Port folio management

Por t f ol io Management
From the rational edge: the first in a new series of articles O n portfolio management, this
introduction expresses IBM’s viewpoint about the foundations and essentials of
portfolio management, and discusses ideas and assets that support and enable effective
portfolio management practices.
A good way to begin understanding what portfolio management i s (and is not) may be to define
the term portfolio. In a business context, we can look to the mutual fund industry to
explain the term's origins. Morgan Stanley's Dictionary of Financial Terms offers the
following explanation
If you own more than one security, you have an investment portfolio. You build the portfolio by
buying additional stocks, bonds, mutual funds, or other investments. Your goal is to increase the
portfolio’s value by selecting investments that you believe will go up in price
According to modern portfolio theory, you can reduce your investment risk by creating a
diversified portfolio that includes enough different types, or classes, of securities so that at least
some of them May produce strong returns in any economic climate.
Executives and managers of organizations both large and small manage portfolios of assets and
activities representing what the business is and what it does. Managed well, these portfolios
directly support the effective and efficient achievement of mission goals. Managed poorly, these
portfolios target achievement of differing and sometimes competing objectives or inappropriately
expend resources on low value activities; ultimately diminishing the organization’s ability to
maximize value creation. thus, the focus of portfolio management is the optimization of resource
deployment across the collection of activities most directly supporting achievement of mission
goals.
Portfolios are the collections of either assets sharing similar characteristics or activities
supporting achievement of common objectives. individual items with the collection may or may
not be interdependent or directly related. these logical groupings, however,

Facilitate measurement, comparison, and prioritization which in-turn provides portfolio
managers with the information necessary to make and implement decisions that maximize value
creation for the resources expended.
Investing in various types of assets is an interesting activity that attracts people from all walks
of life irrespective of their occupation, economic status, education and family background.
When a person has more money then he requires for current consumption, he would be called as
a potential investor. The investor who is having extra cash could invest it in securities or in any
other asset like gold or real estate or could simply deposit it in his bank account. The companies
that have extra income may like to invest their money in the extension of the existing firm or
undertake new venture. All of these activities in a broader sense mean investment.

Need for The Study
Portfolio Management Presents the best investment plans to the individuals as per to the
individuals as per their income, age and ability to undertake risk. Portfolio management
minimizes the risk involved in investing and also increases the chance of making profits.
Portfolio management understands the clients financial need and suggest the best and unique
investment policy for them with risk involved. Portfolio management enables the portfolio
managers to provide customized investment solutions to client as their need and requirements.

Objectives of The Study
· To understand, analyze and select the best portfolio.
· To study the risk and returns of the selected sample companies
· The correlation among the different portfolios.
· To help the investors to choose wisely between alternatives.
· To study the comparison of the equity securities.

Scope of The Study
· Economic liberalization has accelerated the pace of development in the securities market,
which has undergone a sea change during the last 2 decades.
· In India, the role of securities market in mobilizing & channelizing private capital for
the economic development of the country has increased over the years and the securities
market itself has undergone structural transformation with the introduction of
computerized online trading & interconnected market system.
· Investing in securities such as shares, debentures & bonds is profitable well as exciting. It
is indeed rewarding but involves a great deal of risk & need artistic skill. Investing in
financial securities is now considered to be one of the most risky avenues of investment.
· Portfolio Management deals with the analysis of individual securities as well as with the
theory & practice of optimally combining securities into portfolios.
· To study of investment for investor to choose best securities in the market.

Research Methodology
Research design or research methodology is the procedure of collecting, analyzing and
interpreting the data to diagnose the problem and react to the opportunity in such a way
where the costs can be minimized and the desired level of accuracy can be achieved to arrive
at a particular conclusion.
Primary Data:
The primary data are those which are collected a fresh and for the first time and thus
happened to be original in character. Primary data include the information collected from the
officials and existing company through discussions.
Secondary Data:
The secondary data, on the other hand are those which have already been collected by
someone else and which have already been passed though the statically process.
The secondary data include the information from the company annual reports which include
financial statement like balance sheet and income statement and such other information from
text books of financial management, journals and magazine also been collected.
The methodology using for the study for the completion of the project is secondary data
Statistical Tools
· Average returns= R/N
Where: R =returns
N=number of times period
· Standard Deviation= ( variance)
· Variance=1/n-1( d2)
· Covariance(covab)=1/n-1( dx.dy)
· Correlation of coefficient=cov ab/ σa*σb

· Wa = (σb2 )-rab (σa)( σb)
___________________
(σa)2+( σb)2-2rab(σa)( σb)
W = Means Weight of portfolio
· σp= σ2*(Xa)2+σb2*(Xb)2+2rab*σa*σb*Xa*Xb
· Rp=W1R1+W2R2(for two securities)

Limitations of The Study:
The study has certain constraints which has limited to its scope and objectives of the
study.
· From BSE and NSE listing – a very few and randomly selected scripts are analyzed.
· For study purpose 5 Companies will be taken for Calculations.
· Detailed study of the topic was not possible due to limited period of the project
· Study is limited period 5 years.
· The calculations based on secondary data only

Review of Literature
Previous Literature and Theory
There are numerous methods for valuing equity securities; including methods more heavily
employed before the advent of quantitative equity portfolio construction and management.
These theories include the arbitrage pricing theory (apt), capital asset pricing model (capm),
and discounted cash flow (dcf). Although modern portfolio management still employs these
models, they have been replaced with newer, more effective models such as quantitative
equity portfolio management.
According to the quantitative equity portfolio management theory, several factors including
price to earnings, price/earnings before interest, taxes, depreciation, and amortization
(ebitda), and price/cash flow are important in the fundamental factor modeling process.
Price/ebitda is the ratio of the current price to a different iteration of the firm’s earnings. The
price/cash flow ratio measures the security’s price in relation to its generated cash flow,
which is a measure of operating efficiency. The price to earnings ratio, or P/E, is illustrated as
the price of the underlying stock divided by the annual earnings of the target firm. This helps
determine the fair value of the firm. According to qepm, the price of a given security can be
significantly attributed to a combination of these factors. The importance of these factors,
however, may vary for different stocks making it important to determine their influence on an
individual basis. Thus, in order to build a useful model for each stock these factors must be
measured against time in predicting historical returns in order to make the model truly
significant.
A portfolio is a collection of securities since it is really desirable to invest the entire funds
of an individual or an institution or a single security, it is essential that every security be
viewed in a portfolio context. Thus it seems logical that the expected return of the portfolio.
portfolio analysis considers the determine of future risk and return in holding various blends
of individual securities portfolio expected return is a

weighted average of the expected return of the individual securities but portfolio variance, in
short contrast, can be something reduced portfolio risk is because risk depends greatly on the
co-variance among returns of individual securities. Portfolios, which are combination of
securities, may or may not take on the aggregate characteristics of their individual parts.
Since portfolios expected returns a weighted average of the
expected return of itssecurities, the contribution of each security the portfolio’s expected retur
ns depends on itsexpected returns and its proportionate share of the initial portfolio’s market
value. it follows that an investor who simply wants the greatest possible expected return
should hold one security; throne which is considered to have a greatest expected return.
Programmer and projects can be scrutinized and monitored to ensure ongoing alignment with
strategic objectives and business imperatives.
Thee broad allocation of skilled programmer & project resources can be optimized.
Commitments.Program me and project demands on operational business can be managed and
coordinated at a corporate level.

