.94 -8.36 -4.65 -7.41 -8.13 -18.01 -5.64 -20.45 22.34 -156.56 84.17 -10.49 1311.65 187.95 641.50 70.00 1.61 110.60 112.18 -45.26 18.27 6.87 -15.17 -16.99 125.62 -17.14 50.08 -1.06 -100.07 5.93 14.63 50.40 240.36 DE = 112.14
Page 63
TABLE-11: Summary Table Returns and Standard Deviation

PORTFOLIO A B C D E RETURNS() (%) 6.35 5.52 4.42 3.98 5.27 7674.03 7711.98 2379.26 3122.69 9720.19 319.75 321.33 99.14 130.11 405.01 STANDARD DEVIATION () (%) 17.88 17.93 9.96 11.41 20.12
Page 64
TABLE-12: Summary Table of Covariance

COMBINATIONS AB AC AD AE BC BD BE CD CE DE COVARIANCE () (%) 164.60 114.17 142.39 271.39 67.43 99.46 244.10 36.63 67.43 112.14
Page 65
GRAPH-1: Showing Monthly prices of Tata Steel (01/01/2009 to 31/01/2011)

SL NO 1 2 3 4 5 6 7 8 9 10 MONTH Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 STEEL(A) 184.60 172.80 205.90 238.10 405.35 390.65 462.35 424.25 509.45 471.55 SL NO MONTH 11 Nov-09 12 Dec-09 13 Jan-10 14 Feb-10 15 Mar-10 16 Apr-10 17 May-10 18 Jun-10 19 Jul-10 20 Aug-10 STEEL(A) SL NO MONTH 579.20 21 Sep-10 614.80 22 Oct-10 569.10 23 Nov-10 574.35 24 Dec-10 632.05 25 Jan-11 618.85 500.70 485.65 537.00 522.70 STEEL(A) 651.85 589.40 584.80 680.40 639.70
INTERPRETATION: The price of the TATA STEEL in the month of Jan-09 was Rs. 184.60 and at the end of Jan-11 was Rs. 639.70. Within this period, the price was reduced to Rs.172.89 (Feb-09) and also increased to the extent of Rs. 680.40 (Dec-10).
Page 66
GRAPH-2: Showing Monthly prices of BAJAJ AUTO FINANCE (01/01/2009 to 31/01/2011)

SL NO 1 2 3 4 5 6 7 8 9 10 MONTH Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 AUTO(B) 474.75 535.05 618.45 641.65 1034.25 1003.05 1221.75 1215.70 1494.75 1388.15 SL NO MONTH 11 Nov-09 12 Dec-09 13 Jan-10 14 Feb-10 15 Mar-10 16 Apr-10 17 May-10 18 Jun-10 19 Jul-10 20 Aug-10 AUTO(B) 1570.45 1754.80 1747.70 1817.65 2014.80 2093.35 2209.35 2487.60 2688.00 2731.75 SL NO MONTH 21 Sep-10 22 Oct-10 23 Nov-10 24 Dec-10 25 Jan-11 AUTO(B) 1469.90 1510.95 1576.60 1541.00 1245.95
INTERPRETATION: The price of the BAJAJ AUTO FINANCE in the month of Jan-09 was Rs. 474.75 and at the end of Jan-11 was Rs. 1245.95. Within this period, there was no reduction in the price and the price has been increased to the extent of Rs. 2731.75 (Aug-10).
Page 67
GRAPH-3: Showing Monthly prices of ULTRATECH (01/01/2009 to 31/01/2011)

SL NO 1 2 3 4 5 6 7 8 9 10 MONTH Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 CEMENT(C) 395.95 470.10 551.35 570.20 717.80 689.60 799.00 761.80 799.60 767.95 SL MONTH CEMENT(C) NO 836.65 11 Nov-09 914.20 12 Dec-09 930.00 13 Jan-10 1040.05 14 Feb-10 1154.85 15 Mar-10 972.75 16 Apr-10 921.75 17 May-10 879.30 18 Jun-10 863.90 19 Jul-10 902.50 20 Aug-10 SL MONTH NO 21 Sep-10 22 Oct-10 23 Nov-10 24 Dec-10 25 Jan-11 CEMENT(C) 1062.60 1099.90 1137.60 1084.25 1002.80
INTERPRETATION: The price of the ULTRA TECH CEMENT in the month of Jan-09 was Rs. 395.95 and at the end of Jan-11 was Rs. 1002.80. Within this period, there was no reduction in the price and there was increase in the price to the extent of Rs. 1154.85 (March-10).
Page 68
GRAPH-4: Showing Monthly prices of TATA CHEMICALS (01/01/2009 to 31/01/2011)

