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A study on Risk Perception and Portfolio Management of Equity investors in Edelweiss
1.1 INTRODUCTION TO THE TOPIC

Portfolio management concerns the constructions and maintenance of a collection of investment. It is investment of funds in different securities in which the total risk of the portfolio is minimized, while expecting maximum return from it. It primarily involves reducing risk rather than increasing return. Return is obviously important though, and the ultimate objective of portfolio manager is to achieve a chosen level of return by incurring the least possible risk.
RISK
Risk is the quantifiable likelihood of loss or less than expected returns. Risk includes the possibility of losing some or all of the original investment. Risk is usually measured using the historical returns or average returns for a specific investment. Uncertainty about the future benefits to be realized from an investment. Thus, risk can be defined as the measurable possibility of loss on an investment. There is risk involved if the outcome of an investment is uncertain at the time the investment is made. Although the outcome is uncertain, it is measurable. Risk and return are the primary ingredients in making investment choices. Expected risk must be compared to risk. As risk increases so must the return to compensate for the greater uncertainty. This is called the Risk Return Trade-off. Namely, that there is greater risk in investment classes that offer potential of higher returns and vice-versa. Therefore, an investor has to choose between higher returns with higher risk versus lower risk accompanied by lower returns. The risk/return trade off is crucial. A new business may involve a lot of risk, but may offer higher return. On the other hand, government securities have minimum risk, so a low return is enough. Risk creates potential higher return. The investor should seek the highest possible return at the risk level they are willing to accept. As an investor, we need to evaluate each investment separately, comparing expected returns with the risks. In general Risk is defined as the chance that an investment's actual return will be different than expected. This includes the possibility of losing some or all of the original investment.
Holy Grace Academy Of Management Studies, Thrissur
1.2 INTRODUCTION TO THE TOPIC PORTFOLIO MANAGEMENT

Investing in securities such as shares, debentures, and bonds is profitable as well as exciting. It is indeed rewarding, but involves a great deal of risk and calls for scientific knowledge as well artistic skill. In such investments both rationale and emotional responses are involved. Investing in financial securities is now considered to be one of the best avenues for investing one savings while it is acknowledged to be one of the most risky avenues of investment. It is rare to find investors investing their entire savings in a single security. Instead, they tend to invest in a group of securities. Such a group of securities is called portfolio. Creation of a portfolio helps to reduce risk, without sacrificing returns. Portfolio management deals with the analysis of individual securities as well as with the theory and practice of optimally combining securities into portfolios. An investor who understands the fundamental principles and analytical aspects of portfolio management has a better chance of success. Portfolio means bundle of things investors tend to invest in a group of securities or different investment avenues such as group of securities or bunch of Investment Avenue is called portfolio. Portfolio management is the managing the portfolio in efficient manner which serves maximum returns, minimum risk and hedge against the risk.
Portfolio management objectives can be stated as: Risk minimization. Safeguarding capital. Capital Appreciation. Choosing optimal mix of securities. Keeping track on performance.
1.3 STATEMENT OF PROBLEM

With a plethora of schemes to choose from, the investor faces several problems in selecting a portfolio. One of the main reasons associated with that is the risk. Factors such as investment strategy and management style are qualitative, but the funds past record is an important indicator too. Though past performance alone cannot be indicative of future performance, it is frankly, the only quantitative way to judge how well is a fund at present. Though this study Im conducting a research to identify the risk perception and portfolio of equity investors.
1.4 OBJECTIVES OF THE STUDY Primary Objective

The main objective of the study is to find out the risk perceptions and portfolio of equity investors in Edelweiss Financial Advisors Ltd To find out the risk perception of equity investors in Edelweiss Financial Advisors Ltd.
To bring out the importance of portfolio management of equity investors.
Secondary Objective
To give recommendations to Equity investors on Portfolio Management.
To know about the Investors knowledge and experience of investing in equities.
1.5 SCOPE OF THE STUDY

The study covers about the risk perception and Portfolio management of equity investors in Edelweiss Financial Advisory Ltd in order to obtain a better insight in to the companys profitability and performance. With this study, the researcher can bring about a clear picture about the Risk perception and Portfolio management of Equity investors in Edelweiss Financial Advisory Ltd. The researcher will also be in a position to state the understanding of customer/ investors about the equities. It also helps to know the portfolio management of equity investors, and can also suggest the ways through which investors can increase / maximize his return with low risk.
1.6 RESEARCH METHODOLOGY INTRODUCTION:

An appropriate method of research is behind the success of any survey. It provides a scientific framework of plan conduction research investigation. Research methodology is the way to systematically solve the research problem. The role of research related to business or to the economy as a whole has greatly increased in modern times. The increasingly complex nature of business and government has focused attention on the use of research in solving of operational problems. Operation research and market research along with multinational research are considered crucial and their assists managers of any organization in more than one way in taking decisions. The research process which works upon is as shown in the figure below
RESEARCH
Research is a systematic method of finding solutions to problems. It is a search for knowledge. The systematic approach relating to generalization and formulation of theories is called research. The adoption of a proper methodology is an essential step in conducting survey research study. Research can be defined as systematic and purposive investigation of facts with an object of determining cause and effect relationship among such facts and relationship between two or more phenomena.
FIELD OF STUDY
The study has been conducted at Edelweiss Financial Advisory Ltd Thrissur; the study seeks to find out the Risk perception and portfolio management of equity investors in Edelweiss.
RESEARCH DESIGN
A research design is the arrangement of conditions for collection and analysis of data in manner that aims to combine relevance to the research purpose with economy in procedure. It is a comprehensive plan of the series of operation that a researcher intends to carry out to accomplish the research objectives. It is a blue print of study. The research design used in this study is descriptive design. It aims at gaining the overall knowledge about the organization.
DESCRIPTIVE RESEARCH DESIGN Descriptive research design includes surveys and fact-finding, enquiries of different kinds. The major purpose of descriptive research is description of the state of affairs, as it exists at present. In social science and business research, we quite often use the term ex post facto research for descriptive research studies. The main characteristics of this method are that the researcher has not control over the variable; he can only report what has happened or what is happening. Most ex post facto research projects are used for descriptive studies in which the researcher seeks to measure such items, for example, frequency of shopping, and preference of the people over similar item.
SAMPLING METHOD
It is neither feasible nor desirable to cover the entire population, thus sampling was done. The sample is the representative unit of the entire population. Sampling remains the only way when population contents infinitely many members. The researcher has taken samples for this research and proportionate sampling method is used for choosing the sample size. Here the researcher has taken Simple random Sampling.
SAMPLE SIZE
The sample size for the study is 100.
DATA COLLECTION METHOD

The task of collecting data begins after a research problem has been defined and plan is chalked out for this study data is collected from primary and secondary sources. Primary data Primary data are collected directly from the field using interview with questionnaire Secondary data
Secondary are collected from various books, publications, reports from the company and from the companys website
TOOLS USED FOR DATA ANALYSIS:

CHI-SQUARE TEST Chi-Square test is the statistical test which in which the statistic follows a distribution, is called the test. Therefore is a statistical test, which tests the significance of difference between observed frequencies and the corresponding theoretical frequencies of a distribution, without any assumption about the distribution of the population. test is the one of the simplest and most widely used non-
parametric tests in statistical work. This test was developed by Prof. karl Pearson in 1990.
Period of the study

The study was conducted for a period of 45 days from 9th April 2012 to 23rd May 2012.
SOURCES OF DATA
The data sources are: Offer documents Companys records Companys publications Annual repots Journals Websites
1.7 LIMITATIONS OF THE STUDY

The study was conducted for a period of 45days which is major limitation of the study. Since the findings are mostly based on the information given by the participants, there is every possibility of lacking precision for the findings of the study. Though assured of confidentiality, still some of the respondents hesitated to answer freely and firmly. Since the attitude of the respondent is bound to change from time to time, the result of the study may not be universal
2.1 REVIEW OF LITERATURE