Industry profile
History of Stock Exchanges
In 1860, the exchange flourished with 60 brokers. In fact the 'Share Mania' in India began
when the American Civil War broke and the cotton supply from the US to Europe stopped.
Further the brokers increased to 250.
At the end of the war in 1874, the market found a place in a street (now called Dalal Street).
In 1887, "Native Share and Stock Brokers' Association" was established. In 1895, the
exchange acquired a premise in the street which was inaugurated in 1899.
Introduction
In general, the Financial Market is divided into two, Money Market and Capital Market.
Securities market is an important, organized capital market where transaction of capital is
facilitated by means of direct financing using securities as a commodity. Securities market
can be divided into a primary market and secondary market.
Primary Market
The primary market is an intermittent and discrete market where the initially listed shares are
traded first time, changing hands from the listed company to the investors. It refers to the
process through which the companies, the issuers of stocks, acquire capital by offering their
stocks to investors who supply the capital. In other words primary market is that part of the
capital markets that deals with the issuance of new securities. Companies, Governments or
Public sector institutions can obtain funding through the sale of a new stock or bond issue.
This is typically done through a syndicate of securities dealers. The process of selling new
issues to investors is called Underwriting. In the case of a new stock issue, this sale is called
an Initial Public Offering (IPO). Dealers earn a commission that is built into the price of the
security offering, though it can be found in the prospectus
Secondary Market

The secondary market is an on-going market, which is equipped and organized with a place,
facilities and other resources required for trading securities after their initial offering. It refers
to a specific place where securities transaction among many and unspecified persons is
carried out through intermediation of the securities firms, i.e., a licensed broker, and the
exchanges, a specialized trading organization, in accordance with the rules and regulations
established by the exchanges.
A bit about history of stock exchange, they say it was under a tree that it all started in
1875.Bombay Stock Exchange (BSE) was the major exchange in India till 1994.National
Stock Exchange (NSE) started operations in 1994.
NSE was floated by major banks and financial institutions. It came as a result of Harshad
Mehta’s scam of 1992. Contrary to popular belief the scam was more of a banking scam than
a stock market scam. The old methods of trading in BSE were people assembling on what as
called a ring in the BSE building. They had a unique sign language to communicate apart
from all the shouting. Investors weren't allowed access and the system was opaque and
misused by brokers. The shares were in physical form and prone to duplication and fraud.
NSE was the first to introduce electronic screen based trading. BSE was forced to follow suit.
The present day trading platform is transparent and gives investors prices on a real time basis.
With the introduction of depository and mandatory dematerialization of shares chances of
fraud reduced further. The trading screen gives you top 5 buy and sell quotes on every scrip.
A typical trading day starts at 10 ending at 3.30 Monday to Friday. BSE has 30 stocks which
make up the Sensex .NSE has 50 stocks in its index called Nifty. FII s Banks, financial
institutions, mutual funds are biggest players in the market. Then there are retail investors and
speculators. The last ones are the ones who follow the market morning to evening; Market
can be very addictive like blogging though stakes are higher in the former.
Origin of Indian Stock Market
The origin of the stock market in India goes back to the end of the eighteenth century when
long-term negotiable securities were first issued. However, for all practical purposes, the real
beginning occurred in the middle of the nineteenth century after the enactment of the
Companies Act in 1850, which introduced the features of limited liability and generated
investor interest in corporate securities.
An important early event in the development of the stock market in India was the formation
of the native share and stock brokers 'Association at Bombay in 1875, the precursor of the

present day Bombay Stock Exchange. This was followed by the formation of
associations/exchanges in Ahmadabad (1894), Calcutta (1908), and Madras (1937). In
addition, a large number of ephemeral exchanges emerged mainly in buoyant periods to
recede into oblivion during depression times subsequently.
Entrepreneurs needed money for long term whereas investors demanded liquidity – the
facility to convert their investment into cash at any given time. The answer was a ready
market for investments and this was how the stock exchange came into being.
Stock exchange means anybody of individuals, whether incorporated or not, constituted for
the purpose of regulating or controlling the business of buying, selling or dealing in
securities. These securities include:
· Shares, scrip, stocks, bonds, debentures stock or other marketable securities of a
like nature in or of any Incorporated Company or other Body Corporate;
· Government securities and
· Rights or interest in securities.
The Bombay Stock Exchange (BSE) and the National Stock Exchange of India Ltd (NSE) are
the two primary exchanges in India. In addition, there are 22 Regional Stock Exchanges.
However, the BSE and NSE have established themselves as the two leading exchanges and
account for about 80 per cent of the equity volume traded in India. The NSE and BSE are
equal in size in terms of daily traded volume. The average daily turnover at the exchanges has
increased from Rs.851 crore in 1997-98 to Rs 1,284 crore in 1998-99 and further to Rs 2,273
crore in 1999-2000 (April –
August 1999). NSE has around 1500 shares listed with a total market capitalization of around
Rs 9, 21,500 crore.
The BSE has over 6000 stocks listed and has a market capitalization of around Rs 9, 68,000
crore. Most key stocks are traded on both the exchanges and hence the investor could buy
them on either exchange. Both exchanges have a different settlement cycle, which allows
investors to shift their positions on the bourses. The primary index of BSE is BSE Sensex
comprising 30 stocks. NSE has the S&P NSE 50 Index (Nifty) which consists of fifty stocks.
The BSE Sensex is the older and more widely followed index.
It facilitates more efficient processing, automatic order matching, faster execution of trades
and transparency; the scrip's traded on the BSE have been classified into 'A', 'B1', 'B2', 'C', 'F'

and 'Z' groups. The 'A' group shares represent those, which are in the carry forward system
(Badla). The 'F' group represents the debt market (fixed income securities) segment. The 'Z'
group scrip's are the blacklisted companies. The 'C' group covers the odd lot securities in 'A',
'B1' & 'B2' groups and Rights renunciations. The key regulator governing Stock Exchanges,
Brokers, Depositories, Depository participants, Mutual Funds, FIIs and other participants in
Indian secondary and primary market is the Securities and Exchange Board of India (SEBI)
Ltd.
Brief History of Stock Exchanges
Do you know that the world's foremost marketplace New York Stock Exchange (NYSE),
started its trading under a tree (now known as 68 Wall Street) over 200 years ago? Similarly,
India's premier stock exchange Bombay Stock Exchange (BSE) can also trace back its origin
to as far as 125 years when it started as a voluntary non-profit making association.
News on the stock market appears in different media every day. You hear about it any time it
reaches a new high or a new low, and you also hear about it daily in statements like 'The BSE
Sensitive Index rose 5% today'. Obviously, stocks and stock markets are important. Stocks of
Public limited companies are bought and sold at a stock exchange. But what really are stock
exchanges? Known also as the stock market or bourse, a stock exchange is an organized
marketplace for securities (like stocks, bonds, options) featured by the centralization of
supply and demand for the transaction of orders by member brokers, for institutional and
individual investors.
The exchange makes buying and selling easy. For example, you don't have to actually go to a
stock exchange, say, BSE - you can contact a broker, who does business with the BSE, and
he or she will buy or sell your stock on your behalf.
Market Basics
Electronic trading
Electronic trading eliminates the need for physical trading floors. Brokers can trade from
their offices, using fully automated screen-based processes. Their workstations are connected
to a Stock Exchange's central computer via satellite using Very Small Aperture Terminus
(VSATs). The orders placed by brokers reach the Exchange's central computer and are
matched electronically.
Exchanges in India