SL SL SL MONTH CHEMICALS(D) MONTH CHEMICALS(D) MONTH NO NO NO 153.15 11 Nov-09 281.15 21 Sep-10 1 Jan-09 124.10 12 Dec-09 321.85 22 Oct-10 2 Feb-09 141.55 13 Jan-10 296.85 23 Nov-10 3 Mar-09 171.55 14 Feb-10 288.00 24 Dec-10 4 Apr-09 216.35 15 Mar-10 328.15 25 Jan-11 5 May-09 217.35 16 Apr-10 353.85 6 Jun-09 254.15 17 May-10 321.55 7 Jul-09 248.20 18 Jun-10 334.30 8 Aug-09 281.35 19 Jul-10 336.80 9 Sep-09 262.85 20 Aug-10 395.40 10 Oct-09 CHEMICALS(D) 399.60 390.45 354.85 393.90 350.85
INTERPRETATION: The price of the TATA CHEMICALS in the month of Jan-09 was Rs. 153.15 and at the end of Jan-11 was Rs. 350.85. Within this period, the price was reduced to Rs.124.10 (Feb-09) and also increased to the extent of Rs. 399.60(Sept-10).
Page 69
GRAPH-5: Showing Monthly prices of TAJ HOTEL (01/01/2009 to 31/01/2011)

SL NO 1 2 3 4 5 6 7 8 9 10 MONTH Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 HOTEL(E) 45.15 42.65 47.65 56.25 93.30 76.75 123.15 119.95 128.95 118.35 SL MONTH HOTEL(E) NO 152.80 11 Nov-09 147.10 12 Dec-09 144.15 13 Jan-10 153.05 14 Feb-10 157.70 15 Mar-10 167.35 16 Apr-10 154.00 17 May-10 165.10 18 Jun-10 160.00 19 Jul-10 161.00 20 Aug-10 SL MONTH NO 21 Sep-10 22 Oct-10 23 Nov-10 24 Dec-10 25 Jan-11 HOTEL(E) 157.55 153.05 133.55 133.05 112.85
INTERPRETATION: The price of the TAJ GVK HOTEL in the month of Jan-09 was Rs. 45.15 and at the end of Jan-11 was Rs. 112.85. Within this period, the price was reduced to Rs.42.65 (Feb-09) and also increased to the extent of Rs. 167.35 (Apr-10).
Page 70
SUMMARY, CONCLUSION AND SUGGESTIONS
Investment in individual securities to the maximum extent is always risky and an investor by doing so runs the risk of either loosing entire investment or very high returns. Very high returns are acceptable and are welcome by any investor but the downside risk poses great danger to an investor. This was first identified by Harry. Markowitz Model and he laid to the principles of scientific Diversification wherein the returns as well the risk will be compromised. Effects of diversification will be still better if Covariance of returns between two securities in a pair is negative and there will be no diversification effect of correlation is perfectly positive and similarly the portfolio risk becomes zero if the returns between two securities are perfectly negative. It is needless to say both perfect positive correlation and perfect negative correlation are almost next to impossible in real world and correlation varies between +1, -1, and 0. By diversifying, the investor will be able to get benefits of reduction of risk with some reduction of returns also.
Page 71
Summary Statement
TABLE-13: Summary Table of Portfolio Risk and Returns
P
= (WA A+ WB B+ WC C+ WD D+ WE E)/ WA+ WB+ WC+ WD+ WE
P2=WA2A2+WB2B2+WC2C2+WD2D2+WE2E2+2WAWBABAB+2WAWCACAC+2W AWDADAD+2WAWEAEAE+2WBWCBCBC+2WBWDBDBD+2WBWEBEBE+2W CWDCDCD+2WCWECECE+2WDWEDEDE

PORTFOLIO COMPOSITION (%) PORTFOLIO 1 2 3 4 5 A 20 40 60 50 55 B 20 20 10 15 15 C 20 05 05 05 05 D 20 25 15 20 15 E 20 10 10 10 10 PORTFOLIO RETURNS (P) (%) (for 12 months) 61.30 64.64 68.48 66.56 67.99 PORTFOLIO RISK (P) (%) 17.07 17.40 16.76 17.29 17.37
Page 72
TABLE-14: Summary Table of Expected Returns and Standard Deviation

PORTFOLIO EXPECTED RETURNS (%) (for 12 months)
76.20 66.24 53.04 47.76 63.24
STANDARD DEVIATION (%)

