INDUSTRY INTERNSHIP REPORT

on
RISK PERCEPTION AND PORTFOLIO MANAGEMENT OF EQUITY INVESTORS

(Report submitted in partial fulfillment of the requirement for the award of

Post-Graduation Diploma in Management)
(Session-2020-2022)

Title of on Job Training (OJT)

EQUITY RESEARCH ANALYST
Name of the organization
THE MONEY ROLLER

Submitted by
LAVANGA SAIKRISHNA

TPS(B) 29-122

Faculty Guide: Corporate Guide:

Name: DR.K.S. HARISH Name: JANAK SHAH
Designation: Professor Designation: Technical Analyst

Siva Sivani Institute of Management

Kompally, Secunderabad-50010
 INDUSTRY INTERNSHIP REPORT
on
RISK PERCEPTION AND PORTFOLIO MANAGEMENT OF EQUITY INVESTORS

(Report submitted in partial fulfillment of the requirement for the award of

Post-Graduation Diploma in Management)
(Session-2020-2022)

Title of on Job Training (OJT)

EQUITY RESEARCH ANALYST
Name of the organization
THE MONEY ROLLER

Submitted by

LAVANGA SAIKRISHNA

TPS(B) 29-122

Faculty Guide: Corporate Guide:

Name: DR.K.S. HARISH Name: JANAK SHAH

Designation: Professor Designation: Technical Analyst
Signature of the Faculty Guide

Siva Sivani Institute of Management

Kompally, Secunderabad-50010

2
3
 DECLARATION

I Mr, LAVANGASAIKRISHNA declare that this project titled “RISK PERCEPTION AND
PORTFOLIO MANAGEMENT OF EQUITY INVESTORS” is the original work done by
me under the guidance of DR.K.S HARISH PROGRAM CHAIR (Dept), Siva Sivani Institute
of Management, Secunderabad.

I further declare that it is the original work made by me as a part of my Post Graduate Diploma
in Management.

Date: Signature of the student:

Place: Name of the student:
Roll No:

4
 ACKNOWLEDGEMENTS

I would like to take this opportunity to extend my gratitude to all those who have helped me
in completion of my project report and made my working on the project comfortable. Firstly,
I would like to thank Siva Sivani Institute of Management for giving me the opportunity to
work as an intern with The Money Roller, Mumbai. I would also like to extend my thanks to
The Money Roller Co ltd, that they believed in me and gave me the opportunity to work so
closely with their organization and provided me an experience of the professional world. It
gave me a platform to understand real life situations and implement all those concepts which
I had earlier come across only in textbooks as part of my course. I express my sincere
gratitude to Mr. Janak shah– Technical Analyst – The Money Roller Co. Ltd., Mumbai for
his constant support throughout the internship. I thank him for his valuable guidance which
has helped me thoroughly during the project. I would also like to convey my deep sense of
gratitude and thanks to the Faculty Guide- Dr. K.S Harish for his constant support and
feedback throughout the internship

Date: Name of the Student

Roll No
Place:

5
 TABLE OF CONTENTS

Chapter No Content Page

Number
Brief Report On Job Training 8
(OJT)
Chapter-I Introduction 9-17
Chapter-II Review of Literature 18-23
Chapter-III Research Methodology 24-27
Chapter-IV Data Analysis 28-43
Chapter-V Findings and Conclusions 44-46
References 47

6
 LIST OF TABLES

Number Title of the Table Page Number

1 Maruti Suzuki 29
2 Acc cements 29
3 HDFC bank 29
4 Reliance 30
5 Comparative returns on 30
selected scrips
6 Maruti SD 31
7 Acc SD 31
8 HDFC SD 32
9 Reliance SD 32
10 Graph of Companies risk 33
11 Correlation of Maruti &acc 34
12 Correlation of Maruti & 34
HDFC
13 Correlation of Maruthi & 35
Reliance
14 Correlation of Acc & HDFC 35
15 Correlation of Acc & 36
Reliance
16 HDFC & Reliance 36

7
1.On the Job Training (OJT)
Name of the Company: The Money Roller.
Place of the Company: Mumbai, Maharastra.
Internship duration: 2 Months0.
Title of OJT: Equity Research Analyst.

OJT LEARNINGS:
• AS an equity research analyst.
• The company has been provided training on equity research.
• They make has trained on fundamental and technical analysis.
• Global Dashboard Analysis of different countries.
• Analyzing the Market size, Macro and growth drivers, Supply demand, Product and
process, challenges, government and policies of a particular company.
• Learned how to prepare research report on business model, Chairman`s report,
Remuneration, and auditors reports of 5 years.
• Profit& loss, Ratios, Cashflow Statement analysis of a company for a period of 5
years.
• Forecasting of Profit& loss, Cashflow statement, Ratios, and Peer comparison.
• Sectoral analysis of company.
• In technical analysis their make us learn about traditional method and modern
methods.
• In traditional method they make us learn about support and resistance level and
OHLC concept.
• In modern methods they make us learn about chart patterns, candlestick patterns,
moving averages, Rsi, Fibo levels.
• This all are the indicators through which we can trade in stock market.

8
 CHAPTER -1
INTRODUCTION

9
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. 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.
Aspects of Portfolio Management:
Basically portfolio management involves
➢ 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.
➢ Reduce the risk and increase returns.

10
OBJECTIVES OF PORTFOLIO MANAGEMENT:
The basic objective of Portfolio Management is to maximize yield and minimize risk. The other
ancillary objectives are as per needs of investors, namely:
➢ Regular income or stable return
➢ Appreciation of capital
➢ Marketability and liquidity
➢ Safety of investment
➢ Minimizing of tax liability.
NEED AND IMPORTENCE OF STUDY:
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 affected to meet the changing conditions.
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.