The Bombay Stock Exchange, Mumbai (BSE) and the National Stock Exchange (NSE) are
the country's two leading Exchanges. There are 20 other regional Exchanges, connected via
the Inter-Connected Stock Exchange (ICSE). The BSE and NSE allow nationwide trading via
their VSAT systems.
Index
An Index is a comprehensive measure of market trends, intended for investors who are
concerned with general stock market price movements. An Index comprises stocks that have
large liquidity and market capitalization. Each stock is given a weight age in the Index
equivalent to its market capitalization. At the NSE, the capitalization of NIFTY (fifty selected
stocks) is taken as a base capitalization, with the value set at 1000. Similarly, BSE Sensitive
Index or Sensex comprises 30 selected stocks. The Index value compares the day's market
capitalization vis-à-vis base capitalization and indicates how prices in general have moved
over a period of time.
Execute an order
Select a broker of your choice and enter into a broker-client agreement and fill in the client
registration form. Place your order with your broker preferably in writing. Get a trade
confirmation slip on the day the trade is executed and ask for the contract note at the end of
the trade date.
Need a broker
As per SEBI (Securities and Exchange Board of India.) regulations, only registered members
can operate in the stock market. One can trade by executing a deal only through a registered
broker of a recognized Stock Exchange or through a SEBI-registered sub-broker.
Contract note
A contract note describes the rate, date, time at which the trade was transacted and the
brokerage rate. A contract note issued in the prescribed format establishes a legally
enforceable relationship between the client and the member in respect of trades stated in the
contract note. These are made in duplicate and the member and the client both keep a copy
each. A client should receive the contract note within 24 hours of the executed trade.
Corporate Benefits/Action.
Split

A Split is book entry wherein the face value of the share is altered to create a greater number
of shares outstanding without calling for fresh capital or altering the share capital account.
For example, if a company announces a two-way split, it means that a share of the face value
of Rs 10 is split into two shares of face value of Rs 5 each and a person holding one share
now holds two shares.
Buy Back
As the name suggests, it is a process by which a company can buy back its shares from
shareholders. A company may buy back its shares in various ways: from existing
shareholders on a proportionate basis; through a tender offer from open market; through a
book-building process; from the Stock Exchange; or from odd lot holders.
A company cannot buy back through negotiated deals on or off the Stock Exchange, through
spot transactions or through any private arrangement.
Settlement cycle
The accounting period for the securities traded on the Exchange. On the NSE, the cycle
begins on Wednesday and ends on the following Tuesday, and on the BSE the cycle
commences on Monday and ends on Friday. At the end of this period, the obligations of each
broker are calculated and the brokers settle their respective obligations as per the
Rules, bye-laws and regulations of the Clearing Corporation. If a transaction is entered on the
first day of the settlement, the same will be settled on the eighth working day excluding the
day of transaction. However, if the same is done on the last day of the settlement, it will be
settled on the fourth working day excluding the day of transaction.
Rolling settlement
The rolling settlement ensures that each day's trade is settled by keeping a fixed gap of a
specified number of working days between a trade and its settlement. At present, this gap is
five working days after the trading day. The waiting period is uniform for all trades. In a
Rolling Settlement, all trades outstanding at end of the day have to be settled, which means
That the buyer has to make payments for securities purchased and seller has to deliver the
securities sold. In India, we have adopted the T+5 settlements cycle, which means that a
transaction entered into on Day 1 has to be settled on the Day 1 + 5 working days, when
funds pay in or securities pay out takes place.

Short selling
Short selling is a legitimate trading strategy. It is a sale of a security that the seller does not
own, or any sale that is completed by the delivery of a security borrowed by the seller. Short
sellers take the risk that they will be able to buy the stock at a more favorable price than the
price at which they "sold short."
Auction
An auction is conducted for those securities that members fail to deliver/short deliver during
pay-in. Three factors primarily give rise to an auction: short deliveries, un-rectified bad
deliveries, and un-rectified company objections.
Separate market for auctions
The buy/sell auction for a capital market security is managed through the auction market. As
opposed to the normal market where trade matching is an on-going process, the trade
matching process for auction starts after the auction period is over.
Shares are not bought in the auction
If the shares are not bought at the auction i.e. if the shares are not offered for sale, the
Exchange squares up the transaction as per SEBI guidelines. The transaction is squared up at
the highest price from the relevant trading period till the auction day or at 20 per cent above
the last available Closing price whichever is higher. The pay-in and pay-out of funds for
auction square up is held along with the pay-out for the relevant auction.
Bad Delivery
SEBI has formulated uniform guidelines for good and bad delivery of documents. Bad
delivery may pertain to a transfer deed being torn, mutilated, overwritten, defaced, or if there
are spelling mistakes in the name of the company or the transfer. Bad delivery exists only
when shares are transferred physically. In "Demat" bad delivery does not exist.

Company Profile
Way2Wealth
Way2Wealth is a premier Investment Consultancy Firm that has been launched with the aim
of making investing simpler, more understandable and profitable for the investors.
Way2Wealth brings a wide range of product offerings from Fixed Income Securities, Life
Insurance and Mutual Funds to Equity and Derivatives (on the National Stock Exchange) for
the convenience and benefit of it customers. Way2Wealth has over 40 easily accessible
Investment Outlets spread across 20 major towns and cities in the country
Mission:
Way2Wealth is a premier Investment Consultancy Firm, launched with the mission “to be the
pre-eminent destination for personalized financial solutions helping individuals creates
wealth”.
Philosophy:
We believe that “our knowledge combined with our investors trust and involvement will lead
to the growth of wealth and make it an exciting experience”
Heritage:
Sivan Securities started in 1984, has a long and illustrious track record of being amongst the
premier Financial Intermediaries in the country as well as being an incubator for IT start-up
firms. The Venture Capital division came to be known as Global Technology Ventures (GTV
has provided venture capital to companies such as Keshena Technologies, Mind Tree, Vega
etc.) and the Financial Intermediary Division was spun off as Way2Wealth in the year 2000.
Way2Wealth is promoted by Sivan Securities and Global Technology Ventures Ltd. Over the
years, Sivan has developed a strong reputation for navigating its investors through all the ups
and downs in the Market. Way2Wealth has inherited these same values in addition to a base
of 75,000 individual customers, over 300 corporate/institutional clients. Other companies in

