Portfolio Management Service-Product Development &

Market Intelligence”.

OF

First Global Stock broking Pvt Ltd

A report submitted to Lovely Professional University

In partial fulfillment of the

Requirements for the award of Degree of

Master of Business Administration (MBA)

Submitted By:

DEEPAK SOOD

Reg No. 10808278

Department of Management
PREFACE
On the job training in business organization infuses among students a sense of critical
analysis to apply of real managerial situation, to which they are exposed. It gives them an
opportunity to apply their conceptual, theoretical and imaginative skills to the real life
situation and to evaluate the results there after.

I was lucky to have got an opportunity to work at First Global Stock broking Pvt Ltd to
get the project of my interest. I visited the concern for six weeks and prepared my project
on the topic “Portfolio Management Service-Product Development & Market
Intelligence”. I also got practical experience in the field of management.

This report is a written account of what I learnt, experienced and explored during my
summer training.

2
 ACKNOWLEDGEMENT

At the very outset, I would like to take golden opportunity of

thanking those persons without whose guidance, co-operation,
inspiration and suggestion it would have been impossible for
me to accomplish the project successfully.

First of all I would like to thank Mr.Sorabh Gupta for his kind
guidance and necessary support during the study.

I also take this opportunity to extend my heartfelt gratitude to

others who directly or indirectly helped me, by providing me
necessary information required for successful completion of the
project.

DEEPAK SOOD

3
 TABLE OF CONTENTS

• CHAPTER-1 INTRODUCTION OF SUBJECT

 THEORATICAL FOUNDATION…………………………………………....

• PORTFOLIO MANAGEMENT SERVICE

• REVIEW OF LITERATURE…………………………………………..........

• CHAPTER-2 INTRODUCTION TO THE ORGANIZATION

• . INTRODUCTION OF FIRST GLOBAL STOCK BROKING

 HISTORY……………………………………………………………….
 FEATURES……………………………………………………………..
 PMS PRODUCTS…………………………………………………….
 ACHIEVEMENTS ……………………………………………………..

• CHAPTER-3 ABOUT STOCK EXCHANGE

 HISTORY OF STOCK EXCHANGE…………………………………………………………….

 BSE……………………………………………………………………………..
 NSE…………………………………………………………………………….
 TOP 5 PMS COMPANIES IN INDIA AND THEIR PRODUCT………………………….

• CHAPTER-4 RESEARCH METHODOLOGY & ANALYSIS

 RESEARCH STUDY………………………………………………………
 RESEARCH DESIGN……………………………………………………......
 DATA COLLECTION……………………………………………………….
 LIMITATION OF THE STUDY…………………………………………....

• CHAPTER-5 FINDING AND ANALYSIS…………….

• CHAPTER-6

 SUGGESTIONS…………………………………………………………
 CONCLUSION………………………………………………………….

• APPENDIX

 QUESTIONAIRE……………………………………………………………
 ABBREVATIONS…………………………………………………………..
 GLOSSARY…………………………………………………………………
• BIBLOGRAPHY………………………………………………………….....

4
5
Executive Summary
There is growing competition between brokerage firms in post reforms India. For
investors it is always difficult to decide which brokerage firm to choose.
Research was carried out to find which brokerage house people prefer and to figure out
what people prefer whil investing in stock market.
This study suggest that people are reluctant while investing in stock and commodity
market due to lack of knowledge.
Main purpose of investment is returns and liquidity, commodity market is less preferred
by investors due to lack of awareness. The major findings of the study are interested to
invest in stock market but there is lack of awareness.
Through this report we were also able to understand what our companies (FGSB) pvt
ltd positive and strong points, on the basis of which we come to know that on what basis
of which pitching of clients can be done. We also give suggestions to our company what
improvements can be done.

Objectives of The study:

6
PRIMARY OBJECTIVE : Comparsion of PMS PRODUCTS of First Global stock
broking Pvt Ltd with other companies and product development.

The secondary objectives of the study are as follows:

1. To know about the awareness of stock brokers and share market.

2. To study about the competitive postion of various companies in competitive

market.

3. TO know about the investor’s perception about the working, role and services
provided by these pms companies .

4. To know about the problems faced by investors.

5. To know the awareness of people about PMS.

6. To study about the need of improvement in existing pms products offered by

companies.

FINDINGS & RECOMMENDATION

• According to the survey most of the customers of “First Global stock broking
Ltd” says that it is pocket friendly.

7
 • Coming to the faith 70% says Sharekhan Ltd is better than other stock broking
companies due to customer satisfaction.

• Main purpose of investment are return and liquidity.

• Investor take risk as well as return into their mind while making the investment.

• Businessmen are more interested in investment in PMS Products.

• Commodity market is less preferred by investors.

• Share market is also less preferred by high risk taking customers.

• People want to invest in PMS but they haven’t the proper knowledge.

• People are not aware of hedging .

• People pay more emphasis on brokerage than service provided by broking house.

8
 CHAPTER-1

INTRODUCTION TO THE SUBJECT

THEORATICAL FOUNDATION
INTRODUCTION
PORTFOLIO:-
In finance, a portfolio is an appropriate mix of or collection of investments
held by an institution or a private individual.The process of blending together the Board asset

9
classes so as to obtain optimum return with minium risk is called portfolio construction.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

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 return from portfolios
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 fund have developed particular techniques to optimize their portfolio holdings The
basic purpose of portfolio management is to minimise the risk and maximise the profit.

PORTFOLIO CHARACTERISTICS
Portfolio Expected Return
Portfolio Risk
Covariance
Correlation
Interpreting Correlation Coefficients

10
Exponentially Weighted Co variances
Weighted Statistics Worksheet
Portfolio Co variances
Asset Covariances with a Portfolio
Marginal Risks

Theories & Models

Some of the financial models used in the process of Valuation, stock selection, and
management of portfolios include:
Traditional Theory.
Modern portfolio theory—a model proposed by Harry Markowitz among others.
Capital asset pricing model.
Arbitrage pricing theory.
The Jensen Index.
The Sharpe Diagonal (or Index) model.
Value at risk model.
Traditional Theory:-
Acc. To this theory “investor need in terms of income and capital appreciation are
evaluated and appropriate securities are selected to meet to the needs of investor
.Basically this theory simply define that how to evaluate the entire financial plan of the
individual
This theory deals with two major decision.
Determining the objective of the portfolio
Selection of securities to be included in portfolio
This is carried on Following steps :-
Analysis the investor constraints
Formulating the objective
Selection of portfolio
Analysis of Risk and return
Diversification

11
 Modern Portfolio Theory

Modern portfolio theory is the philosophical opposite of traditional stock picking. It is the
creation of economists, who try to understand the market as a whole, rather than business
analysts, who look for what makes each investment opportunity unique. Investments are
described statistically, in terms of their expected long-term return rate and their expected short-
term volatility. The volatility is equated with “risk”, measuring how much worse than average
an investment’s bad years are likely to be. The goal is to identify your acceptable level of risk
tolerance, and then to find a portfolio with the maximum expected return for that level of risk.
Markowitz give more attention to the process of selecting the portfolio.His ideas can be
applied in selection of common stocks

Risk and return

The model assumes that investors are risk averse. This means that given two assets that
offer the same expected return, investors will prefer the less risky one. Thus, an investor
will take on increased risk only if compensated by higher expected returns. Conversely,
an investor who wants higher returns must accept more risk. The exact trade-off will
differ by investor based on individual risk aversion characteristics. The implication is that
a rational investor will not invest in a portfolio if a second portfolio exists with a more
favourable risk-return profile - i.e. if for that level of risk an alternative portfolio exists
which has better expected returns.

Mean and variance

12
It is further assumed that investor’s risk / reward preference can be described via a
quadratic utility function. The effect of this assumption is that only the expected return
and the volatility (i.e. mean return and standard deviation matter to the investor. The
investor is indifferent to other characteristics of the distribution of returns, such as its
skew. Note that the theory uses a historical parameter, volatility, as a proxy for risk,
while return is an expectation on the future .Recent innovations in portfolio theory,
particularly under the rubric of Post-Modern Portfolio Theory (PMPT), have exposed
many flaws in this total reliance on standard deviation as the investor’s risk proxy.

Portfolio Diversification

An investor can reduce portfolio risk simply by holding instruments which are not perfectly
correlated. In other words, investors can reduce their exposure to individual asset risk by
holding a diversified portfolio of assets. Diversification will allow for the same portfolio
return with reduced risk.If all the assets of a portfolio have a correlation of 1, i.e. perfect
correlation, the portfolio volatility (standard deviation) will be equal to the weighted perfectly
uncorrelated, the portfolio variance is the sum of the individual asset weights squared times
the individual asset variance (and volatility is the square root of this sum).If correlation is less
than zero, i.e. the assets are inversely correlated, the portfolio variance and hence volatility
will be less than if the correlation is 0.The lowest possible portfolio variance, and hence
volatility, occurs when all the assets have a correlation of -1, i.e. perfect inverse correlation.

Capital allocation line

The capital allocation line (CAL) is the line of expected return plotted against risk (standard
deviation) that connects all portfolios that can be formed using a risky asset and a riskless
asset. It can be proven that it is a straight line and that it has the following equation.

In this formula P is the risky portfolio, F is the riskless portfolio, and C is a combination of
portfolios P and F.

13
The efficient frontier

Efficient Frontier

Every possible asset combination can be plotted in risk-return space, and the collection of
all such possible portfolios defines a region in this space. The line along the upper edge of
this region is known as the efficient frontier (sometimes “the Markowitz frontier”).
Combinations along this line represent portfolios (explicitly excluding the risk-free alternative)
for which there is lowest risk for a given level of return. Conversely, for a given amount of risk,
the portfolio lying on the efficient frontier represents the combination offering the best possible
return. Mathematically the Efficient Frontier is the intersection of the Set of Portfolios with
Minimum Variance and the Set of Portfolios with Maximum Return.

The efficient frontier will be convex – this is because the risk-return characteristics of a
portfolio change in a non-linear fashion as its component weightings are changed. (As
described above, portfolio risk is a function of the correlation of the component assets, and thus
changes in a non-linear fashion as the weighting of component assets changes.) The efficient
frontier is a parabola (hyperbola) when expected return is plotted against variance (standard
deviation).The region above the frontier is unachievable by holding risky assets alone. No
portfolios can be constructed corresponding to the points in this region. Points below the
frontier are suboptimal. A rational investor will hold a portfolio only on the frontier.

14
The risk-free asset

The risk-free asset is the (hypothetical) asset which pays a risk-free rate - it is usually
proxied by an investment in short-dated Government securities.The return from risk free
asset is certain and risk of return is nil. The relationship between the rate of return of
risk free asset and risky asset is zero.These asset has fixed income securities.In private
institution there is chances of default in fixed income securities. The risk free asset may
be government securities, treasury bills and time deposit in banks.

Portfolio leverage

In leveraged portfolio, The investor is assumed to be investing only on the risky assets.
Riskless assets are not included in the portfolio. In leveraged portfolio investor has to
consider not only risky asset but also risk free assets. He should be able to borrow and
lend money at a given rate of interest.

The market portfolio

The efficient frontier is a collection of portfolios, each one optimal for a given amount of risk.
A quantity known as the Sharpe ratio represents a measure of the amount of additional return
(above the risk-free rate) a portfolio provides compared to the risk it carries. The portfolio on
the efficient frontier with the highest Sharpe Ratio is known as the market portfolio, or
sometimes the super-efficient portfolio; it is the tangency-portfolio in the diagram.This
portfolio has the property that any combination of it and the risk-free asset will produce a return
that is above the efficient frontier - offering a larger return for a given amount of risk than a
portfolio of risky assets on the frontier would.

Capital market line

When the market portfolio is combined with the risk-free asset, the result is the Capital Market
Line. All points along the CML have superior risk-return profiles to any portfolio on the
efficient frontier. (The market portfolio with zero cash weighting is on the efficient frontier;
additions of cash or leverage with the risk-free asset in combination with the market portfolio
are on the

15
Capital Market Line. All of these portfolio represent the highest Sharpe ratios possible.) The
CML is illustrated above, with return μp on the y-axis, and risk σp on the x-axis. One can prove
that the CML is the optimal CAL and that its equation is

Asset pricing:

A rational investor would not invest in an asset which does not improve the risk-return
characteristics of his existing portfolio. Since a rational investor would hold the market
portfolio, the asset in question will be added to the market portfolio. MPT derives the
required return for a correctly priced asset in this context.

Systematic risk and specific risk

Specific risk is the risk associated with individual assets - within a portfolio these risks can be
reduced through diversification (specific risks “cancel out”). Systematic risk, or market risk,
refers to the risk common to all securities - except for selling short as noted below, systematic
risk cannot be diversified away (within one market). Within the market portfolio, asset specific
risk will be diversified away to the extent possible. Systematic risk is therefore equated with the
risk (standard deviation) of the market portfolio .Since a security will be purchased only if it
improves the risk / return characteristics of the market portfolio, the risk of a security will be
the risk it adds to the market portfolio

. In this context, the volatility of the asset, and its correlation with the market portfolio, is
historically observed and is therefore a given (there are several approaches to asset pricing that
attempt to price assets by modelling the stochastic properties of the moments of assets’ returns
- these are broadly referred to as conditional asset pricing models). The (maximum) price paid
for any particular asset (and hence the return it will generate) should also be determined based
on its relationship with the market portfolio.
Systematic risks within one market can be managed through a strategy of using both long
and short positions within one portfolio, creating a “market neutral” portfolio.

16
Security characteristic line

The security characteristic line (SCL) represents the relationship between the market return
(rM) and the return ri of a given asset i at a given time t. In general, it is reasonable to assume
that the SCL is a straight line and can be illustrated as a statistical equation:

where αi is called the asset’s alpha coefficient and βi the asset’s beta coefficient.

Capital asset pricing model

The Capital Asset Pricing Model (CAPM) is a model that provide framework to determine the
required rate of return on an asset and indicates the relationship between return and risk on an
asset. In CAPM theory, the required rate return of an asset is having a liner relationship with
asset beta value that undiversifiable or systematic risk.

Capital Asset Pricing Model:

r = Rf + beta x ( Km - Rf )

where
r is the expected return rate on a security;

Rf is the rate of a “risk-free” investment, i.e. cash;

Km is the return rate of the appropriate asset class.

Beta measures the volatility of the security, relative to the asset class. The equation is saying
that investors require higher levels of expected returns to compensate them for higher expected
risk. You can think of the formula as predicting a security’s behavior as a function of beta:
CAPM says that if you know a security’s beta then you know the value of r that investors
expect it to have.

17
The market portfolio:-

An investor might choose to invest a proportion of his or her wealth in a portfolio of risky
assets with the remainder in cash - earning interest at the risk free rate (or indeed may
borrow money to fund his or her purchase of risky assets in which case there is a negative
cash weighting). Here, the ratio of risky assets to risk free asset does not determine
overall return - this relationship is clearly linear. It is thus possible to achieve a particular
return in one of two ways:By investing all of one’s wealth in a risky portfolio,

or by investing a proportion in a risky portfolio and the remainder in cash (either

borrowed or invested).
For a given level of return, however, only one of these portfolios will be optimal (in
the sense of lowest risk). Since the risk free asset is, by definition, uncorrelated
with any other asset, option 2 will generally have the lower variance and hence be
the more efficient of the two.

This relationship also holds for portfolios along the efficient frontier: a higher return portfolio
plus cash is more efficient than a lower return portfolio alone for that lower level of return. For
a given risk free rate, there is only one optimal portfolio which can be combined with cash to
achieve the lowest level of risk for any possible return. This is the market portfolio.

Assumptions of CAPM:-
All investors have rational expectations.
There are no arbitrage opportunities.

18
Returns are distributed normally.
Fixed quantity of assets.
Perfectly efficient capital markets.
Investors are solely concerned with level and uncertainty of future wealth
Separation of financial and production sectors.
Thus, production plans are fixed.
Risk-free rates exist with limitless borrowing capacity and universal access.
The Risk-free borrowing and lending rates are equal.
No inflation and no change in the level of interest rate exists.
Perfect information, hence all investors have the same expectations about security
returns for any given time period.

The Security Market Line

Securities market line

The SML essentially graphs the results from the capital asset pricing model (CAPM) formula.
The x-axis represents the risk (beta), and the y-axis represents the expected return. The market
risk premium is determined from the slope of the SML.

The relationship between β and required return is plotted on the securities market line (SML)
which shows expected return as a function of β. The intercept is the risk-free rate available for
the market, while the slope is E(Rm − Rf). The securities market line can be regarded as
representing a single-factor model of the asset price, where Beta is exposure to changes in
value of the Market. The equation of the SML is thus:

19
It is a useful tool in determining if an asset being considered for a portfolio offers a reasonable
expected return for risk. Individual securities are plotted on the SML graph. If the security’s
risk versus expected return is plotted above the SML, it is undervalued since the investor can
expect a greater return for the inherent risk. And a security plotted below the SML is
overvalued since the investor would be accepting less return for the amount of risk assumed.

Comparison with arbitrage pricing theory

The SML and CAPM are often contrasted with the arbitrage pricing theory (APT), which holds
that the expected return of a financial asset can be modeled as a linear function of various
macro-economic factors, where sensitivity to changes in each factor is represented by a factor
specific beta coefficient.

The APT is less restrictive in its assumptions: it allows for an explanatory (as opposed to
statistical) model of asset returns, and assumes that each investor will hold a unique portfolio
with its own particular array of betas, as opposed to the identical “market portfolio”. Unlike the
CAPM, the APT, however, does not itself reveal the identity of its priced factors - the number
and nature of these factors is likely to change over time and between economies.

Super-diversification

The highest degree of diversification occurs when institutional asset class funds
are used to construct a financial portfolio. The term was first introduced in Wealth Without
Worry by Jim Whiddon and Lance Alston (Brown Books, 2005) who apply the fundamental
academic research of Eugene Fama and Professor Kenneth French. See also: diversification,
efficient market hypothesis and market portfolio theory. A super-diversified, asset class
portfolio holds somewhere between 10,000 and 12,000 securities through a smaller number of
institutional asset class funds.

Arbitrage pricing theory:

It is the of the tools used by the investors and portfolio managers.Arbitrage pricing theory
(APT), in finance, is a general theory of asset pricing, that has become influential in the

20
pricing of shares.This explain the nature of equilibrium the asset pricing in a less
complicated manner.

ASSUMPTION
1) The investors have homogeneous expectations.
2) The investors are risk averse and utility maximisers.
3) Perfect competition prevails in the market and there is no transaction
cost.
ARBITRAGE PORTFOLIO
Acc. To the APT theory an investor tries to find out the possibility to increase returns from
his portfolio without increasing the funds in the portfolio.
The theory was initiated by the economist Stephen Ross in 1976
APT holds that the expected return of a financial asset can be modeled as a
linear function of various macro-economic factors or theoretical market indices, where
sensitivity to changes in each factor is represented by a factor-specific beta coefficient. The
model-derived rate of return will then be used to price the asset correctly - the asset price
should equal the expected end of period price discounted at the rate implied by model. If the
price diverges, arbitrage should bring it back into line.

Under the APT, an asset is mispriced if its current price diverges from the price predicted by
the model. The asset price today should equal the sum of all future cash flows discounted at the
APT rate, where the expected return of the asset is a linear function of various factors, and
sensitivity to changes in each factor is represented by a factor-specific beta coefficient.When
the investor is long the asset and short the portfolio (or vice versa) he has created a position
which has a positive expected return (the difference between asset return and portfolio return)
and which has a net-zero exposure to any macroeconomic factor and is therefore risk free
(other than for firm specific risk). The arbitrageur is thus in a position to make a risk free profit:

Where today’s price is too low

The implication is that at the end of the period the portfolio would have appreciated at the
rate implied by the APT, whereas the mispriced asset would have appreciated at more
than this rate. The arbitrageur could therefore:

Today:

1 short sell the portfolio

2 buy the mispriced-asset with the proceeds.

21
At the end of the period:

1 sell the mispriced asset

2 use the proceeds to buy back the portfolio
3 pocket the difference.

Where today’s price is too high

The implication is that at the end of the period the portfolio would have appreciated at the rate
implied by the APT, whereas the mispriced asset would have appreciated at less than this rate.
The arbitrageur could therefore:

Today:

1 short sell the mispriced-asset

2 buy the portfolio with the proceeds.
At the end of the period:

1 sell the portfolio

2 use the proceeds to buy back the mispriced-asset
3 pocket the difference.

Identifying the factors

As with the CAPM, the factor-specific Betas are found via a linear regression of historical
security returns on the factor in question. Unlike the CAPM, the APT, however, does not
itself reveal the identity of its priced factors - the number and nature of these factors is
likely to change over time and between economies. As a result, this issue is essentially
empirical in nature. Several a priori guidelines as to the characteristics required of potential
factors are, however, suggested:

1) Their impact on asset prices manifests in their unexpected movements

2) They should represent un diversifiable influences (these are, clearly, more likely to be
macroeconomic rather than firm-specific in nature)
timely and accurate information on these variables is required

22
1. the relationship should be theoretically justifiable on economic grounds

Chen, Roll and Ross identified the following macro-economic factors as significant in
explaining security returns:

surprises in inflation;
surprises in GNP as indicted by an industrial production index;
surprises in investor confidence due to changes in default premium in corporate bonds;
surprise shifts in the yield curve.
As a practical matter, indices or spot or futures market prices may be used in place of
macro-economic factors, which are reported at low frequency (e.g. monthly) and often
with significant estimation errors. Market indices are sometimes derived by means of
factor analysis. More direct “indices” that might be used are:
short term interest rates;
the difference in long-term and short term interest rates;
a diversified stock index such as the S&P 500 or NYSE Composite Index;
oil prices
gold or other precious metal prices
Currency exchange rates

Jensen’s alpha
In finance, Jensen’s alpha (or Jensen’s Performance Index, ex-post alpha) is used to determine
the excess return of a stock, other security, or portfolio over the security’s required rate of
return as determined by the Capital Asset Pricing Model. This model is used to adjust for the
level of beta risk, so that risky securities are expected to have higher returns. The measure was
first used in the evaluation of mutual fund managers by Michael Jensen in the 1970’s.
To calculate alpha, the following inputs are needed:
the realized return (on the portfolio),
the market return,
the risk-free rate of return, and
the beta of the portfolio.
Jensen’s alpha = Portfolio Return - (Risk Free Rate + Portfolio Beta * (Market Return -
Risk Free Rate)

Sharpe index

23
Sharpe ratio or Sharpe index or Sharpe measure or reward-to-variability ratio is a measure of
the excess return (or Risk Premium) per unit of risk in an investment asset or
a trading strategy
This index gives a single value to be used for the performance ranking of various funds or
portfolios.it measures the risk premium of the portfolioelative to the total amount of risk in
portfolio. The risk premium is the difference between portfolio average rate of return and the
riskless rate of return.the standard deviation of the portfolio indicates the risk..
Sharpe Index=Portfolio average return-Risk free rate of interest/Standard deviation of
the portfolio return
The Sharpe ratio is used to characterize how well the return of an asset compensates
the investor for the risk taken. When comparing two assets each with the expected return E[R]
against the same benchmark with return Rf, the asset with the higher Sharpe ratio gives more
return for the same risk. Investors are often advised to pick investments with high Sharpe
ratios. Sharpe ratios, along with Treynor ratios and Jensen’s alphas, are often used to rank the
performance of portfolio or mutual fund managers.
This ratio was developed by William Forsyth Sharpe in 1966. Sharpe originally called it the
“reward-to-variability” ratio in before it began being called the Sharpe Ratio by later academics
and financial professionals. Recently, the (original) Sharpe ratio has often been challenged with
regard to its appropriateness as a fund performance measure during evaluation periods of
declining markets (Scholz 2007).

Value at risk

In economics and finance, Value at Risk (VaR) is the maximum loss not exceeded with a given
probability defined as the confidence level, over a given period of time. Although VaR is a
very general concept that has broad applications, it is most commonly used by security firms or
investment banks to measure the market risk of their asset portfolios (market value at risk).
VaR is widely applied in finance for quantitative risk management for many types of risk. VaR
does not give any information about the severity of loss by which it is exceeded. Other
measures of risk include volatility/standard deviation, semi variance (or downside risk) and
expected shortfall.

VaR has three parameters:

The time horizon (period) to be analyzed may relate to the time period over which a
financial institution is committed to holding its portfolio, or to the time required to
liquidate assets. Typical periods using VaR are 1 day, 10 days, or 1 year. A 10 day
period is used to compute capital requirements under the European Capital Adequacy

24
Directive (CAD) and the Basel II Accords for market risk, whereas a 1 year period is
used for credit risk.
The confidence level is the interval estimate in which the VaR would not be expected to
exceed the maximum loss. Commonly used confidence levels are 99% and 95%.
Confidence levels are not indications of probabilities.
Value at risk(VaR) is given in a unit of the currency.

Asset allocation
Time Horizon –
Your time horizon is the expected number of months, years, or decades you will
be investing to achieve a particular financial goal. An investor with a longer time horizon may
feel more comfortable taking on a riskier, or more volatile, investment because he or she can
wait out slow economic cycles and the inevitable ups and downs of our markets. By contrast,
an investor saving up for a teenager’s college education would likely take on less risk because
he or she has a shorter time horizon

Risk Tolerance –
Risk tolerance is your ability and willingness to lose some or all of your original
investment in exchange for greater potential returns. An aggressive investor, or one with a
high-risk tolerance, is more likely to risk losing money in order to get better results. A
conservative investor, or one with a low-risk tolerance, tends to favor investments that will
preserve his or her original investment. In the words of the famous saying, conservative
investors keep a “bird in the hand,” while aggressive investors seek “two in the bush.”

Risk versus Reward

When it comes to investing, risk and reward are inextricably entwined. You’ve probably heard
the phrase “no pain, no gain” - those words come close to summing up the relationship
between risk and reward. Don’t let anyone tell you otherwise: All investments involve some
degree of risk. If you intend to purchases securities - such as stocks, bonds, or mutual funds -
it’s important that you understand before you invest that you could lose some or all of your

25
money.The reward for taking on risk is the potential for a greater investment return. If you have
a financial goal with a long time horizon, you are likely to make more money by carefully
investing in asset categories with greater risk, like stocks or bonds, rather than restricting your
investments to assets with less risk, like cash equivalents. On the other hand, investing solely in
cash investments may be appropriate for short-term financial goals.

Investment Choices

While the SEC cannot recommend any particular investment product, you should know that a
vast array of investment products exists - including stocks and stock mutual funds, corporate
and municipal bonds, bond mutual funds, lifecycle funds, exchange-traded funds, money
market funds, and U.S. Treasury securities. For many financial goals, investing in a mix of
stocks, bonds, and cash can be a good strategy. Let’s take a closer look at the characteristics of
the three major asset categories.

Stocks – Stocks have historically had the greatest risk and highest returns among the three
major asset categories. As an asset category, stocks are a portfolio’s “heavy hitter,” offering
the greatest potential for growth. Stocks hit home runs, but also strike out. The volatility of
stocks makes them a very risky investment in the short term. Large company stocks as a
group, for example, have lost money on average have been rewarded with strong positive
returns.about one out of every three years. And sometimes the losses have been quite
dramatic. But investors that have been willing to ride out the volatile returns of stocks over
long periods of time generally

Bonds - Bonds are generally less volatile than stocks but offer more modest returns. As a
result, an investor approaching a financial goal might increase his or her bond holdings
relative to his or her stock holdings because the reduced risk of holding more bonds would be
attractive to the investor despite their lower potential for growth. You should keep in mind that
certain categories of bonds offer high returns similar to stocks. But these bonds, known as
high-yield or junk bonds, also carry higher risk

Cash - Cash and cash equivalents - such as savings deposits, certificates of deposit, treasury
bills, money market deposit accounts, and money market funds - are the safest investments, but

26
offer the lowest return of the three major asset categories. The chances of losing money on an
investment in this asset category are generally extremely low. The federal government
guarantees many investments in cash equivalents. Investment losses in non-guaranteed cash
equivalents do occur, but infrequently. The principal concern for investors investing in cash
equivalents is inflation risk. This is the risk that inflation will outpace and erode investment
returns over time

Stocks, bonds, and cash are the most common asset categories. These are the asset
categories you would likely choose from when investing in a retirement savings program or a
college savings plan. But other asset categories - including real estate, precious metals and
other commodities, and private equity - also exist, and some investors may include these asset
categories within a portfolio. Investments in these asset categories typically have category-
specific risks. Before you make any investment, you should understand the risks of the
investment and make sure the risks are appropriate for you.

Performance level

Conception and performance in India

The industry has steadily grown over the decade. For example, before the public
sector mutual fund’s entry, UTI was managing around Rs 6,700 crore on its own. Public sector
mutual funds also helped accelerate the growth of assets under management. UTI and its public
sector counterparts were managing around Rs 47,000 crore when Kothari Pioneer, the first
private sector mutual fund, set up shop in 1993. Before the US 64 fiasco, there were 33 mutual
funds with total assets of Rs 1,21,805 crore as on January 2003. The UTI was way ahead of
other mutual funds with Rs 44,541 crore assets under management. The industry overall has
performed well over the years. Of course, there were a few funds houses, which disappointed
investors. However, overall performance has been good. However, lack of awareness still
impedes the growth of the mutual fund industry. Unlike developed countries, most of the
household savings still go to bank deposits in India

27
Portfolio Risk and Return :- Most investors do not hold stocks in isolation. Instead,
they choose to hold a portfolio of several stocks. When this is the case, a portion of
an individual stock’s risk can be eliminated, i.e., diversified away. This principle is
presented on the Diversification page. First, the computation of the expected return,
variance, and standard deviation of a portfolio must be illustrated. Once again, we
will be using the probability distribution for the returns on stocks A and B.

Return on Return on
State Probability
Stock A Stock B

1 20% 5% 50%

2 30% 10% 30%

3 30% 15% 10%

4 20% 20% -10%

From the Expected Return and Measures of Risk pages we know that the expected return on
Stock A is 12.5%, the expected return on Stock B is 20%, the variance on Stock A is .00263,

28
the variance on Stock B is .04200, the standard deviation on Stock S is 5.12%, and the standard
deviation on Stock B is 20.49%.

Portfolio Expected Return

The Expected Return on a Portfolio is computed as the weighted average of the expected
returns on the stocks which comprise the portfolio. The weights reflect the proportion of the
portfolio invested in the stocks. This can be expressed as follows:

where

E[Rp] = the expected return on the portfolio,

N = the number of stocks in the portfolio,
wi = the proportion of the portfolio invested in stock i, and
E[Ri] = the expected return on stock i.
Diversification (finance):-Diversification in finance is a risk management technique,
related to hedging, that mixes a wide variety of investments within a portfolio. Because
the fluctuations of a single security have less impact on a diverse portfolio, diversification
minimizes the risk from any one investment.

There are three primary strategies used in improving diversification:

1. Spread the portfolio among multiple investment vehicles, such as stocks, mutual funds,
bonds, and cash.

2. Vary the risk in the securities. A portfolio can also be diversified into different mutual fund
investment strategies, including growth funds, balanced funds, index funds, small cap, and
large cap funds. When a portfolio includes investments with varied risk levels, large losses in
one area are offset by other areas.

3. Vary your securities by industry, or even by geography. This will minimize the impact of
industry- or location-specific risks. The example portfolio above was diversified by investing in

29
both umbrellas and sunscreen. Another practical application of this kind of diversification is
mixing investments between domestic and international funds. By choosing funds in many
countries, events within any one country’s economy have less effect on the overall portfolio.

Although diversification reduces the risk of a portfolio, it does not necessarily reduce the
returns. As a result, diversification is referred to as the only free lunch in finance.

Types of diversification

In the above graph, the portfolio represented by point

A is inefficient. Following the horizontal line, there are other portfolios with the same
returns but lower risk. Along the vertical line, there are other portfolios that have the same
risk but higher returns.

Horizontal diversification

Horizontal diversification is when a portfolio is diversified between same-type

investments. It can be a broad diversification (like investing in several NASDAQ
companies) or more narrowed (investing in several stocks of the same branch or sector). In
the example above, the move to invest in both umbrellas and sunscreen is an example of
horizontal diversification. As usual, the broader the diversification the lower the risk from
any one investment.

Vertical diversification

Vertical diversification is investment between different types of securities. Again, it can

be a very broad diversification, like diversifying between bonds and stocks, or a more

30
narrowed diversification, like diversifying between stocks of different branches. While
horizontal diversification lessens the risk of investing entirely in one security, vertical
diversification goes beyond that and protects against market and/or economical changes

Review of literature
Rajesh chakrabarti (2000) Equity analysts serve an important function by bringing information
about companies to the stock market. Equity analysis and reporting by brokerage firms has increased
considerably in recent years in India. We examine over 2000 analyst
recommendations to study the predictive value and market impact of stock analyst forecasts in India. We
find that analysts tend to be optimistic in their predictions, recommending buys considerably more often
than sells. Their recommendations do have investment value at least in the near term. Clear buy
recommendations appear to be the most valuable. The recommendations also seem to have some impact on
stock price.

31
Levine and Zervos (1998) who are among the first to ask whether stock markets are
merely burgeoning casinos or a key to economic growth and to examine this
issueempirically, finding a positive and significant correlation between stock market
development and long run growth. However, Levine and Zervos‟s use of a cross-
sectional approach limits the potential robustness of their findings with respects to
country specific effects and time related effects. The legal liberalization of the stock
market increased the importance of the stock market. It does not only link the importance
of the stock market to economic growth over time, but also interpret it in relationship to
the universal banking system. In a frictionless Arrow-Debreu world there is no room for
financial intermediation. Explaining the role played by stock markets or banks requires
building in frictions such as informational or transaction costs into the theory. Different
frictions motivate different types of financial contracts, markets and institutions

Yet Kyle (1984) argues that, an investor can profit by researching a firm, before the
information becomes widely available and prices change. Thus investors will be more
likely to research and monitor firms. To the extent that larger, more liquid stock markets
increase incentives to research firms, the improved information will improve resource
allocation and accelerate economic growth.

Bencivenga et al (1996) and Levine (1991) argue that stock market liquidity (the ability
to trade equity easily) is crucial for growth. Although many profitable investments
require a long run commitment of capital, savers do not like to relinquish control of their
savings for long periods. Liquid equity markets ease this tension by providing an asset to
savers that they can quickly and inexpensively sell. Simultaneously, firms have
permanent access to capital raised through equity issues.

From the point of view of Greenwood and Jovanovic (1990); King and Levine (1993),
a new stock exchange can increase economic growth by aggregating information about
firms‟ prospects, thereby directing capital to investment with returns. These effects of a
stock market opening result in a measured increase in productivity. Stock exchanges exist

32
for the purpose of trading ownership rights in firms, and a new stock exchange may
increase productivity growth for this reason as well

Hosein Gharavi Stockbroking firms have openly adopted information and

communication technology to improve their competitiveness and responsiveness in
market conditions. Changes in business practices have resulted from the widespread
adoption and diffusion of information and communication technology. Changes
experienced by a firm can be viewed as a process of individual adaptations running
parallel to the evolution of the business environment. To examine the diffusion of
information and communication technology an ecological approach is used. This paper
therefore develops a conceptual framework to explore the ICT diffusion in the
stockbroking industry in the context of environmental evolution and selection. It is
argued that the acceptance of an innovation is affected as much by the complexity of the
interactions between the stockbroking firms and technology. The proposed framework
can be used to provide an ameliorated understanding about the way in which ICT-enabled
innovation is diffused within a technology-oriented industry.

CHAPTER-2

33
INTRODUCTION TO THE
ORGANIZATION

ORGANIZATION PROFILE

First Global Stockbroking Private Limited

HISTORY

34
 FIRST GLOBAL is a multinational firm of Indian origin, with operations spread all
over India and in major financial centres like London & New York. First Global is a
composite member of Bombay Stock Exchange Ltd. (BSE), National Stock Exchange
of India Ltd. (NSE), London Stock Exchange and NASDAQ.

First Global is an international, full-service securities house, servicing primarily an

institutional client base, across the US, UK, Continental Europe and India. It is also
servicing retails clients in India through a pan India network of branches.

First Global Stock broking Pvt. Ltd. is registered with Securities and Exchange Board
of India and is a member of BSE and NSE. It is also registered with SEBI as Portfolio
Manager. FG Markets, Inc., the First Global group company in the United States, is a
registered broker-dealer, member: NASD/SIPC, with its principal office in New York.
First Global (UK) Ltd., the First Global Group company in the United Kingdom, is
regulated by the Financial Services Authority (FSA), and is a member of the London
Stock Exchange. Through FG (UK) Ltd., we trade across UK & Europe, in diverse
markets like Finland, Spain, Germany, France, etc.

First Global employs some of the finest analytical minds in the business, with its
people having consummate skills in financial analysis, mathematics, statistics and
accounting.

Within the institutional set, First Global deals primarily with Hedge Funds, and
devises aggressive trading strategies for them, including long/short combinations.

First Global covers stocks on a fundamental and technical basis across major markets,
like India, the US and Europe. In addition to this, it tracks select commodities, and
major world economies. Nearly all major sectors like Consumers, Cyclicals,
Semiconductors,

Software, Networking, Biotech Automobiles and Pharmaceuticals fall within the

ambit of our coverage, through our analysts, numbering over 20 presently, and
growing.

35
 First Global prides itself only on one aspect - its ability to continually make money
through its research, both Technical and Fundamental, for its clients.

What sets us apart is our consistent delivery of value to our clients' portfolios - we
view our success as a complete securities house, through the narrow prism of our
clients' portfolios. If their portfolios do well as a result of our advice, we sleep well.
Otherwise, we don't.

This is the reason why investors and money managers across the world value First
Global highly - we are neutral, we are completely independent, we have no conflicts
like Corporate Finance, proprietary trading etc., our research is arguably the best in
the business (our track-record shows it) and all put together, we help our clients make
money.

India’s Only Internationally Ranked Securities Firm

First Global is the only Indian brokerage house rated by Asia Money in Asia’s top 10
list of best International research houses, as far back as 2000 and rated No.3 in Asia in
the best buy / sell recommendation category.

India’s Best Research House

Our team of analysts research more than 150 Indian companies, apart from
researching most global companies like Intel, Microsoft, Vodafone etc. which also
includes field research for in-depth corporate and stock. No wonder, when it comes to
making accurate investment decisions, our customers never go wrong.

The Foreign Institutional Investors (FIIs) Choice

The world’s largest FIIs trust us with their investments, thus making us one of the
largest institutional brokerage houses in India.

36
When we talk, People Listen

Our views on stocks and markets trigger major money flows at times giving us that
leading edge to influence market trends.

India’s Truly Global Securities Company

We also have our presence in UK & US through a network of fully functional offices in
these regions already keeping us ahead in the globalization race.

Rock Solid Balance Sheet

With an extremely high capital adequacy, First Global is one of the best capitalized
securities firm in India. In fact, we have a higher capital base than a number of foreign
securities firms operating in India.

THE IS THE KING POWER OF CONVENIENCE – CUSTOMER

It takes accurate research, constant investment advice and timely action to make or save
money in the stock markets. Our internationally ranked research and advice comes as
smooth as silk so you can make the right investment moves at the right time.

Convenience Trading Options

We offer you multiple options for executing order on Equity and F& O segments as
well as Commodities. Customers can trade through a telephone call or personal visit to
the nearest First Global branch or can do online trading sitting at their homes or offices
through e-trading website or can call up on our toll free number from anywhere in
India.

Account Executive

37
At First Global, Account Executive suggests when to buy / sell, what to buy / sell and
also keeps track of customer portfolio which helps in making right investment
decisions. The Accounts Executives offer one window service & also keep customers
updated on the latest news & view.

Demat Services

To offer our customers one stop service, we are also making an application for
becoming a Depository participant.

Products offered
• Equity Trading
• Derivative Trading
• Portfolio Management Services
• Commodity Trading
• Fundamental Research Reports
• Trading Research Reports
• Mutual Fund distribution
• Investment in IPOs
• Wealth Management
• Portfolio Advice

DETAIL OF TOP EXECUTIVES

Mr. Shankar Sharma Chief Executive officer

38
Mrs. Devina Mehra Head of Research

Mr. Santosh Kadam Analyst

Mr. Sandesh Kadem Analyst

Mr. Gautam Singh Analyst

Functions
Few functions of first global stock broking pvt ltd.

39
 • Securities Trading
• Derivatives Trading

• Depository Services

 Securities Trading

Too long, you have tried to navigate the stock market on your own. Too many times,
you have felt overwhelmed by the difficulty of making money consistently. Too many
times, your broker has let you down, giving inaccurate, poorly researched and
downright disastrous advice.

Well, not anymore. First Global is here. Say goodbye to helplessness, nervousness and
insecurity. Say a big hello to confidence, security and peace of mind. Now you have
on your side, India’s pre-eminent brokerage house.

FIRST GLOBAL is an International securities house with memberships of the London

Stock Exchange, NASDAQ, The National Stock Exchange of India Ltd. and the
Bombay Stock Exchange Ltd. First Global offers expert investment advice based on
its rich experience in the Fundamental and Technical research and its exposure to the
markets world over. It has schemes designed to suit every investor right from the
Corporate Investors, HNIs, Day traders, Non-resident Indians, and Small Individual
Investors.

40
 First Global offers Online trading as well as offline trading.

Online Trading

The Online trading offers you the convenience of trading from your home, office or
even while you are traveling with your laptop. In case you are not in a position to go
online, you have the option of calling up any of our branches and place an order on
phone or you can even visit our branch personally to trade through your account.

First Global Online Securities trading account gives you the power to:

• Trade via web, phone, or in person at a branch.

• Get access to internationally acclaimed buy/sell recommendations and make the
right investment decision.

• Move money (pay-outs & pay-ins of funds) easily through a zero balance account
with the designated banks through the payment gateway.
• Move securities easily through a demat account with First Global.

Off-line Trading

An Offline Securities Trading account offers you the convenience of trading from
your home, office and even while you are traveling through the telephone or through
SMS. You have the option of calling up any of our branches and place an order on
phone or SMS or you can even visit our branch personally to trade through your
account.

41
 First Global Offline Securities trading account gives you the advantage of:

• Pan India Network of Branch offices.

• NSE and BSE on an integrated platform.

• Trade through phone, or in person at branch or through the dedicated team of

Relationship Managers.

• Access to internationally acclaimed buy/sell recommendations in person, through

Phone, SMS, E-Mail, etc. and make the right investment decision.

• Moving money (pay-outs & pay-ins of funds) easily through a zero balance account
with the designated banks even through the web.
• Moving securities easily through a demat account with First Global.

• An account executive keeping a track of your portfolio in the market and suggest
timely actions to help you make or save money.

• Integrated online and offline trading – First Global does not segregate Internet
Trading from its regular clients, it is at the absolute discretion of the client whether he
want to deal Online or Offline.

 Derivatives Trading

42
 Futures and Options

FIRST GLOBAL is an International securities house with memberships of the London

Stock Exchange, NASDAQ, The National Stock Exchange of India Ltd. and the
Bombay Stock Exchange Ltd. First Global offers expert investment advice based on
its rich experience in Fundamental and Technical research and its exposure to the
markets world over. It has schemes designed to suit every investor right from the
Corporates, HNIs, Day traders, Non-resident Indians, and Small Individual Investors.

First Global offers Online trading as well as offline trading facilities.

Online Trading

The Online trading offers you the convenience of trading from your home, office and
even while you are travelling with your laptop. In case you are not in a position to go
online, you have the option of calling up any of our branches and place an order on
phone or you can even visit our branch personally to trade through your account.

First Global Online Securities trading account gives you the power to:

• Trade via web, phone, or in person at a branch.

• Get access to internationally acclaimed buy/sell recommendations and make the
right investment decision.

• Move money (pay-outs & pay-ins of funds) easily through a zero balance
account with the designated banks through the payment gateway.

• NSE and BSE on an integrated platform.

43
 Off-line Trading

An Offline Securities Trading account offers you the convenience of trading from
your home, office and even while you are travelling through the telephone or through
SMS. You have the option of calling up any of our branches and place an order on
phone or SMS or you can even visit our branch personally to trade through your
account.

First Global Offline Securities trading account gives you the advantage of:

• Pan India Network of Branch offices.

• NSE and BSE on an integrated platform.

• Trade through phone, or in person at branch or through the dedicated team of

Relationship Managers.

• ccess to internationally acclaimed buy/sell recommendations in person, through

Phone, SMS, E-Mail, etc. and make the right investment decision.

• Moving money (pay-outs & pay-ins of funds) easily through a zero balance
account with the designated banks even through the web.

• Moving securities easily through a depository account with First Global.

• An account executive keeping a track of your portfolio in the market and

suggest timely actions to help you make or save money.

• Integrated online and offline trading – First Global does not segregate Internet
Trading clients from its offline trading clients. It is at the absolute discretion of
the client whether he wants to deal Online or Offline.

44
  Depository services

Demat Account

Indian Stock markets have come a long way in the last 10 years. The share certificates
have been replaced with paperless-dematerialized shares. The Depository system in
India has linked the issuers, the transfer agents, the brokers, the stock exchanges and
the clearing-houses through one system – Depositories (NSDL & CDSL) and their
participants. The depositories facilitates the holding of securities in the dematerialized
form and securities transactions are processed by means of account transfers through
the demat slips just like the money is transferred with cheque.

We are in the process of getting membership of CDSL and NSDL. Once we are
registered we shall be providing the following facilities:

The first Depository account for every customer will be opened free of cost along with
the Securities trading account and we will be charging a concessional rate for the
annual charges. For any additional depository account, the regular charges would be
applicable. The securities trading & depository account opening form may be
downloaded from our site and can be submitted at any of our branches or alternatively
you can contact us and our account opening executive will get in touch with you.

45
 In case of Online trading, the depository account is integrated with the Online trading
account and you can operate your depository account online through First Global
online trading module. For such account First Global will charge only concessional
depository charges.

In case of Offline trading, the depository account is opened along with the securities
trading account and provides the convenience to the investor to trade with First Global
and also hold their security in an account managed by First Global. For such account
First Global charges very nominal fees.

First Global also offers stand alone depository account which offers professional
depository participant services to investors from all its offices at very competitive
price.

Services offered to Depository account holders:

• Online transaction facility for both NSDL and CDSL through Internet.
• Access to client information on Web.
• Online facility for depository accounts through the branch network.
• Periodic depository statement for clients for information on their account status.

PMS PRODUCT PROFILE

• Discretionary portfolio management scheme

First Global Stockbroking Pvt Ltd individually and independently manage customer's
portfolio and fund. Choice of investments will be made taking into account customer's
expectation of returns and appetite for risk based on risk return portfolio.

• Non-Discretionary portfolio management scheme

46
First Global Stockbroking Pvt Ltd manage customer's fund as per his instructions and
recommend buy /sell opportunities in the market.
Initial Amount

The minimum amount of investment is:

Category Minimum Amount

Resident Individuals & NRI Rs. 25,00,000/-

Corporates & OCBs Rs. 50,00,000/-

Customer Can Expect:

a. Optimum returns
b. Safety of principal/capital
c. Professional advice based on comprehensive & in depth research / unbiased
opinion
d. complete transparency in handling your funds
e. Confidentiality

47
 CHAPTER-3

STOCK EXCHANGE

Stock exchange

48
A stock exchange, (formerly a securities exchange) is a corporation or mutual
organization which provides "trading" facilities for stock brokers and traders, to trade
stocks and other securities. Stock exchanges also provide facilities for the issue and
redemption of securities as well as other financial instruments and capital events
including the payment of income and dividends. The securities traded on a stock
exchange include: shares issued by companies, unit trusts, derivatives, pooled investment
products and bonds. To be able to trade a security on a certain stock exchange, it has to
be listed there. A stock exchange is often the most important component of a stock
market. Supply and demand in stock markets is driven by various factors which, as in all
free markets, affect the price of stocks .

Role of stock exchanges

1. Raising capital for businesses.
2. Mobilizing savings for investment.
3. Facilitating company growth.
4. Profit sharing.
5. Corporate governance.
6. Creating investment opportunities for small investors.
7. Government capital-raising for development projects.

STOCK EXCHANGE IN INDIA

• Bombay Stock Exchange
• National Stock Exchange

Bombay Stock Exchange(BSE)

The bombay stock exchange has the greatest number of listed companies in the world,
with 4700 listed as of August 2007. It is located at Dalal Street, Mumbai, India. On 31

49
December 2007, the equity market capitalization of the companies listed on the BSE was
US$ 1.79 trillion, making it the largest stock exchange in South Asia and the 12th largest
in the world

With over 4700 Indian companies list on the stock exchange, and it has a significant
trading volume. The BSE SENSEX (SENSitive indEX), also called the "BSE 30",
is a widely used market index in India and Asia.

Hours of operation

• Beginning of the Day Session....8:00 - 9:00

• Login Session....9:00 - 9:30

• Trading Session....9:55 - 15:30

The hours of operation for the BSE quoted above are stated in terms of the local time in
Mumbai, India (also known as Bombay). This translates into a standard time zone
UTC/GMT +5:30.

Type Stock Exchange

Location Mumbai, India

Owner Bombay/Mumbai Stock Exchange Limited

Madhu Kannan (CEO)
Key people
Mahesh L. Soneji (COO)
Currency INR
No. of listings 4,700
Market Cap US$ 1.79 trillion (Dec 31, 2007)
Volume US$ 980 billion (2006)
Indexes BSE Sensex
Website www.bseindia.com

50
Companies in the BSE (sensex)

1. ACC
16. NTPC
2. BHARTI AIRTEL 17. ONGC
3. BHEL 18. Ranbaxy laboratories
19.Reliance Communication
4. DLF Universal limited
5.Grasim Industries 20. Reliance Industries
6. HDFC BANK 21. Reliance Infrastructure
7. Hindalco Industries
22. State bank of india
8. Hindustan lever limited 23. Sterlite Industries
9. ICICI BANK 24. Sun Pharmaceutical Industries
10. Infosys 25. Tata consultancy services
11. ITC Limited 26. Tata Motors
12. Jaiprakash Associates 27. Tata Steels
13. Larsen & Toubro 28. Tata Power
29. Wipro
14. Mahindra & Mahindra
Limited
15. Maruti Udyog

National Stock Exchange(NSE)

The National Stock Exchange of India was promoted by leading Financial institutions at
the behest of the Government of India, and was incorporated in November 1992 as a tax-
paying company. In April 1993, it was recognized as a stock exchange under the
Securities Contracts (Regulation) Act, 1956. NSE commenced operations in the
Wholesale Debt Market (WDM) segment in June 1994. The Capital Market (Equities)
segment of the NSE commenced operations in November 1994, while operations in the
Derivatives segment commenced in June 2000.

51
The National Stock Exchange of India Limited (NSE), is a Mumbai-based stock
exchange. It is the largest stock exchange in India in terms of daily turnover and number
of trades, for both equities and derivative trading.Though a number of other exchanges
exist, NSE and the Bombay Stock Exchange are the two most significant stock exchanges
in India , and between them are responsible for the vast majority of share transactions.
The NSE's key index is the S&P CNX Nifty, known as the Nifty, an index of fifty major
stocks weighted by market capitalization. NSE is mutually-owned by a set of leading
financial institutions, banks, insurance companies and other financial intermediaries in
India but its ownership and management operate as separate entities. In October 2007, the
equity market capitalization of the companies listed on the NSE was US$ 1.46 trillion,
making it the second largest stock exchange in South Asia. NSE is the third largest Stock
Exchange in the world in terms of the number of trades in equities.It is the second fastest
growing stock exchange in the world with a recorded growth of 16.6%.

Type Stock Exchange

Location Mumbai, India

Owner National Stock Exchange of India Limited

Key people Mr.vinu koshy Managing Director
Currency INR
No. of listings 1587
Market Cap US$ 1.46 trillion (2006)
S&P CNX Nifty
Indexes CNX Nifty Junior
S&P CNX 500
Website www.nse-india.com

Companies in the NSE

1.Asea Brown Boveri Ltd 11.Glaxosmithkline Pharmaceuticals India Ltd

2.Bajaj Auto Ltd 12.Grasim Industries Ltd

3. Bharat Petroleum Corporation Ltd 13. Gujarat Ambuja Cement Ltd

4. Bharti Tele-ventures Ltd 14. HDFC Bank Ltd

52
5.Britannia Industries Ltd 15. HCL Technologies Ltd

6. Cipla Ltd 16. Hero Honda Motors Ltd

7. Colgate-Palmolive India Ltd 17. Hindalco Industries Ltd

8. Dabur India Ltd 18. Hindustan Lever Ltd

9. Dr Reddy's Laboratories Ltd 19. Hindustan Petroleum Corporation Ltd

10.Gas Authority of India Ltd 20. Tata Power Ltd

Many more companies are there in NSE.

Sensex and the Nifty

The Sensex is an indicator of all the major companies of the BSE.The Nifty is an
indicator of all the major companies of the NSE. Besides Sensex and the Nifty there are
many other indexes. There is an index that gives you an idea about whether the mid-cap
stocks go up and down. This is called the ? BSE Mid-cap Index? There are many other
types of indexes. There is an index for the metal stocks. There is an index for the FMCG
stocks. There is an index for the automobile stocks

How the Sensex is calculated

SENSEX, first compiled in 1986, was calculated on a "Market Capitalization-Weighted"
methodology of 30 component stocks representing large, well-established and financially
sound companies across key sectors. The base year of SENSEX was taken as 1978-79.
SENSEX today is widely reported in both domestic and international markets through

53
print as well as electronic media. It is scientifically designed and is based on globally
accepted construction and review methodology.

The base period of SENSEX is 1978-79 and the base value is 100 index
points. This is often indicated by the notation 1978-79=100. The calculation of SENSEX
involves dividing the free-float market capitalization of 30 companies in the Index by a
number called the Index Divisor. The Divisor is the only link to the original base period
value of the SENSEX. It keeps the Index comparable over time and is the adjustment
point for all Index adjustments arising out of corporate actions, replacement of scrips etc.

During market hours, prices of the index scrips, at which latest trades are executed, are
used by the trading system to calculate SENSEX every 15 seconds. The value of
SENSEX is disseminated in realtime.

Dollex-30

BSE also calculates a dollar-linked version of SENSEX and historical values of this
index are available since its inception.

Understanding Free-float Methodology

Free-float Methodology refers to an index construction methodology that takes into
consideration only the free-float market capitalization of a company for the purpose of
index calculation and assigning weight to stocks in Index. Free-float market capitalization
is defined as that proportion of total shares issued by the company that are readily
available for trading in the market. It generally excludes promoters' holding, government
holding, strategic holding and other locked-in shares that will not come to the market for
trading in the normal course. In other words, the market capitalization of each company
in a Free-float index is reduced to the extent of its readily available shares market.

In India, BSE pioneered the concept of Free-float by launching BSE TECk in July 2001
and Bankex in June 2003. While BSE TECk Index is a TMT benchmark, Bankex is

54
positioned as a benchmark for the banking sector stocks. Sensex becomes the third index
in India to be based on the globally accepted Free-float Methodology.

Stock Exchange Trading

The term 'Stock Exchange Trading' suggests the exchange of stocks or shares, or other
securities of companies that are carried forward by brokers or traders of stocks. Parties
concerned with stock trading can be an individual or a company. The market for such
exchanges is called Stock Exchange. A stock exchange is the chief component of a stock
market. Supply and demand forces in stock markets is guided by various factors which,
as in all free markets, affect the price of stocks.

Stock Exchanges also provide facilities for the issue and redemption of securities as well
as other financial instruments and capital events including the payment of income and
dividends.

The in Stock securities involved Exchange Trading include:

 Shares issued by companies

 Unit trusts
 Other pooled investment products like bonds

In order to indulge into Stock Exchange Trading, a company has to enlist itself under a
stock exchange. Usually there is a central location at least for record keeping. However,
riding the success of technology, modern markets are electronic networks have raised the
speed and cost of transactions.

55
Stocks and bonds are offered initially to investors is done in the primary market.
Henceforth, trading is carried out in the secondary market.This is the usual way that
bonds are traded. Trading at stock exchanges is gradually becoming a part of a global
market for securities.

Stock Exchange Trading has multiple roles in the functioning of an economy. Such
diverse roles played by stock exchanges include, generation of initial capital required for
starting a business, channelizing savings for further investment, facilitating growth of a
company, redistributing funds of the company, and creating investment opportunities for
small investors.

How to Calculate Returns ?

There are many different methods for calculating portfolio returns. A traditional method
has been using quarterly or monthly money-weighted returns. A money-weighted
return calculated over a period such as a month or a quarter assumes that the rate of
return over that period is constant. As portfolio returns actually fluctuate daily,
money-weighted returns may only provide an approximation to a portfolio’s actual
return. These errors happen because of cashflows during the measurement period.
The size of the errors depends on three variables: the size of the cashflows, the
timing of the cashflows within the measurement period, and the volatility of the
portfolio.

A more accurate method for calculating portfolio returns is to use the true time-weighted
method. This entails revaluing the portfolio on every date where a cashflow takes place
(perhaps even every day), and then compounding together the daily returns.

==Attribution== Performance Attribution explains the active performance (i.e. the

benchmark-relative performance) of a portfolio. For example, a particular portfolio might
be benchmarked against the S&P 500 index. If the benchmark return over some period
was 5%, and the portfolio return was 8%, this would leave an active return of 3% to be

56
explained. This 3% active return represents the component of the portfolio's return that
was generated by the investment manager (rather than by the benchmark).

There are different models for performance attribution, corresponding to different

investment processes. For example, one simple model explains the active return in
"bottom-up" terms, as the result of stock selection only. On the other hand, sector
attribution explains the active return in terms of both sector bets (for example, an
overweight position in Materials, and an underweight position in Financials), and also
stock selection within each sector (for example, choosing to hold more of the portfolio in
one bank than another).

TOP 5 STOCK BROKING COMPANIES AND

THEIR PMS PRODUCTS
• India Infoline Securities Private Ltd
Portfolio Management Services

• RUBICON – Taking decisive steps

Rubicon is a closed ended scheme investments in stocks where the current spate of bad
macroeconomic news : High crude oil prices, Rising interest rates and inflation worries

57
have lead to large falls in prices and stocks are trading at a significant discount to their
fair values. Rubicon will have a concentrated portfolio of 10 -15 companies with holdings
across large, mid and small cap companies. The allocation would be around 20%-30%
each in Banking and Capital Goods & Infrastructure and the balance in individual stock
plays.

• Growth Portfolio

This is for those who would rather run a marathon than a sprint. They are not concerned
with day-to-day price movements. The portfolio comprises the choicest of fundamentally
sound companies. The focus is on medium to large capitalization blue chip companies,
considered to be undervalued from the point of view of their long-term growth prospect
and well placed to deliver extra-ordinary capital appreciation over the long term.

• Momentum Portfolio

This is for those who want to live life in the fast lane. The main objective of this portfolio
is to generate capital appreciation through short to medium term investments in equities
and equity related instruments. The investment choice is primarily influenced by
technical factors like price and volume indicators, RSI, MACD, and other studies.
Secondary factors will be reasonable levels of market capitalization, good liquidity,
competitive position in the industry, sectors with good growth prospects, etc.

• NRI Portfolio

The main objective of the scheme is to generate capital appreciation through investments
in equities with a long-term perspective. The scheme will invest in all equity and equity
related instruments with emphasis on fundamentally sound, well-researched blue chip
companies perceived to be undervalued from the point of view of their long term growth

58
prospects. The focus will be on medium to large capitalisation companies which have a
proven track record or earning capability, quality management, leadership status in
sectors or potential to achieve such status, etc and that have the potential to deliver
growth over the long term. The scheme is aimed at medium risk taking investors willing
to invest in companies over a long-term period.

• Kotak Portfolio Management

Portfolio Management Services

• Select Portfolio

Description

The scheme will seek to achieve returns through broad based participation in
equity markets by constructing a concentrated portfolio of sizably capitalized
companies

Portfolio Style

Aggressive Concentrated Portfolio consisting of 10-12 stocks

Portfolio Characteristics

• Multi cap portfolio with companies spread across large cap, mid cap and
small cap.
• Investment Domain & Composition

• Sectors expected to be beneficiaries of demographic patterns & reforms.

• Sectors expected to benefit from infrastructure spending.

Portfolio Tenure

59
Long term (approx. 18 Months)

Investor Profile

An investor willing to invest for medium to long term without being perturbed
about short-term returns, volatility and market momentum. Any investor with a
penchant for medium to high risk taking qualifies for the portfolio.

• Klassic Portfolio – Flexi

Description

The scheme will seek to achieve returns through broad based participation in
equity markets by creating a diversified equity portfolio of small, medium and
large capitalized companies.

Investment Strategy

• Present market conditions hints at growth as a central premise to support

valuations
• Scan the investment universe

• Identify companies with higher growth as compared to the market

• Scout for discount in valuations as compared to the market

• Select valuations which provide a case for higher returns potential as

compared to the market

No of Stocks are up to 20

Investor Profile

60
An investor willing to invest for medium to long term without being perturbed
about short term returns, volatility and market momentum.

• Asset Allocation Portfolio - Investguard Planlio

Description

The portfolio strives for long-term capital growth as well as some amount of
capital protection through the use of a quantitative risk model.

Investment Strategy

• Asset allocation would be based on CPPI model.

• CPPI is designed to give the investor the ability to limit the downside risk
while allowing some participation in the upside markets. It allows the
investor to recover, at maturity, a given percentage of their initial capital,
in particular in falling markets.

• Intends to capture some upside on the equity market if and when they
occur

• Invests across shares and fixed income products, moving from shares into
fixed interest investments when the fund's value drops below a
predetermined "floor". When markets start to move up, the product
increases its holdings in shares, tapping into these growth opportunities

• Exposure: Equity: 0-100%; Debt: 0-100%.

Investment Canvass

• The debt portion will be invested in debt oriented schemes of mutual

funds, Gilt schemes, Liquid schemes, money market instruments,

61
 Government securities, Corporate Bonds and deposits, securitised
instruments and / or any other instruments permitted by SEBI.
• The equity portion would be primarily invested in large cap stocks with
high liquidity and closely follows the BSE Sensex movement.

Investor Profile

Any investor with a penchant for low risk taking qualifies for the portfolio.

• Core Portfolio

Core Portfolio aims to capture the long term upside of the India
Growth Story by diversifying across the major themes.

Investment Strategy

• The scheme will invest in all equity and equity related instruments with
emphasis on companies in the business areas driven by consumerism,
outsourcing, real estate and core infrastructure players.
• The portfolio will be a mix of small, medium and large capitalisation
companies.

• The investments may pertain to any sector either in the private or

public/state domain. Stock selection is driven by a good order visibility
which mitigates the downside risk.

• Investment in long term appreciation and value unlocking potential stocks.

• The Portfolio Manager may invest in futures and options to hedge, to

generate returns, or to balance the portfolio. The quantum of exposure to

62
 derivatives will not normally exceed 50% of the portfolio invested by the
client.

Sectoral Composition

Diversified across sectors and Market Capitalisation with focus on companies

benefiting from:

• Increase in consumer spend

• Outsourcing

• Increase in infrastructure spending

• Real estate growth

Number of Stocks

Focused portfolio of 15-20 stocks

Investor Profile

Core Portfolio is aimed at investors seeking to benefit from the

growth in Indian economy. An investor willing to keep aside funds
for at least 18 months without being perturbed about short term
returns, volatility and market momentum.

63
• Sharekhan

Products and Services:

1. PMS Pro Prime

2. PMS Pro Tech

 PMS Pro Prime

The Balanced Scheme: Ideal for investors looking at steady and superior returns with
low to medium risk appetite. This portfolio consists of a blend of quality bluechip and
growth stocks ensuring a balanced portfolio with relat vely medium risk profile. The
portfolio will mostly have large capitalization stocks based on sectors & themes who
have medium to long term growth potential.

Product Details

• Minimum Investment: Rs 10 lakhs

• Lock in period: 6 Months

• Profit withdrawal in multiples of 25000 after lock in period.

Product Characteristics:

64
• Bottom up stock selection
• In-depth, independent fundamental research

• High quality companies with relatively large capitalization.

• Disciplined valuation approach applying multiple valuation measures.

• Medium to long term vision, resulting in low portfolio turnover.

 PMS Pro Tech

Nifty Thrifty: Nifty futures are bought and sold on the basis of an automated
trading system that generates calls to go long/short. The exposure never exceeds
value of portfolio i.e. there is no leveraging; but being short in Nifty allows you to
earn even in falling markets and there by generates linear.

Beta Portfolio: Positional trading opportunities are identified in the futures

segment based on technical analysis. Inflection points in the momentum cycles
are identified to go long/short on stock/index futures with 1-2 month time
horizon. The idea is to generate the best possible returns in the medium term
irrespective of the direction of the market without really leveraging beyond the
portfolio value. Risk protection is done based on stop losses on daily closing
prices.

Product Details

• Minimum Investment: Rs 5 lakhs

• Lock in: 6 months
• Profit withdrawal in multiples of 25000 after lock in period.

65
 Product characteristics:

• Using swing based index -trading systems, stop and reverse, trend
following and momentum trading techniques.
• Nifty based products for low impact cost and low product volatity.

• The use of options to enchance the risk reward profile of the product
and therefore offer a higher Beta.

Trailing Stops: Momentum trading techniques are used to spot short term
momentum of 5-10 days in stocks and stocks/index futures. Trailing stop loss
method of risk management or profit protection is used to lower the portfolio
volitality and maximize returns.Trading opportunities are explored both on the
long and the short side as the market demands to get the best of both upwards &
downward trends.

66
 • Motilal Oswal Securities Ltd

Products and Services

 Value Strategy

Value Strategy is meant for investors with a Long Term investment horizon in the Indian
Equity Markets. Discovering an original investment idea involves deep and meticulous
analysis to discover the hidden true values. The portfolio’s investments philosophy
revolves around finding value. As such, the investment philosophy is not dependent on
the market trends but banks on the power of the intellect. A business is prudently picked
for investment after a thorough study of its underlying hidden long-term potential. To
purchase a piece of great business at a fraction of its true value is the discipline.

Portfolio Objective:
The Portfolio aims to deliver superior in good businesses run by great business managers.

Portfolio Characteristics:

• Value based stock selection

• Investment Approach : “Buy & Hold”

• Investments with Long term perspective

• Aim to Maximize post tax return due to Low Churn

Portfolio Tenure:

67
Long Term (3 – 5 Years)

Bull's Eye Strategy

Bull’s Eye PMS Strategy under is designed to invest in stocks with short-medium term
perspective, for a minimum 15-20% move. The investment philosophy is to find
“Momentum in Value”. It follows an active process driven method of profit booking and
is parked temporarily in the safety of liquid mutual funds/ exchanges traded liquid funds
till further opportunities are identified.
The stock selection lays greater emphasis on companies which good corporate
governance and excellent management track record. It would participate in emerging
sector and turn around stories so as to participate and capture sharp rallies.

Portfolio Objective:

The Scheme aims to deliver superior returns in Low to medium term by investing in
fundamentally strong stocks with momentum approach, coupled with active profit
booking.

Portfolio Characteristics:

• Investment Approach : “Momentum in Value

• Investments with Short-Medium term perspective
• Regular Profit Booking
• Ability to sit on cash

Portfolio Tenure:
Medium Term 1 Year

TDOS

68
The portfolio is designed to invest in themes /stocks in the small and mid cap segment
which are going to be a part the “NEXT TRILLION DOLLAR GDP GROWTH”. The
Portfolio would target to invest in Small & Mid Cap Opportunities which have the
potential of delivering above-average growth over the next 2-3 years. The investment
philosophy is to invest in stocks which are available at reasonable valuations and promise
more than average growth. The portfolio would aim to identify emerging themes. The
Portfolio would attempt to identify emerging themes early and exit when these when they
are fairly discounted.
We firmly believes that markets rewards consistent growth over a period of time and only
after critical size has been achieved by the company. For any stock to get recognized by
the Market and get a desired Valuation one has to wait for the right “Trigger Point”.
Perception Re-rating happens due to:

Portfolio Objective:

The Product aims to deliver superior returns by investing in Small & Mid cap ideas that
are part of the next Trillion Dollar GDP growth opportunity.

Portfolio Characteristics:

• Investments in Small and Mid-cap Stocks

• Bottom Up Stock Picking Approach

• Focused Theme Portfolio

• Buy and Hold Philosophy – low portfolio churn

Portfolio Tenure:

69
Long Term (3 Years)

Focused Strategy – Series 1

The Focused Strategy – Series I has been is designed to invest in stocks that can that can
benefit from growth in earnings and a higher P/E or higher valuation of assets. The
strategy aims to identify investment opportunities which exhibit a re-rating potential over
a 2 yearperiod.The strategy follows a concentrated portfolio approach, by limiting the
number of stocks in the portfolio

Portfolio Objective:
The portfolio will aim to invest in fundamentally sound companies that can benefit from
a re-rating. To increase the prospects for out performance, the portfolio will exhibit a
preference for companies that may have been overlooked or are out of favour.

Portfolio Characteristics:

• Bottom-up stock selection

• Investment in stocks with re-rating potential

• Concentrated portfolio

• Investment horizon: long term (two years)

Portfolio Tenure: long term (two years)

• Birla Sun Life

70
Portfolio Management Services

• Growth Portfolio

1. Higher returns at moderate volatility and risk

2. Rs.25 lacs per individual account (or such other amount as decided by the Portfolio
Manager at its sole discretion in each individual case)

3. Minimum two to three years

4. Invest in stocks of companies that can deliver products and services as good as the
best in the world and are looking at growing through exports.

• N-cash Portfolio

1. Higher returns at moderate volatility and risk

2. Rs 25 lacs per individual (or such other amount as decided by the Portfolio Manager
at its sole discretion in each individual case)

3. At least one year

4. Invest in stocks available at attractive valuations (hammered) due to various factors

but belonging to inherently good companies

71
• Value Portfolio

1. Higher returns at moderate volatility and risk

2. Rs. 25 lacs per individual account (or such other amount as decided by the Portfolio
Manager at its sole discretion in each individual case)

3. Minimum of one to three years

4. Invest in stocks that are inexpensive in terms of valuation and yet offer high growth
potential in terms of forword earnings.

• High Dividend Yield Portfolio

1. Moderate returns at low volatility and risk

2. Rs 25 lacs per individual account (or such other amount as decided by the Portfolio
Manager at its sole discretion in each individual case)

3. Minimum of one to three years

4. Invest in stocks of those companies which are inexpensive relative to the overall
market, peers and historical standards and possess high quality managements,
accelerating earnings and healthy balance sheets

• Custom Portfolio

1. A tailor-made portfolio to meet your particular needs and preferences

2. Rs 250 lacs per individual (or such other amount as decided by the Portfolio Manager
at its sole discretion in each individual case)

72
3. Minimum of one to three years

4. Completely customised to investor's needs and orientation.

• Dynamic Fixed Income Portfolio

1. A portfolio of fixed income securities completely customised to meet your unique

needs and preferences

2. Rs. 10 crores per account (or such other amount as decided by the Portfolio Manager
at its sole discretion in each individual case)

3. At least one year or till maturity of the security

4. Completely customised to meet the balance of returns and risk that you want. Overall,
superior returns through prudent portfolio structuring

73
 CHAPTER-4

RESEARCH METHODOLOGY & ANALYSIS

RESEARCH METHODOLOGY

Research is can be used for different studies depending upon the purpose, nature a
procedure of logical and systematic application of the fundamentals of science to the
general and overall questions of a study and scientific technique by which data is
analyzed.

74
Research Design is the method of conducting the research study. Different types of
research designs and availability of the resources. The research project on “Portfolio
Management Service-Product Development & Market Intelligence” was descriptive in
nature, so the following research design has been used.

1) Data has been collected from two sources

a) Primary Data: Primary data is the data, which is collected from the source
for the first time. It has been collected by using questionnaire to collect
information from the sample population. Interview with two experts and
one in-depth interview is also conducted for the research project in hand.
b) Secondary Data: Secondary data is the data, which is already available. It
has been collected from the research projects and newspapers magazines
and Internet.

2) SAMPLE SPECIFICATION: Random Sampling method has been used to collect

information from the primary source.Some individual, investors and corporate
brokers were selected at the random.
3) Data has been analyzed by keen observation with the help of tables

Assumptions:
The research was based on the following assumption:
1. The methodology used for this purpose is survey and questionable method. It is
assumed that this method is more suitable for collection of data.
2. It is assumed that the respondent have sufficient knowledge to ensure questionable.

75
3. It is assumed that the respondent have filled right and correct option according to
their view.

Objectives of the Research

Each research study has its own specific purpose.It is likely to discover to question
through the application of scientific procedure.But the main aim of our research is to find
out the truth that is hidden and which has not been discovered yet. Research study has
two objective.

RESEARCH DESIGN:
Research Design is the conceptual framework or structure within which research is to be
conducted.

Research Type:
Research type is descriptive. Because it is concerned with knowing the current state of
affairs and existing facts and not with finding any solutions.

Data is collected: Within the city.

Type of Data Required: Primary and secondary both. Survey Research is adopted.

SAMPLE DESIGN:
Due to time and resource contains, I used Sampling method.

Sampling unit: My sampling unit was investors

Sample size: 40 people were selected as sample size.

76
Sampling Method: Convenience sampling method was used in my research study.

COLLECTION OF DATA:
In collecting the primary data questionnaire method was used along with the observation
and personal interview method.

Analysis of Data Collected:

The data collected is then analyzed. The weight system was designed to analyze data
collected. The respondents were asked to give relative weights to various issues in the
questions. Then the percentage method was used for interpretation.

Limitations of the Study:

1. Due to time and resource constraints, the area of my study was small.

2. Biasness of respondents.

3. Sample size was very small, which may not be the representative of whole the
population.

4. Convenience method of sampling was used.

5. Investors have to undergo various formalities.

77
COMPARATIVE ANALYSIS

After whole study, we find out the following result :

Result on the basis of Growth Of PMS Product

59%
58%
57%
56% 3-D Colum n 1
55%
54%
53%
52%
51%
S M K I B F

S → SHAREKHAN
M → MOTILAL OSWAL
K→ KOTAK SECURITIES
I →INDIAINFOLINE
B→ BIRLASUNLIFE
F→ FIRSTGLOBAL

78
COMMENT: According to the survey indiainfoline pms product show better growth
from last 2 year as compared to other stock broking companies , on the other hand motilal
oswal pms product is giving stiff competition to indiainfoline. First global pms product
have better growth rate.

Result on the basis of Charges

• Intra day based

• Delivery based

80%
70%
60% intra based
50%
40% delivery
30% based
20%
10%
0%
S M K I B F

All the figure are in paise / 100 rupee.

S → SHAREKHAN
M → MOTILAL OSWAL
K→ KOTAK SECURITIES
I →INDIA INFOLINE Ltd
B→ BIRLASUNLIFE
F→ FIRSTGLOBAL

79
COMMENT: According to the survey motilal oswal charge maximum brokerage as
compare to others whereas India Info line Ltd charge only 0.20 paise on maximum
investment.

Result on the basis of Customer Perference

BASIS SHAREKHAN MOTILA KOTAK INDIA BIRLA FIRST

difference L OSWAL INFOLINE SUNLIFE GLOBAL

Share YES YES YES YES YES YES

trading
Commodity YES YES YES YES YES YES
tading

COMMENT:

1. According to survey 70% people are satisfied with Sharekhan Ltd because of
their RM’s facility and power of share khan ltd softfare.
2. According to survey , sharekhan ltd open new branches for individually handle to
their customer , but in motilal oswal and birla sun life there is no separate offices
for this.

3. On the otherhand first global professional advice based on comprehensive &

indepth research / unbiased opinion
and complete transparency in handling your funds.

80
 4. First Global Stockbroking Ltd also provide At Account Executive suggests when
to buy / sell, what to buy / sell and also keeps track of customer portfolio which
helps in making right investment decisions.

CHAPTER-5

FINDING AND ANALYSIS

1: Do you know about pms investment option ?

81
 Knowledge % age
YES 63%
NO 37%
TOTAL 100

% age

Yes
No

COMMENT : Only 63% people knows the exact meaning of PMS. Because remaining
37% take his / her residential property as an investment. According to law this is not
investment because of it is not create any profit for owner.

82
2: What is basis purpose of your investment ?

Investment %age
purpose
Liquidity 30%
Return 25%
Tax benefit 20%
Risk covering 5%
Capital 10%
appreciation
Other 10%
Total 100

%age

Liquidity
Return
Tax benefit
Risk covering
Capital apperciation
Other

COMMENT : 75% people are interested in liquidity ,return and tax benefit .And
remaining 25 % are interested in capital appreciation , risk covering and other.

3: What are the most important thing you take into account, while making
investment ?

83
Factor % age
Risk 8%
Return 17%
Both 75%

% age

Risk
Return
Both

COMMENT : 75 % people are considered the both factors risk as well as return but
,only 25% considered the risk or return factor.

4: Do you have any knowledge about pms products in market of different companies
?

84
Knowledge % age
Complete 8%
Partial 75%
NIL 17%
Total 100

%age

Complete
Partial
Nil

COMMENT : On that basis, we conclude that 17% people know nothing about pms
products and 75% people have partial knowledge about it, so some promotional activities
are required for increasing the awareness of security market.

5: On what basis you invest in particular pms product of your chosen company ?

Satisfaction % age
Operating 18%
expenses
Service 25%

85
Brokerage 57%
Total 100

86
CHAPTER-6

SUGGESTIONS
&
CONCLUSION

SUGGESTIONS
• Provide the facility of free demonstrations for all
• Commitment should be equalized for every person.
• Their should be minimum number of clients under relationship manager. So that
he can handle new as well old customer properly.
• Some promotional activities are required for the awareness of the customer.
• Seminar should be held for providing information to prospective and present
customers.

87
 CONCLUSION

On the basis of the study it is found that First Global Stock Broking Ltd is better services
provider than the other stockbrokers because of their timely research and personalized
advice on what stocks to buy and sell. First global provide Discretionary portfolio
management scheme and Non-Discretionary portfolio management scheme, it provide
individually and independently manage customer's portfolio and fund. It also provide
information that what IPO’s are coming in the market and accordingly invest and prepare
portfolio of the investors.

Study also conclude that people are not much aware about portfolio management service
and while it’s going to be biggest market in India.

88
The companies should also organize seminars and similar activities to enhance the
knowledge of prospective and existing customers. So that they feel more comfortable
while investing in portfolio management service.

Appendix

Questionnaire:
Name:
Age :
Income per annum:
Gender:
Occupation:
Contact No:

Ques1: Do you know about pms investment option ?

Ans a) Yes b) No

Ques2 : Do you have any knowledge about pms products in market of different
companies ?

Ans a) Partial b) Complete

Ques3: What is basis purpose of your investment ?

Ans a) Liquidity b) Return

89
 c) Capital appreciation d) Tax benefit

e) Risk Covering

Ques4: What are the most important thing you take into account, while making
investment ?

Ans a) Risk b) Return

c) Both

Ques5: In which company you have invested ?

Ans a) First Global b) Sharekhan

c) Indiainfoline d) Kotak

e) Birla Sunlife f) Motilal oswal

Ques6: Are you satisfied with your stock broking company ?

Ans a) Yes b) No

Ques7 What is the reason ? Please specify ?

Ans a) Growth b) Brokerage

c) Service d) Other

Ques8: Wheather you get expected return from your portfolio ?

Ans a) Yes b) No

Ques9: On what basis you invest in particular pms product of your chosen company ?

Ans a) On the basis of Growth b) Performance

c) Service d) Brokerage

90
Ques10: How will you describe your experience with PMS till date?

Quite Profitable Profitable Average no profit no loss losses

Ques11: What is your trading exchange preference ?

Ans a) NSE b) BSE

c) MCX d) NCDEX

Ques12: Do you know about First global pms products ?

Ans a) Yes b) No

ANYSUGGESTION:
……………………………………………………………………………………………
……………………………………………………………………………………………
…………………………………………………………………………………

91
Bibliography

BOOKS :

• Research methodolgy
• Portfolio management service (Mc Graw Hill Publishing company
ltd)

MAGAZINE:

• Valueline ( sharekhan monthly research magazine)

• Capitalmarket
• The Finapoils

INTERNET

• www.firstglobal.in
• www.sharekhan.com
• www.icicidirect.com
• www.koteksecurity.com
•www.motilaloswal.com
• www.indiainfoline.com
• www.capitaline.com
• www.moneycontrol.com
• http://blog.investraction.com/2007/11/sharekhans-pms-
performance.html

92
93