Risk Management Salvatore (2001: 573) describes risk as follows: Risk refers to a situation in which there is more than one possible outcome to a decision, and the probability of each specific outcome is known or can be estimated. Thus, risk requires that the decision maker know all the possible outcomes of the decision and have some idea of the probability of each outcomes occurrence. Investing in a stock can lead to one of a set of possible outcomes, and the probability of each possible outcome can be estimated from past experience or from market studies. In general, the greater the number and range of possible outcomes, the greater is the risk associated with the decision or action.
Risk could be defined as the probability that the expected return from the security will not materialize. Every investment involves uncertainties that make future investment returns risk-prone. Uncertainties could be due to the political, economic and industry factors. Risk could be systematic in future depending upon its source. Systematic risk is for the market as a whole, while unsystematic risk is specific to an industry or the company individually.
In this section, the literature review including three parts. First, behavior finance perspective of individual investor. Second, individual investors risk perception, risk tolerance and portfolio choice. Third, individual investors socioeconomic status differential and risk tolerance. The results for gender, education level and income level are consistent with the earlier literature. Previous literature indicating those factors on risk-taking and risk tolerance are gender, age, marital status, occupation, income level, education level and economic environments expectations, which might influence an individual investors level of risk taking, but the factor of education level might not. Those studies are classified by three catalogers.
Behavior Finance Perspective of Individual Investor As a result of traditional finance theory appears to play a limited role in understanding this issues such as (1) why do individual investors trade, (2) how do they perform the task, (3) how do they choose their portfolios to conform their conditions, and (4) why do returns vary so quickly even across stocks for reasons other than risk. In the new arena of behavior finance or so called behavior economic, we could to interpret about individual investors behave in their invest choice more completely. Most of behavioral finance researchers often claimed that the reality results presents no unified theory unlike traditional finance theory appears expected utility investigation issues of behavioral finance research.
Maximizations using rational beliefs Its means those scholars in this field actually postulate whole investors in financial market are rationales; they cant influenced through any factors only maximum profit for themselves. Most authors show behavior finance perspective on individual investor, such as Deaux and Emswiller (1974), Lenney (1977), Maital et al. (1986), Thaler and Johnson (1990) and Beyer and Bowden (1997). Those authors are to exclaim that individual investor would demonstrate different risk attitude when facing investment alternatives. Later instruction in our research, we called risk perception and risk tolerance of individual investor. Comparing with previously research, current study is to focus on external factors and psychological factors how to affect investors investment decision and portfolio choice. For instance, Annaert et al. (2005), Wang et al. (2006) indicate the impact of information asymmetric problem on investor behave, this is another subject in behavioral finance field. Most of these researches are pay close attention to behavioral finance, especially in financial products choices (investment) and behave of individual investor invest related.
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Risk Perception, Risk Tolerance and Portfolio Choice Financial risk tolerance is defined as the maximum amount of uncertainty that someone is willing to accept when making a financial decision. Although the importance of assessing financial risk tolerance is well documented, in practice the assessment process tends to be very difficult due to the subjective nature of risk taking (the risk of investor willing to reveal their risk tolerance) and objective factors such as Grable and Joo (1997), Grable and Lytton (1999), and Grable (2000).
Risk tolerance represents one persons attitude towards taking risk. This indicated is an important concept that has implications for both financial service providers (asset management institution or other financial planner) and consumers (investors). For the latter, risk tolerance is one factor which may determine the appropriate composition of many assets in a portfolio which is optimal and satisfied investors invest preference in terms of risk and return relative to the needs of the individual investors Droms, (1987), Hallahan et al., (2004).
There are some empirical evidence showing the impact of risk perception; risk tolerance and socio-economic on portfolio choice, for instance, Carducci and Wong (1998), Grable and Joo (1997), Grable and Lytton (1999), Grable (2000), Hallahan et al., (2003), Hallahan et al., (2004), Frijns et al., (2008), and Veld and VeldMerkoulova (2008). In terms of different risk perception or risk tolerance level, individual investor may show different reaction base upon their psychology factor and economic situation, which would lead to heterogeneous portfolio choice for individual investors. For this reason, it is crucial to recognize and attitudinal how individual investors with different risk perceptions and risk tolerance make their invest products choice on Investment plan, in particular socioeconomic status differentials may make their choice vary and difference.
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Investors Socio-Economic Status and Risk Tolerance Some researchers have indicated that the validity of widely used demographics as determinants of risk tolerance is noteworthy as the relationship between socio-economic status differences including gender, age, income level, net assets, marital status, educational level and investment decision or portfolio choice. With regard to the financial risk tolerance literatures, there is much interest in the demographic determinants and risk attention (involving three risk types: risk aversion, risk moderate and risk seeking) is particularly focused on age, gender, education level, income level, marital status, the number of dependents and net assets. Specifically, although debate remains on some issues, a range of common findings are generally observed. There are five phenomenons in socio-economic status variables differential and portfolio choice as the following: First, risk tolerance decreases with age (e.g., Morin and Suarez 1983; Roszkowski, Snelbecker, and Leimberg 1993). Second, females have a lower preference for risk than males (e.g., Roszkowski, Snelbecker, and Leimberg 1993; Grable 2000). Third, risk tolerance increases with education level (e.g., Roszkowski, Snelbecker, and Leimberg 1993). Second, females have a lower preference for risk than males (e.g., Roszkowski, Snelbecker, and Leimberg 1993; Grable 2000). Third, risk tolerance increases with education level (e.g., Roszkowski, Snelbecker, and Leimberg 1993; Haliassos and Bertaut 1995). Fourth, risk tolerance increases with income level and net assets (e.g., Cohn et al. 1975; Roszkowski, Snelbecker, and Leimberg 1993; Bernheim, Skinner, and Weinberg 2001). Fifth, single (i.e., unmarried) investors are more risk tolerant than married (e.g., Roszkowski, Snelbecker, and Leimberg 1993).
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A study in portfolio management by Magnus Edvald Bjorn son on April 20th 1998 All portfolios that lie on the same indifference curve are equally desirable to the investor (even though they have different expected returns and variance.) An obvious implication is that indifference curves do not intersect. An investor will find any portfolio that is lying on an indifference curve that is "further northwest" to be more desirable than any portfolio lying on an indifference curve that is "not as far northwest." Generally it is assumed that investors are risk averse, which means that the investor will choose the portfolio with the smaller variance given the same return. Risk Averse investors will not want to take fair gambles (where the expected payoff is zero). These two assumptions of no satiation and risk aversion cause indifference curves to be positively sloped. Portfolio management theory by Dr Sam vaknin
S.NO
STATE OF INVESTORS
DESCRIPTION
PROPERTY
1.
Diminishing Avoidance of absolute risk
Invests more in risky assets as his capital grows
Derivative of avoidance of absolute risk <
2.
Constant Avoidance of absolute risk
Doesn't change his investment in risky assets as capital grows
Derivative =
3.
Increasing Avoidance of absolute risk
Invests less in risky assets as his capital grows
Derivative >
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4.
Diminishing Avoidance of relative risk
Percentage invested in risky assets grows with capital growth
Derivative <
5.
Constant Avoidance of relative risk
Percentage invested in risky assets unchanged as capital grows
Derivative =
6.
Increasing avoidance of relative risk
Percentage invested in risky assets decreases with capital growth
Derivative >
2.2 Risk
People have many motives for investing.fro most investors, however, their interest in investment is largely pecuniary-to earn a return on their money. Investors not only like return but they dislike risk. Faerber defined risk as the variability of returns from an investment or the uncertainty related to the outcome of an investment. There are many different types of risk. Risk is the degree of uncertainty of return on an asset (Morgenson & Harvey, 2002, p. 284).
Types of Risk
Reference was made to two types of risk of investor. 1) Systematic Risk 2) Unsystematic Risk. Systematic Risk The systematic risk affects the entire market. Often we read in the news paper teat stock market is in the bear hug or in the bull grip. This indicates that the entire market is moving in a particular direction either downward or upward. The economic conditions, political conditions and the sociological changes affect the security market. The recession in the economy affects the profit prospects of the industry and
Holy Grace Academy Of Management Studies, Thrissur 14
the stock market. The 1998 recession experienced by developed and developing countries have affected the stock markets worldwide. The south East Asian crisis has affected the stock market worldwide. These factors are beyond the control of the corporate and the investor. Market risk Interest rate risk Purchasing power risk
Market risk: Jack Clark Francis has defined market risk as that portion of total variability of return caused by the alternating forces of bull and bear markets. When the security index moves upward haltingly for a significant period of time, it is known as bull market. In bull market, the index moves from a low level to the peak. Bear market is just a reverse to the bull market; the index declines haltingly from the peak to a market low point called trough for a significant period of time.
Market risk is caused by investor reaction to tangible as well as intangible events. This arises out of changes in demand and supply pressure in the markets, following the changing flow of information or expectations. The totality of investor perception and subjective factors influence the events in the market which are unpredictable and give risk to risk, which is not controllable.
Interest rate risk: Interest rate risk is the variation in the single period rate of return caused by the fluctuations in the market interest rate. Most commonly interest rate risk affects the price of bonds, debentures and stocks. The fluctuations in the interest rates are caused by the changes in the government monetary policy and the changes that occur in the interest rates of treasury bills and the government bonds. The root cause of interest rate lies in the fact that, as the rate of interest paid on US government securities rises or falls, the rate of return demanded on alternative investment vehicles, such as stocks and bonds issued in the private sector, rise or fall.
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Purchasing power risk: Variations in the returns are caused also by the loss of purchasing power of currency. Inflation is the reason behind the loss of purchasing power. The level of inflation proceeds faster than the increase in capital value. It is the probable loss in the purchasing power of the returns to be received. Hence inflation or rise in prices lead to raise cost of production, lower margins, wage rises and profit squeezing etc. the return expected by investors will change due to change in real value of returns. Cost push inflation is caused by rise in the costs, due to wage rise or rise in input prices. The increase in demand may be caused by changing expectation of future interest rates and inflation due to increase in money supply or creation of currency to finance the deficits of the government. This element of purchasing power risk is inherent in all investments and cannot be controlled by him.
Unsystematic Risk Unsystematic Risk is unique and peculiar to a firm or an industry. It stems from managerial inefficiency, technological change in the production process, availability of raw material changes in the consumer preference, and labor problems. The nature and magnitude of the above mentioned factors differ from industry to industry, and company to company. They have to be analyzed separately for each industry and firm. The changes in the consumer preference affect the consumer products like television sets, washing machines, refrigerators, etc. more than they affect the iron and steel industry. Financial leverage of the companies that is debtequity portion of the companies differs from each other. The nature and mode of raising finance and paying back the loans, involve a risk element. All these factors from the unsystematic risk and contribute a portion in the total variability o the return. It is divided in to two Business risk
Financial risk
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Business risk: Business risk is that portion of the unsystematic risk caused by the operating environment of the Business. It arises from the liability of a firm to maintain its competitive edge and the growth or stability of the earnings. Variation that occurs in the operating environment is reflected on the operating income and expected dividends. The variations in the expected operating income indicate the business risks. It relates to variability of the business, sales, income, profits etc. it is sometimes external to the company due to changes in government policy or strategies of competitors or unforeseen market conditions. They may be internal due to fall in production, labor problems, raw material problems etc. it leads to fall in revenues and in profit of the company, but can be corrected by certain changes in the companys policies.
Financial risk: It refers to the variability of the income to the equity capital due to the debt capital. Financial risk in a company is associated with the capital structure of the company. Capital structure of the company consists of equity funds and borrowed funds. The presence of debt and preference capital results in a commitment of paying interest or pre fixed rate of dividend. The residual income alone would be available to the equity holders. If the company runs into losses or reduced profits, these may lead to fall in returns to investors or negative returns. Proper financial planning and other financial adjustments can be used to correct this risk and as such it is controllable.
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RISK RETURN MATRIX OF EQUITY
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2.3 Portfolio Management

