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The core objective of the study is to test the performance of portfolio of selected stock in compression with market index. One of the most important features of the portfolio management is to minimize the risk and maximize the return. One of the most important functions of the market index is to show, in which direction the set of scripts are heading towards. The market index as a bench mark against which, the investor evaluate the performance of their own or institutional portfolio. In this study CNX NIFTY is the bench mark for evaluation of portfolio performance for a period of one month. The study is of one month from 1st April 2010 to 30st April 2010. The monthly closing price of seven companies of seven different industries was taken for the calculation of risk and return and various analysis techniques like standard deviation, correlation, co-efficient of variation, beta, portfolio risk, CAPM etc to analysis the performances of stocks and portfolios. Objectives of the study: To study the technique associated with the security Analysis and portfolio management. Construction of portfolio for different categories of investors (i.e. aggressive, conservative and moderate)understanding the performance of portfolio with selected securities in comparison with market index.
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PERFORMANCE OF PORTFOLIO
Method of data collection: The study requires both primary and secondary data. Primary data will be collected from the investors, fund managers and financial advisors. Secondary data will be collected from News papers, Websites Textbooks and journals.\ Analytical techniques used for testing the selected stocks and portfolio performance are correlation, beta, coefficient of variation, return and risk. Limitation the study:
Difference in definitions. Performance of the portfolio is considered only for a period of one month. The research work does not considered other type of securities such as Debentures, short term and long term loans etc. Accuracy of testing the performance of selected securities in comparison with market index depends on the experience of the researcher. Here the researcher lacks in it.
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PERFORMANCE OF PORTFOLIO
Now a day’s investing in market is like playing with money. So investor should take appropriate precautions before investing in the market. They should do some kind of analysis like calculating risk and return from available information in the market. During economy slow down, most of the investor did not know why it has happen, how it has happened, simple they lost their money. Most of investor not aware of much basic information relating to financial maker functions which has made them to burn their fingers. Financial market main function is to mobilize the resource where it has plenty and lend the same to need people for effective use. So investment opportunities are more but selecting appropriate one is very important. If we keep our whole saving in bank, we will get 3.5% p.a which less than the inflation; it means we are loosing our purchasing power every day. Investing in financial market is still very attractive if we do systematic planning and implementation. INTRODUCTION TO PORTFOLIO MANAGEMENT Portfolio: In finance, a portfolio is an appropriate mix of or collection of investments held by an institution or a private individual. Holding a portfolio is part of an investment and risklimiting strategy called diversification. By owning several assets, certain types of risk (in particular specific risk) can be reduced. The assets in the portfolio could include stocks, bonds, options, warrants, gold certificates, real estate, futures contracts, production facilities, or any other item that is expected to retain its value.
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The security analysis is done by calculating Mean.V to know whether security is feasible to buy or sell. RJS Institute Of Management Studies Bangalore . Several investors have gained as well as lost in the stock market. The other way is technical analysis. which in turn is composed of economy. given the goals of the portfolio owner and changing economic conditions. These decisions always involve some sort of performance measurement. so that losses and gains can be estimated with the movement of the market index. When and how much to invest to get the maximum returns wit minimum risk. The relationship between the security and market index is done by moving average tests. The unique goals and circumstances of the investor must also be considered.34 Page 4 . The question that arises here is that weather security movies with the market index. and what assets to divest. Some investors are more risk averse than others Statement of the problem: “To minimize the risk and maximize the return” As there are no of alternatives are available to an investor.e. the standard deviation of the return). Selection involves deciding what assets to purchase. the question arises here is where. Standard Deviation. industry and company. Typically the expected returns from portfolios of different asset bundles are compared. One way to determine the stock price is fundamental analysis. most typically expected return on the portfolio. when to purchase them. how many to purchase. and C. and the risk associated with this return (i. which says that the past trends will repeat in the future. Ultimately everything depends up on the risk bearing capacity of the investor.PERFORMANCE OF PORTFOLIO Portfolio Management: Portfolio management involves deciding what assets to include in the portfolio.
To study the investors perception towards portfolio. With the above all objectives the study has even the following objectives.PERFORMANCE OF PORTFOLIO Objectives of the study: The main objective of the study is to test the performance of the portfolio for a period of one month with different number of securities of different sectors. Application of theories of portfolio. Mean while to know the opinion of the investors about the performance of their own portfolio during recession period and their expectations on their portfolio. To study the technique associated with the security Analysis.34 Page 5 . Construction of portfolio for different categories of investors Understanding the performance of portfolio with selected securities in comparison with market index. RJS Institute Of Management Studies Bangalore .
if the index is heading upwards.34 Page 6 . it shows that economy is on boom. One of the most important functions of the market index is to show. investor can forecast and take decisions accordingly to buy or to sell or to hold the securities.PERFORMANCE OF PORTFOLIO Scope of the study: One of the most important features of the portfolio management is to minimize the risk and maximize the return. It serves as a reference for further research. the investor evaluate the performance of their own or institutional portfolio. investor’s purchasing power is high. by the help of this. and market is bullish. in which direction the set of scripts are heading towards. it signifies slack period in the economy. If index is heading downwards. This research seeks to investigate and constructively contribute to help: Investors to have efficient portfolio. RJS Institute Of Management Studies Bangalore . Market indices are one of the economic indicators. If the historical data is projected it shows future trends. Highlight the Importance of the diversification of portfolio. The market index as a bench mark against which. in this period investor is bearish.
Dialy closing price has been taken into account for analysis the performance of portfolio. The following are the 7 companies selected. Only 7 sectors has been considered.PERFORMANCE OF PORTFOLIO CHAPTER – II RESEARCH DESIGN TITLE OF THE STUDY “EVALUATION OF PORTFOLIO PERFORMANCE AGAINST INDIVIDUAL STOCK PERFORMANCE AND CNX NIFTY PERFORMANCE” SCOPE OF THE STUDY The scope of the study is restricted to only one months. RJS Institute Of Management Studies Bangalore . individuals stock and Nifty. Mean while to know the opinion of the investors about the performance of their own portfolio during recession period and their expectations on their portfolio.34 Page 7 . State Bank of India .Banking Sector Ambuja Cement – Cement Sector Ranbaxy Laboratories – Pharmaceuticals Sector Delhi Land and Finance (DLF) – Real Estate Mahindra and Mahindra – Automobiles Hindustan Unilever Ltd (HUL) – FMCG Tata Consultancy Services – Information Technology OBJECTIVE OF THE STUDY: The core objective of the study is to test the performance of portfolio of selected stock in comparison with market index. One of the most important features of the portfolio management is to minimize the risk and maximize the return.
Application of theories of portfolio. To study the technique associated with the security Analysis. Construction of portfolio for different categories of investors Understanding the performance of portfolio with selected securities in comparison with market index. Based on the data various analysis are performed. The weekly closing price of seven companies of seven different industries was taken for the calculation of risk and return. To study the investors perception towards portfolio. In this study CNX NIFTY is the bench mark for evaluation of portfolio performance for a period of one month.34 Page 8 . Websites Textbooks and journals. Secondary data will be collected from News papers. Analytical Techniques used for calculation Mean (return) Standard deviation Coefficient of variation Correlation Beta Risk RJS Institute Of Management Studies Bangalore . in which direction the set of scripts are heading towards. 2. the investor evaluate the performance of their own or institutional portfolio. Primary data will be collected from the investors. The study covers data collection period from 1st April2010 to 30st April2010. fund managers and financial advisors. Method of data collection The study requires both primary and secondary data.PERFORMANCE OF PORTFOLIO One of the most important functions of the market index is to show. Methodology: 1. The following are the objectives. The market index as a bench mark against which.
Why stock prices fluctuates daily in market. 2. Period of the study The period of the study will be one month. Expected conclusion Total analysis of the project is aimed at the following conclusions. Accuracy of testing the performance of selected securities in comparison with market index depends on the experience of the researcher. Here the researcher lacks it. 3. How portfolio investment will be beneficial in minimizing risk and maximizing return. short term and long term loans etc. Limitation Sincere attempts have been made during the research work. economic and managerial efficiency. 1. What are the precautions should be taken into account before investing in any stock. When and which stock should buy in current market condition. certain limitations cannot be avoided. How different technique will be helpful for calculating risk and return. Performance of the portfolio is considered only for a period of one month. 5. 4. RJS Institute Of Management Studies Bangalore .34 Page 9 . Risk Measurement cannot assure of cent percent accuracy because risk is caused by numerous factors such as social. Measurement provides an approximate quantification of risk.PERFORMANCE OF PORTFOLIO 3. 4. The research work does not considered other type of securities such as Debentures. The portfolio duration will be for one month therefore the data of one month will be taken into consideration for the calculation. political. and they are: Difference in definitions.
