A PROJECT REPORT ON STUDY OF PORTFOLIO MANAGEMENT

FOR

SANDEEP KAKADE & ASSOCIATES SUBMITTED TO

UNIVERSITY OF PUNE IN PARTIAL FULFILLMENT OF THE REQUIREMENT FOR THE AWARD OF THE DEGREE OF MASTER IN BUSINESS ADMINISTRATION

SUBMITTED BY

SACHIN NAMDEV KASHID

BATCH (2007-09) UNDER THE GUIDANCE OF

PROF.MAHESH HALALE

THROUGH VISHWAKARMA INSTITUTE OF MANAGEMENT

KONDHAWA BK, PUNE-411048

ACKNOWLEDGEMENT
Talent and capabilities are of course necessary but opportunities and good guidance are two very important things without which no person can climb those infant ladders towards progress It is great pleasure for me to acknowledge the kind of help and guidance received to me during my project work. I was fortunate enough to get support from a large number of people to whom I shall always remain grateful. I would like to express my sincere gratitude to Mr. Sandeep Kakade for giving me this opportunity to undergo this lucrative project with Globe Capital Marked Ltd. and also for their great guidance and advice on this project, without which I will not be able to complete this project. I am very thankful to my mentor Prof. Mr. Mahesh Halale for him inspiration and for initiating diligent efforts and expert guidance in course of my study and completion of the project and I am very thankful to my project guide for giving me timely and concrete guidance for making this project successful. I would like to thankful to staff members of Globe Capital Marked Ltd. For helped me during the project report and providing me more and more valuable information for my project report. I would thank to God for their blessing and my Parents also for their valuable suggestion and support in my project report. I would also like to thank our friends and those who have helped us during this project directly or indirectly.

Baban R. Mahanur

TABLE OF CONTENTS

Chapter. No 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11.

PARTICULARS
EXECUTIVE SUMMARY COMPANY PROFILE OBJECTIVE OF PROJECT RESEARCH METHODOLOGY THEORETICAL BACKGROUND DATA ANALYSIS & INTERPRETATION FINDINGS CONCLUSIONS LIMITATIONS BIBLIOGRAPHY ANNEXURE

Page. No 4 6 9 10 11 45 87 88 89 90 91

Chapter 1
EXECUTIVE SUMMARY
The Project on Portfolio Management was carried out for Globe Capital Market Ltd. .Overview In Todays Competitive world, where banks and financial institutions provide number of services which provides a customer with a wide spectrum of investment opportunities. They in order to retain their customers provide them special services besides traditional services. The invention of new technology and services by banks and financial institutions has given the consumers a wide range of investment avenues to invest in. One of the special services brought out by banks and financial institutions is PORTFOLIO
MANAGEMENT SERVICES (PMS) which aims at providing an investor to invest a

combination of securities all together which enables him to earn maximum returns at minimum level of risk & without any confusion. I am inclined to this topic, as it has given me actual knowledge of this service along with its working and how the portfolio manager manages the portfolio. Moreover, it has guided me to understand this so called complex world of investment and also increase my knowledge to such extent. I hope it will prove beneficial to me in developing my further career.

Research Objective
The main objective of this project is to review the real meaning of Portfolio Management, its objectives, role, framework, responsibilities of portfolio manger and the study of various other issues related to it. Basically to understand the concept of portfolio management.

Scope Of Project
The scope of the study is confined to Globe capital Market Ltd. only. It is depended on the information collected from various sources like Annual Reports, Magazines, etc. Primary & Secondary sources are used for the data collection.

Findings and Analysis

The collection of information is based on the secondary probe. The information has been collected through various books, various journals,
magazines, articles, books, published documents have also been considered in the project work.

An attempt has been made to simplify the process of the PORTFOLIO

MANAGEMENT by using the fundamental analysis.

Chapter 2
COMPANY PROFILE
Objective To be a good financial service provider by arranging the financial services under one roof at affordable price through cost effective delivery systems and achieve organic growth in business by adding new lines of business

Sole Proprietor: Mr Sandeep Kakade Manager: Samrat Lad

Sandeep kakade & Associates started in the year 2005 when acquired franchisee of Angel Broking Ltd. Earlier Mr Sandeep Kakade had started an investment consultancy in 1992. Areas of Business It is a sole proprietorship firm. It provides services in stock market (NSE, BSE, NSEFO, Commodity & Academy of Share market). It also deals in Insurance products. And now concentrates more on UNIT LINKED PLANS. The Complete Investment Destination: It provides comprehensive range of investment services. Thats advantage of having all the services investor need under one roof. Equity & Derivatives: You can look for an easy and convenient way to invest in equity and take positions in the futures and options market using their research and tools. To start trading in Equity, all you need to do is open an online trading account. You can call them and they will have

their representative meet you. You can get help opening the account and get guidance on how to trade in Equity. Commodity You can enter the whole new world of commodity futures. Investors looking for a fast-paced dynamic market with excellent liquidity can now trade in Commodity Futures Market. The Commodity Exchange is a Public Market forum and anyone can play in these vital Commodity Markets. Globe Capital Market Ltd. can certainly be your point of entry to the Commodity Markets. It is a registered trading-cum-clearing member of NCDEX and MCX. Internet Trading: Making the right trade at the right time! E-Broking service, which brings you experience of online buying and selling of shares with just a click. A detail resource like live quotes, charts, research and advice helps you take proper decisions. Their robust risk management system and 128 bit encryption gives you a complete security about money, shares, and transaction documents. IPO It offers bidding for all booked bills IPOs being floated through NSE network. It also offers services to customer such as advises on the minimum lot to applied in case of refer and details and data to be furnished into IPO form. It enables the investors to subscribe qualitative IPOs. Mutual Fund Transact in a wide range of Mutual Funds. Mutual Funds are an attractive means of saving taxes and diversifying your investment portfolio. So if you are looking to invest in

mutual funds, Globe Capital Market Ltd. offers you a host of mutual fund choices under one roof backed by in-depth information and research to help you invest smartly. Cash Market Services: Globe Capital Market Ltd. offer cash market trading services for the clients. It provides perfect Intraday Calls and Investment Research reports. Stock broking: It offers complete range of pre-trade and post-trade services on the BSE and the NSE. Whether an investor come into its conveniently environment, or issue instruction over the phone, its highly trained team and sophisticated equipment ensure smooth transactions and prompt services. Trading Terminals: It offers its sub-broker and approved/authorized user fully equipped trading terminals, at the location of investors choice. It is fully functional terminal, with a variety of helpful features like market watch, order entry, order confirmation, charts, and trading calls, all available in resizable windows. And it can be operated through the keyboard using F1 for buy, F2 for sell. Other Investment Products: To help investor balance their portfolio, it offers a completer range of other investment products, like Life Insurance, SIP in mutual funds etc. Commodity Exchange: It provides trading facility on MCX & NCDEX, a commodity exchange and has providing services in the field of commodity trades to its clients. It deals in gold silver, and all other commodities.

Chapter 3
OBJECTIVE OF PROJECT
Primarily understand the basic concept of Stock Market To understand concept of Portfolio Management. To understand the functions and responsibilities of Portfolio Management. To understand the concept of company analysis. 1. Fundamental Analysis 2. Technical Analysis

Chapter 4
RESEARCH METHODLOGY
Research methodology is a very organized and systematic medium through which a particular case or problem solved.
It is analytical, descriptive and quantitative research where the comparison between the different stocks is made on the basis of risk, volatility and return.

Research design descriptive Data sources- primary data and secondary data Research approach face to face interview, observation, individual depth interview Research instrument questionnaire. Data Collection: Primary Data: 1) Use of a Questionnaire for carrying out a survey 2) Presentation given by the Advisors 3) Data explaining the working of the Portfolio Management Secondary Data: 1) Books 2) Magazines 4) Internet 5) Booklet

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This project is about studying the portfolio management which is on the boom. The introductory part containts the meaning of portfolio management, its evolution. The project contains various graphs, tables and further explanations.

Chapter 5
THEORETICAL BACKGROUND STOCK MARKET

PRIMARY MARKET

SECONDARY MARKET

EQUITY MARKET OR CASH MARKET

DERIVATIVE MARKET

FUTURE CALL

OPTION PUT

Stock Market Understanding the stock market starts with a basic understanding stocks. A stock represents partial ownership of a company the smallest share possible. Company's issues stocks to raise capital and investors who buy stock are actually buying a portion of the company. 11

Where the buying and selling of stocks take place is known as STOCK MARKET. Stock trading is done on stock market like the NSE (National Stock Exchange) or BSE (Bombay Stock Exchange) This means that only companies listed on a public exchange have shares that can be bought and sold on the open market. Of course, you could also buy partial ownership in a smaller company that is not listed on a stock market but that is a very different type of investment than buying stocks. Because stocks must be bought and sold on a stock market, an individual investor needs a broker to make transactions for him. Brokers take orders to buy or sell a certain stock. The order may include instructions to trade at a certain price or simply what the market will bear. Once the broker receives the order he attempts to execute it by finding a buyer or seller as the case may be. The buyer or seller is also represented by a broker and each broker receives a commission on the sale. Primary Securities Market Most companies are usually stared privately by their promoter(s). However, the promoters capital and the borrowings from the banks and the financial institutions may not be sufficient for setting up or running the business over a long term. So companies invite the public to contribute toward the equity and issue shares to individual investors. The way to invite share capital from the public is through a Public Issue simply stated, a public issue is an offer to the public to subscribe to the share capital of a company. Once this is done the company allots shares to the applicants as per the prescribe rules and regulation laid down by SEBI. Secondary Securities Market Secondary market refers to a market where securities are traded after being initially offered to the public in the primary market and/or listed on the Stock Exchange. Majority

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of the trading is done in the secondary market Secondary market comprises of equity markets and the debt markets. In the primary market, securities are offered to public for subscription for the purpose of raising capital or fund. Secondary market is an equity trading venue in which already existing/pre-issued securities are traded among investors. Secondary market could be either auction or dealer market. While stock exchange is the part of an auction market, Over-the-Counter (OTC) is a part of the dealer market. Equity Market / Cash Market; Capital Market is generally understood as the market for long term fund .However, sometimes used in a very broad sense to include also the market for short term funds. Capital market means the market for all the financial instruments, short term and long term, as also commercial, industrial and govt paper.