An investor considering investment in securities is faced with the problem of choosing from among a large number of securities and how to allocate his funds over this group of securities. Again he is faced with problem of deciding which securities to hold and how much to invest in each. The risk and return characteristics of portfolios. The investor tries to choose the optimal portfolio taking into consideration the risk return characteristics of all possible portfolios. As the risk return characteristics of individual securities as well as portfolios also change. This calls for periodic review and revision of investment portfolios of investors. An investor invests his funds in a portfolio expecting to get good returns consistent with the risk that he has to bear. The return realized from the portfolio has to be measured and the performance of the portfolio has to be evaluated. It is evident that rational investment activity involves creation of an investment portfolio. Portfolio management comprises all the processes involved in the creation and maintenance of an investment portfolio. It deals specifically with the security analysis, portfolio analysis, portfolio selection, portfolio revision & portfolio evaluation. Portfolio management makes use of analytical techniques of analysis and conceptual theories regarding rational allocation of funds. Portfolio management is a complex process which tries to make investment activity more rewarding and less risky.
Portfolio Analysis
Portfolio analysis is a systematic way to analyze the products and services that make up an association's business portfolio. All associations (except the simplest and the smallest) are involved in more than one business. Some of these include publishing, meetings and conventions, education and training, government representation, research, standards setting, public relations, etc. Each of these is one of the
association's strategic business units (SBUs). Each business consists of a portfolio of products and services. For example, an association's publishing business might
include a professional journal, a lay magazine, specialized newsletters geared to different member segments, CDs, a website, social networking sites, etc.
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Portfolio analysis helps you decide which of these products and services should be emphasized and which should be phased out, based on objective criteria. Portfolio analysis consists of subjecting each of the association's products and services through a progression of finer screens. During a time of cutbacks and scarce resources, it is essential to screen out programs and services that are not essential to most members. Those that appeal to a more limited segment can be funded by those desiring the product or service rather than by dues. Analysis of securities in the combined form is portfolio analysis. Group of securities when held together behave in a different manner and give interest and dividend also which are different to the analysis of individual securities.
When diversification does not help Positively correlated return of two securities will not provide risk reducing but only risk averaging.
Rb
Ra
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When diversification can eliminate risk Perfectly negatively correlated
Rb
Ra
Insurance principle Diversification provide substantial risk reduction if the components of a portfolio are uncorrelated
Rb
Ra
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Selection of Portfolio
The selection of portfolio depends upon the 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, sixty percent of the investment is made in debt instruments and remaining in equity. Proportion varies according to individual preference.
Growth of income and asset mix Here the investor requires a certain percentage of growth as the income from the capital he has invested. The proportion of equity varies from 60 to 100 % and that of debt from 0 to 40 %. The debt may be included to minimize risk and to get tax exemption.
Capital appreciation and Asset Mix It means that value of the investment made increases over the year. Investment in real estate can give faster capital appreciation but the problem is of liquidity. In the capital market, the value of the shares is much higher than the original issue price.
Safety of principle and asset mix Usually, the risk adverse investors are very particular about the stability of principal. Generally old people are more sensitive towards safety.
Risk and return analysis The traditional approach of portfolio building has some basic assumptions. An investor wants higher returns at the lower risk. But the rule of the game is that more risk, more return. So while making a portfolio the investor must judge the risk taking capability and the returns desired.
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Diversification Once the asset mix is determined and risk return relationship is analyzed the next step is to diversify the portfolio. The main advantage of diversification is that the unsystematic risk is minimized.
Optimal Portfolio
The optimal portfolio concept falls under the modern portfolio theory. The theory assumes (among other things) that investors fanatically try to minimize risk while striving for the highest return possible. The theory states that investors will act rationally, always making decisions aimed at maximizing their return for their acceptable level of risk. The optimal portfolio was used in 1952 by Harry Markowitz, and it shows us that it is possible for different portfolios to have varying levels of risk and return. Each investor must decide how much risk they can handle and then allocate (or diversify) their portfolio according to this decision.
The chart below illustrates how the optimal portfolio works. The optimalrisk portfolio is usually determined to be somewhere in the middle of the curve because as you go higher up the curve, you take on proportionately more risk for a lower incremental return. On the other end, low risk/low return portfolios are pointless because you can achieve a similar return by investing in risk free assets like government securities.
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The investor can choose how much volatility that he is willing to bear in his portfolio by picking any other point that falls on the efficient frontier. This will give the investor the maximum return for the amount of risk he had wished to accept. Optimizing the portfolio is not something we can calculate in our head. There are computer programs that are dedicated to determining optimal portfolios by estimating hundreds (and sometimes thousands) of different expected returns for each given amount of risk.
Portfolio investment process
The ultimate aim of the portfolio manager is to reduce the risk and increase the return to the investor in order to reach the investment objectives of an investor. The manager must be aware of the investment process. The process of portfolio management involves many logical steps like portfolio planning, portfolio implementation and monitoring. The portfolio investment process applies to different situation. Portfolio is owned by different individuals and organizations with different requirements. Investors should buy when prices are very low and sell when prices rise to levels higher that their normal fluctuation.
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Portfolio investment process is an important step to meet the needs and convenience of investors. The portfolio investment process involves the following steps: 1. Planning of portfolio 2. Implementation of portfolio plan. 3. Monitoring the performance of portfolio.
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1) Planning of portfolio: Planning is the most important element in a proper portfolio management. The success of the portfolio management will depend upon the careful planning. While making the plan, due consideration will be given to the investors financial capability and current capital market situation. After taking into consideration a set of investment and speculative policies will be prepared in the written form. It is called as statement of investment policy. The document must contain (1) The portfolio objective (2) Applicable strategies (3) Investment and speculative constraints. The planning document must clearly define the asset allocation. It means an optimal combination of various assets in an efficient market. The portfolio manager must keep in mind about the difference between basic pure investment portfolio and actual portfolio returns. The statement of investment policy may contain these elements. The portfolio planning comprises the following situation for its better performance: (A) Investor Conditions: The first question which must be answered is this What is the purpose of the security portfolio? While this question might seem obvious, it is too often overlooked, giving way instead to the excitement of selecting the securities which are to be held. Understanding the purpose for trading in financial securities will help to: (1) define the expected portfolio liquidation, (2) aid in determining an acceptable level or risk, and (3) indicate whether future consumption (liability needs) are to be paid in nominal or real money, etc. For example: a 60 year old woman with small to moderate saving probably (1) has a short investment horizon, (2) can accept little investment risk, and (3) needs protection against short term inflation. In contrast, a young couple investing couple investing for retirement in 30 years has (1) a very long investment horizon, (2) an ability to accept moderate to large investment risk because they can diversify over time, and (3) a need for protection against long-term inflation. This suggests that the 60 year old woman should invest solely in low-default risk money market securities. The young couple could invest in many other asset classes for diversification and accept greater investment risks. In short, knowing the eventual
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purpose of the portfolio investment makes it possible to begin sketching out appropriate investment / speculative policies. (B) Market Condition: The portfolio owner must know the latest developments in the market. He may be in a position to assess the potential of future return on various capital market instruments. The investors expectation may be two types, long term expectations and short term expectations. The most important investment decision in portfolio construction is asset allocation. Asset allocation means the investment in different financial instruments at a percentage in portfolio. Some investment strategies are static. The portfolio requires changes according to investors needs and knowledge. A continues changes in portfolio leads to higher operating cost. Generally the potential volatility of equity and debt market is 2 to 3 years. The type of rebalancing strategy focuses on the level of prices of a given financial asset. (C) Speculative Policies: The portfolio owner may accept the speculative strategies in order to reach his goals of earning to maximum extant. If no speculative strategies are used the management of the portfolio is relatively easy. Speculative strategies may be categorized as asset allocation timing decision or security selection decision. Small investors can do by purchasing mutual funds which are indexed to a stock. Organization with large capital can employ investment management firms to make their speculative trading decisions. (D) Strategic Asset Allocation: The most important investment decision which the owner of a portfolio must make is the portfolios asset allocation. Asset allocation refers to the percentage invested in various security classes. Security classes are simply the type of securities: (1) Money Market Investment, (2) Fixed Income obligations; (3) Equity Shares, (4) Real Estate Investment, (5) International securities.
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Strategic asset allocation represents the asset allocation which would be optimal for the investor if all security prices trade at their long-term equilibrium values that is, if the markets are efficiency priced. 2) Implementation of portfolio plan In the implementation stage, three decisions to be made, if the percentage holdings of various assets classes are currently different from the desired holdings as in the SIP, the portfolio should be rebalances to the desired SAA (Strategic Asset Allocation). If the statement of investment policy requires a pure investment strategy, this is the only thing, which is done in the implementation stage. However, many portfolio owners engage in speculative transaction in the belief that such transactions will generate excess risk-adjusted returns. Such speculative transactions are usually classified as timing or selection decisions. Timing decisions over or under weight various assets classes, industries, or economic sectors from the strategic asset allocation. Such timing decision deal with securities within a given asset class, industry group, or economic sector and attempt to determine which securities should be over or under-weighted. (A) Tactical Asset Allocation: If one believes that the price levels of certain asset classes, industry, or economic sectors are temporarily too high or too low, actual portfolio holdings should depart from the asset mix called for in the strategic asset allocation. Such timing decision is preferred to as tactical asset allocation. As noted, TAA decisions could be made across aggregate asset classes, industry classifications (steel, food), or various broad economic sectors (basic manufacturing, interest-sensitive, consumer durables). Traditionally, most tactical assets allocation has involved timing across aggregate asset classes. For example, if equity prices are believes to be too high, one would reduce the portfolios equity allocation and increase allocation to, say, risk-free securities. If one is indeed successful at tactical asset allocation, the abnormal returns, which would be earned, are certainly entering.
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(B) Security Selection: The second type of active speculation involves the selection of securities within a given assets class, industry, or economic sector. The strategic asset allocation policy would call for broad diversification through an indexed holding of virtually all securities in the asset in the class. For example, if the total market value of a company share currently represents 1% of all of its issued equity capital, than 1% of the investors portfolio allocated to equity would be held in companys shares. The only reason to overweight or underweight particular securities in the strategic asset allocation would be to offset risks the investors faces in other assets and liabilities outside the marketable security portfolio. Security selection, however actively overweight and underweight holding of particular securities in the belief that they are temporarily mispriced. (3) Monitoring the performance of portfolio Portfolio monitoring is a continuous and ongoing assessment of present portfolio and the portfolio manger shall incorporate the latest development which occurred in capital market. The portfolio manager should take into consideration of investors preferences, capital market condition and expectations. Monitoring the portfolio is up-grading activity in asset composition to take the advantage of economic, industry and market conditions. The market conditions are depending upon the Government policy. Any change in Government policy would reflect the stock market, which in turn affects the portfolio. The continued revision of a portfolio depends upon the following factors: 1. Change in Government policy. 2. Shifting from one industry to other 3. Shifting from one company scrip to company scrip. 4. Shifting from one financial instrument to another. 5. The half yearly / yearly results of the corporate sector.
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Risk reduction is an important factor in portfolio. It will be achieved by a diversification of the portfolio, changes in market prices may have necessitated in asset composition. The composition has to be changed to maximize the returns to reach the goals of investor. A. The Portfolio Management Process and the Investment Policy Statement The investors should be able to a. Justify the importance of the portfolio perspective; b. Formulate the steps of the portfolio management process c. Compare and contrast the types of investment objectives; d. Contrast the types of investment constraints; e. Justify the central role of the investment policy statement in the portfolio management process; f. Review the elements of an investment policy statement and distinguish among the components within 1) the risk objective, 2) the return objective, and 3) the time horizon constraint; g. Compare and contrast passive, active, and semi active approaches to investing; h. Discuss the role of capital market expectations in the portfolio management process; i. Discuss the role of strategic asset allocation in the portfolio management process; j. Discuss the roles of portfolio selection/composition and portfolio implementation in the portfolio management process; k. Contrast the elements of performance evaluation; l. Explain the purpose of monitoring and rebalancing; m. Formulate the elements of portfolio management as an ongoing process; n. Formulate and justify a risk objective for an investor; o. Formulate and justify a return objective for an investor; p. Determine the liquidity requirement of an investor and evaluate the effects of a liquidity requirement on portfolio choice;
q. Contrast the types of time horizons, determine the time horizon for an Investor, and evaluate the effects of the investors time horizon on portfolio choice; r. Determine the tax concerns, legal and regulatory factors, and unique circumstances for an investor and evaluate their effects on portfolio choice; s. Justify ethical conduct as a requirement for managing investment portfolios.
B. Managing Individual Investor Portfolios The Investors should be able to a. Review situational profiling for individual investors and discuss source of wealth, measure of wealth, and stage of life as approaches to situational profiling; b. Prepare an elementary situational profile for an individual investor; c. Discuss the role of psychological profiling in understanding individual investor behavior; d. Formulate the basic principles of the behavioral finance investment framework; e. Discuss the influence of investor psychology on risk tolerance and investment choices; f. Discuss the use of a personality typing questionnaire for identifying an investors personality type; g. Formulate the relationship between risk attitudes and decision-making styles and individual investor personality types; h. Discuss the potential benefits for both clients and investment managers of having a formal investment policy statement; i. Review the process involved in creating an investment policy statement for a client;
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j. Discuss each of the major objectives that are part of an individual investors investment policy statement; k. Distinguish between an individual investors ability to take risk and willingness to take risk; l. Discuss the setting of risk and return objectives for individual investor portfolios; m. Discuss each of the major constraints that are part of an individual investors investment policy statement; n. Formulate and justify an investment policy statement for an individual investor; o. Demonstrate the use of a process of elimination to arrive at an appropriate strategic asset allocation for an individual investor; p. Determine the strategic asset allocation that is most appropriate given an individual investors investment objectives and constraints; q. Compare and contrast traditional deterministic versus Monte Carlo approaches in the context of retirement planning; r. Discuss the advantages of the Monte Carlo approach to retirement planning.
C. Forming Portfolios The investors should be able to a. Explain how mental accounting may lead both individual and institutional investors to misperceive risk; b. Discuss how the concept of correlation is generally not implemented when investors affected by mental accounting build portfolios; c. Explain how mental accounting can result in naive diversification as compared to the efficient diversification that results from implementing MPT.
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D. Learning Outcomes 1. Managing Institutional Investor Portfolios The investors should be able to a. Contrast a defined-benefit plan to a defined-contribution plan from the perspectives of both the employee and employer; b. Discuss investment objectives and constraints for defined-benefit plans; c. Evaluate pension fund risk tolerance when risk is considered from the perspective of the (1) plan surplus, (2) sponsor financial status and profitability, (3) sponsor and pension fund common risk exposures, (4) plan features, and (5) workforce Characteristics; d. Formulate an investment policy statement for a defined-benefit plan; e. Evaluate the risk management considerations in investing pension plan assets; f. Formulate an investment policy statement for a defined-contribution plan; g. Discuss hybrid pension plans (e.g., cash balance plans) and employee stock ownership plans; h. Distinguish among the types of foundations with respect to their description, purpose, source of funds, and annual spending requirements; i. discuss investment objectives and constraints for foundations,
endowments, insurance companies, and banks; j. Formulate an investment policy statement for a foundation, an endowment, an insurance company, and a bank; k. Contrast investment companies, commodity pools, and hedge funds to other types of institutional investors; l. Evaluate the factors that affect the investment policies of pension funds, foundations, endowments, life and non-life insurance companies, and banks; m. Distinguish among the return objectives, risk tolerances, liquidity requirements, time horizons, tax considerations, legal and regulatory environment, and unique.
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n. Compare and contrast the asset/liability management needs of pension funds, foundations, endowments, insurance companies, and banks; o. Compare and contrast the investment objectives and constraints of institutional investors given relevant data such as descriptions of their financial circumstances and attitudes toward risk.
Simple Sharpe Portfolio