the group include Amalgamated Bean Coffee Trading Company Ltd. (one of the largest
Coffee Exporters in India) and Café Coffee Day, a chain of youth hangout coffee parlors.
Way2Wealth has a very credible management team, who has well over 100 man-years of
experience amongst themselves.
The Way2Wealth Research Desk:
Research is at the core of our advice. We believe that sound investments Decision are made
on sound analysis of facts, past performance and credible Market information. Our research
cell focuses on providing data and analysis.
To help customers make sound investment Decision. The Research cell is managed by a
highly qualified team that is handpicked and trained extensively in the proprietary
Way2Wealth Investment Philosophy centered on finding the best investment solutions for our
customers. Based in the commercial capital enables the team to have a pulse of the trends
allowing dissemination of the most up-to-date and latest information. The Way2Wealth
research cell measures up to international standards of technology and on-site resources.
Investment Outlets:
Way2Wealth Investment outlets are designed to be places where retail investors can come in
touch with Investment opportunities in an atmosphere of convenience and comfort. The look
and feel of the offices across India projects a consistent branch image for the company. The
features that enable a unique facility for retailing financial services include among others:
Easily visible branches set up in the commercial spaces of potential investment zones ranging
between 750sft to 1000sft.Most branches are located in the ground floor sporting huge glass
frontage promoting easy accessibility and reflecting our attitude of complete transparency.
The major portion of the branch area dedicated for customer use. The furniture is in CKD
formats to add flexibility in using the branch for Investors purposes.
Connectivity to NSE for trading facilities:
· Information to our customers.
· Each branch comprises of trained and qualified Investment advisors to take care of the
needs of the customers.

The Way2Wealth Planner – Your Personal Investment Guide:
Every investor has unique needs. So we have created a wide range of services, where you
will always find exactly what you are looking for. Aiding you in this effort is the
quintessential Way2Wealth Investment Planner. These hand-selected planners are made up of
professionals with the expertise and experience to meet your unique financial needs. These
financial planners reflect our commitment to provide financial advice based solely on your
objectives without traditional conflicts of interest.
The Way2Wealth advantage:
Personalized Investment Solutions: All our customers receive individual attention Full
choice of Investments: Mutual funds, Life Insurance, Fixed Income Instruments, Equity and
Derivatives
Unbiased advice:
We do not have any products of our own Processing support: We take care of all your paper
work and provide service at your doorstep. Investor eligibility criteria: Customers with a
minimum investment amount as low as Rs. 2500 per month can avail of our services.
This unique Way2Wealth concept can be easily experienced through the innovative and
customer friendly network of Investment outlets that spans 20 major towns and cities in the
country.
Work environment:
Way2Wealth is a growing organization, which is an ideal place for individuals with high
ambitions. The working atmosphere is highly charged with a young and energetic team of
qualified professionals. The average age of the team is 28. Further it provides an environment
where conventions, protocols do not come in the way of good ideas. Being in the knowledge
industry we associate a high premium to the quality of training.. The holistic Training on
investment avenues, sales, presentation skills, which are done periodically to personally
enrich each individual Trust and Integrity are the values most sought out by our customers. In
addition, every individual who can also identify with the Way2Wealth philosophy “Our
knowledge
Combined with our customers trust and involvement will lead to the growth of wealth in an
exciting manner” can look forward to a long and illustrious career in the company. At
Way2Wealth, the model investors are our employees themselves. In the process of creating
wealth for our investors, the rewards structure ensures that our employees themselves are also
creating wealth.

Network:
In Delhi, Mumbai, Hyderabad, Chennai and Bangalore . Additionally the company has a
network of 50 Investment outlets Headquartered in Bangalore, Way2Wealth has five regional
offices located with the state of the art infrastructure to cater to the needs of retail investors.
These outlets are spread across more than 20 major towns and cities in the country.
About way2wealth logo:
The word “Way” brings focus to the mind. It gives direction. “Wealth” denotes stability,
discipline and long term. Blue symbolizes Knowledge. We are in a Knowledge industry.
Knowledge is limitless, so is the sky and sea, both of which are blue in color. Knowledge
applied leads to creation of wealth for our Investors. Hence, the color blue for knowledge.
Red symbolizes Trust. Red is the color of blood and the heart. Trust is a matter of the heart.
Our knowledge bears fruit only when the investor places his Trust in us. Yellow symbolizes
Excitement and also the Involvement of the investor. Yellow is a vibrant color, which evokes
feelings of excitement. We strive to make investing an exciting and involving experience for
our investors. Green symbolizes Growth. Growth in Nature is visible in the form of plants
and trees; all of which are green. Knowledge, Trust and Excitement should ultimately lead to
Growth of the investors’ wealth. Hence, the color green has been chosen for Growth.

Conceptual Frame Work
Portfolio Management:
Portfolio theory was introduced by Harry Markowitz (1952) with his paper on “portfolio
Selection. Before this work, investors focused on assessing the risks and benefits of
individual securities.
Tobin (1958) expanded on Markowitz’s work and added a risk-free asset to the analysis in
order to leverage or de-leverage, as appropriate, portfolio on the ‘’Efficient frontier” leading
to the concepts of a super-efficient portfolio and the capital market line. With leverage,
portfolios on the capital market line could outperform portfolios on the “efficient frontier”
Sharpe (1964) then prepared a capital asset pricing model that noted that all investors should
hold the market portfolio, whenever leveraged or de-leveraged, with positions on the risk-free
asset .In 1990, Markowitz, along with Merton miller and William Sharpe, shared a Nobel
Prize
For their work on a theory for portfolio selection. Portfolio theory provides a context to help
understand the interactions of systematic risk and reward. It has helped to shape how
institutional portfolios are managed and fostered the use of passive investment management
techniques. It led to the use of portfolio management in numerous other areas, especially
Concept of Portfolio:
In simple term Portfolio can be defined as combination of securities that have Return and
Risk characteristics of their own. Portfolio may or may not take on the aggregate
characteristics of their individual parts. Portfolio is the collection of financial or real assets
such as equity shares, debentures, bonds, treasury bills and property etc. Portfolio is a
combination of assets or it consists of collection of securities. These holdings are the result of

individual preferences, decisions of the holders regarding risk, return and a host of other
considerations.
Portfolio management concerns the construction & 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 risks rather that 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.
Introduction to Portfolio Management:
Investing in securities such as shares, debentures and bonds is profitable as well as exciting.
It indeed it involves a great deal of risk. 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, group
of securities is called a Portfolio Creation of a Portfolio helps to reduce risk without
sacrificing returns.
Definition:
“Portfolio management is the process of building, managing and assessing an inventory
of company products and projects. ...”
Portfolio Management:
An investor considering investment in securities is faced with the problem of choosing from
among a large number of securities. His choice depends upon the risk-return characteristics of
individual securities. He would attempt to choose the most desirable securities and like to
allocate his funds over this group of securities. Again he is faced with the problem of
deciding which securities to hold and how much to invest in each.
The investor faces an infinite number of possible portfolio or group of securities. The risk and
return characteristics of Portfolios differ from those of individual securities combining to
form a Portfolio. The investor tries to choose the optimal portfolio taking into consideration
the risk-return characteristics of all possible portfolios.