11
 INDUSTRY PROFILE
Financial services are the economic services provided by the finance industry, which
encompasses abroad range of businesses that manage money, including credit
unions, banks, creditcard companies, insurance companies, accountancy companies, consume
rfinance companies, stockbrokerages, investmentfunds,individualmanagers,and
some government-sponsored enterprises.

History The term "financial services" became more prevalent in the United States partly as a
result of the Gramm–Leach–Bliley Act of the late 1990s, which enabled different types of
companies operating in the U.S. financial services industry at that time to merge.

Companies usually have two distinct approaches to this new type of business. One approach
would be a bank that simply buys an insurance company or an investment bank, keeps the
original brands of the acquired firm, and adds the acquisition to its holding company simply
to diversify its earnings.

Outside the U.S. (Japan), non-financial services companies are permitted within the holding
company. In this scenario, each company still looks independent and has its own customers,
etc. In the other style, a bank would simply create its own insurance division or brokerage
division and attempt to sell those products to its own existing customers, with incentives for
combining all things with one company.

Relationship to the government

The financial sector is traditionally among those to receive government support in times of
widespread economic crisis. Such bailouts, however, enjoy less public support than those for
other industries

Commercial banking services

A commercial bank is what is commonly referred to as simply a bank. The term

"commercial" is used to distinguish it from an investment bank, a type of financial services
entity which instead of lending money directly to a business, helps businesses raise money
from other firms in the form of bonds (debt) or stock (equity).The primary operations of
commercial banks include:

Keeping money safe while also allowing withdrawals when needed

• Issuance of cheque books so that bills can be paid and other kinds of payments
can be delivered by the post
• Provide personal loans, commercial loans, and mortgage loans (typically loans to
purchase a home, property or business)
• Issuance of credit cards and processing of credit card transactions and billing
• Issuance of debit cards for use as a substitute for cheques
• Allow financial transactions at branches or by using automatic teller
machines (ATMs)
• Provide wire transfers of funds and electronic fund transfers between banks
• Facilitation of standing orders and direct debits, so payments for bills can be made
automatically
12
 • Provide overdraft agreements for the temporary advancement of the bank's own
money to meet the monthly spending commitments of a customer in their current
account.
• Provide internet banking system to facilitate the customers to view and operate
their respective accounts through the internet.
• Provide charge card advances of the bank's own money for customers wishing to
settle credit advances monthly.
• Provide a check guaranteed by the bank itself and prepaid by the customer, such
as a cashier's check or certified check.
• Notary service for financial and other documents
• Accepting the deposits from customers and provide credit facilities to them.
• Sell investment products like mutual funds Etc.
The United States is the largest location for commercial banking services.
Investment banking services

• Underwriting debt and equity for the private and public sector for such entities to
raise capital.
• Mergers and acquisitions – Work to underwrite and advise companies on mergers
or takeovers.
• Structured finance – Develop intricate (typically derivative) products for high net
worth individuals and institutions with more intricate financial needs.
• Restructuring – Assist in financially reorganizing companies
• Investment management – Management of assets (e.g., real estate) to meet
specified investment goals of clients.
• Securities research – Maintain their own department that services to assist their
traders, clients and maintain a public stance on specific securities and industries.
• Broker Services – Buy and sell securities on behalf of their clients (sometimes
may involve financial consulting as well).
• Prime Brokerage – An exclusive type of bundled broker service specifically
meant to service the needs of hedge funds.
• Private banking – Private banks provide banking services exclusively to high-net-
worth individuals. Many financial services firms require a person or family to
have a certain minimum net worth to qualify for private banking service.
New York City and London are the largest centers of investment banking services. NYC is
dominated by U.S. domestic business, while in London international business and commerce
make up a significant portion of investment banking activity

13
Investment Services

Collective investment fund – A fund that acts as an investment pool so investors can put
money into a fund that will reinvest it into a variety of securities based upon their common,
outlined investment goal.

• Investment Advisory Offices – Run by registered investment advisors who

advises clients in financial planning and invests their money.
• Hedge fund management – Hedge funds often employ the services of "prime
brokerage" divisions at major investment banks to execute their trades.
• Private equity – Private equity funds are typically closed-end funds, which usually
take controlling equity stakes in businesses that are either private or taken private
once acquired. Private equity funds often use leveraged buyouts (LBOs) to
acquire the firms in which they invest. The most successful private equity funds
can generate returns significantly higher than provided by the equity markets.
• Venture capital – Private equity capital typically provided by professional, outside
investors to new, high-growth-potential companies in the interest of taking the
company to an IPO or trade sale of the business. Startup companies are typically
fueled by an angel investor.
• Family office – Investment and wealth management firm that handles a wealthy
family or small group of wealthy individuals with financial plans tailored to their
needs. Similar to private banking.
• Advisory services – These firms (or departments within a larger entity) service
clients with financial advisers who serve as both, a broker as well as a financial
consultant.
• Custody services – the safe-keeping and processing of the world's securities trades
and servicing the associated portfolios. Assets under custody in the world are
approximately US$100 trillion.
New York City is the largest center of investment services, followed by London.
Insurance

• Insurance brokerage – Insurance brokers shop for insurance (generally corporate

property and casualty insurance) on behalf of customers. Recently several
websites have been created to give consumers basic price comparisons for
services such as insurance, causing controversy within the industry.
• Insurance underwriting – Personal lines insurance underwriters actually
underwrite insurance for individuals, a service still offered primarily through
agents, insurance brokers, and stock brokers. Underwriters may also offer similar
commercial lines of coverage for businesses. Activities include insurance
and annuities, life insurance, retirement insurance, health insurance, and property
insurance and casualty insurance.
• Finance and insurance – a service still offered primarily at asset dealerships. The
F&I manager encompasses the financing and insuring of the asset which is sold
by the dealer. F&I is often called "the second gross" in dealerships that have
adopted the model
• Reinsurance – Reinsurance is insurance sold to insurers themselves, to protect
them from catastrophic losses.
•