The question is whether our portfolio has performed well when compared to other managed funds such as closed end funds open ended money market funds. Management performance evaluation It is measured by comparing the yield of managed portfolio with the market index (or) with a random portfolio.
Yield = (NAVt- Dt/NAV t-1) 1 Dt = total of all distribution both income-gains When managed fund yield > Unmanaged fund
Sharpes performance measure

St=Rt-r^0/ St= Sharpe index Rt=Average return of portfolio =SD r^0= Risk free return
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The Treynor Measure
Developed by Jack Treynor, this performance measure evaluates funds on the basis of Treynor's Index. This Index is a ratio of return generated by the fund over and above risk free rate of return (generally taken to be the return on securities backed by the government, as there is no credit risk associated), during a given period and systematic risk associated with it (beta). Symbolically, it can be represented as: Treynor's Index (Ti) = (Ri - Rf)/Bi. Where, Ri represents return on fund, Rf is risk free rate of return and Bi is beta of the fund.All risk-averse investors would like to maximize this value. While a high and positive Treynor's Index shows a superior risk-adjusted performance of a fund, a low and negative Treynor's Index is an indication of unfavorable performance Jenson Model Jenson's model proposes another risk adjusted performance measure. This measure was developed by Michael Jenson and is sometimes referred to as the Differential Return Method. This measure involves evaluation of the returns that the fund has generated vs. the returns actually expected out of the fund given the level of its systematic risk. The surplus between the two returns is called Alpha, which measures the performance of a fund compared with the actual returns over the period. Required return of a fund at a given level of risk (Bi) can be calculated as: Ri = Rf + Bi (Rm - Rf) Where, Rm is average market return during the given period. After calculating it, alpha can be obtained by subtracting required return from the actual return of the fund. Higher alpha represents superior performance of the fund and vice versa. Limitation of this model is that it considers only systematic risk not the entire risk associated with the fund and an ordinary investor cannot mitigate unsystematic risk, as his knowledge of market is primitive.
3.1 INDUSTRY PROFILE