As the economic and financial environment keeps changing the risk-return characteristics of
individual securities as well as portfolio also change. An investor invests his funds in a
portfolio expecting to get a good return with less risk to bear.
Portfolio Management comprises all the processes involved in the creation and maintenance
of an investment portfolio. It deals specifically with Security analysis, Portfolio analysis,
Portfolio selection, Portfolio revision and Portfolio evaluation.
Need for Portfolio Management:
Portfolio management is a process encompassing many activities of investments in assets and
securities. It is a dynamic and flexible concept and involves regular and systematic analysis,
judgment and actions. The objective of this service is to help the unknown and investors with
the expertise of professionals in investment portfolio management. It involves construction of
portfolio based upon the investors’ objective, constraints, and preferences for a risk and
returns and tax liability. The portfolio reviewed and adjusted from time to time in tune with
the market conditions. The evaluation of portfolio is to be done in terms of targets set for risk
and return. The changes in the portfolio are to be effected to meet the changing conditions.
Portfolio construction refers to the allocation of surplus funds in hand among the variety of
financial assets open for investment. Portfolio theory concerns itself with the principals
governing such allocation. The modern view of investment is oriented more towards the
assembly of proper combinations of individual securities to form investment portfolios. A
combination of securities held together will give a beneficial result if they are grouped in a
manner to secure a high return after taking into consideration the risk element.
The modern theory is of the view that by diversification, risk can be reduced. Diversification
can be made by the investor either by having a large number of shares of companies in
different regions, in different industries are those producing different types of product lines.
Modern theory believes in the perspective of combination of securities under constraints of
risk and return.
Aim:
The aim of Portfolio Management is to achieve the maximum return from a portfolio which
has been delegated to be managed by an individual manager or financial institution. The
manager has to balance the parameters which define a good investment ie security, liquidity
and return. ...
Objectives of Portfolio Management:

The objective of portfolio management is to invest in securities in such a way that:
 Maximizes one's Return and
 Minimizes risks
In order to achieve one's investment objectives.
A good portfolio should have multiple objectives and achieve a sound balance among them.
Any one objective should not be given undue importance at the cost of others.
 Safety of the Investment:
The first important objective of a portfolio, no matter who owns it, is to ensure that the
investment is absolutely safe. Other considerations like Income, Growth, etc., only come
into the picture after the safety of the investments is ensured.
Investment safety or minimization of risks is one of the important objectives of
portfolio management. There are many types of risks, which are associated with
investment in equity stocks, including super stocks. We should keep in mind that there is
no such thing as a Zero-Risk investment. Moreover, relatively Low-Risk investments give
correspondingly lower returns.
 Stable Current Returns:
Once investments safety is guaranteed, the portfolio should yield a steady current
income. The current returns should at least match the opportunity cost of the funds of the
investor. What we are referring is current income by way of interest or dividends, not
capital gains.
 Appreciation in the value of capital
A good portfolio should appreciate in value in order to protect the investor from any
erosion in purchasing power due to inflation. In other words, a balanced
Portfolio must consist certain investments, which tend to appreciate in real value after
adjusting for inflation.
 Marketability:
A good portfolio consists of investments, which can be marketed without
difficulty. If there are too many unlisted or inactive shares in our portfolio, we will have
to face problems in encasing them, and switching from one investment to another. It is
desirable to invest in companies listed on major stock exchanges, which are actively
traded.
Liquidity:

The portfolio should ensure that there are enough funds available at short notice to
take care of the investor's liquidity requirements. It is desirable to keep a line of credit
from a bank fro use in case it become necessary to participate in Right Issues, or for any
other personal needs.
 Tax Planning:
Since taxation is an important variable in total planning. A good portfolio should
enable its owner to enjoy a favourable tax shelter. The portfolio should be developed
considering not only income tax, but capital gains tax, and gift tax, as well. What a good
portfolio aims at is tax planning, not tax evasion or tax avoidance.
 Elements of portfolio management
Portfolio management is on-going process involving the following basic takes.
a. Identification of investor’s objectives, constraints and preferences.
b. Strategies are to be developed and implemented in tune with investment
policy formulated.
c. Review and monitoring of the performance of the portfolio
d. Finally the evaluation of portfolio.
 Sebi Guidelines to the Portfolio Managers:
On 7th January 1993 the Securities Exchange Board of India issued regulations to the
portfolio managers for the regulation of portfolio management services by merchant bankers.
They are as follows:
¨ Portfolio management services shall be in the nature of investment or
consultancy management for an agreed fee at client’s risk.
¨ The portfolio manager shall not guarantee return directly or indirectly the fee
should not be depended upon or it should not be return sharing basis.
¨ Various terms of agreements, fees, disclosures of risk and repayment should
be mentioned.
¨ Clients' funds should be kept separately in client wise account, which should
be subject to audit.
¨ Manager should report clients at intervals not exceeding 6 months.

¨ Portfolio manager should maintain high standard of integrity and not desire
any benefit directly or indirectly form client’s funds.
¨ The client shall be entitled to inspect the documents.
¨ Portfolio manger shall not invest funds belonging to clients in balancing, bills
discounting and lending operations.
¨ Client money can be invested in money and capital market instruments.
¨ Settlement on termination of contract as agreed in the contract.
¨ Client’s funds should be kept in a separate bank account opened in scheduled
commercial bank.
¨ Purchase or Sale of securities shall be made at prevailing market price.
¨ Portfolio managers with his client are fiduciary in nature. He shall act both as
an agent and trustee for the funds received.

Data analysis and interpretation
Calculation of Average Returns of Companies
Calculation of Average Returns of WIPRO
Table-1
Year Opening share
price
(p0)
Closing
Share
Price
(p1)
(p1-p0) (p1-p0)/
p0*100
(Returns)
2009-2010 529.05 233.4 -295.65 -55.88
2010-2011 233.4 680 446.6 191.34
2011-2012 685 491.25 -193.75 -28.28
2012-2013 496.8 398.7 -98.1 -19.74
2013-2014 399 394.5 -4.5 -1.127
Total Return 86.31
Source: NSE/Products/Equities/Historical Data/ Security-wise High/low Archives.
Average Return = 86.31/5=17.26

Interpretation:
By the comparison of the past five years data the Wipro has got negative Return in four out of
five years. In the year 2010-2011 Wipro has given more profits. Due to the improvement of
the share market in the year 2010-2011 it is recovering from the financial crises. Hence it has
given more profits in that year.
TCS
TABLE-2
Year Opening
share price
(p0)
Closing
Share
Price
(p1)
(p1-p0) (p1-p0)/
p0*100
2009-2010 1077 477.9 -599.1 -55.62
2010-2011 480 750.25 270.25 56.3
2011-2012 754.8 1165.65 410.85 54.43
2012-2013 1167 1160.65 -6.35 -0.54
2013-2014 1161 1255.85 94.85 8.16
Total Return
62.73
Average Return =62.73/5=12.54