Derivative Market The term derivative indicates that it has no independent value, i.e its value is entirely derived from the value of the underlying assets. The underlying asset can be securities, commodities, bullion, currency, live stock or anything else. In other words , derivative means a forward, future, option or any other hybrid contract of pre determined fixed duration, linked for the purpose of contract fulfilment to the value of a specified real or financial asset or to an index of securities Future Future contract means a legally binding agreement to buy or sell the underlying security on future date. Future contract are the organized/standardized contracts in terms of quantity, quality (incase of commodities), delivery time and place for settlement on any

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date in future, the contract expires on a pre-specified date which is called the expiry date of the contract. On expiry, future can be settled by delivery of the underlying asset or cash. Options An option on the other hand is the privilege sold by one party to another that offers the buyer the right, but not the obligation, to buy (call) or sell (put) a security at an agreedupon price during a certain period of time or on a specific date.

Call Option

A call option gives the holder (buyer/one who is long call), the right to buy specified quantity of the underlying assets at the strike price on or before an expiration date. The seller of the call option (one who is short call) however, has the obligation to sell the underlying assets if the buyer of the call option decides to exercise his option to buy.
Put Option

A Put option gives the holder (buyer/one who is long put), the right to sell specified quantity of the underlying assets at the strike price on or before an expiry date. The seller of the put option (one who is short put) however, has the obligation to buy the underlying assets at the strike price if the buyer of the put option decides to exercise his option to sell.

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INTRODUCTION OF PORTFOLIO MANAGEMENT

Portfolio means the total holdings of securities belonging to any person.
Portfolio management is the management various financial assets which comprise the portfolio. In a narrow spectrum, the term portfolio management can be applied to only shares and debentures whereas the management of the total financial assets can be attributed to the investment management. Portfolio management is a decision - support system that is designed with a view to meet the multi-aced needs of investors. As per definition of SEBI Portfolio means a collection of securities owned by an investor. It represents the total holdings of securities belonging to any person". It comprises of different types of assets and securities. Portfolio management refers to the management or administration of a portfolio of securities to protect and enhance the value of the underlying investment. It is the management of various securities (shares, bonds etc) and other assets (e.g. real estate), to meet specified investment goals for the benefit of the investors. It helps to reduce risk without sacrificing returns. It involves a proper investment decision with regards to what to buy and sell. It involves proper money management. It is also known as Investment Management .Portfolio Management, called, as Portfolio Management Services are the advisory services provided by corporate financial intermediaries. It enables investors to promote and protect their investments that help them to generate higher returns. It devotes sufficient time in reshuffling the investments on hand in line with the changing dynamics. It provides the skill and expertise to steer through these complexes, volatile and dynamic times. It is a choice of selecting and revising spectrum of securities to it with the

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characteristics of an investor. It prevents holding of stocks of depreciating-value. It acts as a financial intermediary and is subject to regulatory control of SEBI.
ROLE OF PORTFOLIO MANAGEMENT

In the beginning of the nineties India embarked on a programme of economic liberalization and globalization. This reform process has made the Indian capital markets active. The Indian stock markets are steadily moving towards capital efficiency, with rapid computerization, increasing market transparency, better infrastructure, better customer service, closer integration and higher volumes. Large institutional investors with their diversified portfolios dominate the markets. A large number of mutual funds have been set up in the country since 1987. With this development, investment securities have gained considerable momentum. Along with the spread of securities investment among ordinary investors, the acceptance of quantitative techniques by the investment community changed the investment scenario in India. Professional portfolio management, backed by competent research, began to be practiced by mutual funds, investment consultants and big brokers. The Securities and Exchange Board of India, the stock market regulatory body in India, is supervising the whole process with a view to making portfolio management a responsible professional service to be rendered by experts in the field. With the advent of computers the whole process of portfolio management has become quite easy. The computer can absorb large volumes of data, perform the computations accurately and quickly give out the results in a desired form. The trend towards liberalization and globalization of the economy has promoted free flow capital across international borders. Portfolios now include not only domestic securities but also foreign securities. Diversification has become international.

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Another significant development in the field of portfolio management is the introduction of derivatives securities such as options and futures. The trading in derivative securities, their valuation, etc. has broadened the scope of portfolio management. Portfolio management is a dynamic concept, having systematic approach that helps it to achieve efficiency in investment.

Portfolio Management Role;

Strategy Equity Derivatives Other products

Portfolio Management Process

Origination
Research Process

ISSUER

INVESTOR

Distribution Process

Structuring Process Market Clearing Process

Above figure itself indicate the role of portfolio management. Portfolio management plays very important role in respect of issuer and investor means companies and investors. After research portfolio manager decide which security or which other product is good or investible, accordingly he prepare strategies to invest. On the basis of the strategies he structures a portfolio. According to research portfolio manager decide weightage for the selected companies and distribute the share to that particular portfolio. It also involves market clearing process i.e. taking delivery of share and making payment for those shares. 17

SCOPE OF PORTFOLIO MANAGEMENT

Portfolio management is a continuous process. It is a dynamic activity. The following are the basic operations of a portfolio management: Monitoring the performance of portfolio by incorporating the latest market conditions. Identification of the investors objective, constraints and preferences. Making an evaluation of portfolio income (comparison with targets and achievements). Making revision in the portfolio. Implementation of strategies in tune with the investment objective.
ELEMENTS OF PORTFOLIO MANAGEMENT

Portfolio management is an on-going process involving the following basic tasks: Identification of the investors objectives, constraints and preferences, which will help formulate the investment policy. Strategies are to be developed and implemented in tune with the investment policy formulated. This will help the selection of asset classes and securities in each class depending upon their risk-return attributes. Review and monitoring of the performance of the portfolio by continuous overview of the market conditions, companies performance and investors circumstances. Finally, the evaluation of the portfolio for the results to compare with the targets and needed adjustments have to be made in the portfolio to the emerging conditions and to make up for any shortfalls in achievement vis--vis targets.

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The collection of data on the investors preferences, objectives, etc., is the foundation of portfolio management. This gives an idea of channels of investment in terms of asset classes to be selected and securities to be chosen based upon the liquidity requirements, time horizon, taxes, asset preferences of investors, etc. these are the building blocks for the construction of a portfolio. According to these objectives and constraints, the investment policy can be formulated. The policy will lay down the weights to be given to different asset classes of investment such as equity share, preference shares, debentures, company deposits, etc., and the proportion of funds to be invested in each class and selection of assets and securities in each class are made on this basis. The next stage is to formulate the investment strategy for a time horizon for income and capital appreciation and for a level of risk tolerance. The investment strategies developed by the portfolio managers have to be correlated with their expectation of the capital market and the individual sectors of industry. Then a particular combination of assets is chosen on the basis of investment strategy and managers expectations of the market.

OBJECTIVE OF THE PORTFOLIO MANAGEMENT

The objective of portfolio management is to maximize the return and minimize the risk. These objectives are categorized into: 1. Basic Objectives. 2. Subsidiary Objectives

Basic Objectives
The basic objectives of a portfolio management are further divided into two kinds viz., (a) maximize yield (b) minimize risk. The aim of the portfolio management is to enhance the 19

return for the level of risk to the portfolio owner. A desired return for a given risk level is being started. The level of risk of a portfolio depends upon many factors. The investor, who invests the savings in the financial asset, requires a regular return and capital appreciation.

Subsidiary Objectives
The subsidiary objectives of a portfolio management are expecting a reasonable income, appreciation of capital at the time of disposal, safety of the investment and liquidity etc. The objective of investor is to get a reasonable return on his investment without any risk. Any investor desires regularity of income at a consistent rate. However, it may not always be possible to get such income. Every investor has to dispose his holding after a stipulated period of time for a capital appreciation. Capital appreciation of a financial asset is highly influenced by a strong brand image, market leadership, guaranteed sales, financial strength, and large pool of reverses, retained earnings and accumulated profits of the company. The idea of growth stocks is the right issue in the right industry, bought at the right time. A portfolio management desires the safety of the investment. The portfolio objective is to take the precautionary measures about the safety of the principal even by diversification process. The safety of the investment calls for careful review of economic and industry trends. Liquidity of the investment is most important, which may not be neglected by any investor/portfolio manager. An investment is to be liquid, it must have termination and marketable facility at any time.

TYPES OF PORTFOLIO MANAGEMENT

1. The discretionary Portfolio Management 2. The non-discretionary Portfolio Management The discretionary Portfolio Management 20

In this type, the client parts with his money in favour of the manager, who is return, handles all the paper work, makes all the decisions and give a good return on the investment and charge fees. In the discretionary portfolio management to maximise the yield, almost all portfolio managers park the funds in the money market securities such as overnight market, 182 days treasury bills and 90 days commercial bills. Normally, the return on each investment varies from 14 to 18 per cent, depending on the call money rates prevailing at the time of investment The non-discretionary Portfolio Management The manager function as a counsellor, but the investor is free to accept or reject the managers advice. The paper work is also undertaken by the manager for services charge the manager concentrates on stock market instrument with a portfolio tailor made to the risk taking ability of the investor. Approaches of Portfolio Management Traditional Approach

Buy
Philosophy of holding assets till maturity (or default)

Hold

Relationships have been perceived by the extent of paper / risk that is held by banks Performance metrics have been driven by revenues & net income versus economic capital and ROE Emphasis on primary distribution with no markets / products for secondary sales.

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Modern Approach

Buy
Originate to distribute

Sell, Hedge

Portfolio Management acts as buyer, seller and manager of risk Support OR profit center? Support in a cross sell environment Hold to be at least SVA neutral

Fundamental shift in viewing exposures from Approved commitments to Economic capital usage What is Hedging? A hedge is an investment that is taken out specifically to reduce or cancel out the risk in another investment. Hedging is a strategy designed to minimize exposure to an unwanted business risk, particularly in inflationary economies, while still allowing the business to profit from an investment activity. Typically, a hedger might invest in a security that he believes is under-priced relative to its "fair value".