Parsoli is also a corporate member of the National Stock Exchange of India Ltd.34 Page 10 . Parsoli Corporation Ltd. and the Bombay Stock Exchange Ltd. Parsoli Corporation Ltd is a public limited company listed on Bombay Stock Exchange & Ahmadabad Stock Exchange. Revenue of the company grew 15 times from FY03 to FY07. The prime motivation to setup the company was to tap the vast and untapped potential Muslim investments in India. profits of the company grew 146 times. Ltd. RJS Institute Of Management Studies Bangalore . During the same period. (PCL) is approved by the Reserve Bank of India to carry on business of non banking financial company (without accepting public deposits).. The business of the company has grown in leaps and bounds since its inception. Parsoli Corporation Ltd.PERFORMANCE OF PORTFOLIO CHAPTER III COMPANY PROFILE A Brief about PARSOLI CORPORATION Limited Parsoli group’s online resource of information for its global activities. to provide retail stock broking & financial services. The market capitalization of Parsoli Corporation Ltd is around USD 8 million to USD 10 million as on march 2010. providing depository services to its clients. providing Stock Broking and Stock Advisory services to its clients. was established on 21 November 1990 as Parsoli Investments & Trading Company Pvt. It is also a Depository Participant (DP) with the Central Depository Services (India) Ltd. It is a corporate member of the National Stock Exchange of India Ltd. Parsoli Corporation Ltd is a public limited company listed on the Bombay Stock Exchange Ltd.
is a Securities and Exchange Board of India (SEBI) registered Stock Broker. It is registered as a Non-Banking Finance Company (NBFC) with the Reserve Bank of India (RBI) It is also an RBI registered Full Fledged Money Changer It is Member of the Multi Commodities Exchange of India Ltd. (MCX) Parsoli Corporation Ltd.PERFORMANCE OF PORTFOLIO MISSION “To become a global service provider of Islamic Financial Solutions” GOAL To create products and services designed to serve the special financial needs of the Muslims. It is a Corporate member of the National Stock Exchange (NSE) of India Ltd. Parsoli Corporation Ltd. is a Public Limited Company listed on The Bombay Stock Exchange (BSE) Ltd.34 Page 11 . RJS Institute Of Management Studies Bangalore . It is registered as Depository Participant (DP) of the Central Depository Services (India) Ltd. since 1995. and the Bombay Stock Exchange Ltd.
which are Sheridan Compliant. Developing the Community feeling. Educating Indian Muslims in relation to Stock Market investments. Building alliances with various partners like Mutual Fund Companies.34 Page 12 .PERFORMANCE OF PORTFOLIO The company’s business strategy is: The Proposition • To Project Parsoli as an one-stop investment destination The Positioning • • • The Muslim Community in India The Non-Resident Indian Muslims The Muslim Community around the World who are already active into investments in the Stock Market but rarely invest in India due to their lack of awareness of the Indian Market The Plan • • • Building the brand on the existing goodwill of Parsoli Corporation. Housing Finance Companies. • RJS Institute Of Management Studies Bangalore . Car Financing Companies.
CEO Uves Sareshwala Jt. human resources development. No 1 2 3 4 5 6 7 Name of Directors Designation Zafar Sareshwala Managing Director. operating management. LIST OF THE DIRECTORS AS ON 31-01.PERFORMANCE OF PORTFOLIO The team: A committed and formidable management team anchors the company towards its goal and provides direction in diverse areas of business strategy. Managing Director Talha Sareshwala Non Executive Director Mahesh Bhatt Non Executive Director Mohamad Iqbal Hava Non Executive Director Mushtaq Al Saleh Non Executive Director Sanjay D Shah Non Executive Director RJS Institute Of Management Studies Bangalore .34 Page 13 .2010 Sr. product development etc. regulatory reporting.
The intrinsic value of an equity share depends on a multitude factors. These factors in turn rely on the host of others factors like economic environment in which they function. and finally company’s own performance. To calculate its credit risk. The term is used to distinguish such analysis from other types of investment analysis. the industry they belong to. They are Economic Analysis Industry Analysis Company Analysis RJS Institute Of Management Studies Bangalore . but with the goal of making financial forecasts. To make a projection on its business performance. such as quantitative analysis and technical analysis. To evaluate its management and make internal business decisions. There are several possible objectives: • • • • To conduct a company stock valuation and predict its probable price evolution. the growth rate and the risk exposure of the company has a direct bearing on the price of the share. The earning of the company.PERFORMANCE OF PORTFOLIO CHAPTER IV THEORETICAL BACKGROUND OF DISCUSSION AND RESULTS Fundamental analysis Fundamental analysis of a business involves analyzing its financial statements and health. The study of Fundamental Analysis can be made by dividing into three factors.34 Page 14 . and its competitors and markets. its management and competitive advantages. Fundamental analysis is performed on historical and present data.
PERFORMANCE OF PORTFOLIO ECONOMIC ANALYSIS: The level of economic activity has an impact on investment in many ways. Nature of the product 4. Cost structure and profitability 3. stock rice are low and when the level of economic activity is high. Growth of the Industry 2. If the economy grows rapidly. Following are the factors: Gross domestic product (GDP) Savings and Investment Inflation Interest rates Budget The tax structure The balance of payment Monsoon and agriculture Infrastructure facilities Economic Forecasting INDUSTRY ANALYSIS Following are the factors that should be taken into account while analyzing the industries to predict future course of action would be undertaking in the particular sector. stock price are high reflecting the prosperous outlook for sales and profits of the firms. The analysis of macroeconomic environment is essential to understand the behavior of the stock prices. They are listed below: 1.34 Page 15 . When the level of economic activity is low. the industry can also be expected to show rapid growth and vice versa. Nature of the competition RJS Institute Of Management Studies Bangalore .
primarily price and volume. Technical Tools: 1) Dow Theory: Dow developed his theory to explain the movement of the indices of Dow Jones Average. regressions. He developed the theory on the basis of certain hypothesis is that. Financial Analysis 6. His RJS Institute Of Management Studies Bangalore . In its purest form. Technical analysts. classically. inter-market and intra-market price correlations. Management 5. no single individual or buyer can influence the major trend of the market. may employ models and trading rules based on price and volume transformations. The valuation process depends upon the investor’s ability to elicit information from the relationship and inter-relationship among the company related variables. such as the relative strength index. TECHNICAL ANALYSIS: Technical analysis is a security analysis technique that claims the ability to forecast the future direction of prices through the study of past market data. through recognition of chart patterns. Research and development COMPANY ANALYSIS: In the company analysis the investors assimilates several bits of information related to the company and evaluates the present and future value of the stock.PERFORMANCE OF PORTFOLIO 5. The competitive edge of the company 2. Government policies 6. Capital structure 4. technical analysis considers only the actual price and volume behavior of the market or instrument. moving averages. The risk and return associated with the purchase of the stock is analyzed to take better investment decision. Labor 7.34 Page 16 . Factors that affects Present and Future values of share 1. Earning of the company 3. sometimes called "chartists". cycles or. Analysis of financial statement.
The correction would be 33%-66% of the earlier fall. Primary Trend: The security price trend may either increasing or deceasing. They are simply the daily price fluctuations. The graphical presentation of the data helps the investors to find out the trend of the price without any difficulty.PERFORMANCE OF PORTFOLIO second hypothesis is that the market discounts everything. It is not a tool to beat the market but provides a way to understand it better. the secondary trend earlier the price upward and corrects the main trend. In the bear market. when the market exhibits the increasing trend. The underlying trend can be studied by smoothening of the data. The Secondary Trend: The Secondary trend or the intermediate trend moves against the main trend and leads to correction. The reverse is true with the bear market. The upward and down ward movements are interrupted by counter moves. The word moving means that the body of data moves ahead to include the recent observation. It is called bull market. His third hypothesis is that the theory is not infallible. 2) Moving Average: The market indices do not rise or fall in straight line. Minor trend: Minor trends moves are called random wriggles. Charts: Charts are the valuable and easiest tools in the technical analysis. To smooth the data moving average technique is used.34 Page 17 . RJS Institute Of Management Studies Bangalore . Minor trend tries to correct the secondary trend movement. In the bull market the secondary trend would reset in fall of about 33-66% of the earlier rise.
APPROACHES IN PORTFOLIO CONSTRUCTION: Commonly. A diversification of securities gives the assurance of obtaining the anticipated return on portfolio. investor’s needs in terms of income and capital appreciation are evaluated and appropriate securities are selected to meet the needs of investor.34 Page 18 . it is a common practice to diversify securities in the portfolio. traditional approach and Markowitz efficient frontier approach.PERFORMANCE OF PORTFOLIO CONSTRUCTION OF PORTFOLIO: Portfolio is a combination of securities such as stocks. In the traditional approach. there are two approaches in the construction of the portfolio of securities viz. Diversification of investments helps to spread risk over many assets. Steps involved in portfolio construction Analysis of constraints Determination of objectives Selection of portfolio Assessment of risk and return Diversification RJS Institute Of Management Studies Bangalore . It views portfolios are constructed to maximizes the expected return and to minimize the risk associated with obtaining the expected return. The common practice in the traditional approach is to evaluate the entire financial plan of the individual. In a diversified portfolio. In the modern approach. Keeping a portfolio of single security may lead to a greater likelihood of the actual return somewhat different form that of the expected return? Hence. portfolios are constructed to maximize the expected return for given level of risk. bonds and money market instrument. some securities may not perform as expected. The process of blending together the board asset classes so as to obtain optimum return with minimum risk is called portfolio construction. but others may exceed the expectation and making the actual return of the portfolio reasonably close to the anticipated one.
34 Page 19 Diversification .PERFORMANCE OF PORTFOLIO Chart showing steps in portfolio construction Analysis of constrains Determination of Objectives Selection of Portfolio Bond and Common stock Bond Common stock Assessment of risk and return RJS Institute Of Management Studies Bangalore .
