A SUMMER INTERNSHIP PROJECT ON A STUDY ON PORTFOLIO MANAGEMENT SERVICES FOR THE PARTIAL FULFILLMENT OF POST-GRADUATION DEGREE IN MASTER

OF BUSINESS ADMINSTRATION

UNDER THE ESTEEMED GUIDENCE OF PROF. RAVI KUMAR (FACULTY, AGBS HYDERABAD)

SUBMITTED BY R.DINESH ROLL NO: A30601909062

AMITY GLOBAL BUSINESS SCHOOL BANJARA HILLS ROAD NO: 11 HYDERABAD

DECLARATION
I hereby declare to the best of my knowledge and belief that the Summer Training Project Report entitled as PORTFOLIO MANAGEMENT SERVICES for SHAREKHAN LIMITED HYDERABAD being submitted as the partial fulfilment of Master of Business Administration, has been written and submitted under the guidance of Mr. Shayam Sundar and Mr K.P.Singh Industry guides and Mr Ravi Kumar my faculty guide. I further declare that it is original work done as a part of the academic course and has not been submitted elsewhere. The conclusions and recommendations written in this project are based on the data collected by me while preparing this report.

R.DINESH A30601909062

Amity Global Business School

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Amity Global Business School

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bearing ID No. Hyderabad and submitted the same in the partial fulfilment for the award of the degree of MASTER OF BUSINESS ADMINISTRATION has done his Summer Internship Program under my guidance from 1st June 2010 to 15th July 2010.CERTIFICATE (Whom so ever it may concern) This is to certify that the project report entitled MANAGEMENT SERVICES PORTFOLIO carried at SHAREKHAN LIMITED Hyderabad is a bonafide work done by Mr. I found him to be good in the task and activities assigned to him. R.DINESH. A30601909062 a student of AMITY GLOBAL BUSINESS SCHOOL. DATE: PLACE: HYDERABAD (FACULTY GUIDE) Amity Global Business School Page 4 . I wish his success in all future endeavours.

Share Khan and Mr. I hope my final project report will be a great success and a good source of learning and information. He has been a great source of motivation to me. Ravi Kumar (Faculty Guide-AMITY GLOBAL BUSINESS SCHOOL. Share khan and for helping me and providing me with right direction during the course of my project. I would also like to express my sincere thanks to prof. Prasad Rao (Director AGBS Hyderabad) and D.DINESH Amity Global Business School Page 5 . I would like to take this opportunity to thank Dr.P. enthusiastic and learning atmosphere at ShareKhan Limited.Shyam Sundar. I would also like to extend my regards to my company guides Mr. Amity Global Business School for giving me an opportunity for doing a project in a corporate firm and all my faculty members. Marketing Manager.K. senior officials and colleagues at Share Khan for their help and support during the project.Surekha Thakur (corporate relations). It was indeed a great pleasure for me to work in a very co-operative. With all the heartiest thanks.ACKNOWLEDGEMENT I would like to express word of thanks to all those who have provided me with sincere advice and information during the course of my training period. The interaction with him has provided me with the knowledge which will definitely help me to enrich my career and help me to perform better in future. Hyderabad) for his unstinting guidance and support throughout the project.Singh Territory Manager. R.

INDEX CHAPTER CHAPTER-1 TABLE OF CONTENTS INTRODUCTION Objective Executive summary Introduction to study Myths About PMS Introduction to Stock Exchange PG.NO 8-22 8 9-11 12-14 15-16 17-22 23-24 25 26-29 30-32 33-37 34 35-37 38-39 40 41 42-49 50-53 54-60 61-66 67-72 73-80 81-97 98-106 CHAPTER-2 COMPANY PROFILE Work structure of Share khan Product and Services offered by Company Reasons to Choose Share khan CHAPTER-3 RESEARCH METHODOLOGY Scope of the Study Methodology for Data Collection CHAPTER-4 PORTFOLIO MANAGEMENT SERVICES Need of PMS Objective of PMS Portfolio Construction Risk and Risk Aversion Risk versus Return Portfolio Diversification Techniques of PMS Share khan PMS CHAPTER-5 DATA ANALYSIS AND INTERPRETATION Case study & Article Amity Global Business School Page 6 .

CHAPTER-6 CONCLUSION & SUGGESTIONS Observation and Findings Limitations of the Project Suggestions & Recommendations BIBLIOGRAPHY 107 108-109 110 111-112 113 Amity Global Business School Page 7 .

It is like to discover to Question through the application of scientific procedure. Amity Global Business School Page 8 . Stock.  To study about the effectiveness & efficiency of Share khan Ltd in relation to its competitors  To study about whether people are satisfied with Share khan Services & Management System or not.OBJECTIVE OF THE PROJECT Each research study has its own specific purpose.  To study about the need of improvement in existing Trading system. But the main aim of our research to find out the truth that is hidden and which has not been discovered as yet. Mutual Funds. new IPO s.  To know about the schemes offered by the different insurance companies.  To study about the competitive position of Share khan Ltd in Competitive Market. Bonds etc.  To study about the difficulties faced by persons while Trading in Share khan.  To know in depth about Insurance.  To know about the awareness towards stock brokers and share market. Our research study has two objectives:OBJECTIVES  To know the concept of Portfolio Management. Mutual Funds.

EXECUTIVE SUMMARY Amity Global Business School Page 9 .

10% in Beta Portfolio which is the result when the Market was not doing well from last one year.It has given 43. The research design is analytical in nature. As the PMS services of Share khan Limited have the best result in its field . The target customers were Investors who are trading in the stock market. whereas some needs and expectation are universal.30%return in Nifty and 38. The evaluation of financial planning has been increased through decades. In order to identify the effectiveness of Share khan PMS services this Research is carried throughout the area of Hyderabad. The Sample consists of 100 investors from various broker s premises.50% return in Trailing stops. Therefore. we find that the scenario of the Stock Market is changing day by day hours by hours and minute by minute. 94. For investor it is always difficult to decide which brokerage firm to choose.EXECUTIVE SUMMARY Investing is both Arts and Science. In order to keep the Investor safe from market fluctuation and make them profitable. The Report is prepared on the basis of Research work done through the different Research Mythology the data is collected from both the source Primary sources which consist of Questionnaire and secondary data is collected from different sources such as Company website. Amity Global Business School Page 10 . The investor s profile is based on the results of a questionnaire that the Investors completed. There is growing competition between brokerage firms in post reform India. Magazine and other sources. A questionnaire was prepared and distributed to Investors. Every Individual has their own specific financial need and expectation based on their risk taking capabilities. Now a day s investments have become very important part of income saving. which can be best seen in customers. At the time of investing money everyone look for the Risk factor involve in the Investment option. Portfolio Management Services (PMS) is fast gaining Investment Option for the High Net worth Individual (HNI).

In this project I have shown the details of financial planning as well as wealth management so as to understand about the customer s needs and wants with respect to market and how a client s portfolio can be designed and what factors a portfolio manager must consider for designing a portfolio. Amity Global Business School Page 11 .

CHAPTER-1 INTRODUCTION Amity Global Business School Page 12 .

Investment Management Solution in PMS can be provided in the following ways: i. so in order to move with changes and grab the best opportunities in the field of investments a professional fund manager is necessary. Although portfolio managers may oversee hundreds of portfolio. structured products and other individual securities.Investment can be defined the commitment of funds to one or more assets that will be held over for some future time period. in the present scenario the Portfolio Management Services (PMS) is fast gaining importance as an investment alternative for the High Net worth Investors. fixed income. In today fast growing world many opportunities are available. your account may be unique. iii. Discretionary Non Discretionary Advisory Discretionary: Under these services. Amity Global Business School Page 13 . debt. ii.INTRODUCTION TO STUDY The field of investment traditionally divided into security analysis and portfolio management. You have the freedom and flexibility to tailor your portfolio to address personal preferences and financial goals. managed by a professional money manager that can potentially be tailored to meet specific investment objectives. who owns units of the entire fund. you own individual securities unlike a mutual fund investor. Portfolio Management Services (PMS) is an investment portfolio in stocks. the choice as well as the timings of the investment decisions rest solely with the Portfolio Manager. Value in turn is the function of risk and return. Therefore. cash. These two concepts are in the study of investment . The heart of security analysis is valuation of financial assets. When you invest in PMS.

the portfolio manager only suggests the investment ideas. or financial assets like stocks. debenture. deposits etc. The choice as well as the timings of the investment decisions rest solely with the Investor. However the execution of trade is done by the portfolio manager. Rule 2. then ensure you build discipline into their investment. Advisory: Under these services. 1993 defines the term Portfolio as total holding of securities belonging to any person . portfolio is combination of assets the outcomes of which cannot be defined with certainty new assets could be physical assets. building.They have trained and skilled talent will work on your money to make it do more for you. clause (d) of the SEBI (portfolio managers) Rules. if any investors still insist on managing their own portfolio.Non Discretionary: Under these services. The aim Portfolio management is to achieve the maximum return from a portfolio. As a matter of fact. equity. The choice as well as the execution of the investment decisions rest solely with the Investor. land. Amity Global Business School Page 14 . Therefore. which has been delegated to be managed by manger or financial institution. Merchant banker and the portfolio management with a view to ensure maximum return by such investment with minimum risk of loss of return on the money invested in securities held by them for their clients. Portfolio management refers to managing efficiently the investment in the securities held by professional for others. There are lots of organization in the market on the lookout for the people like you who need their portfolios managed for them . gold etc. Work out their strategy and stand by it. the portfolio manager only suggests the investment ideas. real estates.

The objectives are similar as in both the product but they are different from each other in certain aspects. Amity Global Business School Page 15 . Portfolio can be tailored to address each investor's specific needs. Ownership In PMS. 1: PMS and Mutual Fund are Similar as the investment option As in the Finance Basket both the PMS and Mutual Fund are used for minimizing risk and maximize the profit of the Investors. whereas in Mutual Fund Shareholders own shares of the fund and cannot influence buy and sell decisions or control their exposure to incurring tax liabilities. allowing for tax management flexibility. it s ongoing personalized access to professional money management services. They are as follows. Investors directly own the individual securities in their portfolio. Customization In PMS. in Mutual fund gives personalize access to money. Management Side In PMS. Liquidity In PMS. whereas.MYTHS ABOUT PMS There are two most common myths found about Portfolio Management Services (PMS) which we found among most of the Investors. managers may hold cash. Whereas in Mutual Fund Portfolio structured to meet the fund's stated investment objectives. they are not required to hold cash to meet redemptions. Whereas. Mutual funds generally hold some cash to meet redemptions. Myth No. They are as follows.

5 Crore + for Fixed Income Options Rs. personalized access to professional money management services. Flexibility PMS is generally more flexible than mutual funds. The Portfolio Manager may move to 100% cash if it required. The Portfolio Manager can also manage a portfolio with disproportionate allocation to select compelling opportunities whereas. 20 Laces + for Structured Products.Minimums PMS generally gives higher minimum investments than mutual funds. minimum ranges from: Rs. Myth No. in Mutual Fund comparatively less flexible. Generally. 2: PMS is more Risk free than other Financial Instrument In Financial Market Risk factor is common in all the financial products. whereas in Mutual Fund Provide ongoing. Amity Global Business School Page 16 . 1 Crore + for Equity Options Rs. but yes it is true that Risk Factor vary from each other due to its nature. which varies depending on the security selected. The Portfolio Manager may take his own time in building up the portfolio. investments in small and mid-sized companies tend to involve more risk than investments in larger companies. All investments involve a certain amount of risk. including the possible erosion of the principal amount invested. For example.

As a meeting held in the broker Hall on the 5th day of February. On or about 9th day of July. their number increased to about 200 to 250. 5%. the number of brokers increased considerably. But during the share mania of 1860-65. Accordingly. Between 1840 and 1850. 1887. business passed in the shares of banks like the commercial bank. Englishman reported the quotations of 4%. the oriental bank and the old bank of Bombay and shares of cotton presses. the Articles of Association of the Exchange and the Stock Amity Global Business School Page 17 . It also quoted the prices of business ventures like the Bengal bonded warehouse. This list was a further broadened in 1839 when the Calcutta newspaper printed the quotations of banks like union bank and Agra bank.INTRODUCTION TO STOCK EXCHANGE The emergence of stock market can be traced back to 1830. and 6% loans of East India Company as well as the shares of the bank of Bengal in 1836. a few native brokers doing brokerage business in shares and stocks resolved upon forming in Bombay an association for protecting the character. the number of brokers was about 60 and during the exciting period of the American Civil war. The end of American Civil war brought disillusionment and many Failures and the brokers decreased in number and prosperity. it was resolved to execute a formal deal of association and to constitute the first managing committee and to appoint the first trustees. In Bombay. only half a dozen brokers existed for the limited business. By 1860. the chartered bank. the Docking Company and the storm tug company. status and interest of native share and stock brokers and providing a hall or building for the use of the Members of such association. It was in those troublesome times between 1868 and 1875 that brokers organized an informal association and finally as recited in the Indenture constituting the Articles of Association of the Exchange . the chartered mercantile bank. In Calcutta.1875.

sell or deal in securities. The numbers of members increased to 333 in 1896. Stockbrokers Sub-broker Market makers Portfolio consultants etc. It is obligatory for the person to abide by the rules.1000 in 1896. 362 in 1916and 478 in 1920 and the entrance fee was raised to Rs. iii.2500 in 1916 and Rs. 48.1 and there were 318 members on the list. 6 as companies limited by guarantee and 3 are non-profit voluntary organization.5 in 1877. Of the total of 23. At present there are 23 recognized stock exchanges with about 6000 stock brokers. Rs. 1887. Stock brokers are commission broker. These are the persons who buy. The Association is now known as The Stock Exchange . Organization structure of stock exchange varies. regulations and the buy-law. The entrance fee for new member was Re. rather. These are: i. when the exchange was constituted. 1. Others have to seek recognition on annual basis. Rs. 14 stock exchanges are organized as public limited companies. Stockbrokers: Stock brokers are the members of stock exchanges. only 9 stock exchanges have been permanent recognition. iv. arbitrageur etc. these are run by some persons and with the help of some persons and institution.Exchange was formally established in Bombay on 3rd day of December. floor broker.000 in 1920. SEBI can impose certain conditions while granting the certificate of registrations. A certificate of registration from SEBI is mandatory to act as a broker. These exchange do not work of its own. ii. All these are down as functionaries on stock exchange. Amity Global Business School Page 18 .

03. A market maker has to abide by bye-laws. They make both bid and offer at the same time. The broker and sub-broker should enter into an agreement in which obligations of both should be specified. rules regulations of the concerned stock exchange. 3. For getting registered with SEBI. selling or dealing in securities through stockbroker. 3 Crore but not more than Rs. Amity Global Business School Page 19 .000 Total no. As per the listing requirements. 5 core and having a commercial operation for less than 2 years should appoint a market maker at the time of issue of securities. of sub-broker as on 31. of registered brokers as on 31.09 9000 24. Sub-broker: A sub-broker acts as agent of stock broker. He assists the investors in buying. Market Makers: Market maker is a designated specialist in the specified securities. He is not a member of a stock exchange.Detail of Registered Brokers Total no. He is exempt from the margin requirements. Sub-broker must be registered SEBI for a dealing in securities.03. a company where the paid-up capital is Rs.09 2. he must fulfill certain rules and regulation.

miss communication etc start growing in stock broker offices. direct or undertake the management or administration of securities or funds on behalf of their clients. This software is provided by the stock broker. Traditionally stock trading is done through stock brokers. bonds and money market instruments is collectively called as portfolio. Information technology (Stock Market Software) helps stock brokers in solving these problems with Online Stock Trading. where stockbrokers buy and sell securities for individuals or institutions. Stock exchanges are like market places. Investor can trade shares through a website without any manual intervention from Stock Broker. Online Stock Market Trading is an internet based stock trading facility. Whereas the portfolio consultants are the persons. the Amity Global Business School Page 20 . There are two different type of trading environments available for online equity trading. This software requires high speed internet connection. some issues like location constrains. As number of people trading in stock market increase enormously in last few years. They are like other internet websites which investor can access from around the world through normal internet connection. busy phone lines. personally or through telephones. 2. Installable software based Stock Trading Terminals This trading environment requires software to be installed on investor s computer. These kind of trading terminals are used by high volume intraday equity traders. As per the SCRA (Securities Contracts Regulation Act) 1956. Portfolio Consultants: A combination of securities such as stocks.Web (Internet) based trading application This kind of trading environment doesn't require any additional software installation.4. 1. firms or companies who advise.

3. The primary market is the channel for creation of new securities issued by public limited companies or by government agencies. Amity Global Business School Page 21 . The secondary market operates through the over-the-counter (OTC) market and the exchange trade market.Microsoft. IBM. Huge Choice There are thousands of stocks listed on markets around the world. Advantages of Stocks Trading 1. Better returns Actively trading stocks can produce better overall returns than simply buying and holding. derivatives of securities. stocks.it s just a matter of finding them. debentures. There is always a stock whose price is moving . units of collective investment scheme (CIS) etc. New securities issued in the primary market are traded in the secondary market. The securities market has two interdependent segments: the primary and secondary market. and Cisco etc. 2. Familiarity The most traded stocks are in the largest companies that most of us have heard of and understand . bonds. government securities.definition of securities includes shares.

Pattern Day Trader Rules It requires at least $25. Again there are no such rules in Forex trading or futures trading where going short are as easy as going long. Online futures trading are about 1/4 of the cost for the equivalent value.000 could trade up to $100. Meaning a $25. 3.000 of stock. 4. 5. No such rule applies to Forex trading or futures trading.000 to be held in a trading account if the trader completes more than 4 trades in a 5 day period. Leverage With a margined account the maximum amount of leverage available for stock trading is usually 4:1. 2. Amity Global Business School Page 22 . Need to Borrow Stock to Short Stocks are physical commodities and if a trader wishes to go short then the broker must have arrangements in place to borrow that stock from a shareholder until the trader closes their position.Disadvantages of Stocks Trading 1. Contrast this to futures trading where selling is as easy as buying. In the UK 0.5% stamp duty is also levied on all share purchases making trading virtually impossible. This limits the opportunities available for short selling. Uptick Rule on Short Selling A trader must wait until a stock price ticks up before they can short sell it. This is pretty low compared to Forex trading or futures trading. Costs Although online trading costs for stock trading are low they still add considerably to the costs of day trading. hence the popularity of spread betting.

CHAPTER.2 COMPANY PROFILE Amity Global Business School Page 23 .

Share khan offers its customers a wide range of equity related services including trade execution on BSE. Foreign Institutional Investors generate about 65% of the organization s revenue. Far East. NSE. which has over eight decades of experience in the stock broking business. SSKI holds a sizeable portion of the market in each of these segments. SSKI s institutional broking arm accounts for 7% of the market for Foreign Institutional portfolio investment and 5% of all Domestic Institutional portfolio investment in the country. The content-rich and research oriented portal has stood out among its contemporaries because of its steadfast dedication to offering customers best-of-breed technology and superior market information. SSKI is one of the leading players in institutional broking and corporate finance activities. Earlier it was the retail broking arm of the Mumbaibased SSKI Group. The objective has been to let customers make informed decisions and to simplify the process of investing in stocks Mission of the Share khan is Amity Global Business School Page 24 .COMPANY PROFILE Share khan is one of the leading retail brokerage of City Venture which is running successfully since 1922 in the country. online trading. Derivatives. with a daily turnover of over US$ 2 million. depository services. UK and US. investment advice etc. the SSKI group ventured into institutional broking and corporate finance 18 years ago. It has 60 institutional clients spread over India. Earlier with a legacy of more than 80 years in the stock markets.

Oracle. are net-based executable application that emulates the broker terminals along with host of other information relevant to the Day Traders. Nexgenix. Ltd. Cambridge Technologies.was launched on Feb 8. Spider Software Pvt. The number of trading members currently stands at over 7 Laces. like Sun Microsystems. HSBC. The company has used some of the best-known names in the IT industry. The site gives access to superior content and transaction facility to retail customers across the country. VignetteVeriSigngn Financial Technologies India Ltd. to build its trading engine and content.com . The City Venture holds a majority stake in the company. While online trading currently accounts for just over Amity Global Business School Page 25 . Known for its jargon-free. investor friendly language and high quality research. The firm s online trading and investment site www. WORK STRUCUTRE OF SHAREKHAN Share khan has always believed in investing in technology to build its business. 2002 Share khan launched Speed Trade and Trade Tiger. Microsoft. This was for the first time that a net-based trading station of this caliber was offered to the traders.To educate and empower the individual investor to make better investment decisions through  QUALITY ADVICE  INNOVATIVE PRODUCTS and  SUPERIOR SERVICE. On April 17. the site has a registered base of over 3 Laces customers. 2000. In the last six months Speed Trade has become a de facto standard for the Day Trading community over the net.sharekhan. Intel & Carlyle are the other investors. Share khan s ground network includes over 700+ Share shops in 130+ cities in India.

Portfolio Management Service. 2.Equity Trading Platform (Online/Offline). Gujarat Papaya. 5.Insurance Distribution. 4. PRODUCT AND SERVICES OFFERD BY SHAREKHAN 1.5 per cent of the daily trading in stocks in India.Commodities Trading Platform (Online/Offline). The group has placed over US$ 5 billion in private equity deals. 6-Forex Amity Global Business School Page 26 . Share khan alone accounts for 27 per cent of the volumes traded online. The Corporate Finance section has a list of very prestigious clients and has many firsts to its credit. Hutchison. Finally. Essar. Some of the clients include BPL Cellular Holding. sector tapped etc. and Shopper s Stop. Planetasia. Share khan shifted hands and City venture get holds on it. 3. in terms of the size of deal.Mutual Fund Advisory and Distribution.

Amity Global Business School Page 27 . Forex.com and is suitable for the retail investors who is risk-averse and hence prefers to invest in stocks or who does not trade too frequently. Share khan offers the following products:- CLASSIC ACCOUNT This is a User Friendly Product which allows the client to trade through website www.6.sharekhan.

 Technical Studies.com  Live Terminal and Single terminal for NSE Cash. It is ideal for active traders and jobbers who transact frequently during day s session to capitalize on intra-day price movement. NSE F&O & BSE.  Market summary (Cost traded scrip.  Back-up facility to place trades on Direct Phone lines. Amity Global Business School Page 28 . highest clue etc. Features  Instant order Execution and Confirmation.  Competitive transaction charges.  Single screen trading terminal for NSE Cash.  Alerts and reminders. NSE F&O & BSE.  Multiple Charting. tic-by-tic charts.Features  Online trading account for investing in Equity and Derivatives via www.  Single screen interface for Cash and derivatives and more. SPEEDTRADE SPEEDTRADE is an internet-based software application that enables you to buy and sell in an instant.)  Hot keys similar to broker s terminal.  Streaming Quotes (Cash & Derivatives).  Real-time streaming quotes.  Instant order and trade confirmation by E-mail.  Provision to enter price trigger and view the same online in market watch.sharekhan.  Live market debts. Saving Bank and Demat Account.  Personalized market watch.  Instant cash transfer facility against purchase & sale of shares.  Integration of On-line trading.

Birla.DIAL-N-TRADE Along with enabling access for trade online. Prepaid Classic Account: . Franklin Templeton Investments. great discount are also available (up to 50%) on brokerage. Intra Day Charts. Mutual Fund Online Investors can apply to Mutual Funds of Reliance. SHARE MOBILE Share khan had introduced Share Mobile. 3970-7500. DSP Merrill Lynch. PRINCIPAL and TATA with Share khan. With this service. (As per SEBI regulations. buying-selling shares through a mobile phone are not yet permitted. Beside this. ICICI Prudential. Sundaram.Rs. 2000 Prepaid Speed trade Account: . mobile based software where one can watch Stock Prices.Rs.) PREPAID ACCOUNT Customers pay Advance Brokerage on trading Account and enjoy uninterrupted trading in their Account. paperless and time saving. 6000 IPO ON-LINE Customers can apply to all the forthcoming IPOs online. Research & Advice and Trading Calls live on the Mobile. Beside this. Amity Global Business School Page 29 . one can dial Share khan s dedicated phone lines 1800-22-7500. This is quite hassle-free. Simply allocate fund to IPO Account. the CLASSIC and SPEEDTRADE ACCOUNT also gives Dial-n-trade services. HDFC. Relationship Managers are always available on Office Phone and Mobile to resolve customer queries. Apply for the IPO and Sit Back & Relax. SBI.

over the Internet (through the website www.com) as well as over the Voice Tool. Customers get access to the powerful online trading tools that will help them to take complete control over their investment in shares.Zero Balance ICICI Saving Account Share khan had tied-up with ICICI bank for Zero Balance Account for Share khan s Clients. REASON TO CHOOSE SAHREKHAN LIMITED Experience SSKI has more than eight decades of trust and credibility in the Indian stock market. TOOLS AND EXECUTION services for investors. Technology With their online trading account one can buy and sell shares in an instant from any PC with an internet connection.sharekhan. Ever since it launched Share khan as its retail broking division in February 2000. SSKI won the 'India's best broking house for 2004' award. These services are accessible through many centers across the country (Over 650 locations in 150 cities). In the Asia Money broker's poll held recently. Now their customers can have a Zero Balance Saving Account with ICICI Bank after your demat account creation with Share khan. Amity Global Business School Page 30 . EDUCATION. Accessibility Share khan provides ADVICE. it has been providing institutional-level research and broking services to individual investors.

www.  Secure Order by Voice Tool Dial-n-Trade. billing. printed reports etc. Convenience One can call Share khan s Dial-N-Trade number to get investment advice and execute his/her transactions. They have a dedicated call-center to provide this service via a Toll Free Number 1800 22-7500 & 39707500 from anywhere in India. demat and other queries.Knowledge In a business where the right information at the right time can translate into direct profits.com.sharekhan. Their customer service can be contacted via a toll-free number. email or live chat on www. Benefits  Free Depository A/c  Instant Cash Transfer  Multiple Bank Option. Customer Service Its customer service team assist their customer for any help that they need relating to transactions.com. online chat. investors get access to a wide range of information on the content-rich portal.sharekhan. Their analysts constantly track the pulse of the market and provide timely investment advice to customer in the form of daily research emails. Investors will also get a useful set of knowledge-based tools that will empower them to take informed decisions. Amity Global Business School Page 31 . Investment Advice Share khan has dedicated research teams of more than 30 people for fundamental and technical research.

 On-line Customer Service via Web Chat.  24x7 Voice Tool access to your trading account. Amity Global Business School Page 32 .  Live Chat facility with Relationship Manager on Yahoo Messenger  Special Personal Inbox for order and trade confirmations.  Enjoy Automated Portfolio.  Personalized Price and Account Alerts delivered instantly to your Mobile Phone & Email address.  Buy or sell even single share  Anytime Ordering. Automated Portfolio to keep track of the value of your actual purchases.

CHAPTER-3 RESEARCH METHODOLOGY Amity Global Business School Page 33 .

One of the most important users of research methodology is that it helps in identifying the problem. and manage the investments professionally to achieve specific investment objectives. RESEARCH DESISGN OF THE STUDY This report is based on primary as well secondary data. relieving the investors from the day to day hassles which investment require. every investor seeks to maximize his returns on investments without capital erosion.  It is offers professional management of equity investment of the investor with an aim to deliver consistent return with an eye on risk. Portfolio Management Services (PMS) recognize this. collecting. and not to forget.  Identify the key Stock in each portfolio. however primary data collection was given more importance since it is overhearing factor in attitude studies. analyzing the required information data and providing an alternative solution to the problem .  To find out the Share khan. But regardless of this.  To look out for new prospective customers who are willing to invest in PMS.  In today's complex financial environment. Amity Global Business School Page 34 . PMS services effectiveness in the current situation. investors have unique needs which are derived from their risk appetite and financial goals.It also helps in collecting the vital information that is required by the top management to assist them for the better decision making both day to day decision and critical ones.Scope of the Study The study of the Portfolio Management Services is helpful in the following areas.  It also covers the scenario of the Investment Philosophy of a Fund Manager.

Such as periodicals. Duration of Study The Study was carried out for the period of one and half months from 29th April to 15th of June2009. and website. Amity Global Business School Page 35 .The study consists of analysis about Investors Perception about the Portfolio Management Services offered by Share khan Limited. For the purpose of the study 30 customers were picked up at random and their views solicited on different parameters. journals. news papers. The methodology adopted includes  Questionnaire  Random sample survey of customers  Discussions with the concerned SOURCES OF DATA  Primary data: Questionnaire  Secondary data: Published materials of Share khan Limited.

 Population: (Universe) customers & non consumers of Share khan limited  Sampling size: A sample of hundred was chosen for the purpose of the study.  Sampling Methods: Probability sampling requires complete knowledge about all sampling units in the universe. Hence sampling survey method was adopted for the purpose of the study.  Sampling procedure: From large number of customers & non consumers sample lot were randomly picked up by me. 100% coverage was difficult within the limited period of time. Due to time constraint non-probability sampling was chosen for the study. Sample consisted of Investor as based on their Income and Profession as well as Educational Background. Amity Global Business School Page 36 .SAMPLING PLAN  Sampling: Since Share khan Limited has many segments I selected Portfolio Management Services (PMS) segment as per my profile to do market research.

Field Study: Directly approached respondents by the following strategies  Tele-calling  Personal Visits  Clients References  Promotional Activities  Database provided by the Share khan Limited. Amity Global Business School Page 37 .

CHAPTER-4 PORTFOLIO MANAGMENT SERVICES Amity Global Business School Page 38 .

By owning several assets. There are also portfolios which are aimed at taking high risks concentrated portfolios. Outside of the financial industry. Holding a portfolio is often part of an investment and risk-limiting strategy called diversification. Investors may be institutions (insurance companies. these are called Investment management is the professional management of various securities (shares.g. certain types of risk (in particular specific risk) can be reduced. Investments are often meant to include projects. Investment managers who specialize in advisory or discretionary management on behalf of (normally wealthy) private investors may often refer to their services as wealth management or portfolio management often within the context of so-called "private banking". bonds etc) and other assets (e. Amity Global Business School Page 39 . the term implies that rigorous financial and economic analysis methods are used. to meet specified investment goals for the benefit of the investors. the term "investment management" is often applied to investments other than financial instruments. patents and many things other than stocks and bonds. brands.) or private investors (both directly via investment contracts and more commonly via collective investment schemes e. asset selection. pension funds. corporations etc. whilst the more generic fund management may refer to all forms of institutional investment as well as investment management for private investors. stock selection.g. The term asset management is often used to refer to the investment management of collective investments.PORTFOLIO MANGEMNT SERVICES (PMS) Portfolio (finance) means a collection of investments held by an institution or a private individual. mutual funds). Even in this case. plan implementation and ongoing monitoring of investments. real estate). The provision of 'investment management services' includes elements of financial analysis.

the investment choices also need to be different to meet those needs.Need of PMS As in the current scenario the effectiveness of PMS is required. As the PMS gives investors periodically review their asset allocation across different assets as the portfolio can get skewed over a period of time. As the financial goals are diverse. No single investment is likely to meet all the needs. This can be largely due to appreciation / depreciation in the value of the investments. so one should keep some money in bank deposits and / liquid funds to meet any urgent need for cash and keep the balance in other investment products/ schemes that would maximize the return and minimize the risk. Investment allocation can also change depending on one s risk-return profile. Amity Global Business School Page 40 .

