ON
SUBMITTED TO
SUBMITTED BY:
KASTUBANAND BISHT
(BATCH 2008-2010)
DECLARATION
I kastubanand Bisht hereby declare that the project entitled “Portfolio Analysis” with reference to
submitted in partial fulfillment of the degree in master of business administration is my own work. I
further declare that all the facts and figures furnished in this project report are the outcome of my
This is the original report and is not the copy of any other report.
Kastubanand Bisht
I take this opportunity to express my deep sense of gratitude towards all the persons who
helped me through their guidance and cooperation to complete the project successfully. It
I would like to thank Mr. P.K Patankar (Sr. Manager Accounts) for guiding me in this
project and giving me necessary inputs. Without his constant and sincere support the
Kastubanand Bisht
Bibliography
Appendix
Chapter 1
INDUSTRY PROFILE
INTRODUCTION
Share khan is the retail broking arm of SSKI, an organization with more than eight
SSKI, a veteran equities solutions company with over 8 decades of experience in the
Those who feel comfortable dealing with a human being and would rather visit a brick-
and-mortar outlet than talk to a PC, would be glad to know that Sharekhan offers the
facility to visit (or talk to) any of its share shops across the country. In fact Sharekhan
runs India's largest chain of share shops with over hundred outlets in more than 80 cities!
Sharekhan is also about focus. Sharekhan does not claim expertise in too many things.
Share khan’s expertise lies in stocks and that's what he talks about with authority. So
when he says that investing in stocks should not be confused with trading in stocks or a
spoken with years of focused learning and experience in the stock markets. And these
wealth of content that will help you stalk the right shares. Sharekhan is one of India’s
If experience their language, presentation style, content or for that matter the online
trading facility, one will find a common thread; one that helps you make informed
decisions and simplifies investing in stocks. The common thread of empowerment is what
Apart from Sharekhan, the SSKI Group also comprises of institutional broking and
corporate finance. The institutional broking division caters to domestic and foreign
institutional investors, while the corporate finance division focuses on niche areas such as
infrastructure, telecom and media. SSKI has been voted as the Top Domestic Brokerage
House in the research category, twice by Euro money survey and four times by Asia
money survey.
Chapter 2
ORGANISATIONAL
PROFILE
SSKI – CORPORATE STRUCTURE SSKI Securities Pvt. Ltd.
Owns 56% of Owns 50.5% of SSKI INVESTOR SERVICES PVT. LTD. SSKI
Retail broking arm of the group Investment Banking arm of the group
18.5% HSBC Private Equity India Fund Ltd 49.5 % Morakhia family
Sharekhan is the retail broking arm of SSKI, an organization with more than eight
SHAREKHAN’S SERVICES
1. ONLINE SERVICES
a. Online Home
b. First Step
c. Classic Account
d. Speed Trade
e. Dial N Trade
2. SHARE SHOPS
3. MUTUAL FUNDS
4. COMMODITY FUTURES
5. PORTFOLIO MANAGEMENT
ONLINE SERVICES
With a Sharekhan online trading account, one can buy and sell shares in an instant!
One can choose the online trading account that suits your trading habits and preferences -
the Classic Account for most investors and Speed trade for active day traders. Classic
Account also comes with Dial-n-Trade completely free, which is an exclusive service for
A unique program designed especially for those who have never invested in shares.
Through First Step, Sharekhan informs and handholds one to become a stock market
The Sharekhan First Step is a brand new program designed especially for those who are
new to investing in shares. All one has to do is open a Sharekhan First Step account
Sharekhan as a guide
Been in the business for over 80 years, Sharekhan can provide one with the assistance and
the advice like no one else could. It has created special information tools for its
customers, to help answer any queries one may have. All one has to do is sign up to
receive all the tools one need to understand the markets and invest in shares! From the
right tools and right information at disposal to the host of services besides training, one
In the complex world of investing in shares in India, interested beginners didn't have any
place they could start out from. This is why Sharekhan started the First Step program - to
assist and guide new investors when they take their first steps into the world of investing
in shares. This program is explicitly designed for beginners. One will not feel
unintelligent when asking questions like "Who owns the Stock Market?" or "What is a
stock-split?" since our people are trained to assist those taking their first step in the
market.
At Sharekhan we understand that every investor's needs and goals are different. Hence we
provide a comprehensive set of research reports, so that you can the right investment
Analysis Before, During (live market updates) and After market timings
Soon after you sign up for the First Step program, we'll provide you (along with a group
of other customers) a "Tutorial Session" at one of our Share Shops in your city. This
market
How to use our Dian-n-Trade services to execute trades and get investment advice
How to take assistance of our customer service team via phone, email and chat
Our sales executive will fix an appointment with the customers, and meet them to
Sharekhan has a team of trained professional executives ready to answer any queries one
may have about products and services help him troubleshooting any problems one may
One can call customer service number (Toll-Free) for any kind of help related to
This account enables you to buy and sell shares through website. Customer’s get features
like
e) Real-time portfolio tracking with price alerts and, of course, the assurance of secure
transactions.
Streaming Quotes
Personalized Market Scan with your own customized stock ticker!
MUTUAL FUNDS
Mutual Fund
objective by an asset management company (AMC). The AMC offers to invest the money
regular income or grow the money long term. Investors buy a scheme if it fits in with
their investment goals, like getting a regular income now or letting the money accumulate
over the long term. Investors pay a small fraction of their total funds to the AMC each
COMMODITIES FUTURES
As part of this process, several capital market reforms were carried out by the capital
market regulator Securities and Exchange Board of India. One such measure was to allow
shot in the arm of the capital market and volumes soared within three years. The success
of the capital market reforms motivated the government and the Forward Market
Commission (the commodities market regulator) to kick off similar reforms in the
commodities market. Thus almost all the commodities were allowed to be traded in the
futures market from April 2003. To make trading in commodity futures more transparent
and successful, multi-commodity exchanges at national level were also conceived and
these next generation exchanges were allowed to start futures trading in commodities on-
line.
Commodities exchanges have seen a surge in commodity futures volumes in the last few
months. This rise in volumes has been led by bullion (gold and silver) trading. Today a
whole lot of commodities are available for trading in futures and the list is getting bigger
by the day. No wonder then that the commodity futures market is being viewed as a
banks et al.
DEMAT SERVICES
Dematerialization and trading in the demat mode is the safer and faster alternative to the
physical existence of securities. Demat as a parallel solution offers freedom from delays,
thefts, forgeries, settlement risks and paper work. This system works through depository
participants (DPs) who offer demat services and the securities are held in the electronic
corporate investors. It has a team of professionals and the latest technological expertise
Value and thereby create for the company is now considered the principal objective of a
business firm and in achieving such objective, proper and efficient management of
finance is quite essential. The four most vital and important aspects of portfolio
management are:
1. portfolio risk
2. expected return
4. liquidity
Hence, every business firm should devote considerable attention towards the effective as
and return are vital, to a great extent in creating value of the company.
Chapter 4
LITERATURE REVIEW
Literature Review
Model also has empirically testable implications for trading behavior: in response to a
change in idiosyncratic risk the Keynesian portfolio always exhibits more trading than the
Markowitz portfolio, while the opposite is true for a change in systematic volatility. In the
equilibrium version of the model with heterogeneous agents who are familiar with
different assets, we find that the risk premium of stocks depends on both systematic and
idiosyncratic volatility, and that the equity risk premium is significantly higher than in the
Viju & Baourakis March 19, 2009; last revised: September 16, 2009
The Bucharest Stock Exchange, with all its economical, social and political problems and
sudden ups and downs, is a good reflection of the transition period that emerging
that makes the trade-off between risk and return even more difficult to achieve. The
objective is set in order to assess the market behavior: employing the Markowitz model,
to construct a set of optimum portfolios under a number of varying constraints and to
Anton Abdulbasah Kamil & Chin Yew Fei - Journal of Statistics & Management
This paper focused on Portfolio Analysis that set-up among 15 selected stocks traded in
Kuala Lumpur Stock Exchange (KLSE). Markowitz model (1959) is the main idea which
used to build up the optimal portfolio in order to achieve the objective of maximizes the
return and minimizes the risk. There are few scenarios are considered in constructing the
optimal portfolio, such as risk-free, taxes, transaction cost and benchmark portfolio
Zhidong Bai, Huixia Liu and Wing-Keung Wong - RMI Working Paper No. 09/02
April 13, 2009
This paper extends the work of Markowitz (1952), Korkie and Turtle (2002) and others
by first proving that the traditional estimate for the optimal return of self-financing
portfolios always overestimates from its theoretic value. We further demonstrate the
Abstract: Nowadays investors have a large number of choices of how they can invest
their money. One of their biggest challenges is how to allocate their portfolio between
equities, bonds and properties. It can only be shown afterwards, which was the best
future.
Chapter 5
RESEARCH
METHODOLOGY
OBJECTIVES OF THE STUDY
5. The objective is to determine the percent to invest in each asset while minimizing
The present study has been conducted on portfolio diversification on two groups
including five companies each.
• Empirical research
DATA COLLECTION
• Secondary data - The secondary data are those which have already collected
and stored. Secondary data easily get those secondary data from records,
journals, annual reports of the company etc. It will save the time, money
and efforts to collect data. Secondary data also made available through
trade magazines, balance sheets, books etc.
Harry Markowitz is generally acknowledged as the father of modern portfolio theory after
publishing his seminal paper in 1952, for which he (jointly) received a Nobel Prize in
1990. Markowitz (1952) and Tobin (1958) showed that it was possible to identify the
and an appropriate covariance matrix of share returns. This research endeavours to apply
whether an optimal portfolio can be identified and used as an effective trading rule.
Weekly data over 11 years on the top 40 JSE listed companies was analysed to construct
the study found that the trading strategy significantly outperformed the market in the
period under review Most people agree that holding two stocks is less risky than holding
one stock.
For example:-
Holding stocks from textile, banking and electronic companies is better than investing all
the money on the textile companies stock. But building up the optimal portfolio is very
portfolio expected return for a given amount of portfolio risk, or equivalently minimize
risk for a given level of expected return, by carefully choosing the proportions of various
assets. Although MPT is widely used in practice in the financial industry and several of
its creators won a Nobel Prize for the theory, in recent years the basic assumptions of
aim of selecting a collection of investment assets that has collectively lower risk than any
individual asset. That this is possible can be seen intuitively because different types of
assets often change in value in opposite ways. For example, when prices in the stock
market fall, prices in the bond market often increase, and vice versa]. A collection of both
types of assets can therefore have lower overall risk than either individually. But
diversification lowers risk even if assets' returns are not negatively correlated—indeed,
More technically, MPT models an asset's return as a normally distributed (or more
deviation of return, and models a portfolio as a weighted combination of assets so that the
different assets whose returns are not perfectly positively correlated, MPT seeks to reduce
the total variance of the portfolio return. MPT also assumes that investors are rational and
Portfolio theory in the shape of Markowitz Theory makes the following assumptions
concerning the investment market and investors behavior within those markets. We
2. All investors have the same expected single period investment horizon.
3. All investors are risk-adverse, that is they will only accept greater risk if
4. Investors base their investment decisions on the expected return and risk
5. All markets are perfectly efficient (e.g. no taxes and no transaction cost).
Risk and expected return
MPT assumes that investors are risk averse, meaning that given two portfolios that offer
the same expected return, investors will prefer the less risky one. Thus, an investor will
investor who wants higher expected returns must accept more risk. The exact trade-off
will be the same for all investors, but different investors will evaluate the trade-off
rational investor will not invest in a portfolio if a second portfolio exists with a more
favorable risk-expected return profile – i.e., if for that level of risk an alternative portfolio
returns.
• Portfolio volatility is a function of the correlations ρij of the component assets, for
In general:
• Expected return:
• where Rp is the return on the portfolio, Ri is the return on asset i and wi is the
weighting of component asset i (that is, the share of asset i in the portfolio).
Where ρij is the correlation coefficient between the returns on assets i and j. Alternatively
Portfolio return =
10 COMPANIES PROFILE
ACC LTD.
ACC (ACC Limited) is India's foremost manufacturer of cement and concrete. ACC's
operations are spread throughout the country with 16 modern cement factories, more than
40 Ready mix concrete plants, 20 sales offices, and several zonal offices. It has a
workforce of about 10,000 persons and a countrywide distribution network of over 9,000
dealers.
AIRTEL COMPANY
all the 22 licensed jurisdictions (also known as Telecom Circles) in India, and in Srilanka.
whom 130,616,487 subscribe to our GSM services and 3,092,009 use our Telemedia
Services either for voice and/or broadband access delivered through DSL. We are the
largest wireless service provider in the country, based on the number of customers as of
April 30, 2010. We offer an integrated suite of telecom solutions to our enterprise
India’s second largest pharmaceutical firm Cipla Ltd, edged out the multinational giant
GlaxoSmithKline which was reigning supreme in the country for long, in terms of drug
percent jump in net profit for the quarter ended on March 31 2006, driven by growth in
In the fourth quarter, Cipla posted a net profit of 1.90 billion rupees. Net sales grew 63
percent to 8.7 billion rupees. Cipla's exports in the quarter grew 63.7 percent while
domestic sales rose 56.4 percent. Cipla anticipates 15 to 20 percent growth in this year.
HDFC BANK
Bank Ltd, was established in the year 1994, as a part of the liberalization of the Indian
Banking Industry by Reserve Bank of India (RBI). It was one of the first banks to receive
an 'in principle' approval from RBI, for setting up a bank in the private sector. The bank
was incorporated with the name 'HDFC Bank Limited', with its registered office in
Mumbai. The following year, it started its operations as a Scheduled Commercial Bank.
Today, the bank boasts of as many as 1412 branches and over 3275 ATMs across India
Infosys Technologies
Infosys, India's No. 2 software services exporter, Infosys customers are happy too: 19 out
of 20 come back to the Bangalore Company with repeat orders. Now, Infosys
has its eye on China. Of the 12,600 people it will hire this year; nearly 1,000 will
ITC COMPANY
ITC is one of India's foremost private sector companies with a market capitalisation of
over US $ 22 billion and a turnover of US $ 6 billion.* ITC is rated among the World's
Best Big Companies, Asia's 'Fab 50' and the World's Most Reputable Companies by
among India's Most Valuable Companies by Business Today. ITC ranks among India's
`10 Most Valuable (Company) Brands', in a study conducted by Brand Finance and
published by the Economic Times. ITC also ranks among Asia's 50 best performing
WIPRO LTD
Wipro Technologies is the No.1 provider of integrated business; technology and process
delivering technology-driven business solutions that meet the strategic objectives of our
clients. Wipro has 40+ ‘Centers of Excellence’ that create solutions around specific needs
quality frameworks and service delivery innovation. Wipro is the World's first CMM
Level 5 certified software services company and the first outside USA to receive the
Mahindra Group is one of the largest corporate groups of India. It is a US $4.5 billion
conglomerate with employee strength of over 40,000. The group has diverse business
hospitality, and financial services. Mahindra Group has global presence and it is ranked
amongst Forbes Top 200 list of the World's Most Reputable Companies and in the Top 10
list of Most Reputable Indian companies. The origins of Mahindra Group can be traced
back to October 2, 1945 when Mahindra brothers J.C. Mahindra & K.C. Mahindra joined
hands with Ghulam Mohammad, and Mahindra & Mohammad was set up as a franchise
for assembling jeeps from Willys, USA. After India's independence in 1947, Mahindra &
Mohammad changed its name to Mahindra & Mahindra. Ghulam Mohammad migrated to
Pakistan post-partition and became the first Finance Minister of Pakistan. Since then,
Mahindra Group has gone from strength to strength and today it has evolved into a giant
group.
Chapter 6
ANALYSIS OF
DATA
Comparative analysis of two portfolios taking a group of five companies
from the above table
Details of Portfolio A
Denoted as Portfolio A
Details of Portfolio B
Denoted as Portfolio B
Beneficial.
We found that Portfolio Risk can be reduced by the simplest kind of Securities.
Portfolio.
We found that level of risk exposure is measured with the help of the Standard
Deviation of Returns.
Suggestions
We should diversify our Investments because it helps to spread risk over many assets.
The Investor should be risk Averse because they will take risk only if they are
Sharekhan should enhance investment opportunities for the Investors through the
Portfolio.
APPENDICES
Beta, R2, Volatility and Returns of SENSEX Scrips for One Year Period
(June 2009 - May 2010)
BOOKS:
WEBSITES:
• bseindia.com
• nseindia.com
• yahoofinance.com
• investopedia.com
• networth.com
• economictimes.com
• en.wikipedia.org
• studyfinance.com