Liquidity: Liquidity need of the investment is high quality individualistic of the investor. the investor may to offset the effect of the inflation and so. Income needs The income depend on the for income in constant rupees and current rupees. Safety of the principal: Another serious constraint to be the considered by the investor is the safety of the principal value at the time of liquidation. Time horizon Time horizon is the investment-planning period of the individuals. tax considerations and the temperament. time horizon. Then investor should plan his cash drain and the need for net cash inflows during the investment period. Investing in bonds and debenture is safer than investing in the stocks. If the investor prefers to have high liquidity. liquidity. needs income in constant rupees. Investing money in the unregistered finance companies may not provide adequate safety. commercial papers and shares that are widely traded. then funds should be inverted in high quality short term debt maturity issues such as money market funds. Even among the stocks.PERFORMANCE OF PORTFOLIO Analysis of constraints: The constraints normally discussed are. income needs. safety. The need for income in current rupees arises from the investor’s need to meet all or part of the living expenses. RJS Institute Of Management Studies Bangalore .34 Page 20 . Keeping the funds in shares that are poorly trader or stocks in closely held business and real estate lack liquidity. This varies from individual to individual. At the same time information may erode the purchasing power. Individual’s risk and preferences are often described in terms of his “Life cycle” The stages of the life cycle determine the nature of investment. the money should be invested in regularly traded companies of longstanding.
The capital appreciation is taxed under the head “capital gains” only when the investor sells the realizes the gain. Growth of income and asset mix Here the investor a certain percentage of growth in the income received from his investment. who may not be willing to undertake higher level of risk even for higher level of return. Some investors are risk lovers or takers who like to take up higher risk even for low return. The objectives of portfolio range from income to capital appreciation. The common objectives are stated below Current income Growth in income Capital appreciation preservation of capital SELECTION OF PORTFOLIO The selection of portfolio depends on the various objectives of the investor. Objectives and asset mix If the main objective is getting adequate of current income. DETERMINATION OF OBJECTIVES Portfolios have the common objectives of financing present and future expenditures from a large pool of assets.PERFORMANCE OF PORTFOLIO Tax consideration Investor in the income tax paying group consider the tax concessions they could get from their investments. The investor’s portfolio may consist of 60 to 100 RJS Institute Of Management Studies Bangalore . The proportions of investments on debt and equity differ according to the individual’s preferences. While some investors are risk averse. Temperament The temperament of the investor himself poses a constraint on framing his investment objectives.34 Page 21 . For income tax purpose. interest and dividends are taxed under the head “income from other source”. sixty percent of the investment is made on debts and 40 percent on equities. they would like to reduce the taxes. The return that the investor requires and the degree of risk he is willing to take depend upon the constraints. The selections of portfolio under different objectives are dealt subsequently. For all practical purpose.
the individual prefers larger to smaller returns from securities.34 Page 22 . purchasing power risk. the values of the shares are much higher than their original issue prices. the investor has to take more risk. To achieve this goal. financial risk and market risk. The debt portion of the portfolio may consist of concession regarding tax exemption. First. the final step is the diversification of portfolio. but these securities offer poor resistance to inflation. In the capital market. Investment in real estate like land and house may provide a faster rate of capital appreciation but they lack liquidity. people in the third stage of life also give more importance to the safety of the principal. The ability to achieve returns is dependent upon his ability to judge risk and his ability to take specific risks. Risk and return analysis The traditional approach to portfolio building has some basic assumptions. the risk averse investors are very particular about the stability of principal. According to the life cycle theory. Capital appreciation and asset mix Capital appreciation means that the value of the original investment increases over the years. RJS Institute Of Management Studies Bangalore . Stocks provide better inflation protection than bonds but are more vulnerable to financial risks. Safety of principal and asset mix Usually. Diversification Once the asset mix is determined and the risk and return are analyzed. Financial risk can be minimized by commitments to top-quality bonds.PERFORMANCE OF PORTFOLIO percent equities and 0 to 40 percent debt instrument. The risks are namely interest rate risk.
related to hedging. small cap. and cash.PERFORMANCE OF PORTFOLIO Portfolio Diversification in finance is a risk management technique.or location-specific risks. When a portfolio includes investments with varied risk levels. including growth funds. large losses in one area are offset by other areas. or by geography . 2. the move to invest in both umbrellas and sunscreen is an example of horizontal diversification. Horizontal diversification Horizontal diversification is when a portfolio is diversified between same-type investments. mutual funds. Spread the portfolio among multiple investment vehicles . the broader the diversification the lower the risk from any one investment.34 Page 23 . Because the fluctuations of a single security have less impact on a diverse portfolio. and large cap funds. Vary the risk in the securities. It can be a broad diversification (like investing in several NASDAQ companies) or more narrowed (investing in several stocks of the same branch or sector). index funds. In the example above. As usual. diversification minimizes the risk from any one investment. RJS Institute Of Management Studies Bangalore . There are three primary strategies used in improving diversification: 1. balanced funds. bonds. A portfolio can also be diversified into different mutual fund investment strategies. that mixes a wide variety of investments within a portfolio. 3. Vary your securities by industry. such as stocks. This will minimize the impact of industry.
The Bank transacts general banking business of every description including. or a more narrowed diversification.25 306 276 293 Low 1031.25 1378.65 182.85 155. Together with its 7 Associate Banks.121mm) and a total balance sheet size of Rs. it can be a very broad diversification. Today. like diversifying between bonds and stocks.15 552.261504 crore (US59. for the purpose of taking over the undertaking and business of the Imperial Bank of India.7 139. STATE BENK OF INDIA (SBI) Industry CEO Face value : finance-bank-public sector : Om Prakash Bhatt : 10 Business group : SBI group On 1st July State Bank of India was constituted under the State Bank of India Act 1955. foreign exchange. an aggregate deposit base of nearly Rs196821 crore (US$45.95 266.05 991.PERFORMANCE OF PORTFOLIO Vertical diversification Vertical diversification is investment between different types of securities. like diversifying between stocks of different branches. it has a branch network of over 9000 branches. 950 mm). The Imperial Bank of India was founded in 1921 under the Imperial Bank of India Act 1920. SBI commands about 30% of the market share in banking.2 552.4 2540 2475.7 952. State Bank of India: Yearly High lows Year 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 High 1376.34 .85 689. Again.1 Page 24 RJS Institute Of Management Studies Bangalore .1 845 684. merchant banking and mutual funds.5 399.
80 407. consultancy services.40 250. AMBUJA CEMENT Yearly High lows: Year 2009 2008 2007 2006 2005 2004 2003 High 79.K. the company proposed to issue 458.00 99.00 468. In addition to the above rights issue. etc.00 49.5 lakh tonnes to 18 lakh tonnes. 10 each at a premium not exceeding of Rs.55 43. 2 per share was to be offered to the employees. 1991 The Company's plan to expand the capacity from 11.920 rights equity shares of Rs. The product was launched on Nov 26 at the Tamil Nadu Agricultural University.. It was promoted by Modi Industrial House and Madhya Pradesh Audyogik Vikas Nigam Ltd (MPAVN). The Company manufactures cement.20 149. AMBUJA CEMENT Industry Business Group CEO Face Value : Cement Major : Ambuja Group : Mr.00 315. Suresh Neotia :2 The Company was incorporated on 17th June 1982. (BCI) for technical RJS Institute Of Management Studies Bangalore . 2 per share in the proportion 1:1. 00.. U. The Company had under taken to set up a project to manufacture Portland cement in Madhya Pradesh. The main plant and machinery was obtained from Polysius Ltd U K and their Indian associates Buckau Wolf India Ltd. Subject to necessary approvals being obtained.PERFORMANCE OF PORTFOLIO State Bank of India has rolled out a micro insurance scheme 'Grameen Shakti'.85 160. for its Self Help Group (SHG) members. 5% of the rights issue at a premium not exceeding Rs.80 77.00 147.00 Low 65. 1983.00 The Company entered into a foreign collaboration agreement with Blue Circle Industries PC.34 Page 25 . and the Certificate of Commencement of Business was obtained on 11th February.90 148.
: Yearly High lows Year 2009 2008 2007 2006 2005 2004 2003 2002 2001 High 257. These were shipped during 1978 and were received and installed in Nigeria.50 485.PERFORMANCE OF PORTFOLIO 2002 2001 254. Ranbaxy Laboratories Ltd.00 936.00 1300.15 164.90 Low 161.00 136.30 305.10 340. The shareholders of the Company offered for sale to the public during October simultaneously with the public issue of shares 63. The company also markets a wide range of products including a number of life saving antibiotics.34 Page 26 . cosmetics and chemical products.00 1146.50 146. The Company Manufacture drugs. Atul Sobti :5 Business Group : Ranbaxy Group The Company was incorporated on 16th June. The equipments to be supplied against the Company’s contribution to the equity capital were ordered.00 530.30 RANBAXY LABORATORIES LTD Industry CEO Face Value : Pharmaceuticals : Mr.00 DELHI LAND AND FINANCE PRIVATE LIMITED (DLF) RJS Institute Of Management Studies Bangalore .50 317.70 490.535 equity shares of Rs 10 each of the Company at par. The Company had set up a joint venture company with local participation in Nigeria.00 581. Production commenced in early 1980.00 1265.05 860.95 774. 1961 at Delhi.05 412.70 613. medicines.00 216.
commencing with the incorporation of Raisina Cold Storage and Ice Company Private Limited on 16.10.00 158.03.1970. Mr. In the year 2007 DLF enters into a joint venture with Prudential Insurance to establish a joint venture company to undertake life insurance business in India.09. K P Singh. merged with DLF United Private Limited with effect from 30. Pursuant to the order of the Delhi High Court dated 26. It has a history of over 6 decades.Real Estate : Mr.00 Low 145.09.00 505.1946.60 MAHINDRA & MAHINDRA (M&M) Industry : Auto .1946 and Delhi Land and Finance Private Limited on 18.Cars & Jeeps Page 27 RJS Institute Of Management Studies Bangalore . Pua Seck Guan :2 Business Group : DLF Group It was founded by the late Mr.1970. Yearly High lows: Year 2009 2008 2007 High 310.00 1099. DLF Housing and Construction Private Limited.00 1225. Delhi Land and Finance Private Limited and Raisina Cold Storage and Ice Company Private Limited along with another group company.34 .PERFORMANCE OF PORTFOLIO Industry CEO Face Value : Construction and Contracting . Raghvendra Singh and our Promoter.