Objective of PMS
There are the following objective which is full filled by Portfolio Management Services. 1. Safety Of Fund: The investment should be preserved, not be lost, and should remain in the returnable position in cash or kind.

2. Marketability: The investment made in securities should be marketable that means, the securities must be listed and traded in stock exchange so as to avoid difficulty in their

encashment.

3. Liquidity: The portfolio must consist of such securities, which could be en-cashed without any difficulty or involvement of time to meet urgent need for funds. Marketability ensures liquidity to the portfolio.

4. Reasonable return: The investment should earn a reasonable return to upkeep the declining value of money and be compatible with opportunity cost of the money in terms of current income in the form of interest or dividend.

5. Appreciation in Capital: The money invested in portfolio should grow and result into capital gains.

6. Tax planning: Efficient portfolio management is concerned with composite tax planning covering income tax, capital gain tax, wealth tax and gift tax.

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7. Minimize risk: Risk avoidance and minimization of risk are important objective of portfolio management. Portfolio managers achieve these objectives by effective investment planning and periodical review of market, situation and economic environment affecting the financial market.

PORTFOLIO CONSTRUCTION
The Portfolio Construction of Rational investors wish to maximize the returns on their funds for a given level of risk. All investments possess varying degrees of risk. Returns come in the form of income, such as interest or dividends, or through growth in capital values (i.e. capital gains).

The portfolio construction process can be broadly characterized as comprising the following steps:

1. Setting objectives.

The first step in building a portfolio is to determine the main objectives of the fund given the constraints (i.e. tax and liquidity requirements) that may apply. Each investor has different objectives, time horizons and attitude towards risk. Pension funds have long-term obligations and, as a result, invest for the long term. Their objective may be to maximize total returns in excess of the inflation rate. A charity might wish to generate the highest level of income whilst maintaining the value of its capital received from bequests. An individual may have certain liabilities and wish to match them at a future date. Assessing a client s risk tolerance can be difficult. The concepts of efficient portfolios and diversification must also be considered when setting up the investment objectives.

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2. Defining Policy.

Once the objectives have been set, a suitable investment policy must be established. The standard procedure is for the money manager to ask clients to select their preferred mix of assets, for example equities and bonds, to provide an idea of the normal mix desired. Clients are then asked to specify limits or maximum and minimum amounts they will allow to be invested in the different assets available. The main asset classes are cash, equities, gilts/bonds and other debt instruments, derivatives, property and overseas assets. Alternative investments, such as private equity, are also growing in popularity, and will be discussed in a later chapter. Attaining the optimal asset mix over time is one of the key factors of successful investing.

3. Applying portfolio strategy.

At either end of the portfolio management spectrum of strategies are active and passive strategies. An active strategy involves predicting trends and changing expectations about the likely future performance of the various asset classes and actively dealing in and out of investments to seek a better performance. For example, if the manager expects interest rates to rise, bond prices are likely to fall and so bonds should be sold, unless this expectation is already factored into bond prices. At this stage, the active fund manager should also determine the style of the portfolio. For example, will the fund invest primarily in companies with large market capitalizations, in shares of companies expected to generate high growth rates, or in companies whose valuations are low? A passive strategy usually involves buying securities to match a preselected market index. Alternatively, a portfolio can be set up to match the investor s choice of tailor-made index. Passive strategies rely on diversification to reduce risk. Outperformance versus the chosen index is not expected. This strategy requires minimum input from the portfolio manager. In practice, many active funds are managed somewhere between the active and passive extremes, the core holdings of the fund being passively managed and the balance being actively managed.
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reflecting changes internally and externally. which sets guidelines or criteria for asset selection. Performance assessments. Amity Global Business School Page 44 . In order to assess the success of the fund manager. Usually a systematic procedure known as an investment process is established. The portfolio construction process is continuously iterative. pressure will be put on the fund managers to offer more active funds. Once the strategy is decided. expected movements in exchange rates may make overseas investment more attractive. the manager of the fund may be changed altogether. if many large-scale investors simultaneously decide to switch from passive to more active strategies. the fund manager must select individual assets in which to invest. the performance of the fund is periodically measured against a pre-agreed benchmark perhaps a suitable stock exchange index or against a group of similar portfolios (peer group comparison). 5.4. leading to changes in asset allocation. as an extreme measure. For example. Poor performance of a fund may lead to modifications in individual asset holdings or. Asset selections. Active strategies require that the fund managers apply analytical skills and judgment for asset selection in order to identify undervalued assets and to try to generate superior performance. Or.

Steps to Stock Selection Process \ Amity Global Business School Page 45 .

attitude to risk. negotiable certificates of deposits. but may be held over the longer term as well.Types of assets The structure of a portfolio will depend ultimately on the investor s objectives and on the asset selection decision reached. in a range of highly liquid or easily redeemable instruments. from simple bank deposits. to generate interest income. and the expected rate of inflation. Cash and cash instruments Cash can be invested over any desired period. tax position and availability of investments. sometimes. Bonds Bonds are debt instruments on which the issuer (the borrower) agrees to make interest payments at periodic intervals over the life of the bond this can be for two to thirty years or. A portfolio will normally maintain at least a small proportion of its funds in cash in order to take advantage of buying opportunities. bonds and other fixed income securities. equities. commercial paper (short term corporate debt) and Treasury bills (short term government debt) to money market funds. property and overseas assets. The main asset classes are cash. including the investor s time horizon. the latter being linked to prevailing levels of interest rates. liquidity requirements. The portfolio structure takes into account a range of factors. which actively manage cash resources across a range of domestic and foreign markets. interest rates. Interest payments can be fixed or variable. derivatives. Cash is normally held over the short term pending use elsewhere (perhaps for paying claims by a non-life insurance company or for paying pensions). in perpetuity. Returns on cash are driven by the general demand for funds in an economy. Bond markets are international and have grown rapidly over Amity Global Business School Page 46 .

Future interest rates are driven by the likely demand/ supply of money in an economy. long bonds (over ten years to maturity) tend to be more volatile in price than medium. The highest investment grade is AAA. may acquire bonds for the higher income and may hold them until redemption for perhaps seven or fifteen years. Investors with short-term horizons and liquidity requirements may choose to invest in bonds because of their relatively higher return than cash and their prospects for possible capital appreciation. going all the way down to D. which is graded as in default. Ordinary shares carry the right to receive income in the form of dividends (once declared out of distributable profits) and any residual claim on the company s assets once its liabilities have been paid in full. Depending on expected movements in future interest rates.recent years. Preference shares are another type of share capital. Returns from investing in equities are generated in the form of dividend income and capital gain arising from the Amity Global Business School Page 47 . Longterm investors. providing investors with the potential for capital gains or losses. and have a higher yield. An ordinary shareholder owns a proportional share of the company and an ordinary share carries the residual risk and rewards after all liabilities and costs have been paid. such as pension funds. Equities Equity consists of shares in a company representing the capital originally provided by shareholders. political events and interest rates elsewhere in world markets. To assist investors and to help in the efficient pricing of bond issues. Corporate bonds are bonds that are issued by companies. including governments (sovereigns) and state-guaranteed organizations. future inflation rates. many bond issues are given ratings by specialist agencies such as Standard & Poor s and Moody s. Also. They differ from ordinary shares in that the dividend on a preference share is usually fixed at some amount and does not change.and shortterm bonds. Because of the greater risk. with many issuers of similar standing. preference shares usually do not carry voting rights and. preference shareholders are paid before ordinary shareholders. in the event of firm failure. the capital values of bonds fluctuate daily. The bond markets are highly liquid.

Futures contracts can be set up for the delivery of cocoa. When the futures contract expires. The buyer of a futures contract takes a long position . A futures contract is an agreement in the form of a standardized contract between two counterparties to exchange an asset at a fixed price and date in the future. oil or coffee. Regarding Amity Global Business School Page 48 . Granted. the market price of a share will change from day to day to reflect all relevant available information. reflecting general economic growth. Derivatives Derivative instruments are financial assets that are derived from existing primary assets as opposed to being issued by a company or government entity. The extent to which a fund may incorporate derivatives products in the fund will be specified in the fund rules and. for capital appreciation makes equities an attractive investment proposition for major institutional investors. equity prices generally rise over time. reflecting the changing profitability of a company. there may be periods of time. The seller of the futures contract takes a short position and will. depending on the type of fund established for the client and depending on the client. Each contract specifies the type and amount of the asset to be exchanged. financial futures contracts can specify the delivery of foreign currency or a range of government bonds. in turn. however. The overall long-term prospect. The underlying asset of the futures contract can be a commodity or a financial security. The level of dividends may vary from year to year. make a profit if the price of the futures contract falls. when equity prices trend downwards usually during recessionary times.ultimate sale of the shares. The two most popular derivatives are futures and options. may not be allowable at all. steel. and where it is to be delivered (usually one of a few approved locations for that particular asset). Similarly. the seller of the contract is required to deliver the underlying asset to the buyer of the contract. and have been found over the long term to generate growing levels of income in excess of the rate of inflation. and will make a profit if the value of the contract rises after the purchase. Likewise. even years. Although not guaranteed.

fund managers can use a call option to reduce risk when they own an asset. Property Property investment can be made either directly by buying properties. however. modern industrial warehouses and estates. Buying an option involves paying a premium. Sometimes. however. For example. in the vast majority of cases no physical delivery of the underlying asset takes place as many contracts are cash settled or closed out with the offsetting position before the expiry date. Only very specific funds are allowed to hold options. Only major institutional investors with long-term time horizons and no liquidity pressures tend to make direct property investments. An option contract is an agreement that gives the owner the right. A call option gives the holder the right to buy the asset. Returns are generated from annual rents and any capital gains on realization. hotels. A put option gives the holder the right to sell the asset. quality. or indirectly by buying shares in listed property companies. Option contracts on stocks or stock indices are particularly popular. US options can be exercised at any time before the contract s maturity date. but not obligation. option contracts are used to reduce risk. selling an option involves receiving the premium. These institutions purchase freehold and leasehold properties as part of a property portfolio held for the long term. European options can be exercised only on the options expiry date. These investments are often highly illiquid. Amity Global Business School Page 49 . Options have the potential for large gains or losses. to buy or sell (depending on the type of option) a certain asset for a specified period of time. and are considered to be high-risk instruments. farmland and woodland. perhaps twenty or more years.financial futures contracts. Property sectors of interest would include prime. well-located commercial office and shop properties.