14
Other financial services

• Angel investment networks – A group of angel investors can create their own
network to be the financial foundation for future companies.
• Credit card networking – Companies that serve as the bridge between the retailers
and the banks who issue the bank cards. The four major credit card networks
are: Mastercard, Visa Inc., American Express and Discover Financial.
• Conglomerates – A financial services company, such as a universal bank, that is
active in more than one sector of the financial services market e.g. life insurance,
general insurance, health insurance, asset management, retail banking, wholesale
banking, investment banking, etc. A key rationale for the existence of such
businesses is the existence of diversification benefits that are present when
different types of businesses are aggregated. As a consequence, economic
capital for a conglomerate is usually substantially less than economic capital is for
the sum of its parts.
• Debt resolution – A consumer service that assists individuals that have too much
debt to pay off as requested, but do not want to file bankruptcy and wish to pay
off their debts owed. This debt can be accrued in various ways including but not
limited to personal loans, credit cards, or in some cases merchant accounts.
• Financial market utilities – Organizations that are part of the infrastructure of
financial services, such as stock exchanges, clearing houses, derivative and
commodity exchanges and payment systems such as real-time gross
settlement systems or interbank networks.
• Payment recovery – Assistance in recovering money inadvertently paid to vendors
by businesses, such as by accidental duplicate payment of an invoice or failure to
return a deposit.

Financial Exports
A financial export is a financial service provided by a domestic firm (regardless of
ownership) to a foreign firm or individual. While financial services such as banking,
insurance, and investment management are often seen as domestic services, an increasing
proportion of financial services are now being handled abroad, in other financial centres, for a
variety of reasons. Some smaller financial centres, such as Bermuda, Luxembourg, and
the Cayman Islands, lack sufficient size for a domestic financial services sector and have
developed a role providing services to non-residents as offshore financial centres. The
increasing competitiveness of financial services has meant that some countries, such as Japan,
which were once self-sufficient, have increasingly imported financial services.
The leading financial exporter, in terms of exports less imports, is the United Kingdom,
which had $95 billion of financial exports in 2014. The UK's position is helped by both
unique institutions (such as Lloyd's of London for insurance, the Baltic Exchange for
shipping etc.) and an environment that attracts foreign firms; many international corporations
have global or regional headquarters in the London and are listed on the London Stock
Exchange, and many banks and other financial institutions operate there or in Edinburgh.

15
COMPANY PROFILE
The Money Roller is a Financial Research and Analytics hub. Our goal is to develop a culture
of authentic, independent and fact-based research and analysis. Our Research Culture: Today
the Indian Financial Research industry is in dire need of original researchers. What is being
provided today in the name of the research is superficial data jumbling or even quite often time
pre-decided propaganda. While working in this industry for the last few years, we have come
to realize that there is a huge scarcity of good researchers and that is due to false researching
values and faulty research methodologies. Therefore to change this status quo, we at TMR have
adopted our very own research culture where there is an emphasis on originality! Yes!!! In
TMR we believe in creating our own genuine research, our analysts deep dive into the factual
aspecs to bring out the real picture and in the process, they become experts in their domain.
The big question that came next was, where could we find out researchers with these qualities?
Where would we get researchers who carry out research in the right way? While thinking about
this problem we came to realize that we would need to train our own researchers! That too, in
their budding years! That’s the precise reason we started a set of Live Projects. During the
course of the Live Projects, young minds with their creative approach will create new
knowledge under the guidance of our industry experts!
Website: http://www.themoneyroller.com
Industries: Financial Services
Company size: 51-200 employees
Headquarters: Mumbai, Maharashtra
Type: Partnership
Founded:2014
Specialties: Financial Consultancy, Financial Literacy, Financial Mentoring, Education,
Training, Financial Markets, Investment Expertise, Macroeconomic Research, and
Microeconomic Research.

16
Research
The Money Roller was established with an aim to redefine the research culture in India. In
TMR we believe in creating our own genuine research. Our expertise lies in analyzing the
Equity (Cash & FNO), Currencies, Cross Currencies and Commodity Markets and combining
these with Inter-market Analysis. We at TMR train upcoming budding analyst and get these
young and fresh minds to do Indigenous research for our research requirement. More about
TMR Research Culture: The Money Roller’s Research Culture: Original, Hard Core, Blatant
and Genuine Research
RESEARCH APPROACH
Today the Indian Financial Research industry is in dire need of original researchers. What is
being provided today in the name of the research is superficial data jumbling or even quite
often time pre-decided propaganda. While working in this industry for last few years, we have
come to realize that there is a huge scarcity of good researchers and that is due to false
researching values and faulty research methodology. Therefore to change this status quo, in
TMR we have adopted our very own research culture where there is emphasis on originality!
Yes!!! In TMR we believe in creating our own genuine research, our analysts go as deep as
they can to bring out the real picture and in the process they become experts of their domain.
The big question that came next was, where could we find out researchers with these qualities?
Where would we get researchers who carry out research in the right way? While thinking on
this problem we came to realize that we would need to train our own researchers! That too, in
their budding years! That’s the precise reason we started a set of Live Projects. During the
course of the Live Projects, young minds with their fresh approach will create new knowledge
under the guidance of our industry experts

17
CHAPTER -2

18
REVIEW OF LITERATURE
Numerous studies and research have been conducted by various researchers and scholars of
different universities and research centers from all over the world to understand about
investor’s perception and psychology while investing in different markets. The literature
relevant to risk perception was studied to know the factors that are already been studied related
to psychology of investors and conclusions drawn by other researchers was also studied. Some
scholars concluded that there is a direct relationship between risk and investment which means
that if an investor feels that there is huge risk involved in a particular investment then he tends
to buy more of that investment, whereas some researchers argued that there is an indirect
relationship between the two. Some researchers also observed from their respective studies
that, general factors like herding, over-reaction, cognitive basis, over and under-confidence,
demographic factors, have a greater impact on investor’s behaviour in the stock market, and
also these factors influence the individual investor’s decision making in the investment
markets.
There also have been studies where researchers compared and established a relationship
between risk appetite with demographics and gender. A research done by Slovic in 1999 says
that demographics is one of the most fundamental determinants of risk perception. Scholars
like Barber and Odean (2001) in their research papers concluded that gender plays an
important role while taking risks. They were of the opinion that men take more risks than
women. Chen and Volpe (2002) also discussed about the same issue where they opined that
women are considered to have less information and interest in subjects like finance and
economy than men and hence, their confidence is low while taking any kind of financial risk.
They are also considered to be largely dependent on men for finances and hence cannot take
finance related decisions on their own. However, it is observed that these studies are much
conservative and were done in past which has very less significance in current day scenario.
A study, contradicting to the above-mentioned studies, done by Wag land in 2009 on Australian
university students, proved that gender is not a significant factor in risk-taking and it also stated
that there is no connection between the genders and financial literacy. Hence, bringing down
the curtain, it could be said that many research outputs show that men are less risk averse than
women. However, our current study tries to find out if the same is the case in present day
scenario or not.

Further more,studies have also stated that marriage also play an important role in risk taking
psychology because it is observed that single men take more risk than those who are married.
This fact is supported by a study done by Barber and Odean (2001) which indicates that
single tend to take more risks than those who are married irrespective of the gender.
However, there is not a concrete proof to support this finding. Additionally, some studies
present contradictory statements that married investors are demonstrating more aggressive
investment behaviour than single investors and they are more willing to take risk than others.
An attempt is made in the current study to find if there is any significant relationship between
marital status and investment choices of the investor.

19
Apart from demographics and gender-based studies, MacGregor, Konnce et al., did their
studies on various types of investments for which they asked financial experts to rate the risks
involved in various types of investments. The results of these two studies were comparable,
inline with each other, and found that quantitative aspects (probability of loss and volatility)
and qualitative aspects (such as worry and anxiety, and knowledge) were both significant
predictors of perceived risk. Some researchers associated investment decisions with the level
of overall education instead of only financial literacy. Hibbert, Lawrence and Prakash stated
that individuals who have more knowledge of finance are able to allocate the majority of their
investments efficiently. Finance professors are significantly more likely to invest in foreign
stock/bonds or foreign mutual funds and more likely to manage their retirement savings
portfolios actively. However, these findings also have stayed far away from talking about the
absolute results. Since the sample data could be skewed for any population, it becomes difficult
to come up with concrete proof about the relations explained above. It has also been observed
that researchers have often find it difficult to define risk tolerance level. Nevertheless,
researchers still conduct studies related to financial literacy, investment decisions and
relationship between the two. Different researchers have come up with different theories and
different results according to the demography, objective, and investment option. A scholar
concluded in his study that if we increase the knowledge and information regarding investments
in an individual then his level of risk-taking capacity also increases. And hence, it was revealed
that there is a positive relation between financial literacy and risk-taking capacity. This research
contributes to the existing literature done by eminent scholars and veterans on risk perception
in several aspects, for example, the data gathered for this research is very recent comparing to
the other reports that are mostly old. After reviewing above mentioned reports and studies it
has been identified that the direct relationship between risk tolerance and portfolio management
for the specific financial asset are not emphasised much in the reports and I shall try to
overcome the same gap.

20
ARTICLE :1
TITLE: Portfolio selection

AUTHOR: Harry Markowitz

JOURNAL: The Journal of Finance (volume 7) no1 (March 2007)

ABSTRACT:

The process of selecting a portfolio may be divided in two stages. The first stage starts with
observations and experience and ends with beliefs about the future performance of available

securities. The second stage starts with the relevant beliefs about future performance and ends
with the choice of portfolio. This paper is concerned with the second stage. We first consider
the rule that the investor does maximize discounted expected, returns. This rule is rejected both
as a hypothesis to explain, and as a maximum to guide investment behavior. We next consider
the rule that the investor does consider expected return a desirable thing and variance of return
an undesirable thing. We illustrate geometrically relations between beliefs and choice of
portfolio according to the “expected returns-variance of returns” rule.

ARTICLE:2
TITLE: Reduction of risk through portfolio management.

AUTHOR: Fisher N & Hall GR,

JOURNAL: The Economic Challenger, no12, issue46 (March2010)

ABSTRACT:

The rationale investor analyses the risks associated with the investment before investing his or
her wealth in various investment. Risk is the probability of occurrence of loss. It consists of
two components, Systematic risk and unsystematic risk. Systematic risk is the measurable part
of total risk and the techniques used in the evaluation of portfolios. Unsystematic risk is not
measurable and so it is not considered for portfolio evaluation.

21
ARTICLE :3
TITLE: Portfolio management services

AUTHOR: Mayank Patel

JOURNAL: Portfolio Organizer, the ICFAI University press, May 2009

ABSTRACT:

Portfolio management services (pms) are an established and well developed management
product in developed economics. The primary objective of PMS is to maximize returns and
minimize risks. There are certain aspects which make professional portfolio management
advantageous over a mutualfund. These include asset allocation, timing flexibility, etc. Some
people say that the number one rule of investing is ‘do not pull all of your investments in one
basket.’ Some people say that ‘you can never have too much of good’.

ARTICLE:4
TITLE: Portfolio Management Services.
AUTHOR: Dorota Maria.
JOURNAL: International Advance in Economic Research (2007).
ABSTRACT:
In today competitive world where banks and financial institutions provide number of services
which provides a customer with a wide spectrum of investment opportunities .They in order to
retain their customers provide them special services beside traditional services. The invention
of new technology and services by bank and financial institution has given the customers a
wide range of investment avenues to invest in one of the special services brought out by
objective of this program is to review the real meaning of portfolio management, its objectives
framework, responsibilities of portfolio manager and the study of various other issues related
to it such as its comparison with mutual funds with role of merchant.

22
ARTICLE:5
TITLE: Portfolio Management process.
AUTHOR: Prasanna Chandra
JOURNAL: Investment Analysis and portfolio management-2010
ABSTRACT:
Portfolio management is a complex activity which may be broken down into
following. Specification of investment objectives and constraints, the typical
objectives sought by investors are current income capital appreciation and safety
of principal. Choice of the asset mix; this is concerned with proportion of stocks
and bonds on the portfolio. Formulation of the portfolio strategy; once a certain
asset mix is chosen an appropriate portfolio strategy has to be implemented.

23
 CHAPTER-3
RESEARCH METHODOLOGY

24
Arithmetic average or mean:
The arithmetic average measures the central tendency. The purpose of
computing an average value for a set of observations is to obtain a single value, which is
representative of all the items. The main objective of averaging is to arrive at a single value
which is a representative of the characteristics of the entire mass of data and arithmetic average
or mean of a series (usually denoted by x) is the value obtained by dividing the sum of the
values of various items in a series (sigma x) divided by the number of items (N) constituting
the series.
Thus, if X1,X2……………..Xn are the given N observations. Then
X= X1+X2+……….Xn
N
RETURN
Current price-previous price *150
Previous price
STANDARD DEVIATION:
The concept of standard deviation was first suggested by Karl Pearson in 1983.it
may be defined as the positive square root of the arithmetic mean of the squares of deviations
of the given observations from their arithmetic mean In short S.D may be defined as “Root
Mean Square Deviation from Mean”

It is by far the most important and widely used measure of studying dispersions.
For a set of N observations X1,X2……..Xn with mean X,
Deviations from Mean: (X1-X), (X2-X),….(Xn-X)
Mean-square deviations from Mean:
= 1/N (X1-X)2+(X2-X)2+……….+(Xn-X)2
=1/N sigma(X-X)2
Root-mean-square deviation from mean.

25
VARIANCE:
The square of standard deviation is known as Variance.
Variance is the square root of the standard deviation:
Variance = (S.D) 2
Where, (S.D) is standard deviation
CORRELATION
Correlation is a statistical technique, which measures and analyses the degree or extent
to which two or more variables fluctuate with reference to one another. Correlation thus denotes
the inter-dependence amongst variables. The degrees are expressed by a coefficient, which
ranges between –1 and +1. The direction of change is indicated by (+) or (-) signs. The former
refers to a sympathetic movement in a same direction and the later in the opposite direction.
Karl Pearson’s method of calculating coefficient (r) is based on covariance of the
concerned variables. It was devised by Karl Pearson a great British Biometrician.
This measure known as Pearson correlation coefficient between two variables (series)
X and Y usually denoted by ‘r’ is a numerical measure of linear relationship and is defined as
the ratio of the covariance between X and Y (written as Cov(X,Y) to the product of standard
deviation of X and Y

Symbolically
r = Cov (X,Y)
SD of X,Y
= Σ xy/N = ΣXY
SD of X,Y N
Where x =X-X, y=Y-Y
Σxy = sum of the product of deviations in X and Y series calculated with reference to their
arithmetic means.

X = standard deviation of the series X.

Y = standard deviation of the series Y.

26
LIMITATION

1. In this study the number of funds considered is only two funds of HDFC and they are
dividend fund and growth fund.
2. The data collected for a period of Five year i.e2016-2020
3. In this study the statistical tools used are risk, return, average, variance, correlation.
4. In this study specific data is collected.

27
 CHAPTER-4
DATA ANALYSES

28
MARUTI SUZIKI:

D+(P1-P0)/
Year (P0) (P1) D (P1-P0) P0*150
2015-16 924 992 4.5 68 16.86
2016-17 992 520 5 -472 -42.58
2017-18 520 2060 3.5 1,040 203.50
2018-19 2060 1921 6 -189 -2.91
2019-20 1921 935 7.5 -486 -26.70
AVERAGE RETURN 28.63
Table-1
ACC CEMENTS:
D+(P1-P0)/
Year (P0) (P1) D (P1-P0) P0*150
2015-16 1574 1528 20 -46 20.72
2016-17 1528 478 20 -550 -33.50
2017-18 478 872 23 394 155.43
2018-19 872 1576 30.5 204 53.89
2019-20 1576 1686 16 60 16.58
AVERAGE RETURN 31.62
Table-2

HDFC BANK:
D+(P1-P0)/
Year (P0) (P1) D (P1-P0) P0*150
2015-16 899 1731 15 332 46.93
2016-17 1731 448 16 -783 -52.61
2017-18 448 876 16 428 156.54
2018-19 876 1695 17 269 42.71
2019-20 1695 684 19 -461 -26.26
AVERAGE RETURN 23.46
Table-3

29
RELIANCE:
D+(P1-P0)/
Year (P0) (P1) D (P1-P0) P0*150
2015-16 638 1924 16 786 184.20
2016-17 1924 620 18 -809 -43.81
2017-18 620 1589 18 474 90.07
2018-19 1589 1558 7 -31 4.20
2019-20 1558 692 8 -366 -26.59
AVERAGE RETURN 31.60
Table-4
Comparative Returns on Selected Scrips:

Rate of Return (%)

60.00
Returns
50.00
40.00
31.62 31.60
28.63
30.00 23.46
20.00
10.00
0.00
Maruti ACC HDFC Reliance
Companies

Table-5

Scrip Rate of Return (%)

Maruti 28.63
ACC 31.62
HDFC 23.46
Reliance 31.60

CALCULATION OF STANDARD DEVIATION:

Standard Deviation = Variance

Variance = 1/n (R-R)2

30
MARUTI:

Year Return (R) Avg. Return (R) (R-R) (R-R)2

2015-16 16.86 28.63 -16.77 281.37
2016-17 -42.58 28.63 -71.21 5071.44
2017-18 203.50 28.63 174.87 30578.32
2018-19 -2.91 28.63 -31.54 995.00
2019-20 -26.70 28.63 -55.33 3061.93
TOTAL 39988.07
Table-6 __
Variance = 1/n (R-R)2 = 1/5 (39988.07) = 7997.618162

Standard Deviation = Variance

= 7997.618162

= 89.43
ACC CEMENTS:

Year Return (R) Avg. Return (R) (R-R) (R-R)2

2015-16 20.72 31.62 -20.91 252.99
2016-17 -33.50 31.62 -65.17 4241.19
2017-18 155.43 31.62 73.80 5447.07
2018-19 53.89 31.62 22.27 496.04
2019-20 16.58 31.62 -20.05 226.39
TOTAL 15663.68
Table-7
Variance = 1/n (R-R)2 = 1/5 (15663.68) = 2182.73
Standard Deviation = Variance = 2182.73

= 46.18

31
HDFC BANK:

Year Return (R) Avg. Return (R) (R-R) (R-R)2

2015-16 46.93 23.46 23.47 550.79
2016-17 -52.61 23.46 -76.07 5786.30
2017-18 156.54 23.46 83.07 6901.42
2018-19 42.71 23.46 19.25 370.44
2019-20 -26.26 23.46 -49.72 2472.37
TOTAL 16081.33
Table-8
__
Variance = 1/n (R-R)2 = 1/5 (16081.33) = 3216.26

Standard Deviation = Variance = 3216.26 = 56.717

RELIANCE:

Year Return (R) Avg. Return (R) (R-R) (R-R)2

2015-16 184.20 31.60 152.59 15525.48
2016-17 -43.81 31.60 -75.42 5687.50
2017-18 90.07 31.60 58.47 3418.68
2018-19 4.20 31.60 -27.45 753.52
2019-20 -26.59 31.60 -58.20 3386.93
TOTAL 23772.16
Table-9
Variance = 1/n.(R-R)2 = 1/5 (23772.16) = 4754.42

Standard Deviation = Variance = 4754.42 = 68.95

32
DIAGRAMATIC PRESENTATION OF COMPANIES RISK

Scrip Risk

100.00 94.13
89.43

80.00 68.95
56.71
Risk (%)

60.00
46.18
Risk
40.00

20.00

0.00
Maruti ACC ICICI Reliance TCS
Companies

Scrip Risk (%)

Maruti 89.43
ACC 46.18
HDFC 56.71

Reliance 68.95

TABLE-10
CALCULATION OF CORRELATION:
Covariance (COV ab) = 1/n (RA-RA)(RB-RB)
Correlation Coefficient = COV ab/ a* b

33
MARUTI WITH OTHER COMPANIES

MARUTI (RA) & ACC (RB)

YEAR (RA-RA) (RB-RB) (RA-RA) (RB-RB)

2007 -16.77 -20.91 266.8016
2008 -71.21 -65.17 4637.777
2009 174.87 73.80 17905.9
2015 -31.54 22.27 -702.541
2016 -55.33 -20.05 832.5818
17940.52
Table-11
Covariance (COV ab) = 1/5 (17940.52) = 3588.1
Correlation Coefficient = COV ab/ a* b
a = 89.43 ; b = 46.18
= 3588/(89.43)(46.18) = 0.868

MARUTI (RA) & HDFC (RB)

YEAR (RA-RA) (RB-RB) (RA-RA) (RB-RB)

2007 -16.77 23.47 -393.672
2008 -71.21 -76.07 5417.093
2009 174.87 83.07 19527.01
2015 -31.54 19.25 -607.167
2016 -55.33 -49.72 2751.403
21694.71
TABLE-12
Covariance (COV ab) = 1/5 (21695) = 4339
Correlation Coefficient = COV ab/ a* b
a = 89.43; b = 56.71
= 4339/ (89.43) (56.71) = 0.855

34
MARUTI (RA) & RELIANCE (RB)

YEAR (RA-RA) (RB-RB) (RA-RA) (RB-RB)

2007 -16.77 152.59 -1720.92
2008 -71.21 -75.42 5370.647
2009 174.87 58.47 15224.35
2015 -31.54 -27.45 865.886
2016 -55.33 -58.20 3220.33
17960.29
Table-13

Covariance (COV ab) = 1/5 (17960) = 3592

Correlation Coefficient = COV ab/ a* b
a = 89.43; b = 68.95
= 3592/ (89.43) (68.95) = 0.582

ACC WITH OTHER COMPANIES

ACC (RA) & HDFC (RB)

YEAR (RA-RA) (RB-RB) (RA-RA) (RB-RB)

2007 -20.91 23.47 -373.288
2008 -65.17 -76.07 4953.869
2009 73.80 83.07 6181.276
2015 22.27 19.25 428.6658
2016 -20.05 -49.72 748.1954
16888.67
Table-14
Covariance (COV ab) = 1/5 (16889) = 2378
Correlation Coefficient = COV ab/ a* b
a = 46.18; b = 56.71
= 2378/ (46.18) (56.71) = 0.908

35
ACC (RA) & RELIANCE (RB)

YEAR (RA-RA) (RB-RB) (RA-RA) (RB-RB)

2007 -20.91 152.59 -1631.81
2008 -65.17 -75.42 4916.394
2009 73.80 58.47 4320.295
2015 22.27 -27.45 -616.375
2016 -20.05 -58.20 875.6534
7859.208
Table-15
Covariance (COV ab) = 1/5 (7859) = 2071
Correlation Coefficient = COV ab/ a* b
a = 46.18; b = 68.95
= 1608 / (46.18)(68.95) = 0.505

HDFC WITH OTHER COMPANIES

HDFC (RA) & RELIANCE (RB)

YEAR (RA-RA) (RB-RB) (RA-RA) (RB-RB)

2007 23.47 152.59 2407.774
2008 -76.07 -75.42 5736.688
2009 83.07 58.47 4857.337
2015 19.25 -27.45 -528.333
2016 -49.72 -58.20 2893.74
20367.21
TABLE-16
Covariance (COV ab) = 1/5 (20367) = 3073
Correlation Coefficient = COV ab/ a* b
a = 56.71; b = 68.95
= 3073/ (56.71)(68.95) = 0.785

36
CALCULATION OF PORTFOLIO WEIGHTS
Wa = b [ b-(nab* a)]
a2 + b2 - 2nab* a* b
Wb = 1 – Wa
WEIGHTS OF MARUTI & OTHER COMPANIES:
MARUTI & ACC
a = 89.43
b = 46.18
nab = 0.868
Wa = 46.18 [46.18-(0.868*89.43)]
89.43 2
+ 46.18 2
– 2(0.868)* 89.43 * 46.18
Wa = -1952.19
2960.850
Wa = -0.49
Wb = 1 – Wa
Wb = 1- (-0.49) = 1.49

MARUTI (a) & HDFC (b)

a = 89.43
b = 56.71
nab = 0.855
Wa = 56.71 [56.71- (0.855*89.43)]
89.43 2
+ 56.71 2
– 2(0.855)* 89.43 * 56.71
Wa = -1670.17
2541.35
Wa = -0.44
Wb = 1 – Wa
Wb = 1- (-0.19) = 1.44
MARUTI (a) & RELIANCE (b)
a = 89.43
b = 68.95
nab = 0.582
Wa = 68.95 [68.95 - (0.582*89.43)]
89.43 2
+ 68.95 2
– 2(0.582)* 89.43 * 68.95
37
 Wa = 1665.37
5574.37
Wa = 0.21
Wb = 1 – Wa
Wb = 1-0.21 =0.79

CALCULATION OF WEIGHTS OF ACC & OTHER COMPANIES:

ACC (a) & HDFC (b)

a = 46.18
b = 56.71
nab = 0.908
Wa = 56.71 [56.71-(0.908*46.18)]
46.18 2
+ 56.71 2
– 2(0.908)* 46.18 * 56.71
Wa = 838.09
592.75
Wa = 1.418
Wb = 1 – Wa
= 1- 1.418 = -0.418

ACC (a) & RELIANCE (b)

a = 46.18
b = 68.95
nab = 0.505

Wa = 68.95 [68.95 - (0.505*46.18)]

46.18 2
+ 68.95 2
– 2(0.505)* 46.18 * 68.95
Wa = 3196.17
3670.74
Wa =0.85
Wb = 1 – Wa = 1- 0.85 = 0.20

38
WEIGHTS OF HDFC & OTHER COMPANIES:

HDFC(a) & RELIANCE (b)

a = 56.71
b = 68.95
nab = 0.785

Wa = 68.95 [68.95-(0.785*56.71)]
56.71 2
+ 68.95 2
– 2(0.785)* 56.71 * 68.95
Wa = 1684.63
1831.184
Wa = 0.919
Wb = 1 – Wa = 1- 0.919 = 0.08

CALCULATION OF PORTFOLIO RISK:

RP = ( a*Wa)2 + ( b*Wb)2 + 2* a* b*Wa*Wb*nab

MARUTI & OTHER COMPANIES:

MARUTI (a) & ACC (b):

a = 89.43
b = 46.18
Wa = -0.49
Wb = 1.49
nab = 0.868

RP = (89.43*-0.49)2+ ( ) 2+2 *(46.18)*(-

0.49)*(1.49)*(0.868)

1920.394 = 37.68%

39
MARUTI (a) & HDFC (b):
a = 89.43
b = 56.71
Wa = -0.44
Wb = 1.44
nab = 0.855

RP = (89.43*-
0.44)2+(56.71*1.44)2+2(89.43) * *(1.44)*(0.855)

2722.28 = 52.17%
MARUTI (a) & RELIANCE (b):
a = 89.43
b = 68.95
Wa = 0.21
Wb = 0.79
nab = 0.582

RP = (89.43*0.21)2+(68.95*0.79)2+2(89.43) * *(0.79)*(0.582)

4515.475 = 67.16%

ACC & OTHER COMPANIES

ACC (a) & HDFC (b):
a = 46.18
b = 56.71
Wa = 1.418
Wb = -0.418
nab = 0.908
RP = (46.18*1.418)2+(56.71*-0.418)2+2(46.18) *(-
0.418)*(0.908)

2031.047 = 45.067%
40
ACC (a) & RELIANCE (b):
a = 46.18
b = 68.95
Wa= 0.85
Wb= 0.20
nab = 0.505
RP = (46.18*0.85)2+(68.95*0.20)2+2(46.18 * *(0.20)*(0.505)