00 1002.A.PERFORMANCE OF PORTFOLIO Business Group : M & M Group CEO Face Value : Mr. Jeeps are manufactured under a license and an agreement with Willys Motors Inc. during 1977-78.S... industrial process control instruments and flow meters.95 730. U. petrol industrial engines. was merged with the Company. Toledo.The name was changed from Mahindra Van Wijk & Visser Ltd. Trading in steel and manufacture of professional grade electronic components.00 94.00 358. Ltd.. Ltd.25 140. The Company Manufacture Jeep type vehicles.50 558..00 872.Anand G Mahindra :10 The Company was incorporated in 1945 and converted into Public Limited in 1955 at Mumbai..00 488. This was merged with the Indian National Diesel Engine Co. cargo/personnel carriers and pick-up trucks With effect from 1st April..00 390.00 Low 258.34 Page 28 .00 909. for whom the Company also acts as exclusive distributors for the whole of India for their entire range of vehicles including utility vans.75 HINDUSTAN UNILEVER LTD (HUL) RJS Institute Of Management Studies Bangalore .00 345. the wholly owned subsidiary Mahindra Engineering Co.15 78. was merged with the Company effective from 1st November 1977. to Mahindra & Mahindra Ltd. International Tractor Company of India Ltd.50 608. Ohio.80 235. M&M Yearly High lows Year 2009 2008 2007 2006 2005 2004 2003 2002 High 330.
Software Business Group : Tata Group RJS Institute Of Management Studies Bangalore .00 239. his newly-founded company. started exporting the revolutionary laundry soap to India.Nitin Paranjpe :1 Business Group : MNC Associate Incorporated on 17th October 1933.00 179.00 267. under the name of a Lever Brothers (India) Pvt. Pvt. Ltd. Yearly High lows: Year High Low 2009 2008 2007 2006 2005 2004 267.. were amalgamated with LBIL and the name was changed to Hindustan Lever Ltd.00 186.00 TATA CONSULTANCY SSERVICES (TCS) Industry : Computers . William Gossage & Sons (India) Pvt. Coincidentally.10 170.40 296. Margarine Unie also had a strong presence in India. By the time the company merged with the Netherlands-based Margarine Unie in 1930 to form Unilever. was converted into a Public Ltd. less than four years after William Hesketh Lever launched Sunlight Soap in England. London. Co. it had already carved a niche for itself in the Indian market. to which it exported Vanaspati (hydrogenated edible fat). Co. On 27th October.90 126. UK. Lever Brothers.00 166.30 104. On 1st November.. and Joseph Crosfield & Sons Unilever Ltd. Hindustan Vanaspati Mfg.00 218. Ltd. the Co.00 230.34 Page 29 .PERFORMANCE OF PORTFOLIO Industry CEO Face Value : FMCG : Mr. (LBIL) was the wholly owned subsidiary of Unilever Ltd. Ltd. 1888.
00 2099. Tata Consultancy Services made its debut on the two premier stock exchanges on August 25. a leading R&D laboratory under the Department of Biotechnology. it is also the first software giant to cross 0 million in net profit.00 1338. has entered into a multi-year collaborative agreement with the Hyderabad-based Centre for DNA Fingerprinting and Diagnostics (CDFD).748.20 418. RJS Institute Of Management Studies Bangalore .00 1091.PERFORMANCE OF PORTFOLIO CEO Face Value : N. the global software solutions and consulting services major.47 crore in revenues.00 958. closing around 16 per cent higher than the issue price of Rs 850 per share discovered through book building on a price range of Rs 775 to Rs 900 per share Yearly High lows: Year High Low 2009 2008 2007 2006 2005 2004 556.00 466.55 DEFINITION OF CONCEPTS Stock market: The financial market for small. TATA Consultancy Services (TCS).00 900. At Rs 1.00 1399.00 1505. Chandrasekaran :1 TCS has spread its operations into the Asia-Pacific by setting up a regional headquarters in Singapore to focus primarily on the emerging infocomm industry in the region. Tata Consultancy Services (TCS) becomes country's first IT Company to cross the billion mark as it closed fiscal 2005 with Rs 9.976.90 crore in net profit.00 935.90 1078. medium and long term securities.34 Page 30 .
34 Page 31 .PERFORMANCE OF PORTFOLIO Market index: A stock index is a number that helps measure the levels of the market. Measurement provides an approximate quantification of risk. RJS Institute Of Management Studies Bangalore . a portfolio is an appropriate mix of or collection of investments held by an institution or a private individual. Risk: Risk is a concept that denotes the precise probability of specific eventualities. Stock index is a derivative asset because it derives its existence and value from independent stocks issued by corporations Portfolio: A combination of assets. political. Expressing the risk of a stock in quantitative terms makes it comparable with other stocks. In finance. Measurement cannot assured of cent percent accuracy because risk is caused by numerous factors such as social. The statistical tool used to measure and used as a proxy for risk is the standard deviation. economic and managerial efficiency.
Coefficient of variation: coefficient of variation is the indicator of variations in the stock prices.34 Page 32 . Standard deviation= Correlation Analysis: It is the statistical tool used to describe the degree to which one variable is linearly related to another. Beta describes the relationship between the stocks return and index return β = n ∑XY-(∑x) (∑y) n∑X2-(∑X) 2 RJS Institute Of Management Studies Bangalore . Formula used to calculate SD is as follows.PERFORMANCE OF PORTFOLIO Standard Deviation: SD is the statistical tool often used to measure and used as a proxy for risk. It is the measure of the values of the variables around its mean or it is the square root of the sum of the squared deviations from the mean divided by the number of observations. The stock with more variations in the prices is considered as the more risky stock. It can be calculated by using the following formula. Beta: Beta is the slope of the characteristic regression line. The formula used to find out CV is as follows.
0 market return declines by 10% and vice versa. One percent change in market return The 2. The aggressive portfolios returns more volatile because the prices generally fluctuate. stock is less volatile causes 0. Stock with a Negative beta of -1 The stock moves in the opposite 4. • Moderate portfolio: The moderate portfolio consists of stocks with moderate return and risk.5 return. • Aggressive portfolio: The aggressive portfolio consists of common stocks which yield high return with high risk. + 0. One percent change in market return The stock is more volatile.5% change in the stock compared to the market.34 Page 33 . +1 return causes exactly 1% change in in tandem with the market the stock return. + 2. if the direction to the market return.PERFORMANCE OF PORTFOLIO S no Beta Description Indication One percent change in market index It indicates that the stock moves 1. • Conservative portfolio: The conservative portfolio consists of common stocks which yield low return with low risk. 3. RJS Institute Of Management Studies Bangalore .0 causes 2% change in stock return. -1. would provide a return of 10%.
047.53 114.73 95.47 1.969 959.72 -31.35 2.4 4484 4517.4 4313.232.12 -83.00 2.9 Table No.093.102.40 2.1 4340.032.18 -81.07 -41.095.67 63.02 -89.07 -61.55 2.3924 6572.217.70 42.9 4550.34 Page 34 .00 2.181 1.15 4251.5889 4036.93 213.95 4655.200.00 2.85 Close price of SBIN 2.138.17 -30.115.90 2.333 9049.62 -38.10 2.1409 2031.60 2.85 4375.95 4241.054.305 1859.717 18749.PERFORMANCE OF PORTFOLIO CHAPTER-V ANALYSIS AND INTERPRETATION TABLE SHOWING THE PERFORMANCE OF SBIN (For the month of April) Date 01-Apr-10 05-Apr-10 06-Apr-10 07-Apr-10 08-Apr-10 09-Apr-10 12-Apr-10 13-Apr-10 15-Apr-10 16-Apr-10 19-Apr-10 20-Apr-10 21-Apr-10 22-Apr-10 23-Apr-10 26-Apr-10 27-Apr-10 28-Apr-10 29-Apr-10 30-Apr-10 Index return S&P CNX NIFTY 4586.05 2.80 2.45 2.80 2.9 4348.25 2.40 Y=y-2137.70 2.274.251.37 -104.098.741.8 4356.63 Y² 1188.67 6517.076.238 977.345 3729.6 4235.106.00 2.95 4291.97 -45.32 7986.07 -34.9 4429.5 4390.545 1694.061 13105.60 2.78 143903.092.07 -43.997 10945.48 80.13 136.105.20 2.82 45637.95 2.8129 469.056.34 1499.334 6892.25 4637. 1 Chart No1 Analysis and Interpretation of SBI RJS Institute Of Management Studies Bangalore .7 4583.27 -21.25 4247 4292.350.