17.88 17.93 9.96 11.41 20.12
A B C D E
In this project using hypothetical investment, 5 stocks (Tata Steel, Bajaj Auto Finance, Ultra Tech Cement, Tata Chemicals, Taj GVK) Were analyzed over a study period of 25 months. Weights selected were: I. II. III. IV. V. 20:20:20:20:20 40:20:05:25:10 60:10:05:15:10 50:15:05:20:10 55:15:05:15:10 And the portfolio risk and return were quantified shown in the summary table. Even with just 5 combinations the investor is able to get benefits of Risk Reduction (from a high of 20.12% standard Deviation in TAJ GVK to a low of 16.76% in combination 3 60:10:05:15:10) and similarly returns are much above a low of 47.76% (TATA CHEMICALS) to a high of 68.48% (combination 3 60:10:05:15:10). Finally it is strongly recommended that instead of concentrated Investment; at least some amount of efforts by the Investor to diversify should be done for beneficial effects.
Page 73

Fundamental and Technical Analysis of Steel Sector in India

Загружено:

Сведения о документе

Исходное описание:

Авторское право

Доступные форматы

Поделиться этим документом

Поделиться или встроить документ

Параметры публикации

Этот документ был вам полезен?

Это неприемлемый материал?

Авторское право:

Доступные форматы

Fundamental and Technical Analysis of Steel Sector in India

Загружено:

Авторское право:

Доступные форматы

MUTUAL FUND VALUATION AND ACCOUNTING

EAST POINT COLLEGE OF HIGHER EDUCATION

MUTUAL FUND VALUATION AND ACCOUNTING

Some key characteristics of the sample 394 firms are:

EAST POINT COLLEGE OF HIGHER EDUCATION

MUTUAL FUND VALUATION AND ACCOUNTING

EAST POINT COLLEGE OF HIGHER EDUCATION

EAST POINT COLLEGE OF HIGHER EDUCATION

MUTUAL FUND VALUATION AND ACCOUNTING

2.2. NATURE OF THE BUSINESS CARRIED

2.3. VISION, MISSION AND QUALITY POLICY

EAST POINT COLLEGE OF HIGHER EDUCATION

2.4. PRODUCTS/SERVICE PROFILE

EAST POINT COLLEGE OF HIGHER EDUCATION

MUTUAL FUND VALUATION AND ACCOUNTING

OVERVIEW OF PRODUCTS AND SERVICES

Equities: India Infoline provided the prospect of researched investing to

PMS (Portfolio Management Services):

INSURANCE: An entry to this segment helped complete the clients

MUTUAL FUNDS: India Infoline offers customer a host of mutual fund

MUTUAL FUND VALUATION AND ACCOUNTING

WEALTH MANAGEMENT SERVICE: Imagine a financial firm with the

EAST POINT COLLEGE OF HIGHER EDUCATION

MUTUAL FUND VALUATION AND ACCOUNTING

NEWSLETTERS: The Daily Market Strategy is the morning dose on the

2.5. AREA OF OPERATION- GLOBAL/ NATIONAL/ REGIONAL

EAST POINT COLLEGE OF HIGHER EDUCATION

EAST POINT COLLEGE OF HIGHER EDUCATION

EAST POINT COLLEGE OF HIGHER EDUCATION

MUTUAL FUND VALUATION AND ACCOUNTING

2.7. COMPETITORS INFORMATION:

KARVY KARVY is a premier integrated financial services provider, and ranked

EAST POINT COLLEGE OF HIGHER EDUCATION

EAST POINT COLLEGE OF HIGHER EDUCATION

EAST POINT COLLEGE OF HIGHER EDUCATION

Gokhale Road, Vile Off Western

EAST POINT COLLEGE OF HIGHER EDUCATION

MUTUAL FUND VALUATION AND ACCOUNTING 2.9. ACHIEVEMENTS/ AWARDS

EAST POINT COLLEGE OF HIGHER EDUCATION

EAST POINT COLLEGE OF HIGHER EDUCATION

Informatio n CUSTOMERS and advice

Commoditie s Mutual INDIA Funds Insurance

Execution and Service

EAST POINT COLLEGE OF HIGHER EDUCATION

MUTUAL FUND VALUATION AND ACCOUNTING

EAST POINT COLLEGE OF HIGHER EDUCATION

EAST POINT COLLEGE OF HIGHER EDUCATION

EAST POINT COLLEGE OF HIGHER EDUCATION

MUTUAL FUND VALUATION AND ACCOUNTING 3. MCKINSEY'S 7S framework

EAST POINT COLLEGE OF HIGHER EDUCATION

Nirmal Jain Chairman & managing Director

Harshad Apte, Head -Marketing

R.Venkataraman Executive Director

Kalpesh Shah Head-Risk/Compliance

Seshadri Bharathan Head-Distribution & Insurance

Dharmesh Pandya Head Commodities

Mukesh Singh VP- Broking

Anil Mascarenhas Head-News

Sandeep Vig Arora VP-PMS & Institutional Sales

Toral Munshi VP- Research

Upendra Jaiswal Head -Accounts

Sanjay Nayak Head-Back Office Depository service

Komal Parikh Company Secretary