Interpretation:
By the comparison of the past five years data TCS has given good results in two years and the
returns are fluctuating. In 2010-2011, 2011-2012 TCS has given positive returns and
remaining years negative.
STATE BANK OF INDIA
TABLE-3
Year Opening share
price
(p0)
Closing
Share
Price
(p1)
(p1-p0) (p1-p0)/
p0*100
2009-2010 2380 1288 -1092 -45.88
2010-2011 1329 2269 940 70.72
2011-2012 2175 2811.9 636.9 29.28
2012-2013 2832.7 1619.05 -1213.7 -42.84
2013-2014 1629 2385.5 756.5 46.43
Total Return 57.71

Interpretation:
By seeing the graph above the list shows that SBI Company returns is negative in the year
2009-2010 and 2012-2013, other years are positive returns with increasing year by year (high
in 2010-2011).
ICICI
TABLE-4
Year
Opening
share price
(p0)
Closing
Share
Price
(p1)
(p1-p0) (p1-p0)/
p0*100
2009-2010 1240 448.1 -791.9 -63.86
2010-2011 450 877 427 94.88
2011-2012 877 1145.1 268.1 30.57
2012-2013 1154 684.65 -469.35 -40.67
2013-2014 690.15 1138.25 448.1 64.92
Total Return
85.84

Interpretation:
By seeing the above graph ICICI BANK Company has got the highest returns in the year
2010-2011 and negative returns in the year 2009-2010 and 2012-2013 and other years were
positive returns. In the year 2011-2012 return was low.
SAGAR CEMENT
TABLE-5
Year Opening
share price
(p0)
Closing
Share
Price
(p1)
(p1-p0) (p1-p0)/
p0*100
2009-2010 418.6 150.1 -268.5 -64.14
2010-2011 142.65 172.3 29.65 20.78
2011-2012 172.2 150.8 -21.4 -12.42
2012-2013 145.2 147.45 2.25 1.54
2013-2014 147 290.2 143.2 97.41
Total Return
43.17

Interpretation: On comparison of the past five years data it has known that except in the
year Sagar cement has given fluctuating returns. In the year 2013-2014 it has got highest
return. In the year 2010-2011 returns are moderate and later in all the years it is got negative .
JKC CEMENT
TABLE-6
Year Opening
share price
(p0)
Closing
Share
Price
(p1)
(p1-p0) (p1-p0)/
P0*100
2009-2010 218.15 42.3 -175.85 -80.6
2010-2011 42.3 147.9 105.6 249.64
2011-2012 148 145.7 -2.3 -1.55
2012-2013 144.5 101 -43.5 -30.1
2013-2014 100 360.35 260.35 260.35
TotalReturn 397.74
Average Return = 397.74/5=79.54

Interpretation:
The above the diagram shows that JKC Company returns is positive in the year 2010-2011-
2013-2014 (its increased more than 100%) and other years are negative returns.
RANBAXY
TABLE-7
Year Opening share
price
(p0)
Closing
Share
Price
(p1)
(p1-p0) (p1-p0)/
p0*100
2009-2010 428 252.55 -175.45 -40.99
2010-2011 252 517.95 265.95 105.53
2011-2012 518.5 598.65 80.15 15.45
2012-2013 602.25 404.9 -197.35 -32.7
2013-2014 403.9 503 99.1 24.53
Total Return
71.82

Interpretation:
By the comparisons of past five years data Ranbaxy company has got highest returns in the
year 2010-2011. In the year 2009-2010 the returns are negative. In 2013-2014 the returns are
moderate.
CIPLA
TABLE-8
Year Opening share
price
(p0)
Closing
Share
Price
(p1)
(p1-p0) (p1-p0)/
p0*100
2009-2010 215 186.6 -28.4 -15.21
2010-2011 187 335.05 148.05 44.18
2011-2012 338 369.8 31.8 8.59
2012-2013 370.9 319.9 -51 -15.94
2013-2014 320.9 4141.25 93.5 22.53
Total Return 44.15

Source: NSE/Products/Equities/Historical Data/ Security-wise High/low Archives
.Average Return =44.15/5=8.83
Interpretation:
The above the diagram shows that CIPLA Company returns is positive in the year 2010-
2011(its increased more than 100%) 2009-2010, 2012-2013 years are negative returns.
MTNL
TABLE-9
Year Opening share
price
(p0)
Closing
Share
Price(p1)
(p1-p0) (p1-p0)/
p0*100
2009-2010 193.85 79.15 -114.7 -59.16
2010-2011 79.75 73.70 -6.05 -7.58
2011-2012 74 55 -19 -25.67
2012-2013 54.30 22.80 -31.5 -58.01
2013-2014 22.96 26.4 3.44 14.98
Total Return -135.44
Average Return = -135.44/5=-27.09

Interpretation:
The above the diagram shows that MTNL Company returns is positive in the year 2013-2014
and other years are negative returns(In 2012-2013 high lie negative) .
BHARTI AIRTEL
TABLE-10
Year Opening share
price
(p0)
Closing
Share
Price
(p1)
(p1-p0) (p1-p0)/
p0*100
2009-2010 1000 715.50 -284.5 -28.45
2010-2011 715 329.75 -385.25 -53.88
2011-2012 329.85 358.80 28.95 8.77
2012-2013 360.90 343.50 -17.4 -4.82
2013-2014 344.50 317.50 -27 -7.83
Total Return -86.21
Average Return =-86.21/5=-17.24

Interpretation:
The above the diagram shows that AIRTEL Company returns is positive in the year 2011-
2012, and other years are negative returns(In 2010-2011 high lie negative) .
Calculation Of Standard Deviation
WIPRO
TABLE-11
Year
Total
Average(R)
Average
Returns
Deviation(d)
R-R` D2
2009-2010 -55.88 17.26 -73.14 5349.4596
2010-2011 191.34 17.26 174.08 30303.846
2011-2012 -28.28 17.26 -45.54 2073.8916
2012-2013 -19.74 17.26 -37 1369
2013-2014 -1.127 17.26 -18.387 338.08177
Variance 9858.56
Sd 99.29
Variance = 9858.56
Standard Deviation =√ 99.29
TCS