Co-efficient of Variation: The CV is -3. from the mean. Standard deviation: Standard deviation is the indicator of the risk associated with the return of the shares.27 Return= 11.7996 Beta= -0. 29th and 30th of these days and in remaining days it has less variation. TABLE SHOWIGN THE PERFORMANCE OF M&M (For the month of April) RJS Institute Of Management Studies Bangalore .36 Mean: The average closing price is 2137. We can see more fluctuation only on 19th. Correlation: this stock is negatively correlated with the index.34 Page 35 . Because it has moderate return and high risk. This shows that it is giving Moderate returns in the portfolio.82. in this standard deviation is 84. 26th. 29th and 30th of April. There is no high fluctuation in the closing prices other than 19th.07 Standard deviation = 84.28.82 Co-efficient of Variation = -3.07 for the month of April. Suitability: These kinds of stocks are preferable for Aggressive investors. this shows that the prices are not fluctuating to a greater extent compared to the variation in the price of other shares in the portfolio.The reason being.PERFORMANCE OF PORTFOLIO Mean = 2137. the deviation of prices of share.7996%. Return: The return is 11. Beta: Beta -0. 26th.28 Correlation= -0.As most of the investors choose the stock on the basis of risk and return.36 indicates that the stock moves in the opposite direction to the market return.
95 4291.1 4340.4 4313.85 Close price of M&M 374.81 -23.7825 46.02 Co-efficient of Variation = -12.95 4655.0175 7.95 380.75 379.082306 2183.4508063 9.0825 69.6675 -26.5325 38.0675 -10.8675 -24.5 4390.0393063 543.9 4550.8175 -23.75 388.3408063 773.199806 1770.7058063 615.1095563 377.95 4241.9 468.15 375.35 Date 01-Apr-10 05-Apr-10 06-Apr-10 07-Apr-10 08-Apr-10 09-Apr-10 12-Apr-10 13-Apr-10 15-Apr-10 16-Apr-10 19-Apr-10 20-Apr-10 21-Apr-10 22-Apr-10 23-Apr-10 26-Apr-10 27-Apr-10 28-Apr-10 29-Apr-10 30-Apr-10 Y=y-398.4175 -23.7 4583.3175 -24.81 Standard deviation = 31.936806 4820.9083063 569.4345563 106.10530625 54.3825 18.8 4356.6675 -23.15 372.PERFORMANCE OF PORTFOLIO Index return S&P CNX NIFTY 4586.50130625 343.4 4484 4517.5 374 374.55 447.14 RJS Institute Of Management Studies Bangalore .16638 Table No.95 374.34 Page 36 .8 406.8175 -22.3175 -3.6 4235.6575563 591.25 7976.5 371 376. 2 Chart No 2 Analysis and Interpretation of M&M Mean = 398.4 375.85 4375.2825 42.15 4251.25 4637.872056 19249.8675 -18.6575563 326.4325 Y² 569.6 445.3175 -27.4535562 1504.7325 48.1 440.25 4247 4292.1555563 532.5 395.8155563 711.9 4429.8133063 513.926556 2331.35 437.9 4348.0675 -19.2 417.
It has high fluctuations in all the days of the month except 20th.8486402 RJS Institute Of Management Studies Bangalore .1 3. Standard deviation: It has SD of 31. It is suitable for them in all the angles.33 indicates that the stock moves in the opposite direction to the market return.8845 4429. Return: Return is 24. risk.51 CNX NIFTY HUL 4586. This indicates that the stock is risky. Correlation: The correlation is -0. TABLE SHOWIGN THE PERFORMANCE OF HUL (For the month of April) Index return S&P Close price of Y=y-225.8583402 12. return. Suitability: This kind of stock is most preferable for Aggressive investors. 21st & 22nd of April. There is no fluctuation except 30 th of the April month. beta and variation.5845 Date 01-Apr-10 05-Apr-10 Y² 23.83 Beta= -1.33 Mean: The average closing price of this stock is 398.81.1394 this indicates that.45 Return= 24. Beta: Beta -1.9 230. This stock is giving highest returns among the securities giving positive returns.4674. this stock has much variation.9 229. Co-efficient of Variation: CV is -12.PERFORMANCE OF PORTFOLIO Correlation= -0.4 4.83.02. This stock is negatively correlated with the index.34 Page 37 .
1 227.4845 -0.25 4637.85 219.0333103 29. There is no much fluctuation at all.6 241.42 Return= 4.15 4251.74 Beta= -0.78744 17.7948902 37.8945 3.85 219.9587 Table No.3276403 3.1655 -10.58913025 15.5 231.9845 5.6 4235.1155 -12.63774 0.26574025 125. RJS Institute Of Management Studies Bangalore .58599025 5.69714 250.PERFORMANCE OF PORTFOLIO 06-Apr-10 07-Apr-10 08-Apr-10 09-Apr-10 12-Apr-10 13-Apr-10 15-Apr-10 16-Apr-10 19-Apr-10 20-Apr-10 21-Apr-10 22-Apr-10 23-Apr-10 26-Apr-10 27-Apr-10 28-Apr-10 29-Apr-10 30-Apr-10 4550.35 215.4148 1014.0845 15.43 220.5155 -11.95 4291.2155 -4.4 213 225.34 4510.1 4340.3513903 102.20374025 0.5 4390. 3 Chart No 3 Analysis and Interpretation of HUL Mean = 225.9145 10.8245 41.32334 156.4155 1.51 Standard deviation = 7.31 -6.7655 2.51.4155 -0.8 232.00429025 2.4 4484 4517.12 Co-efficient of Variation = -4.7 4583.4 4313.95 4241.34 Page 38 .1 225 214.3 221.43 235.47 Mean: The average closing price of this stock is 225.9813102 101.0655 1.2845 7.0855 -5.41 229.25 4247 4292.75 227.95 4655.8 4356.21894025 53.29 Correlation= -0.3345 -6.1586403 0.85 4375.5155 -0.9 4348.8762402 34.45 227 224.
822641 45.34 Page 39 .68 349 Y=y-328.29 this indicates that.171 22.4 4484 4517.86924 RJS Institute Of Management Studies Bangalore .PERFORMANCE OF PORTFOLIO Standard deviation: It has SD of 7.079 2.4212.6 328.771 -0. return. Co-efficient of Variation: CV is -4.4724 indicates that the stock moves in the opposite direction to the market return. This indicates that the stock is low risky.8 Close price of DLF 321.9 4550.12.7483.18524 522.18884 330. It is suitable for them in all the angles. this stock has more variation.8 347 351.678441 195. beta and variation all these are preferable for conservative investors.75 331.006241 7.851 20. This stock is giving lowest returns among the securities giving positive returns.129 6. TABLE SHOWIGN THE PERFORMANCE OF DLF (For the month of April) Date 01-Apr-10 05-Apr-10 06-Apr-10 07-Apr-10 08-Apr-10 09-Apr-10 12-Apr-10 13-Apr-10 Index return S&P CNX NIFTY 4586.171 Y² 50.6 342. Return: Return is 4.9 4429.1682 406.95 4655.25 4637.971 18.846441 0.771 13. Suitability: This kind of stock is most preferable for conservative investors.7 4583.829 -7. This stock is negatively correlated with the index. Beta: Beta -0.7 335. risk. Correlation: The correlation is -0.
87424 698.468041 12.5 302. 4 Chart No 4 Analysis and Interpretation of DLF Mean = 328.879 -12.25 4247 4292.4 4313.85 4375. 29th & 30th of the month.329 -26.99 Beta= 0.5 4390. There is no fluctuation except 28 th.25 325.829 Standard deviation = 14.929 1.95 301. Standard deviation: It has SD of 14.426441 8.579041 2.85 343.571 -3.16 Co-efficient of Variation = 4.95 316.95 4241.571 -5.PERFORMANCE OF PORTFOLIO 15-Apr-10 16-Apr-10 19-Apr-10 20-Apr-10 21-Apr-10 22-Apr-10 23-Apr-10 26-Apr-10 27-Apr-10 28-Apr-10 29-Apr-10 30-Apr-10 4356.50 Mean: The average closing price of this stock is 328.4 6576.49204 4010.4 325.462041 34.95 4291.15 4251.9 4348.8926 Table No.35 337.479 8. RJS Institute Of Management Studies Bangalore .229 -2.53 Correlation= 0.429 221.30284 478.879 -27.58 14.6 4235.05 306.34 Page 40 .16%.7 330.38 Return= -5.829. This indicates that the stock is low risky.14664 2.779 -21.103441 73.6 325.4 322.019241 10.562641 163.871 1.421 -3.1 4340.69064 746.9 330.