PORTFOLIO MANAGER

Portfolio Manager is a professional who manages the portfolio of an investor with the objective of profitability, growth and risk minimization. 22

According to SEBI, Any person who pursuant to a contract or arrangement with a client, advises or directs or undertakes on behalf of the client the management or administration of a portfolio of securities or the funds of the client, as the case may be is a portfolio manager.

He is expected to manage the investors assets prudently and choose particular investment avenues appropriate for particular times aiming at maximization of profit. He tracks and monitors all your investments, cash flow and assets, through live price updates.

The manager has to balance the parameters which defines a good investment i.e. security, liquidity and return. The goal is to obtain the highest return for the client of the managed portfolio.

There are two types of portfolio manager known as Discretionary Portfolio Manager and Non Discretionary Portfolio Manager. Discretionary portfolio manager is the one who individually and independently manages the funds of each client in accordance with the needs of the client and non-discretionary portfolio manager is the one who manages the funds in accordance with the directions of the client.

GENERAL RESPONSIBILITIES OF A PORTFOLIO MANAGER

Following are some of the responsibilities of a Portfolio Manager: The portfolio manager shall act in a fiduciary capacity with regard to the client's funds. The portfolio manager shall transact the securities within the limitations placed by the client.

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The portfolio manager shall not derive any direct or indirect benefit out of the client's funds or securities.

The portfolio manager shall not borrow funds or securities on behalf of the client. The portfolio manager shall ensure proper and timely handling of complaints from his clients and take appropriate action immediately

The portfolio manager shall not lend securities held on behalf of clients to a third person except as provided under these regulations.

CODE OF CONDUCT OF A PORTFOLIO MANAGER

Every portfolio manager in India as per the regulation 13 of SEBI shall follow the following Code of Conduct: A portfolio manager shall maintain a high standard of integrity fairness. The clients funds should be deployed as soon as he receives. A portfolio manager shall render all times high standards and unbiased service. A portfolio manager shall not make any statement that is likely to be harmful to the integration of other portfolio manager. A portfolio manager shall not make any exaggerated statement. A portfolio manager shall not disclose to any client or press any confidential information about his client, which has come to his knowledge. A portfolio manager shall always provide true and adequate information. A portfolio manager should render the best pose advice to the client.

SEBIS GUIDLINE TO PORTFOLIO MANAGEMENT

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SEBI has issued detailed guidelines for portfolio management services. The guidelines have been made to protect the interest of investors. The salient features of these guidelines are: The nature of portfolio management service shall be investment consultant. The portfolio manager shall not guarantee any return to his client. Clients funds will be kept in a separate bank account. The portfolio manager shall act as trustee of clients funds. The portfolio manager can invest in money or capital market. Purchase and sale of securities will be at a prevailing market price.

POWER OF SEBI

The Securities and Exchange Board of India has the following powers to control and manage the portfolio managers: The portfolio manager shall submit to SEBI such reports, returns and documents as may be prescribed. SEBI may investigate the affairs of a portfolio manager such as inspection of books of accounts, records, etc., SEBI has full authority in the event of violation of any provision to suspend or cancel the license. No exemptions will be given under any circumstances to portfolio manager.

TYPES OF RISK IN PORTFOLIO MANGEMENT

Each and every investor has to face risk while investing. What is Risk? Risk is the uncertainty of income/capital appreciation or loss of both. Risk is classified into:

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Systematic risk or Market related risk and Unsystematic risk or Company related risk. Systematic risk Systematic risk refers to that portion of variation in return caused by factors that affect the price of all securities. It cannot be avoided. It relates to economic trends with effect to the whole market. This is further divided into the following: Market risk: A variation in price sparked off due to real, social political and economical events is referred as market risk. Interest rate risk: Uncertainties of future market values and the size of future incomes, caused by fluctuations in the general level of interest is referred to as interest rate risk. Here price of securities tend to move inversely with the change in rate of interest. Inflation risk: Uncertainties in purchasing power is said to be inflation risk. Unsystematic risk Unsystematic risk refers to that portion of risk that is caused due to factors related to a firm or industry. This is further divided into: Business risk: Business risk arises due to changes in operating conditions caused by conditions that thrust upon the firm which are beyond its control such as business cycles, government controls, etc. Internal risk: Internal risk is associated with the efficiency with which a firm conducts its operations within the broader environment imposed upon it. Financial risk: Financial risk is associated with the capital structure of a firm. A firm with no debt financing has no financial risk. The extends depends upon the leverage of the firms capital structure.

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PORTFOLIO MANAGEMENT FRAMWORK

Portfolio Management Process 1. SPECIFICATION OF INVESTMENT OBJECTIVES AND CONSTRAINTS The first step in the portfolio management process is to specify the investment policy that consists of investment objectives, constraints and preferences of investor. The investment policy can be explained as follows:
OBJECTIVES

Return requirements: Return is the primary motive that drives investment. It is the reward for undertaking the investment. The commonly stated investment goals are income, growth and stability. Since income and growth represent two ways through which income is generated and stability implies containment or elimination of risk. But investment objectives may be more clearly expressed in terms of returns and risk. However, return and risk go hand in hand. An investor would primarily be interested in a higher return (in the form of income or capital appreciation) and lower level of risk. So he has to bear higher level of risk in order to earn high return. How much risk he would be willing to bear to earn a high return depends on his risk disposition. The investment objective should state the investor the preference of return in relation to risk. Specification of investment objectives can be done in following two ways: Maximize the expected rate of return, subject to the risk exposure being held within a certain limit (the risk tolerance level). Minimize the risk exposure, with out sacrificing a certain expected rate of return (the target rate of return).

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An investor should start by defining how much risk he can bear or how much he can afford to lose, rather than specifying how much money he wants to make. The risk he wants to bear depends on two factors: A. Financial situation B. Temperament To assess financial situation one must take into consideration: position of the wealth, major expenses, earning capacity, etc and a careful and realistic appraisal of the assets, expenses and earnings forms a base to define the risk tolerance After appraisal of the financial situation assess the temperamental tolerance of risk. Risk tolerance level is set either by ones financial situation or financial temperament which ever is lower, so it is necessary to understand financial temperament objectively. One must realize that risk tolerance cannot be defined too rigorously or precisely. For practical purposes it is enough to define it as low, medium or high. This will serve as a valuable guide in taking an investment decision. It will provide a useful perspective and will prevent from being a victim of the waves and manias that tend to sweep the market from time to time. Risk tolerance: Risk refers to the possibility that the actual outcome of an investment will differ from its expected outcome. More specifically, most of the investors are concerned about the actual outcome being less than the expected outcome. The wider the range of possible outcomes, the greater is the risk. It all depends on the investor, how much risk he is able to bear. If he is willing to bear high risk, he is expected to get high return and if he is willing to bear low risk, he will get low return.

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CONSTRAINTS AND PREFERENCES

Liquidity: Liquidity refers to the speed with which an asset can be sold, without suffering any loss to its actual market price. For example, money market instruments are the most liquid assets, whereas antiques are among the least liquid. Investment horizon: the investment horizon is the time when the investment or part of it is planned to liquidate to meet a specific need. For example, the investment horizon for ten years to fund the childs college education. The investment horizon has an important bearing on the choice of assets. Taxes: The post tax return from an investment matters a lot. Tax considerations therefore have an important bearing on investment decisions. So, it is very important to review the tax shelters available and to incorporate the same in the investment decisions.
2. SELECTION OF ASSET MIX

Based on the objectives and constraints, selection of assets is done. Selection of assets refers to the amount of portfolio to be invested in each of the following asset categories: Cash: The first major economic asset that an individual plan to invest in is his or her own house. Their savings are likely to be in the form of bank deposits and money market mutual fund schemes. Referred to broadly as cash, these instruments have appeal, as they are safe and liquid. Bonds: Bonds or debentures represent long-term debt instruments. They are generally of private sector companies, public sector bonds, gilt-edged securities, RBI saving bonds, national saving certificates, Kisan Vikas Patras, bank deposits, public provident fund, post office savings, etc. Real estate: The most important asset for individual investors is generally a residential house. In addition to this, the more affluent investors are likely to be 29

interested in other types of real estate, like commercial property, agricultural land, semi-urban land, etc. Precious objects and others: Precious objects are items that are generally small in size but highly valuable in monetary terms. It includes gold and silver, precious stones, art objects, etc. Other assets includes like that of financial derivatives, insurance, etc. The fallacy of Time Diversification: The notion or the idea of time diversification is fallacious. Even though the uncertainty about the average rate of return diminishes over a longer period, it also compounds over a longer time period. Unfortunately, the latter effect dominates. Hence the total return becomes more uncertain as the investment horizon lengthens.
3. FORMULATION OF PORTFOLIO STRATEGY

After selection of asset mix, formulation of appropriate portfolio strategy is required. There are two types of portfolio strategies, Active Portfolio Strategy and Passive Portfolio Strategy.
ACTIVE PORTFOLIO STRATEGY

Most investment professionals follow an active portfolio strategy and aggressive investors who strive to earn superior returns after adjustment for risk. The four principal vectors of an active strategy are: 1. Market Timing 2. Sector Rotation 3. Security Selection 4. Use of a specialized concept