The capital market is a market for financial assets, which have longer or indefinite maturity. Generally, it deals with long-term securities which have maturity period of above one year. The capital market may be further divided into three namely. 1. 2. 3. Industrial securities market Government securities market Long-term loan market The industrial market, which deals with shares and debentures, can further be divided into: 1. 2. Primary market Secondary Market
PRIMARY MARKET In the primary market, securities are offered to public for subscription for the purpose of raising capital or fund. Secondary market is an equity trading avenue in which already existing/pre- issued securities are traded amongst investors. Secondary market could be either auction or dealer market. While stock exchange is the part of an auction market, Over-the-Counter (OTC) is a part of the dealer market. In addition to the traditional sources of capital from family and friends, start up firms are created and nurtured by Venture Capital Funds and Private Equity Funds. According to the Indian Venture Capital Association Yearbook (2003), investments of $881 million were injected into 80 companies in 2002, and investments of $470 million were injected into 56 companies in 2003. The firms which received these investments were drawn from a wide range of industries, including finance, consumer goods and health. The growth of the venture capital and private equity mechanisms in India is critically linked to their track record for successful exits. Investments by these funds only commenced in recent years, and we are seeing a rapid build-up in a full range of channels for exit, with a mix of profitable and unprofitable outcomes.
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The success with exit suggests that investors will allocate increased resources to venture funds and private equity funds operating in India, who will (in turn) be able to fund the creation of new firms. SECONDARY MARKET Secondary Market refers to a market where securities are traded after being initially offered to the public in the primary market and/or listed on the Stock Exchange. Majority of the trading is done in the secondary market. Secondary market comprises of equity markets and the debt markets. For the general investor, the secondary market provides an efficient platform for trading of his securities. For the management of the company, Secondary equity markets serve as a monitoring and control conduitby facilitating value-enhancing control activities, enabling implementation of incentive-based management contracts, and aggregating
information (via price discovery) that guides management decisions. STOCK MARKET Stock market is a market where trading of company stocks, other securities and derivatives takes place. Stock exchanges are corporations or mutual organizations which are specialized in trading stocks and securities. The first security was issued publicly in Venice in the fourteenth century where the government made the first known issue of bonds. Merchants and landowners purchased these securities as investments.
The stock exchange or secondary market is a highly organized market for the purchase and sale of second hand quoted of listed securities. The securities contracts (Regulation) Act 1956 defines a stock exchange as an association, organization or not, established for the purpose of assisting, regulating and controlling business in buying, selling and dealing in securities. Of all the modern service institutions, stock exchange plays a crucial agents and facilitators of entrepreneurial progress. After the industrial resolution, as the size of the business enterprises grew, it was no longer possible for individual person or even partnerships to raise such huge amount for undertaking these ventures. Such
huge requirements of capital can be met only large number of individuals. These investors could be expected to participate actively only if investment is liquid or they could sell a part of their stake whenever they wish to generate cash. This liquidity can be achieved through shares and debentures representing smallest units of ownership and lending represented by the public. The institution where these securities are traded is known as stock exchange. This stock exchange is one of the most important institutions in the capital market. BOMBAY STOCK EXCHANGE The origin of the Bombay stock exchange date back to 1875. it was organized under the name of the native stock and shares brokers association as a voluntary and non-profit making association. It was recognized on a permanent basis in 1957. This premier stock exchange is the oldest stock exchange in Asia. The objectives of the stock exchanges are: 1. To safeguard the interest of the investing public having dealings on the exchange. 2. To establish and promote honorable and just practices in securities transaction. 3. To promote, develop, and maintain well regulated market for dealing in securities. 4. To promote industrial development in the country through efficient resource mobilization by the way of investment in corporate securities. National Stock Exchange (NSE) With the liberalization of the Indian economy, it was found inevitable to lift the Indian stock market trading system on par with the international standards. On the basis of the recommendations of high powered Pherwani Committee, the National Stock Exchange was incorporated in 1992 by Industrial Development Bank of India, Industrial Credit and Investment Corporation of India, Industrial Finance Corporation of India, all Insurance Corporations, selected commercial banks and others.
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Trading at NSE can be classified under two broad categories: (a) Wholesale debt market and (b) Capital market. Wholesale debt market operations are similar to money market operations institutions and corporate bodies enter into high value transactions in financial instruments such as government securities, treasury bills, public sector unit bonds, commercial paper, certificate of deposit, etc. There are two kinds of players in NSE: (a) Trading members and (b) Participants. Recognized members of NSE are called trading members who trade on behalf of themselves and their clients. Participants include trading members and large players like banks who take direct settlement responsibility. Trading at NSE takes place through a fully automated screen-based trading mechanism which adopts the principle of an order-driven market. Trading members can stay at their offices and execute the trading, since they are linked through a communication network. The prices at which the buyer and seller are willing to transact will appear on the screen. When the prices match the transaction will be completed and a confirmation slip will be printed at the office of the trading member.
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NSE has several advantages over the traditional trading exchanges. They are as follows:
NSE brings an integrated stock market trading network across the nation. Investors can trade at the same price from anywhere in the country since intermarket operations are streamlined coupled with the countrywide access to the securities.
Delays in communication, late payments and the malpractices prevailing in the traditional trading mechanism can be done away with greater operational efficiency and informational transparency in the stock market operations, with the support of total computerized network.
Unless stock markets provide professionalized service, small investors and foreign investors will not be interested in capital market operations. And capital market being one of the major sources of long-term finance for industrial projects, India cannot afford to damage the capital market path. In this regard NSE gains vital importance in the Indian capital market system.
Dematerialization Dematerialization ('Demat' in short form) signifies conversion of a share certificate from its present physical form to electronic form for the same number of holding. It offers scope for paperless trading through state-of-the-art technology, whereby share transactions and transfers are processed electronically without involving any share certificate or transfer deed after the share certificates have been converted from physical form to electronic form. Demat attempts to avoid the time consuming and complex process of getting shares transferred in the name of buyers as well its inherent problems of bad deliveries, delay in processing/fraudulent interception in postal transit, etc.
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Dematerialization of shares is optional and an investor can still hold shares in physical form. However, he/she has to demat the shares if he/she wishes to sell the same through the Stock Exchanges. Similarly, if an investor purchases shares, he/she will get delivery of the shares in demat form only. The Depositories Act 1996 has been enacted to regulate the matters related and incidental to the operation of Depositories and demat operations. Two Depositories are in operation - National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL).
Depositories and Depositary Participants A depository is a place where the stocks of investors are held in electronic form. There are only two depositories in India, The National Securities Depository Ltd (NSDL) and the Central Depository Services Ltd (CDSL). Under the arrangement, the Depository acts as registered owner of the securities in electronic form in the books of issuing company and the client will be the beneficial owner. The Depositary Participants are the agents governed by Depositories through which one can operate the demat account. Depository participants are mainly banks and brokers. There are over a 100 DPs in India.
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3.2 COMPANY PROFILE Introduction Edelweiss Financial Services Limited (formerly Edelweiss Capital Limited), incorporated on 21st November 1995, has emerged as one of Indias leading diversified financial services group. The Edelweiss Group offers one of the largest ranges of products and services spanning varied asset classes and diversified consumer segments. The Groups businesses are broadly divided into Life Insurance, Housing Finance, Asset Management, Credit, Commodities and Capital Markets including Investment Banking and Brokerage Services. The companys research driven approach and consistent ability to capitalize on emerging market trends has enabled it to foster strong relationships across corporate, institutional, HNI and Retail clients. Edelweiss Group employs around 2944 employees, leveraging a strong partnership culture and unique model of employee ownership. It operates through 265 own offices and 32 franchise-led offices in over 140 cities in India. It also has a strong network of over 4500 Sub-brokers and Authorized Persons pan India. The Edelweiss Group is a conglomerate of 51 entities including 45 Subsidiaries and 5 Associate companies (December, 11), which is engaged in the business of providing diverse financial services. It is a listed company since December 2007under the symbols NSE: EDELWEISS, BSE: 532922, Reuters: EDEL.BO and Bloomberg: EDEL.IN.
The core philosophy of Ideas create, values protect is translated into an approach that is led by entrepreneurship and creativity, and protected by intellectual rigour, research and analysis.
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Evolution of Edelweiss
Business Overview The current businesses of Edelweiss are organized around six broad lines Life Insurance, Housing Finance, Asset Management, Credit, Commodities and Capital Markets. Life Insurance and Housing Finance businesses have been launched recently and are the newest businesses of the group. The Asset Management businesses include offshore and domestic asset management. The Credit Businesses include collateralized loans to Promoters and Corporates, Margin funding, ESOP financing and IPO financing. Commodities business includes import of precious metals and distribution. Capital Markets businesses include investment banking, brokerage services institutional, HNI and retail and financial products distribution. Since inception, Edelweiss has successfully followed a strategy of diversifying into adjacent markets, newer asset classes, newer client segments and adjacent products. This strategy has well supported the operations of Edelweiss across cycles by bringing stability to its performance. As a result, Edelweiss has emerged as a truly diversified leading financial services organization with a large range of
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products and services covering multiple asset classes and consumer segments and well diversified revenue streams. To aptly reflect this diversified nature of the businesses of Edelweiss and the transition to a financial services organization from a capital market led firm, the name of the company was changed from Edelweiss Capital Limited to Edelweiss Financial Services Limited in August 11.
LIFE INSURANCE Edelweiss Tokio life Insurance is the first of the new generation Insurance companies in India as a joint venture with Tokio Marine, one of the fastest growing life Insurance companies in Japan. Capitalizing on the immense growth potential in the life insurance sectors that the country offers, Edelweiss Tokio life insurance has set up operations in India with a startup capital of Rs. 550 crores highest for any Indian insurer, dedicated to building a long term sustainable business focused on consumer centricity. The business commenced operations in July 11 with the launch