Risk and Risk Aversion Portfolio theory also assumes that investors are basically risk adverse. A discussion of portfolio or fund management must include some thought given to the concept of risk. In long runs all interest rate move up or downwards. meaning that. one way to define risk is the uncertainty of future outcomes. RBI. It is. These changes affect the value of security. in India. Any upward revision in Amity Global Business School Page 50 . Health insurance and car insurance. and to attempt to explain the way in which market values of investments are determined Definition of Risk Although there is a difference in the specific definitions of risk and uncertainty. is the monitoring authority which effectalises the change in interest rate. Any portfolio that is being developed will have certain risk constraints specified in the fund rules. In fact. Composite risks involve the different risk as explained below:- (1). For example. very often to cater to a particular segment of investor who possesses a particular level of risk appetite. Interest rate risk: - It occurs due to variability cause in return by changes in level of interest rate. given a choice between two assets with equal rates of return they will select the asset with lower level of risk. therefore. they purchased various type of insurance including life insurance. An alternative definition might be the probability of an adverse outcome. for our purpose and in most financial literature the two terms are used interchangeably. important to spend some time discussing the basic theories of quantifying the level of risk in an investment. The Combination of risk preference and risk aversion can be explained by an attitude toward risk that depends on the amount of money involved.

Purchasing power risk is more in inflationary times in bonds and fixed income securities. Business cycle affects all the type of securities viz. It is desirable to invest in such securities during deflationary period or a period of decelerating inflation. TYPES Cash equivalent Long term Bond RISK EXTENT Less vulnerable to interest rate risk More vulnerable to interest rate risk. Thus it establishes an inverse relationship in the prize of security. which carry old lower rate of interest and thus declining market value. there is cheerful movement in boom due to bullish trend in stock prizes where as bearish trend in depression Amity Global Business School Page 51 . This risk emanates from the very fact that inflation affects the purchasing power adversely.interest rate affects fixed income security. (2) Purchasing power risk: It is known as inflation risk also. (3) Business risk: Business risk emanates from sale and purchase of securities affected by business cycles. technological change etc. Purchasing power risk is less in flexible income securities like equity shares or common stuffs where rise in dividend income offset increase in the rate of inflation and provide advantage of capital gains.

Excess of debts against equity in the capital structure indicates the company to be highly geared or highly levered. It is also known as leveraged risk and expressed in term of debt equity ratio. Although leveraged company s earnings per share (EPS) are more but dependence on borrowing exposes it to the risk of winding up. For. which is depicted graphically below Amity Global Business School Page 52 . (4) Financial risk: Financial risk emanates from the changes in the capital structure of the company.brings downfall in the prizes of all types of securities. Here it is imperative to express the relationship between risk and return. Flexible income securities are nearly affected than fix rate securities during depression due to decline n the market prize. its inability to the honor its commitments towards the creditors are most important.

minimize risks Amity Global Business School Page 53 .Maximize returns.

2 0. given the following for Investment A: Circumstance I II III IV Return(x) 10% 12% 15% 19% Probability(p) 0. and it is the possible returns of these spreads that provide the measure of risk.RISK VERSUS RETURN Risk versus return is the reason why investors invest in portfolios. it must be possible to quantify the degree of risk in a particular opportunity. An investment is expected to produce different returns depending on the set of circumstances that prevail. The expected (or average) return Mean (average) = x = expected value (EV) = px Amity Global Business School Page 54 .4 0.3 0. This method measures spreads. To be able to make decisions. The most common method is to use the standard deviation of the expected returns. The presence of risk means that more than one outcome is possible.1 It is possible to calculate: 1. For example. The ideal goal in portfolio management is to create an optimal portfolio derived from the best risk return opportunities available given a particular set of risk constraints.

03 VARAIANCE= 7.Circumstanc e I II III IV Return(x) Probability(p) px 10% 12% 15% 19% 0.5% -1.1 -3.5% +1.68 1.4 0.2 0.3 0.3 0.x) 2 2 Also.5% from p (x -x)2 2.2 0.45 .90 3. Variance (VAR) is equal to the standard deviation squared or Deviation Circumstance Return Probability expected Return (x -x) I II III IV 10% 12% 15% 19% 0.0 1.5% 2.9 Expected Return ( px) = 13.6 6.66% Amity Global Business School Page 55 .5% +5.06 Standard deviation ( ) = Variance = 7.4 0.1 2. The Standard deviation Standard deviation = = p(x.0 3.06 = 2.

Different investors will also have different tolerances or threshold levels for risk return trade-offs i. if there are two investments presenting the same risk. Some investors are completely risk averse and others are willing to take some risk.0% Since both investments have the same expected return. which provides the lower risk. and the greater the spread. the best selection of investment would be Investment A. If the above exercise were to be performed using another investment that offered the same expected return. but a different standard deviation. but expect a higher return for that risk. there are all types of investors. then the following result might occur: Plan Investment A Investment B Expected Return 9% 9% Risk(standard deviation) 2.5% 4. the greater the risk. Amity Global Business School Page 56 . but a different standard deviation. the greater the spread. In the real world.e. that investment would be chosen over the investment with the lower return for the same risk. whereby the greater the standard deviation. Similarly. then the following result might occur: If the above exercise were to be performed using another investment that offered the same expected return. but one has a higher return than the other. for a given level of risk. one investor may demand a higher rate of return than another investor.The standard deviation is a measure of risk.

the investor would require still higher returns to make all of the investments equally attractive. Indifference Curve Expected Return 50% 55% 70% 100% 120% 230% Risk 0% 5% 10% 15% 18% 25% Amity Global Business School Page 57 . A particular investor s indifference curve can be ascertained by plotting what rate of return the investor would require for each level of risk to be indifferent amongst all of the investments.INDIFFERNCE CURVE Suppose the following situation exists Plan Investment A Investment B Expected Return 10% 20% Risk(Standard Deviation) 5% 10% The question to ask here is. The investor being discussed could present the following as the indifference curve shown in Figure. For example. each with a higher degree of risk. there may be an investor who can obtain a return of 50% with zero risk and a return of 55 %with a risk or standard deviation of 5% who will be indifferent between the two investments. If further investments were considered. as the decision would depend on the particular investor s attitude to risk. does the extra 10% return compensate for the extra risk? There is no right answer.

Risk Indifference curve It could be the case that this investor would have different indifference curves given a different starting level of return for zero risk. The exercise would need to be repeated for various levels of risk return starting points. An entire set of indifference curves could be constructed that would portray a particular investor s attitude towards risk Amity Global Business School Page 58 .

Indifference Curve Utility scores At this stage the concept of utility scores can be introduced. Although several scoring systems are legitimate. Higher utility scores are assigned to portfolios or investments with more attractive risk return profiles.e. i. Investment A equaling a return of 10% for a risk of 5% or Investment B equaling a return of 20% for a risk of 10%. one function that is commonly employed assigns a portfolio or investment with expected return or value EV and variance of returns 2 the following utility value: U = EV . Thus if a fund manager had to determine which investment a particular investor would prefer. These can be seen as a way of ranking competing portfolios based on the expected return and risk of those portfolios. the manager would create indifference curves for that particular investor and look at the utility scores.005A 2 where: U = utility value Amity Global Business School Page 59 .

5 4 100 = 18 (Assume A= 4 in this case) Amity Global Business School Page 60 .A = an index of the investor s aversion.005A 10 . Thus. Expected Return(EV) 10% 20% Standard deviation( ) 5% 10% Utility=EV-.005 4 20 . (the factor of . Investors choosing amongst competing investment portfolios will select the one providing the highest utility value. Utility is enhanced by high expected returns and diminished by high risk. in the example above.005 2 25 = 9.005 is a scaling convention that allows expression of the expected return and standard deviation in the equation as a percentage rather than a decimal). the investor will select the investment (portfolio) with the higher utility value of 18.

the investor might lose 100 per cent of the investment. If that company goes bankrupt. whereby investments are made in a wide variety of assets so that the exposure to the risk of any particular security is limited.Portfolio Diversification There are several different factors that cause risk or lead to variability in returns on an individual investment. i. inflation. diversification reduces risk. One way to control portfolio risk is via diversification. Amity Global Business School Page 61 . exchange rates. Although bankruptcy risk has been considered here. If an investor owns shares in only one company. default risk and liquidity risk (the risk of not being able to sell on the investment). Factors that may influence risk in any given investment vehicle include uncertainty of income. then the likelihood of all of those companies going bankrupt simultaneously is greatly diminished.e. that investment will fluctuate depending on the factors influencing that company. Thus. and property. If. stakes in pension funds. In addition. the same principle applies to other forms of risk. an investor will assess the risk of a given investment (portfolio) within the context of other types of investments that may already be owned. interest rates. tax rates. life insurance policies with savings components. however. This concept is based on the old adage do not put all your eggs in one basket . the investor owns shares in several companies in different sectors. the state of the economy.

To measure the success of a potentially diversified portfolio. covariance and correlation are considered. Amity Global Business School Page 62 . A positive covariance means that the returns of the two assets move together.RISK RETURN MATRIX Covariance and Correlation The goal is to hold a group of investments or securities within a portfolio potentially to reduce the risk level suffered without reducing the level of return. Covariance measures to what degree the returns of two risky assets move in tandem. whilst a negative covariance means that they move in inverse directions.

2 0.5 +1.9 -2.4 0.1 +1. Covariance is an absolute measure. Correlation coefficient r = COVxy x y To illustrate the above.3 0. the formula for correlation coefficient [r] is used. where p is the probability.5 -1.Covariance COV(x. here is the example: Circumstance Probability x-x y-y p(x-x) (y-y) I II III IV 0.7 0 0.0 -0. and covariances cannot be compared with one another.2 Amity Global Business School Page 63 .5 -4 -3.0 0 +1.5 COVxy =-2. y) = p(x-x) (y-y) for two investments x and y. To obtain a relative measure.5 +5.

