5players - Main Part

CHAPTER 1
INTRODUCTION
1.1 INTRODUCTION TO THE STUDY:
In the present day financial markets, investment has become complicated and is
both an art and a science. One makes investments for a return higher than what he can
get by keeping the money in a commercial co-operative Bank or even in a investment
Bank. In the financial field, it is a common knowledge that money or finance is scares
and those investors try to maximize their return. But the return is higher, if the risk also
higher. Return and risk go together and they have a trade off. All the investments are
risky to some degree to other. The art of investment is to see that the return is maximized
with the minimum risk, which is inherent in investments.
The project entitled “An Analysis on Five Major Players in the NSE” deals with
the technical analysis and the construction of an optimal portfolio on the basis of risk-
return evaluation and loss minimization.
INDIAN CAPITAL MARKET
Securities Market (overview)
The security market for equity, debt and derivatives. The debt market in turn may
be divided into three parts-the Government securities market, the corporate debt market
and the money market. The derivatives in turn may be divided into two parts-the option
market and future market.
Structure of Securities Market
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SECURITIES
MARKET
EQUITY MARKET DEBT MARKET DERIVATIVE MARKET
Govt: Corporate Money Options Futures

securities Debt market Market Market
Except the derivatives market, each of the above market has two components-the
Primary and the Secondary market. The markets where the new securities are issued the
Primary Market where the new securities are traded are called secondary Market.
History of Stock Exchanges
The history of stock exchanges in India dates back to the 1840s. There were 50-60
brokers led by the legendary Premchand Raychand. They formed the back bone of share
flotation by the east India Company and few commercial banks.
At the time of independence there were seven stock exchanges functioning the
major cities of country, represent at Bombay, Ahamadabad, Culcutta, Madras, Hydrabad
and Delhi etc.
From seven stock exchanges in 1946 the country moved to form a total of
nineteen stock exchanges by 1990. From the 90’s started the current phase under which
index stock exchanges are under going a rapid transaction to be at par with stock
exchanges in the developed world.
Membership of stock exchanges was initially opened to individual and
partnership firm and was later opened to companies.
The expert group suggested for a one-weak settlement ,replacing the old
margining system with ‘marking to market’ to do way with the carry forward system,
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introduction of formal market marking , more investor representation on governing
boards, and introduction of MIS.
In 1991, another high-powered study group on establishment of new stock
exchanges popularly known as Pherwani Committee recommended the promotion of a
new stock exchanges at Bombay as a model of exchange and to act as National stock
exchange (NSE).
The NSE of India was set up and it is Capital market segment became
operational in 1994. With the coming of OTCEI and NSE screen based trading took off
in India.
The stock exchanges are meant to facilitate mobilization of resources by
companies. Their effective regulation is required for protecting the interest of investors
and safeguarding their development role. Thus, when the Indian securities market saw
huge expansion in the late 80s, the government decided to set up a separate board for the
regulation and orderly functioning of stock exchanges and the security market, stop trade
malpractices, and to protect the investors.
SEBI was constituted as an interim administrative body by a notification issued
on 12 April 1988, it was given statutory status on January 1992 by an audience to
provide for establishment of SEBI.
On 2nd July 2001 SEBI removed the age old badla fro the Indian capital market
and introduced compulsory rolling settlement. This constitutes one of the most far-
reaching reforms in the history of India’s capital market. Equally important the widening
of the spectrum of equity derivatives to trading in options on both indices and stock.
The success of derivative segment depends on the degree of understanding on the
part of the various market players and the much needed flexibility in the market
operations as and when provided by SEBI. The SEBI seems to be considering changes in
the derivative segment, like increasing the number of underlying series on which
Operations and Futures may be written resizing the contracts etc.
1.2 OBJECTIVES OF THE STUDY:
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The fundamental objective of the project is:
1. To analyze the trend and relative strength of securities.
2. To construct Portfolio with different weights talking five major players in the
stock market.
3. To select the portfolio from the portfolio constructed.
1.3 SCOPE OF THE STUDY:

The scope of study is limited to the Indian capital market &Indian derivative
market. The recommendation in the study only subject to the Indian capital market
situations. The hedging strategies are very relevant in the stock market.
CHAPTER II
RESEARCH METHODOLOGY
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The study is purely based on the secondary data collected from the journals,
Books and websites.
2.1 DATA ANALYSIS:
Analysis was done by the application of the strategy and using simple statistical
tools, which is represented by tables. For analyzing the performance of the portfolio
Sharpe’s Performance index used.
2.2 DESIGN OF THE STUDY:
A. Determine the trend and relative strength of securities.
B. Determine Return of each security.
C. Determine risk of selected securities.
D. Determine the value of each security.
E. Determine Alpha value of each security.
F. Determine Unsystematic Risk (Residual Value) of each security.
G. Construct four portfolios
 By giving equal weight to each security in the portfolio
 By giving weight to each security based on price earning Ratio.
 By giving weight to the securities randomly.
 By giving the weight to each security on the basis of Risk
Adjusted Rate of Return.
H. Calculate the return and risk of each portfolio.
I. Select best portfolio using Sharpe’s performance index.
2.3 PERIOD OF THE STUDY:

The study was carried for a period of 16th January 2007 to 20th March 2007.
Tools for Analysis;
The collected data has been analyzed using basic statistical tools like Ratios,
charts and formulas.
Portfolio Construction:
Alpha = stock Return –(Beta × Market Return)
αi =(Ri – βm)
βi = N∑xy-∑x∑y
N∑x2 –(∑x)2
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Portfolio Alpha (αp) = ∑nωiαi
Portfolio Beta (βp) = ∑nωiβi
Portfolio Return =Portfolio +(portfolio beta ×Market return)
Ri = αp+(β×Rm)
Portfolio Risk (σp2 ) = βp2 σm2 + ∑n ωi2 σei2
Portfolio Evaluation:
Sharpe Ratio =( Rp-Rf ) ÷ σ p
Treynor ratio (TR) = (Rp-Rf)÷βp
Jensen Measure:
E(Rp+βp (Rm-Rf)
αp = Rp –E(Rp)
2.4 LIMITATIONS:
 The duration of the study was limited to a period of two months so that an extencive
and deep study could not be possible.
 Only three combinations are available in portfolio.
 A well diversified portfolio cannot be constructed due to time constraint.
CHAPTER III
LITERATURE REVIEW
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Technical Analysis
Technical analysis is useful in timing a buy or sells order-an order that may be
implied by the forecast of return and risk. A technician must identify the trend and
recognize when one trend come to an end and price start in the opposite direction. The
central problem is to distinguish between reversals with in a trend real changes in the
trend itself. This problem of sorting out price is critical because the price do not change
in a smooth uninterrupted fashion.
Portfolio Management
Portfolio is a combination of securities such as stock, bond and money market
instruments. The process of blending together the board asset classes so as to obtain
optimum return with minimum risk is called portfolio construction.
Diversification of investment helps to risk over many assets. A diversification of
securities gives the assurance of obtaining the anticipated return on the portfolio. In
diversification portfolio, some securities neither may nor perform as expected, but the
others may exceed the expectation and the actual return of the portfolio reasonably close
to the anticipated one. A wise investor manages his portfolio effectively so as to secure
highest return for the lowest risk possible at the level of investment this is called
portfolio management.
Portfolio management is a process encompassing many activities aimed at
optimizing the investment of one’s fund. Five phases can be identified in the process.
Each phase is an integral part of whole process and success of the portfolio management
depends on the efficiency in carrying out of these phases.
Phases of Portfolio Management
1 Security analysis
2 Portfolio analysis
3 Portfolio selection
4 Portfolio revision
5 Portfolio evolution
Security analysis
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Security analysis is the initial phase of portfolio management process. This step
consist of examining the risk return characteristic of individual securities and sell the
over price securities. The three alternative approaches to securities analysis, namely
fundamental analysis, technical analysis and efficient market hypothesis.
Portfolio Analysis
A portfolio is a group of securities held together as an investment. Portfolio
analysis phase of portfoli0o management consist of identifying the range of possible
portfolio that can be constituted from a given set of securities and calculating their return
and risk for further analysis.
Portfolio selection
Portfolio provided the inputs for the next phases in the portfolio management
which is to generate a portfolio selection. The proper goal of portfolio that provide the
highest return at a given level of risk. A portfolio having this characteristic is known as
efficient portfolio. From this set of efficient portfolio, optimal portfolio has to be
selected for investment. In this study Markowitz model has used for the selection of
portable portfolio.
Portfolio Revision Portfolio revision involves changing the existing mix of the
securities. The main objective of portfolio revision is to ensure the optimally of the
revised portfolio. Portfolio revision is not a casual process of portfolio management,
portfolio revision is as important as portfolio analysis and selection.
Portfolio Evaluation.
Portfolio evaluation is a process, which is concerned with assessing the
performance of the portfolio over a selected period of time in terms of return and risk. It
provides mechanism for identifying weakness in the investment process for improving
these deficient areas. It provides a feed back mechanism for improving the entire
portfolio management process.
FREQUENTLY ASKED QUESTIONS ON DEMATERIALISATION
Disclaimer: These FAQs are not the interpretation of law but provide only a simplistic
explanation of terms /concepts related to the depository system. SEBI does not certify
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the authenticity of the information present in this section. All information has been
updated till March 31, 2006. For full particulars of laws governing the depository
system, please refer to the Acts/Regulations/Guidelines/Circulars appearing under the
Legal Framework Section.
Understanding Depository System
1. What is a Depository?
A depository is an organization which holds securities of investors in electronic form at
the request of the investors through a registered Depository Participant. It also provides
services related to transactions in securities.
2. How is a depository similar to a bank?

It can be compared with a bank, which holds the funds for depositors. A Bank –
Depository Analogy is given in the following table:
BANK-DEPOSITORY – AN ANALOGY
BANK DEPOSITORY
Holds funds in an account Hold securities in an account
Transfers funds between Transfers securities between accounts on the instruction
accounts on the instruction of the account holder
of the account holder
Facilitates transfer without Facilitates transfer of ownership without having to handle
having to handle money securities
Facilitates safekeeping of Facilitates safekeeping of securities
money
3. How many Depositories are registered with SEBI?

At present two Depositories viz. National Securities Depository Limited (NSDL) and
Central Depository Services (I) Limited (CDSL) are registered with SEBI.
4. Who is a Depository Participant?

A Depository Participant (DP) is an agent of the depository through which it interfaces
with the investor. A DP can offer depository services only after it gets proper
registration from SEBI. Banking services can be availed through a branch whereas
depository services can be availed through a DP.
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5. What is the minimum net worth required for a depository?
The minimum net worth stipulated by SEBI for a depository is Rs.100 corer.
6. How many Depository Participants are registered with SEBI?

As on 31/03/2006, total of 538 DPs are registered with SEBI. A list of DP’s and their
addresses can be downloaded from SEBI website.
7. Is it compulsory for every investor to open a depository account to trade in

the capital market?
As per the available statistics at BSE and NSE, 99.9% settlement takes place in demat
mode only. Therefore, in view of the convenience in settlement through demat mode, it
is advisable to have a beneficiary owner (BO) account to trade at the exchanges.
8. What are the benefits of availing depository services?

The benefits are enumerated below:-
A safe and convenient way to hold securities

Immediate transfer of securities;
No stamp duty on transfer of securities;
Elimination of risks associated with physical certificates such as bad delivery, fake
securities, delays, thefts etc.;
Reduction in paperwork involved in transfer of securities;·
Reduction in transaction cost;
No odd lot problem, even one share can be sold;
Nomination facility;
Change in address recorded with DP gets registered with all companies in which
investor holds securities electronically eliminating the need to correspond with each of
them separately;
Transmission of securities is done by DP eliminating correspondence with companies;
Automatic credit into demat account of shares, arising out of
bonus/split/consolidation/merger etc.
Holding investments in equity and debt instruments in a single account.
Account Opening
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9. How can services of a depository be availed?
To avail the services of a depository an investor is required to open an account with a
depository participant of any depository.
10. How can one open an account?

First an investor has to approach a DP and fill up an account opening form. The account
opening form must be supported by copies of any one of the approved documents to
serve as proof of identity (POI) and proof of address (POA) as specified by SEBI.
Besides, production of PAN card in original at the time of opening of account has been
made mandatory effective from April 01, 2006.
All applicants should carry original documents for verification by an authorized official
of the depository participant, under his signature.
Further, the investor has to sign an agreement with DP in a depository prescribed

standard format, which details rights and duties of investor and DP. DP should provide
the investor with a copy of the agreement and schedule of charges for their future
reference. The DP will open the account in the system and give an account number,
which is also called BO ID (Beneficiary Owner Identification number).
The DP may revise the charges by giving 30 days notice in advance. SEBI has
rationalized the cost structure for dematerialization by removing account opening
charges, transaction charges for credit of securities, and custody charges vide circular
dated January 28, 2005.
Further, SEBI has vide circular dated November 09, 2005 advised that with effect from
January 09, 2006, no charges shall be levied by a depository on DP and consequently, by
a DP on a Beneficiary Owner (BO) when a BO transfers all the securities lying in his
account to another branch of the same DP or to another DP of the same depository or
another depository, provided the BO Account/s at transferee DP and at transferor DP are
one and the same, i.e. identical in all respects. In case the BO Account at transferor DP
is a joint account, the BO Account at transferee DP should also be a joint account in the
same sequence of ownership.
11. Why should an investor give his bank account details at the time of account
opening?
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It is for the protection of investor’s interest. The bank account number will be mentioned
on the interest or dividend warrant, so that such warrant cannot be enchased by any one
else. Further, cash corporate benefits such as dividend, interest will be credited to the
investors account directly through the ECS (Electronic Clearing Service) facility,
wherever available, by the company.
12. Can an investor change the details of his bank account?

Yes. Since in the depository system monetary benefits on the security balances are paid
as per the bank account details provided by the investor at the time of account opening,
the investor must ensure that any subsequent change in bank account details is informed
to the DP.
13. What should be done if the address of the investor changes?

Investor should immediately inform his/her DP, who in turn will update the records.
This will obviate the need of informing different companies.
14. Can multiple accounts be opened?

Yes. An investor can open more than one account in the same name with the same DP
and also with different DPs.
15. Does the investor have to keep any minimum balance of securities in his/her
accounts?
No.
16. Is it necessary to have account with the same DP as broker has?

No. Depository / DP can be chosen by investor as per convenience irrespective of the DP
of the broker.
17. Can an investor open a single account for securities owned in different
ownership patterns such as securities owned individually and securities owned
jointly with others?
No. The demat account must be opened in the same ownership pattern in which the
securities are held in the physical form. e. g. if one share certificate is in the individual
name and another certificate is jointly with somebody, two different accounts would
have to be opened.
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18. What is required to be done if one has physical certificates with the same
combination of names, but the sequence of names is different i.e. some certificates
with ‘A’ as first holder and ‘B’ as second holder and other set of certificates with
‘B’ as first holder and ‘A’ as the second holder?
In this case the investor may open only one account with ‘A’ & ‘B’ as the account
holders and lodge the security certificates with different order of names for
dematerialization in the same account. An additional form called "Transposition cum
Demat" form will have to be filled in. This would help you to effect change in the order
of names as well as dematerialize the securities.
19. Can an investor operate a joint account on "either or survivor" basis just like a
bank account?
No. The demat account cannot be operated on "either or survivor" basis like the bank
account.
20. Can someone else operate the account on behalf of the BO on the basis of a
power of attorney?
Yes. If the BO authorizes any person to operate the account by executing a power of
attorney and submit it to the DP, that person can operate the account on behalf of the
BO.
21. Can addition or deletion of names of accountholders is permitted after opening

the account?
No. The names of the account holders of a BO account cannot be changed. If any
change has to be effected by addition or deletion, a new account has to be opened in the
desired holding pattern (names) and then transfer the securities to the newly opened
account. The old account may be closed.
22. Can an investor close his demat account with one DP and transfer all securities
to another account with another DP?
Yes. The investor can submit account closure request to his DP in the prescribed form.
The DP will transfer all the securities lying in the account, as per the instruction, and
close the demat account.
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23. What would be the charges for account closure and securities transfer due to
account closing?
SEBI vide Circular No. MRD/DoP/Dep/Cir-22 /05 dated November 09, 2005 advised
that with effect from January 09, 2006, no charges shall be levied by a depository on DP
and consequently, by a DP on a Beneficiary Owner (BO) when a BO transfers all the
securities lying in his account to another branch of the same DP or to another DP of the
same depository or another depository, provided the BO Account/s at transferee DP and
at transferor DP are one and the same, i.e. identical in all respects. In case the BO
Account at transferor DP is a joint account, the BO Account at transferee DP should also
be a joint account in the same sequence of ownership.
All other transfer of securities consequent to closure of account, not fulfilling the above-
stated criteria, would be treated like any other transaction and charged as per the
schedule of charges agreed upon between the BO and the DP.
24. Whether investors can freeze or lock their accounts?

Investors can freeze or lock their accounts for any given period of time, if so desired.
Accounts can be frozen for debits (preventing transfer of securities out of accounts) or
for credits (preventing any movements of hindrances into accounts) or for both.
Dematerialisation
25. What is dematerialisation?

Dematerialization is the process by which physical certificates of an investor are
converted to an equivalent number of securities in electronic form and credited into the
investor's account with his/her DP.
26. How can one convert physical holding into electronic holding i.e how can one
dematerialise securities?
In order to dematerialize physical securities one has to fill in a DRF (Demat Request
Form) which is available with the DP and submit the same along with physical
certificates one wishes to dematerialize. Separate DRF has to be filled for each ISIN
Number. The complete process of dematerialization is outlined below:
• Surrender certificates for dematerialisation to your depository participant.
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• Depository participant intimates Depository of the request through the system.
• Depository participant submits the certificates to the registrar of the Issuer
Company.
• Registrar confirms the dematerialization request from depository.
• After dematerialising the certificates, Registrar updates accounts and informs
depository of the completion of dematerialisation.
• Depository updates its accounts and informs the depository participant.
• Depository participant updates the demat account of the investor.
27. What is an ISIN?

ISIN (International Securities Identification Number) is a unique identification number
for a security.
28. Can odd lot shares be dematerialised?

Yes, odd lot share certificates can also be dematerialized.
• 29. Do dematerialised shares have distinctive numbers?

Dematerialized shares do not have any distinctive numbers. These shares are
fungible, which means that all the holdings of a particular security will be
identical and interchangeable.
30. Can electronic holdings be converted back into Physical Certificates?

Yes. The process is called dematerialization. If one wishes to get back his
securities in the physical form one has to fill in the RRF (Remit Request Form)
and request his DP for dematerialization of the balances in his securities account.
The process of dematerialization is outlined below:
• One makes a request for dematerialization.

• Depository participant intimates depository of the request through the system.
• Depository confirms dematerialization request to the registrar.
• Registrar updates accounts and prints certificates.
• Depository updates accounts and downloads details to depository participant.
• Registrar dispatches certificates to investor.
Trading / Settlement
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31. What is the procedure for selling dematerialised securities?
The procedure for buying and selling dematerialized securities is similar to the
procedure for buying and selling physical securities. The difference lies in the process
of delivery (in case of sale) and receipt (in case of purchase) of securities.
In case of purchase:-
• The broker will receive the securities in his account on the payout day
• The broker will give instruction to its DP to debit his account and credit
investor's account
• Investor will give ‘Receipt Instruction to DP for receiving credit by filling
appropriate form. However one can give standing instruction for credit in to ones
account that will obviate the need of giving Receipt Instruction every time.
In case of sale:-
The investor will give delivery instruction to DP to debit his account and credit the
broker’s account. Such instruction should reach the DP’s office at least 24 hours before
the pay-in as other wise DP will accept the instruction only at the investor’s risk.
32. What is 'Standing Instruction' given in the account opening form?

In a bank account, credit to the account is given only when a 'pay in' slip is submitted
together with cash/cheque. Similarly, in a depository account 'Receipt in' form has to be
submitted to receive securities in the account. However, for the convenience of
investors, facility of 'standing instruction' is given. If you say 'Yes' for standing
instruction, you need not submit 'Receipt in' slip everytime you buy securities. If you are
particular that securities can be credited to your account only with your consent, then do
not say 'yes' [or tick ] to standing instruction in the application form.
33. What is delivery instruction slip (DIS)? What precautions do one need to
observe with respect to Delivery Instruction Slips?
To give the delivery one has to fill a form called Delivery Instruction Slip (DIS). DIS
may be compared to cheque book of a bank account. The following precautions are to be
taken in respect of DIS:-
• Ensure and insist with DP to issue DIS book.
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• Ensure that DIS numbers are pre-printed and DP takes acknowledgment for the
DIS booklet issued to investor.
• Ensure that your account number [client id] is pre-stamped.
• If the account is a joint account, all the joint holders have to sign the instruction
slips. Instruction cannot be executed if all joint holders have not signed.
• Avoid using loose slips
• Do not leave signed blank DIS with anyone viz., broker/sub-broker.
• Keep the DIS book under lock and key when not in use.
• If only one entry is made in the DIS book, strike out remaining space to prevent
misuse by any one.
• Investor should personally fill in target account -id and all details in the DIS.
34. Is it possible to give delivery instructions to the DP over Internet and if yes,
how?Yes. Both NSDL and CDSL have launched this facility for delivering instructions
to your DP over Internet, called SPEED-e and EASI respectively. The facility can be
used by all registered users after paying the applicable charges.
Corporate Benefits
35. Is it possible to get securities allotted in public offering directly in the electronic
form?
Yes, it is possible to get securities allotted to in Public Offerings directly in the
electronic form. In the public issue application form there is a provision to indicate the
manner in which an investor wants the securities allotted. He has to mention the BO ID
and the name and ID of the DP on the application form. Any allotment made will be
credited into the BO account.
36. How are cash corporate benefit such as dividend / interest received?
The concerned company obtains the details of beneficiary holders and their holdings as
on the date of the book closure / record date from Depositories. The payment to the
investors will be made by the company through the ECS (Electronic Clearing Service)
facility, wherever available. Thus the dividend / interest will be credited to your bank
account directly. Where ECS facility is not available dividend / interest will be given by
issuing warrants on which your bank account details are printed. The bank account
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details will be those which you would have mentioned in your account opening form or
changed thereafter.
37. How would one receive non-cash corporate benefit such as bonus etc.?
The concerned company obtains the details of beneficiary holders and their holdings as
on the date of the book closure / record date from depositories. The entitlement will be
credited by the company directly into the BO account.
38. Who should be contacted in case of discrepancies in corporate benefits?

In case of discrepancies in corporate benefits, one can approach the company / its R&T
Agent.
Pledging
39. Can one pledge dematerialised securities?

Yes. In fact, pledging dematerialized securities is easier and more advantageous as
compared to pledging physical securities.
40. What should one do to pledge electronic securities?

The procedure to pledge electronic securities is as follows:
• Both investor (ledger) as well as the lender (pledge) must have depository
accounts with the same depository;
• Investor has to initiate the pledge by submitting to DP the details of the securities
to be pledged in a standard format ;
• The pledge has to confirm the request through his/her DP;
• Once this is done, securities are pledged.
• All financial transactions between the ledger and the pledge are handled as per
usual practice outside the depository system.
41. How can one close the pledge after repayment of loan?
After one has repaid the loan, one can request for a closure of pledge by instructing the
DP in a prescribed format. The pledge on receiving the repayment will instruct his DP
accordingly for the closure of the pledge.
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42. Can one change the securities offered in a pledge?
Yes, if the pledgee [lender] agrees, one may change the securities offered in a pledge.
43. Who would receive the corporate benefits on the pledged securities?
The securities pledged are only blocked in the account of pledgor in favour of the
pledgee. The pledgor would continue to receive all the corporate benefits.
Transaction Statement
44. How does one know that the DP has updated the account after each
transaction?
The DP gives a Transaction Statement periodically, which will detail current balances
and various transactions made through the depository account. If so desired, DP may
provide the Transaction Statement at intervals shorter than the stipulated ones, probably
at a cost.
45. At what frequency will the investor receive his Transaction Statement from his
DP?
DPs have to provide transaction statements to their clients once in a month, if there are
transactions and once in a quarter, if there are no transactions.
Moreover, DPs can provide transaction statement in electronic form under digital
signature subject to their entering into a legally enforceable arrangement with the BOs to
this effect.
46. What is to be done if there are any discrepancies in transaction statement?

In case of any discrepancy in the transaction statement, one can contact his/her DP. If
the discrepancy cannot be resolved at the DP level, one should approach the Depository.
47. Whom should one contact in case of any investor complaint / problem / query?
In case of any investor complaint / problem / query one may first contact his DP. If DP
is unable to solve the complaint / problem / query one should approach concerned
depository. If one is not satisfied one may approach SEBI. One may also approach SEBI
directly.
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Lending and borrowing of demat securities
48. What is Lending and Borrowing of Securities?

If any person required to deliver a security in the market does not readily have that
security, he can borrow the same from another person who is willing to lend as per the
Securities Lending and Borrowing Scheme.
49. Can lending and borrowing be done directly between two persons?
No. Lending and borrowing has to be done through an 'Approved Intermediary'
registered with SEBI. The approved intermediary would borrow the securities for further
lending to borrowers. Lenders of the securities and borrowers of the securities enter into
separate agreements with the approved intermediary for lending and borrowing the
securities. Lending and borrowing is affected through the depository system.
50. Can I lend the securities lying in my account?

Yes. You can lend your securities through Approved Intermediaries registered with
SEBI.
51. How would I lend my demat securities?

You may enter into an agreement with the approved intermediary to be a lender under
this scheme. After that, you may lend securities any time by submitting lending
instruction to your DP.
52. How would I get back the securities lent by me?

Intermediary may return the securities at any time or at the end of the agreed period of
lending. Intermediary has to repay the securities together with any benefits received
during the period of the loan.
53. How would I receive the corporate benefits which would accrue on these
securities during the period of lending?
The benefits will be given to the Intermediary/borrower. However, whenever the
securities are being returned / recalled. Intermediary/borrower will return the securities
together with benefits received.
Nomination
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54. Who can nominate?
Nomination can be made only by individuals holding beneficiary accounts either singly
or jointly. Non-individuals including society, trust, body corporate, karta of Hindu
Undivided Family, holder of power of attorney cannot nominate.
55. Who can be a nominee?

Only an individual can be a nominee. A nominee shall not be a society, trust, body
corporate, partnership firm, Karta of Hindu Undivided Family or a power of attorney
holder.
Transmission of demat securities
56. What is transmission of demat securities?

Transmission is the process by which securities of a deceased account holder are
transferred to the account of his legal heirs / nominee. Process of transmission in case of
dematerialized holdings is more convenient as the transmission formalities for all
securities held in a demat account can be completed by submitting documents to the DP,
whereas in case of physical securities the legal heirs/nominee/surviving joint holder has
to independently correspond with each company in which securities are held.
57. In the event of death of the sole holder, how the successors should claim the
securities lying in the demat account?
The claimant should submit to the concerned DP an application Transmission Request
Form (TRF) along with the following supporting documents
1. In case of death of sole holder where the sole holder has appointed a nominee
Notarized copy of the death certificate
2. In case of death of the sole holder, where the sole holder has not appointed a
nominee
Notarized copy of the death certificate
Any one of the below mentioned documents -
Succession certificate
21
Copy of probated will
Letter of Administration
The DP, after ensuring that the application is genuine, will transfer securities to the
account of the claimant.
The major advantage in case of dematerialized holdings is that the transmission

formalities for all securities held with a DP can be completed by interaction with the DP
alone, unlike in the case of physical share certificates, where the claimant will have to
interact with each Issuing company or its Registrar separately.
Inter Depository Transfers
58. If my depository account is with NSDL/CDSL, can I receive my securities from

an account holder having account with the other depository in India?
Yes. Inter depository transfers are possible.
CHAPTER IV
DATA ANALYSIS AND INTERPRETATIONS
4.1 TECHNICAL ANALYSIS
Technical analysis is a study of the market data in terms of factors affecting
supply and demand schedules, namely, price volume of trading etc. The technical
analysis believes that share prices are determined by the demand and supply force
operating the market. These demand and supply forces in turn influenced by a number of
fundamental factors as well as certain psychological and emotional factors. The
combined impact of all these factors is reflected in the share price movement. The
technical analysis is the name given to techniques that utilize share price data.
Reliance Industries
22
A. Trend Analysis
Chart 1.Showing Short-term Exponential Moving Average Trend (12 days)
-----------12MA---------PRICE
Inference
The rising EMA indicate that the short term trend for the stock is bullish. This is
again confirmed by the price which is moving above the EMA line. The last trend
reverse was on 27th February 2007, on which date the trend moves from bearish as
indicated by cross over of price line while it is moving upward.
23
Chart 2.Showing Medium-term Exponential Moving Average Trend (40days)
24
-----------48EMA--------PRICE
Inference
The rising EMA indicate that the medium term trend for the stock is bullish. This
is again confirmed by the price which is moving above the EMA line. The last trend
25
-------200EMA------PRICE
Inference
The rising EMA indicate that the long term trend for the stock is bullish. This is
B. Stock Momentum
Chart 1. Showing Rate of Change indicator ( ROC )
26
Inference
The increasing ROC index indicates that the stock is having a positive
momentum or increasing momentum.
C. Oscillators
Chart 1. Showing Moving Average Coverage & Divergence ( MACD )
27
Inference
The MACD line has crossed the reference line on 27th February 2007, while
moving upward providing a buy signal.
Chart2. Showing RSI (Relative Strength Index)
28
Inference
The RSI line has crossed 70 marks on 27th February 2007 providing as a buy
signal.
Chart 3. Showing Stochastic
29
Inference
The %K line below the % D line showing sell Signal.
Technical Indicators of Reliance Industries
30
A. Trend Analysis Signal
Short Term Bullish
Medium Term Bullish
Long Term Bullish
B. Stock Momentum
ROC Positive
C .Oscillators
MACD Buy
RSI Buy
Stochastic Buy
INFOSYS
A. Trend Analysis
31
--------12EMA------PRICE
Inference
The rising EMA indicate that the short term trend for the stock is bearish. This is
indicated by cross over of price line while it is moving downward.
Chart 2.Showing Medium-term Exponential Moving Average Trend (48 days)
32
----------48EMA--------PRICE
Inference
reverse was on 27th February 2007, on which date the trend moves from bullish as
indicated by cross over of price line while it is moving upward
33
----------200EMA--------PRICE
Inference
B. Stock Momentum
34
Chart 1. Showing Rate of Change indicator ( ROC )
Inference
The decreasing ROC index indicates that the stock is having a negative
momentum or decreasing momentum.
C. Oscillators
35
Chart 1. Showing Moving Average Coverage & Divergence (MACD)
Inference
moving upward providing a Buy signal.
36
Inference
The RSI line has crossed below the 70 marks on 27th February 2007
providing as a hold signal.
37
Inference
Technical Indicators of Infosys
38
Short Term Bearish
Medium Term Bullish
Long Term Bullish
B. Stock Momentom
ROC Negative
C .Oscillators
MACD Buy
RSI Hold
Stochastic Sell
ACC
A. Trend Analysis
39
---------12EMA-------PRICE
Inference
40
------------48EMA--------PRICE
Inference
41
----------200EMA-------PRICE
Inference
B. Stock Momentum
42
Chart 1. Showing Rate of Change indicator (ROC)
Inference
C. Oscillators
43
Inference
44
Inference
The RSI line has crossed 70 marks on 27th February 2007 providing as a
hold signal.
45
Inference
Technical Indicators of ACC
46
Short Term Bullish
Medium Term Bullish
Long Term Bullish
B. Stock Momentum
ROC Positive
C .Oscillators
MACD Buy
RSI Hold
Stochastic Sell
SBI
A. Trend Analysis
47
---------12EMA-------PRICE
Inference
48
----------48EMA-------PRICE
Inference
The rising EMA indicate that the medium term trend for the stock is bearish.
This is again confirmed by the price which is moving above the EMA line. The last
trend reverse was on 27th February 2007, on which date the trend moves from bearish as
indicated by cross over of price line while it is moving downward
49
----------200EMA--------PRICE
Inference
The rising EMA indicate that the long term trend for the stock is bearish. This is
again confirmed by the price which is moving below the EMA line. The last trend
indicated by cross over of price line while it is moving downward
B. Stock Momentum
50
Inference
The decreasing ROC index indicates that the stock is having a negative
C. Oscillators
51
Inference
52
Inference
The RSI line has crossed 70 marks on 27th February 2007 providing as a buy
signal.
53
Inference
Technical Indicators of ACC
54
Short Term Bullish
Medium Term Bearish
Long Term Bearish
B. Stock Momentum
ROC Negative
C .Oscillators
MACD Buy
RSI Buy
Stochastic Buy
Mahindra & Mahindra
A. Trend Analysis
55
---------12EMA--------PRICE
Inference
56
----------48EMA--------PRICE
Inference
57
---------200EMA--------PRICE
Inference
B. Stock Momentum
58
Inference
C. Oscillators
59
Inference
moving downward providing a sell signal.
60
Inference
The RSI line has crossed 70 marks on 27th February 2007 providing as a sell
signal.
61
Inference
Technical Indicators of Mahindra
62
Short Term Bullish
Medium Term Bullish
Long Term Bullish
B. Stock Momentum
ROC Positive
C .Oscillators
MACD Sell
RSI Sell
Stochastic Sell
4.2 SECURITY AND PORTFOLIO ANALYSIS:
Any rational investor before investing his or her investable wealth in the stock,
analyses the risk associated with the particular stock. The actual return he receives from
a stock may vary from his expected return and the risk is expressed in the term of
variability of return
Table 1. Showing Return &Risk of Securities
Company Return (Ri) Risk (σi) Risk free rate Risk adjusted rate
63
(Rf) of return)
Reliance 48.75408 2.971867 7.87 13.75704
Infosys -1.5777 5.253261 7.87 -1.79844
ACC 77.73826 2.489492 7.87 28.06527
SBI 92.34586 7.737375 7.87 10.9179
Mahindra 77.68708 3.838485 7.87 18.18871
Total 69.13046
Inference
From the above table it is clear that the security SBI give maximum return and
Infosys have minimum return. The security ACC has the minimum risk and security ask
have the maximum risk. By calculating the adjusted rate of return, the best security to
make the investment is ACC.
Table 1. Showing Beta values of Companies (β)
Company Beta (β)

Reliance 0.008287
Infosys 0.091447
ACC 0.069818
SBI 0.183893
Mahindra -0.10838
Inference
The above table that SBI has the highest beta value and Mahindra has the lowest
Beta value.
Alpha Calculations
Return of stock = Alpha +(Beta ×Market Return Per year)
Ri=α+(βi × Rm)
So
Alpha (αi) = Ri- (βi × Rm)
Alpha of Reliance industries Ltd.
Ri= 48.75408
Βi= 0.008287
Rm=37.52744
(αi)= 48.75408-(0.008287 × 37.52744)
64
(αi)=48.4431
Alpha of Infosys
Ri= -1.5777
Βi= 0.091447
Rm= 37.52744
(αi)= -1.5777-(0.091447× 37.52744)
(αi)= -5.00946
Alpha of ACC
Ri= 77.73826
Βi= 0.069818
Rm=37.52744
(αi)= 77.73826-(0.069818× 37.52744)
(αi)=75.11819
Alpha of State Bank of India
Ri= 92.34586
Βi= 0.183893
Rm=37.52744
(αi)= 92.34586-(0.183893 × 37.52744)
(αi)=85.44481
Alpha of Mahindra and Mahindra

Ri= 77.68708
Βi= 0.10838
Rm= 37.52744
(αi)= 77.68708-(0.10838× 37.52744)
(αi)= 81.75437
Table 2. Showing Alpha values of Companies (α)
Company Alpha (α)

Reliance 48.4431
65
Infosys -5.00946
ACC 75.11819
SBI 85.44481
Mahindra 81.75437
Inference
SBI has the highest alpha indicating the highest market return and the Infisys
indicating the negative alpha, is always earning the below market return.
Portfolio Analysis
A portfolio analysis consisting of identifying the range of possible portfolios that
can be consisted from a given set of securities and calculating their return and risk for
further analysis.
Alpha
The alpha value indicates the extra return earn by the stock over and above the
market return. Alpha measures the unsystematic risk of the security.
Alpha (αi) = Ri- (βi × Rm)
Beta(β)
Beta describes the relationship between the stock return and the market index
return. This can be positive or negative. If beta is one percent change in the market index
return cause exactly one percent changes in the stock return. It indicates that the
systematic moves in tandem with the market. If the portfolio is efficient, the beta
measures the systematic risk effectively.
βi = N∑xy- ∑x∑y
N∑x2 –(∑x)2
Beta Calculation
β = N∑xy- ∑x∑y
N∑x2 –(∑x)2
N= Number of Observations
Y= Current Stock Price – Yesterday’s Stock Price × 100

Yesterday’s Stock Price
66
X= Current Market Index – Yesterdays Market Index × 100
Yesterdays Market Index
Beta of RELIANCE
N = 758
∑xy = 25.81311
∑y = 101.9399
∑x = 84.11371
∑x2 = 1759.194
β = (758 × 25.81311) – (101.9399 × 84.1137)

(758 × 1759.194) – (84.11371) 2
β = 0.008287
Beta of INFOSYS
N = 758
∑xy = 160.924
∑y = 8.157296
∑x = 84.11371
∑x2 = 1759.194
β = (758 × 160.924) – (8.157296 × 84.1137)

(758 × 1759.194) – (84.11371) 2
β = 0.091447
67
Beta of ACC
N = 758
∑xy = 140.5889
∑y = 165.9757
∑x = 84.11371
∑x2 = 1759.194
β = (758 × 140.5889) – (165.9757 × 84.1137)

(758 × 1759.194) – (84.11371) 2
β = 0.069818
Beta of STATE BANK OF INDIA
N = 758
∑xy = 342.0372
∑y = 182.4799
∑x = 84.11371
∑x2 = 1759.194
β = (758 × 342.0372) – (182.4799 × 84.1137)

(758 × 1759.194) – (84.11371) 2
β = 0.183893
68
Beta of MAHINDRA and MAHINDRA
N = 758
∑xy = -172.17
∑y = 157.5526
∑x = 84.11371
∑x2 = 1759.194
β = (758 × -172.17) – (157.5526 × 84.1137)

(758 × 1759.194) – (84.11371) 2
β = 0.10838
Table 3. Showing Residual Variance of Companies ( σ2ei )
Company Residual Variance ( σ2ei )

Reliance 8.8318101
Infosys 27.57434
ACC 6.184506
SBI 59.77633
Mahindra 14.70249
Calculation of Residual Variance (σ2ei )
Residual variance = stock variance – (Beta2 × Market variance)
( σ2ei ) = σi2 –( β2 × σm2)
Residual variance of Reliance
69
σi2 = 8.831995
β2 = 0.000069
σm2 = 2.680047
σ2ei = 8.831995 – (0.000069 × 2.680047)
σ2ei = 8.8318101
Residual variance of Infosys
σi2 = 27.59675
β2 = 0.00836
σm2 = 2.680047
σ2ei = 27.59675 – (0.00836 × 2.680047)
σ2ei = 27.57434
Residual variance of ACC
σi2 = 6.197568
β2 = 0.004874
σm2 = 2.680047
σ2ei = 6.197568- (0.004874 × 2.680047)
σ2ei = 6.184506
Residual variance of SBI
σi2 = 59.86697
β2 = 0.033817
σm2 = 2.680047
σ2ei = 59.86697 – (0.033817 × 2.680047)
σ2ei = 59.77633
70
Residual variance of Mahindra
σi2 = 14.73397
β2 = 0.011746
σm2 = 2.680047
σ2ei = 14.73397- (0.011746 × 2.680047)
σ2ei = 14.70249
4.3 PORTFOLIO CONSTRUCTION
1st Portfolio ( By giving equal weight to each stock )
Table 4. Showing Portfolio Alpha (αp)
Company Alpha(αi) Weight (ωi) ω i αi

Reliance 48.4431 0.2 9.68862
Infosys -5.00946 0.2 -1.00189
ACC 75.11819 0.2 15.02364
SBI 85.44481 0.2 17.08896
Mahindra 81.75437 0.2 16.35087
Total 57.15020
Portfolio Alpha (αp) = ∑ωiαi
71
Portfolio Alpha (αp) = 57.15020
Table 5. Showing Portfolio Beta (βp)
Company Beta(βi) Weight (ωi) ωiβi

Reliance 0.008287 0.2 0.0016574
Infosys 0.091447 0.2 0.0182894
ACC 0.069818 0.2 0.0139636
SBI 0.183893 0.2 0.0367786
Mahindra -0.10838 0.2 -0.021676
Total 0.049013
Portfolio Beta (βp) = ∑ωiβi
Portfolio Beta (βp) = 0.049013
72
Table 6. Showing Portfolio Residual variance
Company Weight (ωi) ω2i σie2 ω2i σie2

Reliance 0.2 0.04 8.8318101 0.35327
Infosys 0.2 0.04 27.57434 1.10297
ACC 0.2 0.04 6.184506 0.24738
SBI 0.2 0.04 59.77633 2.39105
Mahindra 0.2 0.04 14.70249 0.58809
Total 4.68276
Portfolio Residual variance = ∑ω2i σie2
Portfolio Residual variance = 4.68276
73
Measuring Portfolio Return and Risk
Portfolio Return ( Rp )
Portfolio Return = Portfolio Alpha + ( Portfolio Beta × Market Return)
Rp = αp + (βp × Rm)
αp = 57.15020
βp = 0.049013
Rm = 37.52744
Rp = 57.15020 + (0.049013 × 37.52744 )
Rp = 58.98953
Portfolio Risk ( σp2 )
Portfolio Risk = (Portfolio Beta2 × Market Variance)+ Portfolio Residual variance
Portfolio Risk (σp2) = βp2 σm2 + ∑n ωi2 σei2
βp2 = 0.00240227
σm2 = 2.680047
∑n ωi2 σei2 = 4.68276
σp2 = (0.00240227 × 2.680047) + 4.68276
σp2 = 4.689198
74
2nd Portfolio (Giving weight to each stock based on Price Earning Ratio)
Table 7. P/E Ratio of Companies are as Follows :
Company P/E Ratio

Reliance 20.87
Infosys 36.40
ACC 34.40
SBI 6.69
Mahindra 14.45
Total 112.81
source – Business Standard News Papper.
Table 8. Showing Calculation of weight based on P/E Ratio
Company (1) P/E Ratio(2) Total(3) Weight4=2/3

Reliance 20.87 112.81 0.185001
Infosys 36.40 112.81 0.322666
ACC 34.40 112.81 0.304938
SBI 6.59 112.81 0.058416
Mahindra 14.45 112.81 0.128534
Total 112.81 1
Company Alpha(αi) Weight(ωi) ω i αi

Reliance 48.4431 0.185001 8.962021
Infosys -5.00946 0.322666 -1.616382
ACC 75.11819 0.304938 22.906391
SBI 85.44481 0.058416 4.991344
Mahindra 81.75437 0.128534 10.508216
Total 45.75159
75
Portfolio Alpha (αp) = ∑nωiαi
Portfolio Alpha = 45.75159
Company Beta(βi) Weight(ωi) ωiβi

Reliance 0.008287 0.185001 0.001533
Infosys 0.091447 0.322666 0.029507
ACC 0.069818 0.304938 0.021290
SBI 0.183893 0.058416 0.010742
Mahindra -0.10838 0.128534 -0.013931
Total 0.049141
Portfolio Beta (βp) = ∑nωiβi
76
Table 11. Showing Portfolio Residual Variance
Company Weight(ωi) (ω2i) σei2 ω2i σei2

Reliance 0.185001 0.034225 8.8318101 0.302269
Infosys 0.322666 0.104113 27.57434 2.870847
ACC 0.304938 0.092987 6.184506 0.575079
SBI 0.058416 0.003412 59.77633 0.203957
Mahindra 0.128534 0.016521 14.70249 0.242899
Total 4.195051
Portfolio Residual Variance = ∑n ω2i σei2
Portfolio Residual Variance = 4.195051
77
Portfolio Return = Portfolio Aloha + (Portfolio Beta × Market Return)

Rp = αp+(βp×Rm)
αp = 45.75159
βp = 0.049141
Rm = 37.52744
Rp = 45.75159 + (0.049141 × 37.52744)
Rp = 47.59573
Portfolio Risk (σp2)
βp2 = 0.002415
σm2 = 2.680047
∑n ωi2 σei2 = 4.195051
σp2 = (0.002415 × 2.680047) + 4.195051
78
σp2 = 4.20152
3rd Portfolio( Giving weight to stock based on Risk Adjusted Rate of Return)
Company Ri σi Rf (Ri – Rf)/ σi Weight

Reliance 48.75408 2.971867 7.87 13.75704 0.1990
Infosys -1.5777 5.253261 7.87 -1.79844 -0.0260
ACC 77.73826 2.489492 7.87 28.06527 0.4059
SBI 92.34586 7.737375 7.87 10.9179 0.1579
Mahindra 77.68708 3.838485 7.87 18.18871 0.2631
Total 69.13046 1
Company Alpha (αi) Weight(ωi) ω i αi

Reliance 48.4431 0.1990 9.640177
Infosys -5.00946 -0.0260 0.130246
ACC 75.11819 0.4059 30.49047
SBI 85.44481 0.1579 13.49174
Mahindra 81.75437 0.2631 21.50957
Total 75.26221
Portfolio Alpha (αp) = ∑n ωi αi
Portfolio Alpha = 75.26221
79
Company Beta (βi) Weight(ωi) ωi β i

Reliance 0.008287 0.1990 0.001649
Infosys 0.091447 -0.0260 -0.00238
ACC 0.069818 0.4059 0.028339
SBI 0.183893 0.1579 0.029037
Mahindra -0.10838 0.2631 -0.02851
Total 0.028133
Portfolio Beta (βp) = ∑n ωi βi
Table 20. Showing Portfolio Residual Variance
80
Company Weight(ωi) (ω2i) σei2 ω2i σei2
Reliance 0.1990 0.039601 8.8318101 0.349749
Infosys -0.0260 0.000676 27.57434 0.01864
ACC 0.4059 0.164755 6.184506 1.018927
SBI 0.1579 0.024932 59.77633 1.490368
Mahindra 0.2631 0.069222 14.70249 1.01773
Total 3.895414
Portfolio Residual Variance = ∑n ω2i σei2
Portfolio Residual Variance = 3.895414
Portfolio Return = Portfolio Aloha + (Portfolio Beta × Market Return)

Rp = αp+(βp×Rm)
81
αp = 75.26221
βp = 0.028133
Rm = 37.52744
Rp = 75.26221+ (0.028133× 37.52744)
Rp = 76.31796
Portfolio Risk (σp2)
βp2 = 0.000792
σm2 = 2.680047
∑n ωi2 σei2 = 3.895414
σp2 = (0.000792 × 2.680047) + 3.895414
σp2 = 3.897536
Return & Risk of Portfolios
Portfolio Rp σp
Portfolio 1 58.98953 2.165455
Portfolio 2 47.59573 2.049761
Portfolio 3 76.31796 1.974217
82
Inference
Portfolio 3 has the maximum return and the portfolio with minimum return is
portfolio 2. The highest risk portfolio is portfolio 3 and that with lowest risk is portfolio
2
Selection of Best portfolio by Using Sharpe Performance Index
Table 21. Showing the selection of Best Portfolio by using Sharpe performance
Index
Portfolio Rp Rf σp2 σp Rp- Rf

σp2
Portfolio 1 58.9895 7.87 4.68919 2.16545 23.60683
3 8 5
Portfolio 2 47.5957 7.87 4.20152 2.04976 19.38066
3 1
Portfolio 3 76.3179 7.87 3.89753 1.97421 34.67094
6 6 7
Sharpe’s Ratio = Rp- Rf

σp2
Where
Rp = Return of Portfolio
Rf = Risk Free rate
83
σp = Risk of Portfolio
Inference
The Portfolio 3 is having the maximum Sharp ratio (34.67094) is selected as the
profitable portfolio.
CHAPTER V
FINDINGS
Technical Analysis
Reliance Industries
84
 Short medium and long term EMA line that indicates the trend for the stock is
bullish.
 The increasing ROC index indicates that the stock is having a positive
 The MACD line has crossed the reference line, while moving upward providing
a buy signal.
 The RSI line has crossed 70 marks providing a buy signal.
 The %K line moves below the %D line showing buy signal.
 The RS plot indicates that the stock is relatively weaker than the market index
and is upper performing compared to the market.
Infosys
 Short medium and long term EMA lines that indicate the trend for the stock is
bearish.
 Long term falling EMA lines indicate that the long term trend for the stock is
bullish.
 The increasing ROC index indicates that the stock is having a negative
momentum.
a buy signal.
 The RSI index is moving above 70 marks the over bought zone providing a mix
sell signal which can be interpreted as hold.
 The %K line moves below the %D line showing sell signal.
ACC
 Short medium and long term EMA lines that indicate the trend for the stock is
bullish.
 Long term falling EMA lines indicate that the long term trend for the stock is
bullish.
a buy signal.
85
 The RSI index is moving above 70 marks the over bought zone providing a mix
sell signal which can be interpreted as hold.
State Bank of India

bullish.
 Long term falling EMA line indicates that the long term trend for the stock is
bearish.
 The increasing ROC index indicates that the stock is having a negative
a buy signal.
 The RSI line has crossed 70 marks providing a buy signal.
 The %K line moves below the %D line showing buy signal.
Mahindra
bullish.
 Long term falling EMA line indicates that the long term trend for the stock is
bullish.
 The MACD line has crossed the reference line, while moving downward
providing a sell signal.
 The RSI line has crossed 70 marks providing a sell signal.
.
SECURITY ANALYSIS
Risk and Return of selected Securities
Return:
 SBI stock is bring the maximum return of 92.346% and Infosys is bring
the minimum return of -1.578%
86
Total Risk:
 The total risk is maximum of SBI stock (7.74) and is minimum for ACC
(2.49)
Risk adjusted rate of return:
 The risk adjusted rate of return is maximum for ACC (28.07 %) and is
minimum for Infosys (-1.80 %)
Alpha:
 SBI has the maximum Alpha of 85.44 % indicating maximum extra
return.
 Infosys is having the negative Alpha signifying that this stock is always
earning below the market index.
Beta:
 The Beta value for SBI is the highest at 0.184 and is the minimum for
Mahindra at -0.108.
Unsystematic Risk:
 The unsystematic risk is maximum for Infosys at 27.57 and minimum for
ACC at 6.18.
Portfolio Analysis
Portfolio Risk and Return
Return of Portfolio
 The return of portfolio is maximum for portfolio3 with 76.32% and it is
minimum for portfolio 2 with 47.60%
Portfolio total Risk:
 The portfolio total risk is maximum for portfolio1 at 2.17% and is
minimum for portfolio 3 at 1.97%.
Sharpe Ratio
 According to Sharpe ratio portfolio3 is providing the highest rate of
return of 34.67%. So the investor should select this portfolio if Sharpe
ratio is applied.
CONCLUSION
87
The proper goal of portfolio construction is to generate a portfolio that provides
the highest return at given level of risk. Diversification of securities gives assurance of
obtaining the anticipated return on the portfolio. In a diversified portfolio, some
securities may not perform as expected, but the others may exceed the expectation and
making the actual return of the portfolio reasonably close to the anticipated one. A wise
investor manages his portfolio effectively so as to secure highest return for the lowest
risk possible at the level of investment this is called portfolio management.
Technical analysis is a good indicator which shows the trend movement as well
as the varying degree of Oscillators and Relative strength indices. Technical analysis
may be used for more than supplement of fundamental analysis.
88
Bibliography
1. Security analysis and Portfolio Management:- Punithavathy Pandian
2. Portfolio Management:- Kevin
3. Financial Management:- I.M.Panday
4. www.capitaline.com
5. www.nseindia.com
6. www.surfindia.com
7. www.google.com
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CHAPTER 1

1.1 INTRODUCTION TO THE STUDY:

get by keeping the money in a commercial co-operative Bank or even in a investment

with the minimum risk, which is inherent in investments.

return evaluation and loss minimization.

INDIAN CAPITAL MARKET

Securities Market (overview)

market and future market.

Structure of Securities Market

EQUITY MARKET DEBT MARKET DERIVATIVE MARKET

Govt: Corporate Money Options Futures

History of Stock Exchanges

1.2 OBJECTIVES OF THE STUDY:

1. To analyze the trend and relative strength of securities.

3. To select the portfolio from the portfolio constructed.

1.3 SCOPE OF THE STUDY:

2.3 PERIOD OF THE STUDY:

Portfolio Beta (βp) = ∑nωiβi

Portfolio Return =Portfolio +(portfolio beta ×Market return)

Portfolio Risk (σp2 ) = βp2 σm2 + ∑n ωi2 σei2

Sharpe Ratio =( Rp-Rf ) ÷ σ p

Treynor ratio (TR) = (Rp-Rf)÷βp

Phases of Portfolio Management

FREQUENTLY ASKED QUESTIONS ON DEMATERIALISATION

Understanding Depository System

2. How is a depository similar to a bank?

3. How many Depositories are registered with SEBI?

4. Who is a Depository Participant?

6. How many Depository Participants are registered with SEBI?

7. Is it compulsory for every investor to open a depository account to trade in

8. What are the benefits of availing depository services?

A safe and convenient way to hold securities

10. How can one open an account?

Further, the investor has to sign an agreement with DP in a depository prescribed

12. Can an investor change the details of his bank account?

13. What should be done if the address of the investor changes?

14. Can multiple accounts be opened?

16. Is it necessary to have account with the same DP as broker has?

21. Can addition or deletion of names of accountholders is permitted after opening

24. Whether investors can freeze or lock their accounts?

25. What is dematerialisation?

• Surrender certificates for dematerialisation to your depository participant.

27. What is an ISIN?

28. Can odd lot shares be dematerialised?

• 29. Do dematerialised shares have distinctive numbers?

30. Can electronic holdings be converted back into Physical Certificates?

• One makes a request for dematerialization.

32. What is 'Standing Instruction' given in the account opening form?

• Ensure and insist with DP to issue DIS book.

38. Who should be contacted in case of discrepancies in corporate benefits?

39. Can one pledge dematerialised securities?

40. What should one do to pledge electronic securities?

46. What is to be done if there are any discrepancies in transaction statement?

48. What is Lending and Borrowing of Securities?

50. Can I lend the securities lying in my account?

51. How would I lend my demat securities?

52. How would I get back the securities lent by me?

55. Who can be a nominee?

Transmission of demat securities

56. What is transmission of demat securities?

Notarized copy of the death certificate

Notarized copy of the death certificate

Any one of the below mentioned documents -