of diverse products after receiving final approvals from IRDA. The products include term plan, savings options, credit protection and ULIP funds. It has expanded operations by opening 22 offices in 15 centers and has appointed over 530 Personal Financial Advisors (PFAs). It plans to expand its presence and to more centers going forward. Life Insurance market in India currently ranks 136th in the world in penetration and is expected to emerge as one of the top three markets by 2020. This business, therefore, presents exciting opportunities for long-term growth going forward.
HOUSING FINANCE Edelweiss has taken a major step in diversifying its asset class in the credit book through the launch of its housing finance business in H2FY11. The housing finance subsidiary initially launched its business in Mumbai and has expanded it to include the National Capital Region, Ahmedabad, Bangaluru, Pune and Hyderabad. Considering that it is the aspirations of all Indians to own a home, this business represents an exciting opportunity reinforcing Edelweiss intent to cover a larger
retail footprint. The business offers home loans, loans against property and lease rental discounting.
ASSET MANAGEMENT The Asset Management business includes Domestic Asset Management (AMC) and Alternative Asset Management business. Edelweiss Asset Management Company has launched a mix of 11 equity and debt funds. It has an active base of over 5700 clients and has scaled up the distribution network by empanelling over 3000 distributors. The current focus of this business is on broad basing the product portfolio and building investment track record. Alternative Asset Management currently focuses largely on offshore institutional investors offering
advisory/management expertise for India focused Multi-Strategy Fund, Real Estate Fund and a Special Opportunities Fund. Recent Initiatives include launch of an ARC, an Asset Reconstruction Fund and EW SBIH Crossover Fund in joint sponsorship with SBI Holdings of Japan.
CREDIT With a deep knowledge and understanding of capital markets backed by strong origination capabilities, the Companys primary offering in the financing business includes collateralized loan products such as sponsor funding, loans against shares, IPO financing, loans against ESOPs and margin funding etc. The sponsors of mid-tolarge corporate constitute its key clientele. Its prudent financing norms, strong risk management and a conservative margin of safety ensures low nonperforming loans. Edelweiss continues to work on new product offerings around other asset classes.
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CAPITAL MARKETS Investment Banking Equity Capital Markets & Advisory Services Edelweiss has one of the most extensive product offerings in Investment Banking in India, catering to different market and client segments. The verticals within Investment Banking include Equity Capital Markets which include IPOs/FPOs, QIPs, Rights and Open Offers, and Advisory services which offer Mergers & Acquisitions Advisory, Private Equity Syndication, Structured Finance Advisory and Infrastructure Advisory. Edelweiss enjoys strong franchise with emerging and midmarket companies which is reflected in the # 1 ranking in both Bloomberg tables for Mid-market Private Equity placements in CY2007 and Prime Database league tables for IPOs in Mid-market segment in FY2008. It was adjudged winner in the Best Merchant Banker category in the Outlook Money NDTV Profit Awards 2008. It was ranked # 2 in QIPs and # 3 in ECM (QIP+IPO/FPO+Rights) in FY10. For FY11 it is ranked # 2 in ECM by number of deals below ` 400 crore. Overall, it was among the top 10 players in ECM by number of deals in the country in FY11 (Rankings source: Prime Database). Its client segments now range from private to public sector and from Mid-caps to Large-caps across different industries.
Corporate Debt Syndication The Debt Syndication Desk focuses on origination, sales, trading and research. It has gained a strong foothold and visibility in the market. Ranked # 2 in CP placement and Short Term Debt placement for FY09 Ranked # 4 in CP placement and Short Term Debt placement for FY10 Ranked # 3 in Short Term Debt placement and ranked # 4 in CP placement in FY11 Overall Edelweiss is now ranked # 6 among the debt arrangers in the country in 9MFY12 (Rankings source: Prime Database) Its clients in the recent past included large corporates like RIL, Aditya Birla Group, SAIL, REC, PFC, PGC, IFCI, IRFC, Tata Capital, Tata Motors Finance, Sundaram Finance, Yes Bank, SBI Group, BoI, Canara Bank etc.
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Brokerage Services Institutional Equities Edelweiss has one of the leading institutional equities businesses in India backed by a large and experienced research team and a large and diversified client base with a market share of 4 to 4.5%, among the highest in Indian brokerage firms. Intense servicing, seamless execution and innovative research products have helped Edelweiss build strong relationships with over 400 active institutional investors, including domestic institutional investors and FIIs across different geographies.
Edelweiss provides broad corporate access via annual Investor Conferences in different locations across the world with a strong investor and Indian corporate participation. Research coverage presently extends to 189 companies across 20 sectors accounting for over 70% of total market capitalization representing one of the largest Research coverage universes. The quality and caliber of research associated with Edelweiss is widely regarded across the institutional community. It continues to focus on path breaking Perspective Research which identifies future trends before they become popular. After the landmark India 2020 Report that Edelweiss published in March 10, it has come out with another thematic report on opportunities Rural India offers. The Prescriptive Research of Edelweiss believes in never missing a beat with multi dimensional company research covering important company events like quarterly results, bottom up equity research and special reports such as Annual Report analysis and Analysis beyond Consensus. It is also considered a Thought Leader in Alternative and Quant Research with over 15 regular products such as pair trading strategies, corporate action tracker etc. Edelweiss commitment to provide cutting
edge research has resulted in a pioneering effort to provide online research to its clients through the portal with smart features of quick sorting of information, analysis and convenient archiving.
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HNI Broking Edelweiss offers dedicated equities and commodities broking services to high net-worth individuals with a strong emphasis on building long-term relationships with clients. Product offerings include specialized trading execution for active trading clients and structured products backed by high quality execution and reporting.
Retail Broking & Distribution Retail Broking and Distribution are the new initiatives of the Group under its Retail Business strategy. The organic Retail broking business is through the online portal and provides advisory and research based broking services supported by high quality execution platform and best in class reporting. It currently has over 121,000 clients under the online broking. Edelweiss has also completed the acquisition of Anagram Capital Limited in July 10, now renamed as Edelweiss Financial Advisors
Ltd. The offline broking model has around 243,000 clients. Retail broking business has also expanded its presence through a strong network of over 4500 sub-brokers and Authorized Persons in over 580 cities. Distribution business focuses on giving advice and analyzing the best financial product options available in the market. It involves the distribution of the full range of third party financial products and services including IPO syndication for the retail customer. For FY11 Edelweiss is ranked # 1 in HNI category and # 3 in Retail category by amount mobilized in IPOs. It was also ranked # 1 in both HNI and Retail categories in the recent IPO of MOIL Ltd by amount procured. Overall, it was second largest mobilizer of IPO subscriptions in all categories taken together (non-ASBA) in FY11 (Source: Prime Database).
Wealth Advisory & Investment Services The Primary focus is on understanding each client's profile including life style, risk appetite, growth expectations, and current financial position and income requirements to create comprehensive and tailored investment strategies. The broad range of offerings includes a truly multi-asset class allocation advisory to Structured Products, Portfolio Management, Mutual Funds, Insurance, Derivatives Strategies, Direct Equity, Private Equity, Commodities and Real Estate Funds etc. Recent launch includes Financial Planning advisory services.
Treasury The Treasury operations in Edelweiss are similar to that of a Treasury in a Commercial Bank and focus on liquidity management with capital preservation. This business adopts a multistrategy/multi-book approach to diversify and grow its portfolio while imparting liquidity in the balance sheet. The group follows a disciplined and conservative approach to cash management with emphasis on strong risk policies. This has resulted in a low or no correlation between the market returns and the treasury performance.
Growth Initiatives Edelweiss continues to build on the following growth initiatives with the objective of diversifying its client segments and product classes in its quest to emerge as a fully diversified financial services organization: It has invested in Life Insurance business which has been launched recently. It has completed the acquisition of Anagram Capital during FY11, now rebranded as Edelweiss Financial Advisors Limited. This acquisition will help it in expanding its Retail Broking and Distribution businesses. Edelweiss has also invested in building its online retail broking format organically with an aspiration to become a significant player in this industry. The Housing Finance subsidiary commenced business in the latter half of FY11 and has plans to scale up the business going forward. Its Alternative Asset Management business closed the EW Special Opportunities Fund in FY11. It has also launched an Asset Reconstruction Fund and EW SBIH Crossover Fund recently. Edelweiss considers this business as a growth opportunity within its wholesale businesses.
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Corporate Structure
Shareholding Pattern
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Financial Performance at a Glance Edelweiss has delivered strong operating and financial performance since inception, consistently demonstrating a strong track record of high growth and profitability. Its Revenues have grown at a 12-year CAGR of 77% and PAT at 67% till FY11. As at the end of 31st March 11 Edelweiss Groups Net worth excluding minority interest stood at RS24.40 billion (Rs25.55 billion including minority interest), indicating a strong balance sheet. Equity capital is the primary source of funding for the group besides debt. The leverage as on 31st March 11 is 3.4 times including the Minority Interest indicating a healthy position whereby the balance sheet can be further levered. Consolidated Financial Performance of Edelweiss Financial Services Limited: Edelweiss benefits from a strong and liquid balance sheet with a reasonable leverage. A strong capital base and adequate profitability year after year allows Edelweiss to constantly invest in new businesses with an eye on future growth while scaling up the existing businesses. A large capital base also allows it to transact larger volumes of broking and trading in the markets giving it a leadership position in Institutional Equities business. It also enables the group to add debt capital as and when required at reasonable rates. Its market capitalization as on 31st March 11 was 30 billion Rs.
Corporate Social Responsibility At Edelweiss, Corporate Social Responsibility is a part of its DNA and it focuses on initiatives that help to build a better, more equitable and sustainable society. For Edelweiss, CSR means giving back to the society beyond the call of the business. EdelGive Foundation, the CSR wing of Edelweiss, has accordingly been formed to create an effective institutional platform to provide structure and direction to the philanthropic activities of Edelweiss, its employees, its clients and its associates. Its primary focus is on creating educational, employment and sustainable livelihood opportunities for the underprivileged and it brings an institutional banking and venture capital rationale and thinking to the social sector. Edelweiss leverages its strengths - the ability and expertise to act as a bridge between providers and consumers of capital - to achieve the objective of addressing the primary needs of the social sector.
Edelweiss Social Innovation Honours is a CSR initiative to encourage NGOs who are working to improve the status of the girl child in the areas of health, education and employability. The Social Innovation Honours for the year 2010-11 received overwhelming response and 5 NGO were selected for the award for their innovative work to empower women. The process for finalizing the Honours for 2011-12 is underway and will be completed in Q4FY12. Edelweiss has been rated among the top 5% of companies in terms of CSR by Karmyog.com.
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4.1 DATA ANALYSIS TABLENO: 1
DISTRIBUTION OF RESPONDENTS ACCORDING TO GENDER
Gender Male Female Total
No of Respondents 100 100
Percentage 100% 100%
Interpretation: From the above table it is clear that all the surveyed Respondents are male. That is 100% males.
CHART NO: 1
DISTRIBUTION OF RESPONDENTS ACCORDING TO GENDER
0%
male female 100%
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TABLENO: 2
DISTRIBUTION OF RESPONDENTS ACCORDING TO AGE