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Market timing: This involves departing from the normal (or strategic or long run) asset mix to reflect ones assessment of the prospects of various assets in the near future. Suppose an investors investible resources for financial assets are 100 and his normal (or strategic) stock-bond mix is 50:50. In short and intermediate run however he may be inclined to deviate from long-term asset mix. If he expects stocks to out perform bonds, on a risk-adjusted basis, in the near future, he may perhaps step up the stock component of his portfolio to say 60 to 70 percent. Such an action, of course, would raise the beta of his portfolio. On the other hand, if he expects the bonds to outperform stocks, on a riskadjusted basis, in the near future, he may set up the bond component of his portfolio to 60 to 70 percent. This will naturally lower the beta of his portfolio. Market timing is based on an explicit or implicit forecast of general market movements. The advocates of market timing employ a variety of tools like business cycle analysis, advance-decline analysis, moving average analysis, and econometric models. The forecast of the general market movement derived with the help of one or more of these tools are tempered by the subjective judgment of the investor. Often, of course, the investor may go largely by his market sense. Sector Rotation: The concept of sector rotation can be applied to stocks as well as bonds. It is however, used more commonly with respect to stock component of portfolio where it essentially involves shifting the weightings for various industrial sectors based on their assessed outlook. For example if it is assumed that cement and pharmaceutical sectors would do well compared to other sectors in the forthcoming period, one may overweight these sectors, relative to their position in market portfolio. With respect to bonds, sector rotation implies a shift in the composition of the bond portfolio in terms of quality, coupon rate, term to maturity and so on. For example, if there is a rise in the interest rates, there 31

may be shift in long term bonds to medium term or even short-term bonds. But we should remember that a long-term bond is more sensitive to interest rate variation compared to a short-term bond. Security Selection: Security selection involves a search for under priced securities. If an investor resort to active stock selection, he may employ fundamental and or technical analysis to identify stocks that seems to promise superior returns and overweight the stock component of his portfolio on them. Likewise, stocks that are perceived to be unattractive will be under weighted relative to their position in the market portfolio. As far as bonds are concerned, security selection calls for choosing bonds that offer the highest yield to maturity at a given level of risk. Use of a specialized Investment Concept:: A fourth possible approach to achieve superior returns is to employ a specialized concept or philosophy, particularly with respect to investment in stocks. As Charles D. Ellis words says, a possible way to enhance returns is to develop a profound and valid insight into the forces that drive a particular group of companies or industries and systematically exploit that investment insight or concept. Some of the concepts of investment practitioners are as follows: Growth stocks Value stocks Asset-rich stocks Technology stocks Cyclical stocks

32

PASSIVE PORTFOLIO STRATEGY:

The passive strategy rests on the tenet that the capital market is fairly efficient with respect to the available information. The passive strategy is implemented according to the following two guidelines Create a well-diversified portfolio at a predetermined level of risk. Hold the portfolio relatively unchanged over time, unless it becomes inadequately diversified or inconsistent with the investors risk-return preferences

4. SELECTION OF STOCKS Three board approaches are employed for the selection of equity shares: Technical analysis Fundamental analysis Random selection

Technical analysis looks at price behaviour and volume data to determine whether the share will move up or down or remain trend less. Fundamental analysis focuses on fundamental factors like the earnings level, growth prospects, and risk exposure to establish the intrinsic value of a share. The recommendation to buy, hold, or sell is based on a comparison of the intrinsic value and the prevailing market price. Random selection approach is based on the premise that the market is efficient and securities are properly priced.

33

Models of Portfolio
To make the asset allocation process easier for clients, many investment companies create a series of model portfolios, each comprising different proportions of asset classes. These portfolios of different proportions satisfy a particular level of investor risk tolerance. In general, these model portfolios range from conservative to very aggressive: 1. Conservative Portfolio 2. Moderately Conservative portfolio 3. Aggressive Portfolio 4. Moderately Aggressive Portfolio 5. Very Aggressive Portfolio Conservative Model

Conservative model portfolios generally allocate a large percent of the total portfolio to lower-risk securities such as fixed-income and money market securities.

5% to 15% cash & equivqlent

15% to 20% Equities

70% to 75% fixed incom e securities

Our main goal with a conservative portfolio is to protect the principal value of our portfolio. As such, these models are often referred to as "capital preservation portfolios". 34

Even if you are very conservative and prefer to avoid the stock market entirely, some exposure can help offset inflation. You could invest the equity portion in high-quality blue chip companies, or an index fund, since the goal is not to beat the market Moderately Conservative portfolio

A moderately conservative portfolio is ideal for those who wish to preserve a large portion of the portfolios total value, but is willing to take on a higher amount of risk to get some inflation protection.

5% to 10% Cash & Equivalent

35% to 40% Equity

55% to 60% Fixed Incom e Securities

A common strategy within this risk level is called "current income". With this strategy, you chose securities that pay a high level of dividends or coupon payments.

35

Aggressive Portfolio

Aggressive portfolios mainly consist of equities, so these portfolios' value tends to fluctuate widely. If you have an aggressive portfolio, your main goal is to obtain long-term growth of capital. As such the strategy of an aggressive portfolio is often called a "capital growth" strategy.

5% to 10% Cash & Equivalent

20% to 25% Fixed Income Securities

65% to 70% Equities

To provide some diversification, investors with aggressive portfolios usually add some fixed-income securities.

Moderately Aggressive Portfolio

Moderately aggressive model portfolios are often referred to as "Balanced Portfolios" since the asset composition is divided almost equally between fixed income securities and equities in order to provide a balance of growth and income.

5% to 10% Cash & Equivalent

35% to 40% Fixed Incom e

55% to 60% Equity

36

Since these moderately aggressive portfolios have a higher level of risk than those conservative portfolios mentioned above, select this strategy only if you have a longer time horizon (generally more than five years), and have a medium level of risk tolerance. Very Aggressive Portfolio

Very aggressive portfolios consist almost entirely of equities. As such, with a very aggressive portfolio, your main goal is aggressive capital growth over a long time horizon.

10% Fixed Incom e

10% Cash & Equivalent

80% to 90% Equity

Since these portfolios carry a considerable amount of risk, the value of the portfolio will vary widely in the short term.

37

Phases of Portfolio Management

Security Analysis Portfolio Analysis Portfolio Selection Portfolio Revision Portfolio Evaluation

Security Analysis

Professional investor will make more money & less loss than, who let their heart rule. Their head eliminate all emotions for decision making. Be ruthless & calculating, you are out to make money. Decision should be based on actual movement of share price measured both in money & percentage term & nothing else. Greed must be avoided patience may be a virtue, but impatience can frequently be profitable. In Security Analysis anticipated growth, calculations are based on considered FACTS & not on HOPE. Equity analysis is basically a combination of two independent analyses, namely Fundamental analysis & Technical analysis. The subject of Security analysis, i.e. the attempt to determine future share price movement & its reliability by references to historical data is a vast one, covering many aspect from the calculating various FINANCIAL RATIOS, plotting of CHARTS to extremely sophisticated indicators. A general investor can apply the principles by using the simplest of tools: pocket calculator, pencil, ruler, chart paper & your cautious mind, watchful attention. It should be

38

pointed out that, this equity analysis does not discuss how to buy & sell shares, but does discuss a method which enables the investor to arrive at buying & selling decision. Fundamental Analysis The financial analysts always need yardsticks to evaluate the efficiency & performances of any business unit at the time of investment. Fundamental analysis is useful in long term investment decision. In Fundamental analysis company goodwill, its performances, liquidity, leverage, turnover, profitability & financial health was checked & analysis with the help of ratio analysis for the purpose of long term successful investment. It is important criteria for selecting the company to invest. It also provides the base for decision-making in investment. The one of the most frequently used yardstick to check & analyze profitability & financial health is Ratio Analysis. For that matter a verity of ratios was consider. This Fundamental analysis is helpful to general investor in many ways. It provides important & vital information regarding the financial position of the company. Ratio analysis involves the use of various methods for calculating & interpreting financial ratios to assess the performances & status of the business unit. It is the tool of financial analysis, which not only studies but also reflecting the numerical & quantitative relationship between the important financial variables. Fundamental analysis facilitates comparison between two companies. It reflects the financial efficiency & financial position of a company. Fundamental analysis is fruitful in preparing plans for the future. However, fundamental Analysis should not be considering as the ultimate objective test but it may be carried further based on the outcome & revelations about the cause of variations. Fundamental Analysis is helpful in forecasting likely position of company in near future.

39

Fundamental analysis is a very powerful analytical tool useful for measuring performance of an organization. The ratio analysis concentrates on the inter-relationship among the figures appearing in the financial and accounting statements. The ratio analysis helps the investor to analyze the past performance of the firm and to make further future projection regarding financial position. Ratio analysis allows interested parties like shareholders, investors, creditors and government to make an evaluation of financial aspect of a firm s performance. Fundamental analysis i.e. Ratio analysis is process of comparison of one figure against another, which makes a ratio, and appraisal of the ratios to make proper analysis about the strength and weakness of the firms operation. Fundamental analysis is extremely helpful in providing valuable insight into a company s financial picture. Ratios provide an easy way to compare present performance of businesses. Ratios depicts the areas in which a particular business competitively advantaged or disadvantaged through comparing ratios to those of other businesses of the same size within the same industry. Technical Analysis Technical analysis refers to the study of market generated data like prices & volume to determine the future direction of prices movements. Technical analysis mainly seeks to predict the short term price travels. It is important criteria for selecting the company to invest. It also provides the base for decision-making in investment. The one of the most frequently used yardstick to check & analyze underlying price progress. For that matter a verity of tools was consider. This Technical analysis is helpful to general investor in many ways. It provides important & vital information regarding the current price position of the company. Technical analysis involves the use of various methods for charting, calculating & interpreting graph & chart to assess the performances & status of the price. It is the tool 40

of financial analysis, which not only studies but also reflecting the numerical & graphical relationship between the important financial factors. The focus of technical analysis is mainly on the internal market data, i.e. prices & volume data. It appeals mainly to short term traders. It is the oldest approach to equity investment dating back to the late 19th century. Basic premises of technical analysis: 1. Market prices are determined by the interaction of supply & demand forces. 2. Supply & demand are influenced by variety of supply & demand affiliated factors both rational & irrational. 3. These include fundamental factors as well as psychological factors. 4. Barring minor deviations stock prices tend to move in fairly persistent trends. 5. Shifts in demand & supply bring about change in trends. 6. This shift s can be detected with the help of charts of manual & computerized action, because of the persistence of trends & patterns analysis of past market data can be used to predict future prices behaviours. Drawbacks / limitations of technical analysis: 1 Technical analysis does not able to explain the rezones behind the employment or selection of specific tool of Technical analysis. 2 The technical analysis failed to signal an uptrend or downtrend in time. 3 The technical analysis must be a self defeating proposition. As more & more people use, employ it the value of such analysis trends to reduce. Assumptions for Security Analysis 1. Works only in normal share-market conditions with great reliability, it also works in abnormal share-market conditions, but with low reliability. 41