2057.80 = 45.362%
HDFC & OTHER COMPANIES
HDFC (a) & RELIANCE (b):
a = 56.71
b = 68.95
Wa = 0.919
Wb = 0.081
nab = 0.785

RP =
(56.71*0.919)2+(68.95*0.081)2+2(56.71) * *(0.081)*(0.785)
3204.3 = 56.60%

CALCULATION OF PORTFOLIO RETURNS

Rp=(RA*WA) + (RB*WB)
Where Rp = portfolio return
RA= return of A WA= weight of A
RB= return of B WB= weight of B

41
CALCULATION OF PORTFOLIO RETURN OF MARUTI & OTHER COMPANIES:

MARUTI (A) & ACC (B):

RA= 28.63 WA=--0.49
RB=31.62 WB=1.49
Rp = (28.63*-0.49) + (31.62*1.49)
Rp = (-19.03 + 47.16)
Rp = 33.08%

MARUTI (A) & HDFC (B):

RA= 28.63 WA=-0.44
RB=23.46 WB=1.44
Rp = (28.63*0.-0.44) + (23.46*1.44)
Rp = (-17.59 + 33.78)
Rp = 21.2%
MARUTI (A) & RELIANCE (B):

RA= 28.63 WA=0.21

RB= 31.60 WB=0.79
Rp = (28.63*0.21) + (31.60*0.79)
Rp = (6.0173+24.96)
Rp = 30.97%

CALCULATION OF PORTFOLIO RETURN OF ACC & OTHER COMPANIES

ACC (A) & HDFC (B):

RA= 31.62 WA=1.418
RB= 23.46 WB= -0.418
Rp = (31.62*1.418) + (23.46*-0.418)
Rp = 44.67 - 9.68
Rp = 35%

42
ACC (A) & RELIANCE (B):
RA= 31.62 WA=0.85
RB= 31.60 WB=0.20
Rp = (31.62*0.85) + (31.60*0.20)
Rp = (26.877+4.74)
Rp = 31.617
CALCULATION OF PORTFOLIO RETURN OF HDFC & OTHER COMPANIES

HDFC (A) & RELIANCE (B):

RA= 23.46 WA=0.919
RB=31.60 WB=0.081
Rp = (23.46*0.919) + (31.60*0.081)
Rp = (21.55+2.55)
Rp = 24.15%

PORTFOLIO RETURNS & RISKS

OF THE SELECTED STOCKS

Scrip A Scrip B Portfolio Return Portfolio Risk

Maruti ACC 33.08% 37.68%
Maruti HDFC 21.2% 52.17%
Maruti Reliance 30.97% 67.16%
ACC HDFC 35% 45.06%
ACC Reliance 31.61% 45.36%
HDFC Reliance 24.15% 56.60%

43
 CHAPTER-5
Findings and Conclusion:

44
FINDINGS
Investors would be able to achieve when the returns of shares and debentures Resultant would
be known as diversified portfolio. Thus portfolio construction would address itself to three
major via, selectivity, timing and diversification. In case of portfolio management, negatively
correlated assets are most profitable. A rational investor would constantly examine his chosen
portfolio both for average return and risk.

• Individual returns on the selected stocks including Maruti, ACC, HDFC, Reliance are
28.63%, 31.62%, 23.46%, 31.60% respectively.
• Individual risks on the selected stocks including Maruti, ACC, HDFC, Reliance are
89.43%, 46.18%, 56.71%, 68.95% respectively.
• Correlation between all the companies is positive which means all the combinations of
portfolios are at good position to gain in future.
• Portfolios Returns of followed by ACC & HDFC (35%) and Maruti & ACC (33.08%)
stood on the top while Portfolio Return ns of Maruti & HDFC (21.2%) and HDFC & Reliance
(24.15) stood at the bottom.
• Portfolios Risk of Maruti (89. 3%) followed by Reliance & Maruti (67%) and Reliance
are very high while Portfolio Risks of ACC & TCS (22.61%) , Maruti & ACC (37.68%) stood
at the bottom.

45
CONCLUSIONS

Portfolio management is a process of encompassing many activities of investment assets and

securities. It is a dynamic and flexible concept and involves regular and systematic analysis,
judgment, and action. A combination of securities held together will give a beneficial result if
they grouped in a manner to secure higher returns after taking into consideration the risk
elements.

The main objective of the Portfolio management is to help the investors to make wise choice
between alternate investments without a post trading shares. Any portfolio management must
specify the objectives like Maximum returns, Optimum Returns, Capital appreciation, Safety
etc., in the same prospectus.

This service renders optimum returns to the investors by proper selection and continuous
shifting of portfolio from one scheme to another scheme of from one plan to another plan within
the same scheme.

46
BIBLIOGRAPHY
Books referred:
• Investment Analysis and Portfolio Management, written by M.Ranganathan,
R.Madhumathi published by Dorling Kindersley (India) Pvt.Ltd., 3rd Edititon.
• Investment Analysis and Portfolio Management, written by Prasanna Chandra
Published by Tata Mc.Graw-Hill, 3rd Edition.
• Security Analysis and Portfolio Management, written by V.A.Avadhani, Published by
Himayala Publishing house Pvt.Ltd.9th Revised Editon.

• Security Analysis and Portfolio Management, Published by McGraw-Hill, Written by

Punithavathi Pandian, 8th Edition.

Web-site:
• www.nseindia.com,http://www.answers.com/topics/national_stock_exchange_of_indi
a.
• www.bseindia.com,http;//www.answers.com/topics/bombay
_stock_exchange_of_india.
• www.money control.com/nifty/nse
• www.moneycontrol.com/sensex/bse
• www.iifl.com

47