Age <30 31-40 41-50 >50 Total No of Respondents 23 42 32 3 100 Percentage 23% 42% 32% 3% 100%
Interpretation: From the above table, it shows that 42% of the respondents are in the age between 31 3140, 32% of the respondents are in the age between 41 50, 23% of the respondents are 41-50, in the age <30, and it is revealing that people above age 50 are 3% onl only.
CHART NO: 2
DISTRIBUTION OF RESPONDENTS ACCORDING TO AGE
3% 23% 32% <30 30-40 40-50 42% >50
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TABLENO: 3
DISTRIBUTION OF RESPONDENTS ACCORDING TO INCOME LEVEL

Income Level <5000 5001-10000 10001-15000 15001-20000 >20001 Total No of Respondents 0 12 13 47 28 100 Percentage 0 12% 13% 47% 28% 100%
Interpretation: From the above table, it shows that47% of the respondents falls in the category of 15000-20000, 28% of the respondents falls in the category of >20000, 13% of respondents falls in the category of 10000-15000, 12% of the respondents falls in the category of 5000-10000, and none of the respondents falls in the category of <5000.
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CHART NO: 3
DISTRIBUTION OF RESPONDENTS ACCORDING TO INCOME LEVEL
0% 12% 28% 13% <5000rs 5000-10000 10000-15000 15000-20000 47% >20000
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TABLENO: 4(1) TABLE SHOWING RESPONDENTS OPINION EXPERIENCE IN STOCK MARKET Respondents Opinion No of Respondent Percentage
Yes
100
100%
No
Total
100
100%
Interpretation: From the above table, it shows that all of the respondents have previous experience in stock market.
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CHART NO: 4(1) RESPONDENTS OPINION
0%
YES NO 100%
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TABLENO: 4(2) TABLE SHOWING RESPONDENTS OPINION TYPE OF INVESTMENT PREFERRED BY THE RESPONDENTS Type of Investment Bonds Equities Bank Deposits T-Bills Government Securities Total No of Respondent 7 88 5 0 0 100 Percentage 7% 88% 5% 0 0 100%
Interpretation: From the above table, it shows that88% of the respondents prefer to invest in Equities, 7% of the respondents prefer to invest in Bonds, 5% of the respondents prefer to invest in Bank Deposits, and none of the respondents are interested to invest in either treasury bills or Government Securities.
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88 90 80 70 60 50 40 30 20 10 0 bonds equities bank deposits T-bills Govt Securities 7
5 0 0
60
TABLENO: 4(3) TABLE SHOWING RESPONDENTS OPINION TIME TAKEN FOR EVALUATION OF PERFORMANCE OF INVESTMENT
Period of Time
No. Of Respondents 9
Percentage 9%
Monthly 71 Quarterly 13 Annually 7 Over 5 Years Total 100 100% 7% 13% 71%
Interpretation: From the above table, it is clear that 71% of the respondents judge the performance of investment in a Quarterly, 13% of the respondents judge their performance of investment by Annually, 9% of the respondents judge the performance of investment Monthly and 7% of the respondents take over 5 years to judge the performance of the investment.
61
80 71 70
60
50
40
30
20 13 9 10 7
0 quarterly monthly annualy over 5 years
62
TABLENO: 4(4) TABLE SHOWING RESPONDENTS OPINION PERFORMANCE ABOUT THEIR FINANCIAL FUTURE
Financial Future
Percentage 32%
Very optimistic 33 Positive 18 Unsure 17 Pessimistic Total 100 100% 17% 18% 33%
Interpretation: From the above table, it shows that 33% of the respondents are positive about their financial future, 32% of the respondents are Very optimistic, 18% of the respondents are unsure about their financial future and 17% of the respondents are Pessimistic.
63
35 30 25 20 15 10 5 0 very optimistic positive unsure pessimistic
64
TABLENO: 4(5) TABLE SHOWING RESPONDENTS OPINION AGE FROM WHICH THE RESPONDENTS ARE INVESTING
Age of Investing <30
Percentage 23%
31-40
42
42%
41-50
32
32%
>50
3%
Total
100
100%
Interpretation: From the above table, it is found that 42% of the respondents have invested in age between 31 to 40 years, 32% of the respondents have invested in the age between 41 to 50 years, 23% of the respondents have invested in the age Below 30, and it is revealing that people above 50 years only 3% have been investing.
65
45 40 35 30 25 20 15 10 5 0 <30 23
42
32
30-40
40-50
>50
66
TABLENO: 4(6) TABLE SHOWING RESPONDENTS OPINION UNDERSTANDING AND COMFORT LEVEL IN INVESTING IN STOCK Understanding and Comfort level No Experience in Stock Market No Experience, but some level of comfort Some Experience & Interest Reasonable Experience Extensive Background and good comfort Total 100 100% 10 10% 7 7% 58 58% 22 22%
Percentage 3%
Interpretation: From the above table, shows that 58% of the respondents have Some Experience & Interest, 22% of the respondents have No Experience, but some level of comfort, 10% of the respondents have Extensive Background and good comfort, 7% of the respondents have Reasonable Experience and 3% of the respondent is having No Experience in Stock Market.
67
3% 10% 7% 22%
No Experience in Stock Market No Experience, but some level of comfort Some Experience & Interest
58%
Reasonable Experience
Extensive Background and good comfort
68
TABLENO: 4(7) TABLE SHOWING RESPONDENTS OPINION INVESTORS PERCEPTION OF THEMSELVES
Best Statement
Percentage 12%
Some Current Income 18 High Current Income 57 High Total Return 13 Substantial Return 100 Total 100% 13% 57% 18%
Interpretation: From the above table, it is found that 57% of the respondents perceive High Total Return as the best statement, 18% of the respondents perceive High Current Income, 13% perceive as Substantial Return and 12% of the respondents perceive as Some Current Income.
69
60
57
50
40
30
20 12 10
18 13
0 Some Current Income High Current Income High Total Return Substantial Return
70
TABLENO: 4(8) TABLE SHOWING RESPONDENTS OPINION ATTITUDE ABOUT FINANCIAL RISK
Attitude about Financial risk Diversified investment portfolio I Only invested with extra money I can afford to loss Associated with playing in the stock The Higher the investment yield or rate of return the greater the risk Total
Percentage 24%
46
46%
8%
22
22%
100
100%
Interpretation: From the above table, it is clear that 46% of the respondents invest with extra money they can afford to loss, 24% of the respondents have diversified investment portfolio, 22% of the respondents has an attitude that The Higher the investment yield or rate of return the greater the risk and 8%are associated with playing in the stock market.
71
Diversified investment portfolio 22% 8% 24% I Only invested with extra money I can afford to loss 46% Associated with playing in the stock The Higher the investment yield or rate of return the greater the risk
72
TABLENO: 4(9) TABLE SHOWING RESPONDENTS OPINION PORTFOLIO ACTIVITIES BY THE RESPONDENTS
Any Portfolio Activities Yes No Total
No. Of Respondents
Percentage
66 44 100
66% 44% 100%
Interpretation: From the above table, it shows that 66% of the respondents are having portfolio % activities and 44% of the respondents do not have portfolios. CHART NO: 4(9) RESPONDENTS OPINION
40% Yes No
60%
73
TABLENO: 4(10) TABLE SHOWING RESPONDENTS OPINION RISK TOLERANCE SINCE THE TIME OF INVESTMENT Risk Tolerance More Willingness 81 Less Willingness 11 Risk factors has no influence 4 No Idea 100 Total 100% 4% 11% 81% No. Of Respondents 4 Percentage 4%
Interpretation: From the above table, it shows that 81% of the respondents have less willingness to take on risk, 11% of the respondents risk factor has no influence, and 4% of the respondents are willing to risk take more risk as well as 4% of the respondents does not have any idea about.
74
90 80 70 60 50 40 30 20 10 0 More Willingness 4
81
11 4
Less Willingness
Risk factors has no influence
No Idea
75
TABLENO: 4(11) TABLE SHOWING RESPONDENTS OPINION RESPONSE TO MARKET DECLINE Liquidation process Immediately No. Of Respondents 6 Percentage 6%
4 At 90000 8 At 75000 Would Wait for Market turnaround 100 Total 82
4%
8%
82%
100%
Interpretation: From the above table, it is found that 82% of the respondents would wait for market turnaround, 8% of the respondents will move at 75000 for stable investment,6% of the respondents would immediately liquidate and move to a more stable investment, and 4% of the respondents will move at 90000 for stable investment.
76
4% 6% 8% Immediately. At 90,000 At 75,000.
82%
Would Wait for Market turnaround
77
TABLENO: 4(12) TABLE SHOWING RESPONDENTS OPINION TIME HORIZON FOR WITHDRAWALS Time Horizon for withdrawals Currently Less than 3 Years Between 3 to 5Years Between 6 to 15 Years After 15 Years Total
No. Of Respondents 95 5 0 0 0 100
Percentage 95% 5% 0 0 0 100%
Interpretation: From the above table, it is found that 95% of the respondents will make withdrawals currently, 5% withdraw within 3 years and none of the respondents withdrew after 3 years or above.
78