Assume that a similar exercise has been run 2 x).For data regarding (y for data regarding (x y). the correlation coefficient would be r = -2.45.056 If. the other may go up or down or may not move at all.45 * 7. If these securities were combined in a portfolio. Perfect negative correlation (correlation coefficient = 1) takes place when one security moves up and the other one down in exact proportion. and the variance or 2 of y = 7. Thus.06.0 = -0.481 2. a different correlation coefficient might result of say. but using a different set of numbers for y. see earlier example.988. Uncorrelated (correlation coefficient = 0) occurs when returns from two securities move independently of each other that is. Assume the variance or of x= 2. As a result. if one goes up. Perfect positive correlation (correlation coefficient = +1) occurs when the returns from two securities move up and down together in proportion. the combination of these two securities in a portfolio may or may not Amity Global Business School Page 64 . 0. It can be concluded that a large negative correlation confirms the strong tendency of the two investments to move inversely. the same example is run again. Combining these two securities in a portfolio would increase the diversification effect. the offsetting effect would not occur.

the greater the risk reduction. However. Unsystematic and systematic risk As mentioned previously. Total risk = Systematic risk + Unsystematic risk Systematic risk = the potential variability in the returns offered by a security or asset caused by general market factors. diversification diminishes risk: the more shares or assets held in a portfolio or in investments. However. Unsystematic risk = the potential variability in the returns offered by a security or asset caused by factors specific to that company. tax rates. such as interest rate changes. debt levels. As the number of assets in a portfolio increases. The relationship amongst these risks can be quantified as follows TR2 = SR2 + UR2 or 2 i = s 2 + u 2 Amity Global Business School Page 65 . inflation rate movements. it is still better to be in this position than in a perfect positive correlation situation. This risk is also known as systematic risk or non-diversifiable risk.create a diversification effect. susceptibility to demands of customers and suppliers. The risk that remains is called market risk. the total risk may decline as a result of the decline in the unsystematic risk in that portfolio. such as profitability margins. quality of management. unique risk or diversifiable risk. The risk that is associated with a specific asset and that can be abolished with diversification is known as unsystematic risk. the risk that is caused by general market influences. it is impossible to eliminate all risk completely even with extensive diversification. state of the economy.

The correlation coefficient between two investment opportunities can be expressed as: s = i CORim Where. If an investment were perfectly correlated to the market so that all its movements could be fully explained by movements in market. s= i the investment systematic risk = the investment s total risk (systematic and unsystematic) CORim = the correlation coefficient between the return of the investment and those of the market.Where: ¡= the investment s total risk (standard deviation) investment s systematic risk s = the u =the investment s unsystematic risk. then all of the risk would be systematic & i = s If an investment were not correlated at all to the market. then all of its risk would be unsystematic Amity Global Business School Page 66 .

These factors generally include: (1) Market value of shares (2) Book value of shares (3) Price earnings ratio (P/E ratio) (4) Dividend payout ratio (b) External factors (1) Government policies (2) Norms prescribed by institutions (3) Business environment (4) Trade cycles Amity Global Business School Page 67 . Equity portfolioEquity portfolio is affected by internal and external factors: (a) Internal factors Pertain to the inner working of the particular company of which equity shares are held.TECHNOQUES OF PORTFOLIO MANAGEMENT Various types of portfolio require different techniques to be adopted to achieve the desired objectives. (1). Some of the techniques followed in India by portfolio managers are summarized below.

(2). price and dividend. The factors that affect the quality of reported earnings are as under: Amity Global Business School Page 68 .  Many institutional investor like stability and growth and support high EPS. : value of the (a) Earnings per share (b) Price earnings ratio (A) Trend of earning: -  A higher price-earnings ratio discount expected profit growth. Equity stock analysis The basic objective behind the analysis is to determine the probable future shares of the concerned company. (B) Quality of reported earning: - Quality of reported earnings affects P/E ratio.  Growth of EPS is diluted when a company finances internally its expansion program and offers new stock.  EPS increase rapidly and result in higher P/E ratio when a company finances its expansion program from internal sources and borrowings without offering new stock. Conversely. which benefits investors in lower tax brackets? Such investors have not pay tax or to give lower rate tax on capital gains. It is carried out primarily fewer than two ways. a downward trend in earning results in a low price-earnings ratio to discount anticipated decrease in profits. Rising EPS causes appreciation in price of shares.

It is calculated as under: Dividend Cover = EPS / Dividend per Share (D) Investors demand: Demand from institutional investors for equity also enhances the P/E ratio.  Research and development outlets: There is higher P/E ratio for a company. Depreciation allowances: Larger (Non Cash) deduction for depreciation provides more funds to company to finance profitable expansion schemes internally. Dividend rates are raised to push in share prices up. With higher dividend ratio. which carries R&D programs. In terms of earnings. R&D enhances profit earning strength of the company through increased future sales. equity price goes up and thus raises P/E ratio.  Inventory and other non-recurring type of profit: Low cost inventory may be sold at higher price due to inflationary conditions among profit but such profit may not always occur and hence low P/E ratio. This builds up future earning power of company. Amity Global Business School Page 69 . Dividend cover is calculated to find out the time the dividend is protected. (C) Dividend policy: Dividend policy is significant in affecting P/E ratio.

Types of Portfolios The different types of Portfolio which is carried by any Fund Manager to maximize profit and minimize losses are different as per their objectives . Aggressive Portfolio: Objective: Growth. over the short term. This strategy might be appropriate for investors who seek High growth and who can tolerate wide fluctuations in market values. Amity Global Business School Page 70 .(3) Quality of management: - Investors decide about the ability and caliber of management and hold and dispose of equity academy. P/E ratio is more where a company is managed by reputed entrepreneurs with good past records of management performance.They are as follows.

and who can withstand moderate fluctuations in market values Amity Global Business School Page 71 . Balanced Portfolio: Objective: Capital appreciation and income. This strategy might be appropriate for investors who have a preference for growth and who can withstand significant fluctuations in market value. This strategy might be appropriate for investors who want the potential for capital appreciation and some growth.Growth Portfolio: Objective: Growth.

This strategy may be appropriate for investors who want to preserve their capital and minimize fluctuations in market value.Conservative Portfolio: Objective: Income and capital appreciation. Amity Global Business School Page 72 .

Share khan Portfolio Management Services PMS PRO PRIME PRO TECH DIVERSIFIED PRO TECH Pro Prime :Product Approach Investment will be keeping in mind 3 investment tenets. 2. Low Volatility Amity Global Business School Page 73 . Margin of Safety 3. 1. steady and sustainable returns. Consistent.

5% brokerage .Monthly reporting of portfolio holding /transaction.Product offering Pro Prime is the ideal for investors looking at steady and superior with low and medium risk appetite.  Medium to long term vision. resulting in low portfolio turnover.5% pa AMC (Annual Maintenances Charges) fees charged every quarter . The portfolio consists of a blend of quality blue chip and growth stocks ensuring a balanced portfolio with relatively medium risk profile. based on sector and themes which have medium to long term growth potential. Amity Global Business School Page 74 .0. How to invest?  Minimum Investment : 10 Laces  Lock in : 6 months  Reporting: Access to website showing clients holding .independent fundamental research  High quality companies with relatively large capitalization  Disciplined valuation approach applying multiple valuation measure. Product Characteristics  Bottom up stock selection  In depth .20% profit sharing after 15% hurdle is crossed chargeable at the end of fiscal year. The portfolio constitutes of relatively large capitalization stocks.  Charges: 2.

Product Offered Cash future arbitrage: The product intends to spot low risk opportunities which will yield more than the normal low risk product . this products offers an indicative post tax return of 8 to 10% plus.The difference is bound to be zero at expiry. Product Characteristics moderate Risk: This is relatively low risk product which can be compared with liquid funds issued by mutual funds.1 Crore  Lock in :6 months  Reporting: Fortnightly for portfolio Net worth.Similarly the scheme will move on from opportunity to opportunity. High return: Compared with other low risk products. Monthly reporting pf portfolio Holding /transaction. Whenever basis is high we buy the stocks and sell the future to lock in difference .This position will be liquated in the expiry or before that if the basis vanishes early .Whenever such opportunity is spotted stocks will be bought and to lock in the basis. Amity Global Business School Page 75 . future will be sold . Product Details  Minimum Investment:Rs.Pro tech Diversified :Product Approach An opportunity lies in basis which is the difference between cash and future.

The exposure will never exceed the value of portfolio i. Charges: 0. Product offered 1. no leveraging.The protech line of the product is designed around various risk /reward /volatility profiles for the different kind of investment needs.Linear return are possible from having hedged/ sell market positions in downtrends . but allows us to be short /hedged in Nifty in falling market therefore allowing the client to earn irrespective of the market direction.e.035% brokerage for future .Absolute return are targeted by focusing on finding trading opportunities & not out performance of an index. Beta Portfolio : Positional trading opportunities are identified in the future segment based on technical analysis . Nifty Thirty : Nifty futures will be bought and sold on the basis of an automated trading system generated calls to go long/short. Product Approach Better performance is possible from superior market timing and from picking stocks before inflation points in their trading cycles .The idea is to generate the best possible return in the medium term irrespective of the direction of the market Amity Global Business School Page 76 .0. 2.Inflection points in the momentum cycles are identified to go long /short on stock/index futures with 1-2 months time horizon .07% for delivery Pro Tech :Protech using the knowledge of technique analysis and the power of depravities markets to identify trading opportunities in the market .

e.Trailing stop loss method of risk management or profit protection is used to lower the portfolio volatility and maximize return .The exposure never exceeds value of portfolio i. 3. Risk protection is done based on stop losses on daily closing prices.  Trading in future market to allow for active risk protection using trailing stop losses.Trading opportunities are exposed both on the long side and the short side as the market demands to get the best of both upward and downward trends. How to invest?  Minimum : Rs.10 Laces  Lock in : 6 months Amity Global Business School Page 77 .This return can be earned in bull and bear market .trend following and momentum trading technique. Product Characteristics  Using swing based index trading systems stop and reverse .without really leveraging beyond the portfolio value. 4. there is no leveraging. Trailing Stops. Star Nifty: Swing trading technique and Dow theory is used to identify short term reversal levels for Nifty futures and ride with trend both on the long and short side .  Nifty based products for low impact cost and low product volatility  Both long and short strategies to earn returns even in falling market.Stop and reverse means to reverse ones position from long to short or vice a versa at the reversal levels simultaneously . Momentum trading techniques are used to spot short term momentum of 5-10 days in stocks and stocks /index futures .

00 19.30 Sensex 9859.66 Amity Global Business School Page 78 . monthly reporting of portfolio Holding /Transaction. 20% profit sharing on booked profit quarterly basis  Protech Performance Report Nifty Thrifty: NIFTY THRIFTY Date 01/02/2006 29/04/2009 Returns (%) NAV 10.26 11403.05% brokerage for derivatives. 0.  Charges: 0% AMC (Annual Maintenance Charges).25 15.43 94. Reporting: Fortnightly reporting of portfolio Net Worth.

50 Sensex 17559.06 Amity Global Business School Page 79 .25 -24.10 Sensex 15138.40 11403.67 How it works: Our product is based on positional trading with a long and short model investing in plain vanilla stock futures. we identify stocks with greater risk-reward ratios with a time horizon of 1 to 2 months.98 9708. based on the prevalent market situation.00 15.How it works: Our first product is based completely on a mathematical model with zero human intervention. This product has come out of its fifth draw-down period (in 28 years of back testing) and the net asset value (NAV) is taking off to new heights.50 -35.32 43. In this. Trailing Stops: TRAILING STOPS NAV 20/10/2007 24/04/2009 Returns (%) 10.81 38.00 13. Beta portfolio: BETA PORTFOLIO Date 03/08/2007 29/04/2009 Returns (%) NAV 10.

How it works: The trading strategy is to buy short-term momentum over a time frame of 1 to 5 days and then book small profits consistently. Amity Global Business School Page 80 .

CHAPTER -5 DATA ANALYSIS AND INTERPRETATION Amity Global Business School Page 81 .

The remaining 15% take his/her residential property as an investment. 100.So . Do you know about the Investment Option available? NO 15% YES 85% Interpretation As the above table shows the knowledge of Investor out of 100 respondent carried throughout the Hyderabad Area is only 85%.1. it also create the problem for the Investor to not take interest in Investment option. According to law purpose this is not an investment because of it is not create any profit for the owner. The main problem is that in this time from year 2008-2009 . the recession and the Inflation make the investor think before investing a even a Rs. Amity Global Business School Page 82 .

they were quite interested in Protech Services. returns and tax benefits. it is found 75% people are interested in liquidity. and others. As explaining them About the Portfolio Management Services of Share khan. In the entire respondent it is common that this time everyone is looking for minimizing the risk and maximizing their profit with the short time of period. Amity Global Business School Page 83 .2. And remaining 25% are interested in capital appreciations. What is the basic purpose of your Investments? Others Risk Covering Tax Benefits Capital Appreciation Return Liqidity 0% 10% 20% 30% %AGE Interpretation As with the above analysis. risk covering.

Moreover. so as it also getting improvement. So.3. the Market is fluctuating now days. Amity Global Business School Page 84 . Investor are looking for Investment in long term and Shortterm. but most important common things in all are that they are even ready for taking both Risk and Return in around 65% investor. What is the most important factor you consider at the time of Investment? 80% 60% 40% 20% 0% Risk Return Both 12% 23% 65% %AGE Interpretation As the above analysis gives the clear idea that most of the Investors considered the market factor as around 12% for Risk and 23% Return.

Amity Global Business School Page 85 . Similarly. even who don t want to take Risk they are looking for investing in Fixed Deposit for long period of time. The risk in the investment is also high. Since Share Market is said to be the best place to invest to get more returns. Moreover. As the commodities market is doing well from last few months so Investor also prefer to invest their money in Commodities Market basically in GOLD nowadays. From which option you will get the best returns? PERCENATGE OF RESPODENTS Others Property Bonds Fixed Deposits Commodities Market Shares Mutual Funds 20% 16% 22% 8% 18% 2% 14% Interpretation Most of the respondents say they will get more returns in Share Market.4. the Investor are more Interested in Investing their money in Mutual Fund Schemes as that is also very important financial product due to its nature of minimizing risk and maximizing the profit.

Amity Global Business School Page 86 . Investing in PMS is far safer than Investing in Mutual Fund . Do you agree? 80% 60% 40% 20% 0% Yes No 24% 76% Yes %Age of Respodents 76% No 24% Interpretation In the above graphs it s clear that 24% of respondent out of hundred feel that investing their money in Mutual Fund Scheme are far safer than Investing in PMS. This is because of lack of proper information about the Portfolio management services. As the basis is same for the mutual fund and PMS but the investment pattern is totally different from each other and which depends upon different risk factor available in both the Financial Products.5.

As all the respondents were considering the Risk factor also before filling the questionnaire and they were asking about the performance report of all the PMS services offered by Share khan limited.6. How much you carry the expectation in Rise of your Income from Investments? 8% 12% 48% 32% UPTO 15% 15-25% 25-35% Morethan 35% Interpretation The optimism is shown in the attitude of the respondents. Only 8% of the respondents were confident enough to expect a rise of up to 35%. Major part of the sample feels that the rise would be of around 15%. Amity Global Business School Page 87 . The confidence was appreciable with which they are looking forward to a rise in their investments.

Some of the investors face problems due to less knowledge about the market. what has been your experience? 40% 34% 20% 0% Satisfactory return Burned Fingers received 20% 6% %Age of Respo Unsatisfactory results No 40% Satisfactory return received %Age of Respondents 20% Burned Fingers 34% Unsatisfactory results 6% No 40% Interpretation 20% of the respondents have invested in Share market and received satisfactory returns. This is the reason most of the respondents prefer Portfolio Management Services to trade now a days.7. which gives the Investor the clear idea when is the right time to Amity Global Business School Page 88 . 40% of the respondents have not at all invested in Share Market. If you invested in Share Market. Some of the respondents don t have complete overview of the happenings and invest their money in wrong shares which result in Loss.

but at the same time the around 45% investor trade on the basis of speculation and 31% depend upon Investment option Bonds. 8. How do you trade in Share Market? % Respondents 45% 55% Speculation Investment Interpretation As we know that Share market is totally based on psychological parameters of Investors. which changed as per the market condition. Amity Global Business School Page 89 .buy and right time to sell the shares which is recommended by their Fund Manger. Mutual Funds etc.

Moreover. talking about the Share khan PMS services they are far satisfied with the Protect and Prop rime Performance during last year. 43% of the respondents prefer PMS of the company because they don t have to keep a close eye on their investment. they get all the information time to time from their Fund Manager. Amity Global Business School Page 90 . They are satisfied with the quick and active services of Share khan customer services where. How do you manage your Portfolio? %of Respodents Depends on the Company for Portfolio 43% Self 57% Interpretation About 57% of the respondents say they themselves manage their portfolio and 43% of the respondents say they depend on the security company for portfolio Management.9. they get the updated knowledge about the scrip detail everyday from their Fund Manager.

15% respondents are depends upon the tips of Share khan which gives them idea where to invest and when to invest. Last but not the least. 28% based on Brokerage Rate whereas 22 % are happy with its Services. Amity Global Business School Page 91 . If you trade with Share khan limited then why? Research 35% Services 22% Brokerage 28% Investment Tips are good 15% Interpretation As the above research shows the reasons and the parameters on which investor lie on Share khan and they do the trade.10. At the time of research what I found is that still Share khan need to make the clients more knowledge about their PMS product. Among hundred respondents 35% respondents do the trade with the company due to its research Report.

in most of clients it was common that they know about the Option but as the PMS of Share khan have different Product offering. Amity Global Business School Page 92 . Are you using Portfolio Management services (PMS) of Share khan? No 44% Yes 56% Interpretation As talking about the Investment option. It is found that 56% of Share khan client where using PMS services as for their Investment Option.11. Product Characteristics and the Investment amount is also different this makes the clients to think differently.

As 45% investor likes to go for Equity Portfolio and 28% with Balanced Portfolio. whereas around 27% investor like to.12. in which portfolio the investor like to deal more in PMS. go for Debt Portfolio. Which Portfolio Type you preferred? 50% 45% 40% 35% 30% 25% 27% 28% 45% 20% 15% 10% 5% 0% Equity %Age of Respodents 45% Debt 27% Balanced 28% Interpretation The above analysis shows. Amity Global Business School Page 93 .

13. whereas around 18% have to suffer losses in the market. In this current scenario 52% of the Investor earned. where no loss and no profit. Similarly 30% of the Respondents are there in Breakeven Point (BEP). Amity Global Business School Page 94 . How was your experience about Portfolio Management services (PMS) of Share khan Limited? No Profit No Loss Situation Faced Loss Earned 0% 10% 20% 30% Faced Loss 18% 40% 50% 60% Earned %Age of Respondents 52% No Profit No Loss Situation 30% Interpretation In the above analysis it is clear that the Investor have the good and the bad experience both with the Share khan PMS services.

Does Share khan Limited keep it PMS process Transparent? 37% 63% Yes No Interpretation The above analysis is talking about the Share khan Transparency of their PMS services.14. Amity Global Business School Page 95 . In hundred respondents 63% said that they get all the information about their scrip buying and selling information day by day. where as 37% of respondents are not satisfied with the PMS information and Transparency because they don t get any type of extra services in PMS as they were saying.

15. Do you recommend Share khan PMS to others?

No 14%

Yes 86%

Interpretation The above analysis shows the Investor perception toward the Share khan PMS as on the basis of their good and bad experience with Share khan limited. Among hundred respondents 86% respondents were agree to recommend the PMS of Share khan to their peers, relatives etc.

Amity Global Business School

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CORRELATION
5. Investing in PMS is far safer than Investing in Mutual Fund . Do you agree? 6. Do you know about the Investment Option available?
CORRELATION Column1 POSITIVE 1 CORRELATION

INTERPETATION People who think investment in PMS is safer also know the options available in PMS.

14. Does Share khan Limited keep it PMS process Transparent? 15. Do you recommend Share khan PMS to others?
CORRELATION Column1 1 POSITIVE CORRELATION

Interpretation: People think PMS is safer recommend others also.

Amity Global Business School

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Case Study Case Study: Project Portfolio Management with One point in the Manufacturing Industry
Graz, April 7, 2009 Expert conference of German institute for project management focuses on tools and solutions: One point also present at exhibition area At this year's expert conference of the German institute for project management the successful deployment of a project and portfolio management (PPM) solution of One point Software in the manufacturing industry will be presented as a case study. At Amazonen-Werke H. Dreyer GmbH & Co. KG One point supports research and development projects. In addition, visitors of the event ("Focus > Project management Tools & Lösungen 2009") can get first hand experience regarding the usability of One point Project. In its third year, the yearly expert conference has established itself as an important market place for PM tools and solutions. Project managers and vendors are going to present up-to-date project work in the form of workshops and presentations as well as demos in the exhibition area. In doing so, the focus is clearly on the practical aspects of project management. This year's key topics are the selection, implementation processes and the solution aspects of PM tools. In this context the case study presented by Jörn Henkelmann, project manager construction/R&D at Amazon, will share his experience applying project management based on One point Project in his company. The strongly exportAmity Global Business School Page 98

Interested parties have the possibility to get a first impression of the latest version One point Project 9 in individual live demos. Through the increased transparency project risks are minimized. traffic light functions and plan/actual comparisons. CEO of One point Software." said Gerald Mesaric.oriented vendor of agricultural implements and municipal technology sees itself on the road to success since many years.pm- institut. it constantly stimulates research and innovation. One point Software will also be present at the exhibition area. 2009. It is available both for on-premise installation and as Software as a Service (Seas). a major challenge for the project managers.htm. In order to stay competitive.de/tagungen/pm_tools2009/pm_tools_2009. Amity Global Business School Page 99 . The Web-based project leadership software provides an innovative approach to integrated project management from planning to monitoring and controlling. Additional information regarding the event and the registration can be found at http://www. "Development projects are typically time and resource critical and thus. With its development team distributed across different locations." These advantages will also be presented in a public live demo on May 6. "For the development team at Amazon One point Project has proven to be an ideal fit since it integrates ad-hoc monitoring. Amazon also cooperates closely with research institutes and universities abroad.

0-based solution for the extended enterprise. shorten project lead-times. One point enables project-oriented companies and departments to increase project and portfolio transparency. easy-to-use and fast to deploy.About One point Software One point Software is the first project and portfolio management vendor offering both an on demand and an installed Web 2. The ROI period of one point Project is usually well below 12 months. open. automate best practices and reduce project risks. real-time. One point Project is known to be integrated. Amity Global Business School Page 100 . Unlike traditional PPM software.

but don't have the time or inclination to manage it. If this description fits you. YOU earn money in bagfuls. Though a few portfolio managers offer standardized packages for a sum as small as Rs 5-10 laky. it may take a minimum investment size of Rs 25-50 lakh to Amity Global Business School Page 101 . portfolio managers offer to craft a basket of stocks. do consider entrusting your money to a professional portfolio management service (PMS).Article Portfolio management service Aerate Krishnan this can pay off for the well-off Portfolio managers also let you choose from various `concepts' or model portfolios. bonds or even mutual funds that would fit your personal investment goals and risk preferences. In return for a fee.

after a detailed check on your investment goals. Once you hire a portfolio manager. you can also hand over an existing portfolio of stocks. Apart from cash. With PMS. The focus is on preserving value.fetch you a customized portfolio. Flexibility: You are bullish on FMCG stocks. but find that equity funds have marginal exposures to the sector. A portfolio manager may also switch a portion of your portfolio into cash. In a PMS. an asset allocation plan is tailor-made for you. you can expect assistance on when you should be investing more money into equities and when you should be bailing out. if he perceives a big risk to stock prices. equity funds or bonds you would like to own. you can expect the portfolio manager Amity Global Business School Page 102 . Timing: Have you ever kicked yourself for switching your entire portfolio into equities just before they tanked? If you have. Why not mutual funds? But why should you opt for PMS instead of a mutual fund? Here are a few aspects on which portfolio managers say they score over the standardized products offered by mutual funds: Asset allocation: You may know what stocks. you probably need help with regard to timing of investments. savings pattern and appetite for risk. bonds or mutual funds to a PMS that could be revamped to suit your profile. but do you know how much of your savings you should allocate to each of these? The decision on asset allocation will be crucial in determining investment returns over the long term.

All administrative matters. Mutual fund managers have their hands tied on these aspects by SEBI regulations. On handing over your money. portfolio managers do not have to stick to any rigid rules on what proportion of your money will be invested in each sector or stock. You can also expect frequent (maybe monthly) interaction with the portfolio manager to discuss any concerns that you might have. Also. as he will be the best judge of that. you will receive a user-ID and password from the PMS. including operating a bank account and dealing with settlement and depository transactions. Expect to be consulted on any major changes in asset allocation or in the investment strategy relating to your portfolio. the disclosures offered by a PMS may be just right for you. What can you now expect from this service? More handholding from your portfolio manager than you have been accustomed to from your mutual fund.to accommodate your sector preferences when he invests. But don't expect to completely dictate what stocks or sectors your portfolio manager will buy for you. What to expect from PMS Okay. You can expect to have a personal relationship manager through whom you can interact with the fund manager at any time of your choice. you have fallen for the sales pitch and entrusted your money to a PMS. They can also use liberal doses of cash or derivative instruments to pep up your returns. will be handled by the PMS. which will grant Amity Global Business School Page 103 . If you are the type who likes to watch over your money like a baby.

The portfolio manager also gets to share a percentage of your profit usually 15-20 per cent earned over and above a threshold level.5 per cent of portfolio value. Opting for PMS will free you of this chore. as a detailed statement of the transactions on your portfolio for tax purposes comes as a part of the package.you online access to your portfolio details. If you opt for the fixed fee. The structure for the performance-linked fee differs across players. That is. this is usually calculated on a weighted average basis. What you pay Most portfolio managers allow you to choose between a fixed and a performance-linked management fee. usually. Birla Sun Life charges only a performance-linked fee for its portfolio services. When you opt for a performance-based fee. you pay the fee only on the positive returns Amity Global Business School Page 104 . You can use these to check back on your portfolio as often as you like. There are wide variations in fee structure between players and across products. when you have furiously churned your investments through the year. which may range between 8 per cent and 15 per cent. Apart from management fees. Way2Wealth has a differential fee structure for its debt and equity dominated portfolios.5 per cent. separate charges will be levied towards brokerage. Keeping track of capital gains (and losses) for the taxman can be a depressing chore. For instance.5-1. you may pay between 2-2. the profits are reckoned on the basis of "high watermarking". custodial services and towards meeting tax payments. this includes a flat fee of 0.

So consider a PMS only if you have a substantial surplus to invest in stocks. However. if you invest Rs 100 in a PMS and its value appreciates to Rs 150 at the end of the year. Subsequently. the Rs 40 you earn will not be reckoned as profit. a fee will be levied only on gains over and above the Rs 150 mark. the previous "high watermark. Amity Global Business School Page 105 . For instance. a PMS may only add significant value in the following cases: Equity bias: Portfolio management services may be ideal for a person who seeks a substantial investment in the stock markets. An equity portfolio also offers greater scope for a manager to add value than does a debt portfolio." Who should hire a portfolio manager? Anybody with a nest egg. evaluate if you can use the services of a financial planner or an advisor. can consider using a PMS. instead of a PMS. which meets the minimum investment requirement.on your portfolio. You will again be charged a fee only if the value of your portfolio recovers to over Rs 150. Large surplus to invest: The minimum portfolio size that portfolio managers accept for a customized portfolio ranges from Rs 25 lakh to Rs 5 crore. If you don't. and climbs back to Rs 110. If the value of your portfolio slumps to Rs 70. Several of the established players in the PMS business focus on equity investments. though some also offer hybrid products. you pay a fee on the profit of Rs 50.

000.000-15. you can get a financial planner or advisor to construct an asset allocation plan and guide you on the choice of investments for a one-time fee of Rs 5.If you are willing to handle the paperwork associated with investing. Amity Global Business School Page 106 .

CHAPTER-6 CONCULSION AND SUGGESTIONS Amity Global Business School Page 107 .

 The most important reasons for doing trade with Share khan limited is Share khan Research Department than its Brokerage rate Structure.  More than 76% of Investors feels that PMS is less risky than investing money in Mutual Funds.  As among all Investment Option for Investor the most important area to get more return is share around 22%after that Mutual Fund and other comes into existence. Return and Tax benefits.  About 45% respondents do the Trade in the Market with Derivatives Tools Speculation compare to 24% through Hedging .  At the time of Investment the Investors basically considered the both Risk and Return in more %age around 65%. because remaining 15% take his /her residential property as Investment.  As expected return from the Market more than 48% respondents expect the rise in Income more than 15%.OBSERVATION AND FINDING  About 85% Respondents knows about the Investment Option. Amity Global Business School Page 108 .  Around 57% residents manage their Portfolio through the different company whereas 43%Investor manage their portfolio themselves.  More than 75% Investors are investing their money for Liquidity.  As the experience from the Market more than 34% Investor had lose their money during the concerned year. but in actual it not an investment philosophy carries that all the Investment does not create any profit for the owner.And the rest 31% trade their money in Investments. whereas 20% respondents have got satisfied return. 32% respondents are expecting between 15-25% return.

 More than 63% Investor are happy with the Transparency system of Share khan limited.  As based on the good and bad experience with Share khan limited around 86% are ready to recommended the PMS of Share khan to their peers. Amity Global Business School Page 109 . Out of hundred respondents 56% respondents are using Share khan PMs services. whereas 18% investor faced loses also.  Investors preferred more than 45% equity Portfolio. 28%Balanceed Portfolio and about 27% Debt Portfolio with Share khan PMS. relatives etc.  About 52% Respondents earned through Share khan PMS product.

 The sample size was restricted with hundred respondents.  The survey was carried through questionnaire and the questions were based on perception.  Complete data was not available due to company privacy and secrecy.  There was lack of time on the part of respondents.  There may be biasness in information by market participant. Amity Global Business School Page 110 .  Some people were not willing to disclose the investment profile.LIMITATION OF THE PROJECT  As only Hyderabad was dealt in the survey so it does not represent the view of the total Indian market.

It also provides the information through the internet and mobile alerts that what IPO s are coming in the market and it also provides its research on the future prospect of the IPO. Amity Global Business School Page 111 .CONCLUSION AND SUGGESTIONS On the basis of the study it is found that Share khan Ltd is better services provider than the other stockbrokers because of their timely research and personalized advice on what stocks to buy and sell.  People are not so much ware aware about the Investment option available in the Market. We can conclude the following with above analysis.  Share khan Ltd has better Portfolio Management services than Other Companies  It keeps its process more transparent.  Investors are looking for those investment options where they get maximum returns with less returns. provides the facility of Trade tiger as well as relationship manager facility for encouragement and protects the interest of the investors. Share khan Ltd.  It gives more returns to its investors.  It charges are less than other portfolio Management Services  It provides daily updates about the stocks information.  Market is becoming complex & it means that the individual investor will not have the time to play stock game on his own.

Pro Arbitrage.  Investors must feel safe about their money invested. so that they feel more comfortable while investing in the stock market. Proprime.  Share khan limited must try to promote more its Portfolio Management Services through Advertisements. Amity Global Business School Page 112 .Suggestions  The company should also organize seminars and similar activities to enhance the knowledge of prospective and existing customers.  Investor s accounts must be more transparent as compared to other companies.Protech.  Share khan needs to improve more it s Customer Services  There is need to change in lock in period in all three PMS i.e.

gov.moneycontrol.yahoofinance.BIBILOGRAPHY REFERENCES  www.  The economist Amity Global Business School Page 113 .com  www.com  www.com  www.nseindia.com  www.com Book Referred  Value guide by Share khan  Investors Eyes by Share khan  Business world.in  www.sebi.theeconomist.sharekha.com  www.com  www.valueresarchonline.bseindia.karvy.com  www.

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