PERFORMANCE OF PORTFOLIO Co-efficient of Variation: The CV is 4.95 4655.62 23.9824 16.9 459.38 16.82 -3.68 4.2 483.6464 0.3449 58.25 467.38. TABLE SHOWIGN THE PERFORMANCE OF Ranbaxy (For the month of April) Date 01-Apr-10 05-Apr-10 06-Apr-10 07-Apr-10 08-Apr-10 09-Apr-10 12-Apr-10 13-Apr-10 Index return S&P CNX NIFTY 4586.4129 41.8 Close price of RANBAXY 456.2 476. This indicates that the stock is less volatile.48 16.05 466. Return: It has the negative return of -5.5353. Even though the stock is giving negative return of -5. It will be positive sign for the next month.5 463.7 4583. Beta: Beta of this stock is 0. Correlation: this correlation is 0.07 Y² 13.19 for the last month. This stock has comparatively very less variations among the stocks of the portfolio. it causes 0. It gave a positive return of 2.1044 551.3 476.0049 RJS Institute Of Management Studies Bangalore .697 for last month.08 -0.99 for the month of April.9 4550.43 7.4989% change in the stock return.25 4637. It is called as defensive stocks Suitability: This stock is preferable for long term investor.23 6. This indicates that the prices of this stock and NIFTY are moving in the same direction to the extent of 38% and 62% in the opposite direction.3044 263.9993 for the month of April.4 4484 4517.9 4429.34 Page 41 . This indicates that if there 1% change in the NIFTY returns.4989. it had a positive return of 5.3104 268. therefore these kinds of stocks are not preferable for short term investors.75 Y=y-459.
35 490.0304 3582.242 Table No.9 4348.34 Page 42 .5584 56.9924 276.4 4313.05 445.6 449.1304.82 Standard deviation = 13.1744 22.05 455.7 446 443.PERFORMANCE OF PORTFOLIO 15-Apr-10 16-Apr-10 19-Apr-10 20-Apr-10 21-Apr-10 22-Apr-10 23-Apr-10 26-Apr-10 27-Apr-10 28-Apr-10 29-Apr-10 30-Apr-10 4356.82 Correlation= 0.7529 215.77 -4.25 4247 4292.7529 22. This indicates that the stock is less risky.51 Return= 7.77 -16.12 -4.12 -13.53 Mean: The average closing price of this stock is 459.53 30.15 4251.1 4340.82 -16.0729 279.48 27.5 4390. RJS Institute Of Management Studies Bangalore .15 447.77 -14.05 443.67 -12.47 Beta= 0.2 450.3 9196.2244 83.38 Coefficient of variation= 4.85 4375.7009 929.82. Standard deviation: It has SD of 3.4 -5. 5 Chart No Analysis and Interpretation of Ranbaxy Mean = 459.2484 102.72 7.62 -9.95 4291. This is not having more fluctuations.6 4235.7 455.22 -10.85 454.4144 190.2089 163.95 4241.1 467.
9 107.PERFORMANCE OF PORTFOLIO Co-efficient of Variation: The CV is 4. return.82.95 109.15 Close price of AMBUJA 118.51. Suitability: This kind of stock is most preferable for conservative and moderate investors.8 4356.25 4637.6275 1.5225 -8.273006 65. This indicates that if there is 1% change in the NIFTY return. risk.9 4550.526256 RJS Institute Of Management Studies Bangalore . It is suitable for them in all the angles.6725 -5. This stock is giving moderate returns among the securities giving positive returns.48626 4. it causes 53% change in the stock return.526256 20.393756 1. Beta: Beta of this stock is 0.9 4429.53.8 111.5725 -9.0725 2. Correlation: The correlation is 0.95 4655. This stock has comparatively less variations among the stocks of the portfolio.34 Page 43 . TABLE SHOWIGN THE PERFORMANCE OF AMBUJA (For the month of April) Date 01-Apr-10 05-Apr-10 06-Apr-10 07-Apr-10 08-Apr-10 09-Apr-10 12-Apr-10 13-Apr-10 15-Apr-10 Index return S&P CNX NIFTY 4586. beta and variation all these are preferable for conservative and moderate investors.90776 93.8 116.6 Y=y-117.6 112.16526 4.47 0.1275 Y² 0.6 119.55726 34.1 118.4 119.4 4484 4517. Return: Return is 7.47.1275 -4.7 4583. This indicates that the stock is less volatile.762256 0.3275 -0.8725 2. This indicates that the prices of this stock and NIFTY are moving in the same direction to the extent of 51% and remaining 49% in the opposite direction.
95 4291.7 140.8 121.8725 -0.18 113.4 4313.141756 40.6968 541.74 2349. Standard deviation: the SD is 8.03726 369. There is not having more fluctuations.85 115.6 117. 6 Chart No 6 Analysis and Interpretation of AMBUJA CEMENT Mean = 117.2675 165.1 4340.16251 3.9725 -0.3766 1454.7013 61.2425 -2.5 4390.452256 19.45 -12.97626 0.17 Beta= -0.34 Page 44 .5 116.6725 4.PERFORMANCE OF PORTFOLIO 16-Apr-10 19-Apr-10 20-Apr-10 21-Apr-10 22-Apr-10 23-Apr-10 26-Apr-10 27-Apr-10 28-Apr-10 29-Apr-10 30-Apr-10 4251.7725 6.47 for the month of April.47 Standard deviation = 8.33 Mean: The average closing price is 117.99 Correlation= -0.99881 8.14 Return= 19.835756 0.25 4247 4292.6 4235.8 136.063 Table No.085556 17.9 4348.7 123.2925 -4.23 114. RJS Institute Of Management Studies Bangalore .85 104.52 which is not much riskier compared to other stocks.6 109.95 4241.2275 23.8725 -7.85 4375.52 Co-efficient of Variation = -2.3275 19.3775 -1.
52% which is giving higher returns and moderate risk compare to other stocks of the portfolio.25 4637. This stock is negatively correlated with the index Return: the return is 19. .36 -0.8041 126.34 Page 45 .05 798.2401 36.49 6.1376 RJS Institute Of Management Studies Bangalore .35 796.96 7.6 798.5216 54.PERFORMANCE OF PORTFOLIO Co-efficient of Variation: The CV is -2. And the stock has the moderate fluctuations in the month.4 4484 4517. TABLE SHOWING THE PERFORMANCE OF TCS (For the month of April) Date 01-Apr-10 05-Apr-10 06-Apr-10 07-Apr-10 08-Apr-10 09-Apr-10 12-Apr-10 13-Apr-10 Index return S&P CNX NIFTY 4586.45 791.71 11.1696 0. Beta: beta of this stock is -0.9 4550.1201 827.96 5.76 Y² 246.7 4583.7876 15.99.3299 indicates that the stock moves in the opposite direction to the market return. There is no high fluctuation in the closing prices.09 15.26 3.01 28.6816 35.1 820. And the risk associated with this stock is 8.85 Y=y-792.1701%. This stock has moderate risk and high return.14.9 4429.05 799. Suitability: This kind of stock is most preferable for Aggressive and moderate investors.95 4655.8 Close price of TCS 807.8 803. Correlation: The correlation is -0.
7 15841.15 4251.8756 3293.34 -57.7521 529.6121 8265.6 4235.4 4313.3 770.59 -7.79 -21.8041 1045.86 -2. RJS Institute Of Management Studies Bangalore .2681 37.99 -4.79 -32.4601 394.9 4348.01 19.2 785.12 Correlation= 0.85 4375.25 4247 4292.95 4291.PERFORMANCE OF PORTFOLIO 15-Apr-10 16-Apr-10 19-Apr-10 20-Apr-10 21-Apr-10 22-Apr-10 23-Apr-10 26-Apr-10 27-Apr-10 28-Apr-10 29-Apr-10 30-Apr-10 4356.5 4390.9441 474. This indicates that the stock is risky. 7 Chart No 7 Analysis and Interpretation of TCS Mean = 792.95 4241.33 Co-efficient of Variation= 2.3721 48.23 Mean: The average closing price of this stock is 792.8 29.34 Page 46 .1 4340.5 785 785.238 Table No.1 787.6996 141.09.29 Return= -9.85 821.75 734.7 815.1 811.95 780.61 23.3 759.33.05 Beta= 0.95 789.89 -6.14 -11. This is not having more fluctuations.4196 6.09 -6.09 Standard deviation = 20.7081 50. Standard deviation: The SD is 20.39 876.8601 22. Except 30th of April.
Even though the stock is giving negative return of -9.34 Page 47 . It will be showing a positive sign for the next month Beta: Beta of this stock is 0.PERFORMANCE OF PORTFOLIO Co-efficient of Variation: The CV is 2. Correlation: The correlation is 0.68% change in the stock return.12. It gave a positive return of 1.0492 for the month of April. This indicates that the prices of this stock and NIFTY are moving in the same direction to the extent of 29% and remaining 71% in the opposite direction. TABLE SHOWING THE CALCULATION OF MONTHLY RETURNS OF EACH STOCK & PORTFOLIO RJS Institute Of Management Studies Bangalore . This indicates that if there is 1% change in the NIFTY return. This stock has comparatively less variations among the stocks of the portfolio.5479 for the last month.68. there for these kinds of stocks are not preferable for short term investors.5479 for last month.29. it causes 0. Suitability: This stock is preferable for long term investor. it had a positive return of 1. Return: It has the negative return of -9.0492 for the month of April. This indicates that the stock is less volatile.
17 -9.2 118.85 -238.88 4.57 Total /portfolio return 4586.25 241.1 % GAIN/LOSS 11.1 807.3 140.3 10.60 374.350.05 -5.94 -19. 8 S NO 1 2 3 4 5 6 7 COMPANY SBI M&M HUL DLF Ranbaxy Abuja cement TCS S&P CNX NIFTY PRICE ON 1-APR-10 2.7 CHANGE IN PRICE 248.79 24.4 321.74 734.3 34.34 Page 48 .PERFORMANCE OF PORTFOLIO Table No.47 19.05 7.19 RJS Institute Of Management Studies Bangalore .9 4348.1 22.95 230.64 -73.75 -5.10 93.8 PRICE ON 30-APR-10 2.99 7.70 468.7 456.102.4 490.34 302.