TABLE-12
Year Total
Average(R)
Average
Returns
Deviation(d)
R-R`
D2
2009-2010 -55.62 12.54 -68.16 4645.78
2010-2011 56.3 12.54 43.76 1914.9376
2011-2012 54.43 12.54 41.89 1754.7721
2012-2013 -0.54 12.54 -13.08 171.0864
2013-2014 8.16 12.54 -4.38 19.1844
Variance 2126.44
Sd 46.11
Variance = 2126.44
SBI
TABLE-13
Year
Total
Average(R)
Average
Returns
Deviation(d)
R-R` D2
2009-2010 -45.88 11.54 -57.42 3297.0564
2010-2011 70.72 11.54 59.18 3502.2724
2011-2012 29.28 11.54 17.74 314.7076
2012-2013 -42.84 11.54 -54.38 2957.1844
2013-2014 46.43 11.54 34.89 1217.3121
Variance 2822.1332
Sd 53.123754
Variance = 2822.13
ICICI BANK
TABLE-14
Year
Total
Average(R)
Average
Returns
Deviation(d)
R-R` D2
2009-2010 -63.86 17.17 -81.03 6565.8609
2010-2011 94.88 17.17 77.71 6038.8441
2011-2012 30.57 17.17 13.4 179.56
2012-2013 -40.67 17.17 -57.84 3345.4656
2013-2014 64.92 17.17 47.75 2280.0625
Variance 4602.4483

Sd 67.841346
Variance = 4602.44
Standard Deviation = √67.84
SAGAR CEMENT
TABLE-15
Year
Total
Average(R)
Average
Returns
Deviation(d)
R-R` D2
2009-2010 -64.14 8.63 -72.77 5295.4729
2010-2011 20.78 8.63 12.15 147.6225
2011-2012 -12.42 8.63 -21.05 443.1025
2012-2013 1.54 8.63 -7.09 50.2681
2013-2014 97.41 8.63 88.78 7881.8884
Variance 3454.5886
Sd 58.775748
Variance = 3454.58
JKC CEMENTS
TABLE-16
Year
Total
Average(R)
Average
Returns
Deviation(d)
R-R` D2
2009-2010 -80.6 79.54 -160.14 25644.82
2010-2011 249.64 79.54 170.1 28934.01
2011-2012 -1.55 79.54 -81.09 6575.5881
2012-2013 -30.1 79.54 -109.64 12020.93
2013-2014 260.35 79.54 180.81 32692.256
Variance 26466.901
sd 162.686511
Variance = 26466.90

RANBAXY
TABLE-17
Year
Total
Average(R)
Average
Returns
Deviation(d)
R-R` D2
2009-2010 -40.99 14.35 -55.34 3062.5156
2010-2011 105.53 14.35 91.18 8313.7924
2011-2012 15.45 14.35 1.1 1.21
2012-2013 -32.7 14.35 -47.05 2213.7025
2013-2014 24.53 14.35 10.18 103.6324
Variance 3423.71323
Sd 58.5125049
Variance = 3423.71
CIPLA
TABLE-18
Year
Total
Average(R)
Average
Returns
Deviation(d)
R-R` D2
2009-2010 -15.21 8.831 -24.041 577.969681
2010-2011 44.18 8.831 35.349 1249.5518
2011-2012 8.59 8.831 -0.241 0.058081
2012-2013 -15.94 8.831 -24.771 613.602441
2013-2014 22.53 8.831 13.699 187.662601
Variance 657.211151
sd 25.6361298
Variance = 657.21
MTNL
TABLE-19

year
Total
Average(R)
Average
Returns
Deviation(d)
R-R` D2
2009-2010 -59.16 -27.091 -32.069 1028.42076
2010-2011 -7.58 -27.091 19.511 380.679121
2011-2012 -25.67 -27.091 1.421 2.019241
2012-2013 -58.01 -27.091 -30.919 955.984561
2013-2014 14.98 -27.091 42.071 1769.96904
Variance 1034.26818
sd 32.1600401
Variance = 1034.26
BHARTI AIRTEL
TABLE-20
year
Total
Average(R)
Average
Returns
Deviation(d)
R-R` D2
2009-2010 -28.45 -17.24 -11.21 125.6641
2010-2011 -53.88 -17.24 -36.64 1342.4896
2011-2012 8.77 -17.24 26.01 676.5201
2012-2013 -4.82 -17.24 12.42 154.2564
2013-2014 -7.83 -17.24 9.41 88.5481
Variance 596.869575
Sd 24.4309143
Variance = 596.86
Standard Deviation =√24.43
GRAPHICAL REPRESENTATION OF “STANTARD DEVIEATION”

INTERPETITION:
Base on the above calculations standard deviation of JKC cement is highest i.e. 162.68 and
Airtel is lower i.e. 24.43.Where other securities are having moderate standard deviation.
Other securities are earning moderate range such as Wipro Ltd, TCS, SBI Bank, Sagar
Cement, Ranbaxy Laboratories ltd, CIPLA and MTNL.
Calculation Expected Returns And Standard Deviation
Company name Expected returns(%) standard deviation(%)
I.T

WIPRO 17.26 99.29
TCS 12.54 46.11
BANKING
SBI 11.54 56.11
ICICI 17.17 66.84
CEMENT
SAGAR 8.63 58.77
JKC 79.54 162.68
PHARMACEUTICAL
RANBAXY 14.25 58.51
CIPLA 8.83 25.63
TELECOM
MTNL -27.09 32.16
BHARTI AIRTEL -17.24 24.43

INTERPRETITON:
Calculation Of Correlation Between Two Company

WIPRO&TCS
TABLE-21
Year Dev.Of
WIPRO(dx)
Dev. Of
TCS(dy)
Product of dev (dx)
(dy)
2009-2010 -73.14 -68.16 4985.2224
2010-2011 174.08 43.76 7617.7408
2011-2012 -45.54 41.89 -1907.6706
2012-2013 -37 -13.08 483.96
2013-2014 -18.387 -4.38 80.53506
TOTAL dx.dy=11259.7877
correlation of coefficient= 2.45
SBI&ICICI
TABLE-22
Year Dev.Of
SBI(dx)
Dev. Of
ICICI(dy)
Product of dev (dx)
(dy)
2009-2010 -57.42 -81.03 4652.7426
2010-2011 59.18 77.71 4598.8778
2011-2012 17.74 13.4 237.716
2012-2013 -54.38 -57.84 3145.3392
2013-2014 34.89 47.75 1665.9975
TOTAL dx.dy=14300.67
correlation of coefficient=3.96
SAGAR&JKC CEMENTS
TABLE-23
Year Dev.Of
SAGAR(dx)
Dev. Of
JKC(dy)
Product of dev (dx)
(dy)
2009-2010 -72.77 -160.14 11653.3878
2010-2011 12.15 170.1 2066.715
2011-2012 -21.05 -81.09 1706.9445
2012-2013 -7.09 -109.64 777.3476

2013-2014 88.78 180.81 16052.3118
dx.dy=32256.70
Correlation of coefficient=3.37
RANBAXY&CIPLA
TABLE-24
Year Dev.Of
RANBAXY(dx)
Dev. Of
CIPLA(dy)
Product of dev (dx)
(dy)
2009-2010 -55.34 -24.041 1330.42894
2010-2011 91.18 35.349 3223.12182
2011-2012 1.1 -0.241 -0.2651
2012-2013 -47.05 -24.771 1165.47555
2013-2014 10.18 13.699 139.45582
TOTAL dx.dy=5858.21
Correlation of coefficient=3.90
MTNL&AIRTEL
TABLE-25
Year Dev.Of
MTNL(dx)
Dev. Of
AIRTEL(dy)
Product of dev (dx)
(dy)
2009-2010 -32.069 -11.21 359.49349
2010-2011 19.511 -36.64 -714.88304
2011-2012 1.421 26.01 36.96021
2012-2013 -30.919 12.42 -384.01398
2013-2014 42.071 9.41 395.88811
TOTAL dx.dy=-306.55

Correlation of coefficient= - 0.43
INTERPRETITION:
The above graph shows that, BANKING Sector is having a high coefficient of correlation
compared with other companies.
Portfolio Weights
TABLE-26
Company Portfolio Weight
WIPRO&TCS 1.87
SBI&ICICI 1.45
SAGAR&JKC CEMENTS 1.16
RANBAXY&CIPLA 1.68
MTNL&AIRTEL 0.6

INTERPRETITION: The above the diagram show that the portfolio Weights of two securities.
In security A the IT sectors will be high risk and high returns But less risk and good returns in
telecom sector. While in security B telecom sector is high And IT sector will be less
Calculation of Portfolio Risk
TABLE-27
Company Portfolio Risk
WIPRO&TCS 86.31
SBI&ICICI 190.23
SAGAR&JKC 154.01

RANBAXY&CIPLA 94.57
MTNL&AIRTEL 19.12
-
INTERPETITION:
By the study of companies risk and returns it show that the portfolio risk is high in IT sector
Which have more risk and more returns for some period of time its not consistence and
same will be occur for other sectors also.
Calculation Of Portfolio Return
Company Portfolio Risk
WIPRO&TCS 8.43
SBI&ICICI 19.7
SAGAR&JKC 90.88
RANBAXY&CIPLA 5.08

MTNL&AIRTEL -21.17
INTERPRETITION:
The studying of above it show that high portfolio returns are high in cement sectors and less
portfolio returns pharmaceutical & IT sector and TELECOM sector are negative returns.
Correlation Coefficient Between The Companies
Company Name Coefficient Of Correlation
IT
WIPRO
2.45
TCS

BANKING
SBI
3.96
ICICI
CEMENT
SAGAR
3.37
JKC
PHARMACEUTICAL
RANBAXY
3.9
CIPLA
TELECOM
MTNL
- 0.43
BHARTI AIRTEL

INTERPRETITION:
The above graph shows that, BANKING Sector is having a high coefficient
of correlation.

PORTFOLIO RETURNS AND RISK OF COMPANIES
Company Name Returns(%) Risks(%)
IT
WIPRO
8.43 86.51
TCS
BANKING
SBI
19.7 190.2
ICICI
CEMENT
SAGAR
90.08 154
JKC
PHARMACEUTICAL
RANBAXY
5.08 94.57
CIPLA
TELECOM
MTNL
-21.17 19.12
BHARTI AIRTEL

Findings
When we form the optimum of two securities by using minimum variance equation, then the
returns of the portfolio may decrease in order to reduce the portfolio risk .
· From the study ,we can observe that correlation coefficient are positive in every
sector . it indicates that movement of those script moves in same direction .Hence
risk averse investor can not invest in this script and maximum their have loss in
turbulence conditions .Hence returns are low .
· Correlation coefficient between every companies is highly positive which inferences
the script moving in same direction either increases or decrease .investor who will
take the risk can invest here to get good returns in case of bullish market .
· We can find from the study that ,portfolio risk was high in IT sector where risk was
low in pharma sector .Being high risk in IT sector ,investor are caution while in
investing here .investor can prefer to invest in pharma sector as risk was low as
comparative with other sectors .How ever returns also vary
With risk factor .Higher the risk higher the returns vice – versa.
· During the period of the study ,portfolio returns calculated was good in Cement
sector and moderate in banking sector .But investor could have accumulated loss if
at all they invest in Telecom sector .
· By comparing standard deviation with expect returns during the period of study ,we
can conclude that SBI only having good returns with respect risk factor .So investor
can prefer to invest in these company with respect current risk factor .where as
expected returns was negative with MTNL &AIRTEL with respect to low standard
deviation .this indicate that high risk and low returns ,So investor are cautions while
investing in these companies .
· In this situation optimum weight of SAGAR&JKC are 0.75and 0.25 respectively
.The portfolio risk was 94.57 which is lesser than individual risk.
· Of two companies .Hence ,it is recommended it invest the major proportion of the
funds in SAGAR ,in odder to reduce the risk .

· With respect to risk and returns sector wise ,we can find that cement sector is very
good returns followed by banking sector where as Telecom sector gave negative
returns .
· In the year 2011-2012 high returns for every company which remaining 4years
Except SAGAR CEMENT .
· SAGAR CEMENT got high returns in the year 2009-2010 is 201.
· SAGAR CEMENT got zero returns in the year 2013-2014 this is the least
negative returns.
· In IT sector the risk is low and returns are high ,here we seen in WIPRO& TCS
company .
· Every company has got the correlation coefficient is positive in every sector .
· In TELECOM sector MTNL &AIRTEL companies returns are negative with risk
factor .
· The portfolio weight of WIPRO&RANBAXY company are negative because of
market conditions.
· It have high risk , returns are vice-versa.

Suggestions
· Correlation coefficient between all companies are positive .it indicates that
movement of those script moves in same direction .Hence risk averse investor can
invest in these and minimize their loss in turbulence conditions .How ever returns are
low.
· Correlation coefficient between SBI&ICICI is highly positive which inferences that
both script moving in the same direction either increase or decrease .investor who will
take risk can invest here to get good returns in case of bullish market .But in adverse
conditions, there is a possibility of huge loss if script moves in downwards.
· Being high risk in cement sector ,investors are cautions while in investing here
investor s can prefer to invest in banking sector as low as comparative with other
sectors .How returns also vary with risk factor .High the risk high the returns vice –
versa. .
· Even thought portfolio in the banking sector is good ,but the returns are low when
compared to risk .And SBI returns are more compared to the ICICI ,investor are
suggested to invest in SBI than ICICI.
· Cement sector posted very good result followed by banking sector where as Telecom
sector gave negative returns with respect to risk and return. so investors are suggested
to invest in Cement and Banking sector and cautions in other sector.
· Combination of portfolio in Telecom sector is in suggestive because they have
negative returns.
· While investing it should be noted that the returns will be gained over the medium
and long term investments.
· Ask the stockbroker for information about the Company’s profile, Performance and
Economic forecasts before buying or selling any shares.
· Investors should follow the market updates and follow experts’ tips.
· The investor has to consider both risk and returns of the company before investing in
it.

Bibliography
Text books
· Punithavathi Pandian, Security Analysis and Portfolio Management,
Published by McGraw-Hill, , 8th Edition.2007.
· V.A.Avadhani,Security Analysis and Portfolio Management, Published by
Himayala Publishing house Pvt.Ltd.9th Revised Editon.2011.
Websites
· www.bseindia.com
· www.nseindia.com
· www.indianinfoline.com
· www.indiabulls.com
· www.capitalmarket.com

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