A Summer Internship Project: "The Study of How Portfolio Management Has Helped To Increase in Effective Investment"

SIP Program 2014 Project Report
A Summer Internship Project
“The Study of How Portfolio

Management has Helped to
Increase in Effective Investment”
AT
Submitted in partial fulfillment of the requirement of

Post-Graduate Diploma in Management
Indus Business Academy, Bangalore
Academic Year: 2013-2015
SUBMITTED BY: GUIDED BY:
PANKAJ GURNANI Prof. NAGENDRA HEGDE

Reg. No: FPB1315/115
IBA For Academic Purpose Only Page 1 Pankaj Gurnani

FPB1315.115
Certificate from Institution
This is to certify that, Mr. Pankaj Gurnani (FPB1315.115) is a bona

fide student of Indus Business Academy, Bangalore and is presently
pursuing a Post Graduate Program in Management.
This report has not been previously submitted as part of another

degree or Diploma of another business school or university.
Dr. Subhash Sharma

Dean
Indus Business Academy

FPB1315.115
Certificate from Internal Guide
This is to certify that, Mr. Pankaj Gurnani (FBP1315.115) is a

bona fide student of Indus Business Academy, Bangalore and is
presently pursuing a Post Graduate Diploma in Management.
Under my guidance, he has submitted his project titled “How

Portfolio Management has Helped to Increase in Effective
Investment”in partial fulfillment of the requirement for the Summer
Internship Project during the Post Graduate Diploma in Management.
This report has not been previously submitted as part of another

degree or Diploma of another business school or university.
Prof. Nagendra Hegde

Mentor

FPB1315.115
Declaration
I, Pankaj Gurnani, the undersigned, student of Indus Business
Academy, Bangalore, declare that this project report “The Syudy of
How Portfolio Management has Helped to Increase in Effective
Investment” is submitted in partial fulfillment of requirement for the
SIP Report during the Post-Graduation Program in Management.
This is my original work and has not been previously submitted

as a part of any other degree or diploma of another Business school or
University.
The findings and conclusions of this report are based on my

personal study and experience.
Pankaj Gurnani
FPB1315/115
PGDM 13-15

FPB1315.115
Acknowledgements
I would like to thank our CEO, Mr. Manish Jain, and Dean, Dr.
Subhash Sharma, Indus Business Academy, Bangalore for being so
encouraging and helpful throughout my report work. I am grateful to all
for their constant support and encouragement.
I take this opportunity to express gratitude to my mentor Prof.

Nagendra Hegde for his exemplary guidance, monitoring and constant
encouragement throughout the course of this Internship.
I also express deep regards to Company mentor Mr. Preetham

KM, for his cordial support, valuable information and guidance, which
helped me in completing this internship through various stages.
I am also thankful to the Mr. Venugopal.B.S, Mr. Rishab

Bhandari for their extensive support
Pankaj Gurnani
FPB1315/115
PGDM 13-15
Table of Contents

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Page
Contents
No:
Executive Summary 7
Chapter 1 INTRODUCTION 8
Chapter 2 INDUSTRY PROFILE 22
Chapter 3 COMPANY PROFILE 32
Chapter 4 RESEARCH METHODOLOGY 42
Chapter 5 ANALYSIS AND INTERPRETATION 45
Chapter 6 FINDINGS, SUGGESTIONS AND CONCLUSION 65
BIBLIOGRAPHY 70
EXECUTIVE SUMMARY

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This project report on “How Portfolio Management has helped increase effective
investment” is based on understanding portfolio management, which is taking place in the
stock market. Basket Option PVT Limited being the market leader in Portfolio
Management. Marketing of Trading and Demat account and made IPO sub-broker are done
under the project which has further helped to understand how practically the market works.
The project has made technical Break out in BSE 200 Index. Company selection is based
on return and beta of that security also. Further need to found out the risk and return trade-
off, beta, systematic and unsystematic risk, correlation between security and market of
some particular comapanies under portfolio. After which, the selected companies under
portfolio one need to find out the portfolio return and risk on the basis of Markowitz and
Sharpe Single Index Model.
Fundamental analysis is worked on economic analysis, industry analysis and company

analysis, and also finds out target price of such security.
Context of studies-: The project highlights the important points as to in which Midcap
companies, an investor should invest in order to get a profitable return, which can be seen
from the targeted price of fundamental and technical analysis.

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CHAPTER 1
INTRODUCTION

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INTODUCTION
The art and science of making decisions about investment mix and policy, matching
investments to objectives, asset allocation for individuals and institutions, and balancing
risk against performance.
Portfolio management is all about strengths, weaknesses, opportunities and threats in the
choice of debt vs. equity, domestic vs. international, growth vs. safety, and many other
tradeoffs encountered in the attempt to maximize return at a given appetite for risk.
In the case of mutual and exchange-traded funds (ETFs), there are two forms of portfolio
management: passive and active. Passive management simply tracks a market index,
commonly referred to as indexing or index investing. Active management involves a single
manager, co-managers, or a team of managers who attempt to beat the market return by
actively managing a fund's portfolio through investment decisions based on research and
decisions on individual holdings. Closed-end funds are generally actively managed.
A portfolio is a collection of investments held by an institution or a private individual. In

building up an investment portfolio a financial institution will typically conduct its own
investment analysis, whilst a private individual may make use of the services of a financial
advisor or a financial institution which offers portfolio management services. Holding a
portfolio is part of an investment and risk-limiting strategy called diversification. By
owning several assets, certain types of risk (in particular specific risk) can be reduced. The
assets in the portfolio could include stocks, bonds, options, warrants, gold certificates, real
estate, futures contracts, production facilities, or any other item that is expected to retain its
value.
Portfolio management involves deciding what assets to include in the portfolio, given the
goals of the portfolio owner and changing economic conditions. Selection involves
deciding what assets to purchase, how many to purchase, when to purchase them, and what
assets to divest. These decisions always involve some sort of performance measurement,
most typically expected return on the portfolio, and the risk associated with this return (i.e.

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the standard deviation of the return). Typically the expected returns from portfolios,
comprised of different asset bundles are compared.
The unique goals and circumstances of the investor must also be considered. Some
investors are more risk averse than others. Mutual funds have developed particular
techniques to optimize their portfolio holdings.
Thus, portfolio management is all about strengths, weaknesses, opportunities and threats in
the choice of debt vs. equity, domestic vs. international, growth vs. safety and numerous
other trade-offs encountered in the attempt to maximize return at a given appetite for risk.
Two Basic Aspects of Portfolio Management:

 A proper investment decision making of what to buy & sell
 Proper money management in terms of investment in a basket of assets so as to
satisfy the asset preferences of investors.
NEED AND IMPORTANCE OF PORTFOLIO MANAGEMENT
The Portfolio Management deals with the process of selection securities from the number
of opportunities available with different expected returns and carrying different levels of
risk and the selection of securities is made with a view to provide the investors the
maximum yield for a given level of risk or ensure minimum risk for a level of return.
Portfolio Management is a process encompassing many activities of investment in assets

and securities. It is a dynamics and flexible concept and involves regular and systematic
analysis, judgment and actions. The objectives of this service are to help the unknown
investors with the expertise of professionals in investment Portfolio Management. It
involves construction of a portfolio based upon the investor’s objectives, constrains,
preferences for risk and return and liability. The portfolio is reviewed and adjusted from
time to time with the market conditions. The evaluation of portfolio is to be done in terms
of targets set for risk and return. The changes in portfolio are to be effected to meet the
changing conditions.