2. Equity analysis is purely based on the INVESTMENT PHILOSOPHY, so the investment object has vital importance associated to return along with risk. 3. Cash management gets the magnitude role, because the scenario of equity analysis is revolving around the term money 4. Portfolio management, risk management was up to the investor s knowledge. 5. Capital market trend is always a friend, whether it is short run or long run. 6. You are buying stock & not companies, so don t be curious or panic to do Postmortem of companys performances. 7. History repeats: investors & speculators react the same way to the same types of events homogeneously Portfolio Analysis

A portfolio is a group of securities held together as investment. It is an attempt to spread the risk allover. The return & risk of each portfolio has to be calculated mathematically and expressed quantitatively. Portfolio analysis phase of portfolio management consists of identifying the range of possible portfolios that can be constituted from a given set of securities and calculating their risk for further analysis. Portfolio Selection

The goal of portfolio construction is to generate a portfolio that provides the highest returns at a given level of risk. Harry Markowitzh portfolio theory provides both the conceptual framework and the analytical tools for determining the optimal portfolio in a disciplined and objective way. Portfolio Revision

In the entire process of portfolio management, portfolio revision is as important stage as portfolio selection. Portfolio revision involves changing the existing mix of securities. This 42

may be effected either by changing the securities currently included in the portfolio or by altering the proportion of funds invested in the securities. New securities may be added to the portfolio or some existing securities may be removed from the portfolio. Thus it leads to purchase and sale of securities. The objective of portfolio revision is similar to the objective of selection i.e. maximizing the return for a given level of risk or minimizing the risk for a given level of return. The need for portfolio revision has aroused due to changes in the financial markets since creation of portfolio. It has aroused because of many factors like availability of additional funds for investment, change in the risk attitude, change investment goals, the need to liquidate a part of the portfolio to provide funds for some alternative uses. The portfolio needs to be revised to accommodate the changes in the investors position. Portfolio Revision basically involves two stages; Portfolio Rebalancing: Portfolio Rebalancing involves reviewing and revising the portfolio composition (i.e. the stock- bond mix). There are three basic policies with respect to portfolio rebalancing: buy and hold policy, constant mix policy, and the portfolio insurance policy. Under a buy and hold policy, the initial portfolio is left undisturbed. It is essentially a buy and hold policy. Irrespective of what happens to the relative values, no rebalancing is done. For example, if the initial portfolio has a stock-bond mix of 50:50 and after six months it happens to be say 70:50 because the stock component has appreciated and the bond component has stagnated, than in such cases no changes are made. The constant mix policy calls for maintaining the proportions of stocks and bonds in line with their target value. For example, if the desired mix of stocks and bonds is say 50:50, the constant mix calls for rebalancing the portfolio when relative value of its components change, so that the target proportions are maintained. 43

The portfolio insurance policy calls for increasing the exposure to stocks when the portfolio appreciates in value and decreasing the exposure to stocks when the portfolio depreciates in value. The basic idea is to ensure that the portfolio value does not fall below a floor level. Portfolio Upgrading: While portfolio rebalancing involves shifting from stocks to bonds or vice versa, portfolio-upgrading calls for re-assessing the risk return characteristics of various securities (stocks as well as bonds), selling over-priced securities, and buying under-priced securities. It may also entail other changes the investor may consider necessary to enhance the performance of the portfolio. Portfolio Evaluation

Portfolio evaluation is the last step in the process of portfolio management. It is the process that is concerned with assessing the performance of the portfolio over a selected period of time in terms of return and risk. Through portfolio evaluation the investor tries to find out how well the portfolio has performed. The portfolio of securities held by an investor is the result of his investment decisions. Portfolio evaluation is really a study of the impact of such decisions. This involves quantitative measurement of actual return realized and the risk born by the portfolio over the period of investment. It provides a mechanism for identifying the weakness in the investment process and for improving these deficient areas. The evaluation provides the necessary feedback for designing a better portfolio next time

44

Chapter 6
DATA ANALYSIS & INTERPRETATION
Data analysis involve financial analysis, financial analysis could be processed in many different ways, depending on what we want to achieve. Financial analysis can be used as just a monitoring tool in the selection of stocks in the secondary market. Or it can be used as a forecasting tool for future financial conditions and results. It may be used for evaluation and diagnosis of managerial, operating or other problem areas. Furthermore, financial analysis is a great and accurate base to rely which reduces the guessing and uncertainty that presents in all decision making situations. Financial analysis does not lesson the need for judgment but rather establishes a sound and systematic basis for its rational application. This is the first stage of the PORTFOLIO MANAGEMENT PROCESS. On the basis of fundamental analysis select the company to invest in, and accordingly he decide the weightage of that company in the portfolio. After having selected some good performing companies and adds those companies in the portfolio. Since the share market is volatile he makes changes in the portfolio or formulates strategies to earn more return. And compare the portfolios returns with the market returns i.e. with NSE or BSE. Following analysis shows that what portfolio manager has to do while managing portfolio. Analysis also indicates how portfolio manager manage the portfolio.

45

Fundamental Analysis of Companies HDFC BANK LTD Company history;

HDFC Bank, a private sector bank was incorporated in the year of 1994 by Housing Development Finance Corporation Limited (HDFC), India's premier housing finance company. HDFC was amongst the first to receive an 'in principle' approval from the Reserve Bank of India (RBI) to set up a bank in the private sector. The Bank commenced its operations as a Scheduled Commercial Bank in January 1995 with the help of RBI's liberalisation. HDFC Bank deals with three key business segments -Wholesale Banking Services, Retail Banking Services, and Treasury. In credit card industry alone, HDFC grown more than 10 times within the 3 years from 2005 to 2007. The bank has over 10 million customers and 1605 ATMS. The Reserve Bank of India has allowed HDFC Bank to start a non banking finance company. The NBFC, to be set up by HDFC Bank as a wholly owned subsidiary and will undertake retail operations such as auto, personal loans etc. On June 2nd of 2007 HDFC Bank has opened 19 branches in a day in Delhi and the National Capital Region (NCR), outdoing its own record of 14 branches in a day 2005. As part and apart from the regular banking activity. The number of branches accounted 684 in 316 towns and cities as of 2007 and the bank want to survive as ' a World Class Indian Bank ', benchmarking against international standards and best practices in terms of product offering, technology, service levels, risk management.

46

Company Background;
Incorporation year Registered office 1994 HDFC Bank House Senapati Bapat Marg Lower parel, Mumbai Chairman Managing director Company Secretary Auditor Face Value Market Lot Registrar Jagdish Capoor Aditya Puri Sanjay Dongre Haribhakti & Co 10.00 1 Datamatics Financial Services PlotNo-A-16-17 Part B,Cross Lane MIDC, Marol Andheri (East), Mumbai- 400 093 Market Capital 52,928.04 cr

47

Key Financials
Net Profit; YEAR Rs in crore 2008 1590.18 2007 1141.45 2006 870.78 2005 665.56 2004 509.50

Rs

1600 1400 1200 1000 800 600 400 200 0 2004 2005 2006 2007 2008 Net profit

Year Current Ratio; YEAR PERCENTAGE

12 10

2008 10.43

2007 6.75

2006 6.46

2005 7.78

Rs

8 6 4 2 0 2005 2006 2007 2008 Current Ratio

Year

Debt-Equity Ratio; YEAR 2008 2007 2006 2005 48

Equity % Debt %

34.72 65.28

33.92 66.08

34.21 65.79

35.13 64.87

100 80

Rs

60 40 20 0 2005 2006 2007 2008

Debt Equity

Year Earning Per Share; YEAR Rs

50

2008 43.42

2007 34.55

2006 27.04

2005 20.84

2004 17.44

Rs

40 30 20 10 0 2004 2005 2006 2007 2008 EPS

Years

Dividend History; YEAR Rs in crore 2008 301.27 2007 223.57 2006 172.23 2005 140.07 2004 100.05

49

350 300

Rs

250 200 150 100 50 0 2004 2005 2006 2007 2008 Dividend

Year Interpretation; According to data available, HDFCs volume growth was nearly in line with expectations.
Though, we were expecting EBITDA margins to expand. Since 2004 company has made good profit and its increasing year on year. Banks credibility is not in under utilization Management of bank is utilizing its credibility proper result in management is well qualified. Company has been maintaining enough liquidity to meet the current expenses; on the basis of earlier data we can expect it can maintain the proper ratio. If you look at the Net Profit, EPS, Dividend History, company has been doing well. In further year we can expect rise in net profit resulting in rise in dividend and share price. We expect that performance is going to be good in future for long term investment company is good.

TATA MOTORS LTD

Company History;
Tata Sons purchased the Tatanagar shops from the Government of India on 1st June 1945 for Rs. 25.39 lakhs with the aim of immediately manufacturing steam locomotive boilers.

50

Later it planned to manufacture complete locomotives and other engineering products. Tata Motors Ltd was incorporated in the year of 1945. In world charisma the Tata Motors Ltd (Formerly known as Tata Engineering and Locomotive Company Ltd) is the fifth-largest manufacturer of medium and heavy commercial vehicle and the second largest medium and heavy bus manufacturer. The company producing light, medium and heavy commercial vehicles and also manufacturing passenger cars, utility vehicles, excavators and machine tools in manufacturing units located at Jamshedpur, Pune, Lucknow and Pant Nagar in Uttarakhand. 1946 Tata Engineering was undertaken manufacture of 5000 'KC' broad gauge open wagons for the Indian Railway. The Managing Agency Tata Sons was transferred to Tata Industries on 1st July 1946. In the year 1948 the company made collaboration with Marshal Sons (UK) and introduced Steam Road Roller and in 1950 Collaboration signed with M/s Krauss-Maffei, West Germany for manufacture of steam locomotives. Collaboration with M/s Daimler-Benz AG, West Germany was made in the year 1954 for the manufacture of medium commercial vehicles at Jamshedpur. In 1966 the company acquired Investa Machine Tool for setting up of Machine Tools Division at Pune and in the next year it was executed, vehicle manufacture facilities steadily built up at Pune. As on 1977 the first commercial vehicle was successfully produced at Pune. In 1985 First hydraulic excavator produced under Hitachi collaboration. The First Light Commercial Vehicle - TATA 407 was produced by complete indigenous design with minimal import content in the year 1986 followed by next year Second model of completely indigenously designed LCV-TATA 608 produced and LPT 2416 a multi-axled vehicle introduced. In 1989 Third model of LCV - Tatamobile 206 produced Collaboration with M/s Kloth-Senking Metalligessari, Gmbh, West Germany, for know-how of manufacturing aluminum castings. Collaboration with Hitachi, Japan the First EX model 51

hydraulic excavator produced in the year 1990. As on December 2007 Tata launched seven medium and heavy trucks in Pune, the company plans to launch 30 new models in the commercial vehicle segment. Joint venture between Fiat Group Automobiles SpA and Tata Motors, has rolled out plans for expanding production capacity and backward integration in Pune with an additional investment of Rs 2,341 crore comes under memorandum of understanding in March 2008 and also Tata Motors has entered into a definitive agreement with the Ford Motor Company for the purchase of Jaguar Land Rover, comprising brands, plants and intellectual property rights. As on April 2008, the first test a small car namely 'Nanos' roll out from Uttarakhand plant. The trail production of Nano will start in June-July from Singur, West Bengal after the equipment test and commercial production of the same will start around October. Tata Motors is working on technology that will allow its diesel generators to also use natural gas and in process of entering into a technology tie-up with the New Energy & Industrial Technology Development Organisation (NEDO), a Japanese Govt agency. To convert its generator to ' Dual-Fuel System'. The company concentrate on various initiatives which focused on cost reduction, right sizing the organisation, volume / market share gains, product quality and the launch of new products have enabled the company a turnaround one in the globe.

Company Background;
Incorporation Year Registered Office 1945 Bombay House, 24 Homi Mody Street, Mumbai, Chairman Ratan N Tata 52

Managing Director Company Secretary Auditors Face Value Market Lot Registrar

Ravi Kant H K Sethna Deloitte Haskins & Sells 10.00 1 TSR Darashaw Ltd 6-10 Haji Moosa, Patrawala Ind.Estate DrEMoses Rd Mahalaxm Mumbai- 400 011

Market Capital

21,181.03 cr

Key Financial
Net Profit; YEAR Rs in crore 2008 2028.92 2007 1913.46 2006 1528.88 2005 1236.95 2004 810.34

53

2500 2000

Rs

1500 1000 500 0 2004 2005 2006 2007 2008 Net Profit

Year

Current Ratio; YEAR PERCENTAGE 2008 0.86 2007 1.07 2006 1.08 2005 0.87

1.2 1

Rs

0.8 0.6 0.4 0.2 0 2005 2006 2007 2008 Current Ratio

Year

Debt-Equity Ratio; YEAR Equity % Debt % 2008 30 70 2007 34 56 2006 34 56 2005 51 49

54

100 80

Rs

60 40 20 0 2005 2006 2007 2008

Debt Equity

Year Earning Per Share; YEAR Rs 2008 50.52 2007 47.10 2006 37.59 2005 32.44 2004 21.93

60 50

Rs

40 30 20 10 0 2004 2005 2006 2007 2008 EPS

Year

Dividend History; YEAR Rs in crore 2008 578.43 2007 578.14 2006 497.94 2005 453.73 2004 282.11

55

600 500

Rs

400 300 200 100 0 2004 2005 2006 2007 2008 Dividend History

Year Interpretation; On the basis of available financial data companys past has been very good. Since last five to six year company has been making good profit.As per data we can expect that company will earn good EBITDA in next year. As far as debt-equity ratio concern company is utilizing its credibility for expanding business, it also expanding year on year, we can see that in form of net profit. Fundamentally company has been remaining so strong. Company has enough liquidity to meet its current expenses. If you look at the four to five years dividend and EPS history company has been giving good return and its increasing year on year, on the basis of that record we can expect good return in future. On the basis of data we are expecting 15% to 20% rise in net profit.

TATA STEEL LTD

Company History
Tata Steel is the world's 6th largest steel company. It is a Asia's 1st and as well as India's largest integrated steel company in private sector with operations in 24 countries and commercial presence in over 50 countries. The company's history is a century old, the 56

origins and ascent of Tata Steel, which has culminated into the century long history of an industrial empire, emerge from the illustrious efforts of India's original iron man and the remarkable people who thereafter, have kept the fire burning. Tata Steel was founded by Jamsetji Nusserwanji Tata in the year 1907 as Tata Iron and Steel Company (TISCO) and later its renamed to Tata Steel Limited. It is an ISO-14001 and also SA 8000 certified company. Tata Steel is a global player with a balanced presence in developed European and fast growing Asian markets and with a strong position in the construction, automotive and packaging markets. Tata Steel's first ingot of steel was rolled out in February 1912 and the Greater Extension Scheme was launched in 1916 to raise capacity to 4, 50,000 tonnes for diversify production. The period of one year between 1942 and 1943, was characterized by the efforts of the Steel Company to produce a wide variety of special steels required for defence purposes including armoured cars called 'Tatanagars. Tata Steel's took step towards nation building was in 1943 with the construction of Howrah Bridge. The Two Million Expansion plan was undertaken between the years of 1953-54. The Ferro Manganese Plant commenced production at Joda in April 1967 It was ranked the 'World's Best Steel Maker', for the third time by World Steel Dynamics in its annual listing in February, 2006. Tata Steel has been conferred the Prime Minister of India's Trophy for the Best Integrated Steel Plant five times. On 2nd April '07, Tata Steel acquired Corus Europe's second largest steel producer for consideration of US$ 12 Billion, which made Tata Steel the sixth largest steel producer globally and the secondmost geographically diversified steel producer in the world. It also entered into an agreement to acquire controlling equity stake in two rolling mills located in Haiphorg, Vietnam. The fourth retail outlet, 'steel junction', at Behala was opened on February 2008 by the company. The company plans to expand its of Jamshedpur plant's crude steel 57

making capacity from 5 million tonnes to 6.8 million tonnes with cost of Rs.4550 crores and also the company plans to set up a 6 million tonne integrated steel project at Kalinganagar in the state of Orissa under two phases of 3 million each.

Company Background
Incorporation Year Registered Office 1907 Bombay House, 24 Homi Mody Street, Fort Mumbai, Chairman Ratan N Tata 58

Managing Director Company Secretary Auditors Face Value Market Lot Registrar

B Muthuraman J C Bham Deloitte Haskins & Sells 10.00 1 TSR Darashaw Ltd 6-10 Haji Moosa, Patrawala Ind.Estate DrEMoses Rd Mahalaxm Mumbai- 400 011

Market Capital

38,242.21 cr

Key Financials;
Net Profit YEAR Rs in crore 2008 4687.03 2007 4222.15 2006 3506.38 2005 3474.16 2004 1746.22

59

5000

Rs in crore

4000 3000 2000 1000 0 2004 2005 2006 2007 2008 et Profit

Year

Current Ratio YEAR PERCENTAGE 2008 2.86 2007 1.26 2006 0.71 2005 0.65

3 2.5 2 1.5 1 0.5 0 2005 2006 2007 2008 Current Ratio

Debt-Equity Ratio YEAR Equity % Debt % 2008 33 67 2007 49 51 2006 69 31 2005 47 53

60

100

80 60 40 20 0 2005 2006 2007 2008 Debt Equity

Year Earning per share YEAR Rs 2008 61.06 2007 69.95 2006 61.51 2005 60.91 2004 46.02

80 70 60 50 40 30 20 10 0 2004 2005 2006 2007 2008

EPS

Dividend History YEAR Rs in crore 2008 1168.93 2007 943.91 2006 719.51 2005 719.51 2004 368.98

61

1200

Rs in crore

1000 800 600 400 200 0 2004 2005 2006 2007 2008 Dividend History

Year Interpretation As far as TATA STEEL concern. This company has been very good performer since inception. If you look at the financial situation of the company it has also been very strong. On the basis of four to five year financial details company has been performing very well. As per the data available Company is making good profit since 2004. Company has enough liquidity to meet its liability. Company is using its credibility properly. Companys profit is also increasing year on year. If you look at the dividend and EPS history company has been giving good returns. On the basis of available data we can expect that company will earn good profit in future. On the basis of performance we can expect that 15 to 20% rise in net profit in the next year. Since the company is financially strong we can invest into the company for long term.

RELIANCE INDUSTRIES LTD

Company History
In the year 1966 the RIL was founded by Shri Dhirubhai H.Ambani, it was started as a small textile manufacturer unit. In May 8th, 1973 RIL was incorporated and conformed 62

their name as RIL in the year 1985. Over the years, the company has transformed their business from manufacturing of textiles products into a petrochemical major. RIL is the largest private-sector enterprise in India in terms of revenues, profits, net worth, assets and market capitalization. It's operations capture value addition at every stage, from the production of crude oil and gas to polyester, polymer and chemical products, and finally to the production of textiles. The company operates mainly in India but has business activities and customers in more than 100 countries around the world. It has production facilities at three major locations in India and a further four locations in Europe. It also has exploration and production interests in India, Yemen and Oman. The company has set up a texturising / twisting facilities in 1979, RIL has also set up plants for Polyester Staple Fiber (PSF) in 1986 and for Linear Alkyl Benzene (LAB) & Purified Terephthalic Acid (PTA) in 1988. RIL has setup a petrochemical facility to produce HDPE and PVC at Hazira, Gujarat in technical collaboration with DuPont and BF Goodich respectively. The Hazira petrochemical plant was commissioned in 1991-92. In the year 1995-96, the company entered the telecom industry through a joint venture with NYNEX, USA and promoted Reliance Telecom Private Limited in India. Reliance became the first corporate in Asia to issue bonds in the U.S at the year of 1996-97. The company commissioned an 80,000 tonne bottle grade PET chip plant at Hazira manufacturing complex. During the year 2002-03 company has also amalgamated Indian Petrochemicals Corporations Limited (IPCL), which leads to compete from a stronger base in the global market. Reliance discovered natural gas in the very first exploration well it drilled in the deep-water exploration block KG-D6 in the Krishna-Godavari basin off Andhra Pradesh. In 2004-05, RIL acquired the polyester major, Trevira GmbH, headquartered in Frankfurt, Germany which has the capacity of 130,000 tonnes per annum of polyester staple fibers, polyester filament yarns 63

and polyester chips. As of 2007 across the globe, RIL is largest producer of polyester fiber and yarn, 4th largest producer of Paraxylene (PX) and Purified Terephthalic Acid (PTA), 6th largest producer of Mono Ethylene Glycol (MEG) and 7th largest producer of Polypropylene (PP). Gujarat State Petronet Ltd (GSPL) and Reliance Industries Ltd (RIL) have signed a gas transportation agreement to transport 11 million standard cubic meters per day (MSCMD) of natural gas from Bhadbhut in Bharuch to RIL's refinery and petrochemical complex in Jamnagar. The company has signed a letter of intent with NOVA Chemicals on May 2008, to form 51:49 a joint venture in the area of building and construction. This proposed new joint venture between RIL and NOVA Chemicals would be a technological partnership for deploying green building and construction technologies to design, engineer, fabricate and build a range of high-efficiency structures for the Indian sub-continent. Reliance Industries Ltd plans to investment Rs 17,000 crore in oil and gas exploration over the next few years; The Company has already invested Rs 9,000 crore in exploration so far. RIL is also considering surrendering seven exploration blocks awarded to it by the Government.

Company Background
Incorporation Year Registered Office 1966 3rd Floor Maker Chambers IV, 222 Nariman Point Mumbai-400021 64

Chairman Managing Director Company Secretary Auditor Value Market Lot Registrar

Mukesh D Ambani Mukesh D Ambani Vinod M Ambani Chaturvedi & shah/Rajendra & Co 10.00 1 Karvy Computershare Pvt Ltd Karvy House 46,Road No 4 Street, No1, Banjara Hills, Hyderabad - 500034 Face

Market Capital

2, 97,669.85 cr

Key Financial
Net profit Year Rs in crore 2008 19458.29 2007 11943.40 2006 9069.34 2005 7571.68 2004 5160.14 65

25000

Rs in crore

20000 15000 10000 5000 0 2004 2005 2006 2007 2008 Net Profit

Year Current Ratio Year Percentage 2008 0.96 2007 0.90 2006 1.03 2005 1.10

1.2 1

0.8 0.6 0.4 0.2 0 2005 2006 2007 2008 Current ratio

Year

Debt-Equity Ratio Year Equity % Debt % 2008 54 46 2007 53 47 2006 51 49 2005 43 57

66

100

80 60 40 20 0 2004 2005 2006 2007 Debt Equity

Year Earning Per Share Year Rs

140

2008 131.97

2007 84.28

2006 63.70

2005 53.30

2004 36.31

Rs

120 100 80 60 40 20 0 2004 2005 2006 2007 2008 EPS

Year

Dividend History Year Rs in crore 2008 1631.24 2007 1440.44 2006 1393.51 2005 1045.13 2004 733.10

67

250 200

Rs in crore

150 100 50 0 2004 2005 2006 2007 2008 Dividend History

Year Interpretation Reliance Industry Ltd has been very good performer in respect of sales and other investment. As far as financial data concern Companys financial background has been very strong. Company has been giving good return as per expectation. Company is utilizing its credibility properly and expanding its business. If you look at the available financial details of the company has been making good profit since 2004.In next year company can earn 25 to 30% profit. Companys dividend & EPS history have been good. Company can give good return in future.

RELIANCE INFRASTRUCTURE LIMITED

Company History
Reliance Energy Limited (REL), with its corporate lineage going back to 1929. At the time of incorporation REL was called as Bombay Suburban Electric Supply Limited (BSES). 68

The company has been in the field of power distribution for nearly eight decades and with its emphasis on continuous improvements. REL is a fully integrated utility engaged in the generation, transmission and distribution of electricity. It ranks among India's top listed private companies on all major financial parameters, including assets, sales, profits and market capitalization. A key constituent of the Reliance - Anil Dhirubhai Ambani Group, India's third largest business house. Reliance Energy has emerged as one of the leading players in India in the Engineering, Procurement and Construction (EPC) segment of the power sector. Reliance Energy company currently pursue several gas, coal, wind and hydro-based power generation projects in Maharashtra, Uttar Pradesh, Arunachal Pradesh and Uttaranchal with aggregate capacity of over 13,510 MW. Reliance Energy is also active in the trading and transmission of power sector and has forayed as an equity investor in to the infrastructure business, including in the prestigious Mumbai metro rail project and various road projects of the National Highways Authority of India. REL has also entered into the Internet service provider business in a big way by the name of powersurfer.net. REL (BSES) has several group companies - ST-BSES Coal Washery (Joint Venture), BSES Infrastructure Finance, Utility Powertech (Joint Venture), Ticapco, BSES Telecom, BSES Kerala Power, BSES Andhra Power and three new companies of Orissa. The company has a strategy of adding value by strategic alliances within the group During the year 2002-2003, the company has successfully commissioned 210 MW Gas Based Combined Cycle power plants for BSES Andhra Power and 24 MW Bagasse fired Power Plant for Godavari Sugar Mills Ltd and 20 MW for Suryachakra Power Corporation Ltd. In April 2003 Andhra Power Ltd and Reliance Salgocar Power Company Ltd were amalgamated with the company. During the year 2003-2004, the Company was renamed to Reliance Energy Ltd from its old name BSES. The company has targeted to complete all 69

activities under the six sigma project, ISO 27001 and OHSAS certifications during 200708, which will make Reliance Energy the first utility in the country to achieve these certifications. These initiatives are aimed to cater the market and at further promoting business excellence in all functional areas of the company. In 2008 company engaged in several mega projects under implementation and under consideration in different functional areas, in that the notable two big projects are engineering, procurement and construction (EPC) contract from Damodar Valley Corporation (DVC) to set up the 2 x 600 MW coal based power station at Raghunathpur in West Bengal worth of Rs 3,725 crore and Airport Metro Express Line, Delhi project on BOOT basis for a concession period of 30 years worth of Rs 2,500 crore.

Company Background
Incorporation Year Registered Office 1929 Reliance Energy Centre, Santa Cruz (East) Mumbai, Maharashtra - 400055 Chairman Managing Director Anil Ambani Anil Ambani 70

Company Secretary Auditor Face Value Market Lot Registrar

Ramesh shenoy Chaturvedi & Shah/Price Waterhouse 10.00 1 Karvy Computershare Pvt Ltd Plot No 17-24, Vittal Rao Nagar, Madhapur, Hyderabad - 500081

Market Capital

21,980.73 cr

Key Financial
Net Profit Year Rs in crore 2008 1084.63 2007 801.45 2006 650.34 2005 520.29 2004 367.08

71

1200

Rs in crore

1000 800 600 400 200 0 2004 2005 2006 2007 2008 Net profit

Year

Current Ratio Year Percentage 2008 2.57 2007 2.99 2006 2.64 2005 2.23

40 30 20 10 0 2005 2006

Current ratio

Year

2007

2008

Debt Equity Ratio Year Equity % Debt % 2008 42 58 2007 35 65 2006 33 67 2005 38 62

72

100%

80% 60% 40% 20% 0% 2005 2006 2007 2008 Debt Equity

Year Earning Per Share Year Rs 2008 44.97 2007 34.16 2006 29.92 2005 27.40 2004 20.43

50 40

Rs

30 20 10 0 2004 2005 2006 2007 2008 EPS

Year

Dividend History Year Rs In Crore 2008 147.73 2007 81.72 2006 105.98 2005 87.36 2004 70.49

73

Rs in crore

160 140 120 100 80 60 40 20 0 2004 2005 2006 2007 2008

Dividend history

Year Interpretation
Reliance Infrastructure Ltd net profit growth has been nearly in line with expectations. Though, we were expecting EBITDA margins to expand, we were surprised by the extent of it. We are revising our FY08E and FY09E forecast upwards to account for the better pricing scenario. We are also building a case for slight margin expansion in FY08E over FY09E since we see a couple of levers for REL. If you look at the dividend & EPS history company is giving good return. Since the company is fundamentally strong it ca give good return in future.

Comparison of NIFTYS return with above companies return

Niftys Chart

74

Period
Jan 05 To July 05 July 05 To Jan 06 Jan 06 To July 06 July 06 To Jan 07 Jan 07 To July 07 July 07 To Jan 08 Jan 08 To July 08

Index Figure
2000 To 2250 2250 To 2750 2750 To 3300 3000 To 3900 3900 To 4400 4400 To 6000 6000 To 4000

Return %
12.50% 22.22% 20% 30% 12.82% 36.36% -33.33%

Yearly Return Given By Nifty

Jan 05 to Jan 06 = 12.50% + 22.22% = 34.72% Jan 06 to Jan 07 = 20% + 30% = 50 %

75

Jan 07 to Jan 08 = 12.82% + 36.36% = 49.18% 3 years average return of Nifty is 44.63%

Tata Motors Ltd

Period
Jan 05 To July 05 July 05 To Jan 06 Jan 06 To July 06 July 06 To Jan 07 Jan 07 To July 07 July 07 To Jan 08 Jan 08 To July 08

Share Prices (in Rs)

500 to 410 410 to 630 630 to 755 755 to 930 930 to 690 690 to 770 770 to 380

Return %
-18% 34.92% 19.84% 23.17% -25.80% 11.60% -50.64%

Yearly Return of Tata Motors Ltd.

Jan 05 to Jan 06 = -18% + 34.92% = 16.92% Jan 06 to Jan 07 = 19.84% + 23.17% = 43.01% Jan 07 to Jan 08 = -25.80% + 11.60% = -14.20% 3 years average return is 45.73%

Tata Steel Ltd

76

Period
Jan 05 To July 05 July 05 To Jan 06 Jan 06 To July 06 July 06 To Jan 07 Jan 07 To July 07 July 07 To Jan 08 Jan 08 To July 08

Share Prices (in Rs)

350 to 320 320 to 340 340 to 490 490 to 420 420 to 550 550 to 950 950 to 750

Return %
-8.50% 6.25% 44.11% -14.28% 30.95% 72.72% -21.05%

Yearly Return of Tata Steel Ltd.

Jan 05 to Jan 06 = -8.50% + 6.25% = -2.25% Jan 06 to Jan 07 = 44.11% + -14.28% =29.83% Jan 07 to Jan 08 = 30.95% + 72.72% =103.67% 3 years average return is 43.75%

HDFC Bank Ltd

77

Period
Jan 05 To July 05 July 05 To Jan 06 Jan 06 To July 06 July 06 To Jan 07 Jan 07 To July 07 July 07 To Jan 08 Jan 08 To July 08

Shares Prices (in Rs)

550 to 700 700 to 750 750 to 850 850 to 1050 1050 to 1150 1150 to 1700 1700 to 1050

Return %
27.27% 7.14% 13.33% 23.50% 9.52% 52.17% -38.23%

Yearly Returns of HDFC Bank Ltd

Jan 05 to Jan 06 = 27.27% + 7.14% = 34.41% Jan 06 to Jan 07 = 13.33% + 23.50% = 36.83% Jan 07 to Jan 08 = 9.52% + 52.17% = 61.69% 3 years average return is 44.31%

Reliance Industry Ltd

78

Period Jan 05 To July 05 July 05 To Jan 06 Jan 06 To July 06 July 06 To Jan 07 Jan 07 To July 07 July 07 To Jan 08 Jan 08 To July 08

Share Prices (in Rs) 450 to 550 550 to 750 750 to 1100 1100 to 1250 1250 to 1750 1750 to 3000 3000 to 2250

Return % 22.22% 36.36% 46.66% 13.36% 40% 71.42% -25%

Yearly Returns of Reliance Industry Ltd.

Jan 05 to Jan 06 = 22.22% + 36.36% = 58.58% Jan 06 to Jan 07 = 46.66% + 13.36% = 60.02% Jan 07 to Jan 08 = 40% + 71.42% = 111.42% 3 years average return is 76.67%

Reliance Infrastructure Ltd

79

Period Jan 05 To July 05 July 05 To Jan 06 Jan 06 To July 06 July 06 To Jan 07 Jan 07 To July 07 July 07 To Jan 08 Jan 08 To July 08

Share Prices (in Rs) 550 to 600 600 to 570 570 to 470 470 to 550 550 to 580 580 to 2550 2550 to 1000

Return % 10% -3.33% -17.54% 17.02% 5.54% 339.65% -60.78%

Yearly returns of Reliance Infrastructure Ltd.

Jan 05 to Jan 06 = 10% -3.33% = 6.67% Jan 06 to Jan 07 = -17.54% + 17.02% = 34.56% Jan 07 to Jan 08 = 5.54% + 339.65% = 345.19% 3 years average return is 128.80%

As far as market return concern NIFTY has given average 44.63% return yearly since 2005. If you look at the above all companies return, every company has given at least 44% return yearly for long- term investment, it is nearby the NIFTYs return. There were

80

so many up and downs in the share prices of the above companies over 3 years, still the companies have given good return On the basis of above fundamental analysis and market return analysis I have prepared an investment portfolio. And accordingly weightage have been given to each company.

MODEL OF PORTFOLIO

Company

Weightage

Sector

HDFC BANK LTD

15%

Banking

TATA MOTORS LTD

15%

Automobile
81

TATA STEEL LTD

10%

Steel

RELIANCE INDUSTRY LTD

20%

Diversified

RELIANCE INFRASTRUCTURE LTD

30%

Infrastructure

CASH

10%

Portfolios Pie Chart

82

10%

15%

HDFC Bank Ltd Tata Motors Ltd 15%

Tata Steel Ltd Reliance Ind Reliance Infra

30%

10% 20%

Cash

Weighted average return of the PORTFOLIO Year 2005-06 Company Portfolio Share % Returns of 2005-06
HDFC BANK LTD TATA MOTORS LTD

Weighted Avg returns (A*B) 5.16 2.54

83

(A) 0.15 0.15

(B) 34.41% 16.92%

TATA STEEL LTD RELIANCE INDUSTRY LTD RELIANCE INFRASTRUCTURE LTD TOTAL

0.10 0.20 0.30

-2.25% 58.58% 6.67%

-0.225 11.72 2.001

21.20%

NIFTYS return in 2005-06 is 34.72% Portfolios weighted average return in 2005-06 is 21.20% In 2005-06 decision went wrong; portfolio could not beat the NIFTY. Tata steel ltd performed negatively and reliance infrastructure could also not perform as per expectation thats why portfolio could not beat the NIFTY.

Weighted average return of the PORTFOLIO Year 2006-07 Company Portfolio Share % Returns of 2006-07
HDFC BANK LTD TATA MOTORS LTD TATA STEEL LTD RELIANCE INDUSTRY LTD RELIANCE INFRASTRUCTURE

Weighted Avg returns (A*B) 5,52 6.45 2.98 12 10.36

(A) 0.15 0.15 0.10 0.20 0.30

(B) 36.83% 43.01% 29.83% 60.02% 34.56%

84

LTD TOTAL

37.31

NIFTYS return in 2006-07 is 50% Portfolios weighted average return in 2006-07 is 37.31% In this year also portfolio could not beat the NIFTY, but if you compare the portfolios return of 2006-07 with 2005-06, in 2006-07 portfolio has performed well than 2005-06 returns without changing any weightage.

Weighted average return of the PORTFOLIO Year 2007-08 Company Portfolio Share % Returns of 2007-08
HDFC BANK LTD TATA MOTORS LTD TATA STEEL LTD RELIANCE INDUSTRY LTD RELIANCE INFRASTRUCTURE LTD TOTAL

Weighted Avg returns (A*B) 9.25 2.13 10.36 22.28 103.55

(A) 0.15 0.15 0.10 0.20 0.30

(B) 61.69% 14.20% 103.67% 111.42% 345.19%

147.57

NIFTYS return in 2007-08 is 49.18%

85

Portfolios weighted average return in 2007-08 is 147.57% In 2007-08 portfolio performed exceptionally well compare to above two years. It could beat NIFTY too in 2007-08.Without changing any weightage portfolio performed well.

Chapter 7
FINDINGS
In entire Study of Project following things have been observed, While doing project I observed that for systematic and diversified investment portfolio management services is required. Portfolio manager must have and various types of skills like marketing skill, analytical skill, etc. Portfolio manager has to perform various functions like Financial analysis of securities, Selection of securities, Revision of portfolio, etc. Portfolio manager has to keep himself very update about the market conditions. Making a fundamental analysis of a company is difficult task. Analyst has to consider various aspects of company while making fundamental analysis. Technical analysis mainly seeks to predict the short term price travels. 86

Chapter 8
CONCLUSIONS
After the overall all study about each and every aspect of this topic it shows that portfolio management is a dynamic and flexible concept which involves regular and systematic analysis, proper management, judgment, and actions and also that the service which was not so popular earlier as other services has become a booming sector as on today and is yet to gain more importance and popularity in future as people are slowly and steadily coming to know about this concept and its importance.

I also help both an individual investor to manage their portfolio by expert portfolio mangers. It protects the investors portfolio of funds very crucially.

Portfolio management service is very important and effective investment tool as on today for managing investible funds with a surety to secure it. As and how development is done every sector will gain its place in this world of investment.

87

Chapter 9
LIMITATIONS
Project could not cover all the aspect of the Portfolio Management. It is difficult to carry out the whole process of fundamental analysis within two months because of the vastness. Project could cover Portfolio Management of equities only. Inadequacy of data. Fundamental analysis may offer excellent insights, but it can be extraordinarily timeconsuming.

88

Chapter 10
BIBLIOGRAPHY
Books
Khan & Jain ( Financial Management) TATA McGraw Hill, page no- 3.5, 6.1 to 6.25. Dr. M A Kohok ( Advance Financial Management) Everest Publishing House, page no- 257 to 291. Security Analysis and Portfolio Management Prasanna Chandra

Magazines
Dalal Street.

Website
Investsmartindia.com Bygreekshares.com Wikipedia

89

Chapter-11
ANNEXURE
QUESTIONNAIRE

(1). NAME: ________________________________________________________________ (2). ADDRESS: _____________________________________________________________ _____________________________________________________________________ __ (3). CONTACT NO. _________________________________________________________ (4). PROFESSION: _________________________________________________________ (5). SEX: _______________ (6). AGE: ______ (7). EDUCATION: _____________________________ (8). Where do you invest your saving? Bank Mutual Fund Post Office

90

Insurance IPO

Real Assets Gold/Silver

Govt. Bonds Stock Market

If Others, Please specify.____________________________________ (9). If you invest in stock market, where do you invest your savings? Equity Derivatives Commodity

(9). How you reach at investment decision? Self analysis Business channels Tips from Experts Newspapers Tips from friends/relatives Other (Specify) _________

(10). Which factor plays a crucial role when you make a decision to invest in Stock Market? Risk Reduction Investment Less than 1 year More than 10 year (12). Which type of companies you would like to invest? Large cap Square up mode Hedging NSE Trader Short-term investor Mid cap Arbitrage Delivery based BSE Speculator Long-term investor Small cap Intraday (13). Which type of trading you prefer to deal with? Speculative Motive Arbitrage Benefit 1 to 5 year 5 to 10 year Leverage Benefit

(11). Duration of attachment with Stock Market?

(14). Which exchange you prefer to deal with? (15). How do you view yourself?

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92