100 90 80 70 60 50 40 30 20 10 0 currently < Than 3 years. From 3 to Between 6 5 years. to 15 years. Over 15 years. 95
5 0 0 0
79
TABLENO: 4(13) TABLE SHOWING RESPONDENTS OPINION GROWTH EXPECTED OF INVESTMENT IN 5 YEARS
Growth Expected 0 to 15%
Percentage 30%
54 15% to 30% 11 30% to 50% 5
54%
11%
Above 50% Total
5%
100
100%
Interpretation: From the above table, it is clear that 54% of the respondents expect their investment to grow from 15% to 30%, 30% of the respondents expect their investment to grow from 0 to 15%, 11% of the respondents expect a growth from 30% to 50% and 5% of the respondents expect a growth above 50%.
80
60
54
50
40 30 30
20 11 10 5
0 0 to 15% 15% to 30% 30% to 50% Above 50%
81
TABLENO: 4(14) TABLE SHOWING RESPONDENTS OPINION SHARING INFORMATION ABOUT RISK WITH CONSULTANT Feel Free Yes No Total No. Of Respondents 73 27 100 Percentage 73% 27% 100%
Interpretation: ove 73% From the above table, it is found that 73% of the respondents feel free to share information on risk with consultant and 27% the respondents do not feel free to share 27% information with the consultant consultant. CHART NO: 4(14) RESPONDENTS OPINION
27%
73%
Yes No
82
TABLENO: 4(15) TABLE SHOWING RESPONDENTS OPINION LEARNING FROM RISK Learn From Risk Yes No Total No. Of Respondents 100 0 100 Percentage 100% 0 100%
Interpretation: From the above table, it is found that all the respondents learn from their risk. CHART NO: 4(15) RESPONDENTS OPINION
0%
yes no 100%
83
TABLENO: 4(16) TABLE SHOWING RESPONDENTS OPINION MEASURE TO CONTROL RISK
Measure to Control Risk
No. Of Respondents
Percentage
Avoidance Modification Stocks present position Watch market Total
36 6 34 24 100
36% 6% 34% 24% 100%
Interpretation: From the above table, it is found that 36% of respondents control the risk by avoiding it, 34% of the respondents control the risk by evaluating stocks present position in the market, 24% of the respondents control the risk by watching the market closely and 6% of the respondents modify risk to control it.
84
40 36 34 35
30 24 25
20
15
10 6 5
0 avoid modify stock's present position watch market
85
TABLENO: 4(17) CHI SQUARE ANALYSIS FOR INCOME LEVEL AND AGE OF INVESTING
Age of investing Below 30 Income Level
From 31 to 40
From 41 to 50
Above 50
Grand Total
Below Rs.5000
Rs.5001 to Rs.10000
12
Rs.10001 to Rs.15000
13
Rs.15001to Rs.20000
21
17
47
Above Rs.20000
11
28
Grand Total
23
42
32
100
86
Null Hypothesis (H0)
: No Significant relationship between Income and Age of investing.
Alternate Hypothesis (H1)
: There is a Close Significant relationship between Income and Age of investing.
CALCULATED FACTOR CHI-SQUARE VALUE Income Level
TABLE VALUE
DEGREE OF FREEDOM
REMARKS
4.795
21.026
12
Not Significant
Interpretation:
From the above table, it is clear that the calculated Chi-square value is less than the table value. So, there is Close relationship between Age group and Age of investing.
87
CHART NO: 4(17) CHART FORINCOME LEVEL AND AGE OF INVESTING
25
20
15
Below 30 From 31 to 40
10
From 41 to 50 Above 50
0 Below Rs.5000 Rs.5001 to Rs.10001 to Rs.15001to Rs.10000 Rs.15000 Rs.20000 Above Rs.20000
88
TABLENO: 4(18) CHI SQUARE ANALYSIS FOR INCOME LEVEL AND PERFORMANCE OF INVESTMENT
Performance of Investment Quarterly Monthly Annually Over 5 Years Grand Total
Income Level Below Rs.5000 0 0 0 0 0
Rs.5001 to Rs.10000
12
Rs.10001 to Rs.15000
13
Rs.15001to Rs.20000
35
47
Above Rs.20000
22
28
Grand Total
71
13
100
89
: No Significant relationship between Income level and Performance of investments.
: There is Close Significant relationship between Income level and Performance of investments.
TABLE VALUE
DEGREE OF FREEDOM
REMARKS
5.273
21.026
12
Not Significant
Interpretation: From the above table it is noted from the above table that the calculated Chi-square value is less than the table value. So, there is Close relationship between Income level and Performance of investments.
90
CHART NO: 4(18) CHART FOR INCOME LEVEL AND PERFORMANCE OF INVESTMENT
35
30
25
20 Monthly 15 Quarterly Annually 10 Over 5 Years
91
TABLENO: 4(19) CHI SQUARE ANALYSIS FOR INCOME LEVEL AND FINANCIAL FUTURE
Financial Future Very Optimistic Income Level 0 0 0 0 Grand Total
Positive
Unsure
Pessimistic
Below Rs.5000 Rs.5001 to Rs.10000 Rs.10001 to Rs.15000 Rs.15001to Rs.20000
12
13
16
13
10
47
Above Rs.20000
28
Grand Total
32
33
18
17
100
92
: No Significant relationship between Income level and Financial Future.
: There is Close Significant relationship between Income level and Financial Future.
TABLE VALUE
DEGREE OF FREEDOM
REMARKS
5.334
21.026
12
Not Significant
Interpretation: From the above table it that the calculated Chi-square value is less than the table value. So, there is Close relationship between Income level and Financial Future.
93
CHART NO: 4(19) CHART FOR INCOME LEVEL AND FINANCIAL FUTURE
16 14 12 10 8 Very Optimistic 6 4 2 0 Positive Unsure Pessimistic
94
TABLENO: 4(20) CHI SQUARE ANALYSIS FOR INCOME LEVEL AND ATTITUDE ABOUT FINANCIAL RISK
Financial Invest Risk Reduces Risk Income Level with Extra Money Associated with Playing in the Stock Rate of Returns Grand Total
Below Rs.5000
Rs.5001 to Rs.10000
12
Rs.10001 to Rs.15000 Rs.15001to Rs.20000
13
12
21
10
47
Above Rs.20000
14
28
Grand Total
24
46
22
100
95
: No Significant relationship between Income level and Financial Risk.
: There is Close Significant relationship between Income level and Financial Risk
TABLE VALUE
DEGREE OF FREEDOM
REMARKS
1.381
21.026
12
Not Significant
Interpretation: From the above table it is clear that the calculated Chi-square value is less than the table value. So, there is Close relationship between Income level and Financial Risk
96
CHART NO: 4(20) CHART FOR INCOME LEVEL AND ATTITUDE ABOUT FINANCIAL RISK
25
20
15
Reduces Risk Invest with Extra Money Associated with Playing in the Stock
10
Rate of Returns
97
TABLENO: 4(21) CHI SQUARE ANALYSIS FOR INCOME LEVEL AND RISK TOLERANCE
Risk More Tolerance Income Level Below Rs.5000 0 0 0 0 0 Less Risk No Idea Grand Total Willingness Willingness Tolerance
Rs.5001 to Rs.10000 Rs.10001 to Rs.15000 Rs.15001to Rs.20000
12
13
42
47
Above Rs.20000
25
28
Grand Total
81
11
100
98
: No Significant relationship between Income level and Risk Tolerance.
: There is Close Significant relationship between Income level and Risk Tolerance.
TABLE VALUE
DEGREE OF FREEDOM
REMARKS
1.381
21.026
12
Not Significant
Interpretation:
From the above table it is clear that the calculated Chi-square value is less than the table value. So, there is Close relationship between Income level and Risk Tolerance.
99
CHART NO: 4(21) CHART FOR INCOME LEVEL AND RISK TOLERANCE
45 40 35 30 25 20 15 10 5 0 More Willingness Less Willingness Risk Tolerance No Idea
100
5.1 FINDINGS
All of the surveyed respondents are male. 42% of the respondents are belongs to the age between 31 years to 40 years old.
47% of the respondents income is between 15001-20000 Rs. All of the surveyed respondents are having previous experience in the stock market.
88% of the respondents prefer to invest in Equities type of investments. 71% of the respondents evaluate their performance of investment by quarterly. 33% of the respondents are optimistic positive about their financial future. 42% of the respondents are invested in age between 31 to 40 years. 58% of the respondents are having some experience & interest in the stock market.
57% of the respondents perceive as high total return as best statement about their investment.
46% of the respondents are investing with the extra money they can afford to suffer loss in the stock market.
66% of the respondents are not having any portfolio activities. 81% of the respondents are less willing to take risk since the time of first investment.
82% of the respondents would wait for market turnaround. 95% of the respondents are need to make withdrawals currently 54% of the respondents are expecting their return from the investment with a growth rate between 15% to 30%.
73% of the respondents feel free to share information their consultant. All of the respondents learn from their risk. 36% of respondents control the risk by avoiding it.
101
From the Chi-Square Analysis, there is Close relationship between Age group and Age of investing.
From the Chi-Square Analysis, there is Close relationship between Income level and Performance of investments.
From the Chi-Square Analysis, there is Close relationship between Income level and Financial Future.
From the Chi-Square Analysis, there is Close relationship between Income level and Financial Risk.
From the Chi-Square Analysis, there is Close relationship between Income level and Risk Tolerance.
102
5.2 SUGGESTIONS
Since all the respondents are male, an effort to bring females in stock investment should be taken by the company.
Most of the females are not aware about stock broking, so a seminar should be conduct by the company.
Almost all the respondents are investing in stock with the extra money they could suffer the loss; an effort should be taken in order to create an awareness about investing in stocks.
Almost all of respondents prefer to invest in Equities; an effort should be taken in order to in create awareness about investing in Commodities and Bonds.
Nearly half of the surveyed respondents are not aware about Portfolio activity. So the company must guide the investors to invest in Portfolio.
103
5.3 CONCLUSION
The present study is concerned with Risk Perception and portfolio Management of Equity Investors.
Risk is the other side of return. Returns comprise two elements, the periodic payment of interest or dividends (yield) and change in asset values over a period of time (capital gains/losses). In the common perception risk is mostly related to the possibility and magnitude of negative deviations from the benchmark. This definition is supported by Fishburn [1977] and is recognized by most of the financial institutions that construct risk profiles of their clients. Many of their questionnaires contain questions that measure risk tolerance both by the variance of returns and by shortfall measures.The result of the study shows that Male investors are dominating in Edelweiss and nearly half of the respondents are unaware about Portfolio activities.
Through this project study, the researcher gained understanding on the usefulness of analyzing Clients Risk Perception and portfolio Activities and their preferred style investment and about their expected returns of investment.
104
BIBLIOGRAPHY BOOKS
C.R. Kothari Research Methodology, Vis wa Prakasan, New Delhi M,Y Khan Financial Services, 3rd edition Tata McGraw-Hill, New Delhi. V, K Bhalla Management of Financial Services Anmol Publications Pvt Ltd, New Delhi. Sudhindra Bhat Security Analysis and Portfolio Management Excel Book, New Delhi. Punithavathy Pandian Security Analysis and Portfolio Management, Vikas publishing House Pvt Ltd, New Delhi Donald E Fischer, Ronald J Jordan, Sixth Edition, Pearson Education (Singapore) Pte Ltd
WEBSITES www.edelweissfin.com www.ebsco.com www.google.com
105

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A study on Risk Perception and Portfolio Management of Equity investors in Edelweiss

1.1 INTRODUCTION TO THE TOPIC

Holy Grace Academy Of Management Studies, Thrissur

A study on Risk Perception and Portfolio Management of Equity investors in Edelweiss

1.2 INTRODUCTION TO THE TOPIC PORTFOLIO MANAGEMENT

Holy Grace Academy Of Management Studies, Thrissur

A study on Risk Perception and Portfolio Management of Equity investors in Edelweiss

1.3 STATEMENT OF PROBLEM

1.4 OBJECTIVES OF THE STUDY Primary Objective

To bring out the importance of portfolio management of equity investors.

To know about the Investors knowledge and experience of investing in equities.

Holy Grace Academy Of Management Studies, Thrissur

A study on Risk Perception and Portfolio Management of Equity investors in Edelweiss

1.5 SCOPE OF THE STUDY

Holy Grace Academy Of Management Studies, Thrissur

A study on Risk Perception and Portfolio Management of Equity investors in Edelweiss

1.6 RESEARCH METHODOLOGY INTRODUCTION:

Holy Grace Academy Of Management Studies, Thrissur

A study on Risk Perception and Portfolio Management of Equity investors in Edelweiss

Holy Grace Academy Of Management Studies, Thrissur

A study on Risk Perception and Portfolio Management of Equity investors in Edelweiss

DATA COLLECTION METHOD

TOOLS USED FOR DATA ANALYSIS:

Holy Grace Academy Of Management Studies, Thrissur

A study on Risk Perception and Portfolio Management of Equity investors in Edelweiss

Period of the study

1.7 LIMITATIONS OF THE STUDY

Holy Grace Academy Of Management Studies, Thrissur

A study on Risk Perception and Portfolio Management of Equity investors in Edelweiss

2.1 REVIEW OF LITERATURE

Holy Grace Academy Of Management Studies, Thrissur

A study on Risk Perception and Portfolio Management of Equity investors in Edelweiss

Holy Grace Academy Of Management Studies, Thrissur

A study on Risk Perception and Portfolio Management of Equity investors in Edelweiss

Holy Grace Academy Of Management Studies, Thrissur

A study on Risk Perception and Portfolio Management of Equity investors in Edelweiss

Holy Grace Academy Of Management Studies, Thrissur

A study on Risk Perception and Portfolio Management of Equity investors in Edelweiss

Diminishing Avoidance of absolute risk

Invests more in risky assets as his capital grows

Derivative of avoidance of absolute risk <

Constant Avoidance of absolute risk

Doesn't change his investment in risky assets as capital grows

Increasing Avoidance of absolute risk

Invests less in risky assets as his capital grows

Holy Grace Academy Of Management Studies, Thrissur

A study on Risk Perception and Portfolio Management of Equity investors in Edelweiss

Diminishing Avoidance of relative risk

Percentage invested in risky assets grows with capital growth

Constant Avoidance of relative risk

Percentage invested in risky assets unchanged as capital grows

Increasing avoidance of relative risk

Percentage invested in risky assets decreases with capital growth

A study on Risk Perception and Portfolio Management of Equity investors in Edelweiss

Holy Grace Academy Of Management Studies, Thrissur

A study on Risk Perception and Portfolio Management of Equity investors in Edelweiss

Holy Grace Academy Of Management Studies, Thrissur

A study on Risk Perception and Portfolio Management of Equity investors in Edelweiss

Holy Grace Academy Of Management Studies, Thrissur

A study on Risk Perception and Portfolio Management of Equity investors in Edelweiss

RISK RETURN MATRIX OF EQUITY

Holy Grace Academy Of Management Studies, Thrissur

A study on Risk Perception and Portfolio Management of Equity investors in Edelweiss

2.3 Portfolio Management