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Portfolio Construction refers to the allocation of surplus funds in hand among a variety of
financial assets open for investment. Portfolio theory concerns itself with the principles
governing such allocation. The modern view of investment is oriented towards the
assembly of proper combinations held together will give beneficial result if they are
grouped in a manner to secure higher return after taking into consideration the risk element.
The modern theory is the view that by diversification, risk can be reduced. The investor can
make diversification either by having a large number of shares of companies in different
regions, in different industries or those producing different types of product lines. Modern
theory believes in the perspectives of combination of securities under constraints of risk
and return.
Financial Planning
General Steps to Fundamental Evaluation:
Even though there is no one clear-cut method, a Breakdown is presented below in the order
an investor might proceed. This method employs a top-down approach that starts with the
overall economy and then works down from industry groups to specific companies. As part
of the analysis process, it is important to remember that all information is relative.
The Fundamental analysis includes the following phases:
 Economic analysis
Equity market investments typically yield high returns, particularly if invested over longer
periods of time, although such investments are characterized by a high degree of price
volatility in the short term. The volatility in our markets, particularly in the nineties,
reflects significant shifts in the nature of the Indian economy, with the services sector
gaining increasing importance. This fundamental change in the economy has resulted in a
dramatic change in the nature of our stock markets with the services sector, including
technology, assuming increasing importance. Investment in equities has dismayed many in
the short term, but if executed in the framework of the steps outlined below, may help in
better choices

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Knowing how the company operates in different economic environments is important. With
this knowledge about the company,it becomes easier to forcast as how a particular
company may perform in the future.Therefore we need a collection of economic data like:
o Production and Income
o Employment
o Consumption
o Investment Activity
o Interest Rates
o Stock Prices
o Inflation
 Industry analysis
Industry groups are compared against other industry groups and companies against other
companies. Usually, companies are compared with others in the same group.The diagram
below is an example showing the comparison of different sectors and its performance in the
past five years.This helps investors to get a knowelege about how each sector is performing
and invest in those equities accordingly.
STRENGTHS OF FUNDAMENTAL ANALYSIS :
 Long-term Trends
Fundamental analysis is good for long term investments based on long-term trends. The
ability to identify and predict long-term economic, demographic, technological or
consumer trends can benefit investors and helps in picking the right industry groups or
companies.
 Value Spotting

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Sound fundamental analysis will help identify companies that represent a good value. Some
of the most legendary investors think for long-term and value. Fundamental analysis can
help uncover the companies with valuable assets, a strong balance sheet, stable earnings,
and staying power.
 Business Acumen
One of the most obvious, but less tangible rewards of fundamental analysis is the
development of a thorough understanding of the business. After such painstaking research
and analysis, an investor will be familiar with the key revenue and profit drivers behind a
company. Earnings and earnings expectations can be potent drivers of equity prices. A good
understanding can help investors avoid companies that are prone to shortfalls and identify
those that continue to deliver.
 Value Drivers
In addition to understanding the business, fundamental analysis allows investors to

develop an understanding of the key value drivers within the company. A stock’s price is
heavily influenced by the industry group. By studying these groups, investors can better
position themselves to identify opportunities that are high-risk (tech), low-risk (utilities),
growth oriented (computer), value driven (oil), non cyclical (consumer staples), cyclical
(transportation) etc.
Financial planning process
It is a six step process:

1 Establishing client relationship :
No client would like to share their financial information with a stranger. They will only
confide when they have complete faith and trust on the person with whom they are sharing

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their information to keep it confidential and not misuse it. So it is very important to have
transparency in our dealings with clients which will lead to greater level of trust.
2 Data gathering & Goal setting :

Data Gathering process is based on two parameters-
• Quantitative data:
Quantitative data are those which can be measured in numbers for e.g. monthly income of
customer. For a financial planner the quantitative data shows the current financial position
of a client.
• Income & Expenditure Statement:

An income & expenditure statement shows the incomes and expenses incurred for a
particular time period. It highlights if the person has positive or negative cash flows.
• Qualitative data:
Qualitative data cannot be measured; they are different for all individuals for e.g. risk
taking ability of every person is different.
• Risk Profile:
Risk Tolerance is about how much risk a person can take before the same can impact his
decision.
3 Goal setting: Life goals & financial objectives

Some of the major & minor goals in an individual’s life are listed below:
Major goals in Life:
■ Children’s education
■ Children’s marriage
■ Buying a house
■ Independent retirement

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Minor goals in life:
■ Home renovation
■ International vacations
■ Car purchase
■ Holiday home
■ Corpus for start-up
■ Family gifting
■ Other big purchases
Other financial goals:
■ Reducing tax outgo by tax planning
■ Protection of assets & life
■ Being debt free
■ Charity work
1. Identification of financial problems and needs:
After the completion of the data gathering, a financial planner analyses the information and
data gathered and identifies the financial problems/need that are to be addressed in order to
reach the financial goal. Like,
• Contingency funding
A contingency funding plan aims to put aside funds for emergencies. These can be
divided between the bank account and some liquid funds.
• Life insurance
Ideally the life insurance coverage should be 12 -15 times of the gross salary of a person.

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• Health insurance
How much health insurance covers to take it largely a function of an estimate of expenses
that one may incur on certain treatments as well as certain incidental expenses on account
of such medical condition?
• Insurance physical assets
Physical assets such as household goods, jewelry, vehicles, bullion etc. must be insured for
their current value against fire, theft, burglary, etc. These assets are valuable and hence
must be insured for the value they can be replaced with today.
• Accident / Disability Insurance
These policies provide insurance covers if the insured is temporary and partially disabled,
permanently and partially disabled and also if totally and permanently disabled. The
financial advisor has to help the clients in assessing the amount of cover to be taken.
• Keeping cash flow positive
It is important to have a positive cash flow at all point of time else it indicates you are using
your investments to meet regular requirements, which should only happen during
retirement, not otherwise.
• Present tax planning strategies
Financial planner should identify what is the present strategy adopted by the client for its
tax implications whether any change in the same is required?
4 Recommending investment strategies:
• Understanding various asset classes

As seen earlier, there are various investment options having different features. A financial advisor
roll is to suggest appropriate investments based on the needs of the investors. After analyzing the
needs of the investors the advisor then recommends an investment strategy.
The investment plan recommends how much money should be invested in which options and
how such allocation should be changed over period of time. Such a strategy is commonly known
asset allocation.

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• Asset Allocation:
Asset allocation is also important because it is not possible to be invested in the best asset
class at all times. Whereas the occasional rewards could be huge, the cost of a mistake
could be very large.
5 Implementing the advice with right products :
No. Liquid Debt Equity Real Gold

Estate
1.
Cash in hand (> 1 Fixed deposit Shares Property Gold coins,
year) Bars
2.
Savings bank PPF MF Jewelry
3.
Liquid funds EPF Gold ETF
4.
Ultra-short term
funds Debt Mutual Funds
5.
Fixed deposit (<
1 year) Bonds/ Debentures
6.
Company Deposits
7. 36
Post office Schemes

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6 Monitoring & reviewing periodically
Reviewing the Financial Plan Periodically:
• Why?
A periodic review helps understand where the individual is,
Where he should have been, what corrective measures need to be taken (if any), should
there be any change in asset allocation, re- do the plan in case the goals have changed.
• When?
A periodic review of the financial plan can be done once every year, although the portfolio
needs to be regularly monitored, preferably on a quarterly basis.
• Client level changes:
When there are changes in individual’s life, job changes/ increments/ loss, or change in
famiMoly size on account of marriage, it makes sense to re-look at the goals and reset the
plan.
• Macro level changes:
Whenever there are changes in the macro environment, an individual’s plan may need to be
re-looked at. Some of the external factors which need to be considered for effecting
changes in an individual’s financial plan are
 Inflation
 Interest rates
 Stock markets
 Regulations
 New products

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Objectives Of Financial Portfolio Management

The objectives of portfolio management are applicable to all financial portfolios. These
objectives, if considered, results in a proper analytical approach towards the growth of the
portfolio. Furthermore, overall risk needs to be maintained at the acceptable level by
developing a balanced and efficient portfolio. Finally, a good portfolio of growth stocks
often satisfies all objectives of portfolio management.
1. Security of Principal Investment : Investment safety or minimization of risks is

one of the most important objectives of portfolio management. Portfolio
management not only involves keeping the investment intact but also contributes
towards the growth of its purchasing power over the period. The motive of a
financial portfolio management is to ensure that the investment is absolutely safe.