29% 14.16 13.82 31.912 1.06 2.33 Proportional Risk 12.34 Page 49 .29% 14. 5.12 14. Company SBI M&M HUL DLF Ranbaxy Abuja TCS Total Proportion of stock (Equal) 14.02 7.74 -1.22 2. 4. 3.17 -9. 9 Chart No 9 Portfolio Return = 7. 7.57 Portfolio Risk = 25.29% 14.29% 14.67 -0.91 25.81 24.55 0.43 1.29 7.63 Total Return of stock 11. 6.57 Table No.85 1.47 19.12 4.99 7.02 1.02 2.38 8.05 Return of stock (to the given proportion) 1.68 3. 2.29% 14.52 20.29% 100 Total Risk of stock 84.PERFORMANCE OF PORTFOLIO Chart No 8 PORTFOLIO 1: Table showing the risk and return of moderate portfolio S NO 1.29% 14.83 4.74 -5.63 RJS Institute Of Management Studies Bangalore .
PERFORMANCE OF PORTFOLIO
PORTFOLIO 2: Table showing the risk and return of aggressive portfolio
Proportion S NO Company of stock (in %) 1. 2. 3. 4. 5. 6. 7. SBI M&M HUL DLF Ranbaxy Abuja TCS Total 29.51 109.02 38.52 -41.8 -43.47 27.04 -18.85 100 Total Total Risk of stock 84.82 31.02 7.12 14.16 13.38 8.52 20.33 Proportional Risk 25.03 33.82 2.74 -5.92 -5.81 2.31 -3.83 48.33 Table No. 10 Return of stock (in %) 11.79 24.88 4.75 -5.99 7.47 19.17 -9.05 Return of stock (to the given proportion)(in %) 3.48 27.13 1.829 2.51 -3.25 5.18 1.71 38.59
Chart No 10
Portfolio Return = 38.59 Portfolio Risk = 48.33
RJS Institute Of Management Studies Bangalore - 34 Page 50
PERFORMANCE OF PORTFOLIO
Table showing the risk and return of conservative portfolio
Proportion S NO 1. 2. 3. 4. 5. 6. 7. Company SBI M&M HUL DLF Ranbaxy Abuja TCS Total of stock (in %) -18.85 -43.44 -41.81 38.52 109.02 27.05 29.51 100 Total Risk of stock 84.82 31.02 7.12 14.16 13.38 8.52 20.33 Proportional Risk -15.99 -13.47 -2.97 5.455 14.58 2.31 5.99 -4.09 Total Return of stock (in %) 11.799 24.883 4.7482 -5.999 7.4747 19.171 -9.049 Return of stock (to the given proportion) (in %) -2.22 -10.81 -1.98 -2.31 8.148 5.18 -2.67 -6.67
Table No. 11
Chart No 11
Portfolio Return = -6.67 Portfolio Risk = -4.09
Table showing risk and return of all three types of portfolio
RJS Institute Of Management Studies Bangalore - 34 Page 51
PERFORMANCE OF PORTFOLIO
S no 1. 2. 3.
Portfolio Aggressive Moderate conservative
Risk 48.33 25.63 -4.09
Return 38.59 7.57 -6.67
Table No. 12
Chart No 12
RJS Institute Of Management Studies Bangalore - 34
47-6)/13.33 Return – risk free rate of return/ SD (11. This risk premium is the difference between the portfolio’s average rate of return and the riskless rate of return. Even though evaluation of portfolio performance is considered to be the last stage of investment process.83-6)/31.741 RANK IV II V VII III I VI TREYNOR’S PERFORANCE INDEX: RJS Institute Of Management Studies Bangalore .16 13.83 4.81-6)/84.PERFORMANCE OF PORTFOLIO PORTFOLIO EVALUATION An investor should evaluates her/his portfolio performance and identify the sources of strength and weakness.05 -5.81 24. The evaluation of portfolio provides a feed back about the performance to evolve better management strategy. The index assigns the highest values to asset that have best risk-adjusted average rate of return.82 31.38 8.177 -0.risk free rate of return Standard deviation Portfolio evaluation using sharp’s performance index: PORTFOLIOS SBI M&M HUL DLF Ranbaxy Abuja TCS S&P CNX NIFTY (Rm) Risk free rate (Rf) Monthly Return(Rp) % 11. The standard deviation of the portfolio indicates the risk. it is continuous process.82 (24.99-6)/14.068 0.52 20.02 7.74-6)/7.02 (4.12 14.847 0.47 19. Sharp index = portfolio average return.99 7.38 (19.74 -5.16 (-5.546 -0. Sharpe index measures the risk premium of the portfolio relative to total amount of risk in the portfolio.52 (-9.607 -0.34 Page 53 .16 (7.109 1.189 6 SD 84.33 Sp 0. SHARPE’S PERFOMANCE INDEX Sharpe’s performance index gives a single value to be used for the performance ranking of various funds or portfolios.17 -9.17-6)/8.05-6)/20.
05-6)/0.47-6)/0.841 -89.74-6)/(-0.345) (24.Y))/σm Portfolio evaluation using Trey or’s performance index: PORTFOLIOS SBI M&M HUL DLF Ranbaxy Abuja TCS S&P CNX NIFTY (Rm) Risk free rate (Rf) Monthly Return(Rp) % 11.918 -169.045) (-5.189 6 β -0.543 27.PERFORMANCE OF PORTFOLIO To understand the neither trey nor index.299 -732.74 -5.103 (19.018 0.47 19.81 24.103 -0.089 (Return – risk free rate of return)/ Beta (11.045 0.34 Page 54 . an investor should know the concept of characteristic line.221) (4.081 (7.081 0. The ideal fund return rises at a faster rate than the general market performance went the market is moving upwards and its rate of return declines slowly than the market return.83 4. The fund’s performance is measured in relation to the market performance. Treynor index = portfolio average return.17 -9.089) (-9.914 14.089 IT -16.969 -147.345 -0.risk free rate of return Beta coefficient βp = (σp * corr(X.05 -5. The ideal fund may place its fund in the treasury bills or short sell the stock during the decline and earn positive return.448 RANK III IV I V II VII VI JENSEN’S PERFORMANCE INDEX RJS Institute Of Management Studies Bangalore .211 -0.99-6)/0. The relationship between a given market return and the fund’s is given by the characteristic line.17-6)/(-0.99 7.83-6)/(-0.81-6)/(-0.
018 0.211(-5.089(-5.PERFORMANCE OF PORTFOLIO The absolute risk adjusted return measures were developed by Michael Jeans and commonly known as Jensen’s measures.081(-5. It is mentioned as measures of absolute performance because a definite standard is set and against that the performance is measured.0829502 2.47690971 1.Y))/σm Portfolio evaluation using Jensen’s performance index: PORTFOLIOS SBI M&M HUL DLF Ranbaxy Abuja TCS S&P CNX NIFTY (Rm) Risk free rate (Rf) Monthly Return(Rp) % 11.189 6 β -0.17-[(6-0. The standard is based on the investor’s predictive ability.189-6)] 7.189-6)] 9.96892785 -14.94947547 16.089 Rp-[Rf+βp(Rm-Rf)] 11.74-[(6-0.211 -0.05 -5.045(-5.17 -9.081 0.345(-5.189-6)] 5.103 -0.99+[(6+0.345 -0.189-6)] 19.0561527 RANK IV I V VI III II VII RJS Institute Of Management Studies Bangalore .81-[(6-0.83-[(6-0.99 7.47 19.103(-5.764096368 -11. Jensen's Measure = Rp-[Rf+βp (Rm-Rf)] βp = (σp * corr(X.189-6)] JM 1. Successful prediction of security price would unable the investor to earn higher returns than the ordinary investor expects to earning a given level of risk.05+[(6+0.81 24.47-[(6+0.74 -5.189-6)] 4.620298553 12.045 0.34 Page 55 .83 4.018(-5.189-6)] 24.
Capital Asset Pricing Model RJS Institute Of Management Studies Bangalore . Ranbaxy and SBI are moderately performing. HUF is poorly performing in both Sharpe index and Jensen's Measure. Ambuja also performing well because it occupies I and II rank in Sharpe index and Jensen's Measure respectively. it shows that TCS and DLF stocks are poorly performing because. TCS occupies VI rank in both Sharpe index and Treynor index and occupies VII rank Jensen’s index. In case of the M&M Even though it occupies IV rank in Treynor index and II rank in Sharpe index but it achieved I rank in Jensen's Measure.PERFORMANCE OF PORTFOLIO ANALYSIS: From all the three measures.34 Page 56 . So it is well performing.
The model takes into account the asset’s sensitivity to non-diversifiable risk(also known as systematic risk or market risk). if that asset is to be added to an already well-diversified portfolio.34 Page 57 . they cannot influence prices Can lend and borrow unlimited under the risk free rate of interest Trade without transaction or taxation costs Deal with securities that are all highly divisible in to small parcels Assume all information is at the same time available to all investors Shortcomings of CAPM • The model assumes that the variance of returns is an adequate measurement of risk. but for general returns distributions other risk measures will likely reflects the investors preferences more adequately • The model does not appear to adequately explain the variation in stock returns.PERFORMANCE OF PORTFOLIO The capital asset pricing model (CAPM)is used to determine a theoretically appropriate required rate of return of an asset. This might be justified under the assumption of normally distributed returns. For individual securities. as well as the expected return of the market and the expected return of the theoretical risk-free asset. i.e. Assumptions of CAPM All investors: • • • • • • • Aim to maximise economic utility Are rational risk averse Are price takers. Empirical studies show that low beta stocks may offer higher returns than the model would predict. RJS Institute Of Management Studies Bangalore . • The model assumes that all the investors have access to the same information and agree about the risk and expected returns. often represented by the quantity beta(β) in the financial industry . The CAPM is a model for pricing an individual security or a portfolio. given that asset’s non-diversifiable risk. we made use of security market line(SML) and its relation to expected return and systematic risk(beta)to show how the market must price individual securities in relation to their security risk class.
The market portfolio consists of all assets in all markets. were each asset is weighted by its market capitalization.34 Page 58 .0284 20.99 7.return profile.8827 11.47 19.83 4.17 -9.81 24. although this assumption may be relaxed with more complicated versions of the model.2593 0.PERFORMANCE OF PORTFOLIO • • The model assumes that there are no taxes or transaction costs. Ri = Rf + β (Rm-Rf) Table showing the required rate of return using CAPM model Required rate return Using CAPM 10.0693 9.74 -5.05 Remarks Underpriced Underpriced overpriced overpriced underpriced overpriced underpriced Decision BUY BUY SELL SELL BUY SELL SELL SBI M&M HUL DLF Ranbaxy Abuja TCS Table No.4263 Company stock return 11. This assumes no preference between market and assets for individual investors and that investor choose asset slowly as a function of their risk.6927 3.2931 0. 13 RJS Institute Of Management Studies Bangalore .
SUGGESTION AND CONCLUSION RJS Institute Of Management Studies Bangalore . This is because the stock gives less return than the expected return hence such stock should be sold. CHAPTER VI FINDINGS. This is because the stock gives more return than what it should give hence such stock should be brought. If required (as computed by CAPM) return is more than actual return (calculated using any other factor) it would mean than the stock is overpriced.34 Page 59 .PERFORMANCE OF PORTFOLIO Chart No 13 If required (as computed by CAPM) return is less than actual return (calculated using any other factor) it would mean than the stock is underpriced.
this is the stock with conservative and moderate risk and return. DLF: It has the negative return of -5.50.29. This is not having more fluctuations. AMBUJA CEMENT: RJS Institute Of Management Studies Bangalore . The CV and Beta of the stock are 4.36. It has a return of 24.28. M&M: This stock has high risk and high return.82. The average price of this stock is 328. The average price is 2137. The CV and Beta of the stock are -12. It was also found that. it was found that.697 for the last month.83% with 31. It gave a positive return of 5.53. This is not having more fluctuations the CV is 4.38. there were no major fluctuations in the prices of this stock. Its average price is 459. Beta of this stock is 0.53 respectively. RANBAXY: The return on this stock is 7.99 for the month of April.34 Page 60 .74 with the beta of -0. The correlation between this stock and the market index is 53%.82 & 0. HUL: The average price of this stock is 225.829. It is showing a positive sign for the next month. The stock is comparatively less risky it has the risk of 7. There were no high fluctuations in the beginning of the month except 30th of the month. It has a return of 11. This stock is correlated with the market index to the extent of 49%.47.12.47 with the risk of 13.7996% for the month of April.33 respectively.51.PERFORMANCE OF PORTFOLIO FINDINGS: SBIN: After the study. This stock is negatively correlated with the market index. This is not having more fluctuations the.02 risk. the stock is risky. The CV is -4. It has a return of 4.07 with the CV of -3. with 84.14 & -1. Its negatively correlation with market index.82 Risk and beta of -0. It is negatively correlated with the market index.
It is negatively correlated with the market index to the extent. This is not having more fluctuations Except 30 th of April. MODERATE PORTFOLIO: It was found that the moderate portfolio of seven different stocks gave the return of 7.34 Page 61 .57 with the risk of 25. The majority of returns of the portfolio were contributed by M&M. & TCS these two stocks are giving negative return. The CV is 2.09.09.67. AMBUJA CEMENT.59 with the risk of 48.5479 for the last month. CONSERVATIVE PORTFOLIO: This portfolio has the return of -6. The average price of this stock is 792.23.12. SBI & HUL are the stocks giving positive return DLF. Stocks giving Less return in the portfolio are M&M. There is not having more fluctuations. The risk associated with this stock is -4. It gave a positive return of 1. M&M.33 respectively TCS: It has the negative return of -9. It is showing a positive sign for the next month. DLF and TCS are the stocks giving negative returns in the portfolio. AMBUJA CEMENT and SBI followed by RANBAXY and HUL.63. This stock is correlated with the market index is 29%. Beta of this stock is 0.17% with 8.99 & -0. AMBUJA CEMENT and SBI. it has a return of 19. RANBAXY..PERFORMANCE OF PORTFOLIO Ambuja Cement has performed very well during the month of April.05 for the month of April.52 risks. The CV and Beta of the stock are -2. AGGRESSIVE PORTFOLIO: The aggressive portfolio has a return of 38. RJS Institute Of Management Studies Bangalore .33.
return.As most of the investors choose the stock on the basis of risk and return. these kinds of stocks are more preferable for aggressive investors. it has performed well during the month and variations are also less except 19th. This stock has moderate risk and high return. AMBUJA CEMENT This kind of stock is most preferable for Aggressive and moderate investors. beta and variation all these are preferable for conservative and moderate investors. Investors having high risk bearing capacity only can hold these kinds of stocks. Ranbaxy This kind of stock is most preferable for conservative and moderate investors.33. HUL This kind of stock is most preferable for conservative investors. risk. Because it has moderate return and high risk. It is suitable for them in all the angles. Stocks with these features are preferable for conservative investors. therefore these kinds of stocks are not preferable for short term investors.34 Page 62 . risk. DLF This stock is preferable for long term investor.PERFORMANCE OF PORTFOLIO SUGGESTION: SBI The volatility is less in this stock. it had a positive return of 5. return. Therefore this stock can be held with major portion only in aggressive portfolio. M&M As this stock is more volatile.99 for the month of April.697 for last month. beta and variation. 26th. When Beta is -1. 29th and 30th of April. RJS Institute Of Management Studies Bangalore . This is preferable for Aggressive investors. Even though the stock is giving negative return of -5. if market declines by 10% the stock will decline by 20%. It is suitable for them in all the angles.
This is most preferable for the investors who expect the portfolio return equaling to the market return. Therefore this is suitable for the investors seeking high return and having high risk bearing capacity.PERFORMANCE OF PORTFOLIO TCS This stock is preferable for long term investor. Return expected from the aggressive portfolio will be more than the market return. there for these kinds of stocks are not preferable for short term investors. M&M and AMBUJA CEMENTS are most preferable for aggressive portfolio. AGGRESSIVE PORTFOLIO: Stocks like SBI. RJS Institute Of Management Studies Bangalore . Even though the stock is giving negative return of -9.54 for last month.04 for the month of April. As these stocks are more volatile and yielding high return. investors who expects low risk and low return can prefer for the stocks like RANBAXY & HUL which are less volatile and have low return and low risk. CONSERVATIVE PORTFOLIO: Conservative portfolios normally give return less than the market return. it had a positive return of 1. MODERATE PORTFOLIO: For an effective moderate portfolio the investor should choose such stocks which are less volatile and which have average risk and return.34 Page 63 .
therefore diversification plays a predominant role here. RANBAXY. While choosing the stocks for the portfolio. Even though some of the stocks haven’t performed during the month the loss from those stocks was compensated against the returns of the stocks in the portfolio.PERFORMANCE OF PORTFOLIO CONCLUSION: The individual performance of the stocks during the month was good except few stocks like TCS and DLF as they have shown negative return during the month.34 Page 64 . as the number of stocks increases the risk of the portfolio will be reduced to a greater extent. the investor should take relevant information whether the market is bullish or bearish. M&M. RJS Institute Of Management Studies Bangalore . AMBUJA CEMENT. The investors should try to analyze the risk and return of each stock. As the object of constructing the portfolio itself is to minimize the risk. Two portfolios (Aggressive & Moderate) have given positive return during the month But one portfolio (Conservative) giving negative return. When we look at the portfolio performance. and HUL have performed well. The investor should also focus on the number of stocks to be held in the portfolio. But. The analysis like fundamental and technical are very important to take better decision of buying and selling of shares. This was all about the individual performance of the stocks. SBI.
Ninth edition. Economic Times. Financial Express.moneycontrol.34 Page 65 . Tata McGraw-Hill publishing Co Ltd.com www.com RJS Institute Of Management Studies Bangalore .com www. WEBSITES: www.parsoli. Corporate India.com www. New Delhi.com www. Punithavathy Pandian.nseindia.Wikipedia. DAILIES: Business Line.com www.stock-market-investors.investsmartindia.. Vikas Publishing House Pvt Ltd. Emerging trends in financial markets.money. Prasanna Chandra. Outlook. Investment analysis and portfolio management.PERFORMANCE OF PORTFOLIO BIBLIOGRAPHY BOOKS: Security analysis and portfolio management. JOURNALS: Portfolio.