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Other factors such as income, growth, etc., are considered only after the safety of
investment is ensured.
2. Consistency of Returns : Portfolio management also ensures to provide the
stability of returns by reinvesting the same earned returns in profitable and good
portfolios. The portfolio helps to yield steady returns. The earned returns should
compensate the opportunity cost of the funds invested.
3. Capital Growth : Portfolio management guarantees the growth of capital by
reinvesting in growth securities or by the purchase of the growth securities. A
portfolio shall appreciate in value, in order to safeguard the investor from any
erosion in purchasing power due to inflation and other economic factors. A portfolio
must consist of those investments, which tend to appreciate in real value after
adjusting for inflation.
4. Marketability : Portfolio management ensures the flexibility to the investment
portfolio. A portfolio consists of such investment, which can be marketed and
traded. Suppose, if your portfolio contains too many unlisted or inactive shares,
then there would be problems to do trading like switching from one investment to
another. It is always recommended to invest only in those shares and securities
which are listed on major stock exchanges, and also, which are actively traded.
5. Liquidity : Portfolio management is planned in such a way that it facilitates to take
maximum advantage of various good opportunities upcoming in the market. The
portfolio should always ensure that there are enough funds available at short notice
to take care of the investor’s liquidity requirements.
6. Diversification of Portfolio : Portfolio management is purposely designed to
reduce the risk of loss of capital and/or income by investing in different types of
securities available in a wide range of industries. The investors shall be aware of the
fact that there is no such thing as a zero risk investment. More over relatively low
risk investment give correspondingly a lower return to their financial portfolio.
7. Favorable Tax Status : Portfolio management is planned in such a way to increase
the effective yield an investor gets from his surplus invested funds. By minimizing
the tax burden, yield can be effectively improved. A good portfolio should give a
favorable tax shelter to the investors. The portfolio should be evaluated after
considering income tax, capital gains tax, and other taxes.

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Facts about Portfolio

There are many investment vehicles in a portfolio.
 Building a portfolio involves making wide range of decisions regarding buying or
selling of stocks, bonds, or other financial instruments. Also, one needs to make
decision regarding the quantity and timing of the buy and sell.
 Portfolio Management is goal-driven and target oriented.
 There are inherent risks involved in the managing a portfolio.
 The basics and ideas of Investment Portfolio Management are also applied to
portfolio management in other industry sectors.
Application Portfolio Management: It involves management of complete group or subset

of software applications in a portfolio. These applications are considered as investments as
they involve development (or acquisition) costs and maintenance costs.
The decisions regarding making investments in modifying the existing application or

purchasing new software applications make up an important part of application portfolio
management.
Product Portfolio Management: The product portfolio management involves grouping of

major products that are developed and sold by businesses into (logical) portfolios. These
products are organized according to major line-of-business or business segment.
The management team actively manages the product portfolios by taking decisions
regarding the development of new products, modifying existing products or discontinue
any other products. The addition of new products helps in diversifying the investments and
investment risks.
Project Portfolio Management: It is also referred as an initiative portfolio management

where initiative portfolio involves a defined beginning and end; precise and limited
collection of desired results or work products; and management team for executing the
initiative and utilising the resources. A number of initiatives that supports a product,
product line or business segment, are grouped into a portfolio by managers.

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Chapter 2
INDUSTRY PROFILE
Other leading cities in stock market operations are -:

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Ahmadabad gained importance next to Bombay with respect to cotton textile industry.
After 1880, many mills originated from Ahmadabad and rapidly forged ahead. As new
mills were floated, the need for a Stock Exchange at Ahmadabad was realized and in 1894
the brokers formed "The Ahmadabad Share and Stock Brokers' Association".
What the cotton textile industry was to Bombay and Ahmadabad, the jute industry was to
Calcutta. Also tea and coal industries were the other major industrial groups in Calcutta.
After the Share Mania in 1861-65, in the 1870's there was a sharp boom in jute shares,
which was followed by a boom in tea shares in the 1880's and 1890's; and a coal boom
between 1904 and 1908. On June 1908, some leading brokers formed "The Calcutta Stock
Exchange Association".
In the beginning of the twentieth century, the industrial revolution was on the way in India
with the Swadeshi Movement; and with the inauguration of the Tata Iron and Steel
Company Limited in 1907, an important stage in industrial advancement under Indian
enterprise was reached.
Indian cotton and jute textiles, steel, sugar, paper and flour mills and all companies
generally enjoyed phenomenal prosperity, due to the First World War.
In 1920, the then demure city of Madras had the maiden thrill of a stock exchange
functioning in its midst, under the name and style of "The Madras Stock Exchange" with
100 members. However, when boom faded, the number of members stood reduced from
100 to 3, by 1923, and so it went out of existence.
In 1935, the stock market activity improved, especially in South India where there was a
rapid increase in the number of textile mills and many plantation companies were floated.
In 1937, a stock exchange was once again organized in Madras - Madras Stock Exchange
Association (Pvt) Limited. (In 1957 the name was changed to Madras Stock Exchange
Limited).

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Lahore Stock Exchange was formed in 1934 and it had a brief life. It was merged with the
Punjab Stock Exchange Limited, which was incorporated in 1936.
Trading Pattern of the Indian Stock Market
Trading in Indian stock exchanges are limited to listed securities of public limited
companies. They are broadly divided into two categories, namely, specified securities
(forward list) and non-specified securities (cash list). Equity shares of dividend paying,
growth-oriented companies with a paid-up capital of atleast Rs.50 million and a market
capitalization of atleast Rs.100 million and having more than 20,000 shareholders are,
normally, put in the specified group and the balance in non-specified group.
Two types of transactions can be carried out on the Indian stock exchanges: (a) spot
delivery transactions "for delivery and payment within the time or on the date stipulated
when entering into the contract which shall not be more than 14 days following the date of
the contract" : and (b) forward transactions "delivery and payment can be extended by
further period of 14 days each so that the overall period does not exceed 90 days from the
date of the contract". The latter is permitted only in the case of specified shares. The
brokers who carry over the outstanding pay carry over charges (cantango or backwardation)
which are usually determined by the rates of interest prevailing.
A member broker in an Indian stock exchange can act as an agent, buy and sell securities
for his clients on a commission basis and also can act as a trader or dealer as a principal,
buy and sell securities on his own account and risk, in contrast with the practice prevailing
on New York and London Stock Exchanges, where a member can act as a jobber or a
broker only.
The nature of trading on Indian Stock Exchanges are that of age old conventional style of
face-to-face trading with bids and offers being made by open outcry. However, there is a
great amount of effort to modernize the Indian stock exchanges in the very recent times.

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Over The Counter Exchange of India (OTCEI)
OTC has a unique feature of trading compared to other traditional exchanges. That is,
certificates of listed securities and initiated debentures are not traded at OTC. The original
certificate will be safely with the custodian. But, a counter receipt is generated out at the
counter which substitutes the share certificate and is used for all transactions.
In the case of permitted securities, the system is similar to a traditional stock exchange. The
difference is that the delivery and payment procedure will be completed within 14 days.
Compared to the traditional Exchanges, OTC Exchange network has the following
advantages:
 OTCEI has widely dispersed trading mechanism across the country which provides
greater liquidity and lesser risk of intermediary charges.
 Greater transparency and accuracy of prices is obtained due to the screen-based
scripless trading.
 Since the exact price of the transaction is shown on the computer screen, the
investor gets to know the exact price at which s/he is trading.
 Faster settlement and transfer process compared to other exchanges.
 In the case of an OTC issue (new issue), the allotment procedure is completed in a
month and trading commences after a month of the issue closure, whereas it takes a
longer period for the same with respect to other exchanges.
Thus, with the superior trading mechanism coupled with information transparency
investors are gradually becoming aware of the manifold advantages of the OTCEI.

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Current Update noted for BSE Form year 2011 to 2014

 17 November 2011 Maharashtra and United Kingdom Environment Ministers
launched Concept Note for BSE Carbon Index
 30 December 2011, picks up a stake in the proxy advisory firm, Institutional
Investor Advisory Services India Limited (IiAS)
 7 January 2011 BSE Training Institute Ltd. with IGNOU launched India's first 2
year full-time MBA programme specialising in Financial Market
 15 January 2011 Co-location facility at BSE - tie up with Netmagic.com
 22 February 2012 Launch of BSE-GREENEX to promote investments in Green
India
 13 March 2012 Launch of BSE - SME Exchange Platform
 30 March 2012 BSE launched trading in BRICSMART indices derivatives
 19 February 2013 - SENSEX becomes S&P SENSEX as BSE ties up with Standard
and Poor's to use the S&P brand for Sensex and other indices.
 28 November 2013 Launch of Currency Derivatives (BSE CDX)
 28 January 2014 Launch of Interest Rate Futures (BSE –IRF)
 11 Feb 2014 Launch of Institutional Trading Platform on BSE SME
 07 Apr 2014 Launch of Equity Segment on BOLT Plus with Median Response Time
of 200.
Overview of Market
The financial sector is in a process of rapid transformation. Reforms are continuing
globally as part of the overall structural reforms aimed at improving the productivity and
efficiency of the economy in the highly competitive world. The role of an integrated
financial infrastructure is to stimulate and sustain economic growth. The US$ 28 billion
Indian financial sector has grown at around 15 per cent and has displayed stability for the
last several years, even when other markets in the Asian region were facing a crisis. This
stability has come through the resilience that the In-country system and the finance
companies have built over these years.
The financial sector has kept pace with the growing needs of corporate and other
borrowers. Banks, capital market participants and insurers have developed a wide range of
products and services to suit varied customer requirements.

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Organizations in this highly competitive and increasingly regulated industry will especially
need to focus on making themselves more:
• Skillful to face increasing transaction volumes, regulation and the integration of

previously differernt global markets
• Active at identifying and managing risk
• Enhanced in both business & technology, operationally efficient
• Financial professionals with knowledge of Business/Industry and technical
competence
To enhance their competitive advantage in this changed environment, financial services

institutions are increasingly harnessing senior executives with right knowledge of business/
industry and technical competence, who can spearhead new business initiatives with better
IT Technologies to provide superior customer offerings and streamline internal processes.
Today's dynamic marketplace demands that financial services sector emphasize on

technologically advanced, feature-rich solutions, that can operate in real-time and with the
highest degree of precision and reliability.
Financial deepening:
Facing headwinds driven by market maturity as wealth increases, the use of financial
products increases disproportionately, and financial sector revenues grow rapidly,
significantly above GDp growth rates.But this rapid growth cannot go on forever.
The relationship between per capita Gross Domestic product (GDp) and financial services
spending must stabilize. while emerging economies are steeply increasing penetration,
developed ones have approached saturation. This phenomenon is most evident in insurance.
The financial crisis and its aftermath have done little to reduce demand for insurance
products or to increase the cost of supplying them. In the developing world they are
advancing but from a very low base. In mature markets, insurance premiums have hardly
grown for a decade. Insurers in developed economies must find ways to sell more into
apparently saturated markets.

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Segments of the Financial service sector are as follows:
FINANCIAL SERVICES:
Asset Management
1.Capital Broking
Wealth Management
Market Investment Banking
Life
2.Insurance Non-Life
Asset Finance Company

3.NBFCs Investment Company
Loan Company
INDIAN SCENARIO:
India is one of the top ten economies in the world. The growth of the financial sector in
India is at present is nearly 8.5% per year. Indian financial sector comprises of commercial
banks, insurance firms, Non banking financial institutions, Equities, Mutual funds etc.
Today India is recognised as the most vibrant capital markets. The government of India has

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helped in this development by introducing new reforms to liberalize, regulate and enhance
the country’s financial services.
With the market sentiments turning positive due to the formation of a new
and stable newly elected government, the ripple effect is likely to be felt accross all the
financial services in India. The sectors, including banking and insurance and mutual funds,
equities are all beginning to reap the benefits of a good beginning. The segments of
financial services in India are:
1. Capital Market
The Indian capital markets have witnessed a transformation over the last decade. India is
now placed among the mature markets of the world. Key progressive initiatives taken by
the Indian market institutions has been the depository and share dematerialization systems
that have enhanced the efficiency of the transaction cycle, Replacing the flexible, but often
exploited, forward trading mechanism with rolling settlement, to bring about transparency,
Corporatisation of stock exchanges etc. Indian capital markets have rewarded Foreign
Institutional Investors (FIIs) with attractive valuations and increasing returns. Many new
instruments have been introduced in the markets, including index futures, index options,
derivatives and options and futures in select stocks.
2. Insurance
With the opening of the market, foreign and private Indian players are keen to convert
untapped market potential into opportunities by providing tailor-made products, the
presence of a host of new players in the sector has resulted in a shift in approach and the
launch of innovative products, services and value-added benefits. Foreign majors have
entered the country and announced joint ventures in both life and non-life areas. Major
foreign players include New York Life, Aviva, Tokio Marine, Allianz, Standard Life,
Lombard General, AIG, AMP and Sun Life among others. The market’s potential has been
estimated to have a premium income of US$ 80 billion with a potential size of over 300
million people.
Top 10 stock brokers in India

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ICICI Direct: By far the biggest and most well know stock broker in India. They have
decent service and easy to use user interface but there brokerage is really high compared to
what other discount brokers are providing. There biggest selling point is there seamless
integration with your ICICI bank account which make transfer/withdrawal of funds really
easy and quick. Great for investor but not for trader.
Sharekhan: Incorporated in February 2000, Sharekhan is India’s 2nd largest stock

broker providing brokerage services through its online trading website Sharekhan.com and
1950 Share shops which includes branches & Franchises in more than 575 cities across
India. They are full service broker and provide various other services like asset
management etc.
RKSV: RKSV is a discount broker operating from Mumbai. They provide very
competitive rates of Rs 20 per trade irrespective of the size of the trade, with 5 free trades
per month for life. They also have unlimited tradings plan in which, for a fixed monthly
fee, the customer can do unlimited trading at zero brokerage.
HDFC Security: They are one of the larger broking house in India and with there bank
branches, they have one of the largest network which is only after ICICI. They have a vast
network of bank branch in even smaller town.
Kotak Security: They are one more well know name in Financial services and with their
bank branches in big cities they are able to cater to clients in big cities. There online service
is decent but brokerage is not that competitive.
Reliance Money: They came with a bang but lately have lost a lot of sheen from there
name. There have been lots of question about their business practices.
Motilal Oswal: These are one of the decent broker operating in India.
Karvy: They are one of the oldest broking house operating in India. They are the brokers
which your fathers used to use for buying there IPO and MF but there online service are
not that great. Lately they are upgrading there online platform and there brokerage is also
comparable to other full house brokers.

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SBICapSec: This is the broking arm of State Bank of India but there broking service is not
very great. There brokerage structure is also not very competitive and being a public sector
bank, there is a lot to be desired as far as the customer service is concerned.
Zerodha: They are one of the new stock broker in India which have started discount
trading in India. They have a very competitive brokerage structure and decent customer
service. These type of discount brokers are new in India and providing tough competition
to full service brokers.

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Chapter 3
COMPANY PROFILE
COMPANY OVERVIEW:
Basket Option Pvt. Limited is a venture company of Jain Group of Institution (JGI). JGI
Ventures India Pvt Ltd was established towards hatching and supporting entrepreneurial

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ventures and new innovative business ideas with the goal of escorting a revolution in
entrepreneurship based on the pioneering vision of Dr. Chenraj Roychand, the founder and
Chairman of Jain Group of Institutions ".
The organization has invested in the launch and incubation of several start up enterprises
and is now progressing rapidly on an ambitious growth and expansion plan. The
organization comprises of a dedicated team of business and financial experts. JGI Ventures
has a robust network to enable funding of start-ups and is well poised to build a dynamic
ecosystem to nurture the development and fuel the growth of budding enterprises. JGI
Ventures boosts of 70 plus entrepreneurs and 42 ventures running successfully in various
domains namely IT, Financial services, Home décor, Hospitality, restaurants, Music
Industry, Education industry supplies etc.
About Company Profile
Basket Option Pvt Ltd is a JGI ventures initiative started in 2005 with a vision to be a
venture catalyst to ideas. Over the years, Basket Option has evolved into a group with
interests in real estate and construction, parallel education, health care and financial
services and many more. Today we have 41+ and counting ventures in various sectors.
Vision of the Company:
The Focus clearly is on innovation and every team member of Basket Option knows and
works with a vision to create history, to create an organization which will be trusted and
relied on for generations to come. Each of us are here for the long haul, here to stay. Not
every one has to risk to go solo but with basket option‘s model and structure they can play
on their strengths.
Mission of the company

The Company believes in the philosophy of “Changing games”. They pride themselves in
doing things differently Breaking existing pain points & various other such business

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barriers in the areas it ventures into. In short thinking outside the box is always appreciated
and supported.
Organisational Structure:
The talent pool in Basket Option is known for unsettling thinking and action. They believe
that every industry, area or vertical can be unique in its offerings and services irrespective
of the competition.
Entrepreneurial approach
The company is run by 41+ entrepreneurs and 5 intrapreneurs . Each entrepreneur and in
some cases, few of them, run each vertical. This ensures that there is highest degree of
focus and involvement in each vertical. Each vertical have functional experts with relevant
skills, thereby focusing on the quality of product/services & its delivery.
The focus clearly is on innovation and every team member of Basket Option
knows and works with a vision to create history, to create an organization which will be
trusted and relied on for generations to come. They are on the path to create a one stop shop
for the customer for all the needs that he might have throughout his lifespan.
Intrapreneur approach
Everyone does not want to be an independent entrepreneur. There are several who prefer to
work in an organization. The Intrapreneur approach is to encourage and make optimum use
of their skills and help them build their career and reach goals. This model exposes the
individual to the larger aspect of business and helps in transforming the person from being
just an employee to look at himself as an achiever, an intrapreneur within the organization.
Intrapreneur is allowed to be at his best without getting involved in areas that are not his
passion or strength. Not everyone has to risk going solo but with basket option‘s model and
structure they can play on their strengths.
Company’s Mantra:
Basket Option Pvt Ltd believes in the term that “Customers are the Kings” therefore they
ensure that every single customer is happy with their service. Thus the CEO himself holds
the crucial post of Customer Care Executive. Every transaction is viewed and monitored by

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him and the CEO- desk team, who exclusively work on this. The group boosts of 10,000+
retail customers across segments and 220+ corporate clients. The group’s philanthropic
purpose and goal is deep rooted. 50% of the group’s profits go towards educating the
under-privileged children by helping run free schools.
Global Operations:
So far Basket Option Pvt. Limited has no Global Operations.
Indian Operations:
In India the main head office is in Banagalore,Karnataka and therefore it operates with
various companies as its clients. It has a chain of its operations at Bellary, Karnataka.
Basket Option has a market capital of over INR 200 Crores with its different verticals.
PRODUCTS AND SERVICES OFFERED BY THE COMPANY:

The Verticals of Basket Option Pvt Limited:

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 The Bull Street (TBS):
Bull Street, a subsidiary of Basket Options Pvt. Ltd is an advisory firm solely aimed at
enhancing our customers’ wealth through equities and commodities. Bull Street, headed by
veterans in equity research and commodities, works round the clock to make sure that your
wealth is in safe hands, We at bull Street cater to the advisory needs of all segments of
customers in our area of specialization. Our customized packages coupled with our
investment strategy “give the right advice at the right time” has enabled us to live by our
motto “Value Creation, consistent Performance and customer Satisfaction”.
At Bullstreet, they help to balance the volatility in the market with the appealing returns it
gives through their profound knowledge of market functioning and altering trends.
 ADVISE: Bull Street cater to the advisory needs of all segments of

customers in their area of specialization.
 STRATEGIZE: The customized packages coupled with BullStreet

investment strategy “give the right advice at the right time” has enabled
them to live by their motto “Value Creation, consistent Performance and
customer Satisfaction”.
Services offered by Bull Street are:

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1. Investment Advisory : They Provide investment advice on the following

product:
• Equities
• Mutual Funds
• Bonds
• Commodities
• Insurance
2. Financial Goal Planning
3. Real Estate
• Renting
• Leasing
• NRI Property Management
4. Tax Planning
5. Wealth Creation
 Red Lounge:

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Red Lounge: Red Lounge is a value investing organization aiming at helping

clients Red Lounge Wealth Management is a unit of Basket Option Private Limited,
a JGI Ventures initiative achieve Financial Freedom by realizing their Financial
Goals through its expertise in integrated advisory & wealth management. Experts in
Red Lounge do extensive research and deal with long term investment portfolios.
They breathe and breed to enhance client's wealth in a synergistic fashion with
limited tax liability. Their very existence is based on the talent of Asset Allocation.
Red Lounge Wealth Management provides Financial Advisory Services exclusively
to High Net-worth Individuals (HNIs) and Corporates. Their sphere of expertise lies
in tailor-made Investment Management Strategy to enhance Portfolio growth based
on Fundamental Analysis.
The other services offered by basket options are:
 Real World
 52 Week High
 Claims Express
 Stock Market Institute
 Edu Basket
 Basket Option Insurance Brokers
 Passion Connect
 Nutri Paradise
 My Health Check-up. in
 Money Bag Ventures
 Loan Basket

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 i Human
 Lucky Maskot
 Institute of Technical Excellence
 Alchemy
 The abcd store
 100 ML
 Smart Earth
 G- Seas
SWOT ANALYSIS OF BASKET OPTION PVT. LIMITED:

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Financial
SIP ProgramProducts
2014 Lack of marketing
Projectstrategy
Report
Diversification (offline)
Healthy Customer Relationship Less Human Resources
Favorable working Inadequate Inrastructure
Environment
STRENGTHS WEAKNESESS
It has a fresh pool of interns

bringing new ideas Change in economic conditions
Entreprenuers Emerging Competition
OPPORTUNITIES THREATSCompetition from existing
Intraprenuer approach
companies

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SWOT
 STRENGTHS
o Financial Products: Basket option is the company which makes all the
financial product available to customer with value addition. In value
addition company provide a free service to settel the calim of insurance. No
need to directly contact to insurance comapny, Basket Option take care of it.
o Diversification: Basket Option allowes it’s customers to diversified in their
porfolio and also suggest the appropiate plan as per the customers need.
o Heallthy Customer Relationship: Baket option always maintain healty
relationship with it’s customer by providing addition services like:
Reminding of customer’s premium due, collect and drop cheques from
customer’s place.
o Favorable working Envionment: Basket Options provides a favorabe
working envornment to their employies. They give the liberty to come and
go at any time and every employe just need to report only one head.
 WEAKNESS
o Lack of marketing strategy offline : As Basket Option is an start-up its not
much popular among procepects clients. Due to lack of advertising and
offline marketing company is struggling with market share.
o Less Human Resorces: Basket Option has a large portfolio of verticals and
every verical handel by Intrapreneurs. Most of the verticals are inter-related
so it needs large workforce, due to less interest in being a Intrapreneurs. It is
hard to recruit more workforce.
o Inadequate Infrastructure: Existing infrastructure is not sufficient for a
large number of vertical and company has only one branch till now and
present building is still in under construction. So it is hard for Intrapreneurs
to manage in limited sources.

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 OPPORTUNITIES
o It has a fresh pool of interns bringing new ideas: Company is allowing
big numbers of interns who has fresh talent and agree to work in challenging
situation and learn, company also provide tanning sessions time to time to
these interns to learn more.
o Entrepreneurs: All the Vertical’s heads are entrepreneurs so they give their
best to improve their own business and procrastination in work never
happens.
o Intraprenuer approach: Company also hire new EOT (Entrepreneurs On
Training) they are the existing students or Graduated who has interest in
being a entrepreneurs.
 THREAT
o Change in economic conditions: Indian Economy has change a lot in one
decade people has more disposable income than before and they also have
the understanding of the market. But still very less people have investment
intelligence.
o Emerging Competition: Basket Option is one of the player in financial
services but other companies also joining the league, it can be big threat for
company to maintain the existence.
o Competition from existing companies: There is large number of existing
players in financial service sector. It is hard to compete with them without
any differentiation.

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Chapter 5
RESEARCH METHODOLOGY
TITLE

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To Study How Portfolio Management has Helped to Increase in Effective

Investment
OBJECTIVE OF THE STUDY
 To prepare portfolio, which is barometer of market, provide maximum return at a

given level of risk.
 To find out target price, based on technical and fundamental analysis, of securities
included in portfolio.
 To calculate the return of various companies.
 To discover the fundamental analysis tool to estimated the true value of a securities.
This price will be compared to the price at which the market players offer to sell or
buy the securities, as it is overvalues or undervalued.
 To understand, analyze and select the best portfolio.
RESEARCH METHODOLOGY
Getting the best relevant information is important as it helps investors to decide where to
invest. Choosing the methods to analyse is important.There are two types of analysis
namely Fundamental and Technical analysis.But as Technical analysis is another vast topic
so Fundamental Analysis has been choosen in this project.
Fundamental Analysis:
 Economic forecast: First and foremost a top down approach would be an overall
evaluation of general economy, The economy is like a tide in the various industry
groups and companies are like boats, when the economy expands most industry
groups benefit and grow, when the economy declines most sector and companies
usually suffers, many economists link economic expansion and contraction to the
level of interest rates.

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 Group Selection: If the prognosis is for an expanding economy, then certain groups
are likely to benefit more than others, an investor can narrow the fields to those
groups that are best suited to benefit from current or future economic environment
 Narrow within the group: As soon as the industry group is chosen an investor
would need to narrow the list of companies before proceeding to a more detailed
analysis, Investors are usually interested in finding the leaders and the innovators
within the group The first task is to identify the current business and competitive
environment within a group as well as future trends
 Company Analysis: With a shortlist of companies an investor might analyze

resources and capabilities within each company to identify those companies which
are capable of creating and maintaining competitive advantage, the analysis would
focus on selecting companies with a sensible business plan, solid management and
sound financials.
Analysis Tools used: Reggression
SAMPLE SIZE: 60
SAMPLE ELEMENT: Existing customers of Basket Options Pvt. Ltd.

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Chapter 4
ANALYSIS AND INTERPRETATION

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Profile of customer
Break-up on the basis of AGE No. of clients

28-35 40
36-45 20
AGE
20
40
28-35 36-45
Brake-up on the basis of Qualification No. of client

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UG 12
PG 40
Phd./Professional 8
Qualification
8 12
40
UG PG Phd/Proffes i onal

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Break-Up on the Basis of Income No. of Clients

2-5 Lakhs P.A. 32
5-9 Lakhs P.A. 18
Above 9 10
Income
10
32
18
2-5 lakhs P.A. 5-9 lakhs P.A. Abobe 9

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Brake-Up on the basis of Gender No. of Clients

Female 28
Male 32
Gender
28
32
Femal e Mal e
TYPES of PORTFOLIO MANAGED
1. Conservative Portfolio
2. Moderate Portfolio
3. Aggressive Portfolio

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Conservative Portfolio : 75:25
Customer who wants less risk and save the invested capital invest in conservative portfolio.
Company divides portfolio in 15 stocks in which 10 stocks of top 200 stocks and 5 stocks
of potential growing companies.
Moderate Portfolio : 60:40
Customers who interested in taking a littile risk invests in Moderate Portfolio. Here 8
stocks of large capital caompany and 7 stock from mid capital company. In this type of
portfolio always nominal risk and nominal return condition happens.
Aggressive Portfolio: 40:60
Customer who has high risk tolerence invests in aggersive portfolio. Here only 5 stocks of
large capital company and 10 stocks of mid capital comapny. In this type of portfolio
always high risk and high return condition happens.
Type of Portfolio Expected Return

Conservative Portfolio 12-14%
Moderate Portfolio 14-16%
Aggressive Portfolio 18% or above
Source: Provided by the company
CONSERVATIVE:

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MODERATE:

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AGGRESSIVE:

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CUSTOMER PREFERENCE:

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Types of Portfolio No. Of client

Conservative 12
Moderate 35
Aggressive 13
Types of Portfolio
13 12
35
Cons ervative Moderate Aggres s i ve
Returns from Investment Assets:

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Returns Last 5 years
15.67%
10.54%
57.28%
16.50%
Equi ty Gol d PPF Bank Depos i ts
Returns Last 10 years

26.33%
33.80%
25.18% 14.69%
Equi ty Gol d PPF Bank Depos i ts
A comparison between Investment Products:

Source: http://www.moneycontrol.com/

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Interpretation:
The above diagrams proves that equities have outperformed all other popular assets in the
last five and ten years.It is also important to note that the Sensex is not a static value and its
composition continues to change.
A. To understand the benefits of investing in Equities?
There are both short term and long term benefits of investing in Equities.It depends on the
individual as to how much one should invest according to one’s personal goals,aspirations
and risk appetite.There is risk attached to every investment product and therefore it is
known that stocks involves risk. Building an Equity portfolio intelligently is important as it
is the key to build up for the future. Beginning early with equities is advisable but factors
like time horizon,risk profile and standard of living should be kept in mind before
investing.Equities are good for long term financial goals and therfore starting early reaps
more return like shown in the picture below.
EQUITY ALLOCATION:

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Interpretation:
The returns for each individual or company if started early has more return as compared to
starting late. From the example shown above the man who is 30years old yields more
Equity allocation as compared to the older men who are of 40 years and 50 years. In simple
words investing in equities yield high returns in the long run.
B. Finding the information that helps investors to decide where to invest
C. To find which Equities to invest by using secondary data.
Brokerage charges of different companies.
 Kotak Securities
Features Charges
A/C opening 750/-
Brokerage (Intraday) 3 Paisa
Brokerage (DELIVERY) 30%
AMC charges 350/- per annum
Scheme NA
 ICICI Direct
Features Charges
A/C opening 975/-
Brokerage (Intraday) .05%for single trade
Brokerage (DELIVERY) .5
AMC charges
Scheme If client is an present employee of to 200
NSE or BSE listed companies or an
employee of ICICI so A/C charges is 1/-
 Sherkhan
Features Charges
A/C opening Free
Brokerage (Intraday) 0.5
Brokerage (DELIVERY) 0.25
AMC charges 400/- per annum
Scheme If keeps margin money of 2,00,000 than
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Intraday= 0.30
DELIVERY =.15%
 HDFC
Features Charges
A/C opening 999
Brokerage (Intraday) 0.05
Brokerage (Delivery) 0.5
AMC charges
1-10 transaction 750
10-25 500
25< 300
Scheme IF extra 2000 submitted there will be no
charges up to DELIVERY 20,00,000
OR if 5999 submitted extra brokerage
charges as following
DELIVERY = 0.25%
Intraday= 0.025%
 Zerodha
Features Charges
A/C opening 750/-
Brokerage (Intraday) 20/-or 0.1 (D)/ 0.01(I) whichever is less
Brokerage (DELIVERY)
AMC charges 400/- included in A/c Opening charges
Scheme NA
Analysis and interpretation

There are three ways of earning money:
 Income from salary
 Income from house/property
 Profit and gains of business or profession
 Capital gain
o Equity capital gain
o Debt capital gain
 Other sources

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In earlier days, managing money was not so difficult - high interest rates, assured returns
schemes, government sponsored retirement benefits, few financial products, a strong joint
family system, a modest lifestyle and cost of living - all made it simple for a common man
to manage his money without any external expertise.
Today a considerable percentage of urban India now has a higher household income and
disposable income. Interest rates on debt instruments have fallen from as high as 12% in
the 90’s to 7-8% today whereas inflation is also in the same range.
The cost of living and aspirations have gone up putting pressure on income, which has to
generate the best return under the given circumstances. People have scarcity of time in
managing their hard earned money.
This is where financial planning as an approach to managing personal finances helps an

individual to fulfill life’s numerous goals with available resources.
Need of financial planning:

Financial planning can achieve the following for the clients:
 Organize finances
 Improve cash flows
 Lower personal income tax
 Plan for retirement
 Plan for education services
 Improve investment performances
 Lower investment risk
 Reduced insurance costs
 Implement various recommendations

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The five primary stages of a business cycle are:
1. Recession
2. Recovery
3. Early Expansion
4. Late Expansion
5. Slowing into Recession
1. Recession
The bottom stage of the cycle is described as the recession stage. It is characterized as the
stage ahead of recovery and in this stage, the RBI will expand the money supply in order to
stimulate growth.The attractive investment optionsin this stage include investments such as
commodities and stocks.
2. Recovery
The recovery stage is characterized as the stage after recovery.At this stage the economy
starts to recover after the recession; the RBI moves to stimulate the economy begin to have
an affect. In this stage, attractive investment options include investments such as cyclical
investment and commodities.
3. Early Expansion
The early expansion stage is a continuation of the recovery stage, where the recovery
begins to gain momentum. In this stage, attractive investment opportunities include
investments in the overall stock market and real estate.
4. Late Expansion
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The late expansion stage continues on after the early expansion stage. In this stage the
expansion momentum continues and investor confidence is strong. Good investment
opportunities in the late expansion stage include investments in bonds and interest
sensitive investment.
5. Slowing into Recession
This stage occurs after the expansion stage and this is the stage where the economy begins
to show signs of slowing down and even turning negative. In this stage, best investment
options include investments in bonds and interest sensitive investments.
It is important to narrow within the group after choosing the industry group. An investor
would need to narrow the list of companies before starting to a more detailed analysis.
Investors are usually interested in finding the leaders and the innovators within a group.
 The first task is to identify the current business and competitive environment within
a group as well as the future trends.
 How do the companies rank according to market capital, product position and
competitive advantage?
 Who is the current leader and how will changes within the sector affect the current
balance of power?
 What are the barriers to entry?
Therefore a comparative analysis of the competition within a sector will help identify those
companies with an edge.Before investing ,knowing a particular company’s industry or
industries is very important so as to generate revenues from equity investment.Each sector
determines the returns in Equity investment.
 Industry analysis should cover the following aspects namely:
o Nature of Competition
o Company’s Market Capital

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o Labor Conditions
o Regulatory Conditions
o Price elasticity of Demand and Supply
o Sensitive nature of demand to economic conditions
 Company analysis
The different types of information to be gathered for company analysis includes financial
statement data and related financial disclosures, major news items in recent years,position
and market capitalization in industry,company’s life cycle,international investments
etc.Some of the financial statements and disclosures required for getting information are
Balance sheet, Income Statement,Statement of Cash Flows,Statement of Stock Holder’s
Equity and Auditor’s Report.The tools used to analyse company’s financial information
are:
o Financial Ratio Analysis
It provides information on the company’s ability to meet its short-term obligations

in its day to day transactions.
 Current Ratio
 Quick Ratio
 Solvency Ratio
 Debt Equity Ratio
Liquidity and Solvency Ratios of the Five Major Players are:
COMPANY’S NAME CURRENT RATIO LIQUID Debt Equity Ratio

(2013) RATIO(2013) (2013)
=current =quick =(External Equities/
assets/current assets/current Internal Equities)

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liabilities liabilities
1. HDFC 2.17 2.93 4.35
2. IDFC 2.63 3.53 2.98

3. SHRI RAM 2.2 3.03 3.22
TRANSPORT
4. LIC HOUSING(2012) 4.74 5.88 8.42
5. M& M FINANCIALS 1.6 2.32 4.4
 Profitability Ratios:
The term profitability means the profit earning capacity of any business activity.
Profitability is used to measure the overall efficency or performance of a business.
Some important profitability ratios are:
 Gross Profit Ratio
 Net Profit Ratio
 Earning Per share Ratio
Profitability Ratios of the Five Major Players are:

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COMPANY’S NAME Gross Profit Net Profit Earning Per Share

Margin(2013) Margin(2013) Ratio(2013)
=(gross profit/net =(net profit after =(net profit after tax and
sales )*100 tax/net sales ) preference dividend/no.
*100 of equity shares)
1. HDFC 96.6% 22.92% 31.35
2. IDFC 91.71% 22.69% 11.65
3. SHRI RAM 74.42% 20.72% 59.98

TRANSPORT
4. LIC 93.57% 14.89% 18.11

HOUSING(2012)
5. M& M 32.89% 22.31% 15.1
FINANCIALS
o Cash Flow Analysis
Before investing, analysing the three cash flows of a company namely Cash Flows from
Operating Activities,Cash Flows from Investing Activities,Cash Flows from Financing
Activities helps in evaluating the company’sfinancial health and to predict the future cash
flows.
o Common Size Analysis
The analysis of financial statement items through comparisons among the financial
statement or market data is known as Common Size Analysis.It compares each item in a
financial statement with a benchmark item and it is useful in analysing trends in
profitability and trends in investment and financing activity.

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Creating a common size statement by restating each account in a statement as a percentage

of some benchmark.
For Example:
For the Income Statement,the benchmark taken is Sales and therefore each item in the
Income Statement is restated as a percentage of Sales.Similarly for the Balance Sheet,the
benchmark is Total Assets and each item in the Balance Sheet is restated as a percentage of
Total Assets.
Common Size Analysis is a very useful tool because it allows investors to spot the trends
that would have been otherwise unnoticable.

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Chapter 6
FINDINGS, SUGGESTIONS AND CONCLUSION
FINDINGS:
 Company devides customer on the basis of their portfolio like; conservative, moderate,
aggressive. Because it makes easy to manage large number of clients.
 Once we have the knowledge of how the company fits into the economy and the
industry, we can then analyse the company’s financial position and performance using
the tools of financial ratios, cash flow analysis and common size analysis.
 In the Industry analysis,the sector rotation diagram interprets as to which sector is
performing well and this in turn will help investors to invest in these equities according
to their choices.
 The study focused on five companies that operates in same industry ie Financial
Services shows how an investor can choose a company to invest by keeping all the
information in hand. The selection of charting methods usage will depend on personal

FPB1315.115
preferences and trading or investing styles. After chosing a particular charting

methodology, it is probably best to stick with it and learn how best to read the signals.
Interchanging back and forth may cause mix-up and weaken the focus of the analysis.
 Both fundamental and technical analysis is needed to predict accurate signals for
investment in equities.
 It is advisable to always diversify stocks so that even if one sector is effected by
external or internal problems other diversified stock might help reduce loss and
maintain a balance in equity investment with less losses.
 Patience helps a lot in Equity investment because there are always ups and down in the
market and investing sensibly always gives a high return.
 Keeping updates about different companies by watching television,surfing valuable
sites and reading the technical charts always helps. Of all investment products Equity is
the riskest and at the same time the highest gainer and investing early always gives
higher return.
RECOMMENDATIONS:
 Company should Approch not only students for 500 Rs. SIP but also lower income
group like; Rikshawala, SME (small medium enterprices)
 Company should conduct financial literacy events at colleges
 Analysing all aspects of risk and return associated with equity investment is
important.
 Careful selection of stocks in different industries needs careful study prospects

and charts of the stock.

FPB1315.115
 It is vital to understand what a company does, its market and the industry in which
it operates. One imporant point is that an investor should never blindly invest in a
company.
 An investor who would like to be rational and scientific in his investment actions
has to assess a lot of information about the past performance and the expected
future performance of companies, industries and the economy as a whole before
taking investment decision.
 Fundamental analysis thus delivers an analytical structure for rational investment

decision-making.
 Fundamental analysis maintains that no one should purchase or sell a share on the
foundation of tips and rumours. The fundamental tactic calls upon the investor to
make his buy or sell verdict on the basis of a thorough analysis of the information
about the company, the industry to which the company belongs, and the economy.
This marks an informed investing.
 Even though many different charting techniques are available, one method is not
necessarily better than the other.Therfore, the data may be the same, but each
method will provide its own unique interpretation, with its own benefits and
drawbacks.
 Even though Fundamental analysis is enough for making decision in stock market,
simultaneous usage of both fundamental and technical analysis will decrease errors
in future price
CONCLUSION
 Stocks move as a group and therefore knowing a company’s business helps
investors in categorizing stocks within their relevant industry group that can make a
huge difference in the returns.As we know that the primary motive of buying a
share is to sell it subsequently at a better price. In many cases, dividends are also to
be expected.

FPB1315.115
 Thus, dividends and price changes constitute the return from investing in Equities.
Consequently, an investor would be interested to know the dividend to be paid on
the share in the future as also the future price of the share. These values can only be
estimated and not foretold with certainty. These values are initially determined by
the performance of the company which in turn is affected by the performance of the
industry to which the company belongs and the overall economic and socio-political
scenario of the country.Each share is expected to have an economic worth centered
on its present and future earning capacity and this is called its intrinsic value or
fundamental value.
 The purpose of fundamental analysis is to evaluate the present and future earning
capacity of a share based on the economy, industry and company fundamentals and
thereby assess the intrinsic value of the share. The investor can then compare the
intrinsic value of the share with the prevailing market price to arrive at an
investment decision. If the market price of the share is lower than its intrinsic value,
the investor would decide to buy the share as it is underpriced. The price of such a
share is expected to move up in future to match with its intrinsic value. On the
contrary, when the market price of a share is higher than its intrinsic value, it is
perceived to be overpriced. The market price of such a share is expected to come
down in future and hence, the investor would decide to sell such a share.
 The fundamental analysis can be valuable, but it should be approached with

caution. If one is reading research written by a sell-side analyst, it is important to be
familiar with the analyst behind the report. We all have personal biases, and every
analyst has some sort of bias. There is nothing wrong with this, and the research can
still be of great value. Learning what the ratings mean and tracking the record of an
analyst before jumping to a conclusion is advisable. Corporate statements and press
releases of a company offer good information, but they should be read with a
healthy degree of scepticism to separate the facts from the spin. Press releases don’t
happen by accident; they are an important PR tool for companies. Investors should
become skilled readers to weed out the important information and ignore the hype.

FPB1315.115
 One can gain valuable insights about a company by examining its income
statement.Increase in sales offers the first sign of strong fundamentals. Rising
margins specify growing effectiveness and profitability. It is also a beneficial idea to
determine whether the company is performing in line with industry peers and
competitors.Analysis can offer great insight but if used improperly, they can also
produce false signals. Look for significant changes in revenues and costs of goods
sold to acquire a logic of the company’s profit fundamentals.
 Fundamental analysis does not provide 100% accuracy to the investor as the stock
prices are dynamic in nature. Combination of both Fundamental analysis and
Technical analysis will increases the percentage of accuracy and thus giving an idea
to the investor to invest in that stock which will yield him good returns.Last but not
the least as Equity investment is usually beneficial in the long run a careful and
sensible Fundamental analysis along with other analysis is highly recommended.
Bibilography
 www.moneycontrol.com
 http://www.basketoption.com/about-us.html
 http://en.wikipedia.org/wiki/Basket_option

FPB1315.115
 http://www.studymode.com/essays/Portfolio-Management-
1349324.html
 Dion Global Solutions Limited
 www.indiainfoline.com

FPB1315.115

A Summer Internship Project: "The Study of How Portfolio Management Has Helped To Increase in Effective Investment"

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A Summer Internship Project: "The Study of How Portfolio Management Has Helped To Increase in Effective Investment"

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SIP Program 2014 Project Report

A Summer Internship Project

“The Study of How Portfolio

Submitted in partial fulfillment of the requirement of

Academic Year: 2013-2015

SUBMITTED BY: GUIDED BY:

PANKAJ GURNANI Prof. NAGENDRA HEGDE

IBA For Academic Purpose Only Page 1 Pankaj Gurnani

Certificate from Institution

This is to certify that, Mr. Pankaj Gurnani (FPB1315.115) is a bona

This report has not been previously submitted as part of another

Dr. Subhash Sharma

IBA For Academic Purpose Only Page 2 Pankaj Gurnani

Certificate from Internal Guide

This is to certify that, Mr. Pankaj Gurnani (FBP1315.115) is a

Under my guidance, he has submitted his project titled “How

This report has not been previously submitted as part of another

Prof. Nagendra Hegde

IBA For Academic Purpose Only Page 3 Pankaj Gurnani

This is my original work and has not been previously submitted

The findings and conclusions of this report are based on my

IBA For Academic Purpose Only Page 4 Pankaj Gurnani

I take this opportunity to express gratitude to my mentor Prof.

I also express deep regards to Company mentor Mr. Preetham

I am also thankful to the Mr. Venugopal.B.S, Mr. Rishab

IBA For Academic Purpose Only Page 5 Pankaj Gurnani

Chapter 2 INDUSTRY PROFILE 22

Chapter 3 COMPANY PROFILE 32

Chapter 4 RESEARCH METHODOLOGY 42

Chapter 5 ANALYSIS AND INTERPRETATION 45

Chapter 6 FINDINGS, SUGGESTIONS AND CONCLUSION 65

IBA For Academic Purpose Only Page 6 Pankaj Gurnani

Fundamental analysis is worked on economic analysis, industry analysis and company

IBA For Academic Purpose Only Page 7 Pankaj Gurnani

IBA For Academic Purpose Only Page 8 Pankaj Gurnani

A portfolio is a collection of investments held by an institution or a private individual. In

IBA For Academic Purpose Only Page 9 Pankaj Gurnani

Two Basic Aspects of Portfolio Management:

NEED AND IMPORTANCE OF PORTFOLIO MANAGEMENT

Portfolio Management is a process encompassing many activities of investment in assets

IBA For Academic Purpose Only Page 10 Pankaj Gurnani

The Fundamental analysis includes the following phases:

IBA For Academic Purpose Only Page 11 Pankaj Gurnani

o Production and Income

STRENGTHS OF FUNDAMENTAL ANALYSIS :

IBA For Academic Purpose Only Page 12 Pankaj Gurnani

In addition to understanding the business, fundamental analysis allows investors to

Financial planning process

It is a six step process:

IBA For Academic Purpose Only Page 13 Pankaj Gurnani

2 Data gathering & Goal setting :

• Income & Expenditure Statement:

3 Goal setting: Life goals & financial objectives

Major goals in Life:

IBA For Academic Purpose Only Page 14 Pankaj Gurnani

Minor goals in life:

■ Corpus for start-up

■ Other big purchases

Other financial goals:

■ Reducing tax outgo by tax planning

■ Protection of assets & life

■ Being debt free

1. Identification